October 15th, 2008 at 11:39am
GMAC’s new loaning policies may kill GM dealers. Toyota predicts a further drop in sales in the increasingly volatile American market. Sales of diesels are flagging in Europe. All that and more, plus a closer look at the Dodge EV with Chrysler’s VP of Advanced Vehicle Engineering.
Transcript and Story Links after the jump . . .
Here are today’s top stories. GMAC is killing GM dealers, Toyota predicts a further drop in car sales and sales of diesel engines are falling in Europe. Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Wednesday, October 15, 2008. And now, the news.
Is GMAC out to kill GM dealers? Yesterday, GMAC announced it will only offer loans to people who have a credit score of 700 or better. In other words, they’re only going to give loans to people with the best credit out there. But this will eliminate the vast majority of buyers who buy at GM dealerships. GM dealers are reeling from a slumping market and this move by GMAC, which is now 51percent owned by Cerberus is going to drive a lot of them out of business.
And as if the news about the new car market wasn’t already bleak enough, now analysts are predicting that the annualized sales rate in the American market in October could fall below 12 million units for the first time in a quarter of a century. Automakers report that showroom traffic is abysmal. And a lot has to do with the fact that car buyers are having problems getting loans.
As if to put an exclamation mark on the dire situation, reports out of Tokyo say Toyota believes the weakness in the American market will continue well into next year. You watch, this is going to have a dramatic impact on Toyota’s profitability. Even though it’s the most profitable automaker in the world, Toyota overwhelmingly earns its profits in the United States and this is going to have a significant impact on Toyota’s bottom line.
Speaking of Toyota, the Ford Motor Company is once again claiming that it is matching Toyota’s quality. Of course, this claim is based on a study that Ford is paying for. It’s done by a company called the RDA Group, which is based in Bloomfield Hills, Michigan. However, other quality surveys like J.D. Power and Consumer Reports have also shown that Ford is making big gains.
The Detroit News is reporting that the National Traffic Highway Safety Administration, better known as NHTSA, is going to mandate seatbelts in school buses in the United States starting in 2011. The European Union and Australia already have a mandate like this. But don’t look for much of an improvement in safety. School buses are already the safest form of transportation for kids going to school. Statistics show that about five children are killed in school buses every year, meaning that it’s safer to ride the bus than it is to walk to school or have your parents drive you there.
Diesel engines have been selling like crazy in Europe since the early 1990s but that growth is coming to an end. In fact, so far this year, diesel sales in Europe have dropped below 50 percent market share (subscription required), and automakers believe this is the beginning of a long, slow slide in sales of diesel. Why the drop? In the past diesel fuel cost about 20 percent less than petrol in Europe, but in most markets diesel is now about the same. On top of that, Euro 6 emission standards are going to add a lot of cost to diesel engines.
Coming up next is our feature story for the day, where we’ll take a look at one of the electric cars Chrysler recently unveiled. Is this just a publicity stunt or are they really onto something? We’ll be back, right after this.
Chrysler surprised the industry recently when it pulled the wraps off an all-electric sports car for the Dodge brand. It’s based on a Lotus Europa, but with Chrysler EV components. If you haven’t seen the car in action, or heard from the executive in charge of the program, listen up to Lou Rhodes, Chrysler’s VP for Advance Vehicle Engineering.
By the way, Lou Rhodes is one of my guests on the next edition of Autoline, along with Bruce Coventry, the president of GEM electric cars. Did you know Chrysler is already the largest manufacturer of electric cars in the world? Then you’ll want to catch that program.
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.TV. Thanks for watching, we’ll see you tomorrow.