GM is Rolling in the Dough

General Motors has said that it earned $2 billion in the third quarter of this year. This is the third consecutive quarterly profit GM has made due to its pickup trucks and consumers paying higher prices for its vehicles. At this time last year, the company had a $1.2 billion loss immediately after being saved out of bankruptcy. GM has reported earnings per share of $1.20 compared with a loss of 73 cents a share in July 2009. This is due to the company cutting costs.

The automaker reported that it made $1.4 billion on its operations. GM has said that this year will be the first annual profit since 2004. The company has seen U.S. sales improve and fast growth in China and other markets as well. On average, the auto maker earned an average of $3,005 on each vehicles it built. This compares to Ford earning an average of $2,710 on each vehicle and Chrysler only making $593 per vehicle.

GM has seen consumer trends change in the past year. According to officials, “The trend toward buyers favoring trucks could be a troubling sign for auto makers as GM and its rivals prepare to launch a string of small cars-largely in response to stricter U.S. fuel-economy standards,” said Rebecca Lindland. The recent profits have helped GM pay back some of its bailout money and also pay for pension plans.

With new management and a better runned company, I am confident that GM will continue to do well. The company has done a lot to change itself, and it is using the bailout money wisely. It is trying to reestablish itself in the marketplace and be a major competitor overseas.

Source: http://online.wsj.com/article/SB10001424052748703805004575606200306436706.html?KEYWORDS=auto

Foreign investment, everybody's doing it

The city government of Beijing will soon become the largest private employer in Saginaw, Michigan. In a few weeks a unit of GM there will have Chinese owners. The steering equipment producer was known as Saginaw Steering Gear, and is now called Nexteer. 8,300 people work for Nexteer around the world. The Chinese investors out-bid Korean and U.S private-equity contenders. The Beijing owners are known as Pacific Century Motors. This is the first time in history where China’s investors bought such a large U.S. industrial operation. The $450 million deal includes 22 factories, 6 engineering factories, and 14 customer-support centers, located around the world. This action tests people’s attitudes towards foreign investment. A major incentive for GM to make the deal was for Nexteer to dive into the booming Chinese auto market. Some workers see this deal as a life saver in the short-term, but aren’t sure if it’s good for them in the long-run. An unknown is whether the Chinese owners acquiring over 1,000 patents will benefit or hurt the workers. Chinese investment increases the leverage the U.S. has over China to let more U.S. firms in. Alan Wolff, an attorney for Dewey and LeBoeuf, says foreign investment built the U.S. for years. He points out that the investment bolsters U.S. manufacturing, which is better for the U.S. than Chinese manufacturing.

I think this deal shows the beginning of the increasing mix of investment between the U.S. and the world. These types of investments happened before with Japanese investors, and they created manufacturing jobs for the U.S. The interest in the unit by Korean investors also show that we will most likely see Korean owned units in the U.S. soon too. I think the increased investment in the U.S. by foreign investors improves political stability for the U.S. If countries are economically interdependent with one another, they will be much less likely to be aggressive or go to war. I understand that many workers are scared of working for foreign owners. However, the U.S. has done these investments to many countries around the world. The nations that got the investments at the very least gained jobs, and many countries have grown tremendously because of the foreign investment.

http://online.wsj.com/article/SB10001424052748703957804575602943255219552.html?mod=WSJ_auto_IndustryCollection#articleTabs%3Darticle

Best Deals of the Year

Toyota brand boss Bob Carter said  the automaker will launch special leasing and purchase deals within weeks to boost flagging volume. Toyota Motor Sales U.S.A. reported October U.S. sales fell 4 percent from a year earlier. Still reeling from a series of safety recalls this year, Toyota was the only major automaker to post a sales decline last month as the overall industry advanced 13 percent. 

Toyota's U.S. sales are up 1 percent year-to-date, compared to an overall market that is up 11 percent. Carter told journalists the new Toyota Care campaign that includes routine maintenance as standard for all vehicles has improved showroom traffic.  He pledged to follow that with a series of financing and leasing incentives later this month during Toyota's annual Toyotathon sales event. “You will see an enhancement to marketing and incentives but [they] will remain consistent in the APR and lease arenas,” he said. “They will be the best deals of the year -- leasing and APR deals are moving the market.”

Carter added that some light truck incentives will be cash because that's what is typical in those segments, but most will remain leasing and finance deals to protect the brand. Toyota's lingering image problems from recalls and the aggressive discounts the automaker used earlier in the year may cut into sales in the fourth quarter, analysts said. “The recalls are still a black cloud around Toyota,” said analyst Jesse Toprak of TrueCar.com. “Other automakers are making better cars than a few years ago, so this damage to customer loyalty could be very costly for Toyota. There's a chance these losses are permanent.”


I think these incentives and deals are necessary for Carter and Toyota to take action in order to boost consumer sales and trust.  Especially with Toyota's imagine problem and recalls, consumers are now losing their customer loyalty and Toyota's sales are decreasing. Once the " best deals of the year" take place, it will be interesting to see what happens to Totyota's sales and their corporation's image. 

http://www.autonews.coms/pbcs.dll/article?AID=/20101103/RETAIL01/189009485/1448#ixzz14JlSM63N

Strap Up

The Supreme Court has been suggesting whether or not there should be regulations that "require car makers to install shoulder-and-lap seat belts in all rear seats because of cost concerns." There have been individuals who feel the need to sue car makers that install lap-only belts; however, this would affect the National Highway Traffic Safety Administration costs. Recently, there has been a Supreme Court ruling that "barred a lawsuit against American Honda Motor Co. for injuries sustained in a crash involving a 1987 Honda Accord that wasn't equipped with air bags." The ruling was prohibited, but the regulators "intended to promote a variety of passenger restraints in cars." On the seat-belt issue, regulators are encouraging the installation of shoulder-and-lap belts. Still, it is up to the manufacturers to design what is most appropriate for their vehicles.

I feel as though there should be a law that prohibits car manufacturers to install shoulder-and-lap belts in all vehicles. With there being so many automobile accidents, there needs to be a higher concern for automobile safety. This doesn't mean that it will always prevent death or injuries, however it will create a better chance for those in the vehicle. I don't think that it should be up to the auto manufacturers because this is something that concerns the lives of the individuals who purchase the automobiles.


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When people buy a car they consider many different options; some focus on looks, some on speed, others on safety. But everyone cares about reliability. American and European brand name cars are now getting a wake up call because Asia continues to have some of the most reliable cars including Toyota and Honda Motor Co. Predictions say that their 2011 models will only strengthen their reputation.
But Ford and GMC are not just sitting back and watching Asian cars surpass them. They have been working hard to improve their reputations by sending the unreliable cars to the scrap yard and by creating new models such as GMC's 2011 Chevrolet Equinox crossover wagon and Buick LaCrosse sedan. Also, Ford's Fusion sedan is now top-ranked when it comes to family cars.
Reliability is such an important factor because the more people can trust the company's car, the more they are willing to pay for it. Just last quarter Ford earned 1.7 billion. But their work is not done yet, they are still only ranked 10th out of 27 in reliability.
David Champion, senior director of Consumer Reports auto-test operations says, "It doesn't take very long to lose a good reputation, but it takes five or 10 years to gain one." Ford and GMC are now on the right track.

I feel that in general, Ford and GMC have nothing to worry about because soon enough they will find themselves in the top rankings. They have been slowly climbing up by building trust with their consumers, and eventually they will get to where they need to be. Toyota on the other hand, may need to be worried. Last year they experienced many recalls and probably lost a lot of consumer trust. Overall, I feel that American brands will soon take the lead, but in the future the reliability list will continue to be one that fluctuates constantly.

BMW Sells Well in China

Affluent Chinese consumers have been purchasing BMW vehicles in the past year. BMW has reported that their net profit grew by $1.22 billion since last year. The auto maker increased the profit margin on its cars to 7% from being 5% in past years.

These profits have been a result of streamlined cost structures as a result of the market decreasing last year. The company has a target sales of more than 1.4 million cars this year. Sales are up by 13% compared with the same period last year. BMW has claimed, “It expects sales momentum to continue in the fourth quarter with robust growth in the double-digit percentage range” (The New York Times). This confirms how BMW expects growth to continue at a steady rate until the end of the year.

BMW has seen great improvements in the sales of their vehicles in China due to their release of the 5 Series Touring and the Mini Countryman. Soon, the new BMW X3 will be on sale, which has shown positive feedback as a result of many orders for the vehicle in dealerships. I expect BMW to perform well in the future, but this is variable because of the economy. BMW will have to focus on the growing Chinese market as the U.S. market still recovers from this recession.

Source:

http://online.wsj.com/article/SB10001424052748704462704575591660311662990.html?KEYWORDS=auto+industry

Finally some good news...Auto sales improving

A top sales analyst at Ford expects that October new-vehicle sales grew 12% for the auto industry. The annual selling rate is also expected to rise to its highest level in more than a year. 950,000 new cars and light trucks were expected to be sold this October compared with 838,052 the same time last year. This would mean the annualized sales pace for October grew to 12 million; the last time this happened was when the cash-for-clunkers program was in effect. Sales for Hyundai increased 38% from last October to 42,656. BMW sales rose 12.4% to 23,222. Volkswagen reported a sales increase of 18% to 20,084. Subaru sales also went up 25% to 22,720 cars. It’s still too early to know if this signals a needed recovery for the auto industry. While consumer spending has recently gone up, consumer confidence remains weak. This upward trend must be supported by higher consumer confidence for it to continue.

I think this is great news for the auto industry. If I’m worried about my finances and keeping my job, buying a brand new car would be out of the question. The increase in sales indicates that more people are feeling financially secure. While the economy is still in terrible shape, these numbers show that it’s getting better. Because sales have gone up for many companies, it is likely that the market is improving rather than a single company suddenly succeeding. Hopefully the auto industry can pick up some speed after seeing some positive numbers.

http://online.wsj.com/article/SB10001424052748704462704575590662948503410.html?mod=WSJ_auto_IndustryCollection