Check Your Mirrors

Odds and Ends about Cars and the Car Business

By Brendan Moore

08.08.2008


SAAB has announced that they reduced their losses in 2007 compared to 2006; they also sold fewer cars in 2007 than in 2006, and using the same premise, apparently they can get their losses down to nothing if they sell hardly any cars in 2008. Okay, enough of the poor humor – it’s actually a good thing that they lost less money in 2007. Saab made money everywhere except the U.S. and says they are still on track to be profitable in 2009 or 2010. They believe that their new models will power them to that forecasted profitability. The two reasons they were able to lose less money on less sales are (according to Saab) higher margins and lower costs gained through operational efficiencies.

NISSAN has shown two electric vehicles off to the press; one a car that has been promised for sale in 2010, and the other an EV version of the Nissan Cube, a small square truck that will go on sale in its original gasoline-engine form in the U.S. in 2009. The electric vehicle carried a 300 kilogram (660 pounds) lithium-ion battery pack and still went very quickly around a Nissan Motor Co. test course, accelerating more quickly than comparable gas-engine cars. Nissan is late to the EV party, but is diligently making up for lost time in terms of development of EV and to a lesser extent, PHEV (plug-in hybrid vehicles).

NADA (National Automobile Dealers Association) says the average auto dealer in the U.S. is losing money in his or her new-vehicle department, which includes financing and insurance products. Used vehicles and service are profitable lines of business for dealers. Used vehicle profitability took a huge hit the first half of 2008 as SUVs and pickup trucks taken in trade lost value just sitting on the lot as gasoline prices spiked, but the NADA says dealers have now adjusted their trade-in policies accordingly and have stopped those losses. The NADA also states that the dealer population in the U.S. has decreased by approximately 2%. The number of dealerships shrank from 21,200 in 2006 to 20,770 in 2007 and there is expected to be further shrinking in 2008 as a result of plummeting new vehicle sales nationwide.

TOYOTA saw its first-quarter fiscal profit slide 28% due to sliding North American sales, a strong yen and rising material costs. Toyota is not getting hurt as badly as the American manufacturers by the rising cost of gasoline and a sales slowdown in the U.S., but even mighty Toyota is not impervious to market conditions. Nor currency fluctuations – Toyota said its April-June profit fell to 353.66 billion yen ($3.23 billion) from nearly 492 billion in the same period a year earlier. The robust yen, which just kills the profits of Japanese exporters, by itself cost Toyota 200 billion yen ($1.8 billion) in the last fiscal quarter. In the midst of this bad news, the paradox is that sales of Toyota’s fuel-efficient small cars are way up. Unfortunately demand is up even more, and there is considerable opportunity cost occurring as Toyota dealers do not have enough small cars in stock to satisfy the public’s appetite.

ANDREA PININFARINA, CEO of Pininfarina, died in Turin, Italy after his Vespa scooter was struck by a car driven by 78 year-old Giuliano Salmi. Mr. Pininfarina was on his way to work in the morning. His death throws the tenuous existence of the design firm that bears his grandfather’s name into some doubt. Shares of firm jumped on speculation that it would be now be sold. The share price moved up so quickly that trading was halted electronically by the stock exchange in Italy because of the outsized gains. Andrea Pininfarina is survived by his wife Cristiana, and two sons and a daughter.


FORBES compiled a list of the 10 highest-residual cars using ALG (Automotive Lease Guides) values. Leasing companies typically rely on ALG values in order to set residual values on the vehicles they lease. The Top Ten 2008 models, according to ALG are, starting from the very best in residual value and going down:

1. Mini Cooper
2. Infiniti G37
3. BMW 1-Series
4. Jeep Wrangler 4WD
5. VW R32
6. Honda CR-V AWD
7. Scion xB
8. Honda Civic Hybrid
9. Nissan Rogue AWD
10. Audi S5
10. (tie) VW Beetle Cabriolet

So, there you have it. Every car depreciates, but these depreciate more slowly than all the others.

EPA officials last week turned back a request from to reduce the quota mandating the use of ethanol in vehicles, saying that Americans’ need for cheaper fuel overrides any concerns about the use of ethanol contributing to rising food prices or increased environmental damage. E.P.A. administrator Stephen L. Johnson said that the mandate was “strengthening our nation’s energy security and supporting American farming communities,” and that it was not causing “severe harm to the economy or the environment.” The mandate is extremely popular among grain farmers and just as unpopular among ranchers, as the price of corn has risen considerably so far this year, and corn is what the ranchers feed their livestock. The use of corn-based ethanol has fierce critics (myself among them) and also has impassioned champions. It promises to be a contentious issue for some time into the future.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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3 Comments

  1. Having Stephen Johnson, head of the EPA, state that the use of ethanol was not causing “severe harm to the economy or the environment” is like having having Charles Manson tell you that “you don’t seem that crazy to me”.

  2. Rest in peace, signore Pininfarina.

    I was compelled by various reasons –economics being primary– to ride a moped in college. Never again! You might as well be the Invisible Man as far as car drivers are concerned. My old Honda Spree could conceivably get a 100 MPG, but there was absolutely nothing protecting you from the Grim Reaper.

  3. Saab could lose 0 dollars if they just stopped selling cars in the US. They sell their cars everywhere else, they just can’t seem to get Americans to buy many of them anymore.

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