The U.S. Department of Energy (DOE) is backing away from its previously announced plan to see 1 million electric cars on U.S. roads by 2015, saying the timeline isn’t really all that important.
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Cries rang throughout the world last night as President Barack Obama clinched a second term in office, but what that means for the auto industry is still somewhat unclear.
The automotive industry is a global business that is constantly evolving and growing, and we here at AutoGuide know it can be hard to keep up sometimes. So here is a summary of the top stories you may have missed this week:
Likely behind countless sleepless nights among the world’s automotive engineers, the Obama administration’s mandate for improved fuel efficiency was expected to take effect yesterday, but the gun remains unfired.
Election season is upon us and that means one thing, more mudslinging than a figure-eight demolition derby.
The auto industry bailout will certainly near the top of the many contentious issues Republican candidates vying for their party nomination will latch into. That desperate move by the government between 2008 and 2009 is still sparking hot debates and dividing opinion, though overall sentiment is still negative according to a new Gallup poll.
It found that 51 percent of those surveyed still disapprove of the $85 billion rescue effort, with only 44 percent saying they approve of the decision.
As might be expected, that division grows when examined between political parties. Republicans showed 73 percent opposition to the bailout while 63 percent of Democrats supported it.
Sentiments are, however, improving over the general opinion displayed in 2009 when the branding iron was still hot and tax dollars spent on saving big business felt closer and more real.
Three years later, the U.S. treasury could still lose money on the bailout if GM stocks fail to recover, but it seems that some of the public who were quick to cry out have forgotten or become complacent.
Still, the issue around supporting Chrysler and GM is one that the Republicans are likely to leverage against Obama during this year’s race when the number might slide back toward more negative territory.
How do you feel about the bailout? Tell us in the comments section or find us on Twitter.
[Source: The Detroit Bureau]
A truck containing a teleprompter and audio gear used by President Barack Obama was stolen in Virginia, prompting questions about security lapses.
The gear, estimated at about $200,000, was parked in a van at a Virginia hotel parking lot ahead of Obama’s visit to the area. The van was said to be carrying audio equipment, podiums and even the Presidential seal, which only Obama is allowed to stand behind. The truck was eventually recovered, but details about the equipment’s status has not been made public.
The truck was said to be unmarked but wearing government tags, and observers are questioning whether this was simply a random vehicle theft that happened to be carrying important cargo, or whether the goods were specifically targeted by thieves.
Volkswagen was one of several large automakers that did not sign off on the Obama Administration’s proposed Corporate Average Fuel Economy (CAFE) standards for 2025.
“We still have a dialogue going on with the administration in terms of how we think the policy needs to be adjusted,” said Jonathan Browning, CEO of Volkswagen Group of America.
Volkswagen is worried about the current proposed rules that place an unfairly strict rules on passenger cars. Heavier light trucks on the other hand, have much more lenient terms attached to them. Passenger cars maybe required to achieve 5% annual improvements and light trucks may face 3.5 percent annual improvements. The largest trucks on sale face almost no ruling for the 2017-2020 time frame.
“The proposal encourages manufacturers and customers to shift toward larger, less-efficient vehicles, defeating the goal of reduced greenhouse-gas emissions,” one spokesman said.
Volkswagen is also upset regarding the administration ignoring the improvements the German automaker has made to its diesel models. Diesels offer up to 30 percent better fuel efficiency and are installed in up to 80 percent of some VW models sold in the U.S.
“Diesels are growing to pretty much twice the scale in terms of (U.S. sales) of electric vehicles and hybrids together. It’s a technology that is available and affordable…and we think it should be part of the landscape going forward,” Browning explained.
[Source: Wards Auto]
A new Harvard study has found that electric vehicles won’t be accepted by the American public until gas hits $4.50 per gallon. The study also found that surprisingly, over the life of the car, plug-in hybrids like the Chevrolet Volt cost $5,377 more than gas powered cars. The story is the same for the Nissan Leaf which is $4,819 more expensive.
The aim of the study was to determine if Americans will buy electric cars and the study concluded that the answer was “yes-but only if the electric vehicles are competitive with conventional cars on cost, range and fueling convenience.”
The U.S Energy Information administration is predicting that gas in 2012 will cost around $3.65 per gallon and that $4.50 per gallon is not a likelihood in the near future.
The study was released just before President Obama is to outline higher fuel economy standards. Ultimately, the standards are expected to reach 54.5 mpg by 2025. White House spokesman Jay Carney said the following on the White House website, ”This program, which builds on the historic agreement achieved by this administration for model years 2012-’16, will result in significant cost savings for consumers at the pump, dramatically reduce oil consumption, cut pollution and create jobs,”.
[Source: Edmunds Inside Line]
Last year, the Obama Administration heavily backed Detroit’s automakers with a big helping of government funding. The bail-out money that was partly provided to General Motors and Chrysler, was for these companies to develop and sell hybrids, plug-in hybrids and pure electric vehicles. The end result was the hardly amazing Chevrolet Volt.
However, the Obama administration still wants to help the electric and hybrid car industry, and their latest move to help move such products is to cut funding for clean-diesel and fuel-cell technology.
So while $80-million was budgeted for clean-diesel development in 2010, for 2011 that budget is cut down to zero. Congress had originally promised $500-million over 5-years for this project. Similar cuts have been made towards the development of hydrogen fuel-cell vehicles.
The money that is being cut from clean-diesel and fuel-cell vehicles will now go to plug-in hybrid vehicles. Under the new plan, the $7500 tax break will be given to the customer at the dealership, not when taxes are claimed at the end of the year.
So while this might be great news for anyone who is looking to buy a plug-in hybrid vehicle, this will have an effect on manufacturers who had invested in other technologies. Essentially, those who manufacture clean-diesel or hydrogen fuel-cell vehicles will see marketing their vehicles in North America pointless.
Steven Rattner, the man appointed by President Obama to oversee the auto industry bailout, claims that internal GM documents that were analyzed in the early days of the bailout pegged the cost of producing a Chevrolet Volt at $40,000 per car.
“At least in the early years, each Volt would cost around $40,000 to manufacture (development costs not included),” said Rattner. While GM declined to comment on the actual cost of the Volt’s production, Rattner said that he supported the move, since it meant a qualitative advantage for General Motors in the area of alternative fuel vehicles.
The Volt retails for $41,000 before government subsidies, which leaves little profit for GM, although the company arguably derives significant indirect benefits from marketing the vehicle.
[Source: New York Times]
A week after reports that the original $1 billion allocated for the Cash-for-Clunkers program was running low, President Obama today signed into law an additional $2 billion that will keep the program running and fuel a rebounding auto industry.
In just two weeks since the original bill was passed the Cash-for-Clunkers or CARS (Car Allowance Rebate System) has netted $920 million in rebates and has accounted for more than 220,000 new car sales.
The boost to the auto industry has prompted speculation that total car sales for the year, which only a few months ago were pegged at under 10 million, will now exceed the 13 million unit mark.
Automakers are also looking to boost production output as inventory levels have dropped to their lowest levels since 1992. Measured in the number of days worth of inventory a dealer has on its lot, Chrysler dropped its inventory from 71 to 40 days, Ford shed 9 days (from 57 to 48) while both GM and Toyota lost 18 days, from 82 to 64 and 47 to 29 respectively.
If you’ve been trying to decide whether or not to trade in your gas guzzler on a new fuel-efficient model and cash in on the government’s $4,500 CARS rebate, you’ve waited too long. The program, funded with 1 billion dollars of tax payers’ money is already running low – just six days after the Obama Administration officially launched it.
According to the NHTSA (National Highway Traffic Safety Administration), by the end of the Wednesday work day dealers had submitted 22,782 claims for a total of $95.5 million.
At that rate the program will run out of money long before the planned CARS (Car Allowance Rebate System) expiration date of November 1st. Reuters cites Bailey Wood, a spokesman for the National Automobile Dealers Association, who speculates the program will run out of funding before the date.
The Cash-for-Clunkers legislation had been criticized heavily before being passed for not being sufficiently funded.
The good news out of this is that if the CARS rebate system is used up (early or not) it is expected to generate as many as 250,000 car sales – something which should help speed up an economy that already shows signs of recovering.
Reuters cites an unnamed inside government source for the tip, who says the CARS program wil be suspended shortly. There is no word on if there are plans to find additional funding and re-instate Cash-for-Clunkers at a later date.
[Source: Automotive News]
New offer means some models discounted by as much as $9,000
In a bid to get inventory moving out of showrooms in a hurry, Chrysler has decided to offer a new incentive program that would double the value of the government’s cash-for-clunkers program.
Chrysler will offer $4,500 off (or 0 percent financing for 72 months) on most of its 2009 inventory – excluding the Dodge Challenger, Sprinter, Jeep Wrangler and all SRT products. The $4,500 incentive is even available on vehicles that do not meet the requirements for the cash-for-clunkers program, which was recently signed off on by President Obama.
Cash-for-Clunkers, or CARS (Car Allowance Rebate System) gives a $4,500 rebate on a new car when it gets 10 mpg or more better fuel mileage than the one traded in. The rebate is $3,500 on vehicles that get 4 to 9 mpg better or trucks that get 2 to 4 mpg better.
Chrysler, now under new leadership from Italian automaker Fiat is hoping the incentive will help sales rebound. Chrysler has been hit particularly hard this year with sales down 45.7 percent for the first six months.
When combined, these two offers mean a $17,090, Dodge Caliber SE could leave showrooms for as little as $8,090.
Chrysler’s “Double Ca$h for Your Old Car,” incentive starts tomorrow and runs through August.
[Source: Automotive News]
Smaller, more fuel-efficient engines likely needed to meet new fuel-economy regulations
BMW is looking at bringing back for-cylinder engines to the U.S. in order to meet tough new fuel-economy regulations. BMW’s engineering boss, Tom Baloga, told Bloomberg that the smaller and more fuel-efficient engines were likely needed in order to meet the Obama Administration’s 2016 CAFE regulations, which call for a new fleet average of 35.5 mpg – up from 27.3 mpg for 2011.
Last year BMW’s fleet-wide average was 26.5 mpg.
Currently BMW sells the 1 Series, 3 Series, 5 Series and X3 with four-cylinder engines overseas, where fuel-efficient diesel options are also popular. In fact, Baloga says that due to the high volume of diesel sales in Europe, the automaker’s current European fleet average would already meet the 2016 CAFE regulations.
BMW currently offers a high-performance 3 Series diesel, the 335d, in the U.S., but Baloga says BMW will not rely on diesels to offset less fuel-efficient models as demand for diesels in the U.S. isn’t high enough to make a difference.
The real issue in bringing over four-cylinder engines, says Baloga, is keeping the focus on performance. That being said, the four-cylinder models are likely to either be turbocharged or used in significantly lighter models.
BMW is also looking at growing its offering of 1 Series models in the U.S., with numerous new models planned. The higher sales volumes of the more efficient engines will also help to increase BMW’s fuel-efficiency fleet average.
The Canadian government is currently examining if it will pass a cash-for-clunkers bill that could see consumers get up to $3,500 (CDN) towards a new car when they trade in their older and less fuel-efficient model.
Environment Minister Jim Prentice said a decision on the matter will be made within the next 60 days, as the government continues to be pressured by automakers. The government has also received added pressure after U.S. President Barack Obama signed off on a similar program last month that would see U.S. consumers get as much as $4,500 (USD) towards a new car when they trade in an old one with poor fuel economy.
Automakers are pressuring the government to help out in an effort to boost auto sales. Vehicle sales in Canada, however, are not suffering to the same extent that they are in the U.S. According to the Association of International Automobile Manufacturers of Canada (AIAMC), vehicle sales were down just 13.2 percent in June with year to date sales down 18.3 percent. Passenger vehicle sales were down 22.9 percent, while light duty truck sales were actually up 1.5 percent.
[Source: The Vancouver Sun]
Late Sunday a judge approved the sale of GM’s assets to a group comprised of the U.S. government, the UAW and the Canadian and Ontario governments under the name NGMCO, Inc. The decision will see GM exit bankruptcy court quickly with the ‘New GM’ assets going to NGMCO, while the ‘Old GM’ assets will be sold off to the highest bidder.
Judge Robert Gerber then placed a stay on the proceedings to for four days to hear objections or appeals, but as most of those have already been dealt with, GM is expected to reemerge as a new government-owner company by Thursday.
In a statement Judge Robert Gerber said that he would, “prevent the death of the patient on the operating table.”
Gerber pointed out the seriousness of the matter and the alternative, stating that, “The only alternative to an immediate sale is liquidation – a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates.”
The New GM will be majority owned by the U.S. government with a 60 percent stake in the automaker. The UAW will get 17.5 percent, while the Canadian and Ontario governments will get 12 percent.
In response to the news GM’s CEO Fritz Henderson released a statement saying that, “A healthy domestic auto industry remains vital to the global economy and we deeply appreciate the support the U.S., Canadian and Ontario governments and taxpayers have given GM, and the sacrifices that have been made by so many. This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades. Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.”
The Obama Administration’s auto task force has said that sale of GM back to the private sector could begin as early as next year.
[Source: Automotive News]
After passing through both the Senate and the House, the Cash-for-Guzzlers bill has been signed by President Obama. Known also as Cash-for-Clunkers, the official name of the legislation is CARS – the Car Allowance Rebate System.
Vehicles that are traded in must get 18 mpg or worse and be newer than 25 years old. For those who trade in their guzzler for a vehicle that gets (on average) 4 mpg more will receive a $3,500 voucher toward the new car, while those who choose a vehicle that gets 10 mpg more than their current auto will receive the full $4,500.
The rules are slightly different for trucks as the full $4,500 voucher will be available for gas guzzling trucks when traded in on a new truck that gets 5 mpg more.
The hope is that this new legislation will boost auto sales. Similar initiatives (but which target old cars and not gas guzzling ones) have been a huge success in countries like German.
The CARS act will take effect at the end of July.
Those looking for more info can visit the CARS website here:
[Source: Automotive News via Autoblog]
New legislation aimed at improving sales of fuel-efficient cars
Late yesterday the House of Representatives approved a bill that would offer consumers up to $4,500 to trade in their vehicle on a more fuel-efficient machine. The legislation must now go before the Senate before President Barack Obama is expected to give it final approval.
The bill passed with a strong majority of 298 to 119 and has also received the support of U.S. automakers.
Still, the CARS Act as it is being called is significantly different from the successful incentive programs used in Europe as its aim is not to sell cars, but to sell fuel efficient cars.
Vehicles that are traded in must get 18 mpg or worse. For those who trade in their guzzler for a vehicle that gets (on average) 4 mpg more will receive a $3,500 voucher toward the new car, while those who choose a vehicle that gets 10 mpg more than their current auto will receive the full $4,500.
Programs in Europe, like the incredibly successful one in Germany, target older cars, rather than gas guzzlers.
The CARS act is a temporary measure and is being funded through a $4 billion fund. It is also not retroactive.
If passed in the Senate and approved by President Obama, it is likely to go into effect 30 days afterward, which may mean consumers won’t be able to cash in on incentives until August 1st – a full six months after programs like the one in Germany were put into effect.
America's manufacturing engine runs out of gas
While President Obama and General Motors CEO Fritz Henderson are both expected to hold press conferences today, officially GM has already filed for Chapter 11 Bankruptcy Protection.
Once the world’s largest automaker and a symbol of the success of free market economics, GM is now a symbol of failure. In the 1950s it employed over 500,000 people and produced more than half of all the vehicles sold in the United States. Now it also holds the dubious title of the world’s third-largest bankruptcy – and the largest bankruptcy for a manufacturing company.
General Motors, backed by yet another government loan from the U.S. Treasury is expected to get the same fast-tracked bankruptcy proceedings as the smaller U.S. automaker Chrysler – which filed for Chapter 11 just one month ago and which already appears to be emerging. Just yesterday a judge approved the sale of Chrysler’s assets to a group comprised of Fiat, the U.S. government and the UAW. The Chrysler Chapter 11 proceedings were seen by many as a practice for the much larger General Motors corporation.
As a part of the Chapter 11 filing GM will receive $30 billion from the Obama administration, giving it a 60 percent stake in the once-great automaker. The Canadian government will take a 12 percent stake by providing an additonal $9.5 billion, while the UAW gets a 17.5 percent share and bondholders get 10 percent.
The Chapter 11 proceedings are expected to take anywhere from 60 to 90 days but the future of General Motors is anything but certain. In the short term the automaker will most likely push ahead, but the big question mark is if it can become financially viable and build cars that people want to buy – something which is further complicated by the government’s involvement.
While the Obama Administration was reluctant to get involved it almost had no choice as without government help both General Motors and Chrysler were doomed to failure – at a time when the U.S. economy already has enough troubles. But now that the government is involved it doesn’t appear to be willing to part with its economic engine. Even when GM and Chrysler emerge from bankruptcy, the government’s Autos Task Force will continue to be involved in the future of both companies.
With a 60 percent stake in General Motors and a political agenda, will the Obama Administration work with GM and Chrysler to ensure both companies build cars people want – or build cars it wants people to want?
Only time will tell.
[Source: Automotive News]
Due to the overall turmoil at General Motors these days a lot of projects have been put on hold. Included in that list is the replacement for the current Aveo. A new Aveo, code named the T300, was due out in April of 2010, but now that product has been delayed until January of 2011.
The Aveo is built by GM Daewoo Auto and Technology, the Korean arm of General Motors, which was formed when GM bought the Daewoo automaker back in 2002.
GM Daewoo has already used up $2 billion in credit lines and is looking to secure a loan from the state-owned Korea Development Bank. It has suffered considerably during the worldwide recession with sales down 44.5 percent. That might not seem like much from a little-known and little-though-of offshoot of General Motors, but GM Daewoo accounts for 25 percent of GM’s total production.
The Aveo-replacement’s delay is particularly odd when you’d expect that GM, under the strict observance of the Obama Administration, would be focused on bringing small, fuel-efficient cars to market. (That certainly seems to be the case so far). And with the Aveo already long-in-the-tooth, sales of the model should continue to decline annually – making the need for a new Aveo all that more important.
According to a Reuters report, Japanese and Korean automakers (Hyundai and Kia in particular) are expected to gain market share from GM Daewoo in the small-car segment .
Just days after President Obama proposed new legislation that would see fleet fuel-economy standards rise considerably in the U.S., Subaru has said it will explore the possibility of bringing a hybrid to market in order to reduce its fleet average.
Ikuo Mori, the CEO of Subaru’s parent company Fuji Heavy Industries told a group of reporters that the idea was being looked in to and that a vehicle could be brought to market by 2012.
The hybrid model would use a Toyota-sourced gasoline-electric powerplant, as Toyota is the largest shareholder of Fuji.
Mori also said that Subaru is currently working to bring a diesel to market at around the same time. He did not comment on the future of Subaru’s electric vehicles, including the G4e (pictured above), which debuted at the Canadian International Auto Show this past February.
If the proposed legislation in the U.S. is approved it would see fleet standards rise to 35.5, mpg by 2016. Currently automakers are facing an 8 percent increase in fuel-economy standards that would see fleet averages for light-vehicles (cars and trucks) at 27.3 mpg for 2011. Cars would have to achieve a fleet average of 30.2 mpg by that date.
Fleet average set at 35.5 mpg by 2016
Yesterday President Obama announced a new proposal being put forward to increase fuel-economy standards across the board. If enacted, the legislation would see the fleet average for passenger vehicles rise to 35.5 mpg by 2016.
Currently automakers are facing an 8 percent increase in fuel-economy standards that would see fleet averages for light-vehicles (cars and trucks) at 27.3 mpg for 2011. Cars would have to achieve a fleet average of 30.2 mpg by that date.
The new legislation would see increases of 5 percent annually after that, with a fleet average of 35.5 mpg by 2016.
President Obama made the announcement at the White House yesterday and was joined by representatives of 10 supporting automakers and the UAW. In attendance were GM CEO Fritz Henderson, Ford’s Alan Mullaly, Chrysler’s Bob Nardelli, Toyota’s Jim Lentz, Honda’s John Mendel, BMW’s Friedrich Eichiner, Nissan’s Dominique Thormann, Daimler’s Dieter Zetsche, Mazda’s Jim O’Sullivan, Volkswagen’s Stefan Jacoby and the UAW’s Ron Gettelfinger.
If enacted the proposal would reduce America’s fuel-consumption by 1.8 billion barrels of oil.
The agreement was arrived at with the consent of California, which will cease to have its own fuel-economy standards.
The cost of achieving the new fuel-economy standard is expected to be roughly $600 per vehicle, a tab that will no doubt be passed along to the consumer.
[Source: Automotive News]