Episode 607 – Parts Shortages Spreading, Volvo’s Outrageous EV Lease Price, VW to Buy Navistar?

March 25th, 2011 at 11:36am

IHS Automotive projects global vehicle production could drop 30 percent this year due to parts shortages because of the disaster in Japan. Volvo will charge more than $2,100 per month for its C30 electric vehicle and the company says it will still lose money on them! An analyst in Europe says Volkswagen should buy Navistar, the American company that makes big diesels and heavy trucks. All that and more, plus a preview of this week’s Autoline Detroit with GM’s president of North America, Mark Reuss.

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Runtime 7:32

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This is Autoline Daily for Friday, March 25, 2011. And now, the news.

PARTS SHORTAGES SPREADING
There’s more fallout from the tragedy in Japan, and NOT of the nuclear variety. As we’ve been reporting the auto industry is taking a pretty big hit from the earthquake/tsunami disaster. IHS Automotive projects global vehicle production could drop 30 percent this year due to parts shortages. That’s their worst case scenario, it may not get that bad. But remember, if you’re missing just one component you can’t sell a car. These troubles are now spreading to European automakers as well. Shortages could cost them billions of Euros. The situation is also hitting us right here in the good ‘ole US of A. And not just with high-tech parts. Ford halted orders for vehicles painted “tuxedo black” (subscription required) because some of its pigments are made in Japan.

VOLVO’S OUTRAGEOUS EV LEASE PRICE
When we saw the lease price of the smart EVs we thought it was the rip-off of the century. Nearly $650 a month for a cabriolet version of the tiny two-door. But smart doesn’t even come close to ripping off customers compared to Volvo. Autoblog reports it will charge 1,500 Euros per month for its C30 EV! That’s more than $2,100! A month! Spread out over the three-year term that works out to nearly $77,000 for a car you DON’T get to keep. Making the situation even more bizarre, the company says it will LOSE money on the deal. My question to Volvo is, did any of you go to business school?

AMAZING HIGHWAY REPAIR
Right now you are looking at a part of the Great Kanto Highway in Japan which was damaged in the earthquake. But would you believe this is the same stretch of road less than a week later? According to the Daily Mail, construction workers were able to repair the road in just six days. Jalopnik reports that the chasm was 150 meters in length which is close to 500 feet. It’s truly amazing they were able to pull this off during a time of crisis when we can’t even get these kinds of repairs done in the U.S. with no crisis at all.

BOSCH TO DOUBLE WORKFORCE IN CHINA
Despite the slowdown in the Chinese auto market, companies are still planning big investments in the country. According to Bloomberg, auto supplier Bosch plans to double its workforce in China to 50,000 by 2015. Most of the jobs will be for its automotive unit where they will work on development and production. Bosch is trying to increase its revenue in the country from close to $6 billion last year to over $11 billion.

ANALYST RECOMMENDS VW TO BUY NAVISTAR
Can you count all the brands that Volkswagen has? Let’s see, there’s VW, Audi, Seat, Skoda, Bentley, Lamborghini, Bugatti, and Scania, the truck maker. And now one analyst in Europe is saying it would make all the sense in the world if Volkswagen bought Navistar, the American company that makes big diesels and heavy trucks. Bloomberg reports that an analyst at Credit Agricole says VW wants to become the largest car and truck maker in the world, but it doesn’t have a truck presence in the American market. Credit Agricole says Veedub could buy Navistar for a little over $9 billion.

NATIONAL SPEED SPORT NEWS LAST ISSUE
Back in the 1960s and ’70s, before the internet, and at a time when there was very little motor racing on television, a motor-sports reporter named Chris Economaki was a nationally known figure. No one in the media covering motor sports has ever before or since achieved his prominence. I got to know Chris a little bit, what a riot, he was one of the best story tellers I’ve ever met in my life. He actually got his start in 1934 selling a newspaper called National Speed Sport News. He later took over the newspaper, but now his daughter, who runs the operation, announced that they’ve published the last issue. The good news is that they’re going to continue online, and if you’re a motor sports fan and have never heard of it, check out National Speed Sport News.

Will diesel engines in passenger cars ever catch on in the American market? We’ll put that question to GM’s Mark Reuss, right after this.

THIS WEEK ON AUTOLINE
Mark Reuss is my guest on Autoline Detroit this weekend. One thing I was wondering is his views on whether diesels will catch on in passenger cars in the American market. Here’s a clip from that show.

The rumor about a diesel Chevy Cruze actually came from a UAW source at GM’s Lordstown assembly plant in Ohio, which makes the Cruze. Usually the company will alert the union to future work coming into a plant, so I think this is a pretty good rumor. By the way, Peter De Lorenzo, the Autoextremist, and Scott Burgess from the Detroit News join me for that show, which you can see on our website right now.

Also, Autoline Detroit is now carried on public television stations in 40 markets around the United States and Canada. Check your local listings, or call your local public television station and let them know you’d like them to carry Autoline Detroit.

And that brings us to the end of today’s report on the top news in the global auto industry. Thanks for watching, we’ll see you Monday.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog and WardsAuto.com

33 Comments to “Episode 607 – Parts Shortages Spreading, Volvo’s Outrageous EV Lease Price, VW to Buy Navistar?”

  1. Tony Gray Says:

    Wow, Volvo’s Outrageous Lease Price caused an earthquake too! That’s what the banner said!

    (Those that can, do. Those that can’t, nit-pick. Sorry…)

  2. ArmyEd Says:

    @bob

    Your comments yesterday were about as ludicrous as anything I have ever seen, do you really think people take you seriously when you rant and rave about a quality product like Lexus, you have further lost any credibility on this forum, if you ever had any to begin with. And lose the upper case, we all know you are ranting and raving like a lunatic anyway, save yourself the key strokes and stick to the lower case like everyone else.

  3. ArmyEd Says:

    John,

    What happened to the YouTube connection, it didn’t appear for this episode and I had to sit through all those “interesting” commercials we see everyday.

  4. tj Martin Says:

    VOLVO ;

    They’re owned/run by the Chinese now so isn’t that question a bit rhetorical ? re; ” Don’t any of you go to business school ? “

  5. Ron Paris Says:

    John:
    I am apalled by your naive and insulting comments about high lease prices on Smart and Volvo EVs. Did it not even occur to you that maybe these cars did not benefit from layer upon layer of government subsidies lavished on cars like the leaf and Volt? Maybe the result is lease prices that more truly reflect the obscene costs of developing and marketing such technology in a marketplace unwilling to to support it!

  6. tj Martin Says:

    ArmyEd ;

    Nice one ! #2 . Amen !

  7. tj Martin Says:

    Ron Paris ;

    Nice try ( #5 ) but uhhhhh …. Nope . Zero justification for the ridiculous Lease Prices ( not so ) SMART and Chinese Volvo are asking for their pretentious little E/V’s

    If they can’t do it at realistic prices , they shouldn’t do it at all .

    The only ones more Stupid than SMART and Volvo on these leases is the fools who actually sign up for them .

  8. G.A.Branigan Says:

    We all pretty much think the same in regards to a $2100.00 a month lease for a Volvo ev.Yep,it sure is the single dumbest business move,building to lose money,LMMFAO!! Want to see something funnier?How about the few maroons that actually sign up for such a deal.Anybody want to take a video of such a transaction and post it on youtube?

  9. shan Says:

    @Ron Paris…………..you sound like a delusional liberal and i would wager you live out west? Cali? lol, wake up, Government can not take you to the promised land….

  10. tj Martin Says:

    @ Ron Paris ;

    For your edification ;

    Both SMART ( Germany ) and VOLVO ( Sweden ) have benefitted from Government Subsidie € far and above any that any of the US manufactures have ever received .

    But in light of both companies Abject failure of late I’d have to concur with shan’s comment ( post #9) Because saying either SMART or VOLVO have ” Benefitted ” from said extensive Government subsidies would be Hyperbole at best

  11. Keith Darrow Says:

    John,

    With regard to “Mark Reuss bullish on diesels.”
    I have been waiting for diesels to take off for more than 5 years. A friend of mine is an Auto Shop teacher and recently went to a seminar on diesels and pretty much learned why diesels are a lost cause. The reasons… the added cost of the fuel / engine and now the increased maintenance cost via filters / urea and presto your savings vanishes. With a push for ever more stringent emissions standards I don’t think anyone will see a savings. I am a big fan of diesels but I am a bigger fan of saving money!! The government is clearly in the driver’s seat with regard to alternative fuel vehicles. If the government were not we would have a many more natural gas and diesel vehicles on the road. The government likes hybrids and electrics and hates diesels and natural gas power cars.

    If I am missing something please let me know,

    Keith
    Glenside PA

  12. tj Martin Says:

    @shan

    RE; Rental car insurance .

    Save yourself a bundle of money and get yourself a Credit Card ( Chase VISA is one ) that automatically insures your rental car when you use the Card for payment .

    Double down and get the Rental Insurance benefit ( usually about $10 – 30 a year ) that most Auto Insurers offer with your regular Car Insurance Policy .

    The Rental Car Companies are ripping you blind with their Insurance .

  13. Brett Says:

    @shan

    You sound like one of those low-information conservative haters. Do you live in the South?

    Question is: can you take the same style of criticism you seem to like to dish out? Perhaps you should engage some adult discretion when you formulate your posts so you don’t sound like another Faux News stooge.

  14. Bob in Atlanta Says:

    When GM leases a Volt to anyone, who receives the US federal tax credit… GM or the lessee? I thought the reborn GM was exempt from US federal income taxes for some period of time, so does a tax credit amount to another federal handout?

  15. Bob in Atlanta Says:

    Brett: Please make an intelligent statement or ask a relevant question about automobiles or the auto business, or go back to reading the Puffington Host.

  16. Dale Leonard,Lakewood,Oh. Says:

    Bring them Diesel’s on!!! Back in the 80′s I had a Toyota pick-up with a 4 cyl.diesel and on the highway I was getting 60 to 65 mpg and 40 in the city. I was all set to buy a Mahindra,as it came standard with a diesel,but I dont think I will see it in the U.S. in my lifetime they way they’re going with it.

  17. tj Martin Says:

    Y’all will love this one .

    GE , who used our bail out money ( tax payers ) to buy all those Chevy Volts ( which we the Tax Payers paid for ) are now exercising a strategy to AVOID paying Taxes .

    Isn’t that Special ? Take the Tax Payers to the Cleaners , buying Tax Payer Subsidized Cars ….. All while NOT paying taxes .

    I want in on this new form of Economics . After all I am paying for it !!!

  18. tj Martin Says:

    Dale Leonard LO ;

    From what i’ve been reading about Mahindra and their Diesels ( remember initially I was really excited about them myself till I did the research ) Mahindra is doing you/me a favor by not bring their POS to the US along with their back stabbing , grifter business ethics .

    So lets hope Toyota et al gets back on the Diesel Wagon and brings us a few soon .

  19. tj Martin Says:

    @Bob in Atlanta ;

    The VOLT Federal Tax rebate goes to the person leasing the car .

    You are correct in saying that GM is exempt from paying taxes .

    Again another LOOP that has you and me ( the Tax Payer ) holding the Bill .

    We’ve got to get in on this new 21st Century Virtual Economics scam .

    We’re getting screwed left and right as it is now so where do we sign up ???

  20. tj Martin Says:

    BWTM !

    I think I’ve got it figured out how to make this whole GM – GE -Government Subsidies thing work for me .

    So here it is ;

    Everyone here cough up $10,000 ( mandatory ) apiece – For me to put on a Concert – Which I’ll charge you $250 a piece ( mandatory two ticket minimum ) to attend – Which I won’t show up for – But I get to keep all the money anyway .

    Yup . Got that one figured out . So get yer checkbooks and wallets out gentlemen . LoL :o )

  21. Ron Paris Says:

    “@Ron Paris…………..you sound like a delusional liberal and i would wager you live out west? Cali? lol, wake up, Government can not take you to the promised land…”
    Shan: Actually, I’m a Libertarian (who lives in Calif) and the last thing I would advocate is government subsidation of any aspect of the auto industry. What I was trying to point out was that there’s got to be more to this story than meets the eye. Why else would Smart and Volvo advertise lease prices that no one in their right mind (or almost no one, anyway) would pay. Something’s missing in this picture!

  22. dcars Says:

    Hmmm VW has many different brands of cars and it’s ok? GM has lots of different brands and it’s not ok? to add to this a consultant named ‘Credit Agricole” recommends that they buy Navistar? I don’t get it. GM made all sorts of trucks and buses you name it and they were criticized for being to complicated and expensive. Now VW is building them selves up using the same business model as Gm?

  23. HtG Says:

    maybe the high price for the Volvo EV is a kickback scheme. Which clients will be approached to take the deal? Maybe tj’s music industry experience can help us out? (kidding, I’ve seen plenty of paperwork that was for a different kind of work altogether)

  24. C-tech Says:

    Hopefully the lease price of the Electric C30 Volvo was a mis-print, or it includes 2 S60 Volvo’s for back-up transportation.

  25. C-tech Says:

    Mr. Reuss seems to be playing it close to the vest on GM Diesel cars. I hope they do not repeat Roger Smith’s GM era of piss-poor Diesel cars and bad customer service.

  26. XA351GT Says:

    Bottom line anyone stupid enough to lease the not so Smart or the Vulva needs to be taken to the cleaners. I can’t see paying $2100 @ month for any car.

  27. Bob in Atlanta Says:

    tj #18: It appears that the leasing company is the party elegible for the $7500 rebate. Is this your view? See-

    http://www.fueleconomy.gov/feg/taxphevb.shtml

    “• If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.” (in part.)

    That leasing company would have been GMAC – now ALLY? (Now owned by UAW, the FRB, and taxpayers?????)

  28. Andrew Charles Says:

    If we are talking about who should buy Navistar, by far the best fit would be Iveco. There is a vast scope for reducing costs through combining R&D and merging chassis and engine families; International is strong in the Americas, and Iveco in Eurasia; Iveco is actually an abbreviation of International Vehicle Co, and the company actually builds conventional trucks under the International brand in Australia; Iveco is strong in cab-forward and Navistar in conventional trucks, but there is no reason why you can’t build both types on the one platform, as Isuzu and GM have done; Iveco can supply Navistar with large vans and medium cab-chassis that VW can’t (VW’s large van is a Mercedes Sprinter). It’s the only way either group can rival Volvo or Daimler trucks in scale.

  29. HyundaiSmoke Says:

    Eqqus, Shemqqus.

    Who cares what you guys think.

    You know nothing anyway. You guys destroyed the economy, and besides anything Korean is better than what’s offered from Germany, America, or Japan.

    Crapanese Cars
    Americrap Cars
    Germanal Quality

    People are tired of the design Genetics, like the BMW look, the Chevy Bow Tie, the Cadilac Emblem, the GMC brand in general.

    If young people had the money to buy cars and old people didnt then the: Germans, Japanese, and Americans for the most part would be in big ass trouble.

    Many of your ideas will lead to the ultimate destruction of the Automotive industry. You guys still want to use old tech, and still want to overcharge for Victorian Era Electric Car technology. Like this $2100 a month Volvo COMPACT HATCHBACK WITH ABOUT THE SAME TRIMMING AS A HYUNDAI ELANTRA!!!

    When the Dollar Crashes, even the 40 MPG Ford Fiesta will be worthless, as it will only have the Fuel Eficiency Buying power of a 2 ton SUV when Gas AT THE MINIMUM- DOUBLES IN PRICE.

    Time’s up, guys. From Cars to Coffee- The Entire industry of America needs totally fresh blood with new ideas.

    It’s gotten ridiculous when the establishment calls people with Gray Hair- LIKE THE PRESIDENT, Young.

    No Supervision, etc…

    Let our Generation just figure it out.

    You guys really blew it by waiting way, way, way too long to bring the unorthodox young people in. How long did you guys think you could keep the young folks out, what until we are 50? Come on now…

    Yeah, Yeah, Yeah, I’m the controversial and Crazy HyundaiSmoke, right.

    But, I’m the only one reporting on the things that really matter like:

    -The Dollar Collapse and how that’s going to affect the Auto Industry.

    -Why should we just drop everything and move straight into electric.

    -How the Dollar Collapse and the ensuing Depression (which will make the Great Depression look like Prosperity) will radically change the rest of America to look like Detroit.

    - How car companies are tricking people into spending money when they are 12-18 months away from losing it all.

    etc..
    etc..

    Most Automotive Journalism has become nothing but “Non-News.” Like Distracting people from the real problems by making people jealous because Allan Mullaly EARNED his $56.5 Million.

    Yawn

  30. HyundaiSmoke Says:

    Japanese Cars are an absolute Joke, and what’s really sad is that you dont realize it.

    Everything Ive seen from China or India that’s fresh and not a copy looks better and is a breath of fresh Air than ANYTHING Japan has ever made in the past 10 years.

    Japanese Cars are Fuc-ing ridiculous looking, and you know it. So start saying it, dammit.

    You guys worry about the BS, when we have Senators and Government Orgs like NHTSA behind the curtain planning new ways to make the American Motorist’s lives a living hell.

    You decry the very Eco/Safety Legislation that is needed AND THAT WILL SAVE THE CAR, but say nothing about the Totalitarian Police State they are readying against the Car and the American Motorist.

    Carbon Taxes, No Free Parking- ANYWHERE, Congestion Charges, Eco Premiums on Insurance Policies, Taxes just to use the road, No Smoking in your Car, etc….

    Yeah just a snippet of the police state measures they have cooking up. But I guess the EV cars and proponents are the bad guys right?

    From Autoline to Autoblog and 90% of Organizations in between- you guys should be ashamed. You guys know better than to follow the party line.

  31. HyundaiSmoke Says:

    By the way, I had a nap. In this nap I have a dream where it was in the future (I always dream about the future, and 80% of the time it comes true). This was about 6 to 8 years from now.

    America really became an Anti car police state.

    Even to the point to where there were toll points to go from one section of the city to the next. To save money most of these places were rickety gates that you could drive a 4×4 through, but hardly no one drove a 4X4 as those were made obsolete with the Gas crises occuring now, and about to occur. In fact the only trucks available were Diesels.

    America in essence had more in common with a 3rd world country like India to where the standard of living went back 100 years.

    Anyway, at this toll point there was a Mexican husband and wife running the joint who were very nice people. I must have been in Birmingham, AL because we talked about how Birmingham exploded into this bustling Megalopolis from the more sleepy town it is today.

    The place looked Ghetto all over, but you could tell that America was starting to get it’s Mojo Back. It was like America became India- a country that looks Ghetto but there’s hustle and bustle economic activity going on 24/7 365

    Then on the other side of the toll point, a good looking woman driving a school bus was dropping off her kids. She then touched a clip on her dress on the back of her neck and- exposed was her back and her thong, and then she smiled at me and winked.

    The School bus had graffiti on it, and it still looked like one of the models sold today. I guess they couldnt afford to replace school buses anymore.

    America not only had a lower standard of living, but it was a much more risque country making today’s sexual exploits look like the Brady Bunch.

  32. HyundaiSmoke Says:

    The Women were the construction worker whistlers of the day- hooting and hollering for sex.

    The Women used sex to their advantage and power like never before. Any man could get sex at any time, and a good looking guy like myself well….. just say the temptations were ummm… plentiful.

    The Women openly and boastfully exerted the sexual control and power they’ve always had, but current moral standards do not allow them to truly practice, and of course we men……

  33. XA351GT Says:

    H/S Do us all a favor and STFU. If you love Korea so damned much move over there. No one is stopping you that’s what ‘s great about America.You go on these pointless rants that no one gives a damn about besides yourself.