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High gas prices are not scaring drivers as much as has been expected.
The so called experts have been expecting hybrids and smaller cars to knock SUVs off the throne ever since gas hit $3.00 a gallon. However, it is going to take more than that to dethrone the current rulers of the rode. After all, they are very big.
The SUV is alive and well today. In fact, it seems to be thriving. For example, Escalade sales were up 127% last month. These statistics do not show a nation of drivers fleeing from big vehicles into the arms of the hybrids.
This is a very different situation from 25 years ago. During the late 70’s early 80’s gas prices rose dramatically and there were shortages. This propelled people towards more fuel efficient cars. Apparently, today’s motorists aren’t as easily scared.
This can be attributed to a couple of reasons. First, the average household spends about half as much on gas, based on percentage of income, than in 1981. Basically, there are plenty of people out there with the means to pay for a lot of gas. Second, we have become a nation of SUV and truck drivers. It is going to take more than $3.00 a gallon to change this. Now, the experts are saying it will take $4.00 a gallon for a prolonged period of time to bring change, but as we are finding out, they have been wrong before.
The reign of the hybrids might have to wait a little while longer. For now, it is still long live the SUV.
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Honda jump starts its plans for the future.
Honda is currently over half-way toward the deadline of its “2010 Vision.” This vision was first stated in 1998, and with only four years left the Japanese auto maker recently announced its plans to complete the process.
Honda’s 2010 Vision is a long-term corporate initiative "to become a company that society wants to exist." Initiated in 1998, this three-part 2010 Vision calls for the expansion of Honda’s global operations through the year 2010 through "creating new value" for the customer, expanding local operations through "glocalization" and advancing environmental and safety technologies through a "commitment for the future."
Honda has two main points of focus during the next four years. They will increase their presence in North America and further lower emissions.
To accomplish the first goal they will build new plants in the U.S. and Canada starting in 2008. Honda already produces 1. 4 million units in North America. These proposed expansions will bump that number up to 1.6 million. Even at this time almost 8 out of 10 Hondas and Acuras sold in North America are made here.
The other focus will be to lower emissions across the board on all of their vehicles. Honda already has the current lowest Corporate Average Fuel Economy (CAFÉ) but they are not satisfied. Their goal is to lower emission by 5% by 2010.
Honda has increased its North American sales for 9 straight years and it doesn’t look like they plan on breaking that trend any time soon.
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Could ethanol be in NASCAR’s future.
If you pay close attention to auto news or have read this blog
in the recent past, you know about ethanol and it’s E85 blend. There are many reasons for consumers to jump on the ethanol band wagon. These include high gas prices, environment reasons, and the need to decrease our dependence on foreign oil. Sadly, only the first reason I mentioned holds any bearing over most consumers, and that may not be enough to see ethanol flourish in the near future.
Don’t get me wrong, Ethanol has been gaining supporters and popularity. In Brazil most passenger cars run on ethanol. Automakers are beginning to promote it more too. GM already sales flex-fuel vehicles that can run on gas or E85. However, it is still hard to find stations that offer E85.
Ethanol might be the way of the future but what it needs right now to help boost awareness is a celebrity spokesperson. How about spokes persons? As in the NASCAR drivers.
GM and Senator Tom Harkin have already asked NASCAR officials to consider the alternate fuel. The move would not be without precedent either. The Indy Racing League is currently moving towards ethanol. The move could also be very good for NASCAR’s image.
However, a switch to ethanol might not be in the near future for the popular racing league. NASCAR is just now moving away from leaded gasoline to unleaded. So, ethanol might have to wait a little longer for the spotlight.
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Will a Delphi strike take down GM?
Once upon a time, GM’s parts making branch split off and became Delphi. Today Delphi is the worlds largest auto parts maker. They sell parts to everyone including GM’s top foreign rival Toyota. Delphi is currently in bankruptcy and a possible strike is looming. Many have claimed that a Delphi strike would cripple GM and send the top North American auto maker into bankruptcy its self.
However, not everyone thinks this will happen. Jerry Flint, former Forbes senior editor, calls it a case of the media just playing up a negative story. We all now that bad news is more entertaining that good news.
He concedes that this may happen but is very unlikely. There are several factors that support him. A strike would not happen until mid to late summer. This gives Delphi and the auto makers time to store up parts for later. Also by this time GM’s peak production will be over.
On top of this, the United Auto Workers union does not want to destroy 100,000 GM jobs. A crippling strike at Delphi by their members could do that. And, as I mentioned earlier, Delphi supplies many automakers so this would not only affect GM. The union would have national pressure on them.
So, a Delphi strike would not be in GM’s best interests but if it happens that does not mean certain doom either.
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An accounting change turns loss into profit.
The recent struggles of North America’s leading auto maker have been well documented. From the period of January to March of 2005 GM experienced a $1.3 billion loss. Earlier it was reported that for that same period this year they loss $323 million. That is much better than last year but still a loss is a loss.
The good news for GM is that the loss for this year’s first quarter is now a gain. An accounting change made the difference. When the initial loss was reported, GM was still working through a deal that requires retired workers to pay more for health care.
GM must pay $3 billion into a trust for retirees between now and 2011. In its preliminary results, GM included a one-time, pretax charge of $1 billion to cover that contribution. The revised earnings remove that charge, which GM will now take over a seven-year period beginning in the third quarter of this year.
Other factors in GM’s first quarter profit were its sale of Suzuki Motor Corp. and the finalization of its sale of GMAC Commercial Mortgage. The last quarterly profit GM had came in 2004. They hope to shorten that time between the next one this time.
GM expects to eliminate $4.5 billion in structural costs this year.
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The future of powering our automobiles.
Just yesterday I wrote about the need for hybrid cars to become cheaper if they are going to take hold in the auto market. As of now, the cost of upgrading to a hybrid off sets the gas you will save. However, this may change soon.
Right now, the great hope of the auto industry is the hydrogen fuel-cell powered vehicle. However, that is still far away. It may be 20 years before that technology arrives. This means that the hybrid has a chance to rule right now. Many auto makers are focusing on helping it achieve that status.
Toyota is leading the hybrid wave at the moment and it plans to stay at its fore front.
Toyota is practically the lone player in the hybrid car business. In 2005, the company sold about 250,000 hybrid cars, taking up some 80% market share. Currently, only such luxury cars made by Toyota as the Alfard, Prius, Estima and Harrier are equipped with the hybrid system. By reducing the production cost, however, the company plans to install the system on such popular cars as the Carolla and Vitz.
As I said, the key to Toyota’s plans is to make the hybrid cheaper. They hope to accomplish this with further development of the lithium cell battery.
The lithium ion battery is a type of the secondary battery that can be charged and used repeatedly. Compared with the nickel-cadmium and nickel-hydrogen cells, lithium ion battery is lighter in weight and its voltage is three times higher. It can be charged and store more electricity and thus it is more suitable for producing smaller and lighter batteries.
Toyota hopes to drastically cut the costs of producing hybrid models over the next three years. And it looks like several others are looking to get in the hybrid game as well. Hydrogen fuel-cells may be the way of the future but it looks like the next two decades will belong to the hybrids.
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A top advisor leaves after less than a year.
It seems like every other day somebody important is stepping down or leaving a company. Late last week is was Stephen Girsky’s turn. Girsky was a full-time advisor for GM for a little under a year. Before that, he was an analyst on Wall Street.
As usual he cited family/personal reasons for his departure. He wanted a job closer to home. He was currently having to commute from New York to Detroit on a regular basis, and felt good about leaving at this time for business reasons.
Simonetti [GM Spokesperson] also said Girsky felt it was a good time to leave GM because the automaker’s North American turnaround plan is on track. GM narrowed its first-quarter loss to $323 million, down from $1.3 billion the year before.
That is definitely an improvement, but his replacement and the rest of the GM brass have their work cut out for them to get back to positive numbers. It just makes you wonder sometimes when people just leave for “family reasons.” However, GM shares rose 9 cents after the news became public.
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GM CEO thinks so.
We have been talking about the price of gas a lot lately. It seems that everywhere you turn you are reminded of $3.00 a gallon gas and the threat that it might go higher. There are a lot of people afraid of just that happening. However, Rick Wagoner is not among them.
Wagoner, chief executive of General Motors, is optimistic that gas prices will come back down in the future. But how near is that future? I’m not sure but hopefully soon.
"They are too high right now and they will come back down," Wagoner said of oil prices during a conference at the company’s headquarters in Detroit that was broadcast over the Internet. He said consumer behavior isn’t expected to be negatively impacted by current gasoline prices, which are averaging about $2.92 a gallon according to the American Automobile Association.
This kind of thinking does seem to go against the latest trends. Some consumers do seem to be moving toward smaller more efficient cars and automakers like Ford and Toyota are rushing to accommodate them with lots of hybrids. GM is also working on its own share of hybrid vehicles but are not as focused on it as the other two I just mentioned. They are still committed to bigger vehicles as well as the small.
Wagoner said GM aims to keep developing engines for its vehicles with improved fuel economy in mind. He said buyers tend to gravitate to bigger, more-powerful vehicles that typically consume relatively high levels of fuel. GM has touted its new full-size SUVs as being capable of achieving 20 miles per gallon, and the auto maker has a number of vehicles capable of achieving better than 30 miles per gallon.
The truth is that no one can predict exactly what will happen. Each manufacturer will have to make its own adjustments as they go. However, for the sake of our wallets I hope Mr. Wagoner is right.
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Top cars for safety.
Everyone knows that sex sells; sex sells tv shows, books, and even vehicles. Forbes.com has an article about how safety does not sell. Safety, to most westerners, is not preeminent when purchasing things. Although we talk a lot about safety, our purchasing habits don’t always reflect our concerns, which translates into companies building things that sell well. Thus, we have sexy cars outselling safe cars by a large margin
There are plenty of fast sexy cars on the road, but how many earn the highest safety marks?
Sex appeal can translate into big sales volume, but safety technology almost never does. With the exception of Honda Motor, the brands that are most famous for building safe cars– Volvo and German car companies such as DaimlerChrysler’s Mercedes-Benz subsidiary–are not volume players.
So how many cars had the highest possible safety rating this year? Not many. In fact, just four cars can boast this achievement. These are the Acura RL, Honda Civic, Saab 9-3, Volvo S-80.
If you are not concerned about safety, check out this very interesting fact about the safety ratings.
The difference between a good crash-test rating and a poor one is significant: A five-star NHTSA frontal-crash rating means a chance of serious injury of 10% or less in a head-on collision in which each vehicle is going 35 mph. A one-star rating means a chance of 46% or higher. NHTSA defines a "serious injury" as one that requires immediate hospitalization and may be life-threatening.
So that’s what those stars mean. I think I will check those ratings a little more closely from now on. How about you? It’s great to buy a sexy car, but hopefully it will be a safe one too.
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GM�s hot new concept car.
GM has had its share of bad luck recently. So I guess the company is glad to have some good news, even if it comes in the form of a minor controversy.
In January the auto maker unveiled its new Camaro concept car. The buzz about it has been growing since then. It’s grown so much that people are willing to put down cash deposits on the car. Keep in mind, that it is still a concept car, and GM has not confirmed that it will produce the car.
There has been unsolicited deposits offered, but the controversy surrounds a dealership in Dearborn Michigan which has advertised the coming of the new Camaro and offered to take deposits.
Les Stanford Chevrolet in Dearborn has solicited deposits from enthusiasts who want to order the Camaro. In the May edition of the national car-enthusiast magazine duPont Registry, Stanford published an ad that says “the new Camaro is coming,” advising readers to “reserve yours today.”
The dealership took five deposits of about $1,000 each after placing the ad, owner Paul Stanford said.
However, there seems to be no real intent to scam anyone here. It’s just a case of people getting excited over the car. The Dearborn ads will be modified and any mention of the Camaro will be removed.
There has been similar excitement about concept cars in the past as well. In 1989, Chrysler received unsolicited deposits for the Dodge Viper.
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