There are lots of forms of cars available to be used in order to vehicle nightclub customers. This is why simple to use proper to obtain virtually any vehicle they might requirement for any factor. Automobiles after different designs, designs and also requirements are offered at the number of car a lot regarding customers available and rehearse. Some of the costs or perhaps charges for making use of are usually additionally quite low-cost and also cost effective for anyone who want for their services. Therefore, have to have to shell out a great deal cash to push a costly vehicle; all must thrust just about any vehicle that you choose will be read the variety of cars indexed and also reserve for definitely one you prefer.
Normally modest automobiles which are frequently smaller than average designed to support a few people normally 2 to 3 travelers best. A lot of them come into the type of convertibles while many of these may be modest compact car intended for individuals that like to thrust cars on this dimensions. This style of car normally has many requirements according to the brand name and kind of vehicle. By way of example, Bentley possesses wide range of lightweight designs many turn out convertibles which are designed to bring just the drivers and another some other traveler. This may be a excellent choice for those who are crazy and wish to embark on a night out together and take an intimate thrust up to a get-away place. Kinds in automobiles for inside these kinds consist of: Kia Picanto, Hyundai highlight, VW golfing, ford serve, kia Fete and also the brand new electric Nisan section.
Vehicle groups additionally often have a few options for those who like to notice ideal cars that could meet their loved ones demands. By way of example, children can be trying to get a trip, a vacation or perhaps show and could like to thrust along in identical car. When they don't have a car which is able to well support everyone along with just about any bags or perhaps gear these are typically having (particularly when choosing an outside show just like a outing or perhaps mountain climbing), your best option is to choose find a ideal household car car which is able to easily bring everyone choosing some of the ride. Many of these forms of cars which can be excellent choices to select from consist of: Toyota Camry, Toyota Avalon, ayundai classical music, Toyota coil, kia blend, kia highlight, VW Passat, ford agreement, and also ford social and others.
Mini-Vans may be used to have an overabundance many compared to a car or perhaps compact can hold riguardando some time it can be accustomed relocate various products besides due to the total area information technology has. This particular car may be used for several reasons, frequently demands can happen that certain might are expensive of cash to satisfy these demands if a person chooses employ a caravan to satisfy need. Unfortunately, all that you may prefer to do in order to store after expenses all cash perhaps in order to choose and also reserve involving this kind of car in a vehicle posting provider, do this undertaking your self and also maintain the money might produce invested leasing the caravan to get it done for every person. A few of the mini-vans which are normally around consist of: Toyota earth color, ford epic poem, Nisan search, VW Sharan and others.
Athletics Tool Cars (SUVs)
Athletics tool cars are thought in order to become cars which are made to try to be powerful and also resist tough landscapes and also circumstances. They may be able be extremely welcome and also quickly also. They cars may be used many different reasons. People utilize them after entering very long car journeys, many utilize them after generating as part of hard and also tough landscape, and several of recent type sports utility vehicles are useful for daily normal choose due to the safety and comfort qualities they usually have. A few of the a lot of different this particular car around Some of the a number of automobiles made to car club consumers
There are various forms of cars available to be used in order to vehicle nightclub customers. This is why simple to use proper to obtain virtually any vehicle they might requirement for any factor. Automobiles after different designs, designs and also requirements are offered at the number of car a lot regarding customers available and rehearse. Some of the costs or perhaps charges for making use of are usually additionally quite low-cost and also cost effective for anyone who want for their services. Therefore, have to have to shell out a great deal cash to push a costly vehicle; all must thrust just about any vehicle that you choose will be read the variety of cars indexed and also reserve for definitely one you prefer.
Normally small cars that are often small and meant to accommodate a small number of persons usually two to three passengers only. Many of them are in the form of convertibles while some of them may just be small compact cars meant for those who love to drive vehicles of this size. This type of vehicle usually comes with different specifications depending on the brand and type of car. For instance, Mercedes has a number of compact models and some of them are convertibles that are meant to carry only the driver and one other passenger. This can be a very nice option for people who are in love and want to go out on a date or take a romantic drive to a get-away location. Other types of cars that fit into this category include: Kia Picanto, Hyundai Accent, Volkswagen Golf, Honda Prelude, Ford Fiesta and the new electric powered Nissan Leaf.
Car clubs also usually have several options for people who want to find suitable vehicles that can meet their family needs. For instance, a family may be preparing for an outing, a trip or event and may want to drive together in the same vehicle. If they do not own a vehicle that can comfortably accommodate everybody as well as any luggage or equipment they are carrying (especially when going for an outdoor event like a picnic or hiking), the best option may be to go look for a suitable family sedan vehicle that can conveniently carry everybody going for the trip. Some of these types of vehicles that can be good options to choose from include: Toyota Camry, Toyota Avalon, Hyundai Sonata, Toyota Corolla, Ford Fusion, Ford Focus, Volkswagen Passat, Honda Accord, and Honda Civic etc.
Mini-Vans can be used to convey more people than a sedan or compact car can carry per time and it can also be used to move some goods too because of the amount of space it possesses. This vehicle can be used for different purposes, and often needs may arise that one would cost a lot of money to meet such needs if one decides hire a van to meet that need. However, all you may need to do to save yourself from spending all that money maybe to just go and book for this type of vehicle in a car sharing service, do that task yourself and keep all the money you would have spent renting a van to do it for you. Some of the mini-vans that are usually available include: Toyota Sienna, Honda Odyssey, Nissan Quest, Volkswagen Sharan etc.
Sports Utility Vehicles (SUVs)
Sports Utility Vehicles are considered to be vehicles that are built to be strong and withstand rugged terrains and conditions. They can also be very comfortable and fast as well. These vehicles can be used for various purposes. Some people use them when embarking on long road trips, others use them when driving in very difficult and rugged terrain, and many of the latest models of SUVs are now being used for normal daily use because of the comfort and safety features they have. Some of the various types of this vehicle available for use at the parking lots of car clubs include: Toyota Prado, Toyota Landcruiser, Honda Pilot, Hyundai Santa-fe, Volkswagen Touareg, Ford Escape, Land Rover, Range Rover etc.
for use at the parking lots of car clubs include: Toyota Prado, Toyota Landcruiser, Honda Pilot, Hyundai Santa-fe, Volkswagen Touareg, Ford Escape, Land Rover, Range Rover etc.
...remember Japan as Number One?...
I'm just back from a meeting of the Japan Foundation American Advisory Board, where part of the discussion was on the ups and downs of the field, such as high enrollments into the mid-1990s from those approaching the region in an instrumental way. Do you remember a prominent book of that era, Ezra Vogel's Japan as Number One. [mea culpa: he was the advisor for my undergraduate senior paper]
So what of Toyota as Number One? Is this a similar transitory phenomenon? – in many ways, yes. Despite all the doom-and-gloom reportage, though, Japan remains the 3rd largest economy [ahead of Germany, behind China and the US in absolute size] and overall a prosperous place. No, Japan never was going to take over the world. It remains important. Similarly, neither Toyota nor any other single firm will dominate the global auto industry, but Toyota is here to stay.
The metric that is in the headlines is total unit sales. That's not the only such metric; total revenue is another one. As an economist, I look to profits relative to assets. We could also look at quality measures, at the volume of top products (segment leadership), at "car of the year" and similar awards, and at positioning in growth markets. These give different answers – even if we can agree to an objective standard for how product in the industry's shifting array of joint ventures ought to be counted.
Total sales matters to Toyota in several ways. First, the impetus for this post, regaining the lead generates free (and favorable) publicity. After a period of supply disruptions (the 3/11 quake/tsunami followed by the floods in Thailand) and demand shocks (consequent to the US unintended acceleration incidents), this also is an important morale booster at Toyota and its dealers. Gloomy sales staff and gloomy sales go together, though which causes which may be ambiguous. In the US, what Toyota has done though is recover partway (14% of the market, down from 17% a few years back), while it's lower post-bankruptcy fixed costs allow GM to pursue profits rather than volume (18% of the market, rather than 21%). Only VW is picking up market share in North America.
In terms of total revenue, however, it is Volkswagen that has the lead by a hair. Yes, Toyota has Lexus and Hino, but VW has Audi and Porsche and its own truck division; VW has the Golf and other small cars; Toyota has its minicar subsidiary Daihatsu. GM is more focused on cars and light trucks. So in the 3 months ending September 30, 2012 VW had revenue of €48,848 million, Toyota had ¥5,406 billion and GM US$37,567 million. Using end-September 2012 exchange rates (US$1.00 = ¥78 = €0.78) gives revenue of $62.6 for VW and $69.3 for Toyota. At todays rates (US$1.00 = ¥90.5 = €0.74) the ranking shifts: $66 billion for VW and $60 billion for Toyota. So while Toyota may outsell GM and VW this year in unit terms, current exchange rates suggest VW is #1 in revenue. (GM is a distant #3.)
Then there's profits. Here the ranking is slightly different. VW earned a 4.2% return on €309 billion in assets; Toyota earned 0.9% on its ¥30 trillion in assets; GM earned 1.2% on its US$155 billion in assets. Here Toyota is third, not first. Now these companies are different in their structure; in particular, GM has only a very small finance unit, contributing only 7% to its profits. Similarly, VW gets about 11% of its profits from financial activities. It survives on vehicle sales. In contrast, 25% of Toyota's profits come from finance. So if we think of vehicles as the core of these firms, looking at the recent past we find Toyota trails in profitability.
How about quality? In the eyes of Consumer Reports and others, Toyota is no longer an automatic safe choice. Indeed, this past year they've recalled 4.5 million vehicles, more than their rivals. JDPowers ranks everyone very close to each other (look at the absolute numbers, not the rank order!). No one goes to the service bays of the big multibrand dealers but hearsay is that Toyota does not stand out from the standpoint of mechanics and warranty costs. (I don't know of any hard data.) That doesn't mean Toyota's vehicles aren't good; basically, everyone's vehicles are good, and compared to two decades ago, they're very good. No one is ahead in quality – thanks in part to Toyota's leadership in that area and the competitive pressure it exerted.
Similarly, in "xxx of the year" metrics Toyota is present but no single firm is dominant. Toyota doesn't appear in Ward's "best engines" list, while GM appears only once (Cadillac) and VW once (Audi). Honda, Ford and BMW lead their three regions. Another best car list – sorry, I deleted the email! – had a wide variety of makers as tops in specific segments; my recollection is that Toyota did well in minivans and entry luxury, but had no "winner" in regular cars. No one is outstanding in the sense of capturing a majority of "best" ratings.
Now going forward Toyota's profitability has headwinds and tailwinds. It continues to suffer from the political tensions between Japan and China that affect its sales in the latter market, where VW and particularly GM continue to forge ahead. Its domestic market is weak; as the number of licensed drivers falls, firms producing inside Japan will struggle to match capacity with sales.
In contrast, at an exchange rate of ¥90/$1.00 exports will be much more attractive. In particular, most of Toyota's Lexus brand are exported from Japan, so even without better volume, revenue and profits will rebound. They won't make money in Europe, but GM will lose a small fortune. So far VW seems to have come through well amidst the Euro crisis, but we'll see whether that persists. My hunch is that VW will remain at the top of the global Big Three in profitability, while Toyota will pull ahead of GM. But in terms of sheer volume, over the next few years growth in China and Brazil will benefit GM and VW relative to Toyota, while the US market is unlikely to improve much for anyone. So the #1 sales slot will shift back and forth.
...luxury at low cost is a potential disaster for the industry...
Diana Kurylko at Automotive News has a front-page story in the January 21st issue [online here arguing that "$30,000 is the new luxury-car hot spot". The evolution of CAD systems (linked now to engineering databases) and the revolution in materials science means that it is feasible to provide the NVH (noise vibration handling) of a luxury vehicle at little or no incremental development cost and a modest manufacturing cost. Leather remains necessary – a $1,000 cost premium for two front buckets and a rear seat?) – and additional speakers and other spiffs add cost. But safety mandates mean that stability control, keyless entry and so on are either present or can be added at low cost as the underlying IT backbone is in every vehicle.
While a boon for consumers, luxury at low cost is a potential disaster for OEMs as it will undermine their ability to earn fat margins on their upper-end vehicles. Yes, there are consumers for whom a car is used to enhance their social status, and so expensive cars won't go away. Ditto those auto enthusiasts who want unnecessarily large engines or other add-ons (and have the wherewithal to buy them). But my sense is that at present many consumers buy higher-end vehicles because of their NVH attributes. They don't mind the status symbol aspect, but what they really hanker for is simple ... or not so simply ... luxury.
Now having test-driven a wide array of vehicles the past few months, my own personal observation is that a few really stood out for a combination of comfort, quiet and superior drive. And I didn't drive any luxury cars. So maybe those are yet nicer; I suspect not. I've also been in anechoic chambers a couple times in my rule as a judge for the Automotive News PACE supplier competition, evaluating the (lack of!) contribution of one or another component to vehicle noise. I've seen presentations on recycled materials that turn out to be both inexpensive and really good at insulating drivers from noise. I've been in the Chrysler wind tunnel. Creating a quiet car does entail cost, but it's now at a point that can be fit into the cost target of a $30,000 vehicle, both in terms of purchase price and weight (because adding lots of rubber goop adds lots of weight and attendant indirect costs.)
The old saw that small cars mean small profits continues to hold; absent the ability to differentiate (here I think of the Mini) you get the old progression of larger size and larger price, without of course a commensurate increase in costs. The luxury end accounts for a disproportionate share of industry profits.
That may change -- not that the higher end won't generate higher profits, just that it will generate a lot less profits. Can the BMW's of the world maintain their relative position? Perhaps. But it may be harder and harder for Lexus, Cadillac and Lincoln to provide potential purchasers with a good value proposition when a Ford offers comparable luxury.
Public Broadcasting Service Premiere of
American Experience Presents Henry Ford
Tuesday, January 29th, 2013 9:00 – 11:00 PM on PBS
– A Review by David Ruggles –
additional comments by Mike Smitka
Henry Ford changed the world with his assembly line method of auto assembly, patterned after processes he observed in the meat packing industry. One might think there is nothing new to be learned about the man, his life, and his legacy. And perhaps there isn’t. But I have never found such a wealth of information and insight in one place as in this wonderful documentary directed by Sarah Coit and to be presented by PBS in conjunction with the 150th anniversary of Ford’s birth.
A study in contrasts and contradictions, Henry Ford was a genius who did a lot of good for mankind, while at the same time his behavior presented a case study for the psychiatry profession. Henry Ford began his career at a time in our history when a few plutocrats had combined net worth equal to a major portion of the entire GDP of the country. Before the turn of the century, John David Rockefeller’s net worth alone exceeded 10% of the GDP of the United States. In today’s dollars, that would be the equivalent of about $1.5 Trillion. Together with Andrew Carnegie, J. P Morgan, John Jacob Astor, Andrew Mellon, and others, monopolies controlled the U. S. economy and government policy was bought and sold at will, at least until Teddy Roosevelt signed the Sherman Anti-Trust Act in 1890 and the graduated income tax was passed in 1913.
When Henry Ford historically doubled the wage of his workers from about $2.50 per day to $5.00 per day, it was a giant step forward for the country’s middle class. He also pioneered both 8 hour work day and the 5 day work week. Ford didn’t make these moves for altruistic reasons alone. His assembly line production method burned out employees. In the face of overwhelming employee turnover he was interested in employee recruitment and retention. He also attached conditions to the wage which were onerous for many employees. Ford’s “Sociological Department” monitored employees through a network of thugs and spies. Heavy drinking, gambling, and other adverse behavior was strongly “discouraged.”
But Ford was visionary in that he understood that by paying a high enough wage, so his own employees could afford to purchase the product they built, he could become more successful himself. It was a radical theory at the time and enraged his competitors, who were forced to match wages or risk losing their best skilled employees to Ford.
At the time, automobiles were toys for the wealthy. Ford’s Model T soon became a necessity for the masses and spawned a mobile culture that led to the country’s highway system, a burgeoning oil industry, motels, fast food, and hosts of related businesses that fueled economic expansion. And Henry Ford showed that the wealthier could do even better if they had a thriving and consuming middle class to sell to. In that respect he did not regard economics as a zero sum game.
Ford later turned on his employees, unleashing the infamous Harry Bennett to intimidate workers.
Ford resisted offering any color other than black to consumers until it became clear his company would fail if he didn’t. [ms: in the days of lacquer-based paints, Ford offered an array of colors; the first successful oven-drying enamel was only available in black, and to offer a mass-produced vehicle required that he move away from the earlier paint technology that required hours to dry between multiple coats. but by 1920 DuPont had developed an array of colors that were used by GM, to Ford's detriment. the DuPont family became GM's largest shareholder]
It was the same with financing. Ford thought debt was evil, and a person did not deserve one of his vehicles if it couldn’t be paid for in cash. He ceded huge market share to General Motors, who pioneered auto financing through General Motors Acceptance Corporation, until Ford was forced to enter the business of auto finance.
He hated the wealthy, even though he was one of the richest men in the world. He regarded investors and stock holders as parasites. He created his own idyllic country retreat, now called Greenfield Village, so he could return at will to the more rural simple life from which he came, despite being the singular impetus himself for modernization and industrialization.
He abused his only son Edsel to the point that Edsel died prematurely of stomach ulcers. It took Edsel standing up to his father to finally get approval to replace the Model T with the Model A. That was the son’s high point in dealing with his father. But Henry resented being proven wrong, and went out of his way to punish Edsel for being right.
Adamantly anti-Semitic, he regularly published inflammatory articles from the local Dearborn newspaper he bought for the purpose. [ms: yet his factories were designed by Alfred Kahn, a leader in the Jewish community in Detroit]
The documentary is full of movie clips from the period, bringing the history of our country’s industrialization and its dependence on the automobile to life. Students of history, economics, the auto industry, AND psychiatry shouldn’t miss the premiere of this most entertaining and enlightening presentation.
Dale Pollak’s third book, “Velocity Overdrive,” is another winner and is must reading for dealers and any student of the auto business. That includes auto manufacturer executives.
Dale’s ability to put into words the changes the industry has been experiencing has helped hundreds, if not thousands, of auto dealers, both new and used. He has rightfully pointed out that the delivery of information via the Internet has brought “efficient market” economic principles to the pre-owned business in particular, compressing available “spread.” New data driven management methods that are based on rapid inventory turn at lower, but real world gross profit for the specific market, actually produce considerably higher total gross profit through higher velocity, a concept difficult for some to grasp. In some areas of retail the benefits of sacrificing margine to increase inventory turns is commonsense. Automotive retailing is catching on: Daily, market realities are making believers out of skeptics.
My favorite chapters include 8, “Dealership Department Silos,” and 14, “The Extra Mile in Reconditioning.” In these chapters Pollak dares to challenge long and stubbornly held beliefs that the pre-owned department exists to be pillaged by the fixed operations departments. After all, it was thought, sales people and managers sell from their cost, not based on any kind of rational retail market value. And gross profit booked by charging retail prices for internal reconditioning, or “retail recon,” is retained regardless of what happens to the used vehicle, they thought. There are dealers who have followed this “retail recon” policy for another reason. They would rather pay management compensation based on fixed operations rates than sales manager rates. The Internet has changed all of that. Dealers still in denial on the issue especially need to read this book!!
In my mind, the idea that “you can’t manage what you can’t measure” has cost dealers a lot of money. What one could have gotten, should have gotten, but didn’t get, is never quantified. In “econo speak” that means “opportunity costs,” or opportunities unrealized. Figuring opportunity costs is hard, sloppy comparisons and the failure to dig up relevant data abound. There's less excuse for the following common errors in our internet world: Trade-ins under bid and/or units wholesaled instead of retailed because of “retail recon” cost money that can’t be totaled. And many dealers remain oblivious of this fact. My own piece on this blog on the issue can be found here.
The pre-owned business has long been a combination of art and science. The science side has become more important than ever although some old dogs like me might think things have gone overboard in some cases. For example, I’m not thrilled about managers failing to walk around a vehicle and actually drive it before hanging a number on a trade-in because they are relying on an appraisal tool. But then neither is Pollak. Some managers think all they need is their technology driven appraisal tools.
As far as science is concerned, Pollak has already conceived and implemented the most essential and highly used technology tools in use in the industry. His company, vAuto, now offers a new technology tool called Provision®, an inventory management tool. It distills market data into management metrics that dealers and used vehicle managers use to easily and quickly understand the risk and rewards inherent in every vehicle.
Looking forward, Dale dedicates a chapter to trends that will result in further margin compression for dealers. Younger buyers are more internet enabled then older ones and they have different values than older generations. They don’t think in terms of the value a dealer relationship offers them. They tend to be ruthless in their pursuit of the best price, using the internet to obtain it. Unfortunately, in the middle of this generational driven trend OEMs are pressuring dealers to build ever more expensive facilities in an era when consumers are less willing to pay for them. Increasing fixed costs when margins are falling does not lead to a happy ending. Pollak cites Glenn Mercer’s comprehensive study on the subject on behalf of the National Automobile Association (here on the NADA site).
This book is well worth the investment even if a dealer only reads the chapter, “A Peek Inside Dale’s Crystal Ball.” Dealers who ignore Dale’s advice do so at their own peril. Increasingly, the “efficient market” that is the auto business will tend to leave only the leanest operations standing. For a Dealer in search of significant ROI, buy the book and read it.
Ruggles – 12/26/2012
What many stockholders
and taxpayers had feared, had Mitt Romney won the recent Presidential election,
is coming true anyway. The taxpayers (U.
S. Treasury) are quickly being taken out of their remaining General Motors
ownership BEFORE the positive impact of the many new and exciting redesigned GM
products to be introduced in the next few months can have the chance to boost
retained earnings and share price. Waiting
another 18 to 24 months could reduce or eliminate the loss that will be taken
on the original taxpayer investment.
recently arranged for an $11 billion line of credit, and with about $41 billion
in available cash and credit, GM is buying the stock back directly from the
U.S. Treasury. At least buying back
stock directly from Treasury is probably much better than dumping the stock on
the open market, thereby diluting the share value and causing the stock price
to drop even further. At least that is
this stockholder’s point of view.
“Car Czar” Steve
Rattner describes the buy back as “welcome news.” I’m not so sure. He goes on to write in the New York Times:
“For General Motors, the
separation will conclusively remove the appellation of “Government Motors,” a
stigma that the Company had argued affected the buying decisions of a
meaningful segment of consumers.”
The divorce will ultimately also
liberate G.M. from a number of government-imposed restrictions, importantly
including those relating to executive compensation. These restrictions
adversely affected G.M.’s ability to recruit and retain talent. Now, compensation decisions will be made by
the company’s board of directors, just as they are in every other public
company in America.”
As an observation, once GM rids
itself of taxpayer ownership, GM execs can also resume the use of corporate
jets. And we know how car business execs
hate to fly commercial.
Others might say, GM has traded
the appellation of “Government Motors” for another appellation, “The Car
Company on which the taxpayers lost billions.” Rattner himself estimates the loss will come in at about $14
billion. Other estimates are
The taxpayers should pay $14 - $20
billion so GM execs can go back to their spendthrift ways, when waiting 18
months or so would have given the stock the opportunity to rebound based on the
recovering economy and an almost complete makeover of their product line? Not in my world. While this writer is NOT a professional stock
picker, many folks look to Forbes for financial advice. A December 10 article in Forbes recommended
“Roll with GM for 2013,” and gave compelling reasons why.
Others investment experts have
weighed in on the subject and most have recommended buying GM stock for 2013,
despite the attempt from some naysayers to float a rumor predicting a near term
bankruptcy from GM. Of course, these
columns appeared before the stock buyback announcement. And
the naysayers ignored facts, while misinterpreting others, to create their
Ex GM CEO Ed Whitacre was shown
the door after he claimed in a national television commercial that GM had
repaid its government loans. This was
word parsing at its worst, as GM had only returned unused loans it didn’t
need. The commercial implied, even
though it did not specifically state, that GM was no longer in hock to the
government and U.S. taxpayers, which was certainly not true. Some might argue that GM is using tax payer
money to buy back taxpayer stock, a move similar to the claim that sank
What would another 18 to 24
months hurt? The President won his
second term. What can the political
pressure be? Why not give the stock the
chance to improve? Is GM actually
claiming that the cap on compensation is why they have had high velocity
executive churn since the restructuring?
Has the government been “heavy
handed” in its ownerships of GM, except for the jets and executive
compensation? Recalling the previous
bailout of Chrysler in the 1980s, Lee
Iacocca chafed under the government supervision he had to live with during that
era, ESPECIALLY the one that kept his jet grounded. In addition, the Feds were pushing Chrysler
to divest itself of its truck division. All it took was for Ronald Reagan to make a crack to Iacocca at a Statue
of Liberty restoration event about how Iacocca should be grateful that Carter
was in the White House, and not Reagan, when the bailout was approved and
signed, and the Chrysler CEO was more than incensed. He took a huge risk and paid the Feds off
early, forgoing over $300 million in interest savings to do so. Iacocca put Chrysler at risk from a cash
position perspective, even though the gamble ultimately paid off, but he saved
the truck division, which has been the largest source of profits for Chrysler
since. And he got his jet back and stuck
it to Reagan. So is it ego or legitimate
business considerations driving this current GM stock buyback move?
“In a perfect world, I would not be a seller of
G.M. stock at this moment. For one thing, the company is still completing the
reworking of its sluggish management processes in order to achieve faster and
better decisions and lower costs.”
For another, G.M.’s financial problems slowed its
development of new products during 2008 and 2009. Now, a passel of shiny new
models offering great promise is about to hit showrooms.”
And in my view, G.M. stock remains undervalued,
trading at about 7 times its projected 2013 earnings, compared with nearly 13
for the stock market as whole.”
I think the move is driven by GM ego and arrogance,
a really bad sign, and is NOT in the best interests of the U.S. taxpayer. This does not change the fact that while the
auto sector restructuring was not conceived and executed perfectly, on balance
what was accomplished will be considered a feat by economic historians. The cost to have NOT done the restructuring
is incalculable, and most certainly many times more costly than a measly $20
billion. Depression or “moral hazard?” That was the choice. And the “perfect can’t be the enemy of the
good.” In my mind, this premature stock
buyback adds unnecessary tarnish to an otherwise laudatory endeavor.
...Make where you sell, and that's not Japan...
For a while the impact on the auto industry of 3/11 – the earthquake and tsunami – and then the Thai flood garnered headlines. Lately the headlines in Japan have been politics, politics, and more politics. First there was the US election and the leadership transition in China – Japan's #2 and #1 trading partners. Then there are the upcoming elections in Japan and Korea. These have embroiled the auto industry, too, because of the attempt of various parties in China and Japan to wave the nationalist flag, with much of the fallout hitting bilateral Japan-China auto trade. All this has pushed more mundane news – the transition of the domestic Japanese auto industry – out of the headlines.
First, there's the story – Alan Ohnsman at Bloomberg – that Honda will become a net exporter from the US. Why? – because they're ceasing Accord production in Japan. Of course Nissan is already bringing in the March from its plant in Thailand; Mitsubishi has also begun imports from there. But the yen is cutting into the attractiveness of production in Japan, while the domestic market is small: make where you sell, and that's not Japan.
Second, Honda has now moved into second place in sales for January-November 2012, with 701K units. Meanwhile Nissan, the one-time national champion, ranks fifth. (In third and fourth are Daihatsu and Suzuki; Toyota dominates with 1.55 million units, over twice Honda's level.)
What though is Honda selling? It turns out their success -- and that of Daihatsu [a Toyota subsidiary] and Suzuki -- is due to the growth of the "kei" (minicar) segment, vehicles with engines 360cc or smaller. In the full-size segment Honda is a distant 4th, more-or-less tied with Mitsubishi (29K vs 27K units) but far behind Nissan and Toyota. Indeed, in that segment Honda remains behind the importers BMW and Mercedes (at 32,000 and 33,000, respectively). But in compact cars they were second only to Toyota, and Honda sold enough "kei" to move them to the #2 position.
Now domestic sales – cars, trucks and buses – peaked in 1996 at 7.1 mil units; in 2012, the level will be about 5.4 million units, down almost 25% despite the rebound from the depressed levels of 2011. So no one is doing well, and population aging means a declining number of licensed drivers. Things will not improve. But the mix is becoming bimodal, too. Full-sized cars are fine, quite possibly hitting a new peak of 1.5 million units (triple sales in 1990, during Japan's bubble). The shift is from compact cars to minicars. The former peaked in 1990 at 3.8 million units; 2012 will see sales of 1.6 million units. At the same time, minicars will hit 1.6 million units, up from 0.8 million in 1990. The market is thus split about 1/3rd each, but the shift is one that leaves a less rich product mix.
2012 - Nov
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