Episode 70 – Taiwan Turns To Tax Credits, Adesa Sees Recovery Coming, GM Needs To Use B-Word
January 30th, 2009 at 12:00pm
Runtime 6:35
Taiwan figures out a way to boost new car sales by initiating a tax credit. Adesa says used car sales are picking up and a recovery is not far off. JP Morgan says GM is going to have to use the threat of bankruptcy to get bondholders to agree to a deal. All that and more, plus a preview of this week’s episode of Autoline Detroit about the electrification of the automobile.
Transcript and Story Links after the jump . . .
Here are today’s top headlines. Taiwan figures out a way to boost new car sales. Adesa says used car sales are picking up. And JP Morgan says GM is going to have to use the threat of bankruptcy.
Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Friday, January 30, 2009. And now, the news.
And it’s good news. Car sales for 2009 are off to a rip roaring start, in Taiwan (subscription required). Ward’s reports that deliveries of imported new vehicles increased 58 percent compared to December and 44 percent over last January. The Taiwanese government initiated a tax credit on the 19th of the month to spur sales. And I think we’re going to hear calls to do the same sort of thing in other countries. Bailing out the car companies will only work if car sales get going, and tax credits to buy new cars may be the ticket.
And there’s good news coming out of the used car market. Adesa, the second largest auction house in the U.S. says that it’s seeing used car sales rising, and remember, they sell to dealers. Auto Remarketing has an interview with Adesa executives in which they say the worst is over, the recovery is not that far away and they predict that 2009 will exceed historic expectations. Man I hope those guys are right!
OK, back to reality. JP Morgan says that General Motors will have to revive the threat of bankruptcy to get bondholders to agree to a deal, the Detroit Free Press reports. As we reported earlier this week PIMCO walked out on discussions with GM to take stock in lieu of cash for its bond payments. JP Morgan predicts bondholders will have to take 35 percent of their holdings in stock and that they’ll end up owning 20 percent of General Motors. But that’s not the worst of it.
The debt swapped for equity could be considered income for tax purposes. And the Detroit News reports GM is lobbying Congress to avoid a tax bill that could come to $7 billion. Essentially GM would be using a big chunk of the federal loans to pay income tax. Which puts the company right back where it started.
And I don’t want to sound like we’re piling on GM, but WardsAuto.com reports that Saturn is going to drop the Astra by the end of this model year (subscription required). And Saturn is ending its long-standing 30-day return policy, and it’s cutting back on production of the Vue two-mode hybrid. You know, there’s talk that GM is getting ready to bury this brand, and this will only fuel those rumors.
Tough love for the supplier industry. The Free Press reports Ford won’t provide any aid to its main supplier Visteon, despite its struggles and the breakdown that would occur in the supply chain should it fail. In the past, Ford helped Visteon out by taking over plants it was unable to sell, hired back workers and helped pay retiree benefits. Now it looks like Visteon is on its own.
Coming up next, a preview of this week’s episode of Autoline Detroit. We’ll be back right after this.
On this episode of Autoline Detroit I’m joined by two industry insiders, Paul Eisenstein from The Detroit Bureau and John DeCicco of the Environmental Defense Fund. We talk all about the proposed California emissions standards and what that means for the industry. In the following short preview we discuss the electrification of the automobile and the impact that could have on CO2 emissions.
If you want to hear the rest of my interview with these industry insiders, you can watch the entire episode of Autoline Detroit on our website right now.
And that’s it for today’s top news in the global automotive industry, but before we go, I’ve got to announce the winner of this week’s trivia contest. Akio Toyoda was recently named president of Toyota. He’s related to the original founder of the company, and we challenged you to tell us how. Is he the son, grandson or great-grandson of company founder Kiichiro Toyoda? And the correct answer is… he’s the grandson.
So, as always my crack team has randomly selected today’s winner from the pool of correct responses. Pookie, the envelope please! And this week’s winner is… Andy Klueber of Terra Haute, Indiana. You’ve just won a stylish Autoline t-shirt and hat ensemble, perfect for a day at the beach or a night on the town.
Anyway, that’s it for today’s show. As always, from all of us here at Autoline Daily thanks for watching, we’ll see you next week.
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Comments (13)
January 30th, 2009 at 12:45 pm
So now yet again,GM is using strong arm tatics to get thier way with their suppliers.As of this morning GM stock was well below $4.00 per share,hardly worth the paper it’s written on.Yet thats how they want to “pay” their suppliers.The old saying “in god we trust….others cash” seems to be the only way to deal with a deadbeat automaker that keeps threatening to go bankrupt.Please put the world out of your misery and file,go out of business,I for one will not buy another gm vehicle in any case.Their quality matchs their leadership/business practices.garbage in,garbage out.Not that I’m an expert,but I have been buying new vehicles for 41 of the last 57 years of my life.
January 30th, 2009 at 1:04 pm
I think you guys got confused with the Astra story. The car just isn’t going to have a 2009 MY because dealers haven’t sold the 08s yet. The 2010 version is still planned. You made it sound like the Astra was gone forever.
Source:
http://www.autoblog.com/2009/01/28/saturn-astra-disappears-for-2009/
I sure hope that Adesa is right. Its good to see good news cruton emerge from this salad of maliciousness.
January 30th, 2009 at 1:17 pm
To DC,
Good point. We probably should have said something like “…Saturn is going to drop the Astra for this model year,” rather than “…by the end of this model year.” Still, we bet there probably won’t be a 2010 Astra, or maybe even Saturn for that matter.
January 30th, 2009 at 1:50 pm
GM needs to just file BANKRUPTCY and be done with ALL this nonsense.Dump some brands,reorganize and move on.They say they won’t have enough money to pay me my social security when I retire,but they can give these ill run,no freakin’ clue CEO’s money to burn!!The definition of insanity is DOING THE SAME THING OVER AND OVER,EXPECTING DIFFERENT RESULTS!In other words.GM!!
January 30th, 2009 at 1:59 pm
Am I to assume that the Taiwanese and Europeans are smarter than us? The EU has been giving tax rebates to car buyers and now Taiwan has jumped into the bandwagon, and here we’re giving millions and millions to GM and Chrysler and people are still not buying their cars. So now they’re gonna ask for rebates for those who purchase new cars, what is this gonna end up costing? Please before we give TAXPAYERS monies away let’s use a little inteligence and thought into how to best implement it. The rebate idea is excellent, the idea is to sell more cars not less.
January 30th, 2009 at 2:07 pm
If less people buy new cars, two things will likely happen:
1. there will be less trade ins (less supply), and
2. more people may buy a used car in lieu of a new one (greater demand).
Both of these situations call for increased used car prices!
This doesn’t mean that people are in the new car buying mood again.
In fact, if new car sales dip to 10 million, or so, I bet the used car market may sky rocket.
January 30th, 2009 at 2:08 pm
Saturns look better than ever.
Selling Saturn to the Chinese is equal to blowing off both feet with a 12 gauge before running a foot race.
If GM is going to “bury” Saturn, why not take the best of Saturn and build it into Chevrolet?
January 30th, 2009 at 2:14 pm
I’m against governments giving rebates to increase car sales. Eventually, people will need to buy a car.
Auto manufacturers need to develop a way to efficiently trim production when sales are down.
I am, however, supportive of the government helping the companies stay in business and become more competitive.
January 30th, 2009 at 2:30 pm
Your web server is horrible. Autoline daily is the only streaming video I watch that stops repeatedly. This episode stopped playing at least 10 times to catch up during the playback.
January 30th, 2009 at 2:50 pm
Thanks for the response John. So, Saturn is that close to the chopping blocks? Wow. I will surely miss the Sky. (Not a huge fan of the Solstice styling)
Do you have any updates on whether or not Mercury is still on schedule to be killed off after 2012? Or has there been a resurgence planned for the brand considering Ford will bring over multiple models from its Euro line soon?
January 30th, 2009 at 2:51 pm
Hey John,
Here we go again with the group formerly known as The Big Three showing their shortsightedness in full glory. Like you, I think cancelling the ’09 Astra is the beginning of the end for the Saturn brand.
I was really excited for GM when they announced they were brining in the Astra. I thought that someone finaly woke up in the American three and realized that fun european hatchbacks could have a real following in North America.
I said “Bravo” when GM said it would be a Saturn. Someone had finally realized they could make this a brand that would appeal to the young people who didnt want to drive “Mom and Dad’s” GM product. But no, instead of a cool marketing campaign to hit Gen “Y”ers between the eyes and get them excited about it, they pulled a “Merkur” dumping them in show rooms and expecting them to sell.
Hey GM, in case you hadn’t heard, powerful small cars are all the rave these days. Mitsubishi, Subaru, and Mazda have figured it out. Heck, even VW can get people to pony up $30k for a R32 Golf! Opel sells a 240hp 16v Turbo hot hatch in europe, here’s a crazy idea -Astra S Line….
If GM actually stopped to take a look at the excitng cars that Opel makes – they could have an entire family of Saturns, that marketed properly, could really revive the brand. GM just needs to let Saturn go back to its roots, except this time, let them import “a different kind of car”.
January 30th, 2009 at 3:13 pm
The problem with Saturn is the simple fact that it competes with another GM brand: Chevy. GM should know better than to do something like this. You don’t give a brand new crossover to Saturn (Outlook) before you give it to your bread-and-butter company, Chevy. Seriously, why should Chevy have to wait for the Traverse? Was it because they still had the LWB Trailblazer on lots for a while? Saturn and Chevy have always competed against each other. It was the Cavalier vs the SC models and so on. Saturn is a re-badged company. I know all the manufacturers are guilty of badge engineering, but c’mon, GM! There are too many copycat brands that need to be streamlined severly or eliminated. We know it costs money to do this, but what doesn’t cost money?
January 30th, 2009 at 4:35 pm
SWEET!!! I Won!!!