(Source: AP via Yahoo & New York Times)

The Senate will vote to extend the popular “cash-for-clunkers” program before going home on Friday, Majority Leader Harry Reid declared Tuesday in a strong signal the government won’t let the trade-in rebates die under the surging demand that has almost exhausted federal backing.

Images via Apture

Reid’s GOP counterpart, Mitch McConnell of Kentucky, predicted his party would not block a vote and “the matter will be completed.” Republicans were still demanding a chance to amend a House-passed version that would extend the program into September, but Democrats were confident the bill wouldn’t be changed.

“There obviously is a real pent-up demand in America,” the Transportation secretary, Ray LaHood, said. “People love to buy cars, and we’ve given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new automobile.”

Visiting the White House for a lunch with the President, Harry Reid, the Senate majority leader, was also asked about the program.

“We’ll pass ‘cash for clunkers,’ ” he said. And Mitch McConnell, Republican of Kentucky, who is the minority leader, said there would be a vote, but he did not suggest an outcome.  Opposition to extending the program has been dissipating. One vocal GOP critic, South Carolina Sen. Jim DeMint, said Tuesday he would not try to block the legislation. And three lawmakers who wanted the program limited to the purchase of even more fuel-efficient vehicles said Monday they would back the plan.

Republicans have said it puts the government in the bad position of picking winners and losers.

“People want to know what’s going to be next. Cash for shoes? Cash for groceries?” said Sen. Richard Shelby, R-Ala.

The first $1 billion in funding is expected to lead to sales of 250,000 vehicles and the additional $2 billion would generate sales of perhaps a half-million more vehicles.  The program has encouraged about a quarter-million Americans to buy new cars at time when the economy is still in recession and badly needs a boost.

Buyers of new cars and trucks have swamped formerly deserted auto dealers to claim their rebates — up to $4,500 when they trade in older models that get significantly worse gas mileage. The older vehicles are then scrapped.

Because the House has already recessed for August, any change by the Senate would effectively interrupt the rebate program until Congress returns in September. Consumers who don’t get in on a deal this week would have to wait until then to take advantage of the rebates, assuming eventual passage.

Click here to read the entire article.

(Source: Detroit News via Autoblog & Bloomberg)

Image Courtesy: Apture - Ford Focus

The National Highway Traffic Safety Administration has processed 80,500 transactions so far, and the early winner of Cash For Clunkers appears to be the Ford Focus. The Detroit News is reporting that the Focus is the number one vehicle purchased under the government program, showing us why Ford’s C-Segment vehicle gained 43.6% in July. Ford also saw an amazing 97% increase in Escape sales in July, a tally that was likely improved with the help of Cash For Clunkers.

The controversial and somewhat clumsy program is drawing plenty of attention for its popularity amongst car buyers, and Detroit automakers appear to be taking more than their fair share of sales.

The White House says 47% of all vehicles sold through the bill so far come from US automakers; 2% higher than the domestics’ 45% overall share. Four of the top 10 vehicles purchased under the program come from domestic automakers, and over half of all vehicles were built in the States.

This wildly popular program is currently all but spent and is awaiting the Senate nod for a further $2Billion cash infusion to keep it going.   On Friday, the House approved the $2 billion increase. The Senate is expected to vote Wednesday or Thursday; the White House is pressing it to act. Transportation Secretary Ray LaHood told MSNBC that the program has been a “lifeline to the economy.”

To drum up support for more dollars, the White House is touting the program’s value. White House spokesman Robert Gibbs says the average fuel economy increase so far is 9.4 mpg; a 61% increase verses the vehicles destined for a sodium silicate bath. So far, 83% of the vehicles traded in have been trucks, while 60% of the vehicles purchased under the program have been cars. The White House estimates that Cash For Clunkers will save the average car buyer $700 – $1,000 in gas prices during the life of the vehicle.

The sales last month from the federal incentives may result in fewer buyers later this year after the program ends, George Pipas, Ford’s sales analyst, told CNBC today.

A similar program in Germany won’t sustain sales growth into 2010 as those incentives expire, said Matthias Wissmann, president of the German carmakers, today at a Frankfurt news conference. Germany’s car market expanded by 26 percent from a year earlier in the first half, propelled by increases of at least 40 percent in May and June.

Our favorite auto website,  Jalopnik, offers a comprehensive list of the top 10 vehicles  sold and trade-ins) dealt under this CARS program.

The Ten Most Traded-In Vehicles (vehicle’s EPA mileage)
1. 1998 Ford Explorer (14-17 mpg)
2. 1997 Ford Explorer (14-18 mpg)
3. 1996 Ford Explorer (14-18 mpg)
4. 1999 Ford Explorer (14-18 mpg)
5. Jeep Grand Cherokee
6. Jeep Cherokee
7. 1995 Ford Explorer (15-18 mpg)
8. 1994 Ford Explorer (15-18 mpg)
9. 1997 Ford Windstar (18 mpg)
10. 1999 Dodge Caravan (16-18 mpg)

The Ten Most Purchased Vehicles (vehicle’s EPA mileage)
1. Ford Focus (27-28 mpg)
2. Honda Civic (24-42 mpg)
3. Toyota Corolla (25-30 mpg)
4. Toyota Prius (46 mpg)
5. Ford Escape (20-32 mpg)
6. Toyota Camry (23-34 mpg)
7. Dodge Caliber (22-27 mpg)
8. Hyundai Elantra (26-28 mpg)
9. Honda Fit (29-31 mpg)
10. Chevy Cobalt (25-30 mpg

Click here to read the entire article.

(Source: Green Car Congress)

GM’s domestic sales of the automaker and its joint ventures in China jumped to 144,593 units—an increase of 77.7 percent compared to last year. This was GM China’s best July ever, extending an uninterrupted series of single month sales records that started in January 2009.

For the first seven months as a whole, GM China and its joint ventures sold 959,035 vehicles, up 42.8% in comparison with the first seven months of last year.

Shanghai GM registered year-on-year sales growth of 60.6% in July to 56,489 units.

Click here to read the entire article.

(Source: Bloomberg)

The future of the U.S. “cash for clunkers” program depends on the Senate backing a $2 billion infusion this week, with at least one Republican saying he was going to try to block the effort.

“We’ve got to slow this thing down,” Senator Jim DeMint, a South Carolina Republican, said on “Fox News Sunday.”

The House voted 316-109 on July 31 for an emergency measure adding $2 billion to the program aimed at reviving U.S. auto sales, after a burst of demand exhausted most of the initial $1 billion in less than a week.

Transportation Secretary Ray LaHood said in a C-SPAN interview Sunday he expects the current $1 billion in funding to be gone by the end of the weekend. The administration will continue the program until the Senate acts, and dealers will be reimbursed for deals in the pipeline, he said. The government will make a “good-faith effort” for transactions beginning tomorrow, he said.

DeMint said he opposes the program because “we’re helping auto dealers while there are thousands of other small businesses that aren’t getting help.”

Named the Car Allowance Rebate System, the program provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped. Lawmakers had expected the first $1 billion to generate about 250,000 vehicle sales and last until about Nov. 1.

(Source: NY Times )

New York Times’ Sarah Lyall has penned a funny but interesting & intriguing profile of Mr. Michael O’Leary, chief executive of the European budget airline Ryanair.  A must read for those in low-cost commercial aviation business.  Here are some interesting excerpts from the article.

——————————————————————————————————————————

He once dressed as the pope to advertise Ryanair’s new route from Dublin to Rome. He has declared that fat people should pay more for their seats, but that it would take too long to weigh them at the airport. And, at a news conference to discuss the possibility of starting trans-Atlantic flights, he suggested — to the consternation of the young woman gamely translating his remarks into German — that business-class customers would receive oral sex.

At 48, the quick-talking, blue-jean-wearing Mr. Michael O’Leary, chief executive of the European budget airline Ryanair,is one of the most successful businessmen in Ireland, presiding over an airline that is, remarkably, flourishin g in a brutal climate for airlines (and most other businesses). He is known for thick-skinned aggression, outrageous public statements and an implacable belief that short-haul airline passengers will endure nearly every imaginable indignity, as long as the tickets are cheap and the planes are on time.

“Soon he’ll be charging us for oxygen and number of limbs,” The Sun groused in a columnin June, when he unveiled his latest proposal — getting people to carry their own bags to the plane.

Ryanair’s post-tax profit fell by 78 percent in the year that ended in March, but still amounted to $149 million. While most carriers are hemorrhaging passengers, Ryanair expects its passenger numbers to increase, to 68 million this year from 57 million in 2008.

The mystery is why so many people are willing to put up with an airline that, in the words of The Economist, “has become a byword for appalling customer service, misleading advertising claims and jeering rudeness towards anyone or anything that gets in its way.”

(Source: Times of India)

Taking a leaf out of employees’ labour union books, private airlines on Friday threatened to suspend domestic operations on August 18 if the government did not give in to their demand for a bailout package in the form of lower sales tax on fuel and airporttaxes. Never before has an entire industry threatened to pull out from the market to arm-twist the government into buying its line.

“The airline industry realizes its role in the life of the nation. But in view of the indifference shown by the government, it may not be able to continue its operations… and so we have decided not to operate nationwide services on August 18,” Anil Baijal, secretary general of the Federation of Indian Airlines, the lobby group of airlines in India, announced at the Jet Airways office in Mumbai. “The idea is to highlight the urgency for the government to intervene urgently. If, however, an adequate response is not received, member airlines will be compelled to suspend their services for an indefinite period.” Baijal did not spell out the nature of the response or the level of commitment the airlines are expecting from the government in the next 18 days.

The no-fly decision was taken following an afternoon meeting attended by Jet Airways’ Naresh Goyal, Kingfisher Airlines’ Vijay Mallya and other members of FIA except those from Air India and Paramount Airways. Following the meeting, Baijal read out a statement to the media which began with the financial difficulties faced by the industry. The total losses incurred by the Indian airline industry in 2008-09 are estimated to be Rs 10,000 crore, he said, listing ATF sales tax, airport charges, depreciation in the value of India rupee, the economic meltdown and terrorists attacks as contributory factors.

Sudhakara Reddy, president, Air Passengers Association of India, a consumer rights organization, was scathing. “The losses are of their own making,” he said. “The two big airlines, Jet and Kingfisher, bought loss-making airlines like Air Deccan and Air Sahara. The government, on the other hand, gave airlines benefits like a credit period for payment to oil companies and airports. Then again, IndiGo and Spice Jet made a profit in the last quarter, which means there is a turnaround in the industry. When they make a profit, do they share it with the government or public?”

Although the relationship between governments and airline operators worldwide has never been an easy one, the threat by Indian private airlines is a first in the century-old history of the global airline industry. If it is indeed carried out, it will mean cancellation of about 12,000 domestic flights by airlines such as Kingfisher, Kingfisher Red, Jet Airways, Jetlite, IndiGo, Go Air and Spice Jet on August 18. The only option for the domestic air traveller will be the 300 scheduled flights operated by Air India and the additional ones it may mount to meet the demand.

Civil Aviation Minister Praful Patel on Sturday said that the government would not bailout private airlines. Patel advised the private carriers to withdraw their strike call on August 18. He stated, “Passengers interest would be safeguarded and DGCA would take action if needed.”

Air India will increase the number of flights to reduce inconvenience to passengers, Mr Patel said. It is not known if Paramount Airways will join its private sector peers in the strike.

The minister said that the ATF tax was an issue even before the private carriers started operations. Painting a desperate picture of their situation, industry lobby body Federation of Indian Airlines (FIA) said unless the government helps them by lowering taxes on jet fuel and bringing down airport charges, their survival is in doubt.

Click here to read the entire article.

TransportGooru Musings: I can understand the plight of the airline operators in India, a country where rulers take a serious view of situations only when such harsh measures are called for.  As a proud practitioner of Democracy, the country has developed a unique way of making its rulers listen – Indefinite Strike.  Though this method has often been abused by many labor unions, especially the ones associated with employees of public sector banks & railways, this is the first time an entire industry is threatening to go on strike.   During my recent trip to India, me and my family flew on some of the domestic carriers mentioned here.  Though the original price of the tickets were really enticing, the additional costs for a ticket incurred by a passenger were often sky high.

For example, the price for two tickets from Coimbatore to Chennai (two Southern Indian cities) was Rs.1598 (roughly $35).  But the invoice showed a shocking total of Rs.5638, with a line stating  “Other Charges” worth Rs.4,391.44 (~$80). I am assuming that this “Other Charges” line envelops all the above mentioned items that the airline operators are fighting to remove.  If the airlines managed to achieve this, the cost of flying should become really cheap and would fuel a boom in traffic.  These sky high tariffs did really make me re-examine whether it is worth flying and given that the next best alternative is the Indian Railways, which takes six times longer to get me to the same desitination, I went ahead and paid for the ticket inspite of the heart-ache.

Here I’dlike to share an interesting story. My family hired this young driver, Suresh, to drive me around during this recent trip.  I spent a considerable amount of time with him in the car as he drove me around for nearly 2000 kms in a period of 20 days.  Sitting in traffic and during long stretches of driving (while I am not on the phone or sleeping), we asked a lot of questions about how it is to be living in our respective worlds (America & India) and shared stories about driving and the multitude of transportation problems we faced in our daily lives.  He was so fascinated by the idea of flying between cities in such short times compared to the trains.  When I asked him if he had ever flown in an airplane before, he said in a longing voice that he has never been inside an airport all his life (24years of age) and has always wanted to fly but never could afford a ticket due to his financial siuation.  He added that he always wanted to save money to buy a ticket to the nearest destination possible but was not sure how expensive it could be to fly compared to the buses or trains . When he picked me up at the airport, he inquired about how much I paid for the trip and I promptly shared the information.  He was sorta disappointed and said may be he will never get to fly if the prices were to be so high.  He said that flying will never become a reality for many people like him.

It got me thinking.  How is that a driver in India cannot afford to fly while someone holding the same job can do so in a country like America?  Here we have people like Suresh who are ready to fly but can’t afford to do so. There is a huge market that remains untapped and the private airline operators are definitely ready and willing to feast on this bonanza.  If the economics are worked out properly, this could be a wonderful way to resuscitate the ailing aviation industry.  I am no economist but it is not hard to understand what we are dealing with.  It is as simple as this:  There is a Huge Market, there are a number of willing operators, and a thriving industry that is raring to do everything possible to remain profitable.  With growth in passenger traffic, the Government can compensate for the loss of revenue experienced by the reduction in tariffs.   Moderizing the airport infrastructure and streamlining the current services can also help India’s aviation industry to a large degree.

But the only stumbling block that remains is some of the regressive policies of the Government, which is holding back the dreams of soaring high for people like Suresh. As a Transportation industry practitioner, I’d love to see the Ministry of Aviation taking a hard look at this issue and bring down some of these ridiculous charges.  Failing to do that would pretty much doom the industry and would prohibit the development of the aviation infrastructure, which the country needs to develop so badly.  Mr. Praful Patel, are you listening?

With all that said, I totally agree with Sudhakara Reddy, president, Air Passengers Association of India. Airline operators have goofed up tremendously in the past with their bad business moves (some of the horrible mergers and acquisitions are top among them) and can’t go penalizing the passengers like this.  It violates the obligation they have for serving the general public who put their faith in these airlines when they made travel plans.  For the airlines, it is their right to go on strike but that can’t come at the expense of the passengers.  It is a huge discomfort for the very passengers who keep these airlines in business.  It is the worst form of customer service.  Hope the issue gets resolved amicably.

(Source: AP via Yahoo; Freep & Photo Courtesy: TOBY TALBOT/Associated Press via Free)

The Obama administration promised on Friday that the financially strapped “cash for clunkers” program will be good at least through the day.

Less than four days after launching a popular cash-for-clunkers program, the Obama administration warned Congress the plan already had burned through its $950-million budget, setting off a rush for more money while leaving thousands of dealers and consumers in the lurch.

A White House official told the Free Press late Thursday that all valid deals made under the program so far would be honored, saying it had not been suspended. But administration sources could not say what car buyers hoping to trade their clunker for a new vehicle should do today.

The House is set to adjourn today for a monthlong recess, but Michigan lawmakers and administration officials were pushing for an emergency infusion of cash today. A spokesman for House Speaker Nancy Pelosi said any request would be “quickly reviewed.”

Sen. Carl Levin, D-Mich., said he got the word from Transportation Secretary Ray LaHood as members of the Ohio and Michigancongressional delegations huddled on Capitol Hill to discuss ways to keep the popular program going.

“Beyond Friday,” Levin said, “depends on whether the administration can find some money.”

One participant in the meeting said they were examining possible funding sources and whether there were any glitches in the computer system. The participant, who spoke on condition of anonymity because of the sensitivity of the talk, said they were also studying how many dealers had enrolled in the system.

Through Wednesday afternoon, more than 23,000 dealer franchises were participating, according to the National Highway Traffic Safety Administration.

The administration dispatched Brian Deese, a top adviser to the Treasury’s auto task force, to the Hill meeting.

Sen. Debbie Stabenow, D-Mich., said about 40,000 new vehicles had been purchased through the program but dealers estimate another 200,000 vehicles have been sold in transactions that have not yet been completed through the program.

Earl Stewart, who owns a Toyota dealership in North Palm Beach, Fla., said the changing messages on the program has created confusion among his customers and his staff. Stewart’s accounting department also could only enter about a dozen of the 47 sales he made into the government Web site set up to handle the transactions, leaving him wondering if he will get refunded for the remaining vouchers.

Click here to read the entire article.

Breaking News Update:

The Detroit Free Press reports that the U.S. House will vote on $2 billion in additional funding for the cash-for-clunkers program this afternoon.

Michigan lawmakers huddled in the Capitol this morning with a White House official discussing ways to get the cash-for-clunkers program under control. The program is still under way, they said.

While the Obama administration said the plan was not suspended, it doesn’t know how many deals have been made under the program and whether the $950 million available to the plan is enough to cover the deals already made.

The administration may consider whether money from the economic stimulus plan can be diverted to the program.

Click here to read the  update.

(Source: Washington Post & AASHTO)

Supporters garnered the necessary two-thirds support to push through the stop-gap measure intended to keep the Highway Trust Fund solvent through September 30, the end of the fiscal year. The vote was 363 to 68.

The government estimates the account could run dry within several weeks without an emergency infusion of cash. The fund provides states with about $40 billion per year in transportation construction funding.

Trust fund disbursements are separate from the billions in economic stimulus money dedicated to states for transportation projects.

The Senate is expected to act on the temporary trust fund measure before the end of next week, and lawmakers plan to address a longer-term remedy after their August recess.

During the 40 minutes of House floor debate this afternoon, supporters argued the Highway Trust Fund needs additional funding immediately to prevent the payment slowdown to states, which could cause states to then curtail their road construction activity. Opponents contended the transfer is not paid for by any new revenue source and that Congress needs to stop bailing out the Highway Trust Fund. Congress sent the fund an additional $8 billion last September when a similar funding crisis developed due to lower revenue in the trust fund than had been projected as a result of Americans driving less during the economic recession and thus paying less in gasoline and diesel taxes as well as in heavy-truck taxes.

The House bill approved today contains no extension of authority for federal surface transportation programs, which is scheduled to lapse Sept. 30 at the end of this fiscal year. While House leaders have been pushing a full six-year authorization measure, the Obama administration and the Senate have favored a temporary extension of current authority for 18 months. Today’s House vote means Congress will have to face the authorization question in September after returning from the summer recess.

House Transportation and Infrastructure Committee Chairman James Oberstar, D-MN, said during today’s floor debate that he regrets Congress must take action to shore up the Highway Trust Fund. But the drop in vehicle miles traveled experienced over the past year and a half has left the trust fund short of its revenue projections, necessitating an infusion, he said. Oberstar’s six-year, $500 billion authorization measure has been approved by subcommittee but not been brought up before the full T&I Committee yet because there is no agreement with the House Ways and Means Committee on how to raise the extra revenue needed to pay for it.

Click here to read the entire article.

(Source: USAToday & The Hindu)

The much-awaited Nano hit the roads on Friday with Mumbai resident Ashok Raghunath Vichare becoming the first owner of the world’s cheapest car from the stable of the Tatas.

“I hope that the Tata Nano will bring motoring pleasure to those who will be buying their first car as also those who currently own a car but want a modern, contemporary and emission-friendly city car,” Tata Motors Chairman Ratan Tata said after handing over the key of the first Nano to Mr. Vichare here. Tata, a Cornell University-trained architect, decided to develop Nano when he saw an entire Indian family riding on a scooter. Bloomberg says almost seven motorcycles are sold for every car in India, a nation of 1.1 billion people. Car sales in India may triple to 3 million units annually by 2015, according to a government forecast.

Mr. Vichare has bought a Tata Nano LX (lunar silver), the top-end model.

With Tata handing over the top-end model to Mr. Vichare, the delivery process of the first one lakh cars have started, which would be completed by March next year.

Vichare went for the more upscale LX version. It is his first car.The cheapest Nano retails for 123,360 rupees — or $2,531. Splurgers can spend up to $3,536 to pack the car with such luxury as cupholders and air conditioning, Bloomberg News reports.

Nano is expected to come to the U.S. in a couple years, owner Tata Motors has indicated. Don’t expect to see one on the freeway: at 624 cubic centimeters, the engine is smaller than those found on many motorcycles. Safety in crash? Not as bad as you’d expect, if early crash test results in Europe hold up. Tata already has a huge backlog of orders for Nano:

Tata, which owns Jaguar and Land Rover after buying them from Ford, has 206,703 orders. That’s more than double its initial sales plan. The company chose the first 100,000 customers through a lottery. It will take a year of production to catch up to the backlog.

Nano was commercially launched on March 23 this year. It has received 2.06 lakh bookings. Tata Motors has already selected over 1.55 lakh customers for delivering the car, of which the first one lakh cars are price-protected.

The company would roll out the Nanos from its Pantnagar facility, which has an annual capacity of 50,000 units. The car would also be produced from the company’s Sanand unit in Gujarat once its goes on stream.

Click here to read the entire article.