(Source: Business Week & WSJ)

Ford Motor Co. is upping its production of fuel efficient vehicles in the third quarter to meet demand, the company, says for vehicles being purchased under the extended Cash for Clunkers program, as well as overall increased interest in new cars by consumers.

Cash for Clunkers is pushing August sales so far this month to levels not seen since before the global credit meltdown last Fall. In the first few days of August, Edmunds.com says the auto industry was cracking at a 16 million a year rate. That’s up from less than a 10 million selling rate in the first half of the year, and less than 12 million rate in July.

Ford increased its third-quarter production to 495,000 new vehicles, driven primarily by the demand for its Focus and Escape models. The company will build 6,000 more Focus vehicles during the quarter through overtime and Saturday shifts.

Ford senior sales analyst George Pipas says that it is too early to project the selling rate for August on the whole. “But I can tell you that retail sales we are seeing is eyepopping versus a year ago.”

Ford’s chief economist Ellen Hughes-Cromwick said the clunkers program could generate as much as 750,000 in new vehicle sales for the industry and is now on pace to run out of money within the next three weeks.

“This is what fiscal stimulus is suppose to do when you are in the financial situation we were in,” Hughes-Cromwick said.

Ford’s European executives said Wednesday they are holding formal talks with different governments to continue similar clunkers programs which are boosting sales in such countries as Germany. Russia, which is in a deep economic slump, also said Wednesday it too will start a scrappage offer.

Ford will build 10,000 more Focus sub-compact cars and Escape crossover SUVs than it had planned. In July, the first month of the government’s Clunkers program, the Focus was the top model purchased with the help of government rebates, while the Escape was the only utility vehicle to make the top ten.

Ford is increasing its North American production to a total of 495,000 units in the third quarter, an increase of 18% from the same quarter in 2008. Ford also plans to produce 570,000 vehicles in the fourth quarter, a 33% boost from the same quarter last year and 15% above planned third-quarter output.

The increased production will come after the Clunkers program has run out of money, but Ford says it will need it to replenish depleted inventories and deal with increasing demand for more fuel efficient vehicles as consumers anticipate higher gas prices with a recovering economy.

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(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

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(Source: New York Times)

Union leaders said Sunday that they had reached an agreement with Chrysler that meets federal requirements for the automaker to receive more financing.

The deal includes Fiat, the Italian automaker with which Chrysler was ordered by the government to form an alliance before Thursday.

Neither the United Automobile Workers union nor the company released details of the tentative agreement, which would modify the union’s 2007 contract and reduce the amount of money Chrysler must pay into a new health fund for retirees.

Image: New York Times

The union plans to have its 26,000 Chrysler workers vote on the deal by Wednesday.

Chrysler said the agreement, reached during marathon negotiations over the weekend, satisfied the requirements laid out by the Obama administration for a deal by an April 30 deadline.

Even with the agreement, Chrysler is expected to seek Chapter 11 protection, in a case mapped out by the government in advance, including safeguards meant to protect worker benefits, people with knowledge of the company’s plans said Sunday night.

A new company would be set up with the best assets of Chrysler, these people said. Fiat of Italy would own 20 percent to 35 percent of the new Chrysler, they said, with the government also holding a stake. Some of the equity in the new company would also be given to Chrysler’s creditors as repayment.

These people spoke on condition of anonymity because the deals had not been finalized.

The Treasury Department has also reached an agreement with Daimler of Germany, the former owner of Chrysler, to settle tax and other claims left over from its sale of Chrysler in 2007 to Cerberus Capital Management, the private equity firm.

In order to persuade the union to back the sale to Cerberus, Daimler agreed to pay $1 billion to Chrysler if the company’s pension plans were terminated in a subsequent bankruptcy filing. Details of the Treasury’s deal with Daimler were not available.

Last week, the union reached an agreement in principle with the administration and Chrysler that would protect workers’ pensions in the event of a bankruptcy filing and provide for a change in the financing of a health care trust set up in 2007.

Click here to read the entire article.

(Source: AutoBlog, New York Times, Jalopnik)

 REPORT: Bill Ford, Jr. “shocked” at Wagoner’s ousting…Some say GM taking government loans (as opposed to private sector loans) changed the rules, and the government needed to protect its investment; others say it was government interference. Regardless, the way things are going, we would be surprised if that were the last “shocking” development in the car industry saga.[Source: The Detroit Free Pre…

 (Source: Business Week)

As the commercial model of India’s microcar is unveiled, U.S. carmakers would do well to learn from the innovations that brought it about

When Tata Motors (TTM) unveiled a prototype of its Nanomicrocar at the Delhi Auto Show in January 2008, auto executives around the world were aflutter. Quickly, they hustled teams to India to document the planned $2,000 “people’s car.” And industry watchers and innovation experts soon reported on the engineering and supply-chain breakthroughs behind the car.

Some 14 months later, Tata is set to show off the commercial version of the Nano, on Mar. 23. Today, the U.S. auto industry is struggling to survive, with General Motors (GM), once the world’s biggest carmaker, on the brink of bankruptcy. Look beyond the Nano halo and it’s clear that Tata Motors has problems of its own, from the $2.3 billion in debt it took on to purchase Jaguar and Land Rover from Ford Motor (F) last year to the sums sunk into the Nano assembly plant in West Bengal that had to be abandoned. On top of that, there are the Nano competitors in development.

Still, no one disputes that the Nano is innovative on multiple levels—from its engineering to its marketing to its manufacturing. So it’s hard to avoid the question: What can a humbled Detroit learn from the Tata Nano?

A lot. The lessons start with the vision of Ratan Tata, chairman of Tata Motors’ parent, Tata Group, to create an ultralow-cost car for a new category of Indian consumer: someone who couldn’t afford the $5,000 sticker price of what was then the cheapest car on the market and instead drove his family around on a $1,000 motorcycle. “Just in India there are 50 million to 100 million people caught in that automotive chasm,” says vice-president Vikas Sehgal, a principal at Booz & Co. And yet none of the automakers in India were focused on that segment. In that respect, the Nano is a great example of the so-called blue ocean strategy.

ROADS TO GREATNESS

“Great companies are built on creating new markets, not increasing market share in existing ones,” says Vijay Govindarajan, a professor at Tuck School of Business at Dartmouth College and chief innovation consultant at General Electric (GE), who quickly runs off 10 lessons for Detroit. Among them: U.S. automakers should focus less on incremental improvements to existing cars or adding a new model to the Cadillac line in order to compete against Lexus, and think more broadly about new market opportunities. Where, in other words, are Detroit’s blue oceans?

Click here to read the entire article.

 (Source:  Detroit Free Press)

The Obama administration announced today a $5 billion financing plan to aid struggling auto suppliers, the first move by the president toward a broader rescue of the U.S. auto industry.

(Source: Detroit News via Autobloggreen)

 After driving the Chevy Volt prototype and sitting down for a number of discussions, the members of the president’s task force on the auto industry have returned to Washington. While the team was in Michiganover the past few days, they had a chance to see GM’s latest technology, look at what Chrysler has brewing, and spent time reviewing the viability plans of the automakers.

“We have been and will continue to work as hard and tirelessly as we can,” the official said. “This is obviously a very substantial undertaking and we want to move with all deliberate haste.”

The group spent most of the day in Detroit, visiting UAW President Ron Gettelfinger and other union officials in the morning before heading to Warren for meetings with GM and Chrysler.

Advisers to the task force visited Chrysler’s Warren truck assembly plant, meeting Chairman and CEO Robert Nardelli and other top executives, the company said in a written statement.

“In addition to meeting, the group toured the assembly plant and reviewed Chrysler current and future products, including electric and hybrid vehicles,” the company said. The meeting also included Chrysler Vice Chairmen Tom LaSorda and Jim Press and Chief Financial Officer Ron Kolka.

(Source: Wall Street Journal)

President Barack Obama’s auto team will spend Monday at the Detroit home of the Big Three as the administration begins to narrow its options for helping the reeling auto sector.

The field trip wraps up nearly three weeks of fact gathering by the team since General MotorsCorp. and Chrysler LLC submitted their rescue plans to the Treasury Department in the hopes of winning billions more in government loans. Ford Motor Co. is not seeking government aid.

Top Treasury Department advisers Steven Rattner and Ron Bloom, who are leading the auto task force, plan to use the day in Detroit to hone an array of lingering questions surrounding the companies’ rescue plans, which many analysts have criticized as overly optimistic. The team will also meet with the United Auto Workers union to discuss its willingness for deep compromises over wages, staff cutbacks and funding for its retiree health plan.

The weeks ahead are filled with peril for both the White House and the auto makers as administration officials face a March 31 deadline for deciding whether to give the companies nearly $22 billion more in federal assistance.

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