toyota,GM,Ford post massive losses. GM and Ford to ask Gov for more help

[forza2.0]

wow those are some great figures from smart!

 

[YSSMAN]

Funnily enough VAG were the only major manufacturer, with vw and audi in particular who continued to grow in september.

Not in North America... No one is coming out even in North America. Word is that Alfa is putting their launch program on hold, again, until the market evens out.

Hooray for global economic recessions!

 

[YSSMAN]

Holy Pooper, Look What Honda Just Did!

The Best-Selling Car in America Just Received Special Financing

Wow! Honda is giving us 1.9% financing for 36 months or 3.9% APR for up to 60 months on all models (except the GX, includes Hybrid and Si), 2008 or 2009. Beyond that, they're changing the lease rates around to $1,999 down and $189 a month for 36 months, which is uncharacteristically low for Honda (given that their finance and lease rates are ALWAYS higher than everyone elses).

Yeah. We're screwed.

 

[forza2.0]

And with GM and the like postponing development/launch of key new vehicles, surely 1 or 2 of the big three will file for bankruptcy, as the competition doesnt seem to be slowing r&d in these times.

I would just like to add that the interferring government who demand cleaner and more frugal vehicles with unrealistic targets are not helping car manufacturers in such tough times.

 

[homeforsummer]

I would just like to add that the interferring government who demand cleaner and more frugal vehicles with unrealistic targets are not helping car manufacturers in such tough times.

The targets aren't really unrealistic, but it is the government's fault (at least in the UK which I obviously have more knowledge of than the USA or elsewhere) for ridiculous tax on fuel that discourages people from buying the cleaner new cars that the manufacturers are trying to sell.

 

[Tornado]

but if ever there's an example of the trend for downsizing it's smart sales being up over 100% on the previous year.

I'd say it is more of a sign of ignorance or stupidity rather than a trend of downsizing. But hey, at this rate smart may turn a profit in 10 years pr so!

Funnily enough VAG were the only major manufacturer, with vw and audi in particular who continued to grow in september.

Look how desperate we are!

 

[homeforsummer]

I'd say it is more of a sign of ignorance or stupidity rather than a trend of downsizing. But hey, at this rate smart may turn a profit in 10 years pr so!

I wouldn't say people buying smarts are ignorant/stupid...

 

[Tornado]

I would. They are impractical little pointless things in America. I can't imagine how silly they are in Europe, where you actually have decent superminis (with diesels no less!) other than the Honda Fit. They are the kind of car that you usually need a government incentive before you even think about buying. Small and impractical, yet oddly more expensive than larger cars that get similar mileage on cheaper gasoline. I've never driven one, but I doubt you can use the same justifications that Prius and Mini owners use when they face similar issues, either.

 

[///M-Spec]

Just a thought on BMW:

I believe I read yesterday that they're doing 0.9% financing on all of their 2009 models, which seems a bit abnormal. Can't be good, can't be good at all.

Beginning with 2009 MY, BMW has changed its focus from leasing to buying. Prior to now, BMW pushed leasing with subvented rates, resulting in very attractive terms for the consumer. One way to do this is with artificially inflated residuals (what the car will be worth, according to BMW, after the lease term is over) to an unrealistic number. This lowers the cap cost and the lessees' monthly payments.

Of course, BMW is not the only company that leases its cars for silly low monthly payments. Infiniti, Lexus, M-B and Audi does it almost as often.

The single biggest downside to leasing from the manufacturer's perspective is increased exposure for the finance arm who own the cars and have to sell them after lease turn-in.

If the economy chugs along at a good pace and demand for cars stay strong, BMW (and other companies who do a lot of leasing) can continue this approach. But if the economy tanks and demand plummets, the financing company is left holding the keys to a lot of cars it cannot sell for what it wants.

(As an aside, it is a very good time to be purchasing a used premium/luxury car right about now. Rates are good and there is a glut of them on the market.)

Offering strong financing is simply BMW's hail-mary strategy of turning a percentage of lease customers to buying customers. And of course scramble for sales during a downturn.

The odd thing is, BMW apparantly wants to reduce the number of cars it sells, but make more off each car sold. They call this the 'pull' strategy (the former strategy was called, predictably, 'push'). It was the Push Strategy that is responsible for the 1er, X1, X6 and (aborted?) minivan.

I'm ambivalent about BMW selling less cars, but if the Pull Strategy results in a reduction of models that dilutes the brand by pandering to the masses like the X1, X6 and minivan, then I'm all for it.


M

 

[Tornado]

Beginning with 2009 MY, BMW has changed its focus from leasing to buying. Prior to now, BMW pushed leasing with subvented rates, resulting in very attractive terms for the consumer. One way to do this is with artificially inflated residuals (what the car will be worth, according to BMW, after the lease term is over) to an unrealistic number. This lowers the cap cost and the lessees' monthly payments.

So how did BMW make money? Selling off cars afterwards?

 

[Mt. Lynx]

I would. They are impractical little pointless things in America. I can't imagine how silly they are in Europe, where you actually have decent superminis (with diesels no less!) other than the Honda Fit. They are the kind of car that you usually need a government incentive before you even think about buying. Small and impractical, yet oddly more expensive than larger cars that get similar mileage on cheaper gasoline. I've never driven one, but I doubt you can use the same justifications that Prius and Mini owners use when they face similar issues, either.

The smart is just that - smart. In Europe, especially around the mediterranean, Citys are crammed and overpopulated, with narrow streets and shortage of parkingspace. The smart sells very well at places like that.
I mean, I have an Audi A3, a small car by comparison to most, but compared to a smart it´s huge. If I lived in Rome, I´d easily get rid of my Audi in favour of a smart.
But if you intend to go out of town - leave the smart at home and use some other means of transport.

 

[YSSMAN]

I would just like to add that the interferring government who demand cleaner and more frugal vehicles with unrealistic targets are not helping car manufacturers in such tough times.

What they're asking for in the US isn't overly outrageous, it could have been a better graduated program, but the automakers are dragging their feet too. The high gas prices have driven a lot of automakers to begin to change the way they're building their cars and trucks, which is a good thing, but the problem is that they need to do it faster to make sure they can stay alive. My only qualm, as you point out, is the problem with the "cleanliness factor" on diesels in the US. Emissions restrictions have kept far too many diesel-operated cars out of our market.

 

[///M-Spec]

So how did BMW make money? Selling off cars afterwards?

There are a couple of ways in which leasing pays off for the manufacturer.

Interest charged on the transaction. Even though leasing is basically renting with an option to buy, the instrument is structured like a loan. So the consumer pays what's called a 'money factor' which is like the interest rate on a traditional loan. The principle in this case, is not the full amount of the car, but the amount the car is expected to depreciate. Like interest rate, the money factor changes and can be as low as 1.9% or as high as 11% and even higher, depending on the exact model, time of year, consumer's credit score, etc.

The dealer can also jack up the money factor a few points, just like they can jack up financing rates.

The second way is simply increased sales due to volume. Pretty straight forward. The more cars BMW sells, the less it costs to build each one.

The third way is to take the lease returns and, hopefully sell them for a profit. BMW owns a 3 year old lease-return car. They sell them to the dealers, who then sell them to the consumer.

They love to do this with their CPO programs --dealers pay BMW to certify the used cars for an extended warranty, the consumer pays extra (usually $2-4k more) and BMW and their dealers pocket some extra $. They also package CPO cars with attractive financing rates, thus hoping to make even more interest.

Of course, this last part is the part that is busted right now. If the market isn't very strong, then they stand to take a huge hit on their assets.

Also, I probably shouldn't have said 'BMW was focused on leasing'. At this rate, they're probably doing 50/50 in the past few years, give or take 10% depending on the exact model.


M

 

[homeforsummer]

I would. They are impractical little pointless things in America. I can't imagine how silly they are in Europe, where you actually have decent superminis (with diesels no less!) other than the Honda Fit. They are the kind of car that you usually need a government incentive before you even think about buying. Small and impractical, yet oddly more expensive than larger cars that get similar mileage on cheaper gasoline. I've never driven one, but I doubt you can use the same justifications that Prius and Mini owners use when they face similar issues, either.

In Europe, as Mt. Lynx points out above, they can make a hell of a lot of sense in the middle of a city. They're smaller than even the smallest small cars which makes parking and maneuvering a doddle (yet easily big enough to swallow big, big people...), they're also taller than most small cars so visibility is increased in traffic or tight city streets. Fuel economy is very good - sure, maybe no better than something like an Aygo (first city car that came to mind with great economy whether you get petrol or diesel) but then no worse either.

The current diesel, though a bit slow, can do fantastic figures - smart quote 85.6mpg (UK gallons), or roughly 670 miles on a tank. Can you imagine how long that lasts if you only ever drive around town? My (petrol) car gets around 35-40mpg in town where I live - if I stick solely to town driving I only have to fill up every four weeks ish, on about 340 miles on a tank. You'd forget what a fuel station looks like in the diesel smart.

Impracticality is very subjective too. I can count the times on one hand in the last year that I've needed more than two seats at any one time - so only having two isn't really a problem - and my nearest supermarket is in walking distance now so I don't even have to drive to do a weekly shop, so a boot isn't really necessary either. I suspect I could quite easily get away with having a smart - and many people in Europe do too.

Finally, the company has a hell of a lot better eco credentials than most - their factory is supposed to be the cleanest in Europe and smarts take half the time that a normal car takes to build on the production line.

I'll give it a rest there (I could go on for hours - I studied the company for my final year Business dissertation) but suffice to say there is significantly more merit to smarts than many people suspect.

And back on topic - all of the above is pretty much why I'm unsurprised that smart is doing well in the current economic climate - but a 100%+ increase over last year is still very impressive.

 

[YSSMAN]

And back on topic - all of the above is pretty much why I'm unsurprised that smart is doing well in the current economic climate - but a 100%+ increase over last year is still very impressive.

Don't get me wrong, I completely agree with you, but part of the problem here in the US is that the ForTwo essentially out-prices itself against the otherwise "better" competition. At issue is the cost above that of a Honda Fit or Chevrolet Aveo, and with fuel economy figures not drastically different (we only get the gasoline 3-cyl version), the cost differences are minimal. My interpretation of the car, at least right now, is that its more like the Prius when it first debuted; Its a fashion statement, for those who can afford it, a reasonable choice.

I like the car, it was much larger than I had ever thought on the inside, but for the same (or less) money, I can get a bigger car that is just as frugal at the pump. Although your story of a diesel model is intriguing...

 

[SagarisGTB]

I maintain Smarts are useless cars and that whoever buys one lives in a short narrow alley, is a loner, or is just buying it for silly reasons. Id never buy one over the much superior Panda, but also larger cars like the Punto, Polo, Ibiza, Fabia, Jazz/Fit, Yaris, Fiesta, Clio and 207. Makes no sense if you ever plan to leave the city or carry friends or children or do anything productive.

 

[Philly]

Also the size advantage that the Smart has in Europe is pretty much gone in the US. Aside from maybe New York, you can get by in an SUV just fine; people do it every day.

 

[Mt. Lynx]

I maintain Smarts are useless cars and that whoever buys one lives in a short narrow alley, is a loner, or is just buying it for silly reasons. Id never buy one over the much superior Panda, but also larger cars like the Punto, Polo, Ibiza, Fabia, Jazz/Fit, Yaris, Fiesta, Clio and 207. Makes no sense if you ever plan to leave the city or carry friends or children or do anything productive.

Like I pointed out earlier; the cars you mention are enormous beasts compared to the smart, and doesn´t make much sence in a big city such as Rome. And lets face it - if you live in a major city, you don´t leave it very often. Many people only leave their hometown once a year, for vacation. I seriously suspect that many of those people do have another car of some sort, for that very purpose.

 

[SagarisGTB]

Like I pointed out earlier; the cars you mention are enormous beasts compared to the smart, and doesn´t make much sence in a big city such as Rome. And lets face it - if you live in a major city, you don´t leave it very often. Many people only leave their hometown once a year, for vacation. I seriously suspect that many of those people do have another car of some sort, for that very purpose.

A yes, the gigantic Fiesta is too large for Roma... oh dear. There is much more of a problem with the drivers there than the car sizes. I think the much higher versatility of a Panda outweighs the slight advantage of the ForTwo in tight city driving.

And why have two cars when one will do? You think most people in Roma can afford two cars with the expensive living costs and rent there?

For the majority of people SUVs are not needed either. People think they are safer and useful, but they arent. They are just giant chunks of metal, rarely used to their capacities, often empty, wasting excess fuel for no reason. They are too big, too heavy, and too expensive, burning too much petrol. The excuse is often that the car is sometimes useful for carrying groups or large quantities of material, but there are alternate means for specific situations. Pickup trucks are the same (unless you are a farmer). Buying a V6 midsize is similar too, the I4s are plenty good enough.

Simply put, the vast majority should be buying cars from sub-compacts (Fit or polo) to mid-sizes (Accord or Passat). Anything smaller is useless and anything larger is usually excessive.

 

[Mt. Lynx]

A yes, the gigantic Fiesta is too large for Roma... oh dear. There is much more of a problem with the drivers there than the car sizes. I think the much higher versatility of a Panda outweighs the slight advantage of the ForTwo in tight city driving.

And why have two cars when one will do? You think most people in Roma can afford two cars with the expensive living costs and rent there?

For the majority of people SUVs are not needed either. People think they are safer and useful, but they arent. They are just giant chunks of metal, rarely used to their capacities, often empty, wasting excess fuel for no reason. They are too big, too heavy, and too expensive, burning too much petrol. The excuse is often that the car is sometimes useful for carrying groups or large quantities of material, but there are alternate means for specific situations. Pickup trucks are the same (unless you are a farmer). Buying a V6 midsize is similar too, the I4s are plenty good enough.

Simply put, the vast majority should be buying cars from sub-compacts (Fit or polo) to mid-sizes (Accord or Passat). Anything smaller is useless and anything larger is usually excessive.

I actually agree with you, I just pointed out an observation.
A very small car makes parking alot easier, and I think that is the main reason cityfolk buy these things, apart from - like a SUV - being a fashionitem.

 

[niky]

I'd buy a Fit and... with the change... buy a scooter.

The Smart only makes sense versus a scooter in terms of weather protection and crash safety... but to get something that has four wheels and no space for groceries is rather silly, IMHO... unless they charge scooter money for it, which they don't.

It's a neat idea, don't get me wrong... but I can see the Aygo or Fit as being more value for the money with a minimal hit in fuel efficiency (as long as you get the Fit with the smaller engine... which the US doesn't).

 

[homeforsummer]

I won't deny that the smart is overpriced, but then if they're selling as many as they are that's obviously not a concern. Most niche cars are overpriced and many more excessively than the smart.

I maintain Smarts are useless cars and that whoever buys one lives in a short narrow alley, is a loner, or is just buying it for silly reasons. Id never buy one over the much superior Panda, but also larger cars like the Punto, Polo, Ibiza, Fabia, Jazz/Fit, Yaris, Fiesta, Clio and 207. Makes no sense if you ever plan to leave the city or carry friends or children or do anything productive.

Just because you don't happen to be a fan it does not mean the car is "useless", that people buying them "live in a short narrow alley" (WTF?), are "a loner", or are "buying it for silly reasons". You've just made needless generalisations there based on absolutely no evidence.

Let me elaborate. The "short narrow alley" point is vaguely ridiculous because it assumes people buy the car based on literally being forced to because of where they live.

The "loner" point is blatantly untrue because the smart scene is massive - the smart car club is the second biggest car club in the UK (behind, I think, an MG club) and it's probably fair to assume that many people who buy smarts are the more "outgoing" types - let's face it, you have to be fairly outgoing to drive around in a 2.5 metre long, brightly coloured lozenge. Or maybe you were referring to the fact it only has two seats? In that case, people who drive Mazda MX5s, Toyota MR2s, Ferrari 430s, Pagani Zondas, and Eurofighter Typhoons are also loners, as they all only have two seats too.

"Buying it for silly reasons" - care to list some? Even if someone solely bought it because "it's cute", that wouldn't be a silly reason to the person buying it. It might be "silly" in your opinion but that doesn't take away their right to buy the car for whatever reason they see fit. I personally can see a number of good reasons for buying one. Not needing to have any more than one passenger and not regularly having to carry luggage is just one.

There is much more of a problem with the drivers there than the car sizes.

Oh look, another generalisation.

I think the much higher versatility of a Panda outweighs the slight advantage of the ForTwo in tight city driving.

Don't get me wrong, I think the Panda is a great car, but in city driving I quite like the idea of the smart's plastic body panels for the inevitable dents and scrapes that get picked up. The turning circle of the smart is also almost a meter less (8.7m versus 9.6 for the Panda) - great for parking, even before you get to the shorter length.

For the majority of people SUVs are not needed either. People think they are safer and useful, but they arent. They are just giant chunks of metal, rarely used to their capacities, often empty, wasting excess fuel for no reason. They are too big, too heavy, and too expensive, burning too much petrol. The excuse is often that the car is sometimes useful for carrying groups or large quantities of material, but there are alternate means for specific situations. Pickup trucks are the same (unless you are a farmer). Buying a V6 midsize is similar too, the I4s are plenty good enough.

In general, I'd agree with you. But I'm damned if I'm gonna come out with comments like this though:

Simply put, the vast majority should be buying cars from sub-compacts (Fit or polo) to mid-sizes (Accord or Passat). Anything smaller is useless and anything larger is usually excessive.

Who are you to say what people should be buying? And what do you think is more harmful to the environment? The 437,505 Peugeot 207s sold across Europe in 2007 (source), or the mere tens of thousands of Land Rovers? Consider that in 6 months in 2007 Land Rover only sold just over 100,000 cars (source). Even if you pessimistically double that, you're still looking at figures (for the whole world and for a whole company) lower than half of what Peugeot sold of just one model solely in Europe. I'm not condoning buying a 4x4 for the school run (which is ridiculous), but it's not right to deny people the right of choice.

EDIT: And saying anything "smaller than a Fit or Polo is useless" is a load of tosh, because that eliminates fantastic cars like the Ford Ka, Toyota Aygo/Citroen C1/Pug 107, the upcoming Toyota iQ, technically the Panda that you mentioned as that's smaller than the Fit, technically the current MINI as it's significantly less practical than the Fit or Polo, and ridicules the old Mini that people happily drove for over 40 years.

I know 4x4s have much more of an impact over your side of the pond, but again consumers can hardly be blamed for buying them if the companies keep producing them.

 

[SagarisGTB]

^^^Dont take every single thing I say too seriously. And yes I generalise alot. Mostly on my own real life observations.

And yes, cars like the Panda, Aygo, Fox, 107 etc. are very good cars and can be quite useful. I made a mistake. The "smaller" cars I reffered to are the ones that are overpriced "icons". Its only my opinion.

And it is the consumers fault for the large amount of 4x4s on the road. The companies wouldnt be making them if people didnt buy them.

 

[YSSMAN]

EDIT: And saying anything "smaller than a Fit or Polo is useless" is a load of tosh, because that eliminates fantastic cars like the Ford Ka, Toyota Aygo/Citroen C1/Pug 107, the upcoming Toyota iQ, technically the Panda that you mentioned as that's smaller than the Fit, technically the current MINI as it's significantly less practical than the Fit or Polo, and ridicules the old Mini that people happily drove for over 40 years.

Again, I don't disagree with you on the whole thing, I think the ForTwo is pretty good for a large amount of the population, but that likely depends on how big your family is, what kind of stuff you do with your car, and for that matter, what your perception of "value" is. Because I travel fewer than 20 miles a day, mostly in the city, by myself... The ForTwo makes perfect sense. But for someone like my mother, who drives more than 30 miles a day, often with friends or a lot of stuff for her job (not to mention with my brother and I on weekends), a car like the Fit/Yaris/Aveo would make more sense.

Of course, we have yet to get the super-mini cars here in the US, but that depends mostly on whether or not we get the Ka before others would arrive.

 

[forza2.0]

mini originally used the pull strategy. I thought due to the downturn BMW aborted their pull plans for a slightly different strategy?

 

[///M-Spec]

BMW is adapting the pull strategy (at least, for the US market according to BMW US CEO Jim O'Donnell) in part because it has been successful for the MINI brand.

I don't know what they are planning for the rest of the world. It probably varies on the exact market.


M

 

[Tornado]

In that case, people who drive Mazda MX5s, Toyota MR2s, Ferrari 430s, Pagani Zondas, and Eurofighter Typhoons are also loners, as they all only have two seats too.

You're damn right they are. Where is the camaraderie?

GOOOOOOOOOOOOOOSE!!!

 

[YSSMAN]

In proof that the recession is hitting everyone harder than we thought, GM has delayed/cut all development spending until 2010.

Spoiler

WHAT THE HELL ARE THEY THINKING!?!?!?!?!?!

 

[Tornado]

In proof that the recession is hitting everyone harder than we thought, GM has delayed/cut all development spending until 2010.

Funnily enough, this seems to have delayed the Chevrolet Cruze in America for three years despite coming out in Korea today.

 

[///M-Spec]

Looks like even Porsche is scrapping the bottom of the barrel for some US sales.

I just saw a pop-up ad for what must be subvented (subsidized) leases on the Cayman ($650/mo), Boxster ($590/mo) and Cayeneneaaanenn ($690/mo). 36 mos, about 5k down to start, which is a little high. But pushing leasing is very rare for Porsche, at least in this market.


M