Bankrupt American battery maker, A123 Systems, has been auctioned off to Chinese auto parts maker Wanxiang Group, for $256 million. The sale includes A123’s automotive and commercial operations including three factories in the United States. (more…)
Posts Tagged ‘American automobile industry’
Bankrupt Battery Maker A123 Systems Sold
Wednesday, December 12th, 2012Restrictions On Buy Here Pay Here Dealerships
Tuesday, October 2nd, 2012Buy Here, Pay Here is a phrase for used car dealerships in which the company is both the seller and the loan holder . For years, they have operated under the radar, typically selling vehicles to consumers with bad credit at inflated interest rates, making repossessions common. Last fall, the Los Angeles Times ran a three part series on Buy Here, Pay Here dealerships which drew the attention of businesses and government officials.
In a step to protect consumers from these predatory vehicle loans, Gov. Jerry Brown signed into law two bills regulating the practices of Buy Here Pay Here lots. The first bill will require these dealerships to provide warranties on every car they sell in California. The second will require dealers to post fair market values for their vehicles and give customers greater flexibility in making payments. A third bill which would have limited interest rates to 17% plus the federal funds rate, and provide buyers with a fifteen (15) day grace period before repossessing cars for a missed payment was vetoed by Brown. Brown wrote in his veto message that he was not convinced the evidence merits dealers to be regulated by the Department of Corporations under the California Finance Lender’s Law. He added that if consumers still need more protection once those bills are implemented, he and his administration would work with the Legislature to find an appropriate solution.
New Generation Automobile Buyers
Monday, October 1st, 2012A trend in the automobile industry shows that the younger generation is not as interested in driving as the generation before. Not only are they buying fewer vehicles, but many don’t even have drivers license. Some reasons for this change include:
- The younger generation are more connected through internet and iPhones making them less reliant on owning transportation.
- Many live in urban areas where everything is at a walking distance, there is good public transportation or they have access to car sharing programs.
- Young people are facing soaring tuition costs, and the money they’re earning in their part-time, summer and first jobs is going toward paying for school and rent. Even if they could afford to buy a car, insurance is expensive and gas prices keep rising.
- They have grown up in an era where they have had much more exposure to environmental concerns.
Automakers have known for a while that they were going to have a problem selling vehicles to this generation but are unwilling to believe that they will not want actual cars. As a result, automakers spend more time talking about how well their cars interact with an iPhone than they do about engine performance, ride, and horsepower. Technology such as voice recognition are important to many of the younger drivers because it allows them to safely drive while still staying connected.
They are trying to attract the younger urban buyer by developing a fashionable small car that is easy to park and uses less fuel. Car makers have begun shrinking the size of engines, subtracting cylinders while adding turbochargers to maintain horsepower and acceleration. Smaller engines have become a selling point even in the United States, which would have been unthinkable a few years ago. The idea of electric vehicles has also become more widely accepted.
As these technologies become more common they will also become more affordable, hopefully attracting more buyers. While today’s young buyer seems more open toward the trend of smaller autos with more features, car makers have not abandoned the hope that as this generation gets older and becomes parents they will graduate towards roomier vehicles.
A123 Systems Sale Raises Security Concerns
Friday, August 10th, 2012The potential sale of U.S. automotive battery maker A123 Systems to China’s largest auto components company, Wanxiang Group Corp., is raising security concerns among U.S. lawmakers. The $450 million deal would see Wanxiang taking control of 80% of A123 Systems which supplies lithium-ion batteries to luxury car makers like Fisker Automotive. A123 received funds from the Energy Department in 2009 which was used for battery research advancements and job creation programs for batteries used in hybrid and electric vehicles.
Opposition to the sale reports growing concern about foreign controlled or owned companies gaining a niche in the United States supply chain. According to U.S. Rep. Cliff Stearns, “We need to make sure the Federal government isn’t giving away our own national secrets by providing Chinese automobile manufacturing companies with million dollar government grants and loans.” Under the terms of the grant, the company agreed to use funding to support U.S. manufacturing facilities. Changes to the agreement of the grant would first have to be approved by the Department of Energy (DOE) who does not approve grant money being used for anything other than investment in the manufacturing and job creation here in the United States.
Chevrolet Offers New Car Refund
Thursday, July 12th, 2012General Motors (GM) new marketing plan aimed at clearing out remaining inventory of Chevrolet vehicles, will allow customers to return their vehicle for a refund if they are not satisfied with their purchase. Chevrolet’s “Love It or Return It” offer will allow customers of any new 2012 and 2013 model year vehicles, to a full refund as long as there is fewer than 4,000 miles and the customer has driven the vehicle for at least 30 days.
Buyers who choose to return their vehicle will get all their money back, including sales tax. Unfortunately, expenses such as any additional taxes, licensing, registration and extras such as extended warranties will still have to be paid by the customer. GM hopes the plan will encourage customers to give Chevrolet vehicles a try, winning back some of the market share lost to import oriented markets. The promotion will be offered until Sept. 4, 2012.
GM Cuts Its Advertising Spending
Thursday, May 24th, 2012Last week GM announced that they will no longer be paying to advertise on Facebook, except for the pages that cost nothing to create. GM said that with the continuing rise of advertising costs, they question the effectiveness of certain media and are restructuring where the money is spent in order be more effective. Price concerns are not only confined to GM, with many large companies saying it is hard to know where is the best place to put their advertising money. The announcement came days before the highly anticipated Facebook stocks were to be publicly offered. The uncertainty in Facebook advertising has dampened enthusiasm for the stock as the shares for the social networking company tumble.
This week GM continues to cut its spending as they announce that they will not advertise in the next Super Bowl. According to GM’s global marketing chief, the Super Bowl advertising is effective but has become too expensive to justify the cost. Part of the GM advertising overhaul will include an emphasis on markets outside of the U.S., where GM hopes to expand into up-and-coming markets. Last year, GM spent almost $5 billion on ads.
Federal Bill Increases Recall Fines
Monday, December 19th, 2011Automobile manufacturers, dealers, rental companies and the U.S. Chamber of Commerce, have lost their fight against a federal bill that will significantly increase automaker fines for companies who delay automobile recalls. Currently, the maximum fine is just over $17 million, but once the bill goes into effect, the fines will increase to $250 million. According to groups opposing the bill, “The increases are completely out of proportion to the current penalty structure for manufacturers under the Consumer Product Safety Act.” The bill was introduced in response to unintended acceleration recalls by Toyota in 2009-2010. Even though Toyota vehicles were cleared of electronic flaws causing unintended acceleration, the company ended up paying maximum fines for recall delays.
Other provisions of the bill include an increase in the maximum fine for odometer fraud; new regulations for vehicle pedal placement and push-button ignition; an improved recall database and website; and an anonymous complaint hot line for auto workers, dealers and mechanics to report vehicle safety problems.
Auto Sales Strong In November
Thursday, December 8th, 2011
The end of 2011 looks promising for the auto industry as vehicle sales climb almost 14% in November. Analysts predict that lower gas prices and a wider availability of Japanese automobiles, could lead the industry reaching its highest December sales in two years. The Big Three automobile manufacturers showed the biggest increases with Chrysler sales up almost 50%, Ford up 13%, and General Motors up 7%.
According to Edmunds.com, “Many consumers who held off buying a new vehicle because of the uncertain economy, or because of inventory shortages that caused prices to jump, are now making a purchase. The result is a “mini-bubble” that will most likely end in early 2012.
Auto Sales Up In September
Monday, October 3rd, 2011According to reports from General Motors, Ford, and Chrysler, automobile sales rose significantly in September. Chrysler reported the biggest gain at 27%, Nissan with a 25% increase and GM at 20%. Even though Japanese auto makers were running their factories at full capacity for the first time since the March earthquake and tsunami, Toyota and Honda continue to trail the industry with a drop in US sales. The biggest rise came from the sales of full size pickups, sport utility, and crossover vehicles, a trend that seems to coincide with dropping gas prices. Despite the poor sales at the beginning of the year, some auto makers are expecting full year sales to top13 million before the end of the year, a level that has not been seen since 2008.
August Car Sales Up In August
Friday, September 2nd, 2011The slowing economy has left consumers wary about making big item purchases, but according to a recent auto data report, automobile sales in August rose almost 8% from a year ago and 1.2% from last month. All of the large automakers have showed sales gains for the year to date, except for Honda and Toyota, whose dealers have struggled to keep inventory since the earthquake and tsunami in Japan early this year. Shortages of small, fuel-efficient cars, like the Chevrolet Cruze and Ford Focus, have also lead to increased prices on both new and used hybrid, electric and compact cars.
G.M. said it remains confident that industry sales will top 13 million vehicles this year, back to 2008 levels, when 13.2 million were sold in the United States. They intend to step up production by adding overtime shifts to plants that build the Chevy Cruze, in an attempt to fill the compact car void plaguing the auto industry. Ford said it hopes to increase its overall production by 9% in the fourth quarter from what is was in 2010.
But analysts feel the automakers are “playing chicken” with the economy. Stockpiling extra inventory while consumer confidence declines could lead to too much inventory and price reductions that could end up hurting the industry in the long run.
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