Tag Archive | "GM"

Detroit Three, UAW Will Square Off Over Wages, U.S. Jobs


The Big Three U.S. automakers and the United Auto Workers union will kick off bargaining Monday for new contracts that would set how much more robust, post-recession profits the industry shares with workers, and determine union costs to win more U.S. jobs, reports Reuters.

UAW leaders said they will insist on raises for 139,000 blue-collar workers at U.S. plants run by Ford Motor Co, General Motors Co. and Fiat Chrysler Automobiles after rounds of bargaining in 2007 and 2011 that led to substantial concessions. Union leaders and chief executives of the Detroit Three are scheduled to stage public handshakes next week, starting Monday. Their current contracts expire Sept. 14.

Union President Dennis Williams has said he wants to narrow the gap between veteran workers, who make about $28 an hour, and employees hired since 2011 with a “second tier” hourly wage of $16 to $19.

Labor accounts for a declining share of a vehicle’s cost, said Sean McAlinden, chief economist at the Center for Automotive Research, noting that the three automakers’ costs for UAW members fell to 5.7 percent last year from 11.5 percent in 2007.

But executives at the Detroit Three said their ability to add more UAW jobs depends on offsetting increases in wages or benefits with gains in productivity. Health care costs promise to be a central issue, as the automakers face paying a so-called “Cadillac tax” of 40 percent on rich UAW medical plans starting in 2018.

John Fleming, head of Ford manufacturing, said the company expects to boost productivity by 6 to 7 percent in all its factories. “Every dollar that we don’t take out is a dollar that your competitor can spend on making their vehicles more competitive,” he said.

The automakers’ leverage is strengthened by the union’s failure to organize auto plants in the southern United States operated by Asian and European manufacturers, and by the growing capability of Mexican auto workers and suppliers to build cars for the U.S. market.

Ford jolted the union on Thursday by announcing plans to move production of its small Focus and C-max hybrid cars out of a factory in suburban Detroit by 2018. The company said the Wayne, Michigan, factory’s future would be a subject of bargaining in this round of talks.

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Ferrari IPO Filing to Come in Days, Fiat Chrysler CEO Says


Ferrari SpA, the supercar maker being spun off by Fiat Chrysler Automobiles NV, is close to filing for an initial public offering, Fiat Chrysler Chief Executive Officer Sergio Marchionne said, reports Bloomberg.

“We are days away from filing the prospectus,” he told reporters Friday after a panel discussion at the Toronto Global Forum.

Debt-laden Fiat Chrysler is spinning off Ferrari to help fund a 48 billion-euro ($53 billion) investment program that focuses on expanding the Jeep, Alfa Romeo and Maserati brands globally. Ferrari picked UBS Group AG to help manage its IPO in New York later this year, people with knowledge of the matter said this week.

JPMorgan Chase & Co. and Goldman Sachs Group Inc. are also due to play a role in selling 10 percent of Ferrari’s shares to investors, said the people, who asked not to be named before an official announcement.

Marchionne declined to say whether UBS would manage the IPO. Fiat Chrysler may consider a secondary listing for Ferrari, most likely in Milan, he said.

The CEO also said Friday that Fiat Chrysler hasn’t looked at making a hostile bid for General Motors Co. He has been pushing for consolidation, contending that the industry’s profitability even in peak years doesn’t generate enough returns to support investment costs. Potential partners, including GM and Ford Motor Co., have said they’re not interested.

Combining with GM yielded the most theoretical cost savings, Marchionne said.

“There are other, less optimal combinations,” he said.

Shares Rise

Fiat Chrysler rose 3.8 percent to $14.47 at the close in New York, as the broader market also climbed.

Marchionne declined to comment Friday on a valuation for Ferrari. He said earlier this month that he was expecting the unit to be valued “at least” at 10 billion euros, which is equivalent to about 60 percent of the parent company’s market value. That was higher than the 8.7 billion-euro average of four analysts surveyed by Bloomberg News.

Boosting profit is crucial if Marchionne, 63, is to generate sufficient cash to develop the next generation of vehicles and technologies. His only other option is to share the costs by merging with another automaker, which seems unlikely in the short term despite his efforts to cut a deal.

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NHTSA Admits Faults in GM Investigation


The National Highway Traffic Safety Administration admitted Friday it made a series of errors in its handling of General Motors Co.’s delayed recall of 2.6 million cars with faulty ignition switches linked to 109 deaths and more than 200 injuries, reports The Detroit News. The federal agency pledged to make significant reforms.

NHTSA is bracing for what are expected to be scathing reports into the GM recall from the Transportation Department’s Office of Inspector General and Government Accountability Office. The safety agency released its internal findings in part to show it already was making significant reforms. NHTSA said it is making changes to spot defect problems earlier, and announced that a three-member team would advise the agency on its restructuring.

In two internal reports released Friday, NHTSA said it failed to hold the Detroit automaker accountable; didn’t understand alternate theories how the company’s air bags worked; and didn’t follow up on trends from its own data and investigation.

It acknowledged it missed numerous chances over nearly a decade to discover the deadly defect in 2.6 million Chevrolet Cobalts, Saturn Ions and other small cars. In those cars, which since have been recalled, the key can inadvertently turn off the engine and disable power steering and air bags.

Still, the report places most of the blame on GM for failing to disclose problems to NHTSA.

In May 2014, NHTSA fined GM a record-setting $35 million for delaying the recall and GM had to agree to up to three years of intensive monitoring. GM CEO Mary Barra fired 15 and disciplined five after an internal GM report showed a “pattern of incompetence and neglect.”

GM said in a statement Friday, “We support the changes to NHTSA’s organization announced today and we will continue to work collaboratively with NHTSA toward our shared goal of improving automobile safety in all respects.

NHTSA Administrator Mark Rosekind said the agency was not disciplining or firing anyone as a result of Friday’s report. It was the agency’s most forthcoming admission that it shoulders some of the blame in failing to discover the defect. In testimony before Congress last year, NHTSA largely rejected responsibility.

Rosekind didn’t want to focus on blame, seeking instead to emphasize how to improve the system. “There is no single individual who can be blamed for the things that happened previously,” he said, adding there was no evidence that NHTSA employees intentionally failed to do their jobs.

Part of the problem is funding, Rosekind said. The White House proposed tripling NHTSA’s auto defects budget and doubling the number of staff assigned to it. But Congress has shown little interest in doing so.

‘Crucial first step’

Sens. Ed Markey, D-Mass., and Richard Blumenthal, D-Conn., said they were happy NHTSA is finally acknowledging its errors. “Unfortunately, for more than a decade, NHTSA failed to address the information and evidence it had in its own database linking defective ignition switch to fatal accidents,” they said.

The pair said NHTSA must “put in place permanent measures necessary to prevent another tragedy like this from ever happening again.”

Clarence Ditlow, head of the Center for Auto Safety, praised the self-assessment and said Congress must give NHTSA more funding.

He called it “a crucial first step toward restoring the integrity of the agency’s enforcement process and the ability to hold the auto industry accountable for defects that kill and injure … The assessment also sets into motion new internal processes to correct deficiencies in agency procedures that missed defects like GM ignition switch, Jeep fuel tank and Takata air-bag inflators.”

The Justice Department is nearing a decision on whether to pursue criminal charges against GM and impose a fine that could be in excess of $1.2 billion as part of a settlement that is likely to come by summer’s end. The Securities and Exchange Commission and 50 state attorneys general also are investigating.

The announcement comes ahead of a forthcoming report from the Transportation Department’s Office of Inspector General into NHTSA’s handling of GM’s ignition issues. That report is expected to harshly criticize the agency’s handling of the issues.

The Government Accountability Office also is investigating NHTSA’s handling of the recalls as part of a broader assessment of the agency’s performance sought by Congress.

In September, the House Energy and Commerce Committee sharply criticized NHTSA’s handling of the GM complaints between 2007 and 2014, saying it had made “inexcusable errors.” A committee report said that after NHTSA declined to open an investigation into air-bag failures in Cobalts and other cars in 2007, the agency was deeply reluctant to revisit that conclusion even after new crashes and reports came to the agency’s attention.

One of the NHTSA reports found the agency “did not hold GM accountable for providing inadequate information.” That was despite the fact that “GM’s responses often contained very little information and included invocations of legal privilege.” It said the agency did not “push back and request more information.”

Team to address changes

U.S. Transportation Secretary Anthony Foxx said Friday he is naming a three-person team that will spend the next year advising NHTSA on implementing changes outlined in the reports.

The team includes Joseph Kolly, director of the Office of Research and Engineering at the National Transportation Safety Board; J. Victor Lebacqz, former associate administrator for aeronautics research at NASA; and James P. Bagian, a former NASA astronaut who directs the Center for Healthcare Engineering and Patient Safety at the University of Michigan, where he is a professor at the medical and engineering schools.

NHTSA has long been criticized for being too cozy with automakers. But since Rosekind was confirmed as NHTSA’s new administrator in December, the agency has taken a much more aggressive approach to auto safety issues. At the same time, some senior officials have announced plans to retire.

NHTSA pressured Takata Corp. last month to declare 33.8 million vehicles with its air bags defective, announced it would hold an unprecedented July 2 hearing into Fiat Chrysler’s safety issues and prodded Ford Motor Co. to expand a door latch recall.

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GM Recalls Heavy Duty Trucks with Takata Air Bags


General Motors Co is recalling about 375,000 heavy duty pickup trucks equipped with passenger-side air bag inflators made by Takata Corp, the U.S. automaker said, reported Reuters.

The trucks are 2007 and 2008 model Chevrolet Silverados and GM Sierras.

Subaru will expand its recall of 2004 and 2005 model Impreza compact cars with Takata air bags to about 80,000 from 20,000, the unit of Japan-based Fuji Heavy Industries also said on Friday.

Both companies said they have received no reports of inadvertent deployments of air bags in the vehicles.

The latest actions follow an agreement last week between Takata and U.S. safety regulators to expand the recalls of vehicles with potentially faulty Takata air bag inflators.

The inflators have exploded with too much force, sending shrapnel into the vehicles. Six people have been killed, all of them in Honda Motor Co cars.

Twelve incorrect deployments of Takata air bags have occurred in Toyota and Honda vehicles in Japan since 2011, Nikkei reported on Friday, citing a Japanese transport ministry official. No injuries were reported in these incidents.

Takata air bags have been the subject of U.S. Congressional hearings held late last year. Another hearing, before the Subcommittee on Commerce, Manufacturing and Trade, will be held next Tuesday.

On Thursday, five automakers expanded recalls by several million vehicles with Takata air bags.

No root cause for the defect has been found.

Takata managers want the automakers to share some of the blame for the malfunctioning air bags, sources told Reuters this week, as well as some of the financial burden.

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Spending on New Cars Hits All-Time High, Even as Loans Stretch to Record Lengths


While May might not have brought the big uptick in sales we’ve seen in recent months, preliminary data suggest that automakers took in record revenues, with the average transaction price of new cars, trucks and crossovers sold last month climbing by at least 4%, reports The Detroit Bureau. 

All told, U.S. buyers spent a record $52 billion for their new vehicles in May, in part, due to a sharp, year-over-year decline in incentives, according to several firms that track monthly sales data. A separate study suggested that motorists are covering those higher costs by stretching their loans out longer than the industry has ever seen, an average 67 months.

“New vehicle sector and segment preference indicates consumers are confident about the economy and their finances,” said TrueCar President John Krafcik. “Not only are these shifts to premium brands and utilities telling from an economic indicator standpoint, they signal sizable revenue gains automakers should reap this year.”

The data tracking firm estimated that the typical vehicle had an average transaction price, or ATP, of $32,452, up 4% rom May 2014. Lower incentives played a role, but manufacturers have also seen buyers show more confidence by loading up on options and by trading up to higher-level vehicles. TrueCar estimated sales of premium brands jumped 10.6% during the first four months of 2015 compared to just 4.8% for mainstream brands.

BMW and its Mini subsidiary, saw prices jump in May by 6.5%, according to a separate analysis by Kelley Blue Book. Mazda saw a similar increase, while Ford and General Motors prices climbed a more modest 4.3% and 4.2% respectively. Toyota’s average price rose just 2.3%, even though it trimmed incentives by more than 10%, year-over-year.

With only a handful of exceptions, notably including General Motors, Hyundai and Kia, most makers trimmed rebates and givebacks as the U.S. auto market continued to gain ground. And analysts noted that the modest overall sales numbers for May actually misrepresent the market’s momentum, as the peculiarities of the industry’s reporting system counted fewer so-called “sales days” last month than in May 2014.

The surge in spending also reflects a year-long shift from fuel-efficient small cars and alternative-power vehicles to larger passenger cars, pickups and SUVs.

“With the national average price of gasoline down nearly a dollar per gallon on average from one year ago, truck and SUV demand remains strong, elevating average transaction prices,” Karl Brauer, senior analyst for Kelley Blue Book, said in a statement.

The steady climb in new car prices might come as a surprise to those worried about relatively stagnant middle-class earnings and the rising wealth gap. In reality, most new car buyers today register on the upper end of the middle-class spectrum. Even for compact cars, industry research often shows household income levels approaching six figures.

And buyers are simply stretching out their purchases to hold down monthly payments – while also encouraged by continuing low interest rates. Gone are the days of three and even four-year loans. Borrowers extended their loans terms during the previous quarter to 67 months on average, longer than ever for new cars, according to Experian Automotive.

“While longer term loans are growing, they do not necessarily represent an ominous sign for the market,” said Melinda Zabritski, Experian’s senior director of automotive finance.

On the plus side, the trend allows consumers to buy more vehicle without busting the household budget. On the downside, however, it means they likely have to keep those vehicles longer in order to avoid being upside-down on loans when trading in, cautioned Zabritski. That could foretell slower future growth of the automotive market.

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Manheim Reschedules Make-A-Wish Car Show


CLARKSVILLE, Ind. — Manheim Louisville has rescheduled its Cruisin’ for Wishes car show and fundraiser for June 13, after the event was rained out on May 16.

The Criusin’ for Wishes car show will be held from 10 a.m. to 3 p.m. at Manheim Louisville. Registration for the car show begins at 9 a.m. and the event is free and open to the public. Proceeds from the show will benefit the Ohio, Kentucky and Indiana chapter of the Make-A-Wish foundation.

More than 100 vehicles are expected for the show with prizes going to the Best in Show winner as well as second and third places. There will also be awards for individual brands including Buick, Dodge, Ford, General Motors, Oldsmobile, Plymouth and Pontiac.  Trophies will be given out at 3 p.m.

The fee to showcase a classic car is $20. To reserve a spot in the show, contact Manheim Louisville’s David Saylor at 812-258-4318.

“Please join us and show off your beautiful car, truck or motorcycle and help children at the same time,” said David Kaflik, general manager of Manheim Louisville. “This fundraiser can really make the difference in the lives of many children and their families.”

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