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The News Journal The 8th annual Delaware Auto Show is revving to roll Oct. 3-5 with the latest in the world of wheels – including pre-production prototypes – and the chance to drive a legendary 1965 Shelby Cobra. The show at Chase Center on the Riverfront in Wilmington ... |
Source : http://www.delawareonline.com/story/news/l! ocal/2014/09/27/delaware-auto-show-attendees-thrilling-ride/16354187/
Self-driving vehicles and smartphone integration will be among the top features at Europe's biggest auto show this year, as executives focus on something that's become increasingly hard to come by: buyers.
The nascent recovery in the region's car market is already running out of steam after sales contracted for six straight years to a two-decade low in 2013. That puts pressure on carmakers at the Paris event, which kicks off this week, to showcase new technology and gimmicks like an even more powerful version of the ultra-luxury Bentley Mulsanne sedan and running lights shaped like Thor's Hammer on the new Volvo XC90 sport-utility vehicle. With the European economy struggling, the efforts may not pay off.
"The outlook for Europe on the whole is darkening," said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. The slowing growth and prospects for renewed declines in the second half "make me wonder if European car demand will manage to be positive for the year as a whole."
Auto sales in the region grew 1.8 percent in August, the smallest increase this year. Deliveries in the fourth quarter are forecast to decline 0.3 percent, IHS Automotive estimates. Europe's slowing recovery comes after the market tumbled 23 percent from the 2007 peak to 12.3 million vehicles last year.
Ford Motor Co. yesterday forecast worse results in Europe than the company had expected, saying it will probably lose $1.2 billion in the market this year and $250 million next year. The second-biggest U.S. automaker cut its 2014 profit target. It had already reacted to the disappointing pace of recovery by reducing production of the Fiesta subcompact in Germany through the rest of the year.
"The question is if the pre-crisis level will ever be reached again," Martin Winterkorn, chief executive officer of Volkswagen AG, the region's biggest automaker, said in a Sept. 25 interview with German broadcaster N-TV.
To kick-start demand, manufacturers are turning to gadgetry like vehicles that drive themselves and smartphone integration to win over consumers weary of being cut off from the rest of the world while behind the wheel. The advances are part of the response after the industrywide contraction left most mass-market carmakers unprofitable in the region, according to Max Warburton, an analyst with Sanford C. Bernstein.
Along with high youth unemployment, auto demand has been held back by a sputtering euro-area economy that prompted the European Central Bank to lower interest rates and announce other monetary stimulus measures in early September. That's led manufacturers to woo consumers with new features.
Daimler AG's Mercedes-Benz is rolling out an optional Stop&Go Pilot on models like the C-Class sedan. The feature enables the car to steer itself while matching the speed of the vehicle in front of it, including coming to a complete stop. Volkswagen's luxury Audi brand plans to roll out similar technology soon.
In Paris, Mercedes will show an upgraded version of the B-Class hatchback, which automatically avoids collisions, as well as a 100,000-euro ($127,000) Mercedes GT sports car that will vie for buyers of models like the Porsche 911. Audi is showing the revamped TT roadster.
Jaguar Land Rover intends to introduce the so-called Smart Assistant over the next two years. The system will use cameras to recognize the driver's face, along with technology that picks up signals from smartphones to adapt climate-control and even driving settings for that person. The luxury unit of India's Tata Motors Ltd. aims to grow with the more affordable Jaguar XE and Land Rover Discovery Sport models, which will make their public debuts in Paris.
For the chance to see the breadth the auto industry has to offer, the Paris Motor Show, which opens to the public on Oct. 4, attracted a record 1.2 million visitors the last time the auto industry gathered in the French capital in 2012. Social trends, though, suggest it will be difficult to convert these gawkers into buyers, said Tim Urquhart, an analyst at IHS Automotive in London.
"The market is changing with demographic factors at work, such as urbanization and younger potential buyers deciding they don't need a car," he said.
To contact the reporter on this story: Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.net
To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net Tom Lavell, Naomi Kresge, Kim McLaughlin
Source : http://www.bloomberg.com/news/2014-09-29/europe-s-auto-market-woes-overshadows-car-glam-in-paris.html
The fight between federal regulators and auto lenders over alleged discrimination in auto loans officially got a lot broader this month, as the Consumer Financial Protection Bureau asserted its authority over so-called "captive" finance companies that belong to the auto companies.
Previously, the bureau had authority to oversee big banks and a handful of the biggest credit unions, but finance companies that aren't primarily banks, like Ford Motor Credit Co. or Toyota Financial Services, were largely regulated by the states in which they do business.
"Many people depend on auto financing to pay for the car they need to get to work," CFPB Director Richard Cordray said in a written statement. "Nonbank auto finance companies extend hundreds of billions of dollars in credit to American consumers, yet they have never been supervised at the federal level."
The CFPB started a crackdown on auto lending in March 2013. The bureau concluded then that dealerships sometimes charge more for members of legally protected groups, such as minorities or women.
This gets convoluted, but when the CFPB was created in 2010, franchised, new-vehicle auto dealers successfully lobbied Congress to exempt them from the CFPB's jurisdiction. However, the CFPB retained jurisdiction over lenders. The bureau is using pressure on lenders to regulate dealerships indirectly.
In particular, the CFPB has zeroed in on the fact that lenders typically allow dealerships to set their own "dealer markup" on loans. (The auto industry prefers the term "dealer reserve.") Dealerships are allowed to tack on a small amount of interest, which becomes part of the customer's total interest rate, to compensate the dealership for helping generate loans.
Most lenders impose caps of 2 or 3 percentage points on dealer markup, on top of the bank's wholesale rate, the so-called "buy rate." Below those caps, dealers can typically set their own amount. According to the CFPB, the problem is that dealerships sometimes use that discretion to charge more, for protected classes of borrowers.
The auto finance industry strongly denies that it tolerates discrimination.
Director Richard Cordray, Consumer Financial Protection Bureau; CFPB photo
Not only that, according to the National Automobile Dealers Association the actual amount of compensation dealerships get is rarely as high as the rate caps, and it's often a lot less.
The dealer association argues that competition keeps rates low, and that interest rates negotiated at a dealership are often lower than rates on direct-to-consumer loans at banks. Finally, the dealers argue that taking price discretion away from them would also prevent dealerships from offering discounts on financing.
Instead of allowing dealerships to set their own compensation – subject to the existing rate caps – the CFPB has been pushing lenders to switch to some form of dealership compensation that takes away dealer discretion, such as a fixed, flat rate for every customer. Earlier this month, the CFPB also said publicly for the first time that lower rate caps – lower than the existing ones – could also help eliminate variation in dealer pricing.
The "captive" finance companies assumed all along they would be subject to the CFPB's jurisdiction, but the CFPB made it official this month.
Source : http://www.forbes.com/sites/jimhenry/2014/09/29/feds-extend-reach-in-search-for-auto-loan-discrimination/
My colleagues Margot Sanger-Katz and Amanda Cox wrote recently that shopping around for the best price can be crucial for people renewing their coverage on the health insurance exchanges this fall. But evidence suggests that many people probably won't do that. Not only is that bad for them, but it can also harm competition, which is bad for everyone.
A basic truth about health insurance, as with many other things, is that people hate to shop around and change products. They have a status quo bias. That bias can be exacerbated by a large number of plan choices, as consumers in some exchanges face.
Michael McWilliams and colleagues at Harvard found evidence of this bias in Medicare Advantage — private plans that serve as alternatives to traditional Medicare. They found that enrollment in the program rose rapidly as the number of plans offered grew from zero to 15, but then leveled off, and declined when more than 30 plans were in the market. Too much choice can overwhelm: As the number of plans climbed above 30, Medicare beneficiaries increasingly eschewed the Medicare Advantage market completely, instead defaulting into traditional Medicare, the status quo.
Similarly, overwhelmed with increasing choice in the new exchanges, returning consumers may not relish the idea of selecting a new plan. A feature built into the exchanges practically invites them not to do so: auto-renewal. Consumers insured by an exchange plan this year who do not actively choose a new one for next year will be automatically re-enrolled in their current plan or automatically enrolled in a similar one if their plan is discontinued. This auto-renewal is meant to help increase and maintain the size of the insured population and to promote continuous coverage. But if people rely on auto-renewal without evaluating all available options, some may end up in plans that aren't ideal for them.
Auto-renewal also offers insurers a way to retain customers without vigorously competing for them, counting on the fact that some consumers will stick with their plans even when, rationally, they should not.
Next year, the premiums of the currently cheapest silver-rated plans are going up by an average of 8.4 percent. Because of that, many of those plans will no longer be the cheapest. The customers who switch to the silver plans that are the cheapest in 2015 will see their premiums rise by only 1 percent on average. So in raising their rates by that much, those plans may be assuming that status quo bias will keep many of their enrollees from switching to new, cheaper plans offered by competitors.
There's a paradox. Basic economic theory suggests that more choice should always improve consumers' experience, allowing them to get better deals for less money. As choices, variety and competition increase, prices should come down, and consumers should be better able to match their preferences with product features. This theory holds up in many studies of a variety of products, but not all of them.
In this market, there are many different product features and a lot of variation in them. A recent analysis by the Robert Wood Johnson Foundation found that among silver-rated plans, primary care co-payments ranged from zero to $75, while specialist doctor co-payments varied from $10 to $150. Premiums and the networks of doctors and hospitals in each plan vary as well, as documented in a recent report by McKinsey & Company.
Variety in these dimensions and others offer consumers a lot of choice. But this variety can also challenge consumers' ability to make comparisons, leading them to make poorer choices than they could.
Here, basic economic theory is in conflict with the finding from behavioral economics that when choices become too numerous and complex, consumers resort to heuristics (or shortcuts), leading to suboptimal decisions. For instance, when we can't fully evaluate all options, we tend to default to familiar brands. And, because it takes time and effort to re-evaluate options, we tend to stick with our initial choice of brand when making a new purchase. This is why, for example, many people stick with their parents' brand of car or the cellphone preferred by their friends, rather than re-evaluate all makes and models with each purchase.
A recent study by Charlene Wong and colleagues at the University of Pennsylvania sheds light on just how complex shopping for coverage can be. They closely watched and interviewed 33 young and educated adults as they attempted to navigate Healthcare.gov, the federal exchange that serves as the online marketplace for 36 states. They found that the young adults poorly understood features of insurance plans, had trouble matching plans with their preferences, and were overwhelmed and confused by the volume and types of information provided. A study by the Commonwealth Fund found that nearly one-third of Healthcare.gov users found it "very difficult or impossible" to compare benefits and out-of-pocket costs across plans.
Auto-renewal is one solution to this problem. Otherwise, if choice is too hard, some may opt out of the market, as happened with Medicare Advantage. These are people who want coverage, but not enough to do the hard work of selecting the right plan. Auto-renewal means they don't have to do this work each year, but at the risk of getting a worse deal than they otherwise might.
If we want more competition, we need to induce fewer people to default to auto-renewal. Making it simpler for consumers to compare plans would help. Experts are already suggesting changes that could help consumers navigate insurance markets in 2015. For example, Ms. Wong and colleagues suggest providing more accessible explanations of health plan terms, making it easier to sort plans by various features, among other ideas.
Auto-renewal exists for a reason, but if consumers rely on it too much, the results will include higher premiums and greater market power for insurers.
Source : http://www.nytimes.com/2014/09/30/upshot/auto-renewing-your-health-plan-may-be-bad-for-you-and-for-competition.html
Tesla Motors is a pioneer in manufacturing electric-powered cars. But it is not taking the auto market by storm. Its first model, the Roadster, costing over $100,000 per vehicle, sold only 2,400 actual cars in 31 countries from 2006 until production ended in 2012, despite extensive federal subsidies for electric car purchases.
Its new model, a full-size luxury sedan named the Model S, is doing better, costing about half as much as the Roadster. Tesla sold about 25,000 of these worldwide in 2013. Performance of these vehicles is competitive with ideologically maligned gas-powered cars – but the products are heavily subsidized, by both federal and state tax credits of up to $20,000+ to consumers, and zero emissions credits totaling tens of millions of dollars to the company.
Electric cars follow the practice of most "green" developments, going back to old technology, like windmills, adding fancy, modern gadgets, and ballyhooing it as a futurist breakthrough. Tesla is named for 19th century electricity pioneer Nikola Tesla, who worked for Thomas Edison among others, and helped develop the modern AC current electricity technology.
Tesla Motor Company auto batteries are a contemporary descendant of Nikola Tesla's 19th century battery technology, which fueled an early competition with gas powered vehicles that gas won out decisively. While the jury is still out on whether consumers will buy electric cars en masse, given their limitations and the reality that subsidies are likely to eventually end, people should be free to buy what they want, for whatever reasons.
And legally free to sell what they want as well. Tesla Motors is also pioneering a new sales model for autos, as the only automaker selling directly to the consumer marketplace, rather than through franchised auto dealers.
However, while the automotive marketplace is not currently a free one for Tesla, neither is it for franchised dealers, who are drastically limited in their ability to negotiate freely with manufacturers, due to antitrust prohibitions against them.
The dealer system was originally developed on the thinking that franchised dealers would have stronger incentives and knowledge about local markets to sell cars in those markets. But the dealers soon learned that despite their investments in land and capital, they were at the mercy of the manufacturers, who could replace them, or start up nearby competitors, if they were displeased.
Source : http://townhall.com/columnists/peterferrara/2014/09/29/liberate-the-auto-sales-market-for-all-n1897423
Google has released developer guidelines for apps that will run on the company's upcoming in-care software. Android Auto is expected to launch before the end of the year, letting you interact with Android apps while driving thanks to a touchscreen display that'll be built into the dashboard of some vehicles.
But Android Auto apps aren't really standalone apps. Instead they're smartphone or tablet apps that have an Auto component. When you install the apps on your phone, your in-vehicle system will recognize them and add functionality to your Android Auto dashboard.
That way you can receive notifications, control music playback, or use voice actions in the car.
In other words, Android Auto is a lot like Google's wearable platform. You install Android Wear apps by installing Android apps on your phone as well.
There's another similarity between Android Wear and Android Auto: Google is maintaining tight control over the user interface. Device makers won't be allowed to use custom skins. In fact, Android Auto will be even more locked down.
Most apps will look pretty much the same. Developer can choose custom colors and each app will have day and night mode color schemes. But they'll basically all have the same user interface and button layout.
At launch there will be just a few types of third-party apps that work with Android Auto: apps that can display notifications in a car-appropriate way, and media player apps. Media players will all have a simple bar of playback controls, although some apps might have custom buttons including thumbs up or down or bookmark buttons.
Android app developers have a lot more leeway in designing custom user interfaces for smartphone and tablet apps. But it makes sense for Google to insist on a more unified design language for in-car systems. This helps drivers see information at a glance and know where they need to tap on the screen even when using newly installed apps.
The last thing you want is for drivers to get distracted while staring at a confusing screen in their car when they should be looking at the road ahead.
via /r/Android and Ars Technica
Source : http://liliputing.com/2014/09/android-auto-apps-will-look-like.html
PASADENA (CBSLA.com) — Crews were on the scene of a structure fire Saturday that had shut down a portion of the Arroyo Parkway.
According to the Pasadena Police Department, officials closed the parkway at the 110 Freeway, which also impacted roads and required traffic detours for several hours.
The fire broke out just before 7:30 a.m. in the back of Alliance Auto Body located in the 800 block of South Arroyo Parkway, officials said.
"Units found a large volume of fire in an outside vehicle detail building where two vehicles were involved," said Acting Battalion Chief David Watson.
(credit: Pasadena Fire Department)
The cars were lost as a result of the fire, firefighters said.
According to Watson, the total estimated damage to the structure amounted to $300,000. An additional $75,000 was estimated in damage of contents within the shop.
The fire was contained just after 10 a.m. and no injuries occurred as a result, officials said.
(credit: Pasadena Fire Department)
This morning, police recommended taking the 110 Freeway exit prior to Pasadena and entering the 110 Freeway outside of Pasadena to avoid traffic detours.
Authorities also recommended considering using Fair Oaks Avenue as an alternative to avoid delays in the area.
It was unclear how long the parkway was shut down for and what time officials had reopened the area.
The cause of the fire is under investigation.
Source : http://losangeles.cbslocal.com/2014/09/27/auto-body-shop-fire-closes-portion-of-arroyo-parkway-in-pasadena/
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The News Journal The 8th annual Delaware Auto Show is revving to roll Oct. 3-5 with the latest in the world of wheels – including pre-production prototypes – and the chance to drive a legendary 1965 Shelby Cobra. The show at Chase Center on the Riverfront in Wilmington ... |
Source : http://www.delawareonline.com/story/news/l! ocal/2014/09/27/delaware-auto-show-attendees-thrilling-ride/16354187/
The auto sector's second-quarter earnings weakness is likely to spill over to the third quarter. The fourth quarter could, however, surprise with a strong rebound as U.S. sales continue to improve and China remains a strong market for automobiles. However, the recovery in the European auto market is showing signs of wavering.
After a thriving 2013, global automobile sales are expected to rise to 85 million units in 2014 from 82.84 million in the earlier year, according to IHS Automotive, a unit of IHS Inc. (IHS). Even the 100 million-unit milestone is not far and might be reached in 2018.
Last year, the automobile market recovered significantly from the impact of the global financial crisis, buoyed by economic recovery, pent-up demand in the U.S. and high growth in Asia. Japanese automaker Toyota Motor Corp. ( - Analyst Report) retained its market leading position in terms of global sales volume and sold 9.98 million vehicles, up 2% from the 2012 level. General Motors Company ( - Analyst Report) and Volkswagen AG () occupied the second and third positions, with sales volumes of 9.71 million and 9.7 million, respectively.
Toyota topped auto sales in the first half of 2014, too, having sold 5.1 million vehicles globally. The uptrend is expected to continue through 2014 for all automakers, considering the sales increase in the U.S. and China. However, the high incentives they offer and increasing recall-related costs are affecting their bottom lines.
Zacks Industry Rank – Mixed Outlook
The distinctive attributes of the auto industry prompted us to have a dedicated sector for the industry in our database. The automobile sector is one of the 16 Zacks sectors, unlike the S&P classification wherein autos are in the Consumer Discretionary sector (the S&P has 10 sectors versus 16 for Zacks).
At the expanded classification level, the Zacks auto sector is divided into five industries: Auto-Domestic, Auto-Foreign, Auto/Truck-Original, Auto/Truck-Replacement and Engines.
The level of sensitivity and exposure to different stages of the economic cycle vary for each industry. The sector's retail operations are part of the Zacks Retail sector in two industries – one being Automobile/Trucks and the other Auto Parts.
The current Zacks Industry Rank is #42 for Auto-Domestic , #106 for Auto-Foreign, #77 for Auto/Truck-Original, #217 for Auto/Truck-Replacement, #106 for Engines, #51 for Retail/Wholesale Auto/Truck and #106 for Retail/Wholesale-Auto Parts. As a reference point, the outlook for industries with Zacks Industry Rank of #88 and lower is 'Positive,' between #89 and #176 is 'Neutral' and #177 and higher is 'Negative.'
This implies that the general outlook for all auto-related industries is neutral to modestly positive – four of the five industries in the top 50% of all industries. We rank all 260-plus industries in the 16 Zacks sectors based on the earnings outlook and fundamental strength of the constituent companies in each industry.
The industry has been a laggard thus far this year, with the weakest stock price performance of all sectors in the S&P 500. But the coming periods appear promising.
Sector Level Earnings Trend
The auto sector is expected to contribute 1.8% of total the S&P 500 earnings in 2014, more than its 1.4% market cap weight in the index at present.
Looking at the overall results of the auto sector, earnings fell 7.7% year over year in the second quarter, compared with the 22.1% year-over-year decline in the previous quarter. Total revenue increased 2.9% year over year in the quarter versus a 2.1% year-over-year gain in the first quarter. The beat ratio was 80% for earnings and 30% for revenues.
Auto sector earnings are expected to plunge 21.4% in the third quarter of 2014, placing it among the laggards when compared to the other sectors covered by Zacks. However, earnings are expected to recover in the fourth quarter with year-over-year growth of 19.3%, which would position auto among the best-performing sectors. Revenues are expected to move up 1.2% in the third quarter and 0.7% in the fourth quarter.
In 2014, earnings are expected to move down 2.4%, making it the weakest performing sector. Revenue growth is expected to be a modest 0.1% for the sector.
For more information about earnings for this sector and others, please read our 'Earnings Trends' report.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Source : http://www.zacks.com/commentary/34572/auto-stock-outlook-strong-us-sales-to-continue
Photo By Neal Morton/SA Express-News/San Antonio Express-News
The 2015 Jeep Renegade makes it debut at the State Fair of Texas auto show this year. It represents Jeep's first entry in the small SUV market and will arrive at dealerships in the first quarter of next year.
Photo By Neal Morton/SA Express-News/San Antonio Express-News
The 2015 Camaro 2SS coupe adds some color to the Chevrolet indoor display at the State Fair of Texas auto show.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
Nissan showcases its 2015 370 at this year's State Fair of Texas auto show.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
Toyota showcases its 2015 Scion FR-S at this year's State Fair of Texas auto show.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
Ford shows off its Texas-inspired 2014 F-150 King Ranch pickup at the State Fair of Texas auto show. The 2015 model will include 360-degree cameras to provide parallel parking assist technology.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
Hyundai hopes to please crowds at the State Fair of Texas auto show this year with a Texas Ranger-themed 2014 Velostar Turbo.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
Dodge, which debuted the Challenger SRT Hellcat earlier this year, showcases the 707-horsepower muscle car at this year's State Fair of Texas auto show.
Photo By Neal Morton/SA Express-News/San Antonio Express-News
Chrysler showcases its 2015 Ram 2500 Heavy Duty as part of the outdoor truck display at the State Fair of Texas auto show. This pickup features a Turbo Diesel engine and Lone Star Crew Cab 4x4.
Photo By Neal Morton/SA Express-News/San Antonio Express-News
Chevrolet reserves a prominent space for the 2014 Corvette Stingray at its indoor display at the State Fair of Texas auto show.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
The GMC Sierra Elevation Edition, which makes it first auto show debut at the State Fair of Texas this year, offers a new sport appearance for the light-duty pickup. General Motors will set its pricing in the next four to six weeks.
Photo By Neal Morton/SA Express-News/San Antonio Express-News
Artist Cindy Raschke, of Austin, paints an Italian-sculpture-inspired design on a Fiat 500 at the State Fair of Texas auto show. She will add to the design every Friday through Sunday during the monthlong annual event.
Photo By Neal Morton/SA Express-News/San Antonio Express-News
Artist Cindy Raschke, of Austin, paints an Italian-sculpture-inspired design on a Fiat 500 at the State Fair of Texas auto show. She will add to the design every Friday through Sunday during the monthlong annual event.
Photo By San Antonio Express-News
GM hopes its 2015 Chevy Colorado steals sales away from the San Antonio-made Toyota Tacoma, which currently commands a nearly two-thirds share of the mid-size pickup segment.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
The 2014 Ram 1500 earned Chrysler the 2014 Texas Truck of the Year award. The Laramie Edition, pictured here, features a premium interior and up-to-date technology.
Photo By Neal Morton/San Antonio Express-/San Antonio Express-News
Chrysler hopes its 2015 GMC Canyon steals sales away from the San Antonio-made Toyota Tacoma, which currently commands a nearly two-thirds share of the mid-size pickup segment.
Photo By Neal Morton / San Antonio Express-News
Toyota unveiled an off-road Bass Pro Shops edition of its San Antonio-made full-size Tundra pickup at the State Fair of Texas. Price tags start at $43,975, according to a news release.
Photo By Newspress USA
Here's a closer look at the newly unveiled 2015 Toyota Tundra Bass Pro Shops Off-Road Edition
Photo By Newspress USA
The 2015 Toyota Tundra Bass Pro Shops Off-Road Edition
Photo By Newspress USA
The 2015 Toyota Tundra Bass Pro Shops Off-Road Edition
Photo By Newspress USA
The 2015 Toyota Tundra Bass Pro Shops Off-Road Edition
Photo By Newspress USA
The 2015 Toyota Tundra Bass Pro Shops Off-Road Edition
Since Toyota launched the 2014 Tundra last fall, it has spent a monthly average of $1,414 per truck, while the average incentive topped $3,000.
Photo By Newspress USA
The 2015 Toyota Tundra Bass Pro Shops Off-Road Edition
Source : http://www.chron.com/cars/article/Hot-cars-make-debut-at-the-Texas-Auto-Show-5782681.php
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News & Observer North Carolina has watched with envy as auto manufacturers, lured by huge incentive packages, have dotted the Southeast with plants. Jobs at $15 to $20 an hour are not easy to come by in the region, after all, and nearby states were willing to offer a ... |
Source : http://www.newsobserver.com/2014/09/22/4174165/n! c-seeks-auto-plants-but-whats.html?sp%3D/99/108/
Used-car prices are sliding, a boon to penny-pinchers, but troubling for new-car sales.
The auto industry sales recovery in recent years means millions of used cars, many coming off lease, are starting to flood the market. The result is a decline in used-car prices that zoomed sky-high after the recession. And the decline is leading to talk that new-car auto sales growth may be peaking.
"We're going to see a tremendous increase in used-car supply over the next couple of years," says Larry Dominique, an executive vice president of auto-pricing site TrueCar.
That used-car cascade could dampen new-car sales in three ways:
•Less valuable trade-ins. Car shoppers may find their trade-ins are worth less than they expected when they go to buy new vehicles. That means they'll have to shoulder larger new-car loans or forgo the purchases.
•More expensive leases. Lease rates for new vehicles are based on predicted resale value. As resale prices fall, automakers adjust predicted depreciation schedules and have to raise lease prices.
•More attractive used cars. In recent years, used-car prices were so high that car shoppers found they could buy a new one for not much more. Now the pendulum is swinging back, says Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich.
Wholesale prices were down 0.4% in August vs. a year ago, down 1.6% from July and "prices should continue to trend down as supply outpaces demand," writes Tom Kontos of Adesa Analytical Services, which tracks wholesale prices for used cars, in a note to the industry.
At retail, the average used car sold at a franchised auto dealership went for $10,883 last month, down 1.6% from a year ago and 2.4% from July, says CNW Research.
Lower used-car prices are a delayed response to the new-car market's revival from the recession: From a bottom at 10.4 million in 2009, new-car auto sales are on track to break 16 million this year.
Fewer trade-ins in the recession caused wholesale used-car prices to soar more than 25% to a peak in May, 2011, before leveling off, according to Tom Webb, chief economist at Manheim Consulting. August was the fourth straight month of declining wholesale prices, but he says talk of pricing free-fall is "premature."
"We're definitely seeing prices fall," says Duane Paddock of Paddock Chevrolet in Kenmore, N.Y. The decline is real, he says, but it's "not like Niagara Falls. We've seen a gradual drop."
Not every region has seen falling prices yet. Pete Greiner of Greiner Ford and Lincoln in Casper, Wyo., says prices remain stubbornly high for the used vehicles most in demand in his energy-rich area: pickup trucks. Prices are "high, high, high" at the auction where he buys his inventory, he says.
Source : http://www.usatoday.com/story/money/cars/2014/09/21/used-car-prices-fall/15482115/
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News & Observer North Carolina has watched with envy as auto manufacturers, lured by huge incentive packages, have dotted the Southeast with plants. Jobs at $15 to $20 an hour are not easy to come by in the region, after all, and nearby states were willing to offer a ... |
Source : http://www.newsobserver.com/2014/09/22/4174165/n! c-seeks-auto-plants-but-whats.html?sp%3D/99/108/
Used-car prices are sliding, a boon to penny-pinchers, but troubling for new-car sales.
The auto industry sales recovery in recent years means millions of used cars, many coming off lease, are starting to flood the market. The result is a decline in used-car prices that zoomed sky-high after the recession. And the decline is leading to talk that new-car auto sales growth may be peaking.
"We're going to see a tremendous increase in used-car supply over the next couple of years," says Larry Dominique, an executive vice president of auto-pricing site TrueCar.
That used-car cascade could dampen new-car sales in three ways:
•Less valuable trade-ins. Car shoppers may find their trade-ins are worth less than they expected when they go to buy new vehicles. That means they'll have to shoulder larger new-car loans or forgo the purchases.
•More expensive leases. Lease rates for new vehicles are based on predicted resale value. As resale prices fall, automakers adjust predicted depreciation schedules and have to raise lease prices.
•More attractive used cars. In recent years, used-car prices were so high that car shoppers found they could buy a new one for not much more. Now the pendulum is swinging back, says Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich.
Wholesale prices were down 0.4% in August vs. a year ago, down 1.6% from July and "prices should continue to trend down as supply outpaces demand," writes Tom Kontos of Adesa Analytical Services, which tracks wholesale prices for used cars, in a note to the industry.
At retail, the average used car sold at a franchised auto dealership went for $10,883 last month, down 1.6% from a year ago and 2.4% from July, says CNW Research.
Lower used-car prices are a delayed response to the new-car market's revival from the recession: From a bottom at 10.4 million in 2009, new-car auto sales are on track to break 16 million this year.
Fewer trade-ins in the recession caused wholesale used-car prices to soar more than 25% to a peak in May, 2011, before leveling off, according to Tom Webb, chief economist at Manheim Consulting. August was the fourth straight month of declining wholesale prices, but he says talk of pricing free-fall is "premature."
"We're definitely seeing prices fall," says Duane Paddock of Paddock Chevrolet in Kenmore, N.Y. The decline is real, he says, but it's "not like Niagara Falls. We've seen a gradual drop."
Not every region has seen falling prices yet. Pete Greiner of Greiner Ford and Lincoln in Casper, Wyo., says prices remain stubbornly high for the used vehicles most in demand in his energy-rich area: pickup trucks. Prices are "high, high, high" at the auction where he buys his inventory, he says.
Source : http://www.usatoday.com/story/money/cars/2014/09/21/used-car-prices-fall/15482115/
TOKYO Four high-level state Commerce Department officials spent last week crisscrossing the sprawling city of Tokyo, with its vast rows of office towers, glittering high-fashion districts and packed subways beneath the world's largest metro area.
But their thoughts were on tracts of mostly vacant fields back in North Carolina – one of them in Siler City – where efforts are accelerating to recruit a large-scale automobile plant, or something like it. The administration of Gov. Pat McCrory is backing the recruiting in a serious effort to land a large-scale factory.
North Carolina Commerce Secretary Sharon Decker made it clear in an interview as she wrapped up four days of meetings in Tokyo: The state is "aggressively" jumping in to secure what she called a "catalyst-for-jobs" factory.
The automotive industry is the prime target because its assembly plants generate thousands of jobs at above-average wages. Suppliers also build near the plants to provide parts and other components, generating more jobs.
Automakers are widely forecast to be adding production capacity in coming years as demand picks up, which is expected to lead to at least two or three new plants in North America.
But the state faces competition from other Southeastern states as well as a new threat – Mexico, which has won the last six auto plants announced or opened in North America on the strength of low wages, improved utility infrastructure and wider free-trade deals. Kia was the latest, last month choosing to build a $1 billion plant near Monterrey.
Incentives are another potential hurdle. North Carolina has for years come up short as lawmakers in both parties balked at packages offered elsewhere in the hundreds of millions of dollars.
Last week, Decker led the group of commerce officials, including two officials who are based in Japan, in a series of private meetings with undisclosed business interests.
She conducted other informal talks in conjunction with an annual meeting among government and business officials from Southeastern states and Japan that wrapped up Saturday. Honda and Toyota officials who work in North America also made the rounds here.
Decker said she met with "several auto and auto-related" businesses.
"We are talking with companies of a variety of sizes and capacity," she said. "We've talked with both suppliers and manufacturers."
At the conference's opening session, top officials from other states in the Southeast touted the jobs, wages and investment in their states at auto factories. Japanese companies also spoke highly of workers in the Southeast, and there were talks of more than just auto plants. South Carolina has a major all-terrain vehicle plant, for example. Honda Jet is headquartered in Greensboro.
Decker said she leaves Japan with signals from manufacturers that "there is opportunity for us in automotive."
"We've got to catch the wind – the economy is recovering," she added. "And we need a couple of 'catalyst' opportunities that are a magnitude enough that we can get strong multipliers to get the job creation moving."
North Carolina probably came closest in a similar attempt at an auto plant two decades ago, almost reaching an agreement with Mercedes-Benz to build a factory near Mebane.
In 1993, Mercedes went to Alabama instead. The land off Interstate 85/40 that is still called the "Mercedes site" by some in Mebane has recently sprouted an outlet shopping center and, soon, a Wal-Mart distribution facility.
At the time, BMW had just put a plant in South Carolina, and Honda, Nissan, Hyundai, Toyota and Volkswagen would follow with plants across the South.
North Carolina was often outbid in incentive packages and hampered by a lack of large-acreage sites that were already prepared on the scale needed for a big plant.
Both those issues have been addressed, Decker and others said in interviews, which will give the state a better shot at future plants.
Sites ready to go
Three large scale "megasites" are in various stages of preparation, including one on the edge of Siler City. Its owners say it's essentially ready now for a company to start construction.
Decker said she's been able to point to that site, in Chatham County, as well as sites in development north of it, in the town of Liberty, and a 1,200-acre tract near Rocky Mount.
"We're finding that, as we're talking with some now, that you've got to be in a position that you can get to the market fast," she said. "And we have that now."
Tim Booras, a Greensboro beer and wine distributor, and D.H. Griffin, a major construction contractor, have teamed up to offer a huge swath of about 1,800 acres they own near Siler City as a possible "megasite" for an auto plant.
It's mostly been quail hunting grounds, Booras said on a recent tour. His truck bounded along the dirt roads that slice up the timbered land until he reached a high point with sweeping views.
On the ground was some orange spray paint that marked a makeshift helicopter landing pad. He said state officials, who have permission to market the property, had just used it days earlier, bringing three unidentified company representatives to take a look.
"I couldn't even know who they were," he said. "It's kept secret."
Booras has set up a "war room" in his spacious garage nearby, complete with maps and other information about why it makes sense for an automaker – or another large-scale user – to choose his site. He said numerous studies have found no problems with the tract's ability to hold a large plant. It has water and sewer capacity, a nearby rail line, ample power, and other such infrastructure.
Separately, economic developers in nearby Randolph County are piecing together a site near the town of Liberty.
And officials in Edgecombe County have assembled a 1,200-acre site that they think fits well for auto.
Mike Randle, who covers the industry in the South for a trade publication, SouthernAutoCorridor.com, said he believes the Piedmont in North Carolina is a likely place for the next new plant in the South. He said the state's effort should be taken seriously.
"Mexico emerging has really curtailed our chances," he said. "They're kind of on a roll that we can't seem to stop. But I do think there will be one or two or three in the next five to seven years that will land in the South. We'll have to see who they are."
What will we spend?
In speeches around the state, Decker has openly asked the key question this type of recruitment raises: Are lawmakers willing to pay incentives in a mix of cash, tax rebates and training at a level needed to secure a deal?
In the General Assembly session that just ended, legislators refused to give Decker control of a $20 million "closing fund" she could have used to seal the deal on projects with 500 or more jobs.
It was a setback in the administration's effort to line up the type of funding that will be needed. Decker said she remains optimistic that lawmakers would back an auto plant if a deal is close.
The price of incentives for a major factory is generally $200 million to $400 million in various forms of rebates and other benefits, Randle said.
Decker said her office has been lining up funding options from existing sources, including local governments, in anticipation of making a final deal. She said the state has a range of options.
The Southeast already has its own corridor of auto plants, stretching generally along Interstates 65 and 75 from the Gulf of Mexico north toward Detroit.
But Mexico has had recent success, which represents a significant shift in the auto landscape in North America, said Mike Mullis, a site location specialist who has advised auto companies on dozens of projects in the U.S. and has an office in Mexico.
"As these projects are growing, Mexico has become a very, very formidable competition to the United States," Mullis said. "There will be other assembly plants. There's no doubt about it. From the Southeast U.S. perspective, it will be more competition with Mexico than with other states."
Labor at auto plants in Mexico is running at $5 to $6 per hour compared with about $15 to $20 an hour in the South, Mullis said.
Officials in Louisiana, Mississippi, Alabama, Georgia, Tennessee, Kentucky and South Carolina are all pitching sites they say are ready for future auto plants. Still, Mullis said North Carolina can compete and is in a position now to "go after those projects aggressively."
Already, the state ranks high in auto parts suppliers, with more than 25,000 employed in that sector. Aisin AW in Durham, for example, is a major automatic transmission maker.
Decker said 35 of the roughly 150 major suppliers in the world now are operating in the state, which also has helped grab interest.
Assessing the odds
Mullis said the state's chance at landing an auto plant in the next three to five years was probably "50-50." He declined to identify any automakers he is representing that are studying locations.
"North Carolina has the workforce, the attitude of business, the training programs that can achieve winning such a project," he said. "One of the challenges has been, historically, they didn't have the real estate to support the need."
But he said that has changed, too, with land development work going on at three different locations.
"I would say in the past years, North Carolina was not in the mix," Mullis said. "For whatever reason, we couldn't get it to the altar." Now, "North Carolina is a player. But the legislature will have to step up."
State Sen. Bob Rucho, co-chair of the Senate Finance Committee, had helped write bills in the last session to cut back on incentives. But he said in an interview that he believes lawmakers would act on a big factory.
"Most incentives don't deliver," he said. But he said key lawmakers have agreed that the state would "invest $100 million or $200 million or $300 million" on a major project because the return on the investment could be there.
Rucho said key senators, including Senate leader Phil Berger, are open to incentives on a large-scale project, though specifics would always decide it.
"It's not a pie-in-the-sky decision," he said. "It needs to be a large facility."
Lawmakers in the House have been against incentives recently, and there is more uncertainty about their position since Speaker Thom Tillis is giving up his seat to run for the U.S. Senate.
Decker said she thinks local leaders will play a more important role in future incentives offerings, which has been "something missing" in past efforts. Decker said she talked with numerous officials who were involved in past attempts to figure out what happened.
"I heard the same stories – can't get your act together, can't get the legislation, can't get a decision," she said.
Decker said she thinks that's about to change.
Source : http://www.charlotteobserver.com/2014/09/20/5187831/car-chase-in-search-of-major-auto.html
Used-car prices are sliding, a boon to penny-pinchers, but troubling for new-car sales.
The auto industry sales recovery in recent years means millions of used cars, many coming off lease, are starting to flood the market. The result is a decline in used-car prices that zoomed sky-high after the recession. And the decline is leading to talk that new-car auto sales growth may be peaking.
"We're going to see a tremendous increase in used-car supply over the next couple of years," says Larry Dominique, an executive vice president of auto-pricing site TrueCar.
That used-car cascade could dampen new-car sales in three ways:
•Less valuable trade-ins. Car shoppers may find their trade-ins are worth less than they expected when they go to buy new vehicles. That means they'll have to shoulder larger new-car loans or forgo the purchases.
•More expensive leases. Lease rates for new vehicles are based on predicted resale value. As resale prices fall, automakers adjust predicted depreciation schedules and have to raise lease prices.
•More attractive used cars. In recent years, used-car prices were so high that car shoppers found they could buy a new one for not much more. Now the pendulum is swinging back, says Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich.
Wholesale prices were down 0.4% in August vs. a year ago, down 1.6% from July and "prices should continue to trend down as supply outpaces demand," writes Tom Kontos of Adesa Analytical Services, which tracks wholesale prices for used cars, in a note to the industry.
At retail, the average used car sold at a franchised auto dealership went for $10,883 last month, down 1.6% from a year ago and 2.4% from July, says CNW Research.
Lower used-car prices are a delayed response to the new-car market's revival from the recession: From a bottom at 10.4 million in 2009, new-car auto sales are on track to break 16 million this year.
Fewer trade-ins in the recession caused wholesale used-car prices to soar more than 25% to a peak in May, 2011, before leveling off, according to Tom Webb, chief economist at Manheim Consulting. August was the fourth straight month of declining wholesale prices, but he says talk of pricing free-fall is "premature."
"We're definitely seeing prices fall," says Duane Paddock of Paddock Chevrolet in Kenmore, N.Y. The decline is real, he says, but it's "not like Niagara Falls. We've seen a gradual drop."
Not every region has seen falling prices yet. Pete Greiner of Greiner Ford and Lincoln in Casper, Wyo., says prices remain stubbornly high for the used vehicles most in demand in his energy-rich area: pickup trucks. Prices are "high, high, high" at the auction where he buys his inventory, he says.
Source : http://www.usatoday.com/story/money/cars/2014/09/21/used-car-prices-fall/15482115/
In July 2013, an angry and worried Connecticut owner of a 2007 Chevrolet Equinox wrote federal regulators to complain about a gasoline leak that a dealer refused to repair under a recall. The reason, General Motors argued, was that Connecticut did not get hot enough.
The Equinox owner differed.
"Several heat waves in Connecticut causing crack in fuel pump module," the owner wrote the National Highway Traffic Safety Administration. "Not on recall list per G.M. However, should be for any safety issue such as this. Afraid to drive. Huge cost to fix." Without any objection from federal safety regulators, G.M. had recalled only about 41,000 vehicles sold or registered in some states that have hot weather. That included the Equinox in Arizona, California, Nevada and Texas, where, the automaker said, a "state-by-state analysis" of warranty claims showed cracks in the fuel pump module were most likely to occur.
The Equinox recall is an example of what is known in the industry as a regional recall — repairs that are done on a limited, geographic basis. Automakers began such recalls in the 1980s. The idea is that special factors — like extreme heat or extensive use of road salt — cause a crucial part to fail. Automakers argue that it makes no sense to repair vehicles elsewhere, and federal safety officials typically go along.
For roughly three decades, regional recalls have frustrated automobile owners who have found it difficult to navigate the patchwork approach to fixing safety problems. The recalls have also been a focus of consumer advocacy groups, which complain that they save automakers millions of dollars while running the risk that, in a mobile society, some dangerous vehicles will not be fixed. Advocacy groups have tried unsuccessfully to eliminate regional recalls.
"It is irrational and harms the safety and economic well-being of the American people," said Brian Wolfman, a visiting professor at Stanford Law School who studies consumer protection issues. Regional recalls amount "to manufacturer discrimination against certain customers based on where they live, even if they have the problem," said Jack Gillis, a spokesman for the Consumer Federation of America.
In the case of the Equinox, General Motors extended a warranty on the fuel pump to other states. But in a full recall, all of the pumps would be replaced. Under the extended warranty, a consumer would have to have a vehicle that leaked — and a fire danger — to receive help. Even so, some owners, like the one in Connecticut, told the agency the dealer refused to make repairs free.
"I had to pay to get it fixed," the owner of a 2007 Equinox from Michigan wrote in December 2013.
The major automakers did not answer email messages seeking a response to criticism of regional recalls. Wade Newton, a spokesman for the Alliance of Automobile Manufacturers, did not respond directly to the criticism that regional recalls benefit automakers financially while some owners may not get a needed repair. Instead, Mr. Newton wrote by email, "What's most important here is that any recalled vehicle is quickly repaired."
Alan Adler, a G.M. spokesman, said regional recalls were "an option we would consider when appropriate, such as a corrosion case where vehicles in cold weather/road salt use states would be more susceptible to an issue," But Mr. Adler said by email that owners who had the problem in other states could still get a free repair.
The highway traffic safety agency's policy is that "safety-related defects must be remedied on a nationwide basis, unless the manufacturer can justify a limited geographic scope," Karen Aldana, a spokeswoman, wrote by email. "Any regional recall will be scrutinized and monitored to ensure that the regional scope is sufficient and does not need to be expanded." No agency officials were made available to discuss regional recalls.
One of the country's largest current regional recalls is taking place in only two states and two territories: In June, nine automakers recalled about 900,000 vehicles in Florida, Hawaii, the United States Virgin Islands and Puerto Rico to repair air bags, made by Takata Corporation, that can rupture, sending shrapnel flying into the cabin. It is the latest in a series of Takata-related recalls that has grown to include 14 million vehicles.
Takata officials cited high humidity in Florida, Hawaii and the two territories that may set off the air bag's propellant in a crash and rupture its casing. Millions of vehicles in other states, though, may have the same problem, and will not be fixed.
Even Honda, one of the automakers involved, was skeptical of the reasoning.
"The whole Gulf of Mexico region exhibits a combination of high absolute humidity and high temperatures," Chris Martin, a Honda spokesman, wrote by email.
Honda greatly expanded its recall beyond the 420,000 in the two states, Puerto Rico and the United States Virgin Islands and is now recalling an additional 2.4 million vehicles registered or first sold in Alabama, Georgia, Louisiana, Mississippi, South Carolina, Texas and California.
The Takata regional recall "is simply the latest manifestation of a problem that has existed for a long time, and I don't think it has served the American people well," said David C. Vladeck, a professor at Georgetown Law and former director of the Federal Trade Commission's Bureau of Consumer Protection.
The safety agency is going along with Takata's recommendations but will take "appropriate action" if a wider recall seems warranted, Ms. Aldana, the spokeswoman, wrote by email.
A Takata spokesman, Alby Berman, declined to answer questions.
A lawsuit to prohibit automakers from issuing recalls only in certain areas was unsuccessful. In 2004, Public Citizen, represented by lawyers including Mr. Wolfman, joined the Center for Auto Safety in a suit in the United States District Court for the District of Columbia against the safety agency. It claimed federal regulators were required to fix all vehicles.
"By allowing automakers to treat identical vehicles from neighboring states differently, N.H.T.S.A. is endangering the public," the suit said.
Lawyers for the safety agency disagreed and won. The judge concluded that the law "envisions the agency will exercise its discretion to determine whether a safety-related defect exists in a given scenario."
Since that decision, regional recalls have increased, although they remain a tiny fraction of total recalls.
In the decade ending in 2002, there were 39 regional recalls, according to the federal court case. But since 2003 at least 14 million vehicles have been covered in at least 60 regional recalls. About two-thirds of them occurred since 2009, according to a Times analysis of a list of regional recalls compiled by the Center for Auto Safety.
It is unclear how many injuries or deaths, if any, have resulted from defects covered by regional recalls. The highway traffic safety agency does not keep a tally of regional recalls, Ms. Aldana, the agency spokeswoman, wrote by email.
Even though a federal judge ruled that regional recalls were legal, it is still wrong for the agency to allow automakers to issue them, said Rosemary Shahan, the president of Consumers for Auto Reliability and Safety.
"Cars don't stay in the same place — cars move; people move," Ms. Shahan said in an interview. "So, the idea that they only pose a threat in a certain part of the country is fundamentally wrong."
Source : http://www.nytimes.com/2014/09/16/business/general-motors-fuel-pump-recall-reveals-patchwork-approach-to-auto-safety.html
Updated, 11:31 a.m. | LONDON – TRW Automotive, one of the largest safety parts makers, said on Monday that it agreed to be acquired by the German auto parts maker ZF Friedrichshafen in a deal that valued the company at $13.5 billion.
The transaction is expected to create one of the world's largest auto parts suppliers with combined sales of about $41 billion and 138,000 employees.
TRW is expected to be operated as a separate division within ZF.
ZF, based in Friedrichshafen, in southern Germany, said it would pay $105.60 a share in cash for TRW, or about $12.4 billion in equity value for the deal. The price is a 16 percent premium over TRW's closing price on July 9, the day before it confirmed it had received a preliminary takeover offer.
"The acquisition of TRW fits perfectly into our long-term strategy," Stefan Sommer, the ZF chief executive, said in a news release. "We are strengthening our future prospects by enlarging our product portfolio with acknowledged technologies in the most attractive segments."
The merger has been approved by the boards of both companies. The transaction is subject to regulatory approval and is expected to close in the first half of 2015.
ZF said in July that it was in a "preliminary stage" of discussing a possible acquisition of TRW, based in Livonia, Mich.
The deal is expected to be financed through a combination of cash on hand and debt. Citigroup and Deutsche Bank have agreed to provide financing to ZF.
Earlier Monday, ZF agreed to sell its stake in a steering systems joint venture to its partner Robert Bosch, a move expected to ease regulatory approval of the TRW transaction. Bosch will buy ZF's 50 percent stake in the joint venture, ZF Lenksysteme. The purchase price wasn't disclosed.
By taking full control of ZF Lenksysteme, "Bosch is strengthening its ability to actively shape the future of mobility," Volkmar Denner, the Bosch chairman, said in a news release.
The joint venture, based in Schwรคbisch Gmรผnd, Germany, manufacturers steering systems for passenger cars and commercial vehicles. It employs more than 13,000 people in eight countries and had sales of 4.1 billion euros, or about $5.3 billion, in 2013.
TRW makes air bags, crash sensors and other parts used to protect passengers. It had sales of $17.4 billion in 2013, and employs more than 65,000 people. The company was spun out of the defense contractor Northrop Grumman in 2002.
Ferdinand Dudenhรถffer, director of the Center for Automotive Research at the University of Duisburg-Essen in Germany, said the merged company would be well positioned in the fast-growing field of automated driving, in which electronic systems help drivers avoid crashes or stay in lanes.
"Bosch and Continental will have a very strong competitor," Mr. Dudenhรถffer said, referring to two other German companies that are investing significantly in technology that is expected to eventually lead to cars that drive themselves.
Mr. Dudenhรถffer said that the combined company would be better able to resist companies like Volkswagen which have been trying to cut costs by leaning on suppliers. "They can get away with that with mid-sized companies, but not with companies like Bosch or ZF-TRW," he said. For the big car companies, "saving money will not get easier," he said.
Mr. Dudenhรถffer predicted that ZF would eventually pursue a stock listing to finance expansion. If so, he said, ZF would probably copy Volkswagen and other German companies that have issued preferred shares to the public while maintaining control of voting rights.
ZF, founded in 1915, manufactures transmissions, axles and other parts for a variety of European and American automobile manufacturers. It had sales of about $23 billion in 2013 and has 72,643 employees in 26 countries.
Goldman Sachs and the law firms Simpson Thacher & Bartlett and Gleiss Lutz advised TRW.
Jack Ewing contributed reporting from Frankfurt.
Source : http://dealbook.nytimes.com/2014/09/15/zf-friedrichshafen-sells-joint-venture-stake-to-bosch/
Group 1 Automotive announced an acquisition in Brazil on Monday, part of a strategy to expand in what the company sees as a growing car market.
The Houston-based company owns and operates auto dealerships throught the U.S., the United Kingdom and Brazil..
It also said it had sold two dealerships on Long Island in New York.
The Brazilian acquisition is a Mercedes-Benz dealership in Campo Grande, Brazil, the capital of the southwestern state of Mato Grosso do Sul.
Group 1 Automotive entered Brazil with the acquisition of 18 dealerships in February 2013. When it announced the deal, the company said Brazil had a low vehicle-to-population ratio. The latest acquisition is part of a long-term strategy to invest what the company expects to be a strong market, though tough economic times have slowed growth.
BMW MINI and Mercedes-Benz dealerships were sold in Long Island.
Source : http://www.chron.com/business/retail/article/Group-1-Auto-continues-pursuit-of-Brazil-s-car-5756489.php
Updated, 11:31 a.m. | LONDON – TRW Automotive, one of the largest safety parts makers, said on Monday that it agreed to be acquired by the German auto parts maker ZF Friedrichshafen in a deal that valued the company at $13.5 billion.
The transaction is expected to create one of the world's largest auto parts suppliers with combined sales of about $41 billion and 138,000 employees.
TRW is expected to be operated as a separate division within ZF.
ZF, based in Friedrichshafen, in southern Germany, said it would pay $105.60 a share in cash for TRW, or about $12.4 billion in equity value for the deal. The price is a 16 percent premium over TRW's closing price on July 9, the day before it confirmed it had received a preliminary takeover offer.
"The acquisition of TRW fits perfectly into our long-term strategy," Stefan Sommer, the ZF chief executive, said in a news release. "We are strengthening our future prospects by enlarging our product portfolio with acknowledged technologies in the most attractive segments."
The merger has been approved by the boards of both companies. The transaction is subject to regulatory approval and is expected to close in the first half of 2015.
ZF said in July that it was in a "preliminary stage" of discussing a possible acquisition of TRW, based in Livonia, Mich.
The deal is expected to be financed through a combination of cash on hand and debt. Citigroup and Deutsche Bank have agreed to provide financing to ZF.
Earlier Monday, ZF agreed to sell its stake in a steering systems joint venture to its partner Robert Bosch, a move expected to ease regulatory approval of the TRW transaction. Bosch will buy ZF's 50 percent stake in the joint venture, ZF Lenksysteme. The purchase price wasn't disclosed.
By taking full control of ZF Lenksysteme, "Bosch is strengthening its ability to actively shape the future of mobility," Volkmar Denner, the Bosch chairman, said in a news release.
The joint venture, based in Schwรคbisch Gmรผnd, Germany, manufacturers steering systems for passenger cars and commercial vehicles. It employs more than 13,000 people in eight countries and had sales of 4.1 billion euros, or about $5.3 billion, in 2013.
TRW makes air bags, crash sensors and other parts used to protect passengers. It had sales of $17.4 billion in 2013, and employs more than 65,000 people. The company was spun out of the defense contractor Northrop Grumman in 2002.
Ferdinand Dudenhรถffer, director of the Center for Automotive Research at the University of Duisburg-Essen in Germany, said the merged company would be well positioned in the fast-growing field of automated driving, in which electronic systems help drivers avoid crashes or stay in lanes.
"Bosch and Continental will have a very strong competitor," Mr. Dudenhรถffer said, referring to two other German companies that are investing significantly in technology that is expected to eventually lead to cars that drive themselves.
Mr. Dudenhรถffer said that the combined company would be better able to resist companies like Volkswagen which have been trying to cut costs by leaning on suppliers. "They can get away with that with mid-sized companies, but not with companies like Bosch or ZF-TRW," he said. For the big car companies, "saving money will not get easier," he said.
Mr. Dudenhรถffer predicted that ZF would eventually pursue a stock listing to finance expansion. If so, he said, ZF would probably copy Volkswagen and other German companies that have issued preferred shares to the public while maintaining control of voting rights.
ZF, founded in 1915, manufactures transmissions, axles and other parts for a variety of European and American automobile manufacturers. It had sales of about $23 billion in 2013 and has 72,643 employees in 26 countries.
Goldman Sachs and the law firms Simpson Thacher & Bartlett and Gleiss Lutz advised TRW.
Jack Ewing contributed reporting from Frankfurt.
Source : http://dealbook.nytimes.com/2014/09/15/zf-friedrichshafen-sells-joint-venture-stake-to-bosch/
The self-driving car seems like a terrible driver's dream: no steering wheel to control, no trouble parallel parking, no concerns about having a couple of beers on the way home from work. But the removal of fallible human drivers might create havoc for auto insurers.
Human error accounts for 90 percent of road accidents, according to the International Organization for Road Accident Prevention, and our collective failure rate helps the auto insurance industry rake in a cool $157 billion in premiums each year. So if self-driving cars eliminate all those driver mistakes, the business of insuring vehicles will necessarily change as well.
A recent study by RAND Corp. (PDF) predicted increased liability for auto manufacturers while personal liability plummets. "If a vehicle and a human share driving responsibility, the insurance issues could become more complicated," the study noted. The RAND authors had a sober message for insurers: If automated vehicles succeed in reducing the risk of crashes, the industry could see a "significant reduction in insurance premiums." The average cost of auto insurance in the U.S. is $1,020, according to AAA, giving the industry a lot to lose.
In writing driverless insurance policies, underwriters will likely focus on the make and model of a car instead of a driver's accident history or how often he drives. There may also be the introduction of "black boxes," data recorders akin to those found in airplanes that can track car data and decipher what really happened seconds before a crash.
Another possibility: an uptick in no-fault insurance, where an insurer covers the damage regardless of who's to blame. This type of insurance has fallen out of favor in recent years as the cost of medical claims has increased, despite the expectation of lower litigation costs.
While it's too early to tell which way auto insurance will go, there's another cost for car owners that may go up. With fewer accidents keeping the nation well supplied with mechanics, repairing that fender bender may cost you more.
Source : http://www.businessweek.com/articles/2014-09-10/why-self-driving-cars-could-doom-the-auto-insurance-industry
Toyota Motor Corp., the last of the world's major automakers without a full assembly plant in Mexico, is scouting the country for possible factory sites, Bloomberg reported today, citing unnamed sources.
It's no surprise, really, given that the rest of the global auto industry is already producing cars in Mexico. This summer alone, Kia Motors Corp., BMW and a Daimler-Nissan joint venture have all announced plans to build new assembly plants there, at a cost of $1 billion each.
As Forbes wrote in its Sept. 8, 2014 issue, America's car capital will soon be Mexico. Mexico's low labor costs, along with some of the most liberal trade policies in the world, have made it an attractive place for foreign auto producers. With $19 billion in new investment, Mexican auto production has doubled in the past five years to an estimated 3.2 million vehicles in 2014.
Toyota makes Tacoma pickup trucks and truck beds at a plant near Tijuana, but unlike the rest of the world's automakers, lacks a full assembly plant.
The boom in Mexican production has rattled the North American auto industry. Today 40% of all auto-sector jobs are in Mexico, up from 27% in 2000. Canada and the Midwest have taken the brunt of the job losses.
Toyota would not confirm the site search in Mexico. "We are always evaluating opportunities in North America in line with market demand, but no decisions have been made," Tania Saldana, a Toyota spokeswoman, told Bloomberg.
Toyota does have a limited presence in Mexico now. It builds pickup truck beds at a plant near Tijuana. In addition, Mazda will produce about 50,000 cars a year for Toyota at its new factory in Guanajuato.
Source : http://www.forbes.com/sites/joannmuller/2014/09/10/toyota-looks-to-join-the-party-in-mexico-with-new-auto-plant/
The automotive supply industry has been one of the most unregulated industries in China, with the industry becoming progressively less regulated over the past 20 years. While there are increasing regulations regarding emissions, safety, warranties and other areas that impact suppliers, ownership and other corporate governance rules have been among the most liberal in the country. For example, a broad auto policy implemented in 1994 made the auto components industry the first in China in which a foreign company could own a majority of a joint venture with a Chinese partner. As wholly foreign-owned enterprises, or so-called "WOFEs," came into vogue in the late 1990s, many international auto supply companies chose to go it alone rather than establish joint ventures.
When I first arrived in Beijing in 1992, the country was only producing 500,000 vehicles (mostly trucks) per year, a far cry from the over 22 million cars, trucks and buses that are produced annually now. Despite the modest size of the industry, however, many companies and individuals saw the potential for the market and believed that, one day, China would be among the world's largest auto markets. After all, the country's rapid economic growth, coupled with its large physical size, mandated that China develop an extensive highway system and a robust auto industry that could produce the vehicles needed to move a growing number of people and goods around such a big country.
The potential for the China market excited companies like Volkswagen, which had established assembly joint ventures in both Shanghai and Changchun by 1992, and was on record as saying that China was the company's single biggest market opportunity. It also excited the Chinese government, which named the auto industry as one of its seven "pillar industries" due to the economic growth, employment, technology and transportation capabilities its development could bring. Both Volkswagen and the Chinese government were frustrated, though, by the slow pace at which traditional suppliers were coming to China. Both knew that China's auto industry could not develop without a solid supply base. In order to encourage international auto suppliers to come to China, the government said that foreign companies could control their joint ventures in the country.
By all measures, that policy worked, as one major supplier after another made China its number-one priority. The ability to control their Chinese operations through majority ownership gave international suppliers the ability to establish world-class greenfield plants, implement modern management systems, improve transparency and protect their intellectual property. As a result, international suppliers began bringing their latest and greatest, not their outdated, technologies to China.
In this context, an offhand remark in recent weeks by the CEO of a relatively small German auto supplier sent CFOs and government affairs officers at international auto suppliers scurrying to determine whether 20 years of ownership policy in China was about to change.
In an interview with StuttgarterZeitung, a German newspaper, Stefan Wolf, the chief executive of ElringKlinger (ZILGn.DE), was quoted as saying that: "The Chinese state has told several (German car) suppliers that they are no longer allowed to operate their Chinese subsidiaries on their own but only as part of a joint venture in the future." Although his company was not among the three companies that had been given this notice, Mr. Wolf considered this an "attack" on intellectual property by the Chinese government, where 50 percent of a company was effectively being taken away and "expropriated."
China is a big country, and often a simple comment made by a low-level government official can be blown out of proportion and extrapolated to indicate a new direction in national policy. On the face of it, Mr. Wolf's comment made no sense, because it ran counter to 20 years of industrial auto policy in the country. Checks with our industry sources indicated that this was the case, and in fact, the European trade body in China released a statement last week, dismissing the rumor, saying that Beijing is not planning to force foreign auto parts suppliers operating in the country to form local joint ventures. The European Union Chamber of Commerce in China explained that the JV rumors could be the result of a misunderstanding stemming from existing restrictions dating from 2011 for suppliers in the e-vehicle segment.
This rumor could also have emanated from the Chinese government's tough anti-monopoly campaign and its battle against the "over-charging" for parts by foreign auto components makers. In particular, Xinhua News Agency reported in mid-August that Mercedes-Benz has been found guilty of vertical price fixing by the anti-monopoly investigation launched by the Jiangsu Price Bureau. "Mercedes-Benz's case is a typical vertical price fixing. It manipulated the prices of spare parts and maintenance on the downstream after-sales market," the report said, quoting Zhou Gao, an official from the bureau. All spare parts of a C-class Mercedes-Benz model were charged at a price equaling 12 whole units, it said.
Similarly, China's National Development and Reform Commission (NDRC) announced last month that 12 Japanese auto parts and bearing suppliers will be fined nearly 1.24 billion yuan ($201 million) for monopolistic conduct related to pricing. The fine is the largest ever handed out by Chinese antitrust regulators.
China's markets and regulatory environment are in a constant state of development and can be expected to change going forward. Companies doing business in the country must be sensitive to these changes and react accordingly. With the stakes as large as they are now in China, it is easy to understand how an offhand remark can cause a short-term panic, as Mr. Wolf's did. In all things China, however, it is important to bear in mind that common sense rules, and that companies must keep their perspective and rely on the facts at hand when analyzing China's changing landscape.
Source : http://www.forbes.com/sites/jackperkowski/2014/09/09/the-ownership-scare-in-chinas-auto-supply-industry/
The self-driving car seems like a terrible driver's dream: no steering wheel to control, no trouble parallel parking, no concerns about having a couple of beers on the way home from work. But the removal of fallible human drivers might create havoc for auto insurers.
Human error accounts for 90 percent of road accidents, according to the International Organization for Road Accident Prevention, and our collective failure rate helps the auto insurance industry rake in a cool $157 billion in premiums each year. So if self-driving cars eliminate all those driver mistakes, the business of insuring vehicles will necessarily change as well.
A recent study by RAND Corp. (PDF) predicted increased liability for auto manufacturers while personal liability plummets. "If a vehicle and a human share driving responsibility, the insurance issues could become more complicated," the study noted. The RAND authors had a sober message for insurers: If automated vehicles succeed in reducing the risk of crashes, the industry could see a "significant reduction in insurance premiums." The average cost of auto insurance in the U.S. is $1,020, according to AAA, giving the industry a lot to lose.
In writing driverless insurance policies, underwriters will likely focus on the make and model of a car instead of a driver's accident history or how often he drives. There may also be the introduction of "black boxes," data recorders akin to those found in airplanes that can track car data and decipher what really happened seconds before a crash.
Another possibility: an uptick in no-fault insurance, where an insurer covers the damage regardless of who's to blame. This type of insurance has fallen out of favor in recent years as the cost of medical claims has increased, despite the expectation of lower litigation costs.
While it's too early to tell which way auto insurance will go, there's another cost for car owners that may go up. With fewer accidents keeping the nation well supplied with mechanics, repairing that fender bender may cost you more.
Source : http://www.businessweek.com/articles/2014-09-10/why-self-driving-cars-could-doom-the-auto-insurance-industry
Bill Ford, chairman of the namesake car company, said the increase in seven-year auto loans is worrisome.
In a CNBC interview today, he said, "I think we have to be careful because we don't want to get into a situation like we did before, where consumers are over-extended. That doesn't do anybody any good."
His warning comes at a time when Experian Automotive data show that 24.9% of all new-car loans were for 73 to 84 months the first quarter, up from just 10% four-year ago. The average length of a new car loan now is a record 66 months, Experian reports.
Longer loans can keep monthly payments lower. The auto industry's oft-repeated sales mantra is, "Everybody's a payment buyer," paying less attention to the overall cost of the loan and focusing on whether the payments fit their budgets.
Long loans can erode future new-car sales because it takes longer for the vehicle to be worth more than the remaining loan balance. If the owner wants to trade-in the vehicle when the balance is higher than the value of the car, the owner is "underwater" and has to add the difference onto the loan for the new car.
Or simply wait longer to buy a new car, which wrecks auto sales.
Longer loans only are possible because the tight lending standards adopted during the recession are easing now, so more buyers with lower credit scores qualify for bigger and longer loans.
"We've been relatively conservative at Ford about those types of things," Bill Ford told CNBC.
Sales of new cars and trucks this year through August are up 5.1%, according to Autodata. The annualized selling pace in August was a staggeringly high 17.53 million, up from 15.94 million a year earlier.
Source : http://www.usatoday.com/story/money/cars/2014/09/08/bill-ford-7-year-auto-loans-warning/15272301/
