Next victim of mortgage mess: Auto sales

Rising concern about home values and mortgage payments is causing more buyers to slam the brakes on new car purchases.

Already-battered U.S. auto sales could be the next victim of the problems with mortgages, declining home and stock prices as potential car buyers delay purchases due to uncertainty.

Industrywide U.S. auto sales in August could be off 10 percent from a year ago, according to an early read from sales tracker Edmunds.com. That follows July sales that were 19 percent below year-earlier levels

Jesse Toprak, executive director of industry analysis for Edmunds.com, said that the downturn in home values and credit issues that were seen in the July numbers could be an even bigger factor this month.

"I think the issue is becoming more pronounced," he said.

Sales weren't just weak at domestic automakers, such as General Motors, Ford Motor and Chrysler Group. Year-over-year sales fell in July at Toyota Motor and Honda Motor as well. Many forecasters are cutting full-year auto sales targets in the face of these weak summer sales. And some experts say the turmoil in housing could throw even more dirt in the gears.

CNW Research, which specializes in surveys of car buyers, found in its latest reading that 13.6 percent of the potential market's customers were canceling or postponing plans to make a new-vehicle acquisition any time soon, up from 10.1 percent last year.

And of those postponing or canceling plans, home-related issues jumped to the No. 1 reason, cited by 17.6 percent of those staying away from dealers' showrooms, with nearly 11 percent of that group citing a decline in their home equity and another 6 percent citing an increase in their monthly home payment.

Of those postponing purchases, 10.7 percent cited problems with credit scores, as some sources of car loans are tightening lending standards. Gas prices are a distant third, cited by less than 5 percent of those delaying purchases.

"We're probably going to see some pretty bad [auto sales] numbers for the rest of the year," said Art Spinella, president of CNW. "To put it simply, housing is now the major hurdle to new car purchases. The next three to four months are not going to be much better if it's better at all. People are not interested in buying a new vehicle."

Only two years ago, the CNW survey found just 2.3 percent citing home-related issues as a reason to postpone a car purchase, while 5 percent cited credit score problems and about 3 percent cited gas prices.

Automakers, led by GM, are upping cash-back offers and other inducements to try to breathe life into sales in the face of headlines about home foreclosures and market meltdowns.

GM spokesman John McDonald said that GM isn't seeing any sharp drop-off in sales it can trace to the current mortgage and housing slowdown.

"It is one of a number of headwinds," he said. "There's fuel prices, there's interest rates and there's housing prices. But we're not seeing anything new that we've not been talking about for more than a year."

But one auto industry executive, who spoke on condition that his name not be used, said that the higher incentive spending by automakers, particularly on GM pickups, may mask some of the bite that housing is putting on sales.

"The home was not only a source of financing for some car purchases, it contributes to a positive feeling psychologically," said the executive. "That led to a confident outlook, a view that 'I can go ahead and spend from paycheck to paycheck and buy new cars when I want to because the value of my home and portfolio have gone up.'

"It's silliness to say the credit crunch doesn't matter," said the executive. "If the final sales numbers for August have any strength, it will be because of incentives."

Current Auto Rates
36 month new: 6.82%
48 month new: 6.94%
60 month new: 6.94%
72 month new: 7.01%
36 month used: 7.40%

Experts in the field say that car purchases are one of the first items that consumers can and will put off if they are nervous about their own financial outlook, long before they'll cut back on eating out or other discretionary purchases.

Bob Schnorbus, chief economist for auto research firm J.D. Power & Associates, said that the August sales probably won't tell the full story about the drag that the housing turmoil is causing for auto sales.

"I wouldn't expect it to have that quick impact; I would expect it to be more of a drag throughout the rest of this year than a plummet in August," he said.

And Schnorbus said that while consumers may keep making other types of purchases, even as they pull back from buying new cars and trucks, the slowdown could spread to other types of spending in the future if the market does not improve.

"A new car is one of the more postponable purchases that people make," said Schnorbus. "That new vehicle purchase could be a good leading indicator if consumers are going to cut back. Over the next few months, we could be getting some very interesting signals."
(C)CNN

Auto Leasing: Pros and Cons

If you are considering leasing, you need to do your homework. Here is some advice on how to get the best deal.

Aside from having a new car every few years, a major attraction to leasing is that "you get more car for the same monthly payments," says Robert Haber, a New York City art dealer who is leasing his Lexus RX 330 SUV.


These pluses will seem convincing to many new car shoppers, but to lease successfully, you need to understand the transaction. The concept is simple, but the execution is often highly complicated. When you lease, you pay, in effect, for the loss in value of a vehicle for the three or four years you are leasing it, plus interest on that amount.

Dealers will want to talk only about monthly payments, but to lower those payments you need to understand all the moving parts.

How Leases Work
Leasing comes with its own jargon. The most important factor in determining payments is the difference between the starting cost, known as the capitalized cost, and the estimated value at the end of the lease, called residual value. Auto brands that have high resale value, such as Mercedes-Benz, are good candidates for leasing.

Usually the best available lease deal will be the one offered by the manufacturer's captive finance subsidiary (see definition below). They often offer subvented, or manufacturer subsidized, leases, a promotional effort designed to help move certain vehicles. These deals are most common for luxury brands, and typically the residual value will be fixed, as will the interest rate. Thus your only weapon to lower payments is to negotiate down the capitalized cost — just as you would try to lower the purchase price if you were buying the car instead.

Leasing has its pitfalls, as well.

Do’s and Don’ts

Don't sign a lease longer than the warranty on the car. You don't want to be paying for repairs on a car you don't even own. On Ford, General Motors and DaimlerChrysler cars, three-year warranties would call for no longer than three-year leases.

Don't sign a lease with mileage limitations that are unrealistically low for your driving habits. Excess mileage costs at the end of the lease can be very expensive. You will likely save money by negotiating up front for a limit higher than the typical 12,000 miles a year, if you think you will need it.

Do protect yourself against theft or serious collision loss early in the lease. If the vehicle is stolen or totaled, your insurance will pay only the depreciated market value of the car at that time, which may be less than the total you owe on your lease. So-called "gap insurance" will pay you the difference between your insurance settlement and the total amount you still owe on the lease. Most leasing companies offer this coverage, and it is one of the few add-ons that makes sense to accept. Gap insurance as part of the lease usually won't cost you any more than getting it from your insurance agent, and is more convenient.

Do brush up on leasing jargon, so you can be a savvy negotiator.

Leasing Terms to Know

Capitalized Cost: The lease transaction's equivalent of the selling price. Payments are determined largely by the difference between the capitalized cost and the residual value (see below).

Capitalized Cost Reduction: Jargon for down payment in a lease transaction. You can use it as a way to reduce payments if, say, you have the proceeds from selling your old car, or if you are trading in your old car.

Excess Mileage Charge: A penalty for driving more than the mileage allowance in the lease — typically around 12,000 miles a year. To avoid this penalty, make sure your lease has a mileage allowance matching your driving habits.

Captive Finance Companies: These subsidiaries of major auto companies, such as Ford Motor Credit and General Motors Acceptance Corp., make auto loans on the companies' brands. Often they have better rates than those offered by the dealership itself.

Subvented Leases: Subsidized by the manufacturer, these leases are generally designed as promotional efforts to help move vehicles. Often, these can be one of the best deals for the consumer considering leasing as an option.

Residual Value: What the vehicle will be worth at the end of the lease. It may or may not match true estimates of the used car value at that point. When a manufacturer wants to promote leasing of a certain model, it will lower payments by artificially boosting the residual value.

When Does it Make Sense to Lease Instead of Buy?

A choice to lease or buy with a loan is largely one of personal preference and driving habits. If you typically trade for a new car every four years or less, drive less than 12,000 miles a year and keep your vehicle in good condition, you may be a good leasing candidate.

Especially among luxury brands, the best deals are often ones from the company's own finance arm. Because they prefer promotional leases to giving rebates, companies such as BMW, Lexus and Mercedes-Benz often offer leases that have low interest rates, above-market residual values or both. The result is lower monthly payments.
(C)Forbes

Engine: Clean or Efficient?

From the outside, the dark blue Saturn Aura accelerating to a steady 50 miles an hour on the high-bank oval here at General Motors’ proving grounds looked altogether unremarkable.

In fact, it was not much to look at under the hood either, despite an experimental engine using a method of burning gasoline that may prove to be the next major advance in fuel economy and emissions control. Only a couple of stray electrical connectors hinted at the differences distinguishing this engineering prototype from thousands of other Auras on road.

From the driving position it’s another story. A laptop computer placed between me and a G.M. engineer, Jun Mo Kang, displays a graph that plots the car’s changing engine speed against the load on the engine, just colorful enough to draw my attention away from future cars and trucks in full disguises zipping by in the faster lanes of the track.

My time behind the wheel last month was the first test drive G.M. has given to a journalist of its prototype homogeneous-charge compression-ignition engine. An H.C.C.I. engine runs on a combustion process that researchers say holds the potential for significant gains in overall engine efficiency. G.M is one of several automakers developing H.C.C.I. technology.

In principle, the H.C.C.I. engine takes advantage of the best characteristics of gasoline engines — low emissions that can be controlled effectively with available technology — and diesel engines, which offer low fuel consumption.

As I press and release the Aura’s gas pedal, a small orange dot on the laptop screen darts in and out of a wedge-shaped area on the graph. The point of the wedge begins slightly above idle speed, at about 1,000 r.p.m., and ramps up to its widest point at 3,000 r.p.m.

“Don’t push the pedal too hard or fast,” counsels Mr. Kang. “Try to keep the dot within the zone. That’s where the engine is running in H.C.C.I. combustion.”

After less than a lap of practice on the immense track, I find it easy to feather the pedal so that the orange dot constantly floats in the sweet spot on the graph, earning a smile from Mr. Kang.

When H.C.C.I. is finally ready for the road — G.M. won’t say exactly when that might be — computers will take over the task of keeping the engine in its ideal operating range. And though much work to refine the engine’s operation lies ahead, experts say the technology is worth the investment.

“I believe H.C.C.I. represents the next great advance of the internal combustion engine,” said Chris Gerdes, associate professor of mechanical engineering at Stanford University, which is one of G.M.’s partners in H.C.C.I. research.

“With minimal changes to the engine hardware, H.C.C.I. gasoline engines should be able to produce diesel-like efficiencies while simultaneously lowering emissions,” he said.

Dennis Assanis, director of the Walter E. Lay Automotive Laboratory at the University of Michigan in Ann Arbor, says the H.C.C.I. combustion process offers potential for raising gasoline engine fuel efficiency by 15 percent to 20 percent while offering reductions in oxides of nitrogen, an important contributor to smog that is difficult to control.

The 2.2-liter engine in the test Aura is based on the G.M. Ecotec four-cylinder; a 2.4-liter version of this engine is available in the Aura for 2008. G.M. rates the H.C.C.I. engine at 180 horsepower and 170 pound-feet of torque of torque; by comparison, the ’08 Aura engine makes 164 horsepower and 159 pound-feet, and is rated at 22 miles a gallon in town and 30 on the highway.

G.M. would not give fuel economy figures for the H.C.C.I engine beyond the expectation of a 15 percent improvement in mileage.

The H.C.C.I. process is something of an answer to the long quest for so-called lean-burn engines, which use less fuel in relation to the volume of air ingested. Such engines present other problems, though, especially in terms of emissions control, because it is hard to ignite the air-fuel mixture evenly.

The H.C.C.I. gasoline engine aims to solve this by igniting an almost evenly distributed (hence the term homogeneous in its name) mixture of fuel, air and captured exhaust gas in the cylinders. Combustion is spontaneous, a result of heat in the cylinder rather than a spark plug, similar to the way a diesel engine operates.

Until recently, H.C.C.I. combustion was little more than a laboratory experiment. Engineers could coax the process to work successfully on special single-cylinder test engines running at a constant speed. But when applied to multicylinder engines operating under various loads, speeds and atmospheric conditions, H.C.C.I. refused to cooperate.

To get around the difficulty of making it idle smoothly and quietly under high loads, G.M. has, for now at least, limited its H.C.C.I. mode to the 1,000- to 3,000-r.p.m. zone used in the Aura test car, a range that covers most typical driving. Below and above that range the engine uses conventional spark ignition.

Making H.C.C.I. compatible with a broad range of fuels; reducing the faint rattling noise during the transition from compression ignition to spark ignition; and reducing emissions at low loads are other issues being addressed.

“H.C.C.I. relies on a very delicate balance of chemistry happening thousands of times per minute in the cylinder,” said Paul Najt, a manager in G.M.’s powertrain research laboratory who has been working on H.C.C.I. for more than 30 years.

“Controlling the chemistry is the difficult part to implement,” he said. “If the temperature and gas composition aren’t precisely correct, either nothing happens or something very bad happens.”

Bringing H.C.C.I. to production has become a top priority among the world’s major automakers. One sign that the technology is inching closer to production is that automakers are attaching brand names to their various H.C.C.I. programs.

At next month’s Frankfurt auto show, Mercedes-Benz will announce details of its Controlled Auto Ignition system, which it has named DiesOtto in homage to diesel and gasoline engine pioneers. Volkswagen’s Combined Combustion System is under development, and Honda’s H.C.C.I. system, originally conceived for racing motorcycles, is being tested in a four-cylinder auto engine.

China’s automakers and government-backed research institutes are also intensely interested in H.C.C.I. technology, judging by a survey of technical papers presented at last year’s congress of the Society of Automotive Engineers.

G.M.’s decision to move its H.C.C.I. program out of the laboratory and into what Mr. Najt calls the advanced engineering phase, as well as beginning road tests, signals the automaker’s steady progress in critical technology areas, said Matthias Alt, manager of the company’s global H.C.C.I. program.

“In the first half of 2007 we achieved significant gains in the system’s computer controls,” he said. “This moved the program ahead faster than even we ourselves expected.”

But while Mr. Alt and his team of engineers and scientists have made great progress, they acknowledge that many challenges remain before H.C.C.I. combustion is happily percolating inside new G.M. engines.

“As our development of the enablers and computer controls continues, we’ll extend the H.C.C.I. operating range up and down the load range,” Mr. Alt said. The optimism of Mr. Alt and his engineers suggests that the H.C.C.I. Aura won’t be stuck in the slow lanes of the test track much longer.
(C)NYT

Chrysler hires Lexus executive to revive marketing

Chrysler has hired Deborah Wahl Meyer as the vice president and chief marketing officer of Chrysler.

Meyer spent the past six years with Toyota and was recently vice president of marketing for Lexus. Meyer, 44, will report to Steven Landry who is the executive vice president of North American sales.

“She’s young, she’s hip and she’s a fast-tracker from Toyota,” said Jack Nerad, editorial director for the auto-buying guide Kelley Blue Book.

Meyer was not directly recruited by Chrysler’s CEO, Nardelli, although he did meet with her after he was hired on August 5th. “Bob really encouraged Deborah to be a part of his team at the new Chrysler,” Chrysler spokesman Jason Vines said.

Meyer will officially join Chrysler starting August 28th. Robert Nardelli, ex Home Depot CEO, was hired on August 5th.
(C)CarTech

Tesla Roadster to Make First Road Trip

The Tesla Roadster hits the highway later this month for the electric sports car's first public road trip, a 200-mile journey from San Francisco through the Sierras to Lake Tahoe.

Sure, it's a publicity stunt but one designed to demolish the perception that electric cars are short-range put-put mobiles more suited to suburban cul-de-sacs than the open road. As the Silicon Valley startup gears up for production of the zero-to-60-in-four super car this fall, it will use the final prototype of the Roadster for the August 29 road trip. The Global Hyatt hotel chain is sponsoring the event and the Roadster will stop at Hyatts in Sacramento and Incline Village, Nevada, on Lake Tahoe. Hyatt is considering installing charging stations at some properties - Tesla in May won a $561,000 grant from the state of California to develop charging stations that can be deployed at hotels. While this is the first public road trip for the Roadster, Tesla has put the $98,000 car through its paces during long-distance testing, says Tesla public relations director David Vespremi.

The test car is a "fusion red" prototype that screams sex and speed. Vespremi - like other Tesla employees, he's a gearhead - backs the Roadster out of the garage at Tesla's Silicon Valley headquarters and turns onto a busy thoroughfare. We cruise at about 40 mph for a bit and then he punches the accelerator and the car shoots forward into the traffic. I’m pushed back into my leather seat, subconsciously bracing for impact as we silently rocket straight toward a tractor trailer ahead. David flicks the steering wheel and the car effortlessly swings around the truck and heads toward the entrance ramp to the 101. It’s rush hour and the metering lights are on. He hits the accelerator and we rocket up the ramp at 90 miles an hour, gliding around the traffic as we merge onto the freeway. The drive back to San Francisco in the Zipcar Prius is anti-climatic, to say the least.
(C)GW

New Ford Taurus is really good!

The rebirth of the Taurus name was greeted by laughs but, it turns out, Ford has made a good car out of what was the Five Hundred.

Base prices: $23,000 to $28,000
Seating: Four comfortably, five maximum
Fuel mileage: 22 mpg overall, according to new EPA testing method
Power: 3.5-liter V6, 6-speed transmission

Pity the new Ford Taurus. It's a restyled and slightly re-engineered version of the Ford Five Hundred, a dull car that simply got no respect.

To try and turn things around, Ford also changed the name to Taurus, a name originally associated with a great automotive success story. The original Taurus had once been the most popular car in America, but it had long since been eclipsed by the Camry when it finally slipped out of production last year.

When the revamped Five Hundred's name change was announced at this year's Chicago Auto Show, most journalists saw it as nothing more than a laughable attempt to relive a moment of long ago glory.

That's too bad, because it just happens to be a really good car. In fact, the Five Hundred was never a really bad car. It was just dull.

Except for that, the Five Hundred provided in spades: It had good fuel economy, enormous amounts of interior room and a trunk you could float a barge in.

For the new Taurus, engineers put in a more powerful engine and upgraded the suspension. Ford designers worked, both outside and inside, to relieve the painful blandness that marked the Five Hundred.

This car has chrome - maybe even too much chrome - and it has more-than-adequate power. All without changing any of the stuff that made the Five Hundred such a practical, decent vehicle.

Does all this mean the car formerly known as the Five Hundred will finally get some respect? It should.

Big small shape
The Taurus's overall tall, rounded shape is unchanged from the Five Hundred. The car still looks a bit chubby, but the big three-bar chrome grill and the flashy side vents help.
The Taurus Limited, the top trim level, comes with chrome side view mirrors and door handles, too. At that level, the sheer volume of chrome really does lend the car some luxury-class style.

The pudgy shape serves a purpose, though. This car fits an awful lot of space over a small amount of asphalt.

The basic idea has always been to offer all the functionality of an SUV in a sedan body. The Taurus succeeds at that and more. There is plenty of room for passengers in both the front and back seats - more than you'll find in most two-row SUVs, in fact.

With all its seats filled with passengers, the Taurus actually has more storage space than many SUVs. The back seats fold down flat, just like an SUV's, leaving a full top-to-bottom pass-through. Even the front passenger seat folds flat, letting you load items that reach from the taillights all the way to the dashboard.

It's also available with all-wheel-drive.

These are all features that already existed in the Five Hundred and, thankfully, the Taurus hasn't lost them.

Its new interior doesn't look as well put together as, say, the Toyota Avalon's or even the Chrysler 300's, but it's still an attractive and functional piece of work. The center console has two separate bins, a lower, larger one and a big one beneath that.

Even with four occupants, everyone gets plenty of space for beverages. There are front and rear cupholders in the center. The back ones come in a fold-down center armrest. There's als a bottle holder in each door large enough to hold a two-liter soda bottle.

Improved drive
With its new 260 horsepower V6, the Taurus has power enough to accelerate without feeling strained as the Five Hundred did when pressed hard.
The engine also provides enough power for the six-speed transmission to work smoothly. In the Five Hundred, the car would often slog between shifts that seemed to come too early.

The Taurus' 57 horsepower improvement over the old Five Hundred also comes at no cost in terms of fuel economy. In fact, the Taurus gets about one mile more out of each gallon than the Five Hundred did, according to new EPA estimates. (It's actually not that unusual for an increase in power to result in better fuel economy. A stronger engine doesn't need to work as hard.)

The suspension is also tighter, but this is still no performance sedan. The Taurus is supposed to be a roomy, comfortable cruiser. The new shock tuning makes it feel more controlled in turns and over bumps, though, while still offering a smooth ride.

Steering remains a weak point. It doesn't feel like you're tossing around one of those American land barges of the old days, but the steering still feels a bit remote and numb.

Top safety
In advertising, Ford bills the Taurus as "rated the safest full-size car in America." That's based on the Taurus' "Top Safety Pick" rating from the Insurance Institute for Highway Safety. The Taurus actually shares that award with one other large car - the Audi A6 - not counting its own corporate twin, the Mercury Sable, shown here. The wagon version of the Taurus, the Taurus X, got the award, as well.
To earn that award, a car must get the Insurance Institutes's top rating of "Good" for front and side impact protection as well as for whiplash protection in rear impacts. Starting last year, cars were also required to offer electronic stability control, at least as an option. ESC is a computerized system that helps a driver maintain control when a skid or rollover threatens.

The Taurus also gets 5 stars, the top score, for front and side impact safety, according to the government's National Highway Traffic Safety Administration.

Lots to like
In all, the Taurus is a car with a lot to show for itself. Unfortunately, it may be brushed off by shoppers who see it as just a Five Hundred with a little make up and jewelry, but who miss the more powerful engine and suspension improvements.

They're the same shoppers who missed that the Five Hundred - while no-one's idea of a hot ride - really wasn't bad if you were just looking for a practical family car.

If questions about reliability are standing in your way, check with J.D. Power & Associates and Consumer Reports.

If you just look at recently introduced models, like the Ford Five Hundred and Fusion, it's a non-issue. Ford's new models perform just as well as Toyota's and Honda's and, in some cases, better. There's no reason to think the same won't hold true for the Taurus.

If you're shopping for a large car, the new Taurus should absolutely be on your list. In fact, if you're shopping for a mid-sized SUV, it should be on your list as well. You'd have a hard time finding anything in an SUV that you're not getting here except with better fuel economy and closed-in lockable cargo space.

And, if you want a third row of seats, there's the Ford Taurus X. It's basically a crossover SUV based on the Taurus.
(C)CNN

Buick ties Lexus for No. 1 in car reliability

Survey finds Detroit brands making headway against Japanese competitors.

For the first time in 12 years, Toyota's Lexus luxury brand has to share its top rank in J.D. Power and Associates' annual Vehicle Dependability Study.

And it has to share it with an American car.

General Motors' Buick brand tied Lexus in the study, which measures the number of problems owners experience with their cars after three years of ownership.

Following Lexus and Buick in the rankings were GM's Cadillac luxury brand, Ford's Mercury brand and Honda's Honda brand.

Toyota's mass-market Toyota brand ranked sixth.

"Consumers don't necessarily need to pay premium prices to obtain high quality and dependability," said Neal Oddes, director of product research and analysis for J.D. Power and Associates.

"With three non-premium nameplates - Buick, Honda and Mercury - ranking within the top five," he said, "and particularly with Buick tying with Lexus for the top rank, consumers seeking a vehicle with strong dependability have good choices at various price levels."

J.D. Power Vehicle Dependability Study is based on responses from more than 53,000 original owners of 2004 model year vehicles.

Owners of the top-ranked Lexus and Buick vehicles experienced 145 problems per 100 vehicles. Owners of second-ranked Cadillac vehicles experienced 162 problems per 100 vehicles.

The lowest-ranking brand was Land Rover, Ford's European luxury SUV brand. Land Rover owners experienced 398 problems per 100 vehicles, according to the survey.

J.D. Power and Associates also ranked specific vehicles within their respective categories. The top-ranked sub-compact car, for example, was the Scion xA from Toyota's youth-oriented Scion brand.

The top-ranked compact car was the Honda Civic and the top-ranked Sporty car was the Mazda Miata.

The Chevrolet SSR, a low-slung convertible pickup, and the Ford Mustang tied as the most dependable midsize sporty cars, and the Ford Crown Victoria ranked as the most dependable large car.

Lexus vehicles topped five categories, more than any other brand. Lexus had the top-ranked premium SUV, large premium SUV, premium sporty car, large premium car and midsize premium car. Toyota's Toyota brand topped four categories.
(C)CNN

Mercedes: Upcoming compact SUV to be called GLK

Mercedes officially confirmed yesterday that its upcoming compact SUV will be named the GLK class.

Mercedes showed a prototype of the GLK yesterday to the press. Mercedes said that the GLK is a smaller version of the GL-Class SUV, with a relatively squared-off exterior.

At the press event Mercedes showed the interior of the GLK which had white leather seats with black piping, black wood trim, the Mercedes COMAND-Plus single-knob controller and in-dash navigation system.


Production of the Mercedes-Benz GLK will take place at the company’s Bremen, Germany plant with an estimated output of 80,000 units annually.

The Mercedes-GLK is based on the platform of the 2008 C-Class (much like the X3 is based on the 3-Series) and is expected to be powered by a 2.0 liter base model and will eventually have a 2.2-liter turbodiesel that produces 204 horsepower the following year.

While Mercedes did not pricing, Automotive News estimates it being below $40,000 in order to compete head-to-head with the BMW X3, which starts at $38,775. The GLK will make its debut at the Frankfurt Auto Show this September.
(C)AutomotiveNews

10 Ways to Outwit a Car Dealer

Auto dealers have their own colorful slang that says something about how the car business operates; some pitfalls to watch out for; and, in some cases, how some of the more cynical dealerships see the customer.

Many car dealer terms can be applied to customers. Quite a few, like "Minnie the Moocher" are not compliments. (In the Cab Calloway song, Minnie the Moocher dreams she has $1 million in nickels and dimes, which she counts a million times.) A "mooch" is a customer who wants everything, without paying for anything. Not something the dealer likes to see.

Another such term: Be-back. This is a customer who makes multiple visits, as in, "I'll be back." Salespeople get paid on commission, so naturally their first priority is to close the deal.

Don't allow yourself to be rushed. If the salesperson is helpful and knowledgeable on your first visit (on your first visit, you're called an "up"), get their business card and ask for them next time. Consumers should negotiate hard, but they shouldn't get so caught up in the nickels and dimes that they lose sight of the big picture.

Nor should they take to the "ether" and let the details flow in one ear and out the other.

It's important to take your time. Read the fine print. Don't fall in love with a particular car — at least, not so much in love that you get in a rush and won't settle for anything else.

"Good advice," says Rosemary Shahan, president of the Consumers for Auto Reliability and Safety advocacy group, in Sacramento, Calif.

Money Grubbing

She says another term to watch out for is "dealer reserve." Often poorly understood, it refers to the markup the dealer applies to the interest rate on your car loan.

Dealers make money for arranging loans. Based on how risky the customer is, the lender approves a loan at the so-called "buy" rate. The dealer hikes the buy rate to the rate you pay, up to a ceiling specified by the lender, usually a couple of additional percentage points. The difference, called "dealer reserve," is a big source of dealer profit.

There's nothing illegal about it. Dealers and auto lenders have argued successfully in several lawsuits that arranging loans at the point of sale is a valuable, convenient service. And the National Automobile Dealers Association is quick to point out that in independent consumer surveys, most people say they are satisfied with their dealerships.

People should know that the dealership, not the bank or the finance company, sets the final interest rate you pay. "Most people have no idea that the dealer is getting what in essence is a kickback on the loan," Shahan says. "It is an undisclosed conflict of interest." Potentially, the interest rate is even negotiable.

However, Ron Burdge, a Dayton, Ohio attorney who specializes in "Lemon Law" complaints, said that even if you know this, few dealerships will budge.

"What's negotiable about it," he says, "is it just means you can go somewhere else if you don't like it."

Be-back: Customer who makes multiple visits, as in, "I'll be back." Salespeople get paid on commission, so naturally their first priority is to close the deal. Don't allow yourself to be rushed. If the salesperson is helpful and knowledgeable on your first visit (on your first visit, you;re called an "up"), get their business card and ask for them next time.





Dealer reserve: Dealers make money for arranging loans. Based on how risky the customer is, the lender approves a loan at the so-called "buy" rate. The dealer hikes the "buy" rate to the rate you pay, up to a ceiling specified by the lender, usually a couple of additional percentage points. The difference, called "dealer reserve," is a big source of dealer profit.




Ether: A dazed and confused customer is "in the ether," according to Ron Burdge, a Dayton, Ohio, attorney who handles Lemon Law cases against dealerships and is well versed in car dealer lingo. Losing focus is dangerous. An ethical, knowledgeable, well-trained salesperson or finance manager should be willing and able to slow down and answer any questions.




High penny: Rounding up a payment, say from $301.09 to $301.99. Like "ether," this term appears in Burdge's online Car Dealership Dictionary. By itself, the "high penny" might not be worth fighting about. But multiplied by hundreds of deals per month, it adds up.






Minnie the Moocher: A customer who beyond reason wants everything for nothing, after the Cab Calloway "Hi De Ho" song. There is some truth on both sides. Some customers really do make unreasonable demands. However, some dealers simply don’t like a taste of their own medicine. Customers should negotiate hard, but not obsess over nickels and dimes and forget bigger issues.




Packing: Adding extras to a finance contract. Rust-proofing is the classic example. Today’s cars don’t need it. Also beware of "credit life" insurance, which pays off your loan if you die. Homeowners insurance may already cover you. Also be aware that lenders are not allowed to require credit life.






Spiff: A dealer-only rebate. It can also be a bonus paid to the salesperson. When an ad says, "Dealer participation may vary" it means, "The factory is paying the dealer a spiff. This advertised price assumes the dealer will pass on the entire amount to you, in savings. They might not." Read all the fine print. Some ads disclose the amount.





Spot delivery: Buying a car on the spot, out of dealer inventory. Rather than lose a sale, dealers in hyper-competitive markets such as Southern California often let a customer take delivery before the financing is even approved. This can cut both ways. A dealer may be motivated to sell something that’s been sitting there. However, the customer should avoid rushing into a deal.




Third-base coach: Like in baseball. A third-base coach is a friend or relative, or maybe a trusted mechanic, who may try to stop the customer at third base, instead of letting them run for home plate, closing the deal. This is unwelcome to the finance manager trying to close the deal. However, like ballplayers, some consumers ignore their third-base coaches.





Yo-yo financing: The customer must bring the car back and pay more. Rosemary Shahan, president of the Consumers for Auto Reliability and Safety in Sacramento, Calif., said this is simply a tactic to get more money. It’s likely that after a too-hasty spot delivery, lenders refused to approve the deal without a bigger down payment or higher interest.

For the consumer, it pays to know the behind-the-scene details; it also pays to shop around and study up so you know even a few words of the local language.
(C)Forbes

Prius still king as hybrid auto sales rise

Record sales for hybrid vehicles seen for 2007 as more models enter the market. Diesels expected to grow even faster.

The Toyota Prius remained America's most popular gasoline/electric vehicle even as sales of hybrids rose 35 percent in the first quarter of 2007 compared to last year, according to a new report from J.D. Power and Associates.

Sales of diesel-powered vehicles, already a larger portion of the market than hybrids, are expected to grow even faster.

A total of 187,000 hybrid vehicles were sold in the United States in the first six months of 2007, according to J.D. Power. Sales of hybrid vehicles are expected to decline slightly in the second half of the year but, nevertheless, J.D. Power expects a total of 345,000 to be sold over the whole year. That would compare to 256,000 sold in 2006.

"High gas prices during the first half of 2007, coupled with automakers lowering the price premium for most hybrid models, have given the hybrid market a boost," said Mike Omotoso, senior manager of global powertrain forecasting for J.D. Power and Associates.

Lower prices for hybrids, as well as sales incentives, have helped make hybrids a more economically viable choice for consumers wanting to save money on fuel.

The Toyota Prius accounted for slightly more than half of all hybrid vehicles sold in the first half of 2007. Toyota has recently begun offering sales incentives on the Prius which, for years, had been selling so well that even used models were in high demand.

"Toyota realized that they had to offer incentives for the Prius to offset the decrease in the federal tax break, which decreased from more than $3,000 in 2006 to less than $1,000 in 2007," said Omotoso. "The incentives helped Toyota maintain a strong sales pace for the Prius."

A recent J.D. Power consumer survey showed flagging consumer interest in hybrids, but interest remains strong enough to maintain a continued rise in sales.

"While consideration for hybrids is falling, interest in hybrids is still strong among consumers, and projections indicate steady growth for this segment in the coming years," said Omotoso. "Bringing additional hybrid models to the market will serve to fuel that interest."

Despite increasing competition from other hybrid models - including seven new models expected to enter the market later this year - J.D. Power expects the Prius to remain the sales leader for several more years. Among the new hybrid models expected this year are hybrid versions of Ford's Ford Fusion and Mercury Milan sedans and hybrid versions of General Motor's full-size SUVs.

J.D. Power expects hybrid vehicles to make up 4.6 percent of the total new vehicle market by 2010 when there will be as many as 65 hybrid models for sale in the U.S.

Diesel vehicles, including heavy-duty pickups such as the Ford SuperDuty, already make up about three percent of the new vehicle market, Omotoso said.

That percentage is expected to rise to about five percent by 2010, said Omotoso, with most of that growth coming from newly introduced passenger vehicles such as a diesel-powered Honda Accord that will replace the current Accord Hybrid.
(C)CNN

Pontiac’s Plans: New Solstice Coupe in 2009, new G5 in 2010

GM wants to push Pontiac as the “affordable performance” brand with a new line of rear-wheel-drive cars.


Pontiac gets ready to launch the new high-performance 2008 Pontiac G8 it battles CAFE fuel-economy standards.

So what’s going on at Pontiac? Well the 2008 Pontiac G8, which will be the first car in the US to use GM’s Zeta rear-wheel-drive platform, will go on sale in January of 2008. The base model of the Pontiac G8 will have a 3.6 liter V6 engine with 261 horsepower while the higher GT model will have a 6.0 liter V8 which will produce 362 horsepower.

The Pontiac G5 will get a redesign in 2009 while the G6 is slated for a redesign in 2012. GM originally wanted the next-generation G6 to debut in 2010, but with Pontiac moving to the rear-wheel-drive platform, the date has been changed.

Pontiac’s Solstice will get a fastback coupe variant for the 2009 model year and a higher-horsepower engine. The car will be redesigned and re-engineered in the 2011 model year.

A new high-performance coupe is on the cards that will be the successor to GTO and the Firebird. No time has being discussed as of yet. The Torrent will be dropped from the Pontiac line and will be added to GMC as a new crossover.
(C)eGMCT

About Paying for Cars With Cash

There are two questions that greet every car buyer who walks into a showroom: “Are you ready to buy today?” and “How do you plan to pay?”

If the answer to the first is yes, there are smiles all around. If the answer to the second is cash, that warm greeting may grow chilly.

To be sure, no dealer will turn away a cash-paying customer, not in the atmosphere that surrounds the automobile industry these days, but all things considered, they are less welcome than buyers who want to lease or finance their cars. “We actually love all paying customers,” said George Borst, the chief executive of Toyota Financial, “but we really want people to finance.”

On the other hand, many car dealers are trying to clear out big inventories at the end of the 2007 model year to prepare for fresh models that begin arriving soon.

But buyers who pay cash, whether they write a check or borrow the money elsewhere and bring it to the showroom, provide car dealers with fewer opportunities to make money on a car deal.

That ranges from the cut they get from arranging a lease or loan, to options like extended warranties or antirust coating that buyers are more likely to choose if they can fold it into the amount they borrow. In some cases, those extras account for up to 75 percent of a showroom’s profits.

But, to some dealers’ chagrin, cash deals are up in 2007. Some 11.7 percent of buyers paid cash for cars in the first half of this year, versus about 8 percent over the last few years, according to a survey by CNW Marketing Research, which studies car buying habits.

In all, about 26 percent of buyers are bringing cash to the table, whether it is out of their bank accounts or in pre-arranged loans through their credit unions, banks or home lenders, according to the Power Information Network, the research arm of J. D. Power & Associates.

That overall figure is up slightly from last year, but still below the one-third of buyers who paid cash in the 1950s, when customers, many with lingering memories of the Great Depression, came to showrooms with their check books or stacks of bills.

It is in line, however, with the rate during the 1970s and 1980s, before car companies made widespread use of cut-rate loans and discount lease plans.

One big reason for the recent rise in cash-paying buyers is the introduction of small and less-expensive cars into the American market, like the Honda Fit, Toyota Yaris and Nissan Versa, said Art Spinella, the president of CNW Marketing.

Because many consumers purchase small vehicles as second and third cars, and have a car loan for their primary vehicle, a number are choosing instead to pay cash rather than take on another loan, Mr. Spinella said. That is particularly true for women buyers, who account for about 42 percent of cash-paying customers.

Cash-paying buyers, who tend to be wealthier than typical consumers, are often reaping investment profits. This year, 34.8 percent paid for their cars by selling stock, the most common source of cash, compared with 31.8 percent who took money out of their savings, Mr. Spinella’s data showed.

Indeed, at brands like Mercedes-Benz, Volvo, Audi and BMW, as many as one-third of transactions are cash sales.

For these customers, sticker price can be no object. One shopper at Lexus of Ann Arbor, Mich., recently paid $116,000 in cash for the Lexus LS 460 Lh, the hybrid version of Lexus’s ultra luxury sedan, which went on sale in July.

Mark A. Louria, the general sales manager there, said about 25 percent of his customers paid cash for their new cars, keeping them for an average of six to seven years. Mr. Louria said he tried to encourage many customers to lease their cars instead, arguing that it was a better way to take advantage of ever-changing technology.

In the end, “it’s whatever works best for them,” Mr. Louria said.

Shopping sites like Edmunds.com, Cars.com, Kelly Blue Book (kbb.com) and Autobytel.com are places where consumers can research data like the invoice price, and the amount that manufacturers are giving to dealers in rebates and extra incentives.

Those who plunk down dollar bills often cite a single reason. “I just don’t like debt,” said Todd Larson of Shorewood, Minn. Mr. Larson and his wife, Linda, paid $33,000 cash for their 2005 Ford Freestyle, as well as a 2001 Jeep Cherokee.

For Matthew Galloghy, 30, who lives in Batavia, Ohio, outside Cincinnati, it is simply saving money. He recently paid about $20,000 for a Honda Accord, and plans to drive it for about 10 years.

Mr. Galloghy takes his thrift to another level. He said he would make a monthly deposit equal to a car payment, or about $300, in a money market account. “And now I certainly have a cushion for emergencies or anything else that may come up,” Mr. Galloghy said.

Cash purchases had all but died out in 1998, when buyers were snapping up cheap lease deals that allowed them to take home more expensive models, especially sport utility vehicles, for little down and minimal monthly payments.

After a rebound, they plummeted again in the months after the September 2001 attacks, when auto companies led by General Motors rolled out zero percent financing plans in an effort to spur auto sales.

Lately, these plans have been far more limited than they were earlier this decade, said Jesse Toprak, an analyst with Edmunds.com, a Web site that offers car-buying advice. Many automakers, who made zero percent financing available to virtually any customer six years ago, now offer it only to those with the best credit, he said.

Auto company finance arms and banks have been burned by oversetting these cars’ residual value, or the amount that they estimate the vehicle to be worth when the lease is finished. The higher the residual, the lower the monthly payment, but a too-high residual means the finance company takes a loss on the car after it is turned in.

These lenders also have been hurt by their practice of encouraging five and six-year car loans, which can lead to lower payments, but can result in a vehicle being worth less than the remaining amount to be paid off, a situation the industry calls “upside down.”

Zero-percent-financing plans, in which buyers need only pay for taxes, licenses and other documentation, can prove more beneficial to consumers with the best credit.

Likewise, a discounted lease of 36 months or less can allow trend-conscious customers to swap their cars for the next hot model without gambling on the car’s value, even though they will pay interest on the lease, transaction fees, and may need a down payment. No matter what, buyers need to haggle over the price first before discussing the details.

But some buyers simply want to own outright. In that case, these consumers need to do their homework before they begin negotiating, checking out the prices that are being paid in their area for the automobile they want on sites like Edmunds, which provides a tool it calls the “true market value.”

Buyers enter their ZIP codes, and then choose the options they want, and are provided with the price most frequently paid by purchasers in their area.

Without that knowledge, cash-paying customers risk not just a frosty dealer response, but a concerted effort to get them to change their minds, said Mr. Toprak, who sold cars early in his career.

“When I was at a closing and the customer said, ‘this is a cash deal,’ I knew I would not make any money for the next hour,” he said.

Mr. Toprak advised cash buyers to get prices from several dealers through their Web sites. If a sales person balks at honoring that figure because a customer wants to pay cash, the buyer can threaten to go elsewhere, he said.

Still, some buyers prefer to stick to their guns.

John Kealing, a St. Louis salesman, paid $34,000 cash for his 2006 Infiniti G35x, the second car this decade for which he has paid cash. Mr. Kealing said he deliberately waited until the last minute to tell the dealer that he was paying cash. “He found out when he put the loan document in front of me,” Mr. Kealing said.

The dealer “tried to talk me out of it, actually,” he said. “He told me he had some great rates, but I didn’t waver.”

Rob Butler, owner of the Butler Automotive Group in Indianapolis, said he doesn’t discourage customers who want to pay cash from doing so.

“If a guy likes to write a check, fine,” Mr. Butler said. “Cash is still cash.”
(C)NYT

Arrests In Auto-Insurance Scheme

Four Tampa residents were arrested Wednesday in connection with an auto-insurance scheme in which medical clinics reportedly paid patients to receive treatment they didn't need, then billed insurance companies.

People involved in auto accidents were paid $600 or more to report false medical claims, according to Capt. John Corbett of a law enforcement division of the Florida Department of Financial Services.

The bills were sent to auto insurance companies under the drivers' personal injury protection coverage.

By law, Florida drivers are required to carry at least $10,000 in PIP coverage.

At least one of the clinics, Bellamar Medical Center on 4109 N. Armenia Ave., paid people $2,000 or more each to stage auto accidents, Corbett said.

After several months of investigation by the department's Division of Insurance Fraud, Isidoro Martinez, 40, and Yusimy Martinez, 32, were both charged with insurance fraud and grand theft. The two own the Bellamar center.

Also arrested were Lemuel Filipe, 32, and Yunaisy Silverio, 24. Both face charges of insurance fraud and patient brokering.

Filipe and Silverio were listed as employees of Tampa Bay Therapy at 3104 W. Waters Ave., Corbett said.

The department is continuing to investigate other clinics, Corbett said.
(C)Tampa Tribune

Auto insurance will no longer be required in Florida

Come Oct. 1, auto insurance will no longer be required in Florida.

It's the consequence of the Legislature allowing Florida's no-fault auto insurance law to expire.

The aim of ending no-fault, which requires drivers to buy $10,000 of personal injury protection to cover the cost of medical care, was to reduce the widespread fraud created by the program and to lower insurance rates. But PIP is linked to the state's other type of mandatory auto coverage -- property damage liability.

The demise of PIP will kill the mandate to carry a minimum of $10,000 of property damage liability coverage, according to the state Department of Highway Safety & Motor Vehicles, which enforces the no-fault law.

"Insurance will not be required for good drivers," said department spokeswoman Julie Baker, although drivers who get into an accident and have no insurance will be required by the state to carry insurance for a certain amount of time.

The end of mandatory auto insurance in Florida, home to more than 12 million drivers, could raise insurance rates 25 percent to 30 percent as the risk of colliding with an uninsured motorist climbs, said Gunars Mansons, vice president of the Specialty Agents Association of Florida, a trade group representing small independent insurance agents.

Only Tennessee, Wisconsin and Iowa do not require drivers to carry some form of auto insurance.

"Nobody believed this would really happen. Nobody believed it would really go this far," Mansons said. "Mandatory insurance is going away, and rates for responsible individuals will have to go up."

Sen. Bill Posey, R-Rockledge, said lawmakers were well-aware that auto insurance would no longer be mandatory if no-fault was allowed to expire with no changes.

"Of course, they knew what was going on," Posey said. "I think everybody was aware of it. I was certainly aware of it."

But Mansons said most lawmakers were oblivious to the effect of PIP's sunset.

"If all of our lawmakers knew they were heading us into no mandatory insurance, they might have done something while they were in session," he said.

State Farm's Perspective

State Farm, the state's largest auto insurer, and other auto insurers who lobbied hard for the sunset of PIP say the requirement to buy property damage coverage will survive PIP's termination.

The no-fault law requires that all policies must include $10,000 of property damage coverage. State Farm contends the law's reference to property damage, though flawed, will be preserved despite the expiration of the PIP law, company spokesman Justin Glover said.

"If that could happen, the Legislature could accidentally repeal all kinds of things through bad references," Glover said. "That's just not how our system of law works."

Allison North Jones, spokeswoman for Floridians for Lower Insurance Costs, a coalition formed to push for the end of PIP, said eliminating the mandate for drivers to carry property damage liability coverage was not the coalition's intent.

"Property damage is sold as a bundle with PIP, but by removing one part of that bundle doesn't mean you've removed that requirement," Jones said.

What's more, the state has a financial responsibility law that requires drivers to be able to pay for any property damage or medical care they may cause. Carrying liability insurance is the best way to meet the state's financial responsibility law, though it's not required.

"Every driver in the state is personally responsible for compensation incurred if they are at fault in a car crash," said Baker of the motor vehicles department.

However, that law doesn't require drivers to prove they can pay until an accident occurs.

"The financial responsibility law means absolutely nothing because it only counts after you have an accident," Manson said.

Despite arguments from State Farm and others who say property damage coverage will continue to be required, the motor vehicles department has not changed its position. Mandatory auto insurance will disappear when PIP expires in a little more than two months, Baker said.

Drivers will no longer be required to show proof of insurance when they renew their license plates each year, she said.

"We won't have a mechanism in place to track whether someone is insured or not," Baker said

The confusion and uncertainty is created by those who want to see the controversial PIP coverage extended and preserved, Jones said.

Gov. Charlie Crist has said he may call a special session in September to reform the no-fault system.

"This is merely at attempt by special interests to confuse the issue," Jones said.

Meanwhile, lawmakers are trying to devise a plan to reform the no-fault system rather than let it fade away.

The no-fault law is controversial because it allows unscrupulous doctors and clinics to bill for unnecessary and expensive medical procedures to get the full $10,000 of coverage guaranteed for every accident. "We're overpaying for it," State Farm's Glover said.

Consumers To Decide

The end of no-fault will allow consumers to decide for themselves whether they need such medical coverage, Glover said. For some people on Medicare, PIP is a financial burden, he said.

"They're buying PIP when they probably don't need it," Glover said.

But the state's hospitals and trauma centers want to preserve the no-fault system because the mandatory coverage means they're guaranteed to recover up to $10,000 of the cost of care almost immediately. The elimination of PIP will cost them at least $350 million a year as they foot the bill for drivers who have no health insurance.

And health insurers say the demise of PIP will only transfer the cost of medical care to them, which will lead to higher premiums for health insurance.

Paul Sanford, an attorney for Blue Cross and Blue Shield of Florida, the state's largest health insurer, said the end of PIP will cause health insurance rates in Florida to jump at least $5 a month per family member. In Florida, 14 million people have health insurance, he said.

"At $5 a head, that's $70 million a month or $840 million a year that they will have to pay in order for PIP to go away," Sanford said.

Instead of calling a special session to try to reform the no-fault system, lawmakers should let it expire, wait a few months and gauge the results, Glover said.

"The only thing that will happen is auto insurance companies will save money," he said.
(C)Tampa Tribune

Earthquake: Toyota getting back to normal

No. 1 carmaker, hit by supply problems following an earthquake last week, lost 55,000 units of vehicle production, but reaffirms its overall sales target for 2007.

Toyota Motor Corp. said it would resume work at two-thirds of its car assembly lines in Japan on Tuesday after an earthquake cut off supplies of key components to its factories, and it kept its global sales targets unchanged for 2007.

Auto production at Japanese carmakers has virtually ground to a halt after the country's top supplier of piston rings, Riken Corp., was hit by an earthquake on July 16.

Speaking at its annual mid-year news conference, Toyota President Katsuaki Watanabe said on Monday the automaker would lose about 55,000 units of vehicle output after a complete stoppage at all domestic plants through Monday and at 20 of the 31 assembly lines at its 12 group-wide car factories on Tuesday.

Plans for Wednesday and beyond would be decided on Tuesday.

But Watanabe stressed that shutting down factory production was not alarming under the circumstances, and defended Toyota's famed lean manufacturing method as one of its competitive strengths.

"We will gauge how to make up for the lost production in due time," Watanabe said. "What's important is being able to figure out how swiftly we can fix the problem and return to normal."

Car sales in Japan have declined across the board, but Toyota's domestic factories have been working at full speed to satisfy demand overseas. Toyota exports 60 percent of its Japan-made vehicles.

Watanabe conceded that the domestic market remained tough - Toyota's sales fell 10 percent in the first half of the year to 826,000 units - but said he was counting on new car launches and the Tokyo Motor Show in the latter half to jump-start sales.

"We realize that our domestic sales target of 1.72 million units (for 2007) is very challenging, but we've seen some improvement in July and we're not changing our global targets," he said.

Toyota in December set a parent-only sales goal of 8.4 million vehicles for 2007 and 9.34 million units for the group, including Daihatsu Motor Co. and Hino Motors Ltd. Both figures represent a 6 percent rise from 2006.

Margin goal
Toyota, which overtook General Motors Corp. as the world's biggest automaker last year, has been boosting its sales volume and profits steadily driven by its popular, fuel-efficient models such as the Camry and Prius sedans.

Management has set a goal of 10 percent operating profit margin, up from 9.3 percent in the business year ended March 31, and Watanabe said the automaker would keep that target for the mid to longer terms despite intensifying competition, the growing popularity of smaller, cheaper cars and the need to step up spending on developing environmental and safety technologies.

"I think it's a good target that (also) works for the mid to long term," he said.

Toyota already has the highest profit margin among the world's mass-volume carmakers. Domestic rivals Honda Motor Co. and Nissan Motor Co. had margins of 7.7 percent and 7.4 percent, respectively, last year.

As part of its safety activities, Toyota announced on Monday it would include side airbags and curtain shield airbags as standard equipment on all new passenger cars going forward.
(C)Reuters

BMW Mini Colorado - in talks to create Mini SUV

Auto-parts supplier and German automaker would assemble 65,000 of a vehicle called Mini Colorado at a plant in Graz, Austria, a newspaper reports.

Magna International is in talks with BMW AG to build a larger version of the upscale German automaker's trendy Mini cars, Canada's Globe and Mail newspaper reported Thursday.

The sport utility vehicle would be called the Mini Colorado, with 65,000 to be assembled annually at Magna's Steyr plant in Graz, Austria, the newspaper said, citing unnamed sources.

Tracy Fuerst, a spokeswoman for Aurora, Ontario-based Magna told Reuters that the "reports of potential future BMW and Volkswagen assembly programs are speculative and, as a matter of policy, we will not comment on them".

"As a Tier 1 automotive supplier, we are constantly engaged in confidential discussions with [original equipment manufacturers] regarding potential future business," she said.

The Canadian auto-parts maker is also rumored to be in talks with Volkswagen AG about assembling 20,000 roadsters annually for VW at the Steyr plant, the Globe said.

"It would be positive news for Magna because, as is well known, it is facing the loss of pretty significant volumes," said David Tyerman, an analyst at Scotia Capital.

The reports came on the same day that DaimlerChrysler's Chrysler Group announced it was shifting full-sized car production from Magna's Steyr plant to its own Brampton, Ontario, plant, where it will invest $1.2 billion for upgrades of the Chrysler 300, Dodge Magnum and Dodge Charger models.

BMW said in May it planned to pull production of its X3 mid-sized SUV from the Steyr plant and transfer it to its own plant in South Carolina. The X3 represented about 45 percent of total vehicles assembled at Steyr.

"So its assembly facility in Graz, Austria, would be significantly under-utilized and obviously these new programs would help a lot in filling that production hole," Tyerman said.

Magna shares were little changed in late-session trading on the New York Stock Exchange.
(C)Reuters

Plug-In Hybrids a Solution to Global Warming

The first major analysis of the potential impact of plug-in hybrid electric vehicles has found the widespread adoption of such cars and trucks would dramatically reduce greenhouse gas emissions in the United States and improve air quality.

By 2050, plug-in hybrids, or PHEVS, could eliminate 450 million metric tons of CO2 annually - the equivalent of taking 82.5 million conventional cars, or a third of the nation's current fleet - off the road. That would also cut oil consumption by nearly 4 million barrels a day. Assuming PHEVs hit the market by 2010, and depending on sales of the cars, the total reduction in greenhouse gases by 2050 would 3.4 to 10.3 billion metric tons, according to the study conducted by the non-profit Electric Power Research Institute and the Natural Resources Defense Council. The study was based on sophisticated computer modeling of the U.S. power grid and transportation system.

"What we’re talking about today is potentially a very, very large effect," said John Bryson, CEO of utility giant Edison International (EIX), during a press conference in Washington, D.C. this morning. Utilities like Edison, PG&E (PCG) and Austin Energy have taken the lead in pushing automakers to get in gear on plug-in hybrids.

Even if plug-in hybrids become the dominant form of transportation they would only spike electricity demand by five to eight percent, researchers said, because most car owners probably will charge their vehicles at night when power plants are idle or under-utilized. The study's computer models considered various scenarios, from a high CO2-intensive grid to a greener one as well as plug-in hybrids with varying ranges and sales. But even if plug-in hybrids made up only 20 percent of the nation's vehicle fleet in 2050 and the electric grid remained relatively dirty, greenhouse gas emissions would still decline by some 163 million metric tons annually.

The impact of plug-in hybrids on global warming will depend on the electric system, noted NRDC scientist Dan Lashof. "The key to utilizing plug-in hybrids is a cleaner power grid," he said. The greener the grid, the greater the greenhouse gas reductions as coal-fired power plants are displaced by renewable energy or begin to deploy technology to capture their CO2 emissions.

General Motors (GM) executive Tony Posawatz brought a plug-in Chevrolet Volt concept car to the press conference. The automaker is designing the Volt to run primarily on battery power and use other alternative fuels to extend its range. "We at General Motors are certainly very interested in this study," said Posawatz. "The potential for plug-ins, I think everyone recognizes, is tremendous."
(C)B2