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As the indebted Eurozone nation Italy struggles to stay afloat, the country finds many of its wealthier citizens evading taxes and refusing to do their part.
As a result, Italy’s Polizia launched a major operation across Milan in late January, setting roadblocks to halt high-end luxury vehicle drivers. When drivers hand over license and registration, their personal information will be passed on to the national tax agency to determine whether the owner of the car has declared accurate income and if the proper amount of income taxes has been paid.
Targeting tax evaders by profiling luxury vehicles is nothing new. A year ago, Italian authorities applied the same logic to luxury yacht owners in Italy’s harbors.
So far, traffic checkpoints sweeping for tax evaders have been posted in locations including one right across the street from Milan’s famed Corso Como, another at the Cortina d’Ampezzo luxury ski resort, the Italian Riviera’s Portofino, and cities Rome and Florence.
A wealthy entrepreneur of Italy, Andrea refused to give his last name to prevent giving off any further attention to Italy’s tax agency. When asked about his Land-Rover Range Rover, Andrea said, “I’ve been stopped three times in the last few weeks by authorities because I’m driving a luxury SUV. It seems like McCarthy era in America. You’re guilty by suspicion.” Due to excessive harassment from the police, Andrea plans to sell the Range Rover he bought last May. Expecting to receive 40,000 euros at best for a car he bought for more than 100,000 euros, Andrea explains, “Dealers are full of luxury cars. No one wants to buy them now.”
Not only are luxury car owners targeted on the street day to day, but luxury goods tax hikes discouraged premium car ownership as well. An owner of a 316,000 euro Lamborghini Aventador would now have to pay about 8,400 euros in taxes a year for the Italian exotic, an amount that’s almost 500 percent higher than tax charges from the past.
General Manager of Jaguar Italy Marco Santucci said that orders for Jaguar vehicles have “decreased substantially” in the final months of 2011. Demand for the Italian Icons Ferrari, Maserati and Lamborghini have nosedived by 53 percent in January. Maserati CEO Harald Wester expresses his disappointment, “It’s hard to imagine that any other European country having luxury car producers contributing significantly to employment would have introduced a tax.” On the other hand, Ferrari and owner Fiat are less perturbed. Fiat CEO Sergio Marchionne commented that “Italy isn’t a concern for Ferrari as it sells its cars abroad.”
According to ANFIA (Associazione Nazionale Fra Industrie Automobilistiche), the association of Italian automakers, January only netted 66 supercars sold. Italian dealer association Federauto added that new taxes and general national prejudice caused prices for exotic cars to fall by 20 percent. Head of Federatuo Filippo Pavan Bernacchi said, “Extra taxes and fiscal raids are hurting the demand for supercars and killing the second-hand market.”
Despite the displeasure of its citizens, Italy’s raids are working. At the Cortina d’Ampezzo ski resort, 251 luxury vehicles were stopped, including Ferari and Lamborghini supercars. Of the lot, 42 luxury car owners had declared an income of 30,000 euros or less for 2010 and 2009. What’s more 19 luxury vehicles belonged to businesses that posted a loss in the previous year. In Florence, a builder was discovered to have no tax record at all, while his wife received social assistance.
Tax evasion is estimated to cost Italy about 120 billion euros in lost revenues each year and it is unclear whether stopping luxury car owners at checkpoints could really fix Italy’s debt. However, our wealthy readers should note the 20 percent price drop in Italy’s premium car market. Not only is there a bargain to be found, but customers will be lending a hand to Italy’s local business.
German car magazine AutoBild Allrad recently invited readers to participate in a poll, to judge which was their favorite AWD car of the year.
Out of field of some impressive hardware, including the Alfa Romeo Brera Q4; Bentley Continental GT; Lamborghini Gallardo and Nissan GT-R; the readers selected the Cadillac CTS AWD coupe as the overall winner.
Not surprisingly, the folks at Cadillac’s European operations were delighted. “I am very happy to see that the new presence of Cadillac on the European marketplace has been noticed and appreciated,” declared Wolfgang Schubert; Managing Director of Cadillac Europe.
The Cadillac CTS Coupe has been on sale in European markets since the fall of 2010; though around 40 percent of all European buyers so far have chosen AWD models. In some markets, notably Switzerland and Austria, AWD variants account for more than 70 percent of all CTS sales volume.
[Source: General Motors]
As Europe struggles to deal with economic uncertainty in wake of the P-I-G-S crisis, General Motor’s European operations has elected to withdraw its application for government Loan Guarantees. According to sources within GM, the process of securing the loan guarantees has become increasingly complex and is taking longer than anticipated. Although some governments had already committed loan guarantees – particularly Spain and the U.K., uncertainty from others, including Germany, at a time when GM has already committed it’s Opel/Vauxhall brands to new programs and technologies, means that the General has decided to withdraw all applications and instead source the money required internally.
In response to the announcement, Nick Reilly, President of GM Europe and Chairman of Opel/Vauxhall’s management board had this to say. “We appreciate the support indicated by certain governments, especially the U.K. and Spain, but we need to move on. The decision of the German government last week was disappointing and means the conclusion for these guarantees are likely months away. We cannot afford to have uncertain funding plans and time consuming, complex negotiations at this time, when we need to keep investing in new products and technologies. To be clear, our funding needs have not changed and we are grateful to the decision and support of our parent company which will allow us to move forward in this very competitive industry.”
Prior to the announcement the U.K. government had already stated it would commit 330 million Euros (approximately $407 million) worth of Loan Guarantees and the Spanish government a similar amount, this out of a total of 1.8 billion Euros (approx $2.21 billion) requested from across Europe. However with the German government seeking to enter new negotiations, GM has pulled the plug on external funding.
Instead, it will forge ahead with the 11 billion Euro investment plan into future products that was announced back in Februrary. This includes the new Opel/Vauxhall Astra and Meriva, plus the Ampera plug in hybrid, scheduled to be released next year (shown).
[Source: Spiegel Online]
Earlier this week, GM announced "no decision" on which of the two rival bidders would get Opel
After announcing earlier this week that it has not reached a deal to sell Opel, General Motors is now apparently exploring options to keep the European unit.
This news comes as a surprise considering selling off Opel is a part of the company’s viability plan as submitted to the U.S. government in order to receive $50 billion in funding. In order to do so GM would reportedly need to raise $4.3 billion, which seems unlikely for a company that is still suffering from decreased sales and has only recently emerged from bankruptcy.
Earlier this week GM announced that it did not come to a decision on which of the two rival candidates it woud choose to sell Opel to. GM has received significant pressure from the German government to accept a deal from Canadian autoparts maker Magna Internatinal, but board members have been opposed to the deal, mostly because it could provide some of Magna’s Russian backers with technology that would allow them to compete with GM.
The German government favors the Magna deal over competing bidder RHJ International because Magna has agreed to keep jobs in Germany. The German government is offering $6.4 billion in loans to help the Magna purchase go through.
Apparently a new deal by RHJ would allow GM to keep some control over Opel and even allow the automaker to buy it back.
GM board members are currently in talks with the German government, where the Opel situation has become a national issue in the country’s upcoming elections. GM’s best case scenario would see the German government secure loans under a sale to RHJ, but so far German Chancelor Angela Merkel has not shown any interest in RHJ.
[Source: The Detroit News]
Deal contingent on additional investment, bank loans
General Motors has signed an agreement to sell off its Swedish Saab unit to the Koenigsegg Group. Led by supercar maker Koenigsegg, the group includes several additional investors. The deal will see the Koenigsegg Group take a 100 percent stake in Saab.
In a statement Koenigsegg Group CEO Christian von Koenigsegg said that the group plans to “transform Saab into a stand-alone vibrant entrepreneurial company and make it ‘sustainable’ by making it profitable.”
The deal is still contingent on additional funding, which Koenigsegg plans to raise through government loans and additional investors. According to a report in the Swedish newspaper Dagens Industri, a Koenigsegg Group executive said that the company requires $413.6 million in additional investments. Currently the Swedish government is reviewing a plan to secure a loan from the European Investment Bank.
Both Koenigsegg and General Motors seem to have differing opinions on how long it will take for the funding issue to be solved. Koenigsegg spokeswoman Halldora von Koenigsegg said she expects funding to be secured by in a month, while the less-optimistic GM is reported to have the end of 2009 pegged as a deadline to finalize the sale.
Additional specific terms of the agreement are not known, but it is expected that GM will supply the Koenigsegg Group with resources to assist in developing one additional model. Currently Saab is set to launch its latest model, the 2010 9-5 (pictured above) at the Frankfurt Auto Show.
[Source: Automotive News]
After continued rumors that General Motors was still shopping-around its European Opel operations, it appears as though a new buyer has been found. RHJ International, a Belgian company has been cited as the latest bidder and apparently a tentative deal could be signed by the end of the week.
Initially Opel was slated to be sold to Canadian autoparts manufacturer Magna International, but those plans have hit several roadblocks. Magna’s deal did not guarantee the same amount of job protection to Opel’s German workforce and so it put in jeopardy a $2.1 billion loan from the German government. Additionally, GM was not excited about the prospect of handing over its technology so that Magna and Russian partners Sberbank and GAZ could use it to build vehicles for the Russian market.
The deal put forward by RHJ, on the other hand, is more likely to be attractive to the German government and GM would not have to fear competition in the Russian marketplace.
According to the Financial Times, however, the RHJ deal is more attractive because of one factor, the price. An initial bid by the holding company had GM sign an agreement with Magna instead, but apparently RHJ has now upped its offer.
According to the Financial Times, GM could sign tentative agreements with both companies, meaning that the sale of Opel to Magna is not completely out of the question.
One of the other Opel bidders, China’s Beijing Automotive Industry Corp., is also expected to make GM a more attractive offer in the near future.
So it looks like Opel is in hot demand and GM is back in the driver’s seat as it looks to get the most for its European operations and emerge from bankruptcy in the best financial state possible.
[Source: Automotive News]
General Motors has officially announced it has reached a tentative deal to sell its Swedish Saab brand to a group of companies lead by Swedish supercar-maker Koenigsegg.
The deal will see the Koenigsegg group receive $600 million in funding from the European Investment Bank, which has been guaranteed by the Swedish government.
GM will provide Saab with platform and powertrain technology for an undisclosed period of time, while Saab is set to begin production of the next generation 9-5 in the near future at its plant in Trollhättan, Sweden.
“The proposed agreement will enable us to maximize the brand’s potential through an exciting new product line-up with a distinctly Swedish character. Today’s announcement is great news for Saab’s current and future customers, dealers, suppliers and employees around the globe, said Jan Ake Jonsson, Managing Director of Saab.
“This is yet another significant step in the reinvention of GM and its European operations,” said GM Europe President, Carl-Peter Forster. “Saab is a highly respected automotive brand with great potential. Closing this deal represents the best chance for Saab to emerge a stronger company. Koenigsegg Group’s unique combination of innovation, entrepreneurial spirit and financial strength, combined with Koenigsegg’s proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as for General Motors.”
Koenigsegg’s acquisition of Saab is expected to be completed by the third-quarter of this year.