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Unsold foreign cars piling up at U.S. ports

Joseph Lazzaro — Wed, 19 Nov 2008 10:30:00 EST

Filed under: Industry, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Recession

It's rapidly becoming the world's largest parking lot.

Is it the Cross Bronx Expressway at 6 p.m.? No, it's the Long Beach, California port, which along with the Los Angeles port is rapidly becoming a defacto storage lot, The New York Times reported, as thousands of unwanted, new foreign cars pile up, their future unknown.

The reason? Foreign new car sales have plunged as consumers cut back spending amid the caution-inducing U.S. recession and unemployment levels rise, which historically has led to a decline in new car sales. New car dealers order cars months in advance but have the authority to reject delivery if demand declines.

Further, if you thought only U.S. automakers General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler had lots and storage fields of unsold new cars, you're mistaken, so says economist Peter Dawson.

"This recession is an equal-opportunity pain inflicter for auto manufacturers, and it's hitting foreign car manufacturers as well," Dawson said. "Toyota (NYSE: TM), Nissan, even Mercedes-Benz are seeing their inventories build, despite promotions and sales incentives."

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An oil shock is hardly the global economy's best friend

Joseph Lazzaro — Thu, 21 Aug 2008 12:56:00 EST

Filed under: International Markets, Oil, Recession

It would appear to be axiomatic to say that there are few benefits from an oil price over $100 per barrel. Nevertheless, during oil's latest climb to the stratosphere, some have argued that a high oil price is 'net-positive for the global economy,' or 'a long-term good thing.'

Economist Glen Langan has a word for insta-analysis like the above. "Misguided," he calls them.

Not that Langan is an ardent advocate of oil use; hardly. Would that the developed and developing world could shift today to an alternate, renewable, and more environmentally-friendly energy form, he says. But the world can't, and as is some times the case in social science circles, "the normative influences the empirical," he says, and leads to curious conclusions like an 'oil shock being net-positive for the global economy.'

For the record: an oil shock is never net-positive for the global economy, Langan argues.

There are some benefits, to be sure, such as increased conservation, increased research on alternate/renewable energy forms, a transfer of some wealth to some developing nations and, of course, astounding increases in wealth in those connected to oil and oil services, but the overall effect is net-negative. Oil traded Thursday up $5.46 to $121.42 per barrel.

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Most likely, you'll determine the fuel for the car of the future

Joseph Lazzaro — Wed, 20 Aug 2008 15:08:00 EST

Filed under: Consumer Experience, Commodities, Oil

Despite the onset of the latest high energy price era, it goes without saying that the car will remain the main mode of transportation in the United States as the 21st century progresses.

First mass-produced on a national scale by Henry Ford, subsidized by the construction and expansion of the public interstate highway system after World War II, and immortalized by such films as George Lucas's American Graffiti (1973), the car and car culture is intrinsic to modern American life.

The car fuel alternatives

Cheap oil is not intrinsic, however, and that's a major reason why the nation is exploring car / vehicle fuel alternatives. Many options exist, each with strengths / weaknesses, and currently there's no clear winner.

Hence, in a very real sense, your say in the matter will play an important role in determining what fuel most Americans will use for car transportation in the decades ahead.

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A good news, bad news saga regarding auto companies and fuel efficiency

Joseph Lazzaro — Mon, 18 Aug 2008 13:25:00 EST

Filed under: Consumer Experience, Competitive Strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM)

There's an upside and a downside regarding major auto companies and the quest to develop vehicles with increased fuel-efficiency.

The upside: Auto makers are positioning themselves to carve out niches in fuel-efficient technology and design, The Wall Street Journal reported Monday (subscription required).

The downside: Auto makers appear to be exhibiting a 'herd mentality' on the current propulsion technology -- hybrid engine cars with both a modest electric power source and a mainstay internal combustion engine.

An electric hybrid focus

Following up on its successful electric-gasoline Prius hybrid, Toyota (NYSE: TM) announced it will make hybrid engine systems available on all models by 2020, The Journal reported. Meanwhile, Honda said it would import new hybrid technology to the U.S. to compete with Toyota and Ford (NYSE: F) plans to double its hybrid lineup next year, and Chevrolet's (NYSE: GM) Volt hybrid that will go on sale in 2010.

Economist David H. Wang said investors and consumers should not be overly optimistic or pessimistic regarding the sector's concentration on electric-fuel hybrids.

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Amid oil's pull-back, U.S. gasoline prices fall ... but slowly

Joseph Lazzaro — Mon, 11 Aug 2008 14:56:00 EST

Filed under: Forecasts, Good news, Consumer Experience, Commodities, Oil

For U.S. consumers, there's good news and bad news on the gasoline price front.

First the good news: U.S. retail gasoline prices have fallen every day for about a month, CNNMoney.com reported Monday, citing motorist group AAA data.

Now the bad news: Prices are not falling nearly as fast - - or as proportionately - - as they rose, given the same dollar-move in a barrel of oil.

The AAA said the national, average price for a gallon of regular unleaded has fallen 30 cents to $3.81 from a record high of $4.11 set on July 16, 2008, CNNMoney.com reported Monday.

Gasoline prices: Quick to rise, slow to fall

However, during that time period oil has fallen about $25 to roughly $115 per barrel. Given the roughly 2-cent to 2.5-cent move for every $1 move in the price of oil, gasoline prices should have fallen 50-62 cents per gallon. Why haven't they?

Economist Peter Dawson told BloggingStocks Monday the answer is complex and contains many variables, but the strongest factors today appear to be gasoline station cash flow, and profit maximization.

As soon the price of oil increases, some gasoline stations will increase the price of gasoline, in anticipation of a price increase the oil company will institute for the next gasoline delivery, he said. "Failure to do so would create a monthly cash flow deficit for the gas station," Dawson said. "It's sort of like an additional monthly expense."

Continue reading Amid oil's pull-back, U.S. gasoline prices fall ... but slowly

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Transportation issues will be critical to the health of 21st century U.S. economy

Joseph Lazzaro — Thu, 07 Aug 2008 16:21:00 EST

Filed under: Forecasts, Other Issues, Politics, Commodities, Oil

Given the smorgasbord of economic demands and concerns -- domestic and foreign -- likely to face the new U.S. president, investors (and taxpayers) can justifiably ask 'Where's all the money going to come from to pay for these programs?'

Legitimate question, but one, for now, we'll let the political process sort out. (Current Gallup Daily Tracking Poll as of August 6, 2008, for the U.S. presidential election: Obama, 46%, McCain, 44%.)

Electing U.S. Sen. Barack Obama, D-Illinois, or U.S. Sen. John McCain, R-Arizona, will produce different programs and revenue priorities, due to the parties' different sources of power, but the argument forwarded here is that -- regardless of who becomes the new president -- the office holder should address transportation in a comprehensive way. Here are the major concern areas:

Mass transit: We're early into the $4 gas era, of course, but initial U.S. Department of Transportation data indicates Americans are driving less and using mass transit more. The trouble is, many mass transit systems (rail, commuter rail, subway, bus) need to be expanded/upgraded to handle the increased ridership. Bigger, better mass transit systems will save the United States hundreds of billions of dollars in oil costs, not to mention the environmental benefits.

Continue reading Transportation issues will be critical to the health of 21st century U.S. economy

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Pickens Plan: One piece in U.S. transportation energy puzzle

Joseph Lazzaro — Thu, 24 Jul 2008 15:30:00 EST

Filed under: Consumer Experience, Ford Motor (F), General Motors (GM), Commodities, Oil

Billionaire oilman T. Boone Pickens has launched a new campaign to substitute at least a portion of the U.S. imported oil with domestic natural gas.

Pickens would like renewable energy sources, wind power chief among them, to run electric power generation plants currently run by natural gas/coal, and use that natural gas to fuel natural gas vehicles.

Economist Glen Langan told BloggingStocks Thursday the PickensPlan is commendable for a number of reasons (it would lower the trade deficit, create domestic jobs, and decrease greenhouse gas emissions), but investors and readers should not view it as a panacea for the nation's transportation energy bill. "It could be a part of the solution, but it won't address the entire imported oil problem," Langan said.

Another oil saver: better engines

What's another key to reducing both imported oil and U.S.-produced oil consumption? Something that the U.S. auto sector has under-emphasized for more than a decade: technology-driven increases in car/vehicle efficiency, Langan said.

Langan said vehicle weight reduction, transmission/drive train improvements, enhanced aerodynamics, and the biggest factor -- increased engine efficiency -- "have the potential to reduce oil imports by almost as much as the Pickens Plan, and the changes won't take 10 years to see the results."

Further, many of the mpg-enchancing technologies already exist, Langan notes; he suggested an additional federal tax credit for automakers to help them incorporate the changes sooner.

"The fleet [all vehicles driven in the U.S.] should average 25-27 miles per gallon right now. Currently we're at about 20 miles per gallon. With appropriate federal tax credits we could be at 30-32 miles per gallon in five or seven years," Langan said.

Continue reading Pickens Plan: One piece in U.S. transportation energy puzzle

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U.S. automakers discover that size matters

Joseph Lazzaro — Fri, 20 Jun 2008 11:31:00 EST

Filed under: Industry, Competitive Strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Oil

With the U.S. economy in slow-growth / no-growth mode, domestic demand for autos has been low, as predicted. However, almost on cue, demand for smaller vehicles has been robust.

That cue is $4 gasoline, The New York Times reported Friday. Or, as one Harrison, N.Y. resident called her monthly gasoline bill, "My car payment in addition to my car payment."

A 60-70% increase in gasoline prices in the last two years has led to a large increase in demand for small cars and hybrids, The Times reported, with limited supply of some of the most-preferred models creating further frustration for automakers and purchasers alike.

The more things change...

Economist Glen Langan said a great deal has changed during the time between the last oil shock in 1979-80 and today's oil shock: long hair for men is out, as are bell-bottom pants, and album-oriented rock (mainly because there are no more record albums). One thing hasn't changed: U.S. automakers, once again, "were dramatically under-prepared for the high gas price era."

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Kerkorian increases Ford stake to 6.5%, buys another 20 million shares

Joseph Lazzaro — Thu, 19 Jun 2008 11:59:00 EST

Filed under: Ford Motor (F)

What does Kirk Kerkorian know that others on Wall Street don't know?

That was one analyst's meditation after the billionaire investor's Tracinda Corp. indicated in an SEC filing that it has increased its stake in Ford(NYSE:F) by about 20 million shares to a 6.49% stake from 5.5%, The Associated Press reported Thursday. Tracinda now owns 140.8 million shares of Ford.

Ford's shares were virtually unchanged on the news, gaining 5 cents to $6.27 in Thursday morning trading.

Kerkorian now owns 140.8 million shares in the U.S. automaker, and stock analyst C. Leonard Bauer said Kerkorian is either venturing forth where no seasoned investor would go, or is on to something.

A high-risk investment

"On its face, this is a high-risk stake, a calculation that could hurt dearly. There's not a lot running in Ford's favor right now, from an operational standpoint," Bauer said. "Ford wants us to believe their transformation is progressing reasonably well, but it isn't. I've seen little in Ford's fleet or prototypes that suggest a whole new generation of young adults will suddenly run out and buy Fords, and they are still behind-the-curve on efficiency, styling, innovation, and must-have vehicles." Bauer added that he does not have a rating on nor own shares in Ford.

Continue reading Kerkorian increases Ford stake to 6.5%, buys another 20 million shares

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Up ahead: A hybrid in your near future, not a pure electric car

Joseph Lazzaro — Wed, 18 Jun 2008 16:45:00 EST

Filed under: Consumer Experience, Competitive Strategy, Ford Motor (F), General Motors (GM), Oil

With the oil and refining sectors providing evidence that $4 per gallon gasoline may represent a floor, auto makers are beefing-up efforts to improve and introduce electric cars, MarketWatch reported Wednesday.

While the new wave of hybrids and electric cars will emphasize plug-in technology (the ability to recharge the car's battery from a standard 110-volt outlet), industry executives and think tank analysts underscored that a series of government incentives and programs will be needed to enable large-scale production of plug-in hybrids and electric cars. Selected automakers have set the 2010 model year as a target for rolling out the new cars en masse.

Economist Glen Langan told BloggingStocks Wednesday the automakers' roll-out timetable may be a tad optimistic.

"What we're seeing now from General Motors (NYSE: GM), Ford (NYSE: F) and others is that classic, delayed, rush-to-the-future response so typical of a sector that's behind," Langan said. "U.S. auto makers and others should have developed at least a hybrid that could compete with gas engines 10 years ago. But they chose not to and battery technology is behind as a result. I don't think we will see a cost-effective plug-in electric in 2010, and we'll be fortunate if a cost-effective, plug-in hybrid will be in mass production by 2012 or 2013."

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U.S. Energy Department projects $4 gas for as far as the eye can see

Joseph Lazzaro — Thu, 12 Jun 2008 16:04:00 EST

Filed under: Bad News, Consumer Experience, Commodities, Oil

This energy fact will not be a revelation to American motorists:

The U.S. Energy Department now forecasts that gasoline prices will remain high -- around $4 per gallon -- this year and next, The Associated Press reported Wednesday.

The Energy Department's Guy Caruso, head of the department's Energy Information Administration wing, announced the revised forecast in testimony before a U.S. House of Representatives committee, The AP reported.

The EIA now expects the average U.S. gasoline price, currently over $4 per gallon, to peak at $4.15 per gallon in August. Regular-grade gasoline, which typically is 87 octane at U.S. gas stations, is expected to average $3.78 per gallon in 2008, or 97 cents above the 2007 average price.

Nevertheless, many high-cost U.S. cities -- including New York, Los Angeles, San Francisco and Boston -- are already experiencing gasoline prices in the $4.20-$4.60 per gallon range, with selected areas approaching $5 per gallon.

Moreover, the steady rise in gasoline prices is occurring despite the fact that weekly U.S. gasoline consumption has declined, on a year-over-year basis, for more than four months.

Continue reading U.S. Energy Department projects $4 gas for as far as the eye can see

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Kerkorian finds many willing sellers of Ford's shares

Joseph Lazzaro — Tue, 10 Jun 2008 16:15:00 EST

Filed under: Industry, Ford Motor (F)

Shareholders tendered billionaire investor Kirk Kirkorian 1.02 billion shares -- almost half of Ford's shares outstanding -- on growing concern that CEO Alan Mulally's turnaround plan won't work, Bloomberg News reported Tuesday.

Kerkorian is seeking and will buy an additional 20 million shares at $8.50 per share to add to his existing 100 million shares, held by his Tracinda Corp., The Associated Press reported Tuesday. Prior to the 20-million share tender, Kerkorian's average share cost was $6.91.

Shares of Ford (NYSE: F) fell 19 cents to $6.17 in Tuesday afternoon trading.

"I guess one can call Kerkorian's latest tender sufficiently oversubscribed," said C. Leonard Bauer, independent stock analyst. "Seriously, the flood of shareholders willing to sell is investors' statement regarding Ford's remake. It's a sign their's deep doubt regarding the near-term probability of a return on investment. A price of $8.50 looks like a pretty good price for Ford's shares right now." Bauer added that he does not have a rating on nor own shares in Ford.

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Automakers' Battle: TM vs. GM

Eliza Popescu — Wed, 23 Apr 2008 16:52:00 EST

Filed under: International Markets, Forecasts, Consumer Experience, Competitive Strategy, General Motors (GM), Toyota Motor Corp. (TM)

Despite a challenging economic environment, Japanese automaker Toyota Motor Corp. (NYSE: TM) has been continuing its strong competition with rival General Motors Corp. (NYSE: GM) for the title of the world's largest automaker. As results show, the good times are rolling for Toyota which earlier today posted an increase of 2.7% for its global sales, for a total of 2.41 million vehicles during the first-quarter.

On the other side of the coin, GM announced a decline of almost 1% in its total sales. Last year, General Motors held the crown in global sales, but on the other hand Toyota was the leader in global vehicle production. Both companies benefited from strong demand outside the United States.

General Motors has said that strong overseas sales weren't enough to overcome a weak North American market. The company saw a 10% drop in first-quarter sales in its home North American market as high fuel prices and worries about housing and the credit crunch pressured consumers. Regardless of the weak results, GM restated its desire to "win, and we'd like to be No. 1 in sales at the end of the year."

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A few investor, consumer tactics for the $4 gasoline era

Joseph Lazzaro — Fri, 14 Mar 2008 17:13:00 EST

Filed under: Market Matters, Oil

With the national average of unleaded regular gasoline above $3.15 and oil's recent price surge not fully felt by refiners yet, there's a good chance gasoline will hit $4 per gallon this summer in the United States, particularly if driving patterns mirror previous summers.

Moreover, gasoline is already above $4 in certain high-cost zones in California and in Hawaii, the Associated Press reported Friday.

What's a good way to cope with the above? Turn it your advantage, to the extent possible, at both ends. Accordingly, here are a few tactics for investors and consumers in the $4 gasoline era.

Continue reading A few investor, consumer tactics for the $4 gasoline era

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Toyota (TM) keeps strong competition with GM

Eliza Popescu — Thu, 10 Jan 2008 13:11:00 EST

Filed under: International Markets, Forecasts, Competitive Strategy, General Motors (GM), Marketing and Advertising, Toyota Motor Corp. (TM)

This morning, Toyota Motor Corp. (NYSE: TM) posted a rise of 6% for its global group sales to a total of 9.37 million vehicles last year. The company's results put increased pressure on General Motors Corp. (NYSE: GM) for the title of the world's largest automaker.

General Motor hasn't announced yet its annual sales results, but analysts expect the company show 2007 sales of 9.3 million vehicles. As we can see, the sales numbers suggest a tight race in the company's fight for the biggest automaker in global sales.

The recent surge in oil prices helped Toyota to increase sales of its more fuel efficient cars, such as the Camry sedan and the Prius gas-electric hybrid models. General Motors has been able to keep the top industry spot for the past 76 years.

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Democratic-led Congress seen hiking mpg standards

Joseph Lazzaro — Tue, 20 Nov 2007 16:50:00 EST

Filed under: Consumer Experience, Ford Motor (F), General Motors (GM), Politics, Oil

With the U.S. Federal Appeals Court of San Francisco's ruling that threw out proposed fuel economy standards, look for a renewed effort by the current U.S. Congress to pass new, tougher standards, possibly by year's end, a source familiar with various lobbying groups told Bloggingstocks.

Based in Washington and familiar with Democratic Party and energy-issue constituencies, the source told Bloggingstocks that some legislation, albeit minor, was now likely.

"Don't expect miracles, but the public sentiment and Congressional support appears to be there for a modest increase in CAFE [Corporate Average Fuel Economy] standard," he said, speaking on condition that he not be identified by name. He added that to-date the Bush Administration has resisted raising the CAFE; if the administration does so again, it's unclear whether Congress would have the votes to override the veto.

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General Motors (GM) launches joint venture in ex-Soviet territory

Brian White — Wed, 10 Oct 2007 16:30:00 EST

Filed under: Press Releases, General Motors (GM), Russia, Eastern Europe

General Motors Corp. (NYSE: GM) will be joining up with a former Soviet territory to produce and sell Chevy-branded vehicles. GM and Uzavtosanoat (located in Uzbekistan) have signed a partnership agreement for a joint venture that will target consumers in that middle-Asian country. Initially, the joint venture is projected to produce about 250,000 cars annually.

GM continues to invest in emerging markets worldwide to offset sale problems here in its domestic market, and this should be a good move for the auto giant. The ex-Soviet republic had a falling out with the U.S. over a 2005 citizen uprising (and human rights violations en masse) in Andijan, but has warmed back to American business with this rather large partnership.

The GM/Uzbekistan joint partnership will take advantage of a plant that exists in the town of Asaka where Uzavtosanoat already has a factory that recently operated as part of a joint venture with the failed South Korean automaker Daewoo. Ironically, that plant already assembles cars from shipped-in assembly kits supplied by -- GM . well, GM Daewoo Auto & Technology Company, anyway. GM Daewoo is the South Korean unit of the auto giant which happened as a result of GM's buying Daewoo's assets over five years ago.

General Motors (GM) launches joint venture in ex-Soviet territory originally appeared on BloggingStocks on Wed, 10 Oct 2007 16:30:00 EST. Please see our terms for use of feeds.

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Natural Gas Vehicles: Cleaner, cheaper and available

Kevin Shult — Thu, 05 Jul 2007 15:31:00 EST

Filed under: Before the Bell, Forecasts, Industry, Competitive Strategy, United Parcel'B' (UPS), Analyst Initiations

With the price of fuel growing each week, the search for America's next energy alternative grows even stronger. WR Hambrecht looked at Clean Energy Fuels (NASDAQ: CLNE), a California-based supplier of liquid & natural gas for vehicles, and they think they found a hidden gem.

Clean Energy provides solutions for fleets to run on natural gas as an alternative to gasoline or diesel. The company currently operates in 10 states and Canada, with plans to begin operation in Peru later this year. The first quarter of 2007 was the company's first profitable quarter since 2001, generating revenues by selling compressed natural gas, liquid natural gas, and to a lesser extent, by building, operating and maintaining fueling stations. They currently serve over 200 commercial fleets with 13,000 natural gas vehicles, including Waste Management Inc (NYSE: WMI), Enterprise Rent-a-Car, UPS Inc's (NYSE: UPS) fleet in Dallas and the Port of Los Angeles.

The key to Clean Energy's success lies in the continued increase in crude prices and the public's desire for cheaper alternatives. According to Hambrecht, natural gas vehicles emit "50-70% fewer emissions, save $5,000-$17,000 in fuel costs annually and use widely distributed and domestically available natural gas" compared to the standard vehicles used to day.

Not a bad start.

Clean Energy is currently in its growth phase and Hambrecht initiated coverage of the alternative energy stock with a Buy rating and an $18 target. They project the company to earn $0.03 in 2007 and $0.23 in 2008. Hambrecht believes Clean Energy's valuation, currently up $0.12 to $13.00 in mid-day trading, doesn't take into account the upside potential from the natural gas vehicle roll-out and estimates an addressable market over $20 billion.

With gas prices rising so fast, there's no reason natural gas should not be outfitted for commercial vehicles, but for the general populace as well.

Natural Gas Vehicles: Cleaner, cheaper and available originally appeared on BloggingStocks on Thu, 05 Jul 2007 15:31:00 EST. Please see our terms for use of feeds.

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Eight cars bound for steep depreciation

Beth Gaston Moon — Thu, 22 Mar 2007 08:00:00 EST

Filed under: Consumer Experience, Magazines, Internet, Daimler (DAI), Ford Motor (F), General Motors (GM)

I may never hear the word "depreciate" without thinking of the late great Michael Hutchence and the INXS half-single, "Mediate." Anyway...

After consulting Kelly Blue Book, arguably the expert on the subject of used cars, Forbes released its list of the eight worst new-model vehicles in terms of projected depreciation. Claiming the dubious top spot is the Buick Ranier SUV. With a base price of $32,285, the vehicle, made by General Motors (NYSE:GM), is expected to retain just 42% of its value after two years. Five years out, the Ranier will be worth about 26% of its purchase price. The Dodge Caravan Minivan, a DaimlerChrysler (NYSE:DCX) vehicle that I'm fairly certain half of my new-Mom friends have purchased in the past 12 months, starts with a base of $19,770 but will keep just 41% of this value 24 months later. Third is the Dodge Durango SUV (pictured, right), with a base price of $27,055 and projected value retention of 38% after two years.

Rounding out the top eight:

Ford (NYSE:F) Crown Victoria Sedan
Ford E-Series Van
Kia Amanti Sedan
Kia Spectra Compact
Ford Mercury Grand Marquis

Stay tuned for tips on smart shopping for a vehicle that won't utterly disappoint when it becomes time to trade it in ...

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Eight cars bound for steep depreciation originally appeared on BloggingStocks on Thu, 22 Mar 2007 08:00:00 EST. Please see our terms for use of feeds.

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