January 30th, 2009 at 12:00pm
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.