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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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What’s next for hybrid vehicles?
Lately hybrids have been a hot topic in the auto world. Spurred on by the price of gas, many auto makers have begun to focus aggressively on producing and marketing them. However, discerning consumers may have seen that in some cases the purchase of a hybrid will not save them much or any money at all.
It is true that you will save money because of the increased fuel efficiency but a hybrid car will cost around $3,000 more than its standard gas powered equivalent. So, your driving habits will determine how much money you will save in the long run. Most of the time it will end up being a wash.
Up to this point, most hybrid owners purchased their vehicles because of environmental and social reasons. If the hybrid is to make it big, it’s going to need to become cheaper.
However, for hybrids to take a major slice of the mass market, it will require the ‘hybrid price premium’ to be slashed from it’s current $3,000+ level to less than $1,000. Toyota, for one, is focusing on achieving this as soon as practicable.
Better technology and more efficient manufacturing techniques will be needed to bring the hybrid price down. However, there is another option. Flex fuel hybrids may help consumers get the most bang for their buck.
What makes real sense is the upgrading of current hybrid offerings to become ‘flexible fuel hybrids’, and full support from manufacturers that all new hybrid models will run on any mix of gasoline and E85. Less than $200 is added to the production cost of a conventional gasoline vehicle in upgrading it to handle E85. Congress, realizing that we are confronted by Global Warming, Peak Oil, and Energy Insecurity, has put the necessary ethanol pump-priming into the new Energy Policy Act.
Saving the environment is a very noble and worthy reason to own a hybrid but most car buyers are looking for one thing: A cheap fuel efficient car. Hopefully, that option is on the way.
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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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A look at several alternative fuel sources
I read a great article about alternative fuel sources. I caution you that it is a bit long. The article details six alternatives to petroleum. And, as we all know, there are many reasons for us to curb our appetites for petroleum.
These alternatives vary widely from each other and each presents different strengths and weaknesses. Each fuel source was briefly explained with pros and cons being pointed out. After that each was given a graded outlook.
Biodiesel and Hydrogen were both given “good” outlooks, but hydrogen carried the disclaimer that it would be a while until it was actually useful. Hydrogen has a lot of promise and many car companies are spending lots of money to research it. Biodiesel, however, is already starting to make an impact on the ground shipping industry with companies such as, Fedex, UPS, and DHL.
The next two we have heard about a lot more. Ethanol and its E85 blend were given a “hopeful” outlook and electricity (including hybrids) were given a “mixed” outlook. The availability of ethanol and the need for better and cheaper batteries are some of the problems these two face.
Methanol and its M85 blend where deemed “cloudy” and natural gas was labeled “limited.” Methanol has been overpowered by its cousin ethanol and natural gas is still an unrenewable resource.
Petroleum might be a hard habit to kick but we’ve got many options on the way. As time progresses, these outlooks may change greatly; it only takes a breakthrough in one area for the entire paradigm of alternative fuels to change. Who knows, maybe a new source will one day make all these alternatives obsolete.
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A new engine design to compete with all those hybrids.
Yesterday, I talked about a very fuel efficient vehicle that was not a hybrid. Today its not a car. It’s an engine; well, an engine design. The whole process doesn’t sound too complicated, but I’ll let the experts explain it to you.
Whether or not you wanted the full explanation, it boils down to this; the new design will produce a smaller more efficient engine through the use of adding ethanol to the gas at certain points (Ethanol Boosting System or EBS). The smaller engine will also make the car lighter.
The designers claim that this engine will be able to match today’s hybrid systems and will be cheaper. Now that’s a word we all love to hear. However, this technology is still 5 years or so away from mainstream and could face a few hurdles. For example, the driver would have to keep a smaller separate tank filled with ethanol, however, there are problems that come along with this design:
The challenges EBS is likely to encounter he says, have more to do with logistics — two fuel tanks in a vehicle can be hard to implement, and there’s the challenge of making sure ethanol is available at the corner gas station. Also, the engine will need a system that ensures it isn’t damaged if the driver forgets to fill the ethanol tank.
The new engine should be 30 percent more efficient than conventional engines, based on a computer model the researchers say accurately reproduces the behavior of internal-combustion gasoline engines.
I’m just glad to see all these new innovations. I don’t mind diverse answers as long as everyone is working on the problem.
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A look at an impressive new entry in the battle for better fuel economy.
Recently, I’ve posted several topics about auto news relating to the gas crunch and vehicles with good fuel economy. Today, however, I was very excited when I saw the Loremo. Not only does it get 157 miles per gallon but it just looks great.
The Loremo is produced by a six year old German car company name Loremo AG. Despite its gas mileage the Loremo is not a hybrid and still has good performance.
The base model Loremo LS is powered by a 2 cylinder 20 hp turbo diesel engine that will reach a speed of 100 mph and the GT model will reach up to 135 mph with a 0 to 60 mph acceleration of 9 seconds.
Wow! That sounds great but how did they do it? Well, the car is extremely light weight and aerodynamic. And even with its light weight, the Loremo still meets safety standards because of their patented “linear cell structure” method.
This sounds like a very ground breaking and interesting car but, sadly, at this time it looks like it will only be for sale in Europe
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