TIME Auto

There’s Good News About Ford’s Hardcore New Truck

Ford Aluminum Pickup
An attendee looks at the Ford Motor Co. F-150 pickup truck during the Washington Auto Show in Washington, D.C., U.S., on Wednesday, Jan. 22, 2014. Bloomberg via Getty Images

Ford’s big gamble moves into price point. Will it work?

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

One of the most closely watched automotive introductions of recent years is set to unfold as Ford Motor Co. retail dealers begin placing orders for the aluminum-body F Series pickup trucks, scheduled to arrive before year’s end.

This week Ford told dealers the retail price of the new truck will increase from $360 for entry-level models up to $3,615 for high-line luxury versions. The base model 2015 XL F-150 starts at $26,615, up $395 or 1.5% while the top-end Platinum version starts at $52,155, up $3,055, or 6.2%.

Ford is taking a big gamble on aluminum. The new trucks will be up to 700 pounds lighter to improve fuel efficiency, relying on customers’ acceptance that the metal will prove every bit as durable as steel. Ford is sailing into uncharted waters with regard to the manufacturing process, since no automaker has ever fabricated aluminum vehicle bodies at high speed.

Collision shops and dealerships have had to buy new tools and undergo training to gain expertise in repairing aluminum.

Ford so far hasn’t released fuel efficiency figures, which means that the potential savings are unclear. If the numbers are dramatic, they could attract buyers – especially those who use pickups for commercial purposes – providing an advantage for Ford over Fiat Chrysler’s Ram pickups or Chevrolet and GMC models from General Motors.

For the rest of the story, go to Fortune.com.

TIME Auto

10 Cars Americans Simply Don’t Want to Buy

10 Cars Americans Don't Want To Buy
A Volvo S60 at the 2013 Geneva Motor Show in Geneva, Switzerland. Harold Cunningham—Getty Images

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This post is in partnership with 24/7 Wall Street. The article below was originally published on 247wallst.com.

The American auto industry nearly collapsed during the recession as car sales plummeted and companies struggled to stay afloat. Since then, U.S. car and light truck sales have steadily increased, reaching 1.6 million in May, up 11% from the year before.

Despite the general recovery, demand for some vehicles continues to underwhelm. According to figures from TrueCar, an auto industry information and technology platform, 15 models spent an average of at least 90 days on dealers’ lots before being sold. No car took longer to turn over than the Volvo S60, at an average of 155.5 days.

Click here to see the ten cars Americans don’t want to buy

Days to turn is useful metric for gauging inventory levels, Eric Lyman, vice president of industry insights at TrueCar, explained in an interview with 24/7 Wall St. “The clock starts when the car lands at the dealership,” Lyman said. This levels the playing field, he added, because production facilities for various carmakers are located at different points across the U.S. or even in foreign countries.

According to Lyman, several factors may contribute to rising inventory levels. Some of these are temporary factors, such as the switch to a new model year. Because TrueCar data for 2014 covers cars in their 2014 model years, it makes sense that turnover rates are lower for models such as the GM’s (NYSE: GM) GMC Yukon, Chevrolet Tahoe, and Cadillac Escalade, all of which have released newly overhauled 2015 models.

In other cases, Lyman added, “high inventory is going to be [due] to a disconnect between the sales goals of the manufacturer and the retail demand for those units.” In some instances, manufacturers overestimate demand for their brands and ship too many units to their dealers. This results in high inventory and turnover levels for the brands.

Many of the brands that take the longest to sell are unpopular with customers, Lyman explained. Both Mitsubishi and Scion have car models that take the most days to turn. Both were also two of the nation’s lowest rated car brands, according to J.D. Power’s 2013 Automotive Performance, Execution and Layout Study, which measures brands’ appeal with car buyers.

Cars from Cadillac, Ford’s (NYSE: F) Lincoln, Jaguar and Volvo, all of which ranked in the bottom half of premium brands, according to the study, also made the list. Only one of the cars with the highest days to turn, the Chevrolet Tahoe, was manufactured by one of the survey’s 10 highest rated non-premium brands.

Although there are differences in how brands are perceived, Lyman added that disparities in actual quality among various brands is often relatively small. Five of the 10 cars requiring the most days to sell were made by brands with above-average scores on J.D. Power’s 2013 Initial Quality Study. Leading these brands was GMC, maker of the Yukon, which trailed only Porsche for fewest problems per 100 cars, according to the Survey. Only three models belonged to brands with scores considerably below the industry average, although one of these, Scion, was the lowest-rated brand in J.D. Power’s survey.

Based on figures provided by TrueCar, 24/7 Wall St. reviewed the car models with the highest number of days to turn. TrueCar turnover and sales data for each model reference a particular model year — figures for 2013 apply to cars in their 2013 model year, while figures for 2014 count data for 2014 model year vehicles. TrueCar also provided sales data for each of these models. Manufacturer’s suggested retail price (MSRP) data are from manufacturer’s website, and refer to the newest model year. We also relied on information from J.D. Power and Consumer Reports surveys, and the American Customer Satisfaction Index (ACSI). Safety data are from the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS). Sales figures are from The Wall Street Journal, as well as various company press releases.

These are the cars Americans don’t want to buy.

3. Cadillac Escalade
> Days to turn: 115.5
> Jan.-May unit sales: 1,498
> MSRP: $71,695

The Cadillac Escalade is one of three full-size General Motors SUVs among the 10 cars with the longest days to turn, alongside Chevrolet’s Tahoe and GMC’s Yukon. It is also the slowest selling American manufactured car, taking an average of 115.5 days to turn in the first five months of 2014. This is up from 61.2 days to turn between January and May 2013, as sales have dropped 14.7% year-over-year. However, this may not necessarily be an issue of quality. General Motors recently released a new Escalade, which may affect sales and turnover for the 2014 model year. In fact, Cadillac was one of the top-ranked makes in J.D. Power’s 2014 Vehicle Dependability Study, behind only Lexus and Mercedes-Benz. Consumers were also happy with the brand, awarding it one of the industry’s highest ACSI scores.

2. Mitsubishi Outlander
> Days to turn: 117.1
> Jan.-May unit sales: 3,788
> MSRP: $22,995

The Mitsubishi Outlander took dealers an average of 117.1 days to turn so far this year. This was actually an improvement from last year, when it took dealers nearly 128 days to turn an Outlander. Sales of the Outlander have also been strong this year, up 37% in the first five months of 2014 versus the year before. Overall, sales of Mitsubishi cars rose nearly 34% in that time. However, the carmaker still holds just a 0.5% share of the U.S. car market. Mitsubishi’s model competes in a crowded field against some of the nation’s best selling cars, such as Toyota’s RAV4, Honda’s CR-V and Ford’s Escape.

ALSO READ: Ten States with the Fastest Growing Economies

1. Volvo S60
> Days to turn: 155.5
> Jan.-May unit sales: 1,777
> MSRP: $33,300

Volvo’s S60 had the longest average days to turn of any car model sold in the U.S., taking an average of 155.5 days to turn in the first five months of 2014. This was more than twice as long as it took to turn an S60 last year. Sales of the S60 have slid as well, with just 1,777 sold this year through May, down 13% from the same period in 2013. So far this year, total Volvo sales are down roughly 10% nationwide. As a brand, Volvo has long been considered a carmaker in need of a turnaround. Ford sold it to Chinese carmaker Geely in 2010. The brand still maintains a reputation for safety, and the S60 earned a five star safety rating from the NHTSA and was an IIHS Top Safety Pick+ last year.

For the rest of the list, go to 24/7Wall St.

Read more from 24/7 Wall St.:

Volkswagen’s Sales Disaster Continues

Americans Watch Only 17 TV Channel

What to Do If You Won the $149 Million Powerball Lottery

 

 

 

TIME Auto

This Is the State With the Most Stolen SUVs

Best States to Get SUV CUV Stolen
A Ford Escape in Maine is returned to an area dealership after a scam artist had stolen it. Portland Press Herald—Getty Images

Thieves love the Ford Escape

California isn’t just home to the worst traffic—it’s also the state with the most reported SUV/CUV thefts.

According to a report published on Monday by the National Insurance Crime Bureau (NICB), the Golden State had the most reports of stolen SUVs/CUVs (3,531) between January 1, 2010, and December 31, 2013. Florida came in second (1,897), followed by Michigan (1,834), Texas (1,686) and New York (1,577). In total, 21,711 vehicles were stolen during this period, compared to that of the NICB’s previous report, when only 19,961 thefts occurred.

But in which states and territories would owners be most likely to recover their stolen vehicles? All stolen SUVs/CUVs in Idaho, North Dakota, South Dakota, Vermont and Wyoming were recovered, while Puerto Rico, New Jersey and New York posted the lowest recovery rates at 44%, 72% and 78%, respectively. In over half of U.S. states, over 90% of stolen vehicles were recovered.

In general, Ford makes proved to be most attractive t0 SUV/CUV thieves: the Ford Escape (1,421), Ford Edge (1,140), Ford Explorer (958) were the top three most stolen, followed by the Jeep Grand Cherokee (912) and Kia Sorento (725).

In 2012, the most stolen car of any kind was the Honda Accord, with 58,596 thefts.

TIME Business

Ralph Nader: GM Must Pay Big for What Was Clearly an Institutional Cover-Up

GM CEO Mary Barra Testifies To House Hearing On The Company's Ignition Switch Recall
General Motors Company CEO Mary Barra testifies during a House Energy and Commerce Committee hearing on Capitol Hill, on April 1, 2014 in Washington, DC. Mark Wilson—Getty Images

Top management must be held accountable for a pattern of inaction and the auto company's uncommunicative committee structures.

The ongoing and tragic General Motors debacle involving the mishandling of the fatal ignition switch defect reached its latest milestone with the release last week of a company-commissioned 315-page report by former U.S. Attorney Anton Valukas. Valukas condemned GM’s “troubling disavowal of responsibility” that led “to devastating consequences.” He declared that for more than a decade, the facts about these faulty switches that took the lives of motorists by stalling and depowering the vehicles thrashed around an “astonishing number of committees” inside GM’s sprawling silo-like bureaucracy.

What Valukas delivered for top GM management was concisely described by Sen. Richard Blumenthal (D-CT), who said, “It seems like the best report money can buy. It absolves upper management, denies deliberate wrongdoing and dismisses corporate culpability.”

The Valukas Report concluded that there was no cover-up, even though GM’s new CEO Mary Barra attributed the delay to a “pattern of incompetence and neglect.” She dismissed mid-level employees, some senior level managers, disciplined five others and installed new executives to supposedly shape up the place.

In her speech to 1,000 GM employees, Barra began to get at the core problem when she declared that employees should report failures to their supervisors and, if that doesn’t work, to “contact me directly.” This is not remotely the right sequence. Few employees would expose their careers to such potential retaliation by the “cover their rear” attitude of the GM hierarchy.

The report cites what has become known as the “GM nod”: “The GM nod, Barra described, is when everyone nods in agreement to a proposed plan of action, but then leaves the room with no intention to follow through, and the nod is an empty gesture.” Other witnesses explained the “GM salute, a crossing of the arms and pointing toward others, indicating that the responsibility belongs to someone else.”

Meanwhile, year after year, nearly 3 million Chevrolet Cobalts and Saturn Ions, among others, carried this lethal but easily fixable defect, resulting in highway crashes, deaths and injuries. Not until February of this year did GM announce the recall of millions of these cars. Nor did the Department of Transportation act to compel such a recall, even though it knew about the defect for years. Finally, this year, it fined GM the maximum sum of $35 million.

How can top management not be held accountable for such a pattern of inaction, such a miasma of evasive, uncommunicative committee structures, such a malfunctioning chaos of mortal information not being passed on to the top officials of the company? Taken together, it clearly was a 13-year institutional cover-up.

Clarence Ditlow, longtime GM watchdog and head of the Center for Auto Safety, which I co-founded, called the Valukas report “little more than an elaborate whitewash that buys into GM’s arguments that it was a bunch of incompetent engineers, lawyers and mid-level managers who were fired as a result.” Ditlow argues that “GM has a corporate culture where denying safety problems has been prevalent and taking responsibility for safety defects has been rare.” He also faulted the report’s “buying into the company’s argument that this is just an airbag defect – yet stalling has been the subject of over 300 safety recalls from all companies from 1966-2013. The Valukas report ignores the 2004 death and injury Early Warning Reports (EWR) filed by GM on the models covered by the ignition switch recall through 2013.”

Incredibly, the ignition switch hazard was classified as a “customer convenience issue,” rather than an urgent safety failure. But as former National Highway Traffic Safety Administration physicist Dr. Carl E. Nash told me, GM has a long history of denial, delay, cover-ups and blaming everyone but itself for millions of serious defective motor vehicles.

GM is bracing for the results of the Justice Department’s criminal investigation, the Securities and Exchange Commission’s probe, and the two Congressional Committees’ ongoing inquiries, all of which lie ahead. But on its own, GM must act to compensate the bereaved families and the injured survivors in product-defect crashes both before and after its 2009 bankruptcy and its $50 billion government bailout. The kangaroo court of corporate bankruptcy dissolved existing personal injury claims, stripping the victims of their constitutional rights to have their day in court.

Secondly, shuffling personnel and rearranging committees will not do the job Barra says she wants done. What will be effective is if she establishes an independent ombudsman who confidentially receives complaints from internal whistle-blowers and reports them directly to GM’s CEO and President, as well as to the Department of Transportation. As Nassim Taleb wrote in his recent book Antifragile, nothing is more productive of accountability than top bosses having “skin in the game.”

Providing a monetary incentive to the reporting employee for saving the company a boatload of trouble and averting highway tragedies will also help. Companies often give money to workers who suggest dollar-saving ways to run production or distribution lines. GM can certainly do the same for internal life-saving reports by conscientious GM personnel.

Ralph Nader is a consumer advocate and author of Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State.

TIME

China is Trying to Buy a Car Industry

CHINA-ECONOMY-CARS
Workers on the assembly line at the Sino-French joint venture Dongfeng Peugeot-Citroën Automobile (DPCA) plant in Wuhan in China's central Hubei province, Dec. 2013. PETER PARKS—AFP/Getty Images

Struggling Chinese automakers are turning to foreign acquisitions for a competitive edge

China has had dreams of turning Shanghai into a 21st-century Detroit – no, not a bankrupt basket case, but a major center for the global automobile industry. But those hopes have been dashed. Though China is the world’s largest car market, and Chinese have become avid drivers (as you can read in my latest TIME magazine story), the nation’s automobile manufacturers have struggled to catch up with their international rivals.

Generally lacking technology, experience and brand power, Chinese carmakers have faced hurdles even competing in their home market, where Chinese consumers think homegrown cars are of poor quality. As a result, foreign brands like Volkswagen, Buick and Hyundai, command 70% of the Chinese market, Overseas, Chinese cars tend to get exported to other developing countries where shoppers care more about price than nameplate.

What to do? Chinese car companies appear to be trying to buy the technology, know-how and market presence they have struggled to develop on their own. Recently, the global auto industry has seen a series of high-profile deals by Chinese car companies. In February, state-owned Dongfeng Motor agreed to invest some $1.1 billion in troubled automaker Peugeot-Citroen, as part of a rescue package that includes the French government. A few days earlier, Chinese car parts maker Wanxiang won an auction for the assets of Fisker Automotive, a bankrupt U.S. manufacturer of hybrid sports cars. (Last year, Wanxiang also completed the acquisition of most of bankrupt U.S. battery maker A123 Systems.) Then, earlier this month, a unit of China’s FAW inked a joint venture with Michigan-based EcoMotors, a start-up backed by Bill Gates, to manufacture the latter’s environmentally friendly engines. The FAW subsidiary is picking up the entire bill for the Chinese facility, an investment of more than $200 million.

These latest deals follow in the footsteps of the granddaddy of Chinese auto acquisitions: In 2010, private Chinese carmaker Geely bought storied Swedish firm Volvo from Ford. Recently, the two said they were expanding cooperation to develop a new subcompact model.

What’s happening here is that China’s carmakers, with ample access to financing, are using their money muscle to buy technology, market share and access to new product lines that would have been difficult and time-consuming to develop on their own. (In this way, the auto deals are similar to those recently announced by Chinese PC maker Lenovo for Motorola’s handset business from Google and IBM’s low-end servers.) That’s why China’s asset grabs have led some critics to fret that the West is handing Chinese automaker critical know-how that will help them compete with heavyweights like GM and Ford, or even worse, can be used in military applications. After Wanxiang’s purchase of A123 was approved by a U.S. government panel, one senator complained that such technology developed in America “should not simply be shipped off to China.”

Yet as the old saying goes, beggars can’t be choosers. The Chinese (for the most part) are investing in companies or buying assets that have a very troubled history. It is an open question if France’s loss-making Peugeot, for instance, could even survive without a fresh capital injection. Chinese firms like Dongfeng have the money to save the day. Buying assets, however, is much different from using them wisely. It remains to be seen if these Chinese companies can capitalize on their purchases to turn themselves into better auto companies, or if they are capable of helping to turn around their troubled new investments. China’s car industry may find that cash can buy you stuff, but not easy shortcuts.

TIME Automotives

Nissan Sees Electric-Car Sales Boom

Japan Nissan
Itsuo Inouye—AP

The Japanese car manufacturer, which has sold more than 100,000 units of its electric Leaf since its 2010 launch, says it may be able to sell more gas-free vehicles than it initially projected as more and countries embrace fossil-fuel alternatives

The market for electric cars is shifting into high gear. Or at least that’s what the automaker Nissan says.

The Japanese electric-car maker said Saturday it may be able to sell more gas-free vehicles than it initially projected, as more and more countries embrace fossil-fuel alternatives, the Wall Street Journal reports. Nissan has sold more than 100,000 units of its electric Leaf worldwide since its launch in 2010. Nissan will begin selling the Leaf in South Korea in the second half of this year and expects to sell 1.5 million units of electric vehicles by 2020 as the company looks to emerging markets.

Despite having to overcome challenges like shorter range than gas-engine cars, relatively high prices and a minimal refueling infrastructure, tougher emissions standards worldwide will help spur the growth of the electric-car market, Nissan says.

[WSJ]

TIME Unions

VW, Grover Norquist, and the Future of American Unions

New 2012 VW Passat First Drive And Factory Tour
Robots at the Volkswagen Chattanooga plant weld a 2012 VW Passat in the body shop at the plant near Chattanooga, Tennessee, U.S., on Wednesday, June 1, 2011. The plant which has an initial capacity of 125,000 units per year, will build the 2012 Volkswagen Passat for the U.S., Mexico and Canada. Photographer: Mark Elias/Bloomberg Mark Elias—Bloomberg/Getty Images

If there’s a more fascinating business story out there right now than today’s vote in Chattanooga, TN, on whether VW plant workers should be allowed to unionize, I don’t know what it is.

I’ve been watching this story for a few weeks now, and I think it has major implications for the future of unionization and labor relations in America. For decades now, the number of union members in this country has been falling. (Currently only 11 % of U.S workers belong to a union, according to BLS statistics.) That’s unusual for a rich country—union penetration in Europe is much higher, and the relationship between unions and management is different. It’s less contentious, and more collaborative. In places like Germany, labor actually sits on the board of companies and helps make strategic decisions about how plants and even entire corporations are run, which is one reason that Germany was able to retool so quick and grab market share following the 2008 financial crisis and global recession in 2009. Read my colleague Michael Schuman’s excellent piece on that topic.

What’s fascinating about the VW vote is that the company is quite open to a German style works council, which would be organized under the auspices of the UAW. Many of the workers are in favor of it, too. But local politicians like Senators Corker and Watson, as well as conservative activists from Grover Norquist to the Koch brothers, are putting up a fight. They see the VW battle as a key victory in the battle to unionize the South. While Southern states have low union penetration, the South is also where the action is, and organizers like the UAW’s Region 8 director Gary Casteel, who’s in charge of Southern unionizing, have been making good progress there.

It is a battle that’s getting quite vicious, and will likely become more so, because Southern states, which have particularly attractive per unit labor costs on a global basis, are attracting quite a lot of manufacturing business (particularly amongst auto firms, including VW but also others like Nissan), and politicians worry that their states will lose business if they unionize. Sen. Watson, for example, recently threatened to pull job-creating tax incentives from the Volkswagen facility in Chattanooga should workers exercise their right to vote in favor of unionizing.

It’s too bad, because the truth is that there’s little evidence that the anti-union manufacturing model (exemplified by companies like Nissan) works better than the unionized one, particularly when it incorporates Germanic work councils. VW actually credits the system with making it the largest and richest auto firm in the world. What’s more, the workers I’ve spoken with in Chattanooga say they are less interested in pay hikes than in having some say over which cars get made in the factory, what sorts of training programs they’ll have access to, etc. I’ll be reporting out this story further for my column this week. For more about what it’s likely to mean for labor, management, and the U.S. economy, check out the latest episode of WNYC’s Money Talking, where Joe Nocera and I discussed the topic.

MONEY Autos

5 Things to Know About Car Leases

Toyota cars for sale at a Toyota dealer
Toyota cars for sale at a Toyota dealer in Hollywood, California on February 24, 2011. Japanese automaker Toyota recalled another 2.17 million vehicles to fix floor mat and carpet defects that could jam the accelerator, the latest in a spate of recalls to hit the firm. Pressed by US authorities, Toyota announced the recall to fix flaws in its Lexus GS, RX and LX models as well as Toyota's sports Highlander, 4Runner and RAV4 sports utility vehicles. AFP PHOTO/Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images) MARK RALSTON—AFP/Getty Images

Buy vs. lease? The choice can be tricky.

You can get great deals on car leases these days, but a few wrong turns will cost you. Here’s what you need to know.

1. Leasing is especially attractive today

The cost of a lease is the difference between what a vehicle is worth now and what it’s expected to be worth when you return it (the residual value), plus interest and fees. The more a car is forecast to hold its value, the less you pay.

“Manufacturers believe the supply of used cars is on the low side, so they’ve priced residual values higher,” says Jesse Toprak of TrueCar.com.

You can lease some new cars for less than the loan payments on a gently used model.

2. You can negotiate any lease offer

A dealer will typically drop the sticker price (called the capitalized cost) by at least 5% if you haggle, says Alec Gutierrez at Kelley Blue Book.

Even the “money factor” — the number that determines your interest rate — is up for grabs. But you’ll have to scour the fine print to find it so you can compare offers (lower is better).

With today’s low rates, though, agreeing to put more money down in exchange for a price break may not be a good deal.

3. Long-term leases can cost you more in the end

Leases often last three years, but some car makers let you stretch payments out longer.

Toyota has five-year deals on the Yaris, Corolla, and Camry. Steer clear. Most comprehensive warranties last three years, which could leave you with costly repairs, says Ronald Montoya, consumer advice editor at Edmunds.com.

Related: Best resale value cars

Plus, car makers want you back for new wheels, so short leases are more likely to be subsidized.

4. You need to dodge a few costly traps

Leases cap the miles you can drive — typically 10,000 or 12,000 a year. Travel more, and you’ll owe as much as 20¢ a mile later. Heavy drivers can save by paying $10 or so more a month for a higher mileage cap.

Also, you may have to pay extra for gap insurance, which covers the difference between the insured value and the higher amount you may owe the leasing company if you total the car. Dealers typically include it for free, but banks don’t always.

5. An early exit is easier than ever

Assuming the car maker lets you transfer the lease (Honda allows you to do so only under special circumstances; BMW bans it in the final six months), you can find a new owner at sites like LeaseTrader.com and Swapalease.com.

With used-car prices high now, you have another option, says Toprak. Make the remaining lease payments, buy the car for its residual value, and then resell it. In today’s market, says Gutierrez, “you might be able to end up with a profit.”

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