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Industry News

Important info from government agencies and the automotive industry

For Barack Obama’s inauguration, Washington D.C. is expecting blow-out crowds – nearly 1.5M additional visitors are estimated.  The 95,000 hotel rooms in the city are rumored to be sold out.  But, if you booked in time, perhaps you were able to get the “eco-inaugural” package offered by the Fairmont – you receive 4 nights in a suite tricked out with organic materials and use of a hybrid car.

Did you know that the first president to drive to their inauguration was Theodore Roosevelt?  While Obama will probably be driven in his new General Motors special edition, perhaps if you were one of the lucky few to snag a ticket, you can consider one of these fine vehicles:

Congressional Democrats and the White House have reached a preliminary agreement for the $15 billion loan to the Big Three. Under the plan, the funds will be made available as soon as next week. President Bush will need to appoint a "Car Czar" immediately. The Czar will evaluate the recovery progress and if positive progress is not made by March 31, the loans will be revoked and Chapter 11 bankruptcy will be considered.

While this agreement in concept is encouraging for the automakers, Republicans were not included in the discussions and are not completely onboard with the proposed plan. These next few days will be very interesting for the auto industry.

The latest news on the US auto bailout is that Congress and the White House are close to having a $15 billion deal hammered out for GM, Chrysler and Ford. The deal is contingent on the automakers being able to demonstrate to legislators a path to sustainability.

The latest word is that a deal may be reached as soon as today. Senator Christopher Dodd has been vocal in the last day to suggest that if the automakers receive the loan from the government, they should consider replacing their top management. Dodd told ABC's Good Morning America Monday, "It is not my job to hire and fire, but what I'm trying to suggest is that you need to have new teams in place".

The United Auto Workers called an emergency meeting yesterday to discuss ways that the UAW could help assist the Big 3 during their plea for assistance from Congress. UAW president Ron Gettelfinger said that his union was ready to make new concessions despite a landmark cost-cutting labor contract signed just last year, as he urged Congress and the Bush administration to step forward with a multibillion dollar auto industry rescue plan. The UAW, whose membership at the Big Three Detroit car manufacturers has dropped by half in the past five years, said it would let General Motors, Ford and Chrysler delay payments owed to a massive health-care fund for retired workers and suspend a program that pays laid off workers for up to two years.

Watch the recap of that meeting with Neal Boudette and John Stoll from the Wall Street Journal!

In order to get you the most accurate price estimates for keeping your car/truck on the road, we survey dozens of parts suppliers on a regular basis. Historically, parts prices have been pretty stable, increasing a few percent each year at most.

So far this year we're seeing increases averaging 5%, with some price increases exceeding 10%, and much of the increase has occurred recently, just as the economy is struggling. Why would parts makers increase prices just as marginal demand is flagging? The answer lies in the extraordinary volatility the commodity markets are experiencing.

It's been just two weeks since Ford, GM and Chrysler asked Congress for $25 billion and now it's gone up to $34 billion. The new number breaks down as a $9 billion loan to Ford, a $7 billion loan to Chrysler and a $18 billion loan to GM.

With the help of this loan, Ford hopes to breakeven or return to profitability by 2011. They play to accelerate their electric car program with a 2010 model and invest $14 billion in "advanced technologies and products to improve fuel efficiency".

As we were all expecting, the auto industry November sales numbers are very, very bad across the board.

You can read all of the gory details on Autoblog. John Neff observes that while much of the media attention lately has been on the woes of the US automakers, all of the foreign automakers are suffering the same huge volume declines. Nissan's sales decline was worse than all but Chrysler's. I'll be interested to see whether or not Congress raises questions later in the week as to why Detroit needs government money, while foreign automakers seem to be able to suffer through this so far.

According to Reuters, Ford Motor is looking to sell Volvo.  It’s no surprise, Ford is in dire need of cash. 

Ford bought Volvo back in 1999, however, sales in 2008 are down 28% (as compared to 2007).  Some of the possibilities for Volvo include a spin-off into its own entity, or, selling Volvo to a buyer such as Tata of India. 

The Automotive Aftermarket Industry Association (AAIA) published their quarterly industry indicators this week, and there was a lot of interesting and very depressing news, but the following graphic (source: AAIA) describing the recent relationship between gas prices at the pump and the total miles driven by American, month over month, is astounding!

The precipitous drop in miles driven is profound, and though it looks as though when gas hits 4 or more dollars a gallon, driver behavior changes, my guess is that there is more going on.  The  relationship may be between how quickly prices go up and the change to miles driven.  The more sharp the spike in prices, the more sizable the response from consumers, whereas a gradual increase in prices doesn't spark a similar downward trend.

The LA Auto Show is one of the big car events of the season, it starts this Friday the 21st and continues through the 30th.  The LA Auto Show seems to be the venue of choice for learning about the latest hybrid technology -- it has turned into the place to show off new green, alternative automobiles. 

With the LA Auto Show about to start, the big manufacturers are reaching out with exciting news about their alternative vehicles about to appear in the months ahead.  Today, Ford announced that it plans to beat Toyota when it comes to hybrids.