October 31st, 2012 at 12:03pm
GM’s third-quarter earnings are out and revenue is up. But GM barely out-earns its crosstown rival, despite selling a million more vehicles. Could the safety of lithium ion batteries be in question because of Hurricane Sandy? EV sales in Europe are down but Renault pushes to corner the market with 4 pure electric models, more than any other manufacturer. All that and more, plus John responds to your questions and comments on You Said It!
Hello and welcome to Autoline Daily, we’re halfway through the week and here is some of the latest news of what’s happening in the global automotive industry.
GM’S 3Q EARNINGS
Well today was GM’s turn to report its third-quarter earnings. The company boosted its global sales by 36,000 vehicles to almost 2.3 million cars and trucks. That boosted revenue to $37.5 billion, an increase of $857 million. That improved the company’s operating profit by 4 percent to nearly $2.3 billion. But the bottom line didn’t look so good. Net profits dropped 13 percent to $1.8 billion. This has got to be somewhat embarrassing to General Motors. It sold a million more vehicles than Ford, but is barely out-earning its crosstown rival. GM showed big improvements in Asia and South America, but its profits dropped in North America, and its losses in Europe are growing wider by the quarter.
CAPACITY GROWS IN NORTH AMERICA
While most major auto markets are slowing down, North America continues running strong. WardsAuto reports that capacity utilization at assembly plants was 93 percent in the third quarter, the highest for the period since Wards started tracking the data. For the full year capacity utilization is expected to be around 96 percent and will rise slightly next year. The record breaking numbers are mainly due to automakers using 3-shift operations.
SANDY SLOWS SALES
But capacity utilization could fall this quarter because of Hurricane Sandy which is already impacting car sales. Earlier this month Wards forecast that this month’s SAAR would hit 15 million units but now it predicts that will fall to 14.5 million units because of the storm.
WRATH OF SANDY
Hurricane Sandy claimed over a dozen new victims, but we’re not talking bodies, we’re talking cars. About 16 Fisker Karma’s were parked in Port Newark, New Jersey last night when water submerged the vehicles. Jalopnik reports the cars caught fire and burned to the ground. This could potentially trigger a lot of worry about the safety of lithium ion batteries and is going to further tarnish Fisker’s image.
RENAULT EV SALES DRAINED
Speaking of EV’s, Renault is pushing heavily to corner the EV market in Europe. By the end of the year it will have 4 pure electric models, more than any other automaker. But that’s not translating to very many sales. The company has sold just under 14,000 EVs worldwide through September. Not surprisingly Renault has fared better in Europe. It’s Kangoo and Fluence EVs account for 28 percent of the EV market and the company has sold close to 8,000 of its small city EV, the Twizy. Renault will launch its Zoe electric car at the end of the year. Even so, it’s eye-opening to see how poorly electric cars are selling in Europe where gasoline averages eight dollars a gallon.
Ford is beginning to use production components on some of its race cars, like this twin-turbocharged Mustang Cobra Jet Concept that’s at the SEMA show. Its turbos are based on units that are used in the Focus ST, but are 40 percent larger, allowing it to run an eight-second quarter mile. Ford uses production components in a racing environment because of the rapid learning curve and feedback it provides to go back into everyday driving vehicles.
Coming up next, It’s time for You Said It!
And now it’s time for some of your feedback.
Harold Rogers heard us talking about the take rates involving hybrid versions of cars and wants to know: “What is take rate?”
Harold, that’s industry jargon that describes the percentage of people who choose an option on a car. Or to put it another way, it’s the rate at which they take that option. So for example, if 10 percent of customers choose to buy the hybrid version of a given model of car, then we say it had a 10 percent take rate.
We sure got a lot of feedback from a bunch of you on Ernie Brinks ideas of how to improve the Wankel engine. piwright42 wrote in to say, “As a fan of the Wankel concept who is aware of its limitations I have to admit I was more than skeptical. After watching Ernie’s portion I have to admit I am more than a little excited. I hope Mazda does back this so we can learn one way or the other if Ernie’s ideas pan out. Autoline, please keep us updated.”
All I can say is that if anything comes of this you will be the first to know.
Ed heard our report that the SAAR could go back to 15 million units. But he doesn’t agree with me that this signals a full recovery in the American car market. He says, ”I remember the SAAR was at 16 million in ‘08 when the crash came. With population increase, and time (4 years hence) SAAR should be more than that at least upwards of 16, anyway you cut it, it is in decline, or dragging. But call it like it is.”
Ed, remember that when the SAAR was at 16 million and above it was the era of cheap credit. The experts I talk to estimate that boosted sales by well over 1 million units a year. So without all that cheap credit, a situation in which we find ourselves today, the natural rate of the market is more like 15 million. And while you’re right about population increase, the high unemployment rate is definitely holding back sales.
We were very grateful to hear from so many of you we celebrated the 1000th showing of Autoline daily. Emmy Says: “John, team, Congratulations on 1000 shows!! I’m another tiny little piece of this huge, global automotive industry, watching Autoline Daily in Japan. I happened to find your show two years ago and since then watching it is the first thing I do in the office every morning. Just love your shows! And I’m a big fan of John.”
Emmy, you make me blush. I’ve got a great team here and we love what were doing.
But even though you love us you’re not afraid to call us out when you think we’ve made a mistake. Richard Arnold, the editor of BMW TV Guide, though I have no idea what that means, anyway he says: “John, I enjoyed your piece on the BMW ALPINA B7, but your transcript of the video misspelled ALPINA — a common error committed by the automotive press. Both BMW & ALPINA spell BMW & ALPINA in ALL CAPS.”
Richard thanks for the correction, we’ll try to remember that in the future.
Thanks for all your letters and comments and please keep them coming.
Don’t forget that we’re also interested in getting any cool pictures or videos that you are interested in sending to us. And don’t forget that there will not be any Autoline After Hours tomorrow night. I’m traveling to Marysville, Ohio tomorrow as Honda celebrates its 30th anniversary of manufacturing in America. But After Hours will be back next week with special guest Sandy Munro who has a lot of inside information of what it really costs and automaker to build an electric car. That will be a dramatic show.
Anyway that wraps up today’s report thanks for watching will see it tomorrow.