From Automotive News:
Ford burns through $5.5 billion in 4th quarter as losses mount
By Amy Wilson
DETROIT -- Ford Motor Co., the only U.S. automaker operating without federal loans, burned through $5.5 billion in cash during the final three months of 2008 as losses mounted.
Ford finished the year with cash reserves of $13.4 billion as it tries to avoid borrowing money from the U.S. government. Ford said it is immediately drawing down $10.1 billion in available credit lines because of concerns about the instability of the capital markets and the uncertain economy.
The company reported a net loss of $5.9 billion for the fourth quarter, compared with a loss of $2.8 billion a year earlier, capping its third straight year without a profit. The pre-tax operating loss, excluding special items, was $3.7 billion, compared with a loss of $620 million during the same period in 2007.
Some analysts say Ford needs at least $10 billion on hand to run its operations. At the current cash burn rate of $1.83 billion a month, Ford would have crossed that threshold by the end of February.
Drawing down the $10.1 billion would give Ford overall liquidity of $23.5 billion, minus the amount of cash been used thus far in January. Based on its current assumptions, Ford continues to say it has adequate liquidity to fund its business plan.
Ford executives have said they may ask for government help if industry sales don't start to recover this year.
U.S. rivals General Motors has received $9.4 billion in loans so far, part of a $13.4 billion packaged granted by President George W. Bush. Chrysler LLC has received $4 billion and says it needs at least $3 billion more.
Thursday, January 29, 2009
Tuesday, January 27, 2009
From The Washington Post:
Obama Issues Orders Toward More Fuel-Efficient Cars
By Steven Mufson and Juliet Eilperin
Washington Post Staff Writers
Tuesday, January 27, 2009; Page A04
President Obama issued two orders yesterday that could ultimately toughen fuel efficiency requirements for new cars and light trucks in what could prove stiff medicine for a U.S. auto industry already hobbled by financial troubles.
With General Motors and Chrysler leaning heavily on billions of dollars of federal loans, Obama is in a strong position to remake the industry with an eye toward cutting U.S. petroleum consumption and greenhouse gas emissions.
"Our goal is not to further burden an already struggling industry," Obama said, but to help American automakers "prepare for the future" and "thrive by building the cars of tomorrow."
The president raised hopes on all sides for a resolution of years of divisive debate over fuel efficiency requirements. Environmentalists and many state officials said they hope that Obama would endorse tough tailpipe emissions standards proposed by California. Automakers, meanwhile, want the administration to establish uniform nationwide mileage standards while moving to ease the cost by providing assistance and incentives for car buyers.
"If you're a stakeholder, you hope the stake goes in ground and not in your back or chest," said David McCurdy, president of the Alliance of Automobile Manufacturers, who watched Obama sign the orders yesterday at the White House.
Flanked by Transportation Secretary Ray LaHood and Environmental Protection Agency Administrator Lisa P. Jackson, Obama directed the EPA to reconsider granting California and other states waivers to set their own strict regulations over tailpipe emissions. California would require a 30 percent cut in those emissions, a mandate more stringent than the federal mileage standards. The new review process could take several months.
Obama also instructed the Transportation Department to draw up new interim targets for mileage standards starting in 2012 that ensure new vehicles reach the 35 mile-a-gallon level set by Congress for 2020. He left intact Bush administration guidelines for 2011 models already being designed.
"The days of Washington dragging its heels are over," Obama said. Saying the nation has arrived at a crossroads, he said: "It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs."
Separately, the State Department named Todd Stern the new U.S. envoy on climate change. Stern, a partner in the Washington law firm of Wilmer Cutler Pickering Hale and Dorr and a senior fellow at the Center for American Progress think tank, served as the top White House negotiator on the Kyoto talks on global warming from 1999 to 2001.
Obama's announcement on fuel efficiency standards encouraged state officials who want to institute their own greenhouse gas curbs but faced opposition from the Bush administration. Ian Bowles, Massachusetts secretary of energy and environmental affairs, said his state had encountered "a strong headwind from the federal government" over the past two years. But "to my mind, today's announcement represents a shift in direction that will lead to a significant federal tailwind."
Maryland Gov. Martin O'Malley (D) also applauded Obama's announcement. In 2007, the Maryland General Assembly passed a so-called clean cars law that would set stricter emissions standards for vehicle models hitting the road in 2010. The law would eventually raise average fuel efficiency of cars told in Maryland to 43 miles per gallon.
"In the long run, it's best for American automakers as well," O'Malley said.
Automakers in the past have not seen it that way and have filed at least three lawsuits in different jurisdictions to stop states from setting their own emission standards. "The suits are still there," said Gloria Bergquist, a spokesman for the Alliance of Automobile Manufacturers. But, she added, "We're the first to say we would like to find a better way forward."
Environmental groups argue that controlling tailpipe emissions from vehicles will do much to address climate change. According to the advocacy group Environment America, applying the California standards to the 14 states that have already adopted them will reduce global warming pollution by more than 450 million metric tons by 2020, an amount equal to eliminating all of the pollution from 84.7 million of today's cars for a year.
Staff writer Lisa Rein contributed to this report.
Obama Issues Orders Toward More Fuel-Efficient Cars
By Steven Mufson and Juliet Eilperin
Washington Post Staff Writers
Tuesday, January 27, 2009; Page A04
President Obama issued two orders yesterday that could ultimately toughen fuel efficiency requirements for new cars and light trucks in what could prove stiff medicine for a U.S. auto industry already hobbled by financial troubles.
With General Motors and Chrysler leaning heavily on billions of dollars of federal loans, Obama is in a strong position to remake the industry with an eye toward cutting U.S. petroleum consumption and greenhouse gas emissions.
"Our goal is not to further burden an already struggling industry," Obama said, but to help American automakers "prepare for the future" and "thrive by building the cars of tomorrow."
The president raised hopes on all sides for a resolution of years of divisive debate over fuel efficiency requirements. Environmentalists and many state officials said they hope that Obama would endorse tough tailpipe emissions standards proposed by California. Automakers, meanwhile, want the administration to establish uniform nationwide mileage standards while moving to ease the cost by providing assistance and incentives for car buyers.
"If you're a stakeholder, you hope the stake goes in ground and not in your back or chest," said David McCurdy, president of the Alliance of Automobile Manufacturers, who watched Obama sign the orders yesterday at the White House.
Flanked by Transportation Secretary Ray LaHood and Environmental Protection Agency Administrator Lisa P. Jackson, Obama directed the EPA to reconsider granting California and other states waivers to set their own strict regulations over tailpipe emissions. California would require a 30 percent cut in those emissions, a mandate more stringent than the federal mileage standards. The new review process could take several months.
Obama also instructed the Transportation Department to draw up new interim targets for mileage standards starting in 2012 that ensure new vehicles reach the 35 mile-a-gallon level set by Congress for 2020. He left intact Bush administration guidelines for 2011 models already being designed.
"The days of Washington dragging its heels are over," Obama said. Saying the nation has arrived at a crossroads, he said: "It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs."
Separately, the State Department named Todd Stern the new U.S. envoy on climate change. Stern, a partner in the Washington law firm of Wilmer Cutler Pickering Hale and Dorr and a senior fellow at the Center for American Progress think tank, served as the top White House negotiator on the Kyoto talks on global warming from 1999 to 2001.
Obama's announcement on fuel efficiency standards encouraged state officials who want to institute their own greenhouse gas curbs but faced opposition from the Bush administration. Ian Bowles, Massachusetts secretary of energy and environmental affairs, said his state had encountered "a strong headwind from the federal government" over the past two years. But "to my mind, today's announcement represents a shift in direction that will lead to a significant federal tailwind."
Maryland Gov. Martin O'Malley (D) also applauded Obama's announcement. In 2007, the Maryland General Assembly passed a so-called clean cars law that would set stricter emissions standards for vehicle models hitting the road in 2010. The law would eventually raise average fuel efficiency of cars told in Maryland to 43 miles per gallon.
"In the long run, it's best for American automakers as well," O'Malley said.
Automakers in the past have not seen it that way and have filed at least three lawsuits in different jurisdictions to stop states from setting their own emission standards. "The suits are still there," said Gloria Bergquist, a spokesman for the Alliance of Automobile Manufacturers. But, she added, "We're the first to say we would like to find a better way forward."
Environmental groups argue that controlling tailpipe emissions from vehicles will do much to address climate change. According to the advocacy group Environment America, applying the California standards to the 14 states that have already adopted them will reduce global warming pollution by more than 450 million metric tons by 2020, an amount equal to eliminating all of the pollution from 84.7 million of today's cars for a year.
Staff writer Lisa Rein contributed to this report.
What Crisis? Collector Car Prices Soften but Don’t Crash
Scottsdale, Ariz.
FANS of classic cars often like to think of them as time machines. But the notion has recently taken on an unintended meaning, as prices in some sectors of the collectible-car market have turned the clock back to levels not seen since 2004-5.
All things considered, however, the market showed resilience in the string of auctions in and around Scottsdale, Ariz., this month. The long-predicted free fall in prices did not occur.
And there were some genuine surprises among the individual sales as more than $100 million worth of cars changed hands.
Perhaps the most unexpected results came at the Gooding & Company auction, which flew in the face of expectations and surrounding circumstances by a considerable measure. With $32.4 million in sales, compared with $21 million at last year’s sale, it seemed more like the summer of 2008 than the winter of 2009.
Gooding had the top-dollar sale of the final weekend with a 1960 Ferrari 250 GT California Spider, a late consignment that brought $4.95 million. And while seven-figure lots had become commonplace across Arizona over the last several years, this year there were just seven such sales and all were confined to Gooding, the last of the major auctions to get under way.
With the no-sales of some big-ticket cars at the RM Auctions sale and the still unfurling economic crisis on the minds of attendees, the mood at the beginning of the Gooding auction was tense — think back to the first “Saturday Night Live” broadcast after 9/11.
The $1.4 million sale of a 1929 Duesenberg Model J Dual Cowl Phaeton, just nine lots in, had the same ice-breaking effect as when Lorne Michaels, the show’s producer, asked Mayor Rudolph W. Giuliani if it was all right to be funny.
Mayor Giuliani’s impeccably timed response: “Why start now?”
David Gooding, chief executive of Gooding & Company, said there was still a strong market for good quality cars that were priced fairly and truly for sale. He did allow, however, that prices were down somewhat in the $250,000-$850,000 midrange of postwar European cars, although he sensed no similar weakness in prewar American cars in that range.
At the moment, vintage cars seem to be showing more strength in the market than other collectibles. Leigh Keno, a host of “Antiques Roadshow” on PBS, said that in general, presale estimates for American decorative arts sold at auction this season have been as much as 50 percent lower than they would have been two years ago. Mr. Keno said, “There is a sense that the market will reward more conservative estimates.”
At RM, the star car, a 1963 Chevrolet Corvette Grand Sport — one of just five examples of a Corvette racecar whose incredible potential was cut short by General Motors’ decision to stop supporting racing — didn’t sell during the auction. Nevertheless, RM sold a very respectable 83 percent of its lots for a total of approximately $18 million.
According to Ian Kelleher, RM’s chief operating officer, the sale attracted a record number of bidder registrations for the event, and a number of cars that could be considered “sensitive” in the marketplace sold quite well. An example of the latter was a 1967 Ferrari 275 GTB/4 Berlinetta that brought $918,500. While this was a bit less than some sales before October 2008, the price was a healthy increase over the $816,750 that RM got for a similar car at a May 2007 auction in Italy.
Given the economic circumstances, there was great interest in cars priced under $100,000 that would also serve as summer weekend drivers. Cars that are easy to find parts for, and eligible for events like vintage rallies and tours, did well.
RM, for example, sold a 1967 Alfa Romeo Duetto Spider — similar to the car driven by Dustin Hoffman in “The Graduate” — for $46,200. Gooding sold a 1954 Nash Metropolitan hardtop for $19,800, Barrett-Jackson garnered an astonishing $59,400 for a 1979 Pontiac Firebird Trans Am and Russo & Steele managed $49,000 for a 1961 Triumph TR3A. All were at the least strong results, and perhaps records.
Robert Pass of St. Louis was the consigner of the 1961 Triumph. Mr. Pass has been collecting cars since the late 1950s and said he was not aware of a TR3 ever approaching $50,000 at either a public auction or in a private sale. Mr. Pass credited Russo & Steele’s arena-style format, and the enthusiasm of Drew Alcazar, the company’s owner, for pushing the car over the top.
According to Craig Jackson, chief executive of the Barrett-Jackson auction house, his company anticipated the demand for more accessible cars and purposely adjusted its offerings to favor cars in the $50,000 to $100,000 range. This was reflected in the overall sale figure of $63 million, down some $20 million from last year, but a bit higher than the company’s 2005 results of $61 million.
Mr. Jackson said that his company worked hard with consigners to ensure that there was a “meeting of the minds” where sale expectations were concerned. Nevertheless, there were notable high sales, including the second 1957 Chevrolet produced, a two-door from the entry-level 150 series with just 46,133 miles, that brought $165,000. Barrett-Jackson also continues to be the sale known for drawing new people into the hobby, with 70 percent of registered bidders being first-timers.
One of the notable aspects of the Barrett-Jackson sale was the sale of 214 cars from the General Motors Heritage Collection. Most were prototypes or concept cars and included the striking 1996 Buick Blackhawk. Built to celebrate Buick’s 100th anniversary in 2003, it recalled the granddaddy of all design studies, the striking 1938 Buick Y-Job; the Blackhawk sold for $522,500.
Nearly all the cars in the G.M. offering were sold on either a bill of sale or a scrap title, according to Barrett-Jackson. The former, Mr. Jackson said, can never be legally registered for road use. Fortunately, the Blackhawk was sold on a scrap title so it can be registered and driven on public roads. It would be a shame for it to spend its life behind a velvet rope.
Aside from the Buick Blackhawk sold by Barrett-Jackson, few concept cars were offered in Arizona. An exception was the 1954 Dodge Firearrow III sold by RM for $880,000. While some 1950s dream cars look as if they took too much styling inspiration from the Air Force’s latest interceptor, the Firearrow was exquisite in every way.
Perhaps the best buy of the G.M. collection was a 1989 Corvette ZR2, a one-of-a-kind prototype with a big-block V-8 that sold for $71,500. Tom DuPont, a Florida collector, discounted those who tried to tie the timing of the G.M. sale with the company’s dire financial condition. Mr. DuPont said he thought G.M. was simply managing its collection as many private collectors manage theirs, eliminating some cars to make for a more orderly display of the remainder.
There is certainly some common ground between the perceptions of Mr. Gooding and Mr. Jackson in the collector car market, and Mr. Keno in the antiques world. Mr. Keno said he believed that the midrange of the American decorative arts market was the softest now, as is the case with the collector car market. “However,” he said, “the great things will always do well.”
Wednesday, January 21, 2009
From Automotive News:
GM's sales fall, ending reign as world's largest automaker
General Motors said worldwide sales fell 10.8 percent in 2008, ending its 77-year claim as the world's largest automaker.
GM sold 8.36 million vehicles last year, putting it about 616,000 units behind the 8.97 million reported by Toyota Motor Corp. Tuesday.
The 2008 results cap an advance by Toyota that has seen the Japanese automaker overcome a 3 million deficit since the start of the decade, fueled in large part by gains in the United States. In 2008, both automakers posted sales declines.
At the time of the announcement, just before 9 a.m. Wednesday, GM defined itself on its Web site as "the annual global industry sales leader for 77 years.''
GM President Fritz Henderson had said the previous evening that retaining the title wasn't "terribly important," to him. He told the Automotive News World Congress last night that it's more critical that GM, which hasn't posted a profit since 2004, is strong financially.
GM's sales fall, ending reign as world's largest automaker
General Motors said worldwide sales fell 10.8 percent in 2008, ending its 77-year claim as the world's largest automaker.
GM sold 8.36 million vehicles last year, putting it about 616,000 units behind the 8.97 million reported by Toyota Motor Corp. Tuesday.
The 2008 results cap an advance by Toyota that has seen the Japanese automaker overcome a 3 million deficit since the start of the decade, fueled in large part by gains in the United States. In 2008, both automakers posted sales declines.
At the time of the announcement, just before 9 a.m. Wednesday, GM defined itself on its Web site as "the annual global industry sales leader for 77 years.''
GM President Fritz Henderson had said the previous evening that retaining the title wasn't "terribly important," to him. He told the Automotive News World Congress last night that it's more critical that GM, which hasn't posted a profit since 2004, is strong financially.
Tuesday, January 20, 2009
From Automotive News:
Fiat confirms plan to acquire 35% stake in Chrysler
TURIN, Italy -- Fiat S.p.A. and Chrysler LLC confirmed today that the Italian company intends to acquire an initial 35 percent stake in the U.S. carmaker.
In a joint statement, Fiat, Chrysler and Chrysler's majority shareholder Cerberus Capital Management L.P, said they have signed "a non-binding term sheet to establish a global strategic alliance."
The pact "would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrains, and components to be produced at Chrysler manufacturing sites," the companies said.
Under the terms of the deal, first reported on Monday by Automotive News Europe, Fiat would make available its distribution network in key growth markets. "Substantial cost savings opportunities" would be available to the alliance, the companies said.
The transaction already has the blessing of the UAW. UAW President Ron Gettelfinger said in the press release:
"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability."
Fiat confirms plan to acquire 35% stake in Chrysler
TURIN, Italy -- Fiat S.p.A. and Chrysler LLC confirmed today that the Italian company intends to acquire an initial 35 percent stake in the U.S. carmaker.
In a joint statement, Fiat, Chrysler and Chrysler's majority shareholder Cerberus Capital Management L.P, said they have signed "a non-binding term sheet to establish a global strategic alliance."
The pact "would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrains, and components to be produced at Chrysler manufacturing sites," the companies said.
Under the terms of the deal, first reported on Monday by Automotive News Europe, Fiat would make available its distribution network in key growth markets. "Substantial cost savings opportunities" would be available to the alliance, the companies said.
The transaction already has the blessing of the UAW. UAW President Ron Gettelfinger said in the press release:
"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability."
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