January 29th, 2009 at 12:00pm
Ford reports its fourth quarter earnings, which are worse than expected but still says it doesn’t need government help. Fiat is in talks with BMW on platform sharing. GM might build Buicks in Germany if GM moves Saab 95 production back to Sweden. All that and more, plus a look at the proposed emissions standards California wants to enact.
Transcript and Story Links after the jump . . .
Here are today’s top headlines. Ford reports its fourth quarter earnings, which are worse than expected. Fiat is in talks with BMW on platform sharing. And GM might build Buicks in Germany-yeah, that’s what it is says.
Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Thursday, January 29, 2009. And now, the news.
Ford reported fourth quarter losses today of $5.9 billion. That is a loss $2.46 a share. Analysts were expecting a loss of $1.30, and the market doesn’t like downward surprises. Ford Financial Services, which made money last year, lost $372 million. Ford burned through $21 billion in cash last year, leaving it with only $13.4 billion in cash. However, it has $24 billion in cash and liquid securities and the company reiterated its position that it does not need a government bridge loan to get through this recession.
Meanwhile, the Wall Street Journal reports that Chrysler is sending a letter to its suppliers of production parts that they must cut their prices by April 1 (subscription required) and that the company is freezing what it will pay for raw materials, even if those prices go up. And this just adds to the misery that suppliers are facing. And this is the untold story in this economic crisis. Automakers aren’t the only ones who need financial protection from the government. Suppliers need it, too.
We all know that car sales last year were the worst they’ve been in decades, but the industry might be poised for a comeback. WardsAuto.com reports that J.D. Power is predicting a decline in global sales this year, but a rebound by 2010 (subscription required) with RECORD deliveries in 2011 and ’12. They estimate global sales will range between 57 and 62 million in 2009 and between 60 and 67 million next year.
GM might build Buicks in Germany. Autoblog reports that upcoming Buicks based on the company’s Epsilon II architecture could be assembled by Opel if GM moves Saab 95 production back to Sweden. It’s interesting that GM is considering building Buicks in Euros and selling them in dollars. You’d think the exchange rate would kill them. It’s also interesting that Sweden is part of the EU but it doesn’t officially use the Euro, instead it still uses the Krona.
Fiat has been extremely busy the past month, aligning with Chrysler and a rumored alliance with PSA and new reports suggest the company could team up with BMW. According to Autoblog, the partnership is expected to involve Fiat borrowing the platform from either the 1 Series or the MINI for Alfa Romeo’s upcoming replacement for the 147 hatchback.
Over at the University of Michigan’s Lay Automotive Laboratory, they converted a truck to run on ammonia, and drove it from Detroit to San Francisco to prove that it can be done. Ammonia doesn’t emit any carbon emissions and can be used with gas or diesel engines. Ammonia is already manufactured and transported in huge quantities. In fact, it is the fourth most transported commodity in the U.S. Ammonia costs less than gas and the team says it provides better fuel economy.
Coming up next, a look at the proposed emissions standards California wants to enact. We’ll be back right after this.
President Obama instructed the EPA to determine whether it should grant California a waiver to set its own CO2 standards. It’s a hugely controversial issue. Here’s what I see going on.
California set a CO2 standard that requires a fleet average of 35 mpg by 2016. But that translates into an average of 43 mpg for cars and 26 mpg for trucks. By 2020 cars will have to average 49 mpg, trucks will have to average 33 mpg.
This is just California dreamin’! Right now only one car can meet that 43 mpg standard and that’s the Toyota Prius, even the Honda Civic hybrid falls short. Not one truck even comes close to that number.
So you’re going to tell me that the entire fleet is going to be completely retooled to meet that standard by 2016? In 7 years? That’s less than two design cycles. I’m telling you it ain’t gonna happen. It’s not a question of foot-dragging or a lack of technology, or even a question of money. It simply is not physically possible to change the fleet over in that time frame.
And that means automakers will have to severely limit what they can sell in California and the other states that adopt its CO2 standard. And I predict that once consumers learn how limited they are in what they can buy, they’re going to hit the roof. Environmentalists beware, you’re setting up a big backlash against CO2 legislation.
And here’s a point to ponder, California only accounts for 1 percent of global CO2 emissions. So is it really fixing the problem? I think we need a comprehensive national policy, let me know what you think.
And that’s it for today’s top news in the global automotive industry. But don’t forget, you can get podcasts, transcripts and a whole lot more on our website, AutolineDaily.com. Thanks for watching, we’ll see you tomorrow.