- Having owned many different brands of cars both American and Japanese, I can vouch that Toyota make great cars, I have owned 2 for many years and have found them to be of excellent build quality and problem free. I do not buy all the ‘news’ coming from America about runaway Toyota Prius. I don’t believe it. I do not believe that Toyota has made such a simple mistake.
- My opinion: this is about the Hatoyama government wanting to kick American military bases out of Japan. The Hatoyama government wants to break the, for many years secret, nuclear agreement. Ie: they want to stop America from deploying nuclear weapons on Japanese soil. These actions are understood by the American government as Japan’s attempt to break free from the American hegemony and realign itself with China. The combination of China and Japan is terrifying to the western Illuminati. Such moves will jeopardize the western banksters’ financial, economic and fiat currency hegemony. The message is: ‘We own you! If you don’t do as you are told, we will destroy you!’
- The other possible reason is Big Oil. The success of hybrid technology and especially the Prius (which is seen as the flagship of such technology) will dampen demand for oil. Toyota has made great strides in reducing the cost of hybrid technology. The application of hybrid technology will reduce demand for gasoline by 30-50%. This is a big threat to Big Oil. So, the current ‘problems’ with Toyota cars are highly suspicious in my opinion. Bill Anderson writes:
Remember the infamous scene when the Toyota Prius was taking its poor driver for a “stuck accelerator” on a California freeway? Well, it seems that technicians from Toyota AND NHTSA cannot duplicate this event. Hmmm. Can anyone spell H-O-A-X?
CNN: Testing didn’t duplicate sticky gas pedal on man’s Prius
Technicians who tested a Toyota Prius after its owner claimed its gas pedal stuck were unable to recreate the same condition, according to a draft congressional memo obtained Sunday by CNN.
In addition, owner Jim Sikes’ claim that the car kept going even though he slammed on the brake while his gas pedal was stuck to the floor does “not appear to be feasibly possible,” said the draft, obtained from sources familiar with the investigation.
The memo, written for members of the Committee on Oversight and Government Reform, summarizes the observations of a representative present at the testing of the Prius, as well as another car “allegedly involved in sudden unintended acceleration events.”
Contacted by CNN, Sikes declined to comment but said he stands by his story. He said his attorney will be making a statement on his behalf Monday.
- This is interesting. It is what America is great at: innovation. It is creative solutions and out of the box thinking that makes the world a better place. TechnologyReview.com reports:
Transonic Combustion, a startup based in Camarillo, CA, has developed a fuel-injection system it says can improve the efficiency of gasoline engines by more than 50 percent. A test vehicle equipped with the technology gets 64 miles per gallon in highway driving, which is far better than more costly gas-electric hybrids, such as the Prius, which gets 48 miles per gallon on the highway.
The key is heating and pressurizing gasoline before injecting it into the combustion chamber, says Mike Rocke, Transonic’s vice president of business development. This puts it into a supercritical state that allows for very fast and clean combustion, which in turn decreases the amount of fuel needed to propel a vehicle. The company also treats the gasoline with a catalyst that “activates” it, partially oxidizing it to enhance combustion.
The technology is one of many being developed to squeeze more efficiency out of existing engines to meet new fuel economy standards and other regulations–without making vehicles more expensive. “It’s a time of renaissance for internal combustion engines,” says William Green, a professor of chemical engineering at MIT. Improvements include smaller engines boosted with turbocharging, improved valve timing, and direct injection, in which fuel is injected directly into the combustion chamber rather than into an adjacent port. He says Transonic’s approach “may be a promising way to improve on conventional direct injection.”
If it works as promised, the new technology would improve fuel economy by far more than these other options, some of which can improve efficiency on the order of 20 percent. It is expected to cost about as much as high-end fuel injection systems currently on the market, Rocke says.
Transonic’s injection system varies from direct injection in two ways: it uses supercritical fluids and doesn’t require a spark to ignite the fuel. The supercritical fluid mixes quickly with air when it’s injected into the cylinder.
Once the fuel is injected into the piston, the heat and pressure are enough to cause the fuel to combust without a spark (similar to what happens in diesel engines), which also helps provide fast, uniform combustion. Ignition can be timed to happen just when the piston is reaching the optimal point, so it can convert as much of the energy in the gasoline into mechanical movement as possible, without wasting energy by heating up the combustion chamber walls, as happens in conventional technologies. The company has developed proprietary software that lets the system adjust the injection precisely depending on the load put on the engine.
- This an interesting piece of new automotive technology which should be quite simple to implement and could be very effective. Telegraph UK reports :
The familiar sound of cars failing to start in the cold weather is set to become a thing of the past after scientists developed lasers which can be used to replace spark plugs in petrol engines.
Scientists at Liverpool University and engineers at car giants Ford have developed a new ignition system which uses focused beams of laser light to ignite the fuel.
The researchers claim the technology is more reliable and efficient than current spark plug technology and will enable cars to start more easily in cold and damp conditions.
It is understood that Ford, the world’s fourth largest car manufacturer, hopes to put the laser ignition system into their top of the range vehicles within the next couple of years before making it more widely available.
Dr Tom Shenton, a reader in engineering at Liverpool University who is leading the project, said: “We are running engines everyday in our laboratory with this system now and our ultimate objective is have it inside cars driven by consumers.
“Lasers can be focused and split into multiple beams to give multiple ignition points, which means it can give a far better chance of ignition.
“This can really improve the performance of the engine when it is cold, as this is the time when around 80 per cent of the exhaust emissions are produced and the engine is at is least efficient.
“The laser also produces more stable combustion so you need to put less fuel into the cylinder.” In current engines spark plugs are positioned at the top or bottom of a cylinder and they can often fail to ignite fuel effectively if the petrol is not in the right position in the cylinder.
In the new system the spark plug is replaced by a laser powered by the car battery which is sent along thin optical fibres into the engine’s cylinders where lenses focus the beam into an intense pinprick of light.
When fuel is injected into the engine, the laser is fired, producing enough heat to ignite the fuel and power the engine. The researchers claim that the laser, which will need to fire more than 50 times per second to produce 3000 RPM, will require less power than traditional spark plugs.
Some of the laser can be reflected back from inside the cylinder to provide information for the car on the type of fuel being used and the level of ignition, allowing the car to adjust the quantities of air and fuel automatically to optimise the performance.
This raises the prospect of mixed fuel cars which can run on a number of different biofuels while ensuring they still run efficiently.
“It has a real potential to reduce greenhouse gas emissions in the future by improving the ignition and combustion of fuel, particularly in engines starting from cold, but it can also be used in mixed fuel engines such as biofuels.”
- GM and Chrysler are bankrupt. America is no longer the automotive industrial might it once was. Leading edge technology are no longer found in American motor companies. The Chinese are rapidly rising in the electric car race. TimesOnline reports :
A Chinese firm says its four-seater battery car can cover 250 miles – a claim that appears to be almost feasible.
Here, some of the biggest strides in motor engineering are being made, including one shown to The Sunday Times on an industrial estate in Hangzhou, 90 miles southwest of Shanghai. This is where engineers for New Power have beaten western rivals to achieve what they claim is the first production-ready, all-electric car to offer a range comparable to petrol-powered vehicles.
For years, engineers in Europe, America and Japan have struggled to achieve the perfect balance: a battery that is small and light enough to fit in a family car, yet capable of storing enough energy to keep it going for a practical range between top-ups. The Reva G-Wiz, Britain’s bestselling electric vehicle, has a range of no more than 48 miles between charges; the Smart ED, on trial in the UK, beats it by only 14 miles; and although the electric Mini claims a range of 150 miles, it is only a two-seater (the huge battery taking up the back seat), and BMW has no plans to put it into production.
New Power, by contrast, claims to have developed an electric four-seater with a range of 250 miles and plans to bring it to the UK “within the next couple of years”. Known as the Zhong Tai (the name translates roughly as “peace and safety for the people”), it has lithium-ion batteries that can be recharged in 6-8 hours from a conventional socket, or in two hours from a high-power recharging point. With a top speed of 75mph and an estimated price tag of between £16,300 and £20,500 in Britain, the Zhong Tai could be both practical and affordable enough to make drivers part with their internal combustion engines for good.
On first impressions the Zhong Tai looked anything but remarkable. The car’s basic bodywork and chassis are based on a 2006 Daihatsu Terios, a compact 4×4, the licence for which was bought and adapted for Chinese production, originally as a petrol car. The electric version looks identical to a conventional Terios from the outside, with the recharging point where the petrol cap should be and only the absence of an exhaust pipe giving the game away.
The interior feels a little dated but that reflects how much standards of comfort have advanced in the past three years. The dashboard display flashed up speed, distance travelled and the percentage charge left in the batteries — 75% when we first stepped into the car.
Chinese industry has put huge efforts into battery development, a fact that was reinforced last month when Volkswagen said it would be collaborating with BYD, a Chinese manufacturer of lithium-ion batteries, to develop its first hybrid vehicles.
Still, New Power’s claims of a 250-mile range were remarkable so we were intrigued to find out how the vehicle would perform. Tipping the scales at 1.2 tons, the Zhong Tai sounds like a cumbersome beast. Its battery alone weighs about 660lb. It is housed under the car, although in the model I tried, a further auxiliary battery took up a good proportion of the boot space.
The claimed acceleration rate is 0-60mph in 12sec and the car is, indeed, quite spritely. When I pressed hard on the accelerator, the car leapt from 18mph-54mph in just 5sec, but then alarms started screeching and the engine had to be restarted. There was another worry. Accidentally touching the battery in the boot resulted in a mighty electric shock, although the company insisted this was a minor fault and rectified it within minutes.
And what of that all-important 250-mile range? Unfortunately, we couldn’t cover that distance in the time available for the test but by keeping an eye on the charge monitor it was possible to get an idea as to the veracity of New Power’s claims. At the start of the test the car had a three-quarters charge; 120 miles of reasonably hard driving later, it was showing a 42% charge. Assuming the power meter was accurate and proportional, the company’s claim is not unfeasible.
On an open road, at an average speed of 60mph, the car’s range drops to about 170 miles, according to New Power. Reduce average speed to 48mph and the company claims an average range of 218 miles. In “city driving with stops and starts”, the company reckons it can reach its maximum range of about 250 miles.
The Chinese government has announced plans to set up a 10 billion yuan (£890m) fund to promote alternative energy and is offering generous grants towards the production of electric vehicles, stating that all car companies should be producing one green vehicle by 2011.
The Zhong Tai is set to go into production next year, eventually building towards annual production of 20,000 vehicles. Wu Aibing, public relations director for New Power, claims the company is “in conversations about co-operation for overseas distribution” in the UK and US.
The company has been in touch with Electric Village, a London-based marketing company specialising in electric vehicles, about promoting the car in Britain. “The new vehicle is game-changing in the rapidly emerging electric car sector,” says Stewart McKee, the chief executive of Electric Village. “Hence we are looking at a distribution and sales strategy for the UK market.”
Even if New Power’s reliability and range claims hold up under further testing, there are still question marks about the car’s potential success, particularly in foreign markets. Chinese exports, such as the Jiang-ling Landwind, a large petrol-powered SUV, have failed European safety tests. Aside from safety, the Zhong Tai’s retro looks may not appeal to image-conscious westerners.
However, with most mainstream European car manufacturers putting off electric car production until 2011 or later, and current options offering a range of no more than about 50 miles, this car could lead the way to a practical all-electric automotive future.
- The company which Alfred Sloan built is going bust. I wonder what he will say to all the management idiots running the company to the ground? I wonder how he would have handled the powerful unions too? Death knell for GM, Reuters reports :
After 100 years in business and 10 months of frenzied but failed restructuring, General Motors Corp is weeks from the bankruptcy filing experts say will be required to complete the Obama administration’s bid to reshape a fallen icon of American industry.
Facing a government-imposed June 1 deadline to restructure, GM is scrambling to slash some $27 billion of bond debt, win sweeping cost concessions from the United Auto Workers union and eliminate almost 1,600 U.S. dealers.
But with the clock ticking, experts see it as all but certain GM will follow its smaller rival Chrysler into federal bankruptcy court. “I almost think it is inevitable,” independent auto industry analyst Erich Merkle said. “I don’t know how they are going to escape it.”
The battery of problems to have hit GM range from plunging sales and declining share to a line-up that has seen more misses than hits over the past decade and that trails engineering leaders like Toyota Motor Corp and Honda Motor Co in hybrid technology.
But GM’s debt-laden balance sheet is the source of its immediate crisis and the reason restructuring experts, analysts and auto executives do not see a way forward that avoids what could be a complicated and contentious bankruptcy.
“The only way it is not inevitable is if the government accepts whatever percentage of bondholders have tried to exchange, whether it is 40 percent or 50 percent or 60 percent,” said Peter Kaufman, president and head of restructuring and distressed mergers and acquisitions at the Gordian Group LLC in New York.
GM has said that it must have 90 percent of the $27 billion of bonds participate in the exchange or it will be forced to file for bankruptcy. GM’s offer to its bondholders would give them only a 10 percent equity stake in a reorganized company. Representatives of a committee representing major bondholders have called that offer unfair given the payout being offered to the UAW.
In a sign of how far apart the sides remain, bondholders have sought a majority stake in the new GM, the controlling position in a new and smaller auto company GM has offered to the U.S. Treasury.
After extending $15.4 billion to keep GM afloat since the start of the year, the U.S. Treasury would own at least 50 percent of the automaker under GM’s proposed terms.
A UAW healthcare trust would hold nearly 40 percent of GM in return for allowing GM to pay $10 billion — half of its remaining funding obligation — in stock, instead of cash.
- Wall Street Journal reports :
General Motors Corp. is teaming with Segway Inc., maker of the upright, self-balancing scooters, to build a new type of two-wheeled vehicle designed to move easily through congested urban streets. The machine, which GM says it aims to develop by 2012, would run on batteries and use wireless technology to avoid traffic backups and navigate cities.
The struggling auto maker, surviving on a government lifeline, is looking to generate enthusiasm for its increasingly uncertain future ahead of the New York auto show this week. GM has slashed product-development programs, advertising and spending on auto-show events. But it will take to the streets of Manhattan on Tuesday to show off a prototype of the vehicle, called PUMA, for Personal Urban Mobility and Accessibility.
The Segway Personal Transporter was launched with considerable hype eight years ago but practical issues prevented the scooter from becoming a mass-market product, including its relatively high cost and restrictions on its use in many jurisdictions.
GM is betting PUMA’s more car-like traits — an enclosed compartment and top speed of 35 miles per hour — will lead to better results. GM didn’t say how much the machines would cost, but research chief Larry Burns said owners would spend one-third to one-fourth of the cost of a traditional vehicle.
PUMA would have a range of about 35 miles. GM said it aims to use so-called vehicle-to-vehicle technology to avoid traffic problems and potentially have it navigate itself through city streets.
- Honda Insight versus Toyota Prius.
- This is quite an innovative 3 wheel electric vehicle. The company’s website is: Aptera Motors . We need more of such innovative companies and less GM, Chrysler and Ford. The Big 3 auto makers are just too bureaucratic, unprofitable and badly run. Too many idiots with too high salaries in too high management positions who have no idea how to manage a car company.
- Reuters reports :
A three-wheeled, all-electric vehicle is set to go into mass production later this year despite a snub from the U.S. government.
There is also a gasoline version. The two-seater Aptera electric version has a 100 mile range per charge and can be recharged by plugging into a regular electric outlet.
The gasoline version has a range of 100 miles per gallon (42 km per litre) because of its low drag and weight.
With 4,000 orders already, the California-based company plans to make about 10,000 cars initially, with a price tag of between $25,000 and $40,000 depending on whether buyers want an electric, hybrid or traditional power train.
- No respite for automotive makers in sight. Despite the earlier bailout, GM is still in deep trouble. They are still asking for more money. GM said they may go bankrupt if they do not get it.
- The sad fact is: as a matter of priority and saving jobs, it would be far better to bailout auto makers than banksters. I am no fan of bailouts. But if I have to do it, I will bailout auto makers before banksters. The amount of jobs saved would be far more. Manufacturers, factories of all types are needed for the US economy. Otherwise, how will America recover? Where will all the jobs be? The consumer economy that has driven America for the past decades is coming to an end. America must make things, must rebuild its industrial base, to export things that the world wants. Otherwise how is America going to pay for its imports?
- Having said that, the annual production rate has gone from 17-18 million cars to 9-10 million cars. There is too much capacity. Rapid downsizing is needed. 1 in 3 companies will go bust. So bailout will still result in job loss. The industry is not going back above the 12 million cars per year rate any time soon! AP reports :
Of all the words in General Motors Corp.’s 402-page annual report, none is more jarring than two written by the company’s auditors: “Substantial doubt.”
The doubt, according to Deloitte & Touche LLC, is about whether GM can overcome its staggering losses and generate enough cash to stay in business, or remain a “going concern” as accountants would say.
GM concedes in the report filed Thursday that it’s on the edge of bankruptcy and won’t be able to avoid it unless it gets more government money and successfully executes a huge restructuring plan.
It’s no surprise that auditors would question GM’s viability. The Detroit-based behemoth lost $30.9 billion last year, is living on $13.4 billion in government loans, and is seeking up to $30 billion as it tries to survive the worst auto sales climate in 27 years.
But the auditors’ comments are serious because the threshold for raising such concerns is tilted heavily in favor of companies, and often they can negotiate them away, said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy.
“If you get a qualified going concern audit letter like this, that suggests you are in extreme financial distress and very likely may file for bankruptcy,” he said.
U.S. Sen. Charles Grassley, the top Republican on the Senate Finance Committee, said the auditors’ concerns mean the government will likely have to provide more help to GM. The senator from Iowa called for a “restructured bankruptcy” involving the government.
“It would be a process of bankruptcy but be worked out outside of the court in mutual agreement to bondholders, stockholders, management, in this case, the federal government, because we’ve got a lot invested there, and also the unions,” Grassley said in a conference call with reporters from his home state.
Ray Young, GM’s chief financial officer, said in an interview Thursday that GM can accomplish its restructuring goals without bankruptcy. The company is making progress in negotiations to swap debt for stock and to gain concessions from the United Auto Workers union, he said.
“One thing for certain is there’s going to be recovery,” Young said. “We just need to take advantage of this situation to streamline, downsize, get ourselves leaner, so that when the recovery occurs we will emerge as a far stronger company.”
Both GM and Chrysler LLC, which also has received government loans, face a March 31 deadline to get signed agreements for concessions from debtholders and the UAW to show the government they can become viable again. If they can’t reach the necessary deals, the government could recall the loans and force the companies into bankruptcy protection.
Chrysler, which so far has received $4 billion in government loans and is seeking another $5 billion, likely will receive a “going concern” letter from its auditors, although it won’t be made public because the company is privately held, Pottow said.
- Just how bad are things for Japan? AP reports :
Strangled by the collapse in global export demand, Japan’s economy shrank at its fastest rate in 35 years in the fourth quarter and shows no signs of reversing course anytime soon.
Japan’s gross domestic product contracted 3.3 percent from the previous quarter, or an annual pace of 12.7 percent, in the October-December period, the government said Monday.
That was worse than expected and the steepest slide for Japan since the oil shock in 1974. It is more than triple the 3.8 percent annualized contraction in the U.S. in the same quarter.
“There is no question that this is the worst economic crisis since the end of World War II,” said Economy Minister Kaoru Yosano. “The outcome clearly shows that Japan’s export-dependent economy has been severely hit.”
Chief Cabinet Secretary Takeo Kawamura went further, calling the economic downturn a once-in-a-century calamity.
Japan’s economy — the world’s second-largest — has now contracted for three straight quarters and is almost certainly headed for a fourth.
The first three months of the year will likely be “another horrifying quarter,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo, who predicts GDP to contract an annualized 10 percent during the period.
The latest data underscore the vulnerability of Asia’s export-driven economies during global downturns and point toward more cuts in jobs, production and profits in the coming months. Even demand from emerging markets, which earlier had partly offset declines in North America and Europe, began falling sharply in the fourth quarter.
- Toyota the icon of efficiency, financial stability and Japanese manufacturing might is tanking big time. Toyota Will Cut Japan Output 54% in Current Quarter :
Feb. 16 (Bloomberg) — Toyota Motor Corp., the world’s biggest carmaker, will slash domestic production 54 percent in the current quarter as demand plunges in the U.S. and Japan.
The company’s output, excluding its Daihatsu Motor Co. and Hino Motors Ltd. units, will drop to about 519,000 vehicles in the three months ending in March, compared with 1.13 million units a year ago, according to figures derived from Toyota’s latest full-year forecast. Toyota spokesman Paul Nolasco declined to confirm the figures.
The worst U.S. car market in 28 years is forcing Toyota to widen production cuts after it slashed domestic output 23 percent in the third quarter. The plunge in car production at Japan’s largest company is contributing to the country’s sharpest economic contraction since the 1974 oil shock.
“This kind of drop is unprecedented, probably since the end of World War II,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages about $3.1 billion. “This is terrible.”
- Bad economic news ’Ain’t over till the fat lady sings!’ The fat lady seems to have contracted severe bronchitis and soar throat. No schedule on when she will recover.
- Car sales are collapsing worldwide. If you thought December car sales were bad, January’s crashed even more spectacularly. Bloomberg reports GM, Ford Say Sales Tumbled at Least 40%; Toyota Dives :
Feb. 3 (Bloomberg) — General Motors Corp. and Ford Motor Co. said U.S. sales plummeted at least 40 percent in January and Toyota Motor Corp. dived by almost a third, dragging the world’s biggest auto market toward the worst month since 1982.
The declines were 49 percent at GM, the largest U.S. automaker; 40 percent at Ford and 55 percent for Chrysler LLC. Toyota dropped 32 percent, Honda Motor Co. fell 28 percent and Nissan Motor Co. was down 30 percent.
Today’s reports showed the toll of sinking confidence among car and truck buyers. GM, Ford and Chrysler said January deliveries may have tumbled to an annual rate of fewer than 10 million vehicles, after full-year sales averaged about 16 million this decade.
“In this downward spiral, as a company it’s hard to plan your business and as a consumer it’s hard to change your sentiment,” said Joe Barker, an analyst at consulting firm CSM Worldwide Inc. in Northville, Michigan. “We’re all looking for some sense of stability in the sale rate.”
Weak consumer and business demand adds to the challenges facing GM and Chrysler as they work to restructure with the help of $17.4 billion in federal loans, and ratchets up pressure on Ford, which says it doesn’t need government aid.
“If 20 percent to 30 percent retail declines persist, it would be more difficult” for Ford to avoid accepting U.S. loans, Standard & Poor’s equity analyst Efraim Levy in New York wrote in a report today. He rates Ford shares as “hold.”
Annual Sales Rate
Light vehicles haven’t sold at an annual pace of fewer than 10 million units in any month since the 9.8 million rate posted in August 1982, according to Autodata Corp. of Woodcliff Lake, New Jersey. The last full year of fewer than 10 million sales was 1970, according to trade publication Automotive News.
Hyundai Motor Co. was alone among large automakers with a gain, saying sales rose 14 percent.
January’s industrywide sales rate may have slipped to fewer than 10 million vehicles, Chrysler President James Press said today in an interview. Ford also raised that prospect, and Michael DiGiovanni, the chief sales analyst at Detroit-based GM, estimated the rate at 9.8 million. December’s figure was 10.3 million and November’s was 10.2 million, the lowest in 26 years.
GM said January sales fell to 129,227 cars and trucks, including a 58 percent decline in cars and 43 percent drop in light trucks. The automaker said it will cut North American first-quarter production 57 percent to keep pace with flagging demand.
Ford’s sales to non-business customers were in line with company expectations and retail demand “appears to be stabilizing,” the Dearborn, Michigan-based automaker said in a statement. Ford initially released a tally that didn’t include Volvo, showing a 39 percent drop for its domestic brands.
January had 26 selling days, 1 more than a year earlier. Some automakers release results adjusted for sales days, meaning the totals will be about 4 percent lower than unadjusted numbers. Bloomberg uses unadjusted figures.
Plummeting sales hamper efforts by GM and Chrysler to pare labor costs, cut debt, trim dealers and idle plants to reduce cash use and make a case to keep $17.4 billion in loans from the U.S. Treasury that kept them from slipping into bankruptcy. The companies face a Feb. 17 federal deadline for a progress report.
GM and Auburn Hills, Michigan-based Chrysler are offering cash and vehicle vouchers to entice more factory workers to leave and ended a 25-year-old program that assured union employees most of their pay even when there weren’t any tasks for them to perform.
- In Japan things are just as bad. Bloomberg again Toyota Leads Drop in Japan Car Sales on Economy Slump :
Feb. 2 (Bloomberg) — Toyota Motor Corp. and Honda Motor Co., Japan’s two largest carmakers, led the biggest drop in the country’s auto sales in 35 years last month as a recession cut wages and jobs and crippled consumer demand.
Sales of cars, trucks and buses fell 28 percent to 174,281 vehicles in January, excluding minicars, the Tokyo-based Japan Automobile Dealers Association said in a statement today. It was the biggest monthly drop since May 1974, the group said.
Honda slashed its full-year profit forecast 57 percent on Friday as sales plunge in Japan, the U.S. and Europe. Japan is headed for its worst postwar recession as factory output slumped an unprecedented 9.6 percent in December and unemployment surged.
“Since this autumn, the very bleak economic climate has replaced high gasoline prices as the biggest reason” for the drop in car sales, said Mitsuru Kurokawa, senior market analyst in Tokyo at consulting company IHS Global Insight. “We won’t hit bottom until the second half of this year.”
Toyota, the world’s largest carmaker, sold 81,985 vehicles excluding its Lexus brand, down 22 percent, and sales at Honda dropped 31 percent to 22,087 units. Sales at Nissan Motor Co., Japan’s third-largest automaker, fell 31 percent to 30,786 vehicles last month.
Toyota shares lost 1.4 percent to close at 2,885 yen in Tokyo. Nissan fell 2.9 percent and Honda declined 1 percent.
- Cars are the quintessential durable goods, this severe plunge in car sales tells us that we are in a depression. Consumers do not have job security so they cut back on buying new cars and real estate.
- See also :
Auto Sales Bloodbath!
Excess Capacity – Automotive Industry
Chrysler, Toyota, Lead Declines in Auto Sales
- Car sales are still plunging. Across the board sales for all the Big Boys are down big time. In US December Auto Sales Dive 36%, Drag Industry to 16-Year Low :
Jan. 6 (Bloomberg) — U.S. auto sales plunged 36 percent in December, dragging the industry’s volume in 2008 to a 16-year low as the recession ravaged demand. General Motors Corp.’s annual total was the smallest in its home market since 1959.
Toyota Motor Corp. and Honda Motor Co. reported their first drop in full-year U.S. sales since the mid-1990s after December declines of at least 35 percent. Chrysler LLC’s 53 percent dive last month led major automakers, while Ford Motor Co. slumped 32 percent and GM and Nissan Motor Co. fell 31 percent.
“It’s one of the worst years ever, and this year will be worse,” said Stephanie Brinley, an analyst at consulting firm AutoPacific Inc. in Southfield, Michigan. “It’s not a gas problem. It’s not a credit problem. It’s a consumer confidence problem, and it’s worldwide.”
Toyota’s U.S. deliveries plummeted 37 percent, as it failed to get a boost from no-interest loans offered on most models since Oct. 2. Sales of its Prius hybrid, the best-selling gasoline-electric car in the U.S., fell 45 percent. The Tundra full-size pickup dropped 52 percent, while Toyota’s Lexus luxury brand finished the month down 32 percent.
Honda, No. 2 in Japan behind Toyota, said U.S. sales slid 35 percent. Toyota hadn’t posted an annual U.S. sales decline since 1995, while Honda’s last full-year drop came in 1993.
European brands joined the decline among U.S. and Asian automakers. Sales of Daimler AG’s Mercedes-Benz and Smart minicar fell 24 percent last month. Volkswagen AG was down 14 percent, while its Audi unit was off 9.3 percent. Bayerische Motoren Werke AG’s BMW- and Mini-brand autos dropped 36 percent.
- Toyota has just announced that it will be suspending production at all of its 12 factories in Japan for an additional 11 days in February and March. Toyota to suspend production for 11 days in Japan :
The last time Toyota Motor Corp. halted production at all its Japan plants was in August 1993, when demand plunged because of a rising yen, and that was for only one day, according to the company.
A global economic downturn has hammered the auto industry in Japan and elsewhere, forcing carmakers to cut staff, lower production and delay new models. Major automakers in the U.S. had teetered on the brink of collapse until securing a multibillion dollar government lifeline.
“We are coping with a slump in global sales,” Toyota spokesman Hideaki Homma said Tuesday. “Demand in the world auto market is so depressed that every model is falling sharply in sales.”
Toyota said last year that it was stopping production at its 12 domestic plants for three days in January. But it decided on additional closures because of the global downturn. Toyota will stop output for six days in February and five days in March, it said.
Sales of new vehicles in Japan fell to 3.2 million vehicles last year, the lowest in 34 years, the Japan Automobile Dealers Association said Monday.
Last month, Toyota said it was slipping into its first operating loss in 70 years, expecting 150 billion yen ($1.66 billion ) of operating losses for the fiscal year ending March 2009.
- A somewhat strange report is coming from the Middle East. It is stating : the US government is begging for US$ 300B to bailout the automotive industry. In a strange way this probably make a lot of sense for oil producers. The biggest consumers of oil are petrol guzzling SUVs which US car makers are good at. I don’t give much credence to the report though. Here it is : US asks Arab nations for $300 Billion to fund auto bailout ,
According to reports published in Al-Seyassah, a Kuwaiti newspaper, and some other Gulf newspapers, the United States has asked four Gulf states for financial aid close to $300 billion to face the fallout of the financial crisis and help prevent its economy from sliding into a painful recession.
Washington is seeking $120 billion from Saudi Arabia, $70 billion from the United Arab Emirates, $60 billion from Qatar and $40 billion from Kuwait.
The Kingdom has dismissed these reports. There is enough evidence that the Federal Reserve is out of ammunition. The Fed can only control the supply of money, it cannot control the velocity of money or the rate of its turnover. The outcome of this crisis will be that the currency will be “devalued” as policy makers seek to weaken it, undermining its role as an international reserve currency.
The dollar is going to lose its status as the world’s reserve currency. The catalyst will be foreign creditors who are replacing dollar with gold. That will in turn lead to global recognition of the need for a vastly more disciplined financial system.
A collapse/devaluation of the USD is increasingly being discussed in the open. Here is look at all the cars that are parked in the ports :
Car Sales Slump, Imports Backed Up at Ports
- Japan reported a larger than expected plunge in its Nov exports. Overall exports fell at their fastest rate ever of 26.7%. The steepest decline since 1980.
- Exports to USA plunged 33.8% also the fastest on record. Exports to EU plunged 30.8% . Exports to rest of Asia plunged 26.7% .
- Overall imports fell 14.4% .
- These are alarming figures. Japan is the 2nd largest economy in the world. They are predominantly export driven. These figures basically tells us that the US and EU economy may be contracting greater than 10%. Compare this with sales of GM, Ford and Chrysler in US plunging 35-45%, and you get the picture that the economy is in free fall.
- Just how bad is the Automotive market ? Well : Korea’s Ssangyong delays payroll as sales slump !
“ A South Korean automaker said Monday it would be unable to pay workers on time this month, and another announced a temporary shutdown of all its plants as the industry struggled with a slump in demand. ”
- There is a worldwide excess capacity issue for car makers. Capacity must contract. There is no 2 ways about it. 1 in 3-4 automakers will not survive.
- In boom times people tend to be rather extravagant. They will change their mobile phones for the latest models every 6-9 months. Similarly, some will buy a new car every 3-4 years even though their current 1 is perfectly ok. This extravagance is repeated down the line for many manufactured ‘must have’ goods.
- Because of this habit, demand is artificially high for many such goods. This is especially the case for the past 7 years after 9/11. Greenspan lowered the interest rate too aggressively to 1% after 9/11 and the dot com bust. With real interest rate way below inflation and borrowing cost artificially low, consumers naturally decided : why not? Why not upgrade to a bigger house? Why not a newer mobile phone? Why not a boat?
- We are currently seeing the blowback from all these unnecessary extravagance. Production capacity has been built up to such an extent that we can easily see a collapse of 1 in 3 companies. The world as a whole need to reduce excess capacity. There is simply no way around this. Companies are going to fail because there is excess capacity and plunging demand.
- When times are bad, people become more conservative with their expenditures. They will drive the current car longer before changing to a new 1. They will just use their perfectly ok mobiles for a few more years and eschew all the fancy new models with their fancy new features. Why upgrade your PC, do we really need a 10 trillion GHz computer to surf the internet and send email? This abrupt change in buying habit means a sudden contraction in demand. No 2 ways about it.
- No matter how much bailout money you provide, companies need to contract their capacity. Needless to say there is and will be an increasing redundant workforce. And companies will need to shed headcount and destroy capacity or go bankrupt.
- Providing bailout money to such companies will not make them solvent overnight. So you bailout GM, FORD and Chrysler, does that mean they will not retrench anybody? America car sales have collapsed 35-45%, and it does not look like it will recover any time soon. Witness : From hybrids to SUVs, unsold cars pile up at ports in US.
- What I am saying is, it is clear that the automotive market in America can no longer sustain so many car companies. You can either let 1 in 4 car companies in America go bust or you can get all car companies to cut capacity and headcount by 25%. Either way the effect is about the same.
- My guestimate is that as many as 1 in 3 companies will fail in the coming 3 years much like in the 1st GD. And I don’t mean just the car makers. From mobile phones, toys, computers, white goods, semiconductors… manufacturers and retailers, wholesalers, financiers…. all will be facing essentially an excess capacity and declining demand scenario. See :
Chrysler to Shut All Factories for a Month, GM Will Shut 20 Factories for Part of Q1
U.S. Light Duty Vehicle Sales Plunge 36.7% in November
No. 2 Retail Mall operator warns of bankruptcy
UK Car Production Slumps by a Third
- Government bailouts encourages failures and penalizes the efficient and prudent companies. Why not spend the money directly in helping the retrenched. Why not allocate resource and capital to the efficient and productive? So you provide billions to the top 10 banks that are bankrupt to bail them out. What did they do with the money? Why not let them go bust and allow the good companies to take over their viable assets/portions ?
- America has over 8000 banks, so the biggest 10 are insolvent, so what ? It is not like you only have 10 banks right? Get the well managed ones to take over the biz of these. And back them up with money when necessary. Are these top banks really too big to fail? Why reward incompetence and negligent behavior?
- What the government need to do is to look at how they can correctly apply a fiscal stimulus to create new jobs for the increasing unemployment level. Don’t throw tax payer money down the black hole that is Wall Street. It creates very little jobs.
- By quite a few accounts, the infrastructure of America is in great need of rebuilding and repair. Some estimate that US$ 2 Trillions is needed. So this is 1 area which the government can productively spend their fiscal stimulus funds. It is needed and can create alot of new jobs.