February 16th, 2012 at 12:00pm
The folks at J.D. Power just released their latest Vehicle Dependability Study and Toyota carried the day. Its Lexus brand was ranked No. 1. A couple days ago President Obama unveiled his latest budget proposal for the next fiscal year. Among other things, it proposes raising the tax credit for electric vehicles. An extremely rare 1913 Hispano-Suiza is going up for auction at the Amelia Island Concourse next month and it could fetch as much as $1 million. All that and more, plus John breaks down GM’s financial performance for 2011.
This is Autoline Daily for February 16th, and now the news.
General Motors announced its financial results for last year and the numbers are impressive, but they also show there are still big problems in the company. More on that later in the show.
TOYOTA TAKES COMMAND
The folks at J.D. Power just released their latest Vehicle Dependability Study. It surveys drivers of vehicles that are three years old. Overall the news was good for Toyota. The Japanese automaker took home top honors. Its Lexus brand was ranked No. 1 in the study. The Detroit Three continue to accelerate their quality improvements at a faster rate than the competition. For all the details hit the link in today’s show notes on our website, Autoline.tv.
MORE TAX REBATES FOR EVs
A couple days ago President Obama released his latest budget proposal for the next fiscal year, which starts in October. Among other things, it proposes raising the tax credit for electric vehicles. This rebate currently stands at $7,500 dollars, but the president wants to boost it to 10 grand. You know, if something’s not working, we’d better do more of it! I hope you can hear the sarcasm in my voice. According to Nissan the average EV buyer earns $140,000 a year.
We couldn’t pass up this next story. The car is just too cool! Autoblog reports an EXTREMELY RARE 1913 Hispano-Suiza is going up for auction at the Amelia Island Concourse next month. The “Type Alfonso XIII” as it’s called was built to honor the king of Spain, who was a real gearhead. Only four of them were made! The car’s body looks like it was pulled out of a Cinderella storybook. Underneath the exquisite coachwork, it’s powered by a 3.6-liter four-cylinder engine good for 64 horsepower and a top speed of 80 miles an hour. That’s stunning for a pre-war vehicle . . . a pre-World-War-I vehicle! This Hispano-Suiza is expected to fetch between $750,000 and a million bucks at auction. Sure wish the President would give me a rebate to buy something like that.
CRANK IT UP!
While we’re on the topic of vintage cars, Cadillac is celebrating an important innovation. Today the electric starter turns 100. It debuted a century ago on a 1912 Cadillac Touring Edition. We all take it for granted, but at the time it was a huge innovation. It wasn’t just a convenience for drivers, it was a safety feature. It eliminated the need for a hand crank and the risk of a broken wrist or arm if the engine backfired.
Coming up next, we’ll take a look at GM’s numbers.
GM’S 2011 PERFORMANCE (PDF)
GM reported its earnings for last year and the numbers are pretty impressive. The company sold just over 9 million vehicles worldwide. That’s 641,000 more vehicles than it sold the year before, representing a 7.6 percent gain. That increase in sales boosted revenue to more than $150 billion, which is $14.6 billion more than a year ago, an increase of almost 11 percent. And the company’s net profits hit almost $7.6 billion, a 62 percent increase.
So how is it that if sales are up 7.6 percent, and revenue is up 11 percent, that profits can jump 62 percent? Well, that’s how the magic happens in the automotive business. Once you get over your break-even point everything starts dropping to the bottom line. It may cost a bundle of money to hit that point, but once you cross over it’s all gravy.
GM generated almost $7.5 billion in positive cash flow and ended the year with over $31 billion in cash and securities. That’s a pretty healthy war chest and shows how wonderfully well the company has emerged from bankruptcy.
Yet there are some troubling items in this financial report. GM lost almost $750 million in Europe, and while that’s a huge improvement on the $1.9 billion it lost the year before, it’s nowhere near the break even that the company promised its shareholders.
It also saw its operations in South America go upside down. In 2010 GM posted an $800 million profit, but that flipped into a $122 million loss, despite the fact that car sales were up. Could this be the impact of all those Chinese cars flooding into South America?
The same thing happened in Asia, which mostly involves China. Sales were up by nearly 300,000 vehicles and yet profits dropped 22 percent to $1.8 billion. It’s not supposed to happen that way.
How ironic that GM’s North American operations are overwhelmingly generating the company’s profits, the same operations that emerged from bankruptcy only two years earlier. But shareholders and Wall Street analysts are going to be pouring over GM’s weaknesses overseas. There’s no excuse to have profits declining in the face of increasing sales. The people in charge of those operations are going to be under enormous pressure.
But enough of earnings, let’s get back to the fun stuff. Let’s talk cars. Did you know there’s a small American company building an exotic sports car? By exotic I talking only four and a half pounds per horsepower. I’m talking about the Falcon F7, from Falcon Motorsports, which is located in Holly, Michigan. Join me and the Autoextremist, Peter De Lorenzo tonight for Autoline After Hours, when our guest will be Jeff Lemke, the designer of the car.
And that wraps up today’s show, thanks for watching, we’ll see you tomorrow.