Big money for a little car

              Imagine spending 190 million dollars for a small sedan? That is what General Motors Co. plans to spend $190 million in a Michigan plant to build a small sedan for Cadillac. General Motors CEO Dan Akerson is supposed to reveal the news tomorrow at the Lansing Grand River assembly plant. The Lansing State Journal and The Detroit News reported the news today. GM officials and Lansing Mayor Virg Bernero,  the Democratic candidate for Michigan governor, announced the news together. The Cadillac ATS will be marketed below the CTS. CTS will no longer be the smallest Cadillac model. The ATS, a compact luxury coupe, is expected to go on sale as early as the 2012 model year. Speculators say Cadillac may sell coupe and wagon versions of the ATS as well. GM already builds the Cadillac STS sedan and CTS sedan, coupe and wagon at the Lansing factory. The Lansing City Council voted to offer GM about $9.8 million in tax breaks to persuade the company to build a new model at the plant, the State Journal reported. The paper said city officials expect the investment and addition of the ATS sedan to create about 600 jobs at the plant.
    It is a definite perk to investing that much money into a new model of a sadan that the plant provides 600 jobs. If it weren't for the people that are now able to support themselves from this plant, I would think it is a little extreme to waste that much money, time and energy on a model that, personally, doesn't have that much consumer appeal. Only time will tell if GM made the smart investment. 

http://www.autonews.com/apps/pbcs.dll/search?Category=SEARCH&SearchProfile=1250&exclcat=COPY;COPY01;COPY02;VIDEO;HOLD&noblankcheck=1&ProfileName=--%20Chrysler%20brand 

Consumer Reports Says Yay to Some, but Nay to Others

Surprisingly, Ford had the highest-ranked models in the family car segment with their Ford Fusion Hybrid and Ford Fusion V6 models. This vehicle beat the Toyota Camry and Honda Accord, which do not usually lose in this segment. However, Toyota led in five other segments, but scored only an average rating on their popular Prius model. This was a decline from last year. Toyota’s major recall on the brakes of the Prius caused it to score significantly lower than usual.

As the Japanese and most of the American automakers strive to the top of the charts, the European luxury brands were in a different category. BMW, Mercedes-Benz, and Audi performed very poorly. In particular, BMW had five of 11 models ranked below average.

The overall comparison ranked Scion as the best brand and Chrysler as the lowest-ranked brand. Unfortunately, Chrysler has not undated its model line to meet consumer demands and it has not improved like Ford and GM. I expect Chrysler to create even more of a financial deficit than it already has in the future and I am sure that it will run out of business within the next ten to fifteen years. Ford and GM have shown that they are taking the initiative to improve their image and their hard work is paying off. The improving ratings of these two brands has helped shift consumers eyes off of the popular German brands and redirect them to American automakers.

Source: http://online.wsj.com/article/SB10001424052702303341904575576454238670026.html?KEYWORDS=auto+industry

Fuel Efficiency Standards for Trucks

Fuel economy targets have been set for small vehicles, which inclues anything under 8,500 lbs.) for many decades. But now for the first time ever the Obama administration is attempting to set fuel-economy standards on trucks, buses and tractors. The goal they want the Industry to achieve is for all trucks to be 20% more fuel efficient by 2018.

This is such an important issue to address because although trucks over 8,500 lbs. only make up 3% of the vehicle fleet, they consume over 15% of the fuel. For example, a garbage truck takes 5 miles per gallon, while traveling on average 20,000 miles per year...thats means they consume over 3,600 gallons a year! With the implementations of these electric and hydraulic hybrids they are expected to save 1,100gallons of fuel within the first year.

Although it seems that there are only positive consequences to this change, that is not the case. Because of the new technological advances that will be needed to improve the fuel-economy, the expected cost of the improvements come out to 7.7 billion.
in order to bounce-back from this outstanding debt, they will raise the prices significantly to make sure the buyers recover the cost within the first year. The American Truck Dealers Association cautions that this plan will deter many small market buyers from purchasing trucks. But others argue that on average, a truck driver will save 74,000 over the span of a trucks life. These enormous savings should bring back and buyers that may have been in doubt.

At first a higher price tag on trucks, buses, and other heavy vehicles may make buyers question their purchase, but in the end I feel that they will realize that will save money. Before making a purchase they will speak to the sellers and they will eventually understand that they will save the money they would've normally put towards gasoline and spend half of it on the vehicle itself, and just pocket the rest. This idea to up the fuel efficiency standards is a fantastic plan to keep our overall fuel usage down.


http://online.wsj.com/article/SB10001424052702303467004575574251198447096.html?KEYWORDS=all+electric

Problem, Officer?

A study was conducted to see which car models received the most traffic tickets. Quality Planning, a company that analyzes driving statistics for insurance companies, looked through data on 2 million cars. High-performance luxury cars got a lot of tickets. This is probably because these drivers want to test out what these cars can do. Colorful SUVs and compact sporty cars with young drivers also got a lot of tickets. Overall an average of 1 moving violation was found for every 500,000 miles driven. The most ticketed model was the Mercedes SL, which received 4 times more tickets than the average model. Others on the top 10 most ticketed models list include the CLS 63 AMG sedan, the Scion tC, the Acura Integra, and the Toyota Camry Solora convertible. The least ticketed models include bland SUVs, minivans, and average looking cars. While Quality Planning doesn’t have an official conclusion, they suggested that drivers who want to drive fast often buy high-performance cars. This leads to these cars being on the receiving end of speeding tickets.

Some interesting finds in the article that were conducted in separate researches include:
• Out of town drivers who are caught speeding are more likely to pay and pay a higher fee for speeding than drivers from that town.
• Drivers caught speeding in cities with budget deficits were more likely to be handed pricier tickets.
• Young women received 33% less tickets than men, but women over 75 years old got tickets at the same rate as men.

I think it makes sense that luxury cars get more tickets than average cars. I agree that drivers who are riskier and more aggressive tend to drive high-performance cars. Another good reason these flashy cars get more tickets could be that these cars simply get more attention than the average car. A police officer sitting in his car with his radar gun sees cars speeding all the time. A car that triggers his attention is more likely to make him give chase. On the finding that young women get a third less tickets than men, I wonder if this meant women are less likely to speed or women are less likely to get a ticket when they are stopped. If it’s the latter, it would be interesting that police officers have such a bias.

http://online.wsj.com/article/SB10001424052702304510704575562313011143510.html?mod=WSJ_auto_TopRightCarousel_1

Environmental Limits

As we know, many auto makers are trying to produce better fuel efficient vehicles. This is why we have been noticing more hybrid gas-electric vehicles, as well as all-electric vehicles. Auto manufacturers have found that all-electric vehicles help cut greenhouse gases and smog, which is very beneficial to the environment. However, when it comes to hybrid gas-electric vehicles, there is not much of a difference between the two products. It's obvious that electric vehicles have lured in its customers because of "its ability to curb use of fossil fuels, which spew out pollutants including greenhouse gases." Studies have found that "charging an electric car over a 10 year span could be as much as 80% lower than driving a gasoline powered car." With this also comes and economic issue that troubles many individuals, and that is whether or not the battery packs used by plug-in hybrids will be recycled. Right now, there aren't many recycling companies that will take in such large batteries and because of this, GM Co. and Nissan Motor Co. are trying to find ways to give batteries a second life.

I feel as though no matter what the automakers try to come up with to build a more fuel efficient economy, there will always be an opportunity cost. There will be some benefits to their ideas as well as some disadvantages. Some people aren't always going to agree with the products being used because of how harmful it could be to society, such as the batteries not being recycled, but looking long-term, it's evident that using electrical vehicles are still better for out environment. The most important thing is to find ways to reduce greenhouse gases, and as long as that is taking place, there shouldn't be much disagreement with how the auto industry is working.

http://online.wsj.com/article/

Beijing demonstrating power equals halt to BYD Co.

The chinese government ordered BYD Co. to surrender land in a recent zoning dispute. They confiscated approximately 121 acres of land in Xian, a central chinese city.  This caused a slow in chinese national competition in the car battery and auto maker market. BYD was no longer able to build the car plant they were planning on building there next year. China's minestry of land and resources said that the reason for confiscating the land was because the land was illegally adjusted to industrial from agricultural. They also scolded dozens of government officials, and fired the main decision makers who were a part of planning how to build on the land. 


In addition to firing of government officials, they hit BYD with a 295 million yuan plan, which is 442,000 dollars in U.S dollars. Still, an individual close to BYD said the company, one of China's best car brands, might have to look for a different site in Xian to build a third assembly plant. Each existing plant in the city can produce 200,000 cars a year. BYD said Wednesday that its car sales in China last month fell 25% from a year earlier to 33,085 cars, even as China's overall vehicle sales rose 19%. 


I think It would be a shame that BYD, a main player in the Chinese auto industry would be out of the competition because of a mistaken use of land, and a fine. I think this was a little bit extreme of a consequence and I believe they should of approached BYD in a different manner and went into greater detail about why China's ministry of land and resources was taking the land.  I want to follow BYD in the future to see how they recover from this set back. 


http://online.wsj.com/article/SB10001424052748704763904575549793829052072.html?mod=WSJ_auto_IndustryCollection

Solar Cars in my neighborhood? Not for a while

Enough sunlight hits the earth in an hour that it could power the world for one year. In 2008 Louis Palmer drove around the world on a car that uses solar energy as power. In 24 hours he could travel up to 100 kilometers at night. However, these solar powered cars are very bulky and require plenty of sunlight to travel a decent distance. Throughout the years car makers have developed solar cars, but they have never reached the mass market because it is simply too impractical; solar panels just don’t generate enough energy. Currently a square meter of solar panels only get seventy-five percent of a kilo-watt hour per day. This would let you travel 2 miles. Despite these challenges, inventors and auto companies continue to research solar cells. Solar power could be fused with petroleum and electricity, helping shape a tribrid car. For $10,000 extra, the 2010 Toyota Prius can come with a solar roof. The Leaf hybrid car by Nissan can also be made with solar panels. When the day comes when an average car runs on solar energy, the solar panels may be on houses rather than the cars themselves. 10 square meters of solar panels on the roof of a house could power a car for 15,000 miles.

It’s unfortunate that technology isn’t advanced enough for solar panels to generate a respectable amount of energy. I do have hope that in the future that they will, and that would solve the energy crisis the world is going to face. I didn’t know that a Prius could come with solar panels, as that means the car utilizes 3 forms of energy already. I’m glad that auto companies are exploring solar energy as well as other renewable energy sources. With any luck, gas stations will become non-existent in my lifetime. I think one day almost all homes would have solar panels on the roof. It would be amazing if a house could function on its own just from generating energy from sunlight.

http://online.wsj.com/article/SB10001424052748704129204575505803617253926.html?mod=WSJ_auto_IndustryCollection

Mercedes Benz Worries About Confusion

New president and CEO of Mercedes Benz, Markus Schaefer, is growing more and more worried as the days pass. Previously, when people were going to buy cars their main concerns involved superficial wants; How big are the rims? Does it have a spoiler? Etc. But now, thanks to the growing green movement, the consumers main question should be which car is best for my unique usage? Because every driver uses their car for different purposes, some long-distance, others short-distance, and still others are somewhere in between.

Therefore the company adapted and released new cars for every different kind of user. For the country-styled folks who like to take road tips they made the Bluetec diesel engine which is used in the E-Class Sedan. For those like to stay in the city they made the all electric vehicles, because they dont need to worry about being stranded due to an an charged batter since it will be docked most of the time. Ten for the people who live in the city but still like to get away sometimes they made the S400 hybrid sedan and the ML hybrid Sports Utility vehicle to give them a taste of both worlds.

Mercedes Benz as a company is adapting well to these changes towards a more green economy, but the big question is whether or not consumers will be able to do the same. 2,424 adults entering Mercedes Benz were surveyed and asked if they would like to drive a vehicle that runs on alternative fuel. Just over 50% said yes. Out of that 50%, only 35% felt that they were educated on which kind they should buy. The thought that the public will not make the correct decisions when purchasing a vehicle is worrisome to the company because an incorrect purchase may deter them from coming back for more in the future.

But I do not think this will impose a big threat to the company, or the auto industry as a whole. I think this because for most people, any purchase over $500 will require a lot of thought and contemplation. Usually, car purchases are not impulsive, they are well thought out. They will recieve information from the dealers themselves (Schaefer is requiring more interaction between dealers and potential customers), and they are adding a lot more information to their websites and pamphlets. Therefore, I believe that the consumers will seek out information on which car is best for them, and ultimately make the right choice.

Sourcce: http://online.wsj.com/article/SB10001424052748703440004575548142995118902.html?mod=WSJ_auto_IndustryCollection

Ethanol Use is in Question

The Obama administration is exercising a demand for greater ethanol content in gasoline for newer cars. This could greatly benefit corn growers, however, it has been strongly opposed by automakers, livestock ranchers, oil refiners, and some public-health advocates. The Environmental Protection Agency is planning to announce that ethanol levels will be approximately 15% in gasoline blends of vehicles made since 2007. This is an increase over the previous 10% that gasoline blends contained.

There is strong criticism of this because many officials claim that there is not sufficient research for this change in ethanol levels. The opposition to this movement has also said, “Allowing 15% ethanol blends for some cars but not others could confuse customers at the pump”(Wall Street Journal). The EPA has said that gasoline pumps should be well labeled to reduce the possibility that drivers will use the wrong fuel in their cars. Another concern for the ethanol industry is that the 45 cent a gallon excise tax credit, which helped increase the demand for ethanol is going to expire at the end of 2010.

It seems as though this movement by the Obama administration is illogical and therefore, consumers will not respond well to this change in ethanol content. The slow economy will not urge consumers to buy new vehicles that will allow for this change in ethanol content in gasoline blends. At a time when other alternative energy resources are the main focus, ethanol is not viewed as one of them because it does not yield as much energy as other resources.

Source: http://online.wsj.com/article/SB10001424052748703440004575548883403355828.html?KEYWORDS=auto%20industry

Is it worth it?

As we consider The American University, we find that there are many students who navigate around campus in their own vehicles. The campus is fairly small and the university has supplied its students with a shuttle to transport them back and forth to the Metro station, which is supplied by the city. Now, is it really necessary that the students have vehicles? The university alone costs over $52,000 to attend yearly. If a student desires to have a car, then they have to include the cost of parking on the campus property, as well as putting gas in their vehicle. The price begins to rise quickly, especially with other expenses that the student is responsible for. Granted, many of the students come from financially stable households and have no concern over how much money they are wasting. The DC area has provided them with an accessible way to maneuver around the city, yet they still wish to drive their own vehicle.

I feel that it isn't necessary for American students to have cars. The only reason why they may need one is if they live off campus. However, if they are on campus, then they should use the resources that they have been provided with. As most of us know, being a college student comes with having responsibility for your own finances. Money gets tight, and things are becoming more and more expensive. I haven't even mentioned the cost of automobile repairs. Why not use some of the money that you would put into your vehicle to use somewhere else? Some people think that it's an easier way to get to social gatherings throughout the city, but if there is a way for students to get around that will not hinder their social life, then they need to use it to their advantage. With that said, the social status of the students of university is very high; therefore, I see no change in the amount of vehicles that will be brought to campus by the students.

The Ford Fiesta is on the Right Track

In the past, small cars were used by those who couldn't afford the perks of a big car. They didn't have any sort of styler, no airbags, and after a while the startup may have become difficult. But nowadays things are changing. Small cars are becoming more luxurious and appealing to the public. Take for example the Ford Fiesta, it may be a small car but it has a lot to offer; stability control, anti-lock brakes, automatic dimming mirrors, a voice activated sound system, almost every kind of airbag you'd ever want (including one for your knees!), and most importantly, 40 miles to the gallon. Obama's administration understads the huge problem that our gas-guzzling economy is causing our future. Because of this they are setting a goal that mist be met by 2025- most cars on the market must be 2 times more fuel efficient than those sold in 2009. In order to reach this goal they are setting mini targets in 2017. But California says Obama's plan isn't enough. They are setting their own standards separate from those of the nation stating that every year the average fuel economy of every car must boost by 3 to 6%. They understand that not every car will follow the standard, but their hope is that most will, and that will make a huge difference.

I believe that the Ford Fiesta will help the Auto industry reach this fuel efficiency goal set by California and the entire nation. although it may seem like a lot to increase by 50% or more in just 15 years, from 1975 to 1987 the fuel efficiency increased by 67%...so our nation's goals are by no means impossible. Another reason I believe that the Auto Industry will accept and abde by these changes is because the rest of the world is already doing so. Europe and China have already set standards and are reaching them, if we don't do the same then our auto industry will only cater to one nation, ultimately making it less valuable. I do not see that mistake in our future.

Toughen up

The U.S. Transportation Department on Tuesday started a more rigorous system for grading car safety, which applies to cars and light trucks starting in the current 2011 model year. The new system gives vehicles one overall safety rating, in addition to various sub ratings. This tougher crash test is making it more challenging for cars to get their " 5 star" crash rating. Which is good because too many vehicles were getting top scores on the government's previous crash tests, so regulators made the tests harder. For the first time, the tests use crash-test dummies to gauge the impact of a crash on women, not just men. The tests also simulate a crash into a pole on the driver's side.The U.S. plans to test about 55 vehicles from the 2011 model year under the new system. Of the 33 tested so far, only two achieved an overall score of five stars, BMW AG's BMW 5 Series and Hyundai Motor Co.'s Sonata. Some say that sales of the non "5 star" vehicles will severally decline, however, I think that there is only a small handful of consumers that wouldn't buy a vehicle because it wasn't 5 star. "We're just trying to make the manufacturers stretch" even more to make cars safer, said David Strickland, chief of the National Highway Traffic Safety Administration. The car industry hasn't taken a position on the new system, so it will be interesting to see how this new system plays out. "It's like in high school, when every student gets an A, you want to switch the test," said Wade Newton, a spokesman for the Alliance of Automobile Manufacturers. All in all I think this is a great decision. A "5- star" safety rating doesn't mean much if everyone is getting one. Therefore, I think this new system will save lives because it forces manufactures to make safer vehicles. 

http://online.wsj.com/article/SB10001424052748703843804575533961959252030.html?mod=WSJ_auto_IndustryCollection

GM is on Track with Obama Proposal

GM’s bailout and bankruptcy money, which lead to 61% of the company under the ownership of the U.S. government, has lead the automaker to adhere to Obama’s goals for fuel-efficient vehicles. The current Chevy Tahoe and Cadillac Escalade get an average fuel economy of 15 miles per gallon. With the redesigned models in the works, GM will increase the fuel economy of these vehicles to meet new mileage regulations. GM is working at a fast clip in order to gain greater SUV and truck sales. This is necessary in order to raise the initial public offering of stock later this year. The IPO will provide the funds for the beginning stages of reducing the government’s involvement in the company.

Obama’s administration has urged, “Smaller, more efficient engines, and wider use of electric propulsion” (Wall Street Journal). The administration has set different approaches in order to reach their goal for improving fuel economy.

The first method involves increasing fuel efficiency to 47 miles a gallon, which adds as much as $1,050 to the cost of a vehicle. This has the potential to save consumers between $4,900 and $5,200 in fuel costs over the life of a car. Another, and much more aggressive, method would propose that the fuel economy to 62 miles a gallon. By doing so, this would add between $2,800 and $3,500 to the cost of an average vehicle. However, this could save drivers between $5,700 and $7,400 over the life of the car. The government has also said that to achieve this manufacturers would have to increase their sales of gas-electric hybrids to 68% of the market and cut 26% from the weight of the average car.

I endorse this proposal by the Obama administration because it gives automakers a need to create more fuel-efficient vehicles. GM’s concern with the efficiency of their vehicles will also encourage other car companies to follow suit. It also increases the investment that manufacturers make in alternative energy solutions. I’m interested to see how the auto industry looks by 2025, and whether most Americans are either driving hybrid or electric vehicles. If so, the overall economy of the U.S. will change and we will be must less dependent on foreign oil for our energy.

Source: http://online.wsj.com/article/SB10001424052748703859204575525963701140270.html?mod=WSJ_auto_MiddleSecondHighlights

Tougher Safety Standard

There may be a lot less car ads in the future that tout their 5 star safety ratings. Many 2011 car models will have to undergo a tougher safety standard set by the U.S. Transportation Department. Cars will now receive sub ratings along with the overall rating. Crash test dummies will now also include female models. The change in rating system could cause confusion among consumers who are used to the old ratings. The stricter standard is evident from the fact that the 2011 Toyota Camry earned 3 stars overall, while the 2010 model received 5 star ratings for both front and side crashes. Advancements in safety and design has helped lead to the fewest number of traffic deaths in 2009 since 1950. Some in the auto industry worry that the new ratings would lead to a drop in sales. Some worry that consumers could decide to not buy a car because it doesn’t have a 5 star rating.

I think it makes perfect sense to keep imposing higher standards to keep innovation going. Once companies earn 5 star ratings for their cars, they would do little to improve it. Setting the bar higher means the auto industry must keep improving the quality of its cars. The complacency of companies with their models is evident from the fact that the Toyota Camry’s ratings fell so much in a year even with the new test. Consumers expect newer models to be safer and higher quality in exchange for the higher price. This new standard will ultimately help consumers by providing them with safer cars.

http://online.wsj.com/article/SB10001424052748703843804575533961959252030.html?mod=WSJ_auto_IndustryCollection