NADA Headlines (Aug. 11, 2010)
Dealers Beg for Cars as Automakers’ New Discipline Curbs Sales
Ford Motor Co. used to flood Beau Boeckmann with more cars than he knew what to do with. Now, he’s not getting enough. Boeckmann, vice president of Galpin Ford in Los Angeles, asked for 100 Fusion sedans in July. He received 7. “I am begging for inventory across the board,” said Boeckmann, whose dealership is the automaker’s top-selling U.S. store. “I couldn’t sleep a year ago because I thought, ‘We have a year’s supply of these cars!’ And now I’m worried about our inventory again because we don’t have enough.” With Ford, General Motors Co. and Chrysler Group LLC kicking a decades-long habit of building more cars than customers want, dealers are howling that they can’t get enough models to drive sales back to pre-recession levels. “Buyers have always been able to find 10 versions of the same vehicle they want,” said Jeff Schuster, J.D. Power’s executive director of forecasting. “Now we’re in an environment that they’re probably not going to get the exact one they want and they’re going to pay more because the incentives aren’t there.” The trend contributed to lower-than-expected sales in the past few months, he said. Read more from Bloomberg.
Five months into an investigation of safety issues involving Toyota Motor Corp. vehicles, U.S. safety officials have yet to identify any new defects beyond those reported by the car maker itself. And in more than half of the crashes blamed on sudden acceleration analyzed by the government, data from the vehicles' "black boxes" show the driver was not stepping on the brake at the time of the accident—indicating that driver error may have been at fault. Those were the findings that U.S. Transportation Department officials disclosed Tuesday to members of Congress, offering the first significant details of the government's ongoing investigation into Toyota's recall of more than 8.5 million vehicles globally since last fall. The report doesn't specify driver error as a cause of unintended acceleration, although people familiar with the investigation have said the findings point to pedal misapplication—mistakenly hitting the gas instead of the brakes—as a likely cause. Read more from The Wall Street Journal.
General Motors Co is preparing to report second-quarter results that will show a substantial gain over the first quarter in a report it will use to bolster its bid to return to capital markets and pay back taxpayers, two people familiar with the matter said. GM Chief Executive Ed Whitacre, appointed by the Obama administration to oversee the automaker's turnaround, said last week he expected the automaker's second-quarter result would be viewed positively by both potential investors and creditors. "It will be good. It will be impressive," said Whitacre, who has also said his top priority is shedding the automaker's ties to the U.S. government and the label "Government Motors" used by critics of its bailout. A GM spokeswoman said the automaker was not providing financial forecasts and would not comment. GM will report second-quarter results on Thursday. Read more from Reuters.
This week’s mediocre financial showing by Chrysler should be more than offset by its cross-town rival, General Motors, at least if signals sent by two of its top executives are any indication. Former Wall Street whiz kid and now GM Vice Chairman Steve Girsky has suggested observers “will be encouraged” by the automaker’s second-quarter numbers, which are expected Thursday. They’ll need to be very impressed, in fact, if Girsky’s boss, GM Chairman and CEO Ed Whitacre, is to pull off a miracle in the coming months. But speaking with his trademark Texas twang, Whitacre made it clear he’d be happy to have to live up to the rules for Wall Street if it allowed him to get the government out of his boardroom. The GM chairman said that staging a much-anticipated initial public offering of stock, or IPO, is “No. 1 on our list.” Read more from MSNBC.com.
DETROIT -- Chrysler Group has invited roughly 600 dealers in 119 U.S. markets to apply for franchises to sell Fiat cars. The invitation was sent to the dealers Monday by Laura Soave, head of Fiat North America, and Peter Grady, Chrysler's vice president of network development and fleet. Dealers who accept the invitation will attend a program called the Fiat Experience on Aug. 30 in Detroit. Chrysler extended the invitations to dealers in 36 states and Puerto Rico. The company said the 119 markets have “strong small-car registrations and growth potential in the small-car segment over the next five years.” Chrysler plans to grant about 200 Fiat franchises across those markets. Read more from Automotive News.
Honda Motor Co., Japan’s second- biggest seller of gasoline-electric cars, will fix a software flaw in about 90,000 Civic Hybrids sold in the U.S. that can cause their batteries to wear out sooner than expected. Honda informed owners of model years 2006 through 2008 Civic Hybrids of the flaw starting this month and asked them to bring the vehicles into dealerships so the software could be reprogrammed. The batteries may deteriorate and fail much earlier than their warranty of at least eight years and 100,000 miles, Honda said. Read more from Bloomberg.
WASHINGTON -- As recently as two months ago, the Federal Reserve sounded optimistic about the economic recovery. Now the central bank is taking a new step that shows it is clearly more worried, but economists say it probably won't help much. The Fed said Tuesday that it would spend a relatively small amount of money - about $10 billion a month, economists estimate - buying government debt. The move is designed to drive interest rates on mortgages and corporate borrowing at least a little lower and help the economy grow faster. "The Fed talked loudly but carried a small stick," said Joel Naroff, president of Naroff Economic Advisors. He said that while the financial system has the money to lend, banks are unwilling or unable to find suitable loans to make. Until they do, he said, "the recovery will be softer than anyone hoped for and there may be little the Fed can do about it." Read more from The Associated Press.