Post Tagged with: "President Obama"

US Government put its money where its mouth is; Orders $285 Million In New Cars From Detroit

April 10, 2009 at 11:01 am

(Source: Jalopnik,  Freep & World Car Fans)

Looks like American automakers have found at least one more buyer for their vehicles. The U.S. government is planning on the purchase of $285 million worth of fleet vehicles that get better gas mileage than the current fleet. Under the plan, the General Services Administration will purchase more than 17,500 vehicles as a part of their existing deals with Chrysler, Ford, and General Motors.

U.S. President Barack Obama, and his administration, have said the purchases will take place by 1 June. Although it is unclear what will happen to the older fleet vehicles being replaced, many will likely be sold at government auctions.

The purchase is hardly a surprise. In the much talked about stimulus package approved by Congress, $300 million was included for the automotive purchase. This is not a gigantic purchase in the grand scheme of things, as the Big Three sold a combined total of 380,000 vehicles for March 2009. Still, the move may help to bolster confidence in the sector, while even a marginal increase in revenue would be welcomed by the automakers.

More than 14% of the vehicles will be hybrid sedans. 2,500 orders for the vehicles, which will likely include the Chevy Malibu, Ford Hybrid Fusion, and Saturn Aura, will be placed by the end of next week.

Image: Jalopnik

If nothing else, the move underscores the administration’s willingness to put its money where its mouth is: Last week, Obama sent GM and Chrysler back to the drawing board, saying they needed more aggressive restructuring plans if they were to get more government loans to survive. 

But he also promised this big government buy of fuel-efficient vehicles and created a special office to help communities in Michigan and elsewhere struggling with the downturn in the industry. In a prepared statement released today along with details of the planned purchases, Obama said, “The problems that caused this economic crisis weren’t created in a day and it will take time and hard work to get our economy back on track. But I am 100% committed to a strong American auto industry, and we will stand with America’s auto workers and their families during these difficult times.”

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Germany increases subsidy to 5 Billion Euros, tripling incentives for its “Cash for Clunker” (Abwrackprämie) program

April 8, 2009 at 7:20 pm

(Source: Telegraph, UK) Germany is more than tripling the incentives on offer to buyers of new cars as it attempts to boost its auto industry, which employs around 15pc of the nation’s workforce.

The scheme offers German consumers €2,500 for trading in vehicles more than nine years old if they buy a car that is less than one year old.

Chancellor Angela Merkel’s coalition government, which is facing re-election on September 27, agreed proposals that will increase the amount of government funds available for car subsidies to €5bn (£4.5bn) from €1.5bn. 

The programme was due to expire on May 31, but the government has extended it until the end of 2009.

Ulrich Wilhelm, Mrs Merkel’s spokesman, said the new funding level would cover 2m cars, compared with 600,000 under the previous plan. The scheme has given a vital boost to German car sales, with new registrations in March hitting the highest level since 1992. “This is a massive election gift. Car dealers and buyers will be completely over the moon,” said Ferdinand Dudenhoeffer, director of the Centre for Automotive Research at the University of Duisburg-Essen in an interview with Bloomberg.

Click here to read the entire article.  

TransportGooru has compiled several articles in the past reporting on similar efforts in UK (which is now contemplating introduction of  a similar program after watching the Germans successfully implement the program) & USA.  Here are the links to some of the earlier articles:

Consumer Assistance to Recycle and Save (CARS) Act revives “Cash for Clunkers” scrapping plan in U.S

Germany plans to extend Abwrackprämie aka “Environmental Bonus”

The bickering starts over the implementation of the Cash for Clunkers legislation

Obama Favors “Cash for Clunkers”

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The “Chosen One” – NY Times profiles Obama’s Car Czar-lite, Mr. Steven Rattner

April 8, 2009 at 12:01 am

(Source:  New York Times; Photo: Jay Mailin/Bloombern News)

Obama’s Top Auto Industry Troubleshooter

After 26 years as one of the most politically connected investment bankers on Wall Street, Steven Rattner finally took a job in Washington — only it is not quite the one friends and business associates thought it would be.
Washington buzzed that Mr. Rattner, a big name in the New York media world who, friends say, aspires to a cabinet post like Treasury secretary, would be named the car czar of the Obama administration. Instead, he is one of 14 people on a committee that is orchestrating the rescue of the giant automakers.

Still, Mr. Rattner, a well-known media banker, is playing a central role as car czar lite, traveling to Detroit to visit plants, meeting with the automakers’ bankers, unions and bondholders, and advising the White House on which companies seem salvageable and how. If he succeeds, he may get a chance at a larger job in the administration.

That is a big if. He has to push the car companies to overhaul decades-old practices, persuade his former colleagues on Wall Street to lower their demands on the automakers’ debt payments and appeal to union leaders who may be turned off by Mr. Rattner’s financial success.

Mr. Rattner said in an interview that he has long been interested in returning to Washington, where he worked as a newspaper reporter 30 years ago, and that he hoped to stay on for some time to work on aspects of the financial crisis.

“In the fall, as the economic crisis intensified, it became clearer and clearer to me that this was a moment of historic importance,” Mr. Rattner said, “and if one was ever to have an interest in serving your country in the area of economic policy, this was the moment.”

Mr. Rattner has been among the most politically connected people in the banking industry. He and his wife, Maureen White, who together have been referred to by New York magazine as the “D.N.C.’s A.T.M.,” have hosted many Democratic fund-raisers at their lavish apartment on Fifth Avenue. They were initially Clinton supporters, but they hosted events for Barack Obama after he sealed the nomination.

Click here to read the entire article.

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President Obama’s Nominees for USDOT Administrations: FHWA – Victor Mendez; RITA – Peter Appel

April 3, 2009 at 12:43 pm

(Source: Washington Post)

Victor M. Mendez, director of the Arizona Department of Transportation, is Obama’s pick for administrator of the Federal Highway Administration. Mendez worked under former governor Janet Napolitano before she became Obama’s homeland security secretary. In Arizona, Mendez helped implement the state’s multi-billion dollar freeway system and gained extensive experience in transportation funding, technology, infrastructure, research and planning.

Joining Mendez at the Transportation Department will be Peter H. Appel, Obama’s nominee for administrator of the Research and Innovative Technology Administration. A principal with the global management consulting firm of A.T. Kearney, Inc., Appel has over 20 years of experience in transportation and infrastructure projects. He has helped organizations in the railroad, trucking, airline and ocean shipping industries, and he previously served as a top aide at the Federal Aviation Administration and at Amtrak.

Below are the brief Bios of the nominees as shown in Washington Post.

Victor M. Mendez, Nominee for Administrator, Federal Highway Administration, Department of Transportation

Victor M. Mendez was a member of former Arizona Governor Janet Napolitano’s Cabinet as the Director of the Arizona Department of Transportation. He has extensive experience in transportation including innovations in the areas of funding and financing, technology, infrastructure, research, planning and internal operations. Mendez has served as a past President of the American Association of State Highway and Transportation Officials and in 2008 he was selected as Leader of the Year in Public Policy in Transportation by the Arizona Capitol Times. Previously, Mendez was selected as the Deputy State Engineer to lead the implementation of the Phoenix area’s multi-billion dollar freeway system. Mendez earned a Masters of Business Administration degree from Arizona State University and a Bachelors of Science in Civil Engineering degree from the University of Texas at El Paso. 

Peter H. Appel, Nominee for Administrator, Research and Innovative Technology Administration, Department of Transportation

Peter H. Appel is a Principal with the global management consulting firm of A.T. Kearney, Inc. He has led business improvement initiatives for clients in the private and public sectors, with a focus on Transportation and Infrastructure. Appel has over 20 years of experience in Transportation, and has supported organizations in the railroad, trucking, airline, and ocean shipping industries with growth strategy, supply chain improvement, post-merger integration, public-private partnerships, and other key business and policy issues. Previously, Appel served as the Special Assistant to the Administrator of the Federal Aviation Administration, and as Assistant Director for Pricing and Yield Management at Amtrak. Appel earned his bachelor’s degree from Brandeis University in Economics and Computer Science with Highest Honors, and received his Master of Science in Transportation from the Massachusetts Institute of Technology.

Click here to read more.

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Obama Favors “Cash for Clunkers”

April 1, 2009 at 7:43 pm

(Source: TreeHugger); Video: YouTube)

 Yesterday President Obama told Chrysler and GM that it is time to shape up or ship out. He also said he supports a program that would pay people to trade in older cars for newer, more fuel efficient vehicles. Europe has successfully tried this, but could it work here and would it be good for the planet? 

Speaking about a so called “cash for clunkers” program, Obama said:

“Such fleet modernization programs, which provide a generous credit to consumers who turn in old, less fuel-efficient cars and purchase cleaner cars, have been successful in boosting auto sales in a number of European countries.”

Here is an analysis from a News portal on what it could mean for consumers.

This is especially true in Germany, where new auto sales are said to have risen 20 percent last month. Of course, Europe has much higher gas prices than we do, increasing the desire to go with a greener car. They are also taxing people for their carbon output, again incentivizing people to get rid of heavier, more inefficient cars and trucks., A gas tax and other complimentary taxes that would bring our prices in line with Europe’s is politically unlikely, so a trade-in program may have some political legs given Congress’s new found attention on the climate. 

Another supporter is Ohio Rep. Betty Sutton, who sponsors the CARS Act, which creates vouchers of between $3,000 and $5,000 for people to trade-up. Given the president’s announcement yesterday, it’s suddenly a viable question to ask if there will be any American cars to buy if a cash for clunkers plan was enacted.

Here are some of the related posts from TransportGooru:

Consumer Assistance to Recycle and Save (CARS) Act revives “Cash for Clunkers” scrapping plan in U.S

Germany plans to extend Abwrackprämie aka “Environmental Bonus” (in plain english, car scrapping program)

The bickering starts over the implementation of the Cash for Clunkers legislation

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Fear strikes the Kingdom! Saudi Oil Minister Urges Caution on Renewable Energy

April 1, 2009 at 7:12 pm

(Source: Green, Inc. – New York Times via AutoBlogGreen )

Al-Naimi

Fears about energy security, and last year’s oil price spike, have sparked a serious push for renewable energy in the United States, the world’s largest oil consumer.

The trend is apparently making the world’s largest oil producer, Saudi Arabia, nervous.

Speaking at a major energy conference earlier this month, Ali Al-Naimi, the Saudi oil minister, offered an impassioned defense of oil, which he called “an enabler of progress and prosperity.” He cautioned that the current economic crisis — and the uncertainties over future oil consumption — could force producers to trim their supplies, and hence could cause a new price shock.

Mr. Naimi also offered his strongest public criticism against the drive for alternative fuels — which he referred to as “supplemental” energy — and the inconsistent policies of consuming countries. Although he never once mentioned either the United States or President Obama by name, these were clearly his targets.

But as I listened to the speech carefully again this week, it also struck me as one of the most important discourses on the economics of petroleum made by a senior oil official in recent times.

A video of the session is available here — though it takes a while to get through other speakers. (The relevant parts start around the ninth minute and last about 20 minutes.)

Mr. Al-Naimi, without doubt the most influential spokesman for the petroleum industry, began his address by praising the virtues of oil, the mainstay of the Saudi economy for 60 years.

“Oil is expected to retain its leading position as the world’s largest single source of energy,” Mr Al-Naimi said.

An article on AutoBlogGreen says:  “Court disaster.” “Catastrophic.” “In their infancy.” These are logical statements for someone who represents the Saudi oil industry, but it sure sounds like someone is working hard to dial down expectations for anything that threatens the dominance of oil. 

Thanks to AutoBlogGreen for pointing to a video on OPEC’s website featuring Mr. Naimi’s speech (starting at minute 9 in the video).

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Brookings Musings: Driving the Auto Industry to a New Place

March 31, 2009 at 4:45 pm

(Source:  Howard Wial, The Brookings Institution)

In announcing restructuring hurdles for the struggling auto industry, President Obama said that he wants General Motors to create “a credible model for how not only to survive, but to succeed in this competitive global market.” The steps that he announced—such as requiring GM to cut the number of brands and reduce its debt if it is to receive further federal assistance, providing federal backing for car warranties, and providing new incentives for car purchases—will help GM survive… in the short term.

So will other steps that the president’s auto task force recommended, such as cutting the number of dealerships.

However, the president’s announcement simply does not go far enough to help GM succeed in the long run. As Susan Helper and I pointed out in a previous Brookings commentary, GM’s long-run problems are primarily problems of quality and innovation, not problems of cost. Neither the president’s statement nor his task force’s analysis addresses those long-run problems.

Improving quality requires adopting world-class production and design methods that tap the knowledge of suppliers and production workers. The federal government should condition further aid to GM and its suppliers on the company’s agreement to implement—in cooperation with the United Auto Workers and suppliers—the recommendations of a federal auto industry manufacturing assistance program patterned after the existing Manufacturing Extension Partnership Program.

Spurring innovation requires doing the necessary research to develop the next generation of alternative-powered cars. Part of any additional federal aid to automakers and suppliers should go to support their participation in a consortium that would perform that research.

Click here to read the entire article.

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Understanding Obama’s Auto Warranty Plan

March 30, 2009 at 7:45 pm

 (Source: New York Times – Wheels)The Big (Troubled) Three


On Monday morning, President Obama announced that the Treasury Department would back the warranties of new General Motors and Chrysler vehicles.

“If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always,” President Obama said during a speech from the White House. “Your warranty will be safe. In fact, it will be safer than it’s ever been, because starting today, the United States government will stand behind your warranty.”

The administration’s plan to stand behind new-car warranties for G.M. and Chrysler is intended to reassure consumers worried about buying domestic vehicles. And to a large extent, the plan should do exactly that. But people who already own a G.M. or Chrysler vehicle are not covered by this program and it also does not cover safety recalls, which can occur years after the warranty expires.

In a nutshell: The Obama warranty commitment program sets up special warranty accounts that will be used only if the automaker runs out of money. If that happens, the government will “appoint a program administrator who, together with the U.S. Government, will identify an auto service provider to supply warranty services.” Those accounts will be funded with 125 percent of the expected warranty cost. The automaker will contribute 15 percent and the government 110 percent. The federal funds will come from the Troubled Asset Relief Program.

That could be a lot of money (except, perhaps, by the government’s current standards). For example, G.M. paid $4.5 billion worldwide in 2007 on warranties and $3.9 billion during the first nine months of last year, according to a filing with the Securities and Exchange Commission.

Click here to read more.  For those interested in reading the President’s Warranty Program, here is a PDF file.

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Ultimatum Issued: Gov’t rejects automaker restructuring plans, new deadlines set

March 30, 2009 at 12:41 pm

(Source: Autoblog; Image: Doug Mills @ New York Times)

 

President Obama has just finished his press conference on the government’s determination of the viability of General Motors and Chrysler, and the gist is that both automakers have failed to convince the feds that their business plans deserve further investment. Obama and his task force will give GM enough working capital to survive another 60 days and prove its viability, though no dollar amount was given. Chrysler, meanwhile, is being given another 30 days and working capital up to $6 billion to finalize a partnership deal with Fiat. If a deal can’t be made and another partner is not found, Chrysler will get no more federal aid. Also, Fiat won’t be allowed to take a majority stake in Chrysler until the automaker repays all the money it has borrowed from the government so far. 

Perhaps the biggest news from the press conference is that the U.S. government will now fully back the warranties on vehicles sold by General Motors and Chrysler in the hopes that buyers will continue to consider their products amidst these tumultuous restructuring efforts. Also, the President has pledged to work with Congress to find funds to pay for a U.S.-version of the Cash for Clunkers program that has been so successful in Germany. 

BREAKING NEWS Report from WSJ: The Obama administration’s leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.

Click here to read the entire article.  Also, shown below is the PDF version of Restructuring Fact Sheet  compiled by The Truth About Cars.
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Change you can believe in! GM chief resigns at the behest of White House

March 30, 2009 at 9:41 am

 (Source:  CNNMoney.com Video: MSNBC via YouTube)

GM chief out in bailout shakeout

Rick Wagoner forced out of top spot as Obama administration moves to overhaul automaker.

General Motors CEO Rick Wagoner announced his resignation early Monday as the Obama administration gave automakers failing grades for their turnaround efforts.

White House and GM sources had told CNN Sunday that Wagoner would resign as part of the federal government’s bailout strategy for the troubled automaker.

“On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have,” Wagoner said in a statement posted to the GM Web site.gm_chrysler_chart2.gif

He is being replaced by GM’s president and chief operating officer, Fritz Henderson. Kent Kresa will serve as interim chairman.

“Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy, and support among GM’ers worldwide to succeed,” Wagoner said.

Click here to read the entire article.

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