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5 Hybrid Myths

Demystifying the hybrid

With hybrid technology looking as though it will be the “next generation” for cars, there are certain myths that are very prevalent in main stream American thought. There are actually 10 big myths of hybrid cars, but we’ll just look at 5.

You need to plug in the car
Usually, whenever you talk about electricity, almost everyone’s mind jumps to the outlet. In that, you have plug-in a hybrid every night before you go to sleep. However, that could not be more untrue. Hybrids today don’t need to be plugged in; engineers developed regenerative braking.  Whenever you brake, that friction and energy that is produced is harnessed and stored in multiple batteries in the car.  However, there are some hybrids that you do plug in that get better gas mileage because they stay plugged up over night. There are some hybrids that have regenerative braking and plug in technology together.

Hybrid batteries need to be replaced.
With the charge of a hybrid battery staying between 40%- 60%, automakers have greatly extended the hybrid’s battery. There is, however, the standard warranty that comes when you buy a hybrid that includes the batteries, so if something goes wrong you’ll have the warranty.

Hybrids are a new phenomenon
The first gas-electric patent was filed in 1905.  However, when the self starter was introduced in 1913, gasoline engines became more prevalent and easier and cheaper to make.

People buy hybrids only to save money on gas
Saving gas at the pump is probably the foremost outcome of owning a hybrid, but the majority of owners actually have them for environmental reasons. A hybrid car sends a message. It sends a message that “I care about the environment.” That’s what some people want others to know about them. (bumper stickers are cheaper)

Hybrids are expensive.
Beginnings in 2006, hybrids were available in 10 different models. The price varies largely. Some hybrids barely cross the $13,000, while other companies have luxury hybrids that can cost up to $60,000.  Hybrids do add about $3,000 to the price tag of any car, but that figure is dropping rapidly.  

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The New Sentra

Nissan’s Hope for the Future

warranties for busy people Nissan, during the 90’s, was struggling to stay out to bankruptcy, and they did a good job. They released a redesigned, reengineered Nissan Altima  that single handedly brought Nissan out of the woods for a little while and then they revamped the Maxima. I remember seeing the new Altima and Maxima for the first time, they were amazing.

Now, they’re at it again. Nissan unveiled the new Sentra earlier this year and it will be in the hands of dealers in the fall. Nissan is almost in the same position as it was in the 90’s. They’re banking on the remake of the Sentra to boost them into car heaven. Nissan sold 119,000 Sentras in 2005, and they’re looking to increase that number substantially for 06-07. Since the car does not launch until the fall, Nissan will not see the benefits until late 07.

And, with any redesign, there are always people who see otherwise. Not everyone is convinced the new Sentra is enough to help Nissan. When the car was debuted earlier this year, there were mixed reviews about it on their website.  A company is never in a good situation when they’re banking on a redesign to get themselves out of murky water. 

Hopefully this redesign will renew hopes throughout the entire auto industry.

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GM and Ford sales Fall in May

Honda and Toyota sales rise in May.

May is no longer known for having kids, but for buying foreign cars. Toyota and Honda sales climb for the month of May. Rising interest rates and rising gas prices have contributed to the lowest sales from GM and Ford of all time, but Toyota and Honda saw double digit sales increase.

GM sales fell nearly 16 percent due to cut back in rental company sales.  Rental companies are now switching to Honda and Toyota. Trucks and SUV sales were also down a whole 10 percent.  This was a record setting year for foreign auto manufactures and most analysts suggest that things will continue this way until Ford and GM refocus and revamp their strategy.

However, it seems, at least through commercials, that GM and Ford are both busy advertising about their fuel flex vehicles that are hitting the market. But, I’ve actually yet to see a fuel flex vehicle on the road. So, I wonder if GM and Ford’s strategy will work.  

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Pontiac Looks To The Rear In Order To Move Ahead

Can GM breath some life into this struggling brand?

extended warranty newsRecently, GM decided against scrapping its Saturn brand. Instead GM gave  it a new image.  Once again they face this same choice with their Pontiac brand.  Pontiac sales have been declining and many see it as a dying brand.  

GM still thinks it has some life left in it.  Just like Saturn, Pontiac will get an image make over.  They looked to modern European design to infuse Saturn with for new life, but they will take a different approach with Pontiac.  They will look back into Pontiac’s past.  Pontiac’s new focus will be providing high performance rear-wheel-drive cars.

This plan, which is not final yet, will phase out the front-wheel-drive Pontiacs over the next two years.  These will be replaces with rwd models.  Some of these models will be brand new, while others will be rwd versions of current ones.  

This move may reduce the volume sales Pontiac will incur,  but GM is focusing on more streamlined line-ups from its brands.  

GM is pressuring dealers to combine Buick, Pontiac and GMC franchises into single stores by cutting the brands’ product lineups.


GM is continuing to get its house in order as they restructure.  Saturn and Pontiac are just two of their brands.  Look for them to continue shaking things up until they get things turned around.
 

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GM Shares Rise

GM stocks are upgraded

auto warrantiesOn Wednesday, General Motors Corp. shares jumped. The shares jumped because an analyst upgraded GM’s stock to “buy” status. That’s where a company wants to be. GM’s restructuring model looks as though it is working. The restructuring of most companies is usually laying people off and GM is no different. GM will reduce its workforce by 30,000 by the end of 2008.

After the analyst announced the “buy” status, GM’s stocks rose $1.86 or 7.6% to $26.34 per share. Merrill Lynch’s John Murphy announced that the capacity reduction plan will boost shares by about $4 in the future.

Murphy more than doubled his 2007 earnings estimate to $4.10 from $1.90 and increased his 2008 estimate to $5.25 from $3.15. The increase also accounts for an adjustment for the portion of earnings from GM’s financial arm, which will be sold in late 2006/early 2007, Murphy said.


Hopefully Murphy’s estimates are correct ,and GM will pull out of this slump. That wold greatly  boost the economy and maybe GM could higher some of its workforce back once it gets rid of the nasty overhead it’s having to deal with now.  

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Lets cut foreign oil consumption in half

Hillary Clinton proposes cut our addiction in half by 2025

Senator Hillary Clinton is pushing for a major reform with dependence on foreign oil; she proposes that we cut our dependence in half. That would be 8million less barrels a day, and she proposes that we should be at that point by 2025.

Now, there are two ways to interpret this “reform” of hers. We could say she is legitimately concerned about our dependence on foreign oil, or she’s making a political stab at George Bush. There is a small chance that she wants people to see that she has a date that we can look ahead to and marvel at and then realizes that not much has happened since GW announced his concern. And, do remember that she is one of the leading candidates for the Democratic nomination.

Nevertheless, she thinks that tax credits, private investment, and new research will push our country into a heavenly bliss when it comes to being dependent on foreign oil. She hopes that these incentives will help auto makers to bring more fuel efficient cars to the U.S. and help scientist make ethanol more useful.

The “new research” that she wants to occur would be in ethanol. Ethanol defiantly has a future in the U.S., but it’s taking a long time to become popular. Clinton wants ethanol gasoline or E85 to be in at least 50% of America’s gas stations by 2015. While this is a good goal, E85 currently is only at 1% of all America’s gas stations. If E85 was at 50% of all gestations in a few years, I can almost see this goal being met.

"Senator Clinton’s energy policy consists of a unique balancing act involving partisanship, political pandering and yesterday’s mistakes," said Tracey Schmitt, press secretary for the Republican National Committee. "Voting against meaningful legislation that would increase domestic production is harmful enough, but adopting the energy policies of the 1970s is a price Americans cannot afford."


Clinton also begged automakers to migrate toward higher fuel standards and incorporate more fuel flex vehicles. We have to realize, most of the technology is out there. Brazil already has a large majority of their vehicles running on ethanol. Why is it taking America so long to catch on?  

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Will Diesel Passenger Cars Cross The Atlantic?

Can the diesel engine have success in the U.S. like in Europe?

auto newsRight now, 35% of the passenger automobiles sold in Europe have diesel engines.  This number could grow to as much as 50%, during the next ten years.  In contrast to these numbers, there is currently only one diesel passenger car available in the U.S.  This would be the Volkswagen Golf TDI.  

Diesels have flourished in Europe because of expensive gasoline and tax breaks for diesel.  Many European governments promote diesel because it emits less carbon dioxide into the atmosphere.  On top of lower fuel prices, diesel drivers experience increased fuel efficiency.  The diesel engine is a more efficient design than the gasoline powered engine.  

So, what’s stopping diesel engines from invading our cars here in America?  It may still happen but there are a couple of obstacles.  

First, diesel fuel is not cheaper than gas here in the States.  We enjoy lower gas prices than our European friends, and our government does not offer the nice tax breaks on diesel like most European governments.  Therefore, diesel is harder to come by and more expensive in the U.S.  
   
The main reason for the tax breaks in Europe and lack of them here is a difference in the way we set up environmental standards for our vehicles.  This is the second obstacle.  In Europe the focus is on low carbon dioxide emissions but here in the States the EPA wants low levels of nitrogen oxides and particulates.  This is because nitrogen oxides may be carcinogenic and particulates help form smog.  

There are solutions to these environmental questions, but these as well as the diesel engine add to the cost of the automobile.  This may keep buyers away. Tax breaks, like those in Europe, may be needed to entice buyers. 

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Honda Has Big News

Honda jump starts its plans for the future.

extended warrantyHonda 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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Can GM Keep It Going?

After their first quarter profit how will GM fair?

extended warrantyOn Thursday, I blogged about GM’s first quarter profit this year.  They had initially reported a loss of $323 million, but after an accounting change, GM reported a $445 million profit during that time period.  This was is a good sign for the struggling company, but does it mean they are back on the right track for good?

Rick Wagoner, Chairman and CEO, calls the first quarter an “important milestone.”  However, he is still cautious and maintains that profits are not the only important step needed for the auto maker right now.  He is mainly interested in restructuring the company and offering new cars.  The redesign of the Saturn brand is a central part of the new plan.

All of this suggests that the company may be back on the right track but there are also negative signs as well.  Eric Noble, the President of The CarLab, points out that GM is still heavily dependent on its trucks and SUVs.  They make great large vehicles, but they are weak in the mid size and smaller car areas.  This could hurt if gas prices drive car buyers to the smaller vehicles.
                
GM will also lose revenue when the 51% sale of GMAC is complete at the end of this year.  They will gain $14 billion from its sale but they will miss out on the steady income it used to provide.  Hopefully by the end of the year, when they lose the GMAC revenue, they will be on their way to being profitable without it. 

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Shareholders Split Over Ford CEO

Criticism from some Ford shareholders.

extended warrantyThis country’s second leading auto maker has had a tough time over the last few years.  Ford lost over $2.5 billion in the first quarter of this year.  As with most companies, when things are going wrong you look to the person at the top.  In this case it is Bill Ford.

 He may have seen this coming or he might just be a generous guy because last year he pledged not to earn a salary or accept a bonus until Ford was profitable again.  However, that move did not silence the critics for long.

 "Mr. Ford is a failure. He has put shareholders and the company at bankruptcy’s door," said Sam Joanette, a Ford retiree and shareholder from Miami Beach, Fla., who said he has lost more than $1 million since investing most of his retirement money in Ford in 1999.


"Mr. Ford knows he is not qualified, that he is in over his head."


There are plenty of critics, but he has supporters as well.  There are many shareholders standing behind him. 

"He’s been a chairman who’s very responsive to small shareholders," Davis said.


Ford hopes that the restructuring plan and a move away from a more bureaucratic setting will help the company get back on the profitable side.  I’m sure he loves this company and has many reasons why he wants it to become profitable again, but I’m sure the resumption of his salary has to be one of those reasons.
 

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