SAAB is now officially bankrupt. The company filed for bankruptcy after two Chinese companies changed their minds about buying the Swedish automaker.
There was talk that General Motors was concerned about the Chinese getting their hands on U.S. technologies, because GM supplied those parts to SAAB.
The demise of SAAB will now hurt GM’s parts sales.
“U.S. vehicles benefiting from subsidies and dumping on the China market have substantially damaged China’s auto industry.”-statement from Chinese Ministry of Commerce
General Motors and Chrysler will suffer the most from Chinese economic action against vehicles made in the United States.
Anti-dumping duties on GM vehicles are 8.9%, and 8.8% for Chrysler vehicles.
GM vehicles will also face anti-subsidy duties of 12.9%, and 6.2% for Chrysler vehicles.
The tariffs target cars with engines bigger than 2.5 liters, and made between December 201 through December 2013.
German car makers BMW and Mercedes will be hit with much much lower tariffs.
Chinese officials say the United States is violating the trade rules of the U.S. dominated World Trade Organization.
GM and Chrysler officials are not to worried. Why? Because the majority of the cars they sell in China, are actually made in China (another reason for growing unemployment in the U.S.), and the tariffs do not apply to the cars they make in China.
“Russia is Mazda’s second largest market in Europe and sales are rapidly increasing. Mazda sold approximately 28,000 units during the period from January through September 2011, a year on year increase of approximately 77%!”-Mazda Motors statement
Mazda announced they’ve made an U.S.$80 million joint venture deal with Russian car maker Sollers. By next autumn they will begin production of Mazda cars in the far eastern city of Vladivostok.
Mazda is not the only foreign car maker to make moves on the Russian car market: Renault-Nissan, General Motors, Izuzu, SsangYong, Fiat and Volkswagen have all started production in Russian factories.
SAAB has new Chinese owners. The car maker was sold at a loss, after it filed for bankruptcy in September. SAAB hasn’t made any cars in its factory in Sweden, since April!
SAAB was originally offloaded by GM to Dutch company Spyker (now Swedish Automotive). Chinese distributor Pang Da Automobile Trade, and auto manufacturer Zhejiang Youngman Lotus Automobile will pay about U.S.$142 million for SAAB.
SAAB joins Volvo in becoming a Chinese owned company. In 2010 Volvo was sold by Ford, also at a loss, to Chinese company called Geely.
SAAB sales in the U.S. suck, in September only 429 cars were sold. So far for the year 2011 only 4,612 cars have been sold. In 2003 SAAB sales in the U.S. were ten times that (40,000 cars)!
“The next 12 months look tough. Incentives brought forward buying in a very dramatic fashion in 2009, 2010, and now we are seeing a lack of pent-up demand.”-Ashvin Chotai, Intelligence Automotive Asia
General Motors can’t stand the heat of the competition in China, so they’re sacrificing profit margin by dropping their prices, on minivans.
“GM does not rely on the minibus for profit, they only contribute volume.”– Jenny Gu, JD Power & Associates.
GM might not rely on minivan sales for profits in China, but they’re sure taking the competition serious. GM’s sales of minivans, in China, dropped 3% this year, so far. That’s important when you realize that China, not the United States, is now GM’s largest auto market.
The minivans that GM sells in China, are made in China, not the U.S. One in eight vehicle sales in China are minivans.
It looks like VolksWagen is taking up the slack in GM’s lagging Chinese made minivan sales. GM sold 1.27 million vehicles in China in the first half of this year, compared with VW’s 1.1 million. This means VW could soon overtake GM’s number one foreign car maker position in China.
Ford and GM reported profits in July. They also reported increased U.S. sales. Ford claims 9% increase, GM an 8% increase, while Chrysler claims an incredible 20% increase in U.S. sales.
This while Japanese car makers Toyota and Honda reported that their U.S. sales crashed by more than 20% each.
Despite Chrysler reporting a 20% increase in sales, they claimed a net loss in profits, from buying back stocks from the U.S. taxpayers (interestingly the U.S. taxpayer also lost money).
Ford reported a small 9% increase in sales, but a big increase in profits. One reason is because they jacked up the prices of their cars. According to one report, the price increases accounted for $900 million of Ford’s profit. Profiting by inflation. Ford’s Chief Financial Officer, Lewis Booth, said they expect a drop in U.S. sales in the second half of 2011.
GM reported a small 8% increase in July sales, with a profit of $2.5 billion. Remember GM still owes U.S. taxpayers for the bailout. However analysts say now would be a bad time for taxpayers if GM decided to buy back its taxpayer (U.S. Treasury Department) held stock. Just like the Chrysler buy back taxpayers would lose big time. Most of GM’s sales came from pickup trucks. The problem is that GM still has a surplus of pickup trucks, equal to a 115 day supply. In order to get the surplus inventories down GM will continue with planned factory shut downs, that means more people out of work. GM officials also expect the second half of 2011 to be hard on sales.
Mitsubishi reported an amazing 41% increase in July sales, while sales for most other Japanese companies stalled or crashed.
German car makers did well: Volkswagen reported a respectable 21% increase (not counting their AUDI brand). Mercedes had a 13% increase. BMW increased by 11%.
British companies Jaguar and Land Rover went in opposite directions, with Jaguar down 0.3% and Land Rover up 22%.
The problem is that you can’t go by percentages. Here’s an example: Even though Toyota’s U.S. sales for July were down 22.7%, they still sold 130,802 vehicles in one month. Compare that to Chrysler’s huge gain of 20%. In July they sold 112,026 vehicles, still less than Toyota.
For another example of how percentages can deceive, let’s look at Mitsubishi and GM. Mitsubishi reported an amazing 41% increase in July, but the actual number of vehicles sold that month was only 7,972. GM reported a 8% increase in U.S. sales. Sounds small, but the actual number of vehicles they sold in July is 214,915. That makes GM the sales leader, however GM officials pointed out they’re still stuck with a surplus of vehicles to sell.
So, is the auto industry on the rebound, or not? Overall light vehicle (cars & pickup trucks) sales indicate that the auto industry stagnated in the month of July. Car sales down 3%, pickup truck sales up 4.8%, almost cancelling each other out.
Data from Autodata Corp
Some idiot at CNN called the huge billion dollar car maker bailout loss for U.S. taxpayers “Excellent!”.
He justifies his statement by saying it’s better than the originally projected loss of $40 billion. What this idiot doesn’t seem to realize is that most taxpayers were against the bailouts, because they knew they would lose.
In total, between Chrysler and GM, the U.S. taxpayers lost $14 billion dollars in the auto maker bailout joke. But this guy at CNN thinks it’s great, calling it “…a mere $14 billion”.
The idiot goes on to claim that the U.S. government (taxpayers) would have lost huge tax revenues if Chrysler and GM went out of business. Hello, most of their sales are now outside the U.S., which means they’re not paying U.S. taxes on those sales.
General Motors, desperate to increase domestic sales, will include insurance on new car purchases. But only if you live in Oregon or Washington states.
It is part of an experimental marketing program, to increase car sales. The insurance will be provided by Met Life.
The experiment will last until September 6. Oregon and Washington are being targeted because GM sales suck in those two states.
“This was not a normal case. The government was deciding who was going to be taken care of and who was not.”-David Skeel, University of Pennsylvania Law School
The recent bailout of General Motors and Chrysler, did not just include money, it included legal liability for defective vehicles that caused injuries and deaths.
The bailout allowed GM and Chrysler to skip paying any court ordered settlements for injuries or deaths that happened before the auto makers went bankrupt. GM had 2,500 claims against it when they went bankrupt. The excused settlements are in the tens of millions of dollars.
In the words of Telly Savalis: “Who loves ya baby?” It’s not your government that’s for sure.
Toyota has already lost its number 1 ranking, no thanks to the March 11 disasters in Japan. Now its heading down to number 3.
General Motors is now the number 1 world producer of cars, not just because of what happened in Japan, but because GM’s sales are taking off in China. Who’s about to become number 2? Volkswagen.
VW is expected to produce 7 million cars by the end of 2011, right behind GM.
Japan is now rethinking its “just in time” supply system. The March 11 disasters reveled the inherent flaw in the system, especially without any back up systems in place. A “just in time” system is a house of cards, just pull one or two, and the whole house comes down.