NADA Headlines (March 18, 2010)
New GM Finance Chief Is Optimistic
Company May Turn a Profit This Year, but Public Stock Offering Not a Top Goal
General Motors Co. has a reasonable chance of becoming profitable in 2010 and a "remarkably strong" balance sheet eight months after emerging from bankruptcy, GM Chief Financial Officer Chris Liddell said Wednesday in his first public comments since taking the job. Mr. Liddell, who previously held the top finance job at Microsoft Corp., said GM is in no rush to launch an initial public stock offering, as it is expected to do under terms of its U.S. government bailout. Instead, the car maker is focused on strengthening its cost structure. "The preconditions for success are remarkably good," Mr. Liddell told reporters. "The cost structure is fundamentally in much better shape than it was. Our balance sheet is actually remarkably strong." Read more from The Wall Street Journal.
Sen. Lisa Murkowski (R-Alaska) on Wednesday said that auto industry opposition to her plan to block EPA climate change regulations stems from pressure by Democratic leaders. And Sen. Kit Bond (R-Mo.), who supports Murkowski’s plan, said the automakers’ position is no surprise given the financial aid they’ve received from the Obama administration. “Two weeks ago, it was reported that automakers were pressured to weigh in against the bipartisan, bicameral disapproval resolutions that have been introduced to halt EPA climate regulations. Today, we see a letter that stems from that pressure,” Murkowski said in a prepared statement. She argues that EPA doesn’t need to be in the auto game at all, and notes that states only have authority to move ahead because the administration granted a Clean Air Act waiver in 2009 that allows the state actions.“The notion that auto efficiency can only be improved with EPA’s involvement is false. Statutory authority to improve fuel economy has existed for 35 years at the Transportation Department, and it still exists today,” she said. Read more from The Hill.
Editor's note: NADA welcomes the input from the Auto Alliance regarding whether there should be one national fuel economy standard, which NADA supports, or three different standards administered by three different agencies, which EPA supports. The Alliance's concern regarding California's patchwork fuel economy regime is well-placed. Their letter, however, neglected to state that the new Obama fuel economy standards, which will be finalized later this month, are higher than the standards California proposes. Accordingly, there is no need for California's completely different fuel economy regime. Since the administration contends that California's fuel economy program is "inconsistent with the federal standards," and will drive "up the cost for compliance for automobile manufacturers and consumers alike," the administration should move to protect consumers by withdrawing its permission for California to regulate fuel economy. If not, Congress must intervene.
NADA supports higher fuel economy standards. NADA's concerns are over the structure of the Obama administration’s multiple fuel economy standards, not their stringency. Apart from being duplicative and unnecessary, the EPA and California fuel economy regulations will increase compliance costs, which are eventually passed along to the customer. In turn, these redundant new regulations will needlessly make it more difficult for the auto industry to recover from the recession.
NADA supports a single national fuel economy standard. Passage of the Murkowski Resolution would help achieve that goal, as there would be one less redundant fuel economy standard (EPA’s) with which the industry must comply.
DETROIT -- Shares of Ford Motor Co. surged to a five-year high Wednesday after a ratings agency upgraded the automaker's debt and said Ford has the potential to improve its finances even further. The Dearborn, Mich., automaker's stock hit $14.15 per share in afternoon trading, a 4.9 percent surge to levels not seen since January 2005. Moody's on Wednesday said that the restructured Ford is performing better than it had expected and the ratings agency is now reviewing Ford for another upgrade. "Ford clearly has a much more robust and competitive business model that is capable of supporting significant improvement in performance over time," Bruce Clark, Moody's senior vice president, said in a statement. Read more from The Associated Press.
Ford Motor Co. Chief Executive Officer Alan Mulally said talks to sell the automaker’s Volvo unit to China’s Zhejiang Geely Holding Group Co. are proceeding, rebutting local media reports the deal could be delayed. “We are making progress on the negotiations,” Mulally said in an interview in Shanghai, without giving a time frame for when the agreement will be made. Ford aims to sign a $2 billion deal to sell Volvo Cars to Geely by the end of this month, three people familiar with the talks said last week. Dearborn, Michigan-based Ford put Volvo up for sale in late 2008, part of a strategy of dropping European luxury lines to focus on its namesake brand. Read more from Bloomberg.
WASHINGTON — Complaints of sudden acceleration in Toyotas repaired under recalls have nearly doubled in the past two weeks, according to an Associated Press analysis of government data. Toyota has said it is confident in its repairs and has found no evidence of other problems, such as faulty electronics. The National Highway Traffic Safety Administration said it was contacting owners who have complained about their repaired vehicles. David Strickland, NHTSA's administrator, ... said NHTSA has discussed the issue with Toyota, which is trying to improve instructions to dealers. Read more from USA TODAY.
Toyota Motor Corp., struggling to rebound from record U.S. recalls, is reviewing complaints linked to electronic control units in Corolla and Matrix small cars sold in the U.S. that may cause the engine to shut down. The components in question are in 1.19 million model 2005 through 2007 vehicles, Toyota told the National Highway Traffic Safety Administration in a March 2 letter the company provided to the media (Wednesday). Toyota doesn’t believe there’s an immediate safety issue related to the problem and hasn’t determined whether a recall will occur, said Brian Lyons, a company spokesman. Read more from Bloomberg.
LOS ANGELES - Lawyers seeking civil damages against Toyota Motor Corp (7203.T) (TM.N) on behalf of U.S. consumers for diminished resale value of recalled vehicles are broadening their cases to add racketeering claims against the automaker. As a result, litigation that originally stood to reap more than $2 billion in damages for Toyota owners could end up costing the cash-rich Japanese automaker in excess of $10 billion, said Tim Howard, lead counsel for a team of law firms handling about half the cases. The updated complaints draw on numerous documents and congressional testimony by Toyota executives to make the case that the company was aware of unintended acceleration problems in its vehicles for several years, even as it continued to promote defective cars as safe and reliable. Read more from Reuters.
Ford and General Motors achieved impressive marks in the latest vehicle dependability study released today by J.D. Power and Associates. Lincoln finished second to only Porsche in the study, which measures the number of problems experienced by the owners' 2007 model year cars. Mercury and Ford also scored in the top 10. “It’s pretty impressive to get all three of them in the top 10,” David Sargent, J.D. Power’s vice president of global vehicle research, told the Free Press. The Cadillac DTS had the fewest problems of any car in the industry with just 76 problems per 100 vehicles. “It is the first time in more than a decade that a domestic brand vehicle has been the top-rated vehicle,” Sargent said. Read more from the Detroit Free Press.
Honda Motor Co., Japan’s second- largest carmaker, plans to introduce lithium-ion battery-powered hybrid cars as it struggles to narrow Toyota Motor Corp.’s lead in sales of gasoline-electric cars. Honda plans to use lithium-ion batteries in its Civic compact “within the next two to three years,” as well as in its Acura luxury cars and other models, Executive Vice President Koichi Kondo said in an interview. The lithium-ion batteries will be produced with Honda’s joint- venture partner, Kyoto-based GS Yuasa Corp., starting in the second half of this year, he said. The venture is 49 percent owned by Honda. Read more from Bloomberg.