Posts for 'Consumer Reports' Category

Analysts predict declines across industry in staggered economy

Detroit's automakers and, indeed, the entire auto industry, are expected to report a historic drop-off in monthly auto sales Tuesday a plunge that helps explain why the automakers are dramatically, and decisively, cutting production at factories during the months ahead.

In fact, when sales for the first half of the year are reported next week, they are expected to show the worst half-year performance since at least 1995, as the nation struggles through a confluence of gloomy factors that have consumers on edge.

June auto sales are expected to be off the most at Chrysler LLC, with a plummet of 27%, according to an average of forecasts from major brokerages and Edmunds.com, the automotive consumer Web site.

At General Motors Corp. and Ford Motor Co., meanwhile, analysts are expecting declines of about 20%.

John Mihalopoulos, owner of Rodeo Ford, a large dealer in Dallas, said the economic environment "has halted business."

"We went from selling 80 to 100 pickups a month down to 10," he said.

Brian Johnson, an auto analyst for Lehman Brothers, wrote in a note to investors Friday, that the environment "continues to take a much heavier toll on the Big Three, which are being hit disproportionately by the consumer's dramatic shift away from traditional trucks toward more fuel-efficient vehicles."

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The auto industry is rushing to adapt to the world of $4-per-gallon gasoline, but the effort is a costly one that could tax America's homegrown carmakers most of all.

From Honda to Ford, all the automakers are ramping up production and design of high-mileage small cars and gas-electric hybrids. But consumers shouldn't hold their breath for hot deals on 50-mile-per-gallon vehicles.

The challenge: Product line make-overs can't be accomplished overnight, and a deep slump in current sales is burning through the cash available for investment.

In the past few days, Ford Motor Co. has announced production cutbacks for its light trucks, General Motors has unveiled big incentives to unload showroom inventory, and even Toyota has warned that it may have to scale back its sales target for the year.

In this climate of an overall sales decline, the US brand names are the hardest hit: For the first year ever, they may account for less than half the nation's car sales.

"That is certainly possible," says Tom Libby, an analyst at J.D. Power in Detroit. "In May we saw a dramatic shift in the marketplace."

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As $4 gas has pushed American drivers into fuel-efficient cars, the news has been full of reports chronicling the Detroit Three's small car development and GM's upcoming plug-in hybrid, the Volt. But what about the current leader in hybrid technology, Toyota? Recently sales of the Prius passed the one million mark, and word leaked that the company was increasing battery production and would possibly build its popular hybrid in California. Now the automaker has officially announced far more detailed plans for its future, including info about the next Prius, other gas-electric models, and a new plug-in hybrid car due in 2010.

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At a time when auto sales are struggling, Hyundai is introducing its Genesis luxury car. The timing is bad, but the car is surprisingly good

Hyundai Motor (HYMLF), a little Korean startup company just over 40 years ago, grew into a global brand by selling inexpensive vehicles. Now the company is entering the highly competitive luxury-import market to go toe-to-toe with such automakers as BMW (BMWG), Lexus, and Mercedes-Benz (DAI). Hyundai is offering startling prices, too.

There could not be a worse time to introduce a new brand of luxury car. Oil costs more than $130 a barrel, the economy is in a shambles, unemployment is rising, salaries are stagnating, the housing market is a disaster, and most industries are suffering. As the "R" word circulates broadly, the new car business is sluggish. "Stinks" is the description I've heard from some dealers.

Despite the obstacles, Hyundai will start selling a new luxury car in just a few weeks! A new luxury car?

Do words like "nuts," "gutsy," and "crazy" come to mind? Obviously not to the Koreans. "It's just challenging," Dong Jin Kim, Hyundai's vice-chairman, said at a recent meeting in Seoul. "We have invested a significant amount in time, resources, and money to assure the Genesis is a successful marketing launch."

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Corrects 15th paragraph to show that Mexico plant slated for closure is in Toluca, not Silao.

WILMINGTON, Delaware (Reuters) - General Motors Corp on Tuesday said it was closing four truck plants and could sell its Hummer brand to cut slow-selling trucks and SUVs from its lineup in response to higher gasoline prices the automaker now sees as a permanent threat to its business.

Chief Executive Rick Wagoner, speaking after a revised restructuring plan was approved by the automaker's board, said GM would close the four North American truck plants and add shifts at two U.S. plants making more popular car models.

In addition, Wagoner said GM was reviewing the Hummer brand and could sell the military-derived SUV line, which has become synonymous with gas-guzzling excess.

"U.S. economic and market conditions have become significantly more difficult," Wagoner said, adding higher gasoline prices have caused consumers to swap out of higher-margin trucks and SUVs faster than GM had expected.

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Nissan Motor Co., Japan's third- largest carmaker, led a drop in domestic auto sales in May, as higher taxes and fuel costs cut demand for new vehicles.

Sales of cars, trucks and buses fell 6.1 percent to 221,377 from a year earlier, the Japan Automobile Dealers Association said in a statement today. The total excludes minicars.

Japan's consumer spending has slumped because of inflation driven by higher food costs and a record price for gasoline. Car sales also dropped on one less selling day and after the tax rate on automobiles rose to 5 percent in May from 3 percent in April.

``With gasoline prices so high, consumer sentiment is taking a big hit,'' said Takashi Aoki, who helps manage about 130 billion yen ($1.2 billion) at Mizuho Asset Management Co. in Tokyo. ``People aren't spending money at shopping malls and they certainly aren't driving there either.''

Gasoline in Japan surged to a record 160.3 yen a liter ($5.76 a gallon) last week. The tax rate fell for one month in April after the government failed to agree on a revenue bill.

The high gasoline prices also deterred transport companies from buying new trucks. Truck sales in May fell 16 percent to 29,659 units.

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A NEW four seater eco car built from lightweight materials should be on the market by 2010.

The Axon uses a tiny 500cc engine to give a fantastic 100 miles per gallon plus a top speed of 90 miles an hour.

The British-design will be built in Northamptonshire and was unveiled at the Sexy Green Car Show in Cornwall.

It’s made from recycled carbon fibre – the same lightweight stuff used to make the bodies of Formula 1 cars.

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According to Automotive News Europe's John Revill, General Motors' Opel brand will unveil a new version of its logo when it launches the Insignia upper-medium car later this year.

The new version of the lightning bolt badge, which has appeared on Opel cars since 1963, will be displayed in July at the London auto show.

Earlier this month, GM executives revealed how they wanted to reposition Opel and move the brand upmarket by emphasizing design and engineering superiority based on traditional German manufacturing attributes.

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Ford's Microsoft-powered Sync system has been a huge hit with car buyers and the he one bit of sunshine in the Blue Oval’s gloomy outlook. But with the automaker's exclusive deal  with Microsoft winding down, the software giant has signed a deal with Hyundai and Kia to provide its vehicles with the hands-free navigation, communication and entertainment system.

The Microsoft-Ford marriage ends in November, which is about the same time the Korean automaker will offer Microsoft Auto in its vehicles worldwide. The crew in Redmond says upcoming versions of Sync will add navigation and emergency response to exclusive features Ford now offers, such as text messaging and wireless streaming of Internet radio from Web-enabled phones.

Martin Thall, general manager of Microsoft's automotive business unit, told the Detroit Free Press the latest version of Microsoft Auto, the operating system Sync is build upon, soon will be available for "general release to the automotive community.”

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Dan Kuske had little time reveling in TGIF kind of mentality at the end of last week.

While others counted down the hours to a weekend of finally sunny weather, Kuske, vice president of Carr Auto Group, oversaw the move of 220 autos from Carr’s downtown Vancouver lot to its new home close to the Vancouver auto mall. Adding to the challenge was the fact that the sales unit never closed.

“It was insanity at Mach 9,” Kuske said. “It’s crazy to move a dealership.”

Kuske said Carr employees drove the company’s line of Cadillac, GMC, Pontiac and Buick autos the 5½ miles to the new $8 million dealership at 6600 N.E. Fourth Plain Blvd., hopped onto a borrowed school bus and returned to the downtown location. Five trips later, the cars and trucks were all at the new site.

The 30,000 square feet of showroom space is divided between two buildings one for the Cadillac line, the other for the GMC, Pontiac and Buick. Almost as important as the new building is the proximity to the competition. Kuske said existing as a destination business in downtown was difficult.

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