Tag Archive | "General Motors Co."

Toyota’s Lexus Trails Mercedes-Benz In U.S. Luxury Race For A Third Month

Daimler AG’s Mercedes-Benz outsold Toyota Motor Corp.’s Lexus in the U.S. in March, marking three straight months the Japanese brand has failed to come out on top after winning the annual luxury race for 11 years.

Mercedes U.S. deliveries, boosted by sales of its E-Class and C-Class sedans, rose 9.4 percent to 21,484 compared to the same month last year, the Stuttgart, Germany-based automaker said today in a statement. Lexus sales rose 2.3 percent to 20,682 from a year ago while Bayerische Motoren Werke AG’s namesake brand reported a 12 percent gain to 20,295, reported Bloomberg.

March’s results combined with January and February make Mercedes the leader for the year so far by 729 sales over BMW and 5,990 over Lexus. Mercedes in the first quarter sold 53,346 vehicles. BMW, which is based in Munich, sold 52,617 and Lexus 47,356.

The results exclude Daimler’s Sprinter vans and Smart cars and BMW’s Mini brand, which aren’t luxury vehicles.

The ongoing disruption on factory operations in Japan following last month’s earthquake mean the Lexus brand may not be able to retain its rank as the top-selling U.S. luxury brand, Mark Templin, head of U.S. Lexus sales, said today.

“That may not happen as a result of production issues in Japan,” he said in a conference call.

He declined to say whether he expected competitors such as BMW and Mercedes-Benz to capitalize on the Lexus inventory situation. “You’ll have to ask them,” Templin said.

All Lexus models, except for RX sport-utility vehicles are produced only in Japan. Templin said he’s getting daily updates on what to expect in terms of inventory, without elaborating.

While Lexus has been the annual luxury leader in the U.S. since 2000, the Toyota City, Japan-based automaker’s lead over BMW shrank to 9,216 in 2010 as the Japanese automaker felt the effects of record recalls last year.

Even before the earthquake, the brand had been hurt by a lack of new vehicles while the German automakers have been helped by aggressive leasing deals, said Jesse Toprak, an industry analyst with TrueCar.com, a website that tracks auto sales.

“I don’t know if they care as much this year,” he said. Toyota’s focus this year is “to make sure their supply-chain issues – due to what’s happening in Japan – do not cost them more than what it may have already.”

The situation might also help domestic brands, such as General Motors Co.’s Cadillac, he said.

“By all means, whether it’s Mercedes or BMW or us, is that an opportunity? Sure it is,” Kurt McNeil, Cadillac’s vice president of sales, said in a telephone interview.

Sales for GM’s Cadillac luxury division rose 4.5 percent to 12,164 last month, as CTS sales rose 36 percent aided by the new coupe version.

Mercedes, which sets its production plans 60 to 90 days in advance, has limited ability to take advantage of any Lexus shortage, Ernst Lieb, head of Mercedes’s U.S. unit, said in a telephone interview.

“We can’t flip a switch quick enough to get more production,” he said. “There might be a bit of shift in terms share in these months but it’s limited.”

Nissan Motor Co.’s Infiniti sold 11,287 vehicles, a 14 percent increase from a year earlier, said Ben Poore, head of U.S. sales for the brand.

Honda Motor Co., based in Tokyo, said in a statement that sales for its Acura brand rose 7.6 percent to 12,611 last month.

U.S. deliveries of Volkswagen AG’s Audi brand rose 14 percent to 9,818 vehicles, a record for March, the company said in an e-mail.

Porsche SE, the Stuttgart-based automaker merging with Volkswagen, sold 2,588, a 36 percent gain, the company said in a statement.

Ford Motor Co. sold 8,501 Lincoln luxury vehicles in March, a 2.2 percent decrease from a year earlier, according to a statement from the Dearborn, Michigan-based automaker.

Land Rover deliveries rose 26 percent to 3,441, while Jaguar sales slipped 11 percent to 874, Mumbai-based Tata Motors Ltd. said in an e-mailed statement.

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Ally Set To File Papers For IPO

WASHINGTON – Reuters reported Monday that Ally Financial Inc. is preparing to file the paperwork for an initial public stock offering as soon as next month – a move that could allow the Obama administration to cut its majority stake.

Reuters said Ally would file the IPO paperwork within the next two weeks and that the offering could raise $6 billion to $7 billion.

A person briefed on the matter, however, told The Detroit News on Tuesday that the filing is expected in the next month, but said the proceeds could be lower than Reuters reported.

Ally spokeswoman Gina Proia declined to comment on the timing of an IPO.
After the Detroit-based auto and mortgage lender files its prospectus, it will take a few months to win approval from the Securities and Exchange Commission before the company can hold its initial public offering.

Ally has said it hoped to go public in the second half of the year. That timetable is still probably on target.

The U.S. Treasury holds a 74 percent stake in the lender as part of its $17.2 billion bailout of the auto industry. The government rescued Ally, the major lender to General Motors Co. and Chrysler Group LLC dealers, to keep a source of credit to auto buyers and dealers.

Ally will work to reassure potential investors during its road show that it has a positive long-term relationship with former parent GM. The automaker has since acquired AmeriCredit and renamed it GM Financial as the basis of a captive finance arm. It is using the lender to boost its leasing and subprime business.

The Treasury Department earlier this month sold $2.7 billion in securities it holds in Ally Financial – its first step toward exiting its stake in the Detroit lender. Strong demand allowed the Treasury to sell all of the $2.7 billion in trust preferred securities – an instrument similar to a bond.

The “transaction represents an important step toward exiting our investment in Ally, as we continue to work to recover taxpayer dollars,” said Tim Massad, a Treasury official who oversees the auto and bank bailouts.

Last week, GM sold all of its fixed-rate perpetual preferred stock in Ally Financial Inc. for $1 billion. GM received the security as part of its sale of 51 percent of GMAC, which was renamed Ally Financial, to Cerberus Capital management LP for $7.4 billion in 2006.

After GM exited bankruptcy, it valued its Ally Financial stake at $665 million.

The sale resulted in a gain of $300 million to be recorded in the first quarter of 2011. GM’s investment will shrink to a 9.9 percent interest in Ally common stock. It’s not clear if GM would participate in an Ally Financial IPO by selling some of its common stock. Ally CEO Michael Carpenter called the sale of the government stock this month “a key step in the company’s plan to repay the U.S. taxpayer in full.”

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GM Finance Chief’s Compensation to Top $4 Million

DETROIT – General Motor Co.’s new finance chief Daniel Ammann will receive a base salary of $750,000 and stock options valued at almost $3.5 million when he steps into the new role next month.

Mr. Ammann, a former Morgan Stanley managing director who had served as the auto maker’s treasurer, will succeed current chief financial officer Chris Liddell on April 1, reported The Wall Street Journal.

Under the payment package, Mr. Ammann will receive stock totaling $2,050,000 which will be granted quarterly and delivered in annual installments over three years beginning in 2012, the auto maker said in a federal filing Thursday. He will also receive some restricted stock valued at $1,400,000 under the company’s long-term incentive plan.

The salary comes just after GM’s first profitable year in more than a decade and less than two year after the auto maker’s government funded bankruptcy. Mr. Ammann was a central player in GM’s successful initial public offering last year.

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GM Sells $1 Billion In Ally Stock

WASHINGTON – General Motors Co. is selling all of its fixed-rate perpetual preferred stock in Ally Financial Inc. for $1 billion, it said Tuesday.

The sale should close by the end of the week.

GM sold a 51 percent stake in GMAC, which was renamed Ally Financial, to Cerberus Capital management LP for $7.4 billion in 2006, reported The Detroit News.

As part of the sale, GM received preferred stock valued at $1.4 billion in 2006.
“Today, we are taking another step forward in our strategy to strengthen and simplify the company’s balance sheet,” said Chris Liddell, GM’s outgoing vice chairman and chief financial officer.

After GM exited bankruptcy, it valued its Ally Financial stake at $665 million.

The transaction will result in a gain of $300 million to be recorded in the first quarter of 2011.Following the sale, GM’s investment in Ally Financial will shrink to a 9.9 percent interest in Ally commonstock.

Ally Financial is 74 percent owned by the U.S. Treasury, which gave the Detroit-based auto and mortgage lender a $17.2 billion bailout.

The company hopes to launch an IPO later this year and may file its prospectus by the end of June.

Treasury Department representatives declined to comment Tuesday on GM’s announcement.

Ally makes loans to GM customers and finances dealer inventories.

The government first bailed out the company, then known as GMAC Inc., in late 2008 as part of the Bush administration’s aid to the auto industry. The Obama administration provided additional money in May and December 2009.

The Treasury Department has said that Ally has made good progress in restructuring its operations. But a congressional oversight panel in January criticized what it called Treasury’s “hands-off” approach toward Ally.

The Treasury Department hopes to get back more taxpayer money through a public stock offering of Ally.

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Volkswagen, GM Lead First Europe Car Sales Gain In 11 Months As Fiat Falls

Volkswagen AG and General Motors’ Opel brand led the first increase in European car sales in 11 months as new models attracted buyers in markets such as Germany, France and Poland.

Registrations in the region rose 1.4 percent in February from a year earlier to 1.01 million vehicles, the European Automobile Manufacturers’ Association said today in a statement. Sales by the VW group rose 9.1 percent, while Detroit-based GM sold 8.3 percent more cars, reported Bloomberg. Fiat SpA, Ford Motor Co. and PSA Peugeot Citroen all lost sales compared with the same month in 2010, according to the statement.

Demand in Germany and France, the two largest auto markets in the European Union, expanded 15 percent and 13 percent, respectively. In 10 central and eastern European countries that have joined the EU since 2004, sales increased 13 percent, accelerating from 7.4 percent growth in January.

“European markets began to stabilize last year, and that stabilization seems to be broadening to the region’s periphery,” said Christoph Stuermer, a Frankfurt-based analyst at IHS Automotive who estimates industry sales will resume growth this year. “It’s too early to make a definite call before March, and we’ll have to see whether the events in Japan will affect production chains in coming months” as manufacturers work to recover from the March 11 earthquake and tsunami.

Fiat, Renault SA, Peugeot and VW are among carmakers that have been wooing customers with price cuts, cheaper financing or free options as government “cash-for-clunkers” incentives expired during the economic recovery. State assistance has helped European manufacturers avoid factory closures on a scale seen in the U.S., leaving the industry with overcapacity across the region.

Car-market growth was held back by declines of 21 percent in Italy, 28 percent in Spain and 7.7 percent in the U.K., according to the Brussels-based association, or ACEA.

“We’re seeing a revival in countries that, like Germany, are benefiting from good economic data,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch-Gladbach, Germany. “You also have to consider the base effect from the car- scrapping incentives that have run out. I’d be careful to characterize this as a turnaround.”

Volkswagen’s preferred shares rose as much as 2.9 percent to 112.50 euros, the biggest intraday gain since Feb. 28, and were up 2.2 percent as of 10:15 a.m. in Frankfurt. Shares of Renault, which posted a 3.1 percent European sales increase in February, rose as much as 2.8 percent in Paris.

VW, Europe’s largest carmaker, sold 226,126 vehicles for a market share of 22 percent, including the Audi, Skoda and Seat brands. The Wolfsburg, Germany-based manufacturer, which introduced a new version of its Passat model in November, aims to overtake Toyota Motor Corp. as the global leader by 2018.

Renault, the Boulogne-Billancourt, France-based carmaker that plans online sales of its Dacia vehicles, increased European registrations last month to 113,342 cars. Its larger French peer Peugeot sold 141,894 vehicles in the region, 5 percent fewer than a year earlier. Fiat, with headquarters in Turin, Italy, saw deliveries drop 17 percent to 76,808, including Lancia and Alfa Romeo cars.

Opel, the GM brand aiming to return to profit this year excluding restructuring costs, surged 8.9 percent to 72,542 cars sold, while Chevrolet also increased registrations. Nick Reilly, head of Ruesselsheim, Germany-based Opel and its U.K. sister brand Vauxhall, said at the Geneva motor show in early March that a revamped Meriva minivan and the Astra Sports Tourer are helping win market share and growth in profitability.

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GM Offers Interest-Free Financing As Sales Pace Accelerates

General Motors Co. is offering buyers interest-free financing on some 2011 models after the company increased discounts and incentives to lead all major automakers’ U.S. sales gains last month.

The loans became available yesterday for 72 months on the Chevrolet Impala sedan, as well as for 60 months on the Malibu sedan, HHR wagon, Traverse sport-utility vehicle, and Silverado, Colorado and Avalanche pickups, according to AIS Rebates in Ann Arbor, Michigan. The 60-month deal also applies to the Buick Enclave and GMC Acadia SUVs and Sierra pickups, reported Bloomberg.

GM raised discounts 12 percent from a year earlier to an estimated $3,732 per vehicle last month, the most among major automakers and 45 percent more than the average, according to researcher Autodata Corp. The company’s spending on incentives will “moderate” this month, Don Johnson, GM’s vice president for U.S. sales, said earlier this week.

“GM’s rhetoric has been saying one thing – discipline, discipline, discipline – and then their actions have been going completely in another direction,” Jeremy Anwyl, chief executive officer of Santa Monica, California-based Edmunds.com, said in a telephone interview.

GM doesn’t comment on specific incentive programs, Tom Henderson, a spokesman, said today in a telephone interview. GM still has the highest average transaction prices among mainstream automakers according to J.D. Power & Associates and GM data, he said, without giving specifics.

GM fell 7 cents to $32.88 at 4:15 p.m. in New York Stock Exchange composite trading. The Detroit-based company’s shares have dropped 0.4 percent from their $33 initial offering price in November.

Reduced-rate financing also is being offered on other models, such as 2.9 percent, 60-month loans on the Chevy Cruze compact and 3.9 percent, 60-month loans on the Cadillac SRX, according to AIS.

The automaker’s discounts may force rival Ford Motor Co. to increase its sales incentives, Anwyl said. GM’s U.S. sales in February climbed 46 percent, giving it a 20.8 percent share of the market last month, topping Ford’s 15.7 percent and Toyota Motor Corp.’s 14.3 percent, according to in Woodcliff Lake, New Jersey-based Autodata.

Ford Chief Executive Officer Alan Mulally has emphasized profitability over market share, with Ford boosting prices in February by $700 to $800 a vehicle from January, George Pipas, the automaker’s sales analyst, told reporters on Feb. 28.

“Up until three months ago, Ford was the one everybody was talking about,” Anwyl said. “The question is, ‘How long are they going to want to be the disciplined car company and allow GM to pick up their share?’”

Ford reduced average incentive spending 9.7 percent to $2,542 last month. The Dearborn, Michigan-based company’s 10 percent increase in February sales trailed GM and Toyota, which had a 42 percent gain after it raised spending 11 percent to $2,003. Chrysler Group LLC’s average discounts fell 14 percent to $3,052, while sales climbed 13 percent.

Chrysler, the U.S. automaker operated by Fiat SpA, said its March incentives include offering financing as low as zero percent on some vehicles, including the Ram 1500, according to its website.

GM needs steeper incentives to clear out older models such as the Impala and Malibu, said Maryann Keller, principal of a self-titled consulting firm in Stamford, Connecticut. The automaker also can afford discounted lease deals because vehicles’ resale values are now at high levels, she said.

“You use incentives on stuff that’s old,” Keller said in an interview yesterday. “Leasing can be done today very affordably because interest rates are low and residual values on the cars are high.”

GM’s sales gains were “far stronger than the magnitude of the incentive spend,” Itay Michaeli, an analyst at Citigroup Inc. in New York, wrote today in a research note.

“This may remain a subject of debate until GM demonstrates solid share on lower incentives,” Michaeli said. “The industry did not appear to plunge into a price war in February as some feared.”

The discounts by GM and Toyota City, Japan-based Toyota may be artificially inflating the U.S. auto market, said Ernst Lieb, chief executive officer of Daimler AG’s Mercedes-Benz USA.

Light-vehicle sales in February ran at a seasonally adjusted 13.4 million annual rate, according to Autodata. The pace topped the 12.5 million average estimate of 10 analysts surveyed by Bloomberg and exceeded 13 million for the first time since the U.S. government’s “cash for clunkers” program in August 2009.

“I wonder if you’d see such a strong market, month after month” without the incentives from GM and Toyota, Lieb said in an interview yesterday. “Things are still extremely unpredictable. Look at fuel prices and the uncertainty and unrest in the Middle East.”

Auto incentive spending throughout the U.S. industry in February fell 4.6 percent to $2,578 per vehicle, according to Autodata. GM plans to reduce incentives to get back in line with the industry average, Johnson said yesterday on a conference call with reporters and analysts.

The reluctance on the part of the entire industry to raise incentives has probably constrained the market prior to last month, Edmunds’ Anwyl said. Incentives helped propel the U.S. to its all-time fastest auto sales pace in 2001 when GM introduced its no-interest campaign dubbed “Keep America Rolling,” after the September 11 terrorist attacks.

“If GM plans to make good on its promise to keep incentives in line with the industry average over the course of the year, it will have to post below-average incentives at some point,” Chris Ceraso, a New York-based analyst with Credit Suisse Group AG, wrote in a research report today. “This may get difficult, as its key competitors are showing a willingness to increase incentive levels in order to stay competitive.”

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