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Episode 381 – GM Dumps Daewoo, German Environmentalists Against EVs, Ford’s Stock-Drop

April 29th, 2010 at 12:11pm

Runtime 8:09

GM is getting ready to drop the Daewoo brand.  A group of German environmentalists has come out against electric cars.  And what in the world is going on with Ford’s stock?  All that and more, plus an interview with Ernst Lieb, the President and CEO of Mercedes-Benz USA.

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Transcript and Story Links after the jump . . .

Here are today’s top headlines. GM gets ready to drop the Daewoo brand. German environmentalists come out against electric cars. And what in the world is going on with Ford’s stock?

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

This is Autoline Daily for Thursday, April 29, 2010.   And now, the news.

GOODBYE DAEWOO, HELLO CHEVROLET
Next year the Chevrolet brand will be introduced in Korea.  GM Daewoo President and CEO Mike Arcamone made the announcement yesterday.  But any of you who watched our live webcast from the Detroit Auto Show waaaaaaay back in January, already knew that.  You can check out my interview with Mike Arcamone on the John’s Journal page of our website – AutolineDetroit.tv – or just follow the link in today’s transcript.  The reason the Chevy brand will be used in Korea is that something like 90 percent of Daewoo’s production is exported and those cars are already branded as Chevys, plus the Daewoo brand is pretty much only used in South Korea and it’s not very well regarded there.  According to GM’s market research, half of all Koreans are familiar with Chevy, more than 80 percent of them recognize the bow-tie logo and they see it as more prestigious than the Daewoo brand.

PHOOEY ON EVs!
Here’s a seemingly paradoxical story, courtesy of Bloomberg.  Most American environmentalists are gung-ho for electric vehicles, but a group of greenies in Germany are opposed to them.  The Berlin-based eco-organization Deutsche Umwelthilfe says that government incentives for electric vehicles will “plunder” government treasuries and that EVs do little to curb pollution since so much power is generated by burning coal and natural gas.  The group says automakers should focus on improving fuel efficiency and lowering carbon emissions for conventional internal-combustion engines instead of building electrics.  The group also advocates using taxpayer money to fund public transport instead of EVs.

WHY DID FORD’S STOCK DROP?
What in the world is going on with Ford’s stock? On Tuesday the company announced its financial earnings, blowing through Wall Street’s expectations.  Usually an upside surprise drives up the price of the stock, and yet the price of Ford’s stock went down. According to the Detroit News some analysts believe that Ford’s earnings did not meet expectations, while others believe that Ford’s performance is not sustainable.  I say those analysts don’t know what they’re talking about.  Here’s my Autoline Insight. I believe the UAW’s VEBA trust fund took advantage of Ford’s earning report to dump a bunch of shares.  Ford gave the UAW stock warrants instead of cash to pay for retiree health care.  So the union needs to sell those stock warrants, and I believe that’s exactly what it’s doing.  In the period leading up to Ford’s announcement the volume of trading was roughly 100 million shares a day. Then on the day of the announcement it suddenly skyrocketed to almost 300 million shares. With so many shares being dumped, the price went down despite the fact that Ford surprised everyone with its financial performance. Full disclosure here, I own a modest amount of Ford stock.

IS IT REAL?
An effort is under way to have stricter penalties for companies that counterfeit auto parts. According to Ward’s, the U.S., European Union and Japan are negotiating rules that would better police counterfeiting around the globe. This is a huge problem for the industry; the global market for counterfeit parts is estimated at $16 billion and will grow around 10 percent every year. China is the worst offender by far.  The country is responsible for about $9 billion of the $12 billion in estimated losses due to counterfeiting. And it’s estimated over half of the vehicles in China have counterfeit parts.

RENEWABLE BIODIESEL FROM FINLAND
Finnish biofuel producer Neste Oil is set to begin trials of its diesel fuel produced from 100 percent renewable raw materials with no fossil fuels. Employees of the company and a few select individuals will test the fuel, in Finland, from now until the end of summer. Greenhouse gas emissions with its renewable diesel are 40 percent to 80 percent lower than conventional diesel. Neste produces its diesel from vegetable oil and waste animal fat using proprietary hydrogenization technology.

When the car market collapsed last year, automakers slashed their production. Maybe they cut too much. BMW is complaining that it could sell more cars if it could get them right now. So what does Mercedes say? That’s coming up next.

Mercedes is running with twice as much car inventory right now as BMW. It’s not that Mercedes has too much; it’s that BMW has too little. Chip Drake from Autoline Daily just caught up with Ernst Lieb, the head of Mercedes-Benz USA, and asked him about their inventory level and if they could use that as a competitive advantage.

That was Ernst Lieb, the head of Mercedes-Benz USA.

Don’t forget to tune in to Autoline After Hours tonight when our guest will be Nina Beckhardt, who is an expert in naming products, including coming up with the names of new cars. Join me, the Autoextremist Peter DeLorenzo, and Bloomberg’s David Welch tonight at 7 p.m. Eastern.

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, Car Chat, WardsAuto.com and WWJ Newsradio 950

41 Comments to “Episode 381 – GM Dumps Daewoo, German Environmentalists Against EVs, Ford’s Stock-Drop”

  1. G.A.Branigan Says:

    Kudos to Neste Oil on it’s research and production of 100% bio-diesel.As I’ve said many times before,that (bio-diesel + clean diesel tech)is a more viable alternative then E-85.Now,how to go about some serious bio-diesel production here in the USA.It would be nice if the auto manufacturers would push diesels instead of avoiding them like the plague.

  2. Tony Gray Says:

    Whoa…might have to watch AAH tonight!

  3. Nick Stevens Says:

    Actually I will NOT watch AAH tonight exactly because of the silly topic. I wish cars had names that indicate some serious facts about them and NOT Rabbit, Golf, Achieva (SIC!!!), or, more appropriately, LEMONA.

  4. Nick Stevens Says:

    And Merc and BMW save a ton of $ by not wasting millions of $ to name their cars, but using informative alphanumeric names. (at least they USED to…)

  5. pedro fernandez Says:

    GM is dropping the Daewoo name due to its horrible reputation for quality and reliability worlwide, even in its own country. Fools are those who continue to buy those cars. Funny how they put Chevy name on them, which only hurts the Chevy brand, completely illogical.

  6. Nick Stevens Says:

    Now that GM has bought Daewoo some years ago, it has to use it somehow, there is no way to get its $ back! Chevy is the lowest-priced brand GM has. What else can it do, rename Daewoos as Cadillacs? (actually their (Cadillac) reliability is not that much better than Daewoos, and they cost 6 and 8 times more!!)

  7. Jim Terruso Says:

    John,
    Regarding GM,s loan payback, they repayed the
    George Bush loan only. The Obama loan of
    50 bil. still remains.

  8. Chuck Grenci Says:

    Looking forward to AAH as usual; mostly for the insight from John, Peter and David (the special guest, well, I’ll just reserve judgement till after the show).

    And I think Pedro is on to something; if the Daewoo product continues to be subpar (though some of there latest is almost up to par), it will just drag the Chevrolet name down with the Korean car market.

  9. Kit Gerhart Says:

    Car names like Rabbit, Mustang, etc. don’t bother me. The ones that really annoy me, and have cost GM a sale, (and maybe another sale in the future) are deliberately misspelled real words. The car I didn’t buy because of the name was a PriZm. GM has had a long history of this with Ciera, Savana, Aztek, and now Cruze. The latter is a car I might well consider, at least if they eventually sell a hatchback version, but the name will keep me from buying it. Call it Cruise if they want to, or ever resurrect Cavalier, but don’t use those horrid deliberately misspelled words that have confused school children, and adults for years about how to spell words like prism, and soon, cruise.

  10. P.J. Phares Says:

    Actually, GM did not pay back ,with interest and on time, the so-called Bush part of the bail out.
    The loan pay back didn’t come out of ‘earnings’, but from another load of TARP money…like shifting money from one pocket to another…or paying off your Mastercard with your VISA. One explanantion appears in the http://www.hotair.com blog, April 23rd post by Ed Morrisey.

  11. dcars Says:

    Bob Lutz had mentioned that GM needs to focus on best in class with all GM cars. As Pedro says, re-branding Daewoos to Chevys will hurt the Chevy Brand.

  12. HtG Says:

    One reason I resist going to Starbucks is having to say unctuous names for coffee cup sizes. A bit off topic here.

    Also, is it Porsche or Porsche?

  13. pedro fernandez Says:

    A better idea was to have named it “Daewoo, by GM” or something like that. Even bringing back the Geo name would have been better for Chevy. Ford improved Jaguar quality, but GM has been unable to move the needle on those Daewoo cars,

  14. Nick Stevens Says:

    “Also, is it Porsche or Porsche?”

    Huh? Both are identical and correctly spelled, do you mean is it pronounced “Porsch” (like many in the US say) or “PorschE” as is the original said in German?

    Lambo names now refer to HP, such as the Murcielago 640 (!). Ferraris used to be more organized and rational, like the 355 and the 430, referring to engine displacement. But the best system is either MB or BMW.

    And the best of all is on Chinese restaurant menus. Guess how many less people would go there if the items were not numbered on the menu!

    “I’ll have the No. 18, thanks.”

  15. pedro fernandez Says:

    At my local Chinese take out their #1 is almost guaranteed to give you #2.

  16. Nick Stevens Says:

    Not to me, I lived more than a month in China and heard all kinds of stories and even bought a pack of over the counter pills for diarrhea which are still all unused except one, when I went for a very spicy soup at a train station family restaurant.

    My vegetarian former HS classmate took me to a mexican place Monday and they thought I was a vegetarian too, they filled the burrito with broccoli and other BS that really did not fit well… I’ ve been to far better mexican places in San Diego, Del mar and other towns along the Socal coast.. still, it looked authentic..

  17. len Says:

    I didn,t know UAW was at Daewoo! <g

  18. Kit Gerhart Says:

    The Chevy name is almost totally unknown in Asia, so using it on Daewoos in Korea shouldn’t “diminish” the name. There is nothing about it in Korea to diminish. In South America, the Chevy name has been used on the most basic of GM cars sold, so it is already starting from the bottom there.

  19. Kit Gerhart Says:

    According to Hyundai/Smoke, the next generation Aveo is going to be a great car. If it is, and if people realize that it’s good, it could help establish the Chevy name in Korea.

  20. pedro fernandez Says:

    Kit: if a Daewoo built Chevy is seen as an unreliable POS then it will hurt Chevy. Right now that’s what’s happening in the UK where most of the Chevys are Daewoo-made and are seen as inferior products in every way. And that does hurt the brand since they don”t know Malibu or Equinox over there all they see Chevy are the Daewoo and the Corvette. I have seen enough British, auto related TV shows to know this is true.

  21. HyundaiSmoke Says:

    Thanks Kit, screw the POS Korean cars for the Good Korean cars.

    Did you guys see that new Elantra? All I have to say about that car is Efing Awesome. It nukes all comers, and makes New Focus look a little tame and almost boring.

  22. HyundaiSmoke Says:

    Its the beauty pageant winner of all C-Segments here and upcoming by far.

  23. pedro fernandez Says:

    smoke: where did you see the photo? the ones I found online are camouflaged

  24. HyundaiSmoke Says:

    http://www.autoblog.com/2010/04/29/busy-hyundai-reveals-next-elantra-at-busan-show-in-korea/

  25. HyundaiSmoke Says:

    I think they out did KIA this time on the styling. I know this pisses some of my KIA friends off, but Im sorry Forte doesnt thold a candle to this despite the fact that Forte is a nice looking car.

  26. pedro fernandez Says:

    Thanks, it looks like a higher priced vehicle than it is. Cruze, Focus need to go back to the drawing board.

  27. Kit Gerhart Says:

    That Elantra looks pretty good, but how about the 5-door, or did it get deleted from the US market?

  28. HyundaiSmoke Says:

    im30=Next Gen Elantra Touring. They are testing the prototypes now.

    They are still deciding whether or not to badge tha Veloster as an Accent or Elantra hatch.

  29. HyundaiSmoke Says:

    They probably have decided already I know, but its tightlipped.

  30. HyundaiSmoke Says:

    There will be an Elantra hatch Kit so dont worry.

  31. Alex Kovnat Says:

    >The Berlin-based eco-organization
    >Deutsche Umwelthilfe says that
    >government incentives for electric
    >vehicles will “plunder” government
    >treasuries and that EVs do little
    >to curb pollution since so much
    >power is generated by burning
    >coal and natural gas …

    So why didn’t Deutsche Umwelthilfe think of that when they either supported, or at any rate condoned, the idea of phasing out nuclear power?

  32. Kit Gerhart Says:

    pedro fernandez Says:
    April 29th, 2010 at 3:47 pm

    “Kit: if a Daewoo built Chevy is seen as an unreliable POS then it will hurt Chevy. Right now that’s what’s happening in the UK where most of the Chevys are Daewoo-made and are seen as inferior products in every way.”

    It sounds like they are calling the Daewoos Chevy in the UK to avoid diminishing the Vauxhall name. Chevy is such an unknown name in the UK and Europe in general, that they may be willing to sacrifice its reputation rather than call the Daewoo cars Opel or Vauxhall.

  33. Andrew Charles Says:

    Phares highlights some confusion re the GM loan repayment. They did not pay one lot of loans with money from another. The borrowed a lot of money, some of which was converted into equity after the bankruptcy reorganization. All they’ve done is say “Hey, you know, we’re making good money now, we’re not going to need this, so we’ll give it back.”

  34. Andrew Charles Says:

    Talking about AH, Camaro is not a made-up name. It’s very low class French slang for “comrade”. Someone found it in a French-English dictionary the French didn’t have an opportunity to censor.

    Phaeton was a coachbuilding term for a type of sporting open body, which transferred to automaking. Someonewhat prophetically for VW, Phaeton was a figure from Greek mythology who crashed and burned.

  35. pedro fernandez Says:

    Kit: unlike Americans, the British don’t seem very interested in reliability, but more on build and material quality where these Daewoo products are sorely lacking. I don’t understand how Hyundai has been able to become such a world-class manufacturer and Daewoo has not. Almost like Ford/Chrysler over here.

  36. Kit Gerhart Says:

    I suspect that the people here who keep bashing Chrysler haven’t driven a 300 or Charger. Those cars perform and handle well, and the interiors, while not Audi quality, are not terrible.

  37. Drew Says:

    Ford’s stock simply went down because a LOT of people who bought at 2,3,4,5,6,7,8,9…or so dollars a share finally sold making a HUGE percentage profit.

  38. Nick Stevens Says:

    Motorweek tested the new sonata, and while the EPA estimates are 22 city and 35 hwy, quite good for this size car, they only got 26 in their mixed loop of real life driving, which is pathetic, it is less than the 27 mixed loop they got with the almost 5,500 lbs X5 Diesel!

    Most cars today can get MORE than the new lower EPA MPG ratings. Especially the VW diesels, but gas ones too. A few makers seem to have been able to game EPA’s procedure and got high official EPA numbers, while in reality their MPG is as bad as their competitors (see Fusion Hybrid vs Camry Hybrid etc)

  39. Kit Gerhart Says:

    I bought a modest amount of Ford stock when it seemed like a bargain at ~$13. It went only down from there, but has finally recovered to where I bought it.

  40. Nick Stevens Says:

    HAs Consumer Reports tested the new Sonata, and what were their (usually more careful and standardized than Motorweek’s) MPGs?

  41. Kit Gerhart Says:

    C/R hasn’t tested the new Sonata yet.