Episode 272 – GM Reports Earnings, Overcapacity Abounds, Porsche Sues Shoe Company
November 16th, 2009 at 12:00pm
Runtime 7:11
General Motors lost $1.2 billion in the third quarter. Even with all the restructuring in the auto industry, a report says that there is still way too much overcapacity. Porsche is suing a shoe company over naming its sandal the Cayman. All that and more, plus a look at the all-new Kia Sorento.
Transcript and Story Links after the jump . . .
Here are today’s top headlines. GM posts its first earnings since emerging from bankruptcy. There is still way to much overcapacity in the global auto industry. And we also have a story where I get to use some of my vacation pictures.
Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Monday, November 16, 2009. And now, the news.
General Motors lost $1.2 billion in the third quarter, what it calls a managerial net loss. Managerial accounting refers to financial reporting that management uses, and differs from GAAP guidelines, which is used to report to shareholders. On an earnings-before-income-taxes basis, it lost $261 million. GM’s North American operations lost $661 million, and its international operations made a profit of $238 million. But GM said it would also start repaying U.S. and Canadian loans in the fourth quarter, and would make quarterly payments of $1.2 billion until the loans are paid off in 2011. It will repay the German government loans to Opel by the end of this month. GM also said that it’s global market share was up, compared to the second quarter of 2009.
Saab dealers in the U.S. are running low on inventory. According to Bloomberg, the car maker has cut production and is retooling a factory to produce the new 9-5 next year. GM’s sale of Saab to Koenigsegg is holding back production until that deal goes through. And last week it was announced that 81 out of 218 Saab dealers in the U.S. will close. Saab sales in the U.S. have dropped over 60 percent this year.
Even with all the restructuring in the auto industry, a report from CSM Worldwide says that there is still way too much overcapacity (subscription required). According to the Wall Street Journal, the industry is capable of building nearly 86 million vehicles a year, about 30 million more than will be sold this year. And by 2015 the industry will only get to 85 percent of capacity utilization. It says that more brands need to die off and that acquisition of brands, like Volvo and Saab by Chinese automakers, will not help reduce overcapacity.
The Detroit Free Press reports that Ford resolved the labor troubles at its Kansas City, Missouri, plant. Workers were voting to strike over workload issues. The facility builds the F-150 pickup and the Escape/Mariner/Tribute SUVs.
Ford also announced the development of an all-new, purpose-built police interceptor to replace the ancient Crown Victoria when production ends in 2011. The company says it will exceed the old model in durability, safety and performance, but doesn’t say what it will be built on.
The European Union is working on a research project to allow platoons of cars to automatically link together. According to the BBC, up to eight vehicles would autonomously follow a lead “platoon” vehicle that’s driven by a professional driver. Thanks to various sensors, the cars in platoon would automatically follow each other behind the lead car so drivers can read, watch TV or do whatever they want. The idea is to make the platoons active so vehicles can exit and join freely. This approach eliminates the need to embed expensive sensors in the road because each vehicle would be outfitted with its own electronics.
I just love this next story because I get to use some pictures I took on my vacation. Autoblog reports that Porsche is suing Crocks Inc., the company that makes those blobby looking foam shoes, because it calls its popular sandal “Cayman,” a name Porsche trademarked. A Cayman is a type of crocodile, also known as a Yacare. But who’s going to confuse a sports car with a pair of shoes? Sounds to me like Porsche’s lawyers have too much free time on their hands.
Coming up next, a look at the all-new Kia Sorento, we’ll be back right after this.
The Crossover segment continues to grow as manufacturers either add new product, or in this case, upgrade an existing one. And that’s just Kia has done with the 2011 Sorento CUV.
This all-new vehicle is also the first product to start coming off the line of the equally all-new Kia manufacturing facility in West Point, Georgia which has the capacity to build around 300,000 Sorentos a year.
One of the bigger changes to the vehicle is visual…it’s over four inches longer and an inch or so wider than its predecessor. That gave engineers the room to add a third seat, allowing Sorento an advantage over some of its more popular competition. The extra five more cubic feet of space didn’t hurt either…All of which is key since Kia is now spotlighting the family with this latest version of its CUV.
And keeping with that target, up front, the upgraded interior comes with a standard technology package that features everything in it from satellite radio, CD and an MP3 system along with Bluetooth connectivity that’s hands-free. Push button-start and a host of other options are available to add-on.
The unibody construction sports either front wheel or all wheel drive.
Under the hood there are two engines available — the 2.4-liter four-cylinder with 172 horsepower and the 3.5-liter V-6 with 273 horsepower. With a six-speed automatic transmission that gives the four-cylinder 21 city (11.2 l/100 km) 28 highway (8.4 l/100 km) while the six is just under that at 20 mpgs in town and the same 28 on the road.
The 2011 Sorento which goes on sale in January starting around $20,000 is still looking up at segment leaders like the Ford Escape and Honda’s CR-V. We’ll see if Kia’s recent success in the North America market can bring this crossover closer to the competition in sales.
And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.
Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, WardsAuto.com and WWJ Newsradio 950
Share
Embed
Permalink
Comments (25)
November 16th, 2009 at 12:17 pm
What kind of vacation did you go on in order to take pictures of wierd orange footwear John? I always knew you were a bit strange, but…
November 16th, 2009 at 12:43 pm
And yet another concept to take away driving skills…..platoon???? John,taking pictures of weird shoes and crockagators??? Not my idea of a vacation ;}>
November 16th, 2009 at 12:57 pm
platoon? No wonder the price of cars is getting so high. Just give me nice car at a good price that will not make me dinner, cut my grass, wash it self, etc….well maybe?#!@#
November 16th, 2009 at 1:04 pm
John, I just got back from a cruise to St. Croix, USVI; fortunately I lucked out and found a fully restored Triumph TR-3 to take pictures of. I think I win (this time) lol
Looks like GM has at least slowed the ‘bleeding’; good on them for planning to do the loan payback as soon as they suggest. And also good on Ford (and the Union) to see that cooler heads have prevailed and that strick nonsense will be avoided.
November 16th, 2009 at 1:32 pm
Did I miss those vacation pictures?
GM does have its work cut out for it! A bit of magic is what they need to turn GM around.
November 16th, 2009 at 1:35 pm
So what’s the tag line for this crazy platoon idea: “blow your horn in my ear and I’ll follow you anywhere” What a stupid idea. There we go again another replacement model bigger than its predecessor, is this ever gonna end? No wonder there’s so much overcapacity, nobody can afford these “improved” new models.
November 16th, 2009 at 2:12 pm
So Mr McElroy, you expect the government to believe you went to South America, took pictures of Caymans,Crocs, and Porsche imported vehicles, and now you want to deduct that as a business expense of your Public Television show’s podcast thingy?
Sounds good, move along.
November 16th, 2009 at 2:15 pm
So GM is going to start making quarterly debt payments to the US. It’s going to pay off Merkel for the Opel loans. When can I buy stock in this new company?
November 16th, 2009 at 2:22 pm
- What I like to know is where exactly they going to get the professional driver to do the job of being in charge of 4-6 or maybe more other clowns, while doing the hard work of driving all day and those behind him taking a nap???
2. I’m going to give the benefit of doubt to JohnMc. and assume he took the pictures of the Porsche Cayman -not the actual animal cayman -nor the shoes cayman… He did take the pictures of the shoes didn’t he??? oh- the humanity.
Also, maybe the WWF(World Wildlife Fund) can sue Porsche for exploiting a protective animal’s name.
Pedro I think by Industry Overcapacity, they mean – factory equipment and such not vehicles.- in other words, they’re capable of building more in the factories but they are only building about 75% of total capacity.
-
November 16th, 2009 at 2:32 pm
Salvador: True, but by not using the factory to its full capacity, they waste money. You still have to pay the workers, keep the plant open and just slow down the assembly line, I guess. The one benefit should be less manufacturing errors, since the line could move slower, when they speed up production to meet demand, you get a lot of mistakes which then the customer has to fix at the dealership
November 16th, 2009 at 2:43 pm
Keep in mind that excess capacity is an overall figure. So one manufacturer or one final assembly plant could be operating near capacity and profitably. Also, shut down plants don’t cost as much even though they may still be counted as capacity. And plants are designed to make different returns based on three shifts, with the third being the greasy gravy. Still, someone has to go.
November 16th, 2009 at 2:52 pm
John, Porsche isn’t concerned people will think Crocks is selling Porsche sportscars, they’re concerned about selling their own Cayman-branded footwear, apparel and personal accessories etc.
November 16th, 2009 at 3:13 pm
I hope the “Purpose Built ” new Ford police car will be based on the Ford of Australia Falcon , just as the new Chevrolet Police Car will be based on the Holden Commodore. Wouldn’t that be great , Mad Max is coming !
Edward Lipman
November 16th, 2009 at 3:58 pm
HtG Says:
Keep in mind that excess capacity is an overall figure. So one manufacturer or one final assembly plant could be operating near capacity and profitably. Also, shut down plants don’t cost as much even though they may still be counted as capacity
-HtG, we kind of figure that already,…
To Pedro’s point, I think what some are currently doing like in Japan is having less work days or even weeks since they can’t fired anyone because of the unions.
-The hard thing to do is, what to do with the equipment that is not currently being used, they have to keep it because they expect to increase production but, they need to maintain it in top condition.
-Why I can’t understand is why they (meanin the car industry) can’t used that overcapacity equipment to build test cars or something like it, rather than just wasting money by not using it.
November 16th, 2009 at 4:39 pm
Unfortunately for these companies, when a car is a hot seller, they can never seem to produce enough to accommodate the demand,like the Camaro. When they finally catch up, they demande dies down and then tehy sit at the dealer’s lot. What they should do is start making them a few months before they “launch”, so they have enough on hand. I remember when the PT Cruiser came out there was actually quite a wait time to get one.
November 16th, 2009 at 5:18 pm
Looking at Ford’s EU and Aus website I have a question.Why do we get the short end of the stick when it comes to the availability of new models. We still got the old Focus, NO Fiesta and an antique called Crown Vic. The Falcon should have been here years ago, incredible!!!
November 16th, 2009 at 5:22 pm
Pedro, your right, but that also seems to be that car companies don’t really know what to mass produce, then they flood their own dealers with cars that no one will buy and finally overcapacity comes full circle at production.
November 17th, 2009 at 7:20 am
“Even with all the restructuring in the auto industry, a report from CSM Worldwide says that there is still way too much overcapacity (subscription required). According to the Wall Street Journal, the industry is capable of building nearly 86 million vehicles a year, about 30 million more than will be sold this year. And by 2015 the industry will only get to 85 percent of capacity utilization. It says that more brands need to die off and that acquisition of brands, like Volvo and Saab by Chinese automakers, will not help reduce overcapacity.”
This is SO important and SO true! Unless China and, much later, if ever, India, are able to absorb some more of the above, the auto industry will never be healthy.
November 17th, 2009 at 7:24 am
“There we go again another replacement model bigger than its predecessor, is this ever gonna end? ”
Give Kia credit, they did not mindlessly enlarge the SOrrento, they gave it a much needed third seat, and with the 4 it gets 28 HWY even with the EPA’s tough new 2008 MPG standards, that most people easily beat.
The Sorrento looks like a winner on paper. I’ll stay tuned for the road tests and the CR eavluation though. Detroit crossovers have been very obese and wasteful, witht he exception of some recent GM offerings that get 32 MPG highway! (NOT the 25ish MPG Enclave!)
November 17th, 2009 at 7:50 am
as a owner of a 05 Sorrento, and have no problems, I like the new one a bit bigger, better mpg if it can tow 5000lbs i am in.
November 17th, 2009 at 11:05 pm
It’s too bad Kia is unwilling to spell the word “Sorrento” properly. Even Dave who owns one spells it properly, while the labels on his car have a missing “r”.
November 18th, 2009 at 2:20 am
Sportage goes against the 32 MPG Equinox, and that wont be out until Q3 2011. The New Tuscon is expected to get 34 MPG, and since KIAs will have 1-3 less MPG than Hyundais for now on Id expect the Sportage to get about 31 MPG.
November 18th, 2009 at 2:39 am
For some cars its will be more than 1-3 MPG.
The goal is to have KIA placed as the lower priced maker, like Ford or Chevy, and Have Hyundai in Buick/Mercury Territory. Less fuel economy tech=lower prices.
The 5 year company agenda is to get Hyundai as a leader in Affordable near luxury, the undisputed global fuel economy leader, and a leader in design. Long term 10 years out, it will become the global safety leader.
KIAs agenda in the next 5 years is to become the undisputed global leader in reliability, a leader in affordable performance, and a leader in affordable comfort.
They will still come at a bargain, just to different segments now. Instead of Hyundai being a bargain to Toyota, it will be a Bargain to a SAAB/Volvo(Elantra, Sonata), MINI(Accent, new B segment car), or Chrysler/Buick (Azera, Genesis). Hyundai will take more share from the weak Near Luxury companies.
KIA will truly take Hyundai’s place as the bargain to Toyota and Honda, but in smaller cars it will really be a bargain to Scion. KIA will take more share from the weak economy car companies.
November 18th, 2009 at 2:16 pm
Somehow, it seems a long way off that Hyundai will be very big in the “near luxury” segment, given the power of brand name in this segment. That is why people buy $40K C-Class’s and almost as expensive Lexus ES’s that are little, if any better than Accords and Camrys that cost ~$10K less. Lack of brand name panache is also why Buick will have a hard time taking sales away from Lexus, even with very good cars. I just don’t see Hyundai doing very well in this market any time soon.
November 19th, 2009 at 6:23 am
Kit, Lexus is not a Near Luxury make anymore. It, as well as Cadillac have gone further upmarket, and been abandoned the Near Luxury Market about 5 years ago. They Compete with BMW and Benz now. Hyundai’s not a Lexus Competitor, its just Lexus 25 years ago. The First Lexuses were Glorified Toyotas, I see Hyundai taking the same path for the next few years.
Slowly but surely building credibility, and that name pannache. It will take some years, and nobody is going to get out of a Lexus for a Hyundai, but with lower prices, and great equippment I can see many willingly trade in their: Buicks, MINIs, SAABs, Mercurys, and Chryslers for a car with a better reliability history and better fuel economy with the same or more power like the cars Hyundai is about to go balistic on the American Market with within the next 24 months.
Biggest Trade ins for a Genesis= 300C
Biggest trade ins for a Sonata=Sebring
Biggest Trade ins for an Elantra/Accent=Pt Cruiser.