North American share of auto output to shrink: prof October 15, 2009
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North America’s share of global auto production will continue to shrink through 2015 even as sales worldwide grow, a leading automotive researcher predicts.
Currently, North American automakers produce about 19 per cent of vehicles sold worldwide, according to Tony Faria, co-director of the office of automotive research at the University of Windsor’s Odette School of Business.
While worldwide sales are expected to reach 80 million vehicles in 2015, the North American share is “going to decline another per cent to 18 per cent by 2015,” Faria said. This would represent 14.4 million units.
Faria’s projection came as about 100 analysts, economists, politicians and industry followers convened at the University of Windsor on Wednesday to discuss the future of the auto sector.
Industry must ‘reinvent itself’
For many, that future is grim.
Ford Motor Co., Chrysler Group LLC and General Motors Corp. reported sales declines in September, of 5.1 per cent, 42 per cent and 45 per cent, respectively, from September 2008.
Automotive consultant Dennis DesRosiers addressed a conference of industry experts at the University of Windsor Wednesday.(Allison Johnson/CBC)
The auto industry “has to totally reinvent itself this coming decade to meet the needs of society,” said Dennis DesRosiers, the founder of DesRosiers Automotive Consultants Inc.
“You look at GM and say ‘What are they doing different?’” DesRosiers said. “Yes, they cleaned up brands and cleaned up their cost structure. But are they positioning vehicles on the market differently than in the past? Arguably not.”
The outlook is discouraging for student Mario Tancoc-Marcu, a Windsor native who has spent four years at the University of Windsor in hopes of working in the auto industry.
“You see your friends and family getting laid off,” he told CBC News, “so your perception is that you are not going to find a job after you graduate.”
Auto industry recovery depletes inventories September 24, 2009
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Strong auto sales have led to a boost in production as inventories fall to record lows.(Paul Sancya/Associated Press)
The auto industry continues to gain traction, with inventories in some parts of the world at record low levels, according to the latest Global Auto Report released by Scotia Economics.
Sales in the U.S. last month jumped almost 50 per cent thanks to the cash for clunkers program, which offered buyers lucrative incentives for scrapping their old gas guzzlers. But the report notes that even when the cash for clunkers sales are excluded, U.S. sales climbed to a nine-month high.
The U.S. sales performance in August was so strong that U.S. dealer inventories fell to a record low of 30 days supply. The normal inventory level is 65 days. “Inventories are currently 20 per cent less than the previous low in August 1983,” Scotiabank economist Carlos Gomes said.
Inventories of Canadian-made models in the U.S. are very low ? especially for Toyota Corollas, Honda Civics and Chevy Camaros. Gomes said the stock of Corollas at U.S. dealerships was “virtually non-existent” at the end of August. The Corolla was the most popular car picked in the cash for clunkers program.
Production is rising around the world as a result of low inventories. “Current production plans will add roughly two percentage points to U.S. overall economic activity in the second half of 2009,” the report says. In Canada, the increase in auto assembly activity is expected to add “at least a percentage point” to economic growth in the third and fourth quarters.
But the report notes that output would need to rise at least 20 per cent above current schedules before inventories return to normal levels.
Vehicle sales in Canada remained strong in August, with annualized sales of 1.51 million units. Scotia Economics has boosted its 2009 sales forecast to 1.45 million cars and light trucks and says sales could come in higher than that because several automakers have introduced their own cash for clunkers incentives in Canada.
As rosy as sales and production forecasts are for Canada and the U.S., the bounce-back in some overseas markets is even more impressive. Sales in several emerging markets are at record levels, led by an average 55 per cent year-over-year increase in China, India and Brazil.
Ontario pushes electric cars as auto-sector boost July 15, 2009
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The Chevrolet Volt is expected to cost about $40,000.(Illustration: Chevrolet)
Electric cars will become part of the Ontario government’s fleet and consumers will get up to $10,000 in rebates to buy one of the experimental vehicles, Premier Dalton McGuinty said Wednesday.
But with a hefty price tag, the new electric-hybrid cars will be a hard sell.
McGuinty was undeterred, saying eventually “the price comes down.”
General Motors Co.’s Chevrolet Volt is expected to hit the roads next year, but will cost as much as $40,000.
“Electric vehicles are the way to go in Ontario,” McGuinty said in a statement released Wednesday morning. “This plan helps get more people behind the wheel of a green vehicle to create jobs, reduce smog and equip Ontario for the 21st century.”
European car sales rose in June for the first time in over a year thanks to government “cash-for-clunkers” handouts, automakers said Wednesday.
Manufacturers’ group ACEA said sales were up 2.4 per cent to 1.46 million units, the first increase after 14 months of falling sales.
State incentives are credited with firing up car sales. Germans get $3,500 US in cash for swapping their cars. This has accelerated sales by 40.5 per cent in June in Europe’s biggest market and by 26 per cent for the first half of the year compared to 2008.
Sales also were up last month in two other nations with the programs ? in Italy by 12.4 per cent and in France by 7 per cent.
ACEA said the handouts for car buyers had cushioned tumbling sales in Spain, down 15.9 per cent and Britain, down 15.7 per cent.
Both countries have been hit hard by collapsing house prices, which have held shoppers back from big purchases.
Later, the premier told a news conference at a Toronto auto dealership that he wants electric cars to make up five per cent of all cars on the road by 2020.
In an effort to achieve that, McGuinty announced “rebates of between $4,000 and $10,000 for plug-in hybrid and battery electric vehicles purchased after July 1, 2010.
“They tell me that when they roll the first of these off the assembly line, they’re going to be expensive, relative to the traditional car powered by the regular internal combustion engine,” he said. “We want to help people buy those first cars.”
The province will buy 500 of the new cars for government use.
When asked why the government is handing out taxpayer dollars to subsidize the new line of autos, McGuinty said the idea is to help build a market for the vehicles.
“At some point, the price comes down … and you can take away the government initiative.”
Subsidy ‘won’t last forever’
McGuinty said the subsidy, which doesn’t begin for 12 months, will eventually be dropped. He just couldn’t say when.
“It won’t last forever.”
Not all electric or hybrid cars will be covered by the announcement. The rebate is restricted to cars that can travel on highways.
That rules out the Zenn car, which was designed for urban use and has not been approved for Ontario’s highways.
The government has cited safety concerns, even though two other provinces have approved the Zenn car for use on roads with speed limits below 50 km/h.
Analysts say the province is using the incentive as an attempt to boost its struggling auto sector and position itself at the forefront of the green technology.
The province also announced plans to expand recharging facilities and allow owners of the new cars to use carpool lanes.
With files from The Canadian Press (more…)
Auto lending shows signs of improving: economist June 28, 2009
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Auto sales are expected to rise in the second half of this year as conditions in the lending market thaw out, a Scotiabank economist said Thursday.
In the bank’s latest global auto report, senior economist Carlos Gomes said the key to the shift is a rise in the loan-to-value ratio for new U.S. auto loans. It has risen to 89.1 per cent — the highest it has been since August 2008 — from 86.4 per cent in February.
“The increase in the loan-to-value ratio indicates buyers need a smaller down payment to purchase a new vehicle, and points to an easing in credit conditions,” said Gomes.
Scotiabank also said that auto loan approvals have reached their highest point since April of this year.
“Asset-backed security issuance had virtually disappeared through April, while the withdrawal of some major lenders from the auto-loan business over the past year had dampened credit availability,” Gomes said.
“However, the Bank of Canada indicates that auto loans at chartered banks in Canada have remained readily available, providing some offset.”
Another sign of a turnaround in the auto sector is in the prices of used cars, said the bank. In Canada, used car prices — while still below year-ago levels — saw a two per cent drop in May, which was the smallest decrease since mid-2006.
In the United States, used car prices went up for the fifth month in a row in May. Scotiabank said that year-over-year prices last month were up for the first time since October 2007.
Auto lending shows signs of improving: economist June 25, 2009
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Auto sales are expected to rise in the second half of this year as conditions in the lending market thaw out, a Scotiabank economist said Thursday.
In the bank’s latest global auto report, senior economist Carlos Gomes said the key to the shift is a rise in the loan-to-value ratio for new U.S. auto loans. It has risen to 89.1 per cent — the highest it has been since August 2008 — from 86.4 per cent in February.
“The increase in the loan-to-value ratio indicates buyers need a smaller down payment to purchase a new vehicle, and points to an easing in credit conditions,” said Gomes.
Scotiabank also said that auto loan approvals have reached their highest point since April of this year.
“Asset-backed security issuance had virtually disappeared through April, while the withdrawal of some major lenders from the auto-loan business over the past year had dampened credit availability,” Gomes said.
“However, the Bank of Canada indicates that auto loans at chartered banks in Canada have remained readily available, providing some offset.”
Another sign of a turnaround in the auto sector is in the prices of used cars, said the bank. In Canada, used car prices — while still below year-ago levels — saw a two per cent drop in May, which was the smallest decrease since mid-2006.
In the United States, used car prices went up for the fifth month in a row in May. Scotiabank said that year-over-year prices last month were up for the first time since October 2007.
No luck for U.S. auto parts suppliers seeking billions more aid June 17, 2009
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A request by U.S. auto parts suppliers for an additional $8 billion to $10 billion US in government aid has been turned down by the Obama administration.
The U.S. Treasury Department said in a statement Tuesday that an existing $5 billion US support program for auto parts suppliers was playing an important role in stabilizing the nation’s auto supply base. It said no changes were being made to the funding level.
The suppliers were lobbying for billions in loan guarantees to help them cope with the bankruptcies of General Motors and Chrysler.
They said the guarantees were necessary for them to get the financing they require to keep producing parts without interruption and to be able to ramp up production as GM and Chrysler emerge from bankruptcy protection.
Industry groups, such as the Original Equipment Suppliers Association, and company executives spent the past week making their case to the president’s auto industry task force, as well as members of the Senate and House of Representatives.
Ann Wilson, a senior vice-president for government affairs for the Motor & Equipment Manufacturers Association, said the auto task force “does not see any immediate need to provide additional liquidity to suppliers.”
The OESA conducted a survey in May asking members how their opinion of their business outlook had changed in the past two months. About 62 per cent of respondents said they were either somewhat or significantly more pessimistic.
Government aid and payment guarantees for GM and Chrysler have kept most suppliers afloat. About 20 suppliers have filed for bankruptcy this year, including Visteon Corp., Ford Motor Co.’s largest supplier, and Metaldyne Corp.
With files from The Associated Press
Support car sales with $350M ’scrappage’ program, auto industry pleads June 7, 2009
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Cars junked in Germany, where a scrappage program has boosted sales of new vehicles, the Canadian auto industry says.(Fabian Bimmer/Associated Press)
Auto dealers and car manufacturers want the federal government to immediately commit $350 million to a one-year program to subsidize purchases of new cars.
The industry proposed Friday expanding an existing environmental program to boost its sales. But “there are no plans at this time to expand the Retire Your Ride program,” an Environment Canada spokesman said.
The dealers and manufacturers said Friday that the government should give consumers $3,500 towards the purchase of a new car if they trade in or scrap a vehicle that’s more than 10 years old.
“The 3,500 new car dealers who are at the heart of nearly every community across Canada are struggling to survive this unprecedented economic downturn,” said Richard Gauthier, president of the Canadian Automobile Dealers Association.
“A robust scrappage program could increase sales by as much as 100,000 units, which would be a significant benefit to consumers, dealers and their local economies,” said Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association.
That would go a long way to replacing the 141,000 vehicle sales that disappeared in 2008, compared with 2007. But it would cost the federal government as much as $350 million.
At the moment, its four-year, $92-million Retire Your Ride program offers a “reward” of up to $300 to get older, higher polluting vehicles off the road. The reward may include discounts on public transit passes, bicycles, memberships in car-sharing programs or cash.
However, the industry said that money could be reallocated to its program, while some of the costs could be recouped through the additional estimated $125 million GST collected, and the $65 million estimated green levy, the tax on vehicles with poor fuel efficiency.
Gauthier said a similar program in Germany shows how it might work in Canada. Germany introduced a $3,800 per vehicle scrappage incentive, and new vehicle sales jumped sharply in April and May, he said.
A U.S. program will offer between $3,800 and nearly $5,000, the industry release said.
The existing federal program is aimed at older cars, because vehicles built before 1996 “produce about 19 times more air pollutants than newer cars and trucks,” the government said in a news release earlier this year.
Nearly five million of the 20 million vehicles in Canada were built before 1996.
Flaherty announces $12-billion plan to boost auto purchase financing May 11, 2009
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In an effort to bolster the ailing auto sector, the federal government announced on Friday it is rolling out a $12-billion program to support financing to buy or lease vehicles and equipment.
“A serious shortfall in Canada has been the lack of financing of vehicles and equipment for consumers and businesses, and this has led to increased borrowing costs for some and limited credit availability for others,” Finance Minister Jim Flaherty said in a speech to the Canadian Club of Hamilton.
“It’s a situation that can’t be allowed to continue if we want to restore confidence and get our economy growing again.”
Flaherty announced the rollout of the Canadian Secured Credit Facility, a program under which the government will purchase asset-backed securities backed by loans and leases on vehicles and equipment. The program had been announced in the budget.
Flaherty said the Business Development Bank of Canada has allocated $10 billion of the $12 billion to 15 Canadian lenders.
The group includes the financing arms of major auto and equipment manufacturers in Canada and covers loans, leases and dealer floor plans, Flaherty said.
To limit risk to taxpayers, the assets must be rated AAA by two nationally recognized credit rating agencies and “structured so that they will be able to withstand current market conditions or worse.”
“The auto sector isn’t just assemblers, as you know. There are many people in the auto sector who are employed and rely on the success of the sector,” Flaherty said.
CAW urges Ont. support of auto-sector retirees April 11, 2009
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The Canadian Auto Workers on Thursday decried a suggestion from Ontario Premier Dalton McGuinty that the province’s pension plan emergency fund isn’t large enough to handle a possible collapse of GM’s pension fund.
“I can’t suggest to you how furious we are as an organization to suggest that our retirees won’t be treated with decency and respect during this particular crisis,” CAW president Ken Lawenza said during a news conference.
The best way to protect the pension plan, Lawenza said, is to keep the auto companies alive.
The CAW is encouraging all its retirees to attend a rally to press their case at Queen’s Park on April 23.
GM’s pension plan is underfunded by billions of dollars. The autoworkers said the province allowed GM’s pension plan to carry on underfunded since the early 1990s.
Ontario Finance Minister Dwight Duncan said Thursday that the provincial government will work with unions, companies and the federal government to address pension shortfalls.
Duncan said the province will not turn its back on pensioners. He also said the pension safety net has been underfunded for 30 years.
Available funds ‘very, very modest,’ premier says
McGuinty warned on Wednesday that the emergency fund for Ontario’s pensions isn’t large enough to cover autoworkers should GM or Chrysler go bankrupt.
“The money available in that is very, very modest,” McGuinty said, noting the Pension Benefits Guarantee Fund has about $100 million in it ? not nearly enough to cover the billions of dollars involved in the automakers’ pensions.
“That comes nowhere near meeting any liabilities ? for example, for the auto sector alone, to say nothing of all the other sectors.”
The Pension Benefits Guarantee Fund has provided pensioners with up to $1,000 per month in case a pension plan fails to provide its full benefit, or any at all.
‘We will maintain our share’ of auto industry: PM February 18, 2009
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Prime Minister Stephen Harper said he believes General Motors will stay put in Canada and that the country will continue to have a strong auto industry, despite troubling economic times.
In a news conference on Tuesday in Toronto, Harper was asked whether he feared GM could declare bankruptcy or pull out of Canada entirely after the company recently decided not to take an emergency loan from the government.
?I?m not concerned about General Motors moving out of Canada. We?ve had good discussions with the company,? Harper told reporters.
The government announced in December a plan to loan General Motors Canada up to $3 billion and Chrysler Canada up to $1 billion ? totals based on the U.S. aid and proportional to their Canadian production.
Last week, GM Canada said it no longer needs the emergency loan because it was able to temporarily support itself through “cost-saving measures and access to other facilities.”
Harper added on Tuesday that the announcement in December was for a short-term financing package to deal with immediate cash concerns. He said that they are anticipating there will be ?greater loans involved in a longer-term restructuring.?
Harper said there are a range of options and the restructuring will be extremely complex, but Canada will maintain a strong industry.
“We have to be frank here, not to say there will not be job losses, because we know there are some very tough decisions to be made, but I am confident, with our participation in the restructuring, that we will maintain our share of this industry in North America.”
Although GM Canada declined Ottawa’s loan offer, Washington is expected to give GM and Chrysler in the U.S. a second instalment of bailout loan funding Tuesday.
GM will receive $4 billion US on top of the $9.4 billion it got earlier, while Chrysler will get $3 billion on top of its earlier $4 billion, said a report from the Associated Press.
With files from the Canadian Press and the Associated Press (more…)
