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Episode 260 – U.S. & China Trade Spat, October Sales Will Improve, New 3-D Nav System

October 29th, 2009 at 12:00pm

Runtime 6:36

China will investigate whether American automakers unfairly benefited from government assistance. October sales will be better than a year ago, we’ll explain why. Navteq develops a new kind of nav system, with a 3-D display. All that and more, plus a look at whether or not Kia is looking to expand its dealer base by adding some Saturn dealers.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. The U.S. and China run into trade problems. October sales will be better than a year ago, we’ll explain why. And there’s a new kind of nav system coming, with a 3-D display.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Thursday, October 29, 2009. And now, the news.

Is there a trade spat brewing between the U.S. and China? According to Bloomberg, China will investigate whether American automakers unfairly benefited from government assistance, with GM and Ford reporting record sales in the country. But reports say the probe is likely retaliation for the U.S. imposing tariffs on low cost Chinese tires.

General Motors says it expects to post a sales gain for this month, the Associated Press reports, and it expects a gain in market share. GM also says annualized sales for the American market should hit 10.5 million units, up from 9.2 million last month, meaning the payback from the Cash for Clunkers program is over. I’d point out that it was one year ago when the American car market really started to crash, so next week look for many automakers to report better sales compared to a year ago.

Lots of earnings reports coming in from automakers around the world, and they’re all over the map. Volkswagen said its profits fell 86 percent, and Honda’s fell 56 percent, but at least they’re still profitable. Daimler posted a small profit, and Mahindra posted record profits. Mitsubishi and Mazda are both losing money. And Toyota says it will not lose as much as it thought, but with a $2.7 billion loss, that’s still bad enough.

General Motors plans to use more government bailout money to buy parts of Delphi, according to the AP. GM agreed to pay several billion dollars to purchase Delphi’s steering business and several factories in order for the company to emerge from bankruptcy. And you’ve got to love this line. House Republicans are criticizing the President over giving aid to the company. According to the Detroit Free Press, they’re calling the bailout “a bridge loan to nowhere.”

Volkswagen released a sketch of its New Midsize Sedan, or NMS for short. We don’t know much about this upcoming four-door, but it’s expected to replace the Passat in the automaker’s line up. It should also be a little bit bigger, offering Camry and Accord buyers a viable German alternative. The NMS will be built at Vee-Dub’s new Chattanooga, Tennessee, plant. Expect a turbo-four under the hood and probably an optional V-6. If the production version looks anything like the sketch, it shouldn’t be a bad-looking car.

Navteq provides car companies and GPS makers with map and traffic data for use in navigation systems. Now it’s developing a new technology that can help guide motorists through difficult intersections. The New York Times reports that the system shows three-dimensional views of complex interchanges so drivers know exactly where to go. Lanes, overhead objects and even signage is visible, so there’s no mistaking an exit ramp for an overpass. This technology is NOT available yet, but this is just the tip of the iceberg in how nav systems are going to evolve.

Coming up next, could foreign automakers be interested in picking up a few leftover Saturn dealerships? We’ll find out, right after this.

Kia’s one of the only automakers who’s been rolling through the recession without seemingly missing a beat. The South-Korean manufacturer posted a third-quarter profit last week while its North-American arm continues to score with increasing sales, market share and even a new Georgia plant coming online ready to build as many as 300-thousand all-new Sorrentos a year. And with all that new product, Kia just may be looking to expand its dealer base by adding some top-notch facilities that just a few weeks ago Roger Penske thought he would be getting.

Kia’s not the only manufacturer with its eye on the Saturn dealers. In fact, it may not even be the only South-Korean manufacturer looking at these 400-plus businesses, with a built-in customer base, who are essentially free agents.

By the way, as for that new Sorrento I mentioned, we’ll have a closer look at it in next week’s Autoline Daily.

And that’s it for today’s top news in the global automotive industry. One more thing, don’t forget to tune in to Autoline After Hours TONIGHT where our special guest will be Mark Reuss, the head of global product engineering at General Motors. This will be an excellent program. Thanks for watching, we’ll see you tomorrow.

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26 Comments to “Episode 260 – U.S. & China Trade Spat, October Sales Will Improve, New 3-D Nav System”

  1. Pedro Fernandez Says:

    When I saw the lead story regarding China, I had to check my calendar to make sure John wasn’t playing an April’s fool story on us. The nerve of these commies, and just wait until they start dumping their POS vehicles over here, they’ll soon demand that every American HAS to buy a Chinese car or else they’ll stop supplying Walmart with their super cheap products.

  2. Jim Sachetti Says:

    The most important story of today was not in today’s John’s broadcast.

    I and many others here strongly protested the moronic, wasteful, Cash for Clunkers program. Now we have PROOF, from the Very Esteemed folks at Edmunds.com, that it was an even more terrible disaster than even we, its critics, thought.

    “Tab: $24,000 Per Vehicle of Taxpayer Cash
    October 28, 2009

    This summer’s so-called Cash for Clunkers program cost taxpayers $24,000 per vehicle sold, Cash for Clunkers car, according to an analysis by Edmunds.com.

    Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as the Car Allowance Rebate System (CARS),

    but Edmunds.com analysts indicate that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway.

    Analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle sold.

    As a matter of fact, this $24,000 is not the full extent of the catastrophe, as it does not include the value of the cars and trucks mindlessly scrapped, as well as the cost in energy and wages of that scrapping process.

    In summary, it was the dumbest, most mindless, car scrapping program I have Ever Seen.

    I know John McElroy originally and doggedly insisted that the program was such a great success, based on anecdotal dealer salesmen comments and the like, but the facts above are truly devastating!

  3. hermann the german Says:

    If VW does indeed make lots of midsize sedans in Chattanooga, this will also get them the unstinting devotion of one Senator Robert Corker, who is/was a successful business man from that city. The south will raahz agin’.

  4. hermann the german Says:

    Jim S, did Edmunds make an accounting of the benefits of improved mileage in the fleet? How about the extra costs of reduced used car and junk yard supplied parts. How about the multiplier effects of inventory replacement at a very vulnerable time in the economy? It seems like a simple division of two factors may not capture all the costs and benefits.

  5. John Says:

    Hey Pedro,

    GM makes cars in china, what is their problem?

    The P.O.S. commie chinese tires, made in china, and imported into the U.S. to intentionally destroy the U.S. domestic tire industry is a real abuse of “free trade”.

    I read the Bloomberg article, but the commie chinese “problem” is not clear.

    Does anybody understand their circular logic?

  6. Andy S Says:

    Jim S and Hermann, the part of the C4C analysis is missing — “who reclaimed the scapped value of the 690K vehicles trned in?”. The sheetmetal has value for scrap steel, and the major components (except the destroyed engine) should have value to a salvage yard. Is our government (and indirectly, we, the taxpayers) recouping this value are enterprising dealers recouping it? Re-sale of the parts could be a huge revenue opportunity.

  7. Jim Sachetti Says:

    Andy S,

    The idiots in Congress that authorized this awful program made sure that the cars were destroyed, their engines at least, and then crushed, exactly as to take them out of the market completely, even their parts. The scrap metal value for any car is utterly insignificant, since the steel content is less than a ton, usually, and the meager price of the ton of steel is largely offset by the costs of labor and energy to crush the alleged clunker, which, in MANY cases, was a perfectly fine vehicle with low miles.

    I can guarantee you that the few hubdred doillars (IF Any) of the srcap value net profit, will be eclipsed by the value of the car if NOT scrapped, but sold as a trade-in. SO the total cost per car should still be way above the $24,000 Edmunds mentioned (you can go see the details at EDmunds.com). Not $4,500, but $24,000 per car!!!!

    Only in the FOrmer Soviet Union and Mao’s bad old China , NOT today’s excelent Economic powerhouse China, would such econ illiterate policies exist…

  8. Salvador G. Says:

    - I like that VW is comming with a new car to replace the Passat (which is a good car to begin with) Although; knowing VW, they will probably name it after a human organ(and not the important ones).

    Also, good for Saturn dealers, hopefully they will become part of Kia/or Hyundai= they obviously recognize the quality of these dealers, which is the kind of smart business decisions that have made South-Korean car companies so succesfull in this economy… And why is that so hard for American companies to figure out, I’ll never know.

    And, JohnMc; can you find out if Republicans are at least praising president Obama for imposing tariffs on Chinese tires.

  9. Pedro Fernandez Says:

    The consumer cannot even trust the labels put into products that indicate country of origin since this long-standing business practice is being violated by both the Chinese and importers who just want to make a quick buck,no matter who gets screwed. I remember reading a report not too long ago where Chinese-made car parts were placed in boxes that read “made in Japan”. Consumers need to be very careful with replacement parts and don’t just let technicians use whatever part that’s available, same goes for tires. Need to check those sidewalls and look for country of origin and don’t buy Chinese tires, they’re not safe.

  10. Rick Fortney Says:

    Have to agree with Pedro on the Chinese tires. We don’t need a tariff on them, we need a complete embargo on them. I’ll walk before I put them on my vehicles, I don’t care how cheap they are. And I hope no one else does because I don’t want to be involved in an accident because someone put their wallet before their safety. Don’t believe me, just go to the Car and Driver web site and search for tire tests. Tire in case here is the Ling Long L688.

    Quote: “even though they cost half the price of many competing tires, they scored less than half the points of even the eighth-place tire. To us, that doesn’t qualify as a value, even at $57.”

  11. Nick Stevens Says:

    “This summer’s so-called Cash for Clunkers program cost taxpayers $24,000 per vehicle sold, Cash for Clunkers car, according to an analysis by Edmunds.com.

    Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as the Car Allowance Rebate System (CARS),

    but Edmunds.com analysts indicate that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway.”

    This is both important and, indeed, terrible news!!

  12. Nick Stevens Says:

    Jim Sachetti,

    Excellent Catch, and congratulations to EDMUNDS for their outstanding, truly investigative journalism and analysis!

    Unfortunately, this is far worse than my earlier nightmares re the fundamental stupidity and failure of the CFC program.

    I falsely thought that our tax dollars used were only $4,500 per car. NOT SO! Read the excellent Edmunds analysis!

    Long before I read the Excellent and Original Analysis by Edmunds, I already was sure that the CFC program was a terrible failure, and a huge waste of our hard-earned taxpayer $.

    But it dit not cross my mind to think the way Edmunds analysts thought. It is indeed SHOCKING how much WORSE than I thought the waste actually has been.

    Edmunds analysis is 100% correct. Whether some can dispute their 125,000 new sales generated number, and have data to show that they actually were a bit higher, say 150,000 or even 200,000, this is a FAR cry from the 690,000 vehicles total, the vast majority of which would have been bought anyway!

    One more gigantic handout to the welfare queens of Renaissance Center and Auburn Hills… except in the CFC case, the welfare payments went primarily to HONDA and TOYOTA!!!!!!!!

  13. Dave Says:

    Why does VW even need another mid sized sedan? The CC is very nice, why have 2 cars in the same class..maybe they want to be like GM

  14. Jim Sachetti Says:

    “And, JohnMc; can you find out if Republicans are at least praising president Obama for imposing tariffs on Chinese tires.”

    Even if some cowards in the Rep party do praise him for his moronic protectionist decision, that does not do anything to prevent Econ Literate people, who understand the benefits of free trade and the perils of protectionism, to blast this clueless, very unqualified person in the WH for his demagoguery, and for buckling under pressure from such despicable demagogues like Lou Dobbs of CNN!

    You need to study youir recent history. Free Trade, warts and all, brings prosperity and peace to the world, and mathematically proven, it increases the size of the world econ pie AND the stuff in the slice of any nation, EVEN if the % of the slice goes down, if you understand what I mean.

    This has been known to economists since 1817, almost 200 years!!! (Ricardo’s Theory of Comparative Advantage). But not to our worthless incompetents in Congress and the WH!

    On the contrary, protectionism, no matter how well-intentioned, can only bring misery, failure and then war! As it did precicely that in the 30s and WW II!

    China is NOT goinf to take this lying down. I read today that they will impose retaliatory penalties where it really hurts, on the Escalades and other vehicles we sell in their vast auto market (larger this year than US sales!!!)

    And I am sure Government Motors and their masters in the WH do not really want that, do they.

  15. Jim Sachetti Says:

    “# Dave Says:
    October 29th, 2009 at 3:19 pm

    Why does VW even need another mid sized sedan? The CC is very nice, why have 2 cars in the same class..maybe they want to be like GM”

    The CC is very elegant exterior or even interior, but it is not a sedan, but rather a 4-door coupe with limited rear room. VW still needs a Passat-sized sedan and wagon, or a bit larger for the US market.

    I also believe the CC is more expensive than the regular passat sedan and its competitors (Accord Camry etc)

  16. Willi Says:

    !!!
    has any program from the WH made sense?

    are you ready for health care?

    who is going to pay?

    John Mc, you need to just acknowledge that the CfC was wrong

    oh, wait, the Chinese already own us – they’re our banker – what were we ( they ) thinking?

    let’s add another few trillion, hell it’s just money, we’ll print more

    people, we’re in serious trouble!!!

  17. Salvador G. Says:

    -Just for the Record-

    I BELEIVE IN TRADE, open trade; a nation thats able to produce and sell to its neighbors/ and in return buy products from its neighbors is a good nation, I am not a Protectionist.
    I also understand how free trade works, better than some people that can only see the pros or cons- of free trade, and it is because I understand that no american worker can compete with SLAVE-LABOR either be China or India and when a country like China that intentionally lowers the value of its currency so it can export massively and alot cheaper than any other nation and has not respect or follows international trade laws…. THAT its not free trade that I want and if President Obama decides to tax any product from such nation -Well good.

    Protectionist- HA- and how ignorant its to believe that WWII was started because of protectionist, in what BOX do you live in???

  18. Jeff Mohr Says:

    ——they should have just given the cash for clunkers money to AIG and all the other worldly financial wizards, they surely would not have wasted it right????? please allow some comparitive perspective

  19. Pedro Fernandez Says:

    It is the duty of all governments to protect their citizens from dangerous, possibly deadly products, no matter where they come from. If Chinese tires are indeed so dangerous, they should be either removed form the market or at least give the consumer a very clear warning on the danger of buying these products, that’s not protectionism, dangerous toys, dog food, dry walls what’s next? cars that don’t brake properly or lose steering control as you drive down the road. Protectionism is what Japan has done with their auto industry for decades, I don’t hear anyone raising hell about that

  20. Kit Gerhart Says:

    If VW’s decision to build the Passat replacement in the US goes the way Toyota’s and Honda’s transplant decisions have gone, VW will drop the wagon, the only version of the car that would interest me. I hope I’m wrong, and they will have a wagon version of the new car, with a TDI available.

  21. Kit Gerhart Says:

    We well know that some of you didn’t like “cash for clunkers,” or anything else this administration might be involved with. Sure, it was expensive, but any analysis of its effects are very complex, and it is quite possible that the incremental sales it brought about did something real in “jump starting” the economy.

  22. C-tech Says:

    I agree with Pedro. Whether right or left, if another country is exporting an unsafe product, or government-subsidized product with the intent of taking advantage of the “free” market then what is the problem with banning or taxing that product?
    Bravo to Kia for considering some of those Saturn dealers. Too bad GM could not figure out how to used those newer dealerships and keep those loyal customers. I guess we don’t pay those executives enough. (Tongue firmly in cheek)

  23. Kit Gerhart Says:

    It looks like the places Kia needs more dealers are in a different part of the world from where I am. There is a Kia dealer about 4 miles from my home (in Florida). The nearest Saturn dealer is about 23 miles away, and there is another Kia dealer near the Saturn dealer.

  24. Dave Says:

    @ JIm
    I guess, but the CC is built on a Passat platform and is the same car underneath. Why not just make a CC wagon and or a TDI CC would be great. The CC starts at 27,500 and the Passat at 26,990 that puts them in the same class and there are listed as sedans. I know the roof line is diff. , but is it worth running a whole other model?

  25. Alex Kajdi Says:

    John,

    I went today to a Saturn Dealer who now has added Kia to his dealership. This is Kia of West Nyack, N.Y. I test drove a 2010 Kia Forte.
    I am a big guy and I was very comfortable in the EX version I drove with the Fuel Economy Package. As a former Saturn Owner, (The last GM product I will probably ever own), the Forte had great braking and smooth exceleration. The Electric steering reminded me of my gone but not forgottten 2003 Saturn Vue AWD V6. Kyle Brown at Saturn / Kia of West Nyack was very helpful and informative. Kia has a golden opportunity in picking up some of these Saturn Dealerships. Saturn Dealers will catapult Kia Motors into the front of the pack here in North America in a very short time. “Kick It Up” – Kia!

  26. Kit Gerhart Says:

    I am potentially in the market for a cheap, basic car to keep at my condo in Florida. I wanted to find a little basic information about the Kia Rio 5 door, like if the car had cruise control standard or available. The Kia web site didn’t give this information. I then tried to find a way to e-mail Kia and ask if the Rio had cruise control. There is no way to e-mail and ask a question. While Kia has some decent products, they have a long way to go in some areas, like availability of product info.