CHRYSLER on the Brink of BANKRUPTCY

Associated Press - WASHINGTON - Chrysler will file for bankruptcy after talks with a small group of creditors crumbled just a day before a government deadline for the automaker to come up with a restructuring plan, President Barack Obama said Thursday.

The Obama administration said it had long hoped to stave off bankruptcy for the nation's third largest automaker, but it became clear that a holdout group wouldn't budge on proposals to reduce Chrysler's US$6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by the Thursday deadline.

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Chrysler will file for Chapter 11 bankruptcy protection in New York, giving Chrysler time to galvanize a partnership with the Italian car maker Fiat Group SpA. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.

The deals give Chrysler "a new lease on life," President Barack Obama said.

"This is not a sign of weakness," he said. "I have every confidence that Chrysler will emerge from this process stronger and more competitive."

Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties.

The officials, speaking on condition of anonymity because the terms of the bankruptcy had not yet been released, said there would be no job losses or plant closing due to the Chapter 11. But it will be up to Fiat and Chrysler to decide whether to restructure the steadily shrinking company.

Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.'s finance arm. The new GMAC will get government support.

The Treasury Department's auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation's automakers.

Along with the Fiat deal, the United Auto Workers ratified a cost-cutting pact Wednesday night.

Treasury reached a deal earlier this week with four banks that hold the majority of Chrysler's debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 per cent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and they were holding out for a better deal.

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Fiat will obtain a 20 per cent stake in Chrysler in return for giving the company access to its fuel-efficient technology,

A person briefed on Wednesday night's events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

Fiat will obtain a 20 per cent stake in Chrysler in return for giving the company access to its fuel-efficient technology, a move toward cleaner cars that the Obama administration thinks is critical to Chrysler's future survival. The company has committed to building Fiat cars in Chrysler factories, to be sold as Chryslers.

The bankruptcy will be filed under a section of the law that allows a company to shed bad assets and some liabilities. The administration expects it to last only up to 60 days.

Obama's auto task force in March rejected Chrysler's restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat. The company has borrowed $4 billion from the federal government and needs billions more to keep operating.

The UAW agreement, which would take effect May 4, meets Treasury requirements for continued loans to Chrysler Corp., and includes commitments from Fiat to manufacture a new small car in one of Chrysler's U.S. facilities and to share key technology with Chrysler.

Meanwhile, the Fiat partnership means Chrysler CEO Robert Nardelli could be out of a job. In an April e-mail to employees, he said that if the deal is completed, Chrysler would be run by a new board appointed by the government and Fiat. The new board, Nardelli wrote, would pick a CEO "with Fiat's concurrence."

Sergio Marchionne, CEO of the Italian automaker, told reporters earlier this month that he could run Chrysler. Obama said Wednesday that Fiat's management "has actually done a good job transforming their industry."

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Obama Forces GM CEO Rick Wagoner to resign

The Obama administration pledged only to fund GM's operations for the next 60 days while it develops a sweeping restructuring plan, instead of granting GM's request for up to a further US$16-billion in loans.

GM CEO Rick Wagoner, who had presided over the company's rapid decline in the past five years and had run the automaker since 2000, was forced out at the request of the autos panel headed by former investment banker Steve Rattner. A majority of GM's board will also be replaced.

"We are left to look back and say that Wagoner's appointment as both chairman and CEO in 2003 was little more than an act to ensure the dynasty of GM boardroom arrogance and failure continued," said Howard Wheeldon, senior strategist at brokerage BGC Partners.

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Wheeldon said Wagoner's departure had been all but inevitable since the automaker sought government funds and said he was disappointed the authorities had not insisted on an external replacement.

Wagoner protege and GM President and Chief Operating Officer Fritz Henderson was named as new CEO. Wagoner's departure came as the Obama administration came under fire for not blocking bonuses to executives at American International Group Inc.

The senior labor leader of GM's German brand Opel, being spun off with the UK's Vauxhall and seeking investors and government support, said the move was overdue.

In Europe, auto stocks fell on concerns about the broader industry impact of the failure of a major U.S. producer. The DJ Stoxx European autos index fell 6.4% by 1000 GMT, while PSA Peugeot Citroen fell 7.7%.

In France PSA Chairman Thierry Peugeot said in a statement the exceptional difficulties faced by the industry warranted a change in management, but Streiff defended himself saying his policies had equipped the group to weather the storm.

Some analysts viewed the appointment of Philippe Varin as positive.

"It brings somebody in that can look at the problem with fresh eyes. The hope will be that he will have a similar impact here to the impact (Sergio) Marchionne had at Fiat, and indeed Varin had at Corus," said Credit Suisse analyst Stuart Pearson.

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Elsewhere, Russia's Avtovaz bucked the trend, its shares surging after Prime Minister Vladimir Putin pledged 20 billion rubles in aid, while Spain's plan to grant subsidies for green cars won approval from the European Commission.

Chrysler, controlled by Cerberus Capital Management, was given 30 days to complete an alliance with Italy's Fiat or face a cut-off of its government funding that could force its liquidation.

Fiat was not immediately available for comment.

The autos panel rejected a claim by Cerberus that Chrysler could be viable on its own, citing its relatively small size, weak product line-up and declining U.S. market share.

If Chrysler can complete a tie-up with Fiat and cost-saving deals with creditors and its major union, the Treasury would consider investing up to another $6 billion, officials said.

U.S. officials said there had been progress in recent negotiations involving the task force. Fiat had agreed to take less than the 35% stake in Chrysler the two companies had first negotiated, the senior official said.

Meanwhile, Henderson, a key architect of GM's now-rejected turnaround plan, was charged with working with U.S. officials and advisers to develop a more aggressive restructuring.

"We believe our approach to GM is starting with a clean sheet of paper," the senior official said.

GM bondholders, the official said, could have to take less than the US33-cent-on-the-dollar payout they have been offered and should abandon hope of a government guarantee.

The Obama administration had also not ruled out a quick bankruptcy process for either GM or Chrysler, he said.

Wagoner had been outspoken in his opposition to a Chapter 11 reorganization, saying it would drive away consumers and probably lead to GM's liquidation.

GM had asked for more than US$16-billion in new government loans, while Chrysler wanted $5 billion to ride out the weakest market for new cars in almost 30 years.

GM has lost about US$82-billion since 2005 when its problems began to mount in the U.S. market. GM stock has also lost about 95% of its value since Wagoner took over as CEO. Although he inherited many of the company's deeper problems, his critics say he failed to act fast enough to resolve them.

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OBAMA Takes over GENERAL MOTORS - The Bail-out / Buy out

With Barack Obama in the driver’s seat, the U.S. auto industry is set to veer on a new course away from the production of gas guzzlers to smaller, more fuel efficient cars.

Barack Obama, the U.S. president, is demanding General Motors Corp. and Chrysler accelerate their production of “green” vehicles as part of conditions unveiled Monday that the ailing automakers need to meet before they receive billions more in bailout money from U.S. taxpayers.

The requirement is part of his administration’s broader effort to end America’s addiction to foreign oil and improve environmental standards. Industry analysts said Monday that includes an ambitious plan to dramatically reshape the U.S. auto industry and give government an unprecedented role in its future.

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The pit crew installed to help oversee the shake-up includes Steven Rattner, a Wall Street financier who earlier this year was named to lead the administration’s auto task force; Edward Montgomery, who will fight for autoworkers and the communities that have been hard hit by the sector’s slump; and Fritz Henderson, who was named chief executive of General Motors after his boss Rick Wagoner stepped down over the weekend at the government’s request.

At a speech at the White House Monday explaining the latest ultimatums GM and Chrysler face to get more bailout funds – or go bankrupt — Barack Obama said he believes the U.S. auto industry can once more out-compete the world.

Revamping U.S. automakers can lead to “a 21st century auto industry that is creating new jobs, unleashing new prosperity, and manufacturing the fuel-efficient cars and trucks that will carry us toward an energy independent future,” Barack Obama said. “I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars.”

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It is unclear at this stage whether the restructuring of GM and Chrysler can occur without either or both companies winding up in bankruptcy court first.

Worries that GM could be headed in that direction contributed to a stock-market sell-off Monday. The Dow Jones Industrial Average sank more than 254 points to 7,522.02. Ongoing worries about the health of U.S. banks also helped drag stocks down. Shares of GM plunged 25%.

The company’s much smaller rival, Chrysler, which is privately held, was given until the end of April to complete a deal with Fiat SpA.

Barack Obama administration showed it is calling the shots at GM by demanding Mr. Wagoner’s exit.

Industry analysts considered the ouster a symbolic move to appease an angry American public upset over the billions in taxpayer dollars that have gone to bail out GM and Chrysler.

Fritz Henderson, GM’s chief operating officer and Mr. Wagoner’s right-hand man, stepped in as interim CEO.

The administration is giving him 60 days to boost the restructuring efforts or the company will face bankruptcy.

“We believe it’s going to be tough to get that accomplished,” said George Magliano, director of auto industry research at IHS Global Insight. “The government has raised the bar so high. I suspect what’s likely to happen is that current management at General Motors will be eliminated and the government will install people that are favorably disposed to the direction it wants to take General Motors.”

To further its green effort, the Barack Obama administration hopes to persuade U.S. Congress to use some of the U.S. government’s US$787-billion stimulus program to fund tax rebates for consumers who turn in their old, less fuel-efficient cars for more environmentally friendly models.

“Obama is going to restructure GM to be a producer of clean, fuel efficient vehicles and make laws and regulations so that automakers in the American market will have to sell them,” said Mr. Magliano. “It’s a way to get American consumers to drive them that doesn’t require the thing that’s political suicide, which is to raise gas prices.”

Some industry analysts questioned the move to emphasize the production of such vehicles when gas prices are falling and consumers don’t feel like they can afford new cars, particularly the usually pricier green models.

“Buying those kinds of cars is not really what’s on people’s minds right now,” said Jessica Caldwell, an industry analyst with Edmunds.com.

Edmunds’ AutoObserver.com Editor Michelle Krebs, added in a note: “The market for fuel efficient vehicles rises and falls with gas prices. Until there is a consistent and compelling reason for consumers to buy hybrids, such as stabilized gas prices, automakers cannot realistically turn over their product lines to that more expensive, less profitable product that has only achieved 2% market share after all these years in production.”

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SAAB FILING FOR BANKRUPTCY

STOCKHOLM (AP) Saab has filed for bankruptcy protection and intends to split from its troubled parent company, General Motors.

GM had asked Sweden for government help for Saab but had to take 'no' for an answer.

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With no help forthcoming from Sweden's government, Saab has filed for bankruptcy protection. The goal is to split from its parent company, General Motors. GM says its exploring all options.
General Motors' subsidiary has filed for reorganization, a step taken to stave off bankruptcy protection.

General Motors' Swedish subsidiary, Saab, confirmed on Friday that it has filed for reorganization, a step to avoid bankruptcy protection, as the company seeks to pay down pending debt and return to profitability.

"I can confirm that Saab has filed for reorganization. It is not a bankruptcy situation. The aim is to have Saab as a freestanding entity," a spokesman for the firm told Forbes.

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SAAB is seeking funds from both public and private sources but will operate as usual with government funding during the reorganization process.

Under Swedish law, when a company files for reorganization, it means that it is looking for ways to raise capital to pay off debt. One of the solutions a company might consider is seeking a buyer to could acquire an equity stake.

The legal process will be headed by an independent administrator appointed by court as the company seeks funds from both private and public sources, TradeTheNews.com reported. Saab will operate as usual, with the central government providing assistance during the process, which will be executed over a 90-day period.

The Swedish government has categorically denied the possibility of buying equity in its struggling carmakers. "The Swedish state and taxpayers in Sweden will not own car factories," Industry Minister Maud Olofsson said on Wednesday. "Sometimes you get the feeling that [GM] is a small, small company, but it is the world's biggest automaker, so we have a right to make demands."

Saab builds fewer than 1 million vehicles per year, in contrast to Renault or Volkswagen, whose capacity ranges between 2 million and 3 million cars per year.

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"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," Democratic Senate Majority Leader Harry Reid said. News of the failed bid to broker emergency loans sent share prices tumbling in Asia and in early European trade. The dollar also fell sharply, hitting a 13-year low against the yen.

For GM and Chrysler, the last hope for a government lifeline rested with the White House, which has so far refused to draw on the 700-billion-dollar Wall Street bailout fund for the reeling car companies. The financial bailout money "may be where they go next," said Republican Senator John Thune. Reid called on President George W. Bush to reconsider his administration's opposition to dipping into the Wall Street rescue fund, known as the Troubled Asset Relief Program (TARP).

"I would hope that the president who has worked so well with us the past few weeks on this legislation would now consider using the TARP money to help the auto industry and the workers of this country." Democrats initially pushed for a portion of the funds for the auto bailout but the Bush administration refused.

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The White House , which suffered a stinging political defeat after backing the Democrats' proposal for the short-term auto rescue loans, did not say if it would relent on freeing up the financial bailout funds. "It is disappointing that Congress failed to act tonight," White House spokesman Scott Stanzel told AFP. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy," Stanzel said. "We will evaluate our options in light of the breakdown in Congress."

GM , which has warned it could run out of cash within weeks, said in a statement it was "deeply disappointed" at the result. Before the vote, the once mighty car company acknowledged that it was considering bankruptcy among other options and had hired a team of legal advisers. Chrysler said it would "continue to pursue a workable solution to help ensure the future viability of the company."

GM and Chrysler are the most troubled of the iconic Big Three, with Ford in better financial shape but worried about the knock-on effects if their counterparts go down. Along with Bush, president-elect Barack Obama had called on Congress to approve the bailout, citing the dangers of a "rippling effect" from the collapse of the companies. Republican Senator Bob Corker, who spearheaded his party's alternative proposal, said the breakdown came over differences on employee compensation, and said that a union representative from the United Auto Workers was present for the talks. "We are about three words -- three words -- away from a deal," he said.

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Democrat Chris Dodd, chairman of the Senate banking committee, criticized Republican senators for pushing for steep wage cuts and warned the auto industry's fate was tied up with the wider economy. "I'm deeply saddened. But more than saddened, I'm worried," Dodd said. "This will fail, we will go home, and I'm afraid our country will be in deeper and deeper trouble." For workers in the industry, "this will not be a joyous season wondering whether or not their jobs, their livelihoods, their homes, their children's futures are at risk," he said.

The legislation would have provided GM and Chrysler bridge loans to operate until March 31, the date by which they must have crafted a restructuring plan that ensures their long-term survival while repaying government aid.

The bill also required the president to name a special designee, or "car czar," who would oversee the process.

Foes of the plan have said the automakers -- and not taxpayers -- must bear the burden of bad business decisions and declare bankruptcy.

NOT FOR NORTH AMERICAN MARKET - FORD 2009 FIESTA ECOnetic - 65 Miles per Gallon

SOURCE http://allautomobile.blogspot.com


If ever there was a car made for the times, this would seem to be it: a sporty subcompact that seats five, offers a navigation system, and gets a whopping 65 miles to the gallon. Oh yes, and the car is made by Ford Motor, known widely for lumbering gas hogs.

Ford's 2009 Fiesta ECOnetic goes on sale in November. But here's the catch: Despite the car's potential to transform Ford's image and help it compete with Toyota Motor and Honda Motor in its home market, the company will sell the little fuel sipper only in Europe. "We know it's an awesome vehicle," says Ford America President Mark Fields. "But there are business reasons why we can't sell it in the U.S." The main one: The Fiesta ECOnetic runs on diesel.

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Automakers such as Volkswagen and Mercedes-Benz have predicted for years that a technology called "clean diesel" would overcome many Americans' antipathy to a fuel still often thought of as the smelly stuff that powers tractor trailers. Diesel vehicles now hitting the market with pollution-fighting technology are as clean or cleaner than gasoline and at least 30% more fuel-efficient.

Yet while half of all cars sold in Europe last year ran on diesel, the U.S. market remains relatively unfriendly to the fuel. Taxes aimed at commercial trucks mean diesel costs anywhere from 40 cents to $1 more per gallon than gasoline. Add to this the success of the Toyota Prius, and you can see why only 3% of cars in the U.S. use diesel. "Americans see hybrids as the darling," says Global Insight auto analyst Philip Gott, "and diesel as old-tech."

None of this is stopping European and Japanese automakers, which are betting they can jump-start the U.S. market with new diesel models. Mercedes-Benz by next year will have three cars it markets as "BlueTec." Even Nissan (NSANY) and Honda, which long opposed building diesel cars in Europe, plan to introduce them in the U.S. in 2010. But Ford, whose Fiesta ECOnetic compares favorably with European diesels, can't make a business case for bringing the car to the U.S.

TOO PRICEY TO IMPORT
First of all, the engines are built in Britain, so labor costs are high. Plus the pound remains stronger than the greenback. At prevailing exchange rates, the Fiesta ECOnetic would sell for about $25,700 in the U.S. By contrast, the Prius typically goes for about $24,000. A $1,300 tax deduction available to buyers of new diesel cars could bring the price of the Fiesta to around $24,400. But Ford doesn't believe it could charge enough to make money on an imported ECOnetic.

Ford plans to make a gas-powered version of the Fiesta in Mexico for the U.S. So why not manufacture diesel engines there, too? Building a plant would cost at least $350 million at a time when Ford has been burning through more than $1 billion a month in cash reserves. Besides, the automaker would have to produce at least 350,000 engines a year to make such a venture profitable. "We just don't think North and South America would buy that many diesel cars," says Fields.

The question, of course, is whether the U.S. ever will embrace diesel fuel and allow automakers to achieve sufficient scale to make money on such vehicles. California certified VW and Mercedes diesel cars earlier this year, after a four-year ban. James N. Hall, of auto researcher 293 Analysts, says that bellwether state and the Northeast remain "hostile to diesel." But the risk to Ford is that the fuel takes off, and the carmaker finds itself playing catch-up—despite having a serious diesel contender in its arsenal.

BMW Recall's over 200,000 cars over Airbag Safety concerns

SOURCE: http://allautomobile.blogspot.com

BMW AG said Wednesday it was recalling 200,000 vehicles over concerns that the front passenger air bag may not deploy in a crash.

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The German automaker said the recall involves the 2006 3 Series, the 2004-2006 5 Series, and the 2004-2006 X3 compact sport utility vehicles in the United States.

The National Highway Traffic Safety Administration said in a posting on its Web site that small cracks could develop in a seat detection mat and deactivate the front passenger air bags.

NHTSA said the air bag warning lamp and the passenger air bag "on-off" light would remain on. The head protection system, however, would not be affected, the government said.

BMW spokesman Tom Plucinsky said there were no injuries or accidents reported.

If the seat detection mat fails to sense that a person is sitting in the passenger seat, it deactivates the air bag. Plucinsky said customers alerted the company when they noticed that the air bag light indicated a deactivated air bag even when a passenger sat in the seat.

NHTSA opened an investigation into the issue in September 2007 and upgraded its probe in January. In addition to the vehicles under Wednesday's recall, the ongoing investigation also includes the 2004-2006 Z4, 2006 X5, 2006 6 Series and some 2004-2006 7 Series vehicles.

BMW had received 23,739 warranty claims over the air bag system issue by early January, NHTSA said. Plucinsky could not immediately address why the additional vehicles under NHTSA's investigation were not part of the recall.

To respond to the problem, BMW said it would extend the warranty to 10 years without any mileage limit for the following vehicles: 2006 6 Series, 2006 3 Series with standard seat, 2004-2005 Z4, 2004-2006 7 Series, 2006 X5, and 2004-2006 5 Series with comfort seats.

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BMW said under the extended warranty program, the detection mat in a vehicle with the air bag system problems would be replaced at no charge to the customer.

Owners can contact BMW at (800) 525-7417.

On the Net:
BMW of North America: http://www.bmwusa.com

FORD Looses $8.67 billion in second Quarter

Ford Motor Co. said Thursday it lost $8.67 billion in the second quarter and will retool two more North American truck and sport utility vehicle plants to build small, fuel-efficient vehicles. The net loss includes $8.03 billion worth of write-offs because of a decline in value of North American assets and Ford Motor Credit Co.'s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share. Including the write-downs, Ford lost $3.88 per share in the April-June quarter, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

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Second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion. Ford also announced that it will bring six European small car models to North America by the end of 2012 as it deals with a market shift from trucks to cars brought on by high gasoline prices. The company said it will retool the Michigan Truck plant in suburban Detroit, shifting its products from large SUVs to make global vehicles off the European Focus platform by 2010. The SUVs made at Michigan Truck — the Lincoln Navigator and Ford Expedition — will be shifted to the Kentucky Truck plant in Louisville, which makes Ford Super Duty pickups.

The company also will retool the Louisville Assembly Plant, which now builds the Ford Explorer midsize SUV, to produce vehicles on the European Focus frame, starting in 2011. The company had previously announced it would retool its pickup truck factory in Cuautitlan, Mexico, to build the Fiesta subcompact for North America starting in 2010. Ford also said its Twin Cities Assembly Plant in St. Paul, Minn., will continue producing the Ranger small pickup through 2011. The plant was

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scheduled to close next year, but Ranger sales are down just 4 percent in the first half of this year, versus 18 percent for the U.S. light truck market as a whole.

The company said its write-offs included $5.3 billion in North America and $2.1 billion for Ford Credit's truck-heavy lease portfolio. Chief Financial Officer Don Leclair said most of the write-down was triggered by the drop in value of the company's truck and SUV inventory and lease residuals. Ford reported a pretax loss of $1.3 billion in North America because of the deteriorating U.S. market and the shift away from trucks. U.S. sales overall were down 10 percent in the first half of the year, with Ford's sales down 14 percent.

The company, though, continued to be profitable overseas, posting a $582 million profit in Europe and $388 million in South America. The company also made $50 million at its Asia-Pacific-Africa division.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," President and CEO Alan Mulally said in a statement.

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Ford said it does not expect a U.S. economic recovery to start until early 2010.

The company identified only three of the European small vehicles it will bring to North America: the Transit Connect small van, the European Focus and the subcompact Fiesta. Most will be built in North America, and Leclair said some might be exported. Ford already has announced that the Transit Connect will be imported from Turkey.

Ford said the other three vehicles would be identified later, including one that is unique within its segment.

Other possible vehicles are the Kuga small crossover, the C-Max small van and the Mondeo midsize car.

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Ford also announced that the next-generation Ford Explorer midsize SUV will come out in 2010 and be built on car underpinnings, making it more fuel efficient than the current truck-based model. And it announced it will build a seven-passenger car-based crossover vehicle for Lincoln in mid-2009.

2009 Volkswagon TDI Diesel coming to North America

SOURCE: http://allautomobile.blogspot.com


Volkswagen's long-awaited new family of diesel engines has finally hit the road to the United States.

The powerful and fuel-efficient engines, which account for 63% of VW sales in Europe, have been absent from the automaker's U.S. lineup for more than a year.

Diesel buyers are among VW's most eager and enthusiastic owners in the United States, but they had to do without 2008 models because the automaker was caught flat-footed without engines that met U.S. emissions standards that took effect Jan. 1, 2007.

VW will rectify that by offering the engines, which have used less fuel than gasoline-electric hybrids in some driving tests, in two 2009 model year vehicles. Both models will wear VW's TDI badge, which stands for turbocharged direct injection, two of the technologies that make modern diesels cleaner and more powerful. The Jetta Sportwagen and sedan are already in showrooms. The Jetta scored 29 m.p.g. city/40 highway in EPA tests, up from 21 city/29 highway for the 2.5-liter gasoline engine.

VW will also add a V6 diesel version of its Touareg SUV in 2009. It may add diesel versions of other models later.

The Volkswagen group's Audi luxury brand will offer its first U.S. diesel, with a 3.0-liter 221-horsepower V6 for sale in the Q7 SUV in March. Audi is expected to add diesels to other models in the United States, including the all-new A4 sport sedan that goes on sale later this year.

Tesla Motors to manufacture all electric car in California

SOURCE: http://allautomobile.blogspot.com/

Tesla Motors will build the follow up vehicle to the Tesla Roadster in California. The plan to manufacture the 4-door, 5-passenger sedan was announced earlier this week by Ze’ev Drori, CEO of Tesla Motors, and California Governor Schwarzenegger

Known as the Model S, the second addition to the company's fully-electric line-up is slated for late 2010 production and will reportedly cost around US$60,000 and make 225 miles on a single charge. The new model signals Tesla's intention to evolve beyond the boutique market targeted by the US$100,000 Roadster

“Make no mistake - we are not a niche player with a car only for the rich and famous. As our agreement with the state so clearly demonstrates, we are building a high volume ZERO EMISSION VEHICLE, manufactured in California for mid-range family use. And we aren’t going to stop there. We will continue on and build even more affordable cars. You are witnessing the debut of a new car company, a company unlike all others, a company with a disruptive technology, a company dedicated for the exclusive production of Zero Emission Vehicles,” said Ze’ev Drori.

The decision to build the new sedan in California (not New Mexico as originally planned) keeps the manufacturing operations close to Tesla's engineering and research HQ in San Carlos. Tesla’s battery pack and the final assembly of the Tesla Roadster is also currently in California.

The news also boosts California's push to attract ZEV manufacturers. The California Alternative EnergyAlternative energy and Advanced Transportation Financing Authority (CAEATFA) recently approved a new program that exempts new manufacturers from paying sales and use tax on the purchase of manufacturing equipment and Tesla will also be eligible for at least USD 1 million in Employment Training Panel Workforce Development Funds to train employees according to the company's press release.

There's no details yet on what the new car looks like or exactly when we may see it

URGENT Jeep Liberty Recall

SOURCE: http://allautomobile.blogspot.com

The government has upgraded an investigation into Chrysler LLC's Jeep Liberty following reports of drivers losing control of their sport-utility vehicles.

The National Highway Traffic Safety Administration said it has received 22 complaints of the upper ball joint separating on either of the front wheels. The problem can lead to the front wheel collapsing, which can disable the vehicle or cause the driver to lose control.

The investigation involves more than 300,000 2002 and 2003 model year Liberty 4X4 SUVs.

Max Gates, a Chrysler spokesman, said Monday the automaker was continuing its investigation. Chrysler has received 74 complaints, but no reports of any accidents or injuries tied to the problem.

Most of the drivers who filed complaints have said the joints separated at speeds of under 20 miles per hour, according to NHTSA. But the government said it received five complaints of the separations happening at speeds of 40 mph or more, including one at 75 mph.

Seven of the separations occurred while the driver was pulling into the flow of traffic and two others happened while the driver was trying to make a left-hand turn across the flow of traffic.

One of the drivers who filed a complaint said they almost got hit by an oncoming truck. Another driver said the front right wheel collapsed while making a turn, causing the vehicle to swerve into a ditch and narrowly missing striking a telephone pole.

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NHTSA has upgraded the investigation to an engineering analysis to "assess the scope, frequency and safety consequences of the alleged defect," the agency said in a report on its Web site.

The issue has caused problems for the Liberty before.

Chrysler recalled more than 800,000 Liberty SUVs in August 2006 to fix the front suspension lower ball joint, which could experience excessive wear and looseness. The recall affected Liberty SUVs from the 2002-2006 model years.

Previously, in November 2003, the automaker recalled more than 300,000 2002-2003 Liberty vehicles because of problems with the lower ball joint, but some of the parts were damaged during the shipping process or installation.

In a March 14 letter to NHTSA, Chrysler said publicity from the two recalls may have led to an increase in the number of complaints about the ball joints, along with confusion about the differences between the lower and upper ball joints.

Over 300,000 Hyundai Sonata's recalled due to Airbag problems

SOURCE: http://allautomobile.blogspot.com

Over 300,000 Hyundai Sonata sedans are being recalled due to an issue with the air bag system. The system isn’t defective per se, but the company has received complaints about how it works. Advanced air bag systems are supposed to be able to detect when small children are present in the front passenger seat, then deactivate the airbag from deploying in case of an accident.





In regards to children, the force of an airbag deploying is considered more dangerous than if an airbag had not deployed. However, there are complaints that the system is shutting off even when small adults are in the front seat. A small adult would be better served with the airbag deploying.

The recall will begin next month. Dealers will evaluate the systems and make necessary repairs. Owners can call Hyundai at 800-633-5151 for more information.

GM Pushing industry to get on the Hydrogen Bandwagon

SOURCE: http://allautomobile.blogspot.com

General Motors Corp.'s leading proponent of hydrogen fuel-cell vehicles will challenge the energy industry and governments to commit to developing a public hydrogen fueling infrastructure when he addresses the National Hydrogen Association's annual conference in Sacramento, Calif., Wednesday.

In his keynote address to the conference aimed at ramping up commercialization of hydrogen, GM Vice President of Research & Development and Strategic Planning Larry Burns is expected to urge cooperation from government and the energy industry and to outline GM's proposed plan for establishing hydrogen fueling stations first in small numbers in and around a few major cities and over time connecting cities to one another along main arteries.

"The automobile industry has reached a critical juncture in our journey to realize the full potential of hydrogen fuel cell-electric vehicles," Burns is expected to say as part of his prepared remarks. "We have now reached a point where the energy industry and governments must pick up their pace so we can continue to advance in a timely manner."

Urban areas that could be first to establish hydrogen fueling infrastructures include Berlin, Shanghai and Los Angeles, Burns says.

But even in California, a state that is pushing automakers to improve fuel economy and lessen vehicle dependence on fossil fuels, GM says government hasn't cleared the way for hydrogen fueling stations.

The Los Angeles area is one of three urban areas where GM has launched a pilot program called Project Driveway to put Chevrolet Equinox hydrogen fuel cell vehicles into the hands of businesses and average drivers. To support the program, GM is prepared to put in fueling stations that deliver hydrogen in a compact form, called 700-bar, that delivers the desired mileage from a fill-up. But GM was surprised at how difficult it is to get the permits it needs to build adequate fueling stations.

"We are all excited about the project and frustrated by this issue," said Chevrolet spokeswoman Carolyn Normandin.

"What is urgently needed is sufficient investment by energy providers and the cooperation of government."

Indian Study indicates many vehicles are not ready for 10% Ethanol Blend

The mandatory 10 per cent ethanol blending in petrol may not happen for the existing 101 million vehicles on the Indian roads without introducing technical changes in them.

The central government plans to make 10 per cent blending compulsory from October from the current 5 per cent.

“We can introduce 10 per cent blending in new vehicles from October, after making the necessary changes in them. However, we are not ready to introduce 10 per cent ethanol blending in the existing 101 million vehicles from October since there is no domestic study on the impact of 10 per cent blending,” said an automobile industry official.

The Society of Indian Automobile Manufacturers (SIAM) is conducting a study with the oil marketing companies to study the impact on existing vehicles.

These vehicles are not capable of running on 10 per cent ethanol-blended petrol as ethanol releases more heat and can corrode vehicle engines, experts say.

Automobile industry officials also say that 10 per cent blending will lead to a 3 per cent drop in a vehicle’s mileage since ethanol has a lower calorific value than petrol. “However, being an energy deficient country, this should not deter us from blending,” the official added.

In a move that could have implication for India, Germany, which had plans similar to India’s, has decided to scrap the 10 per cent blending programme “as the cost of damages to existing vehicles” would be very high, news agency Bloomberg reported recently.

Biofuel programmes around the world are at the centre of a food-versus-fuel debate. Ecologists argue that producing ethanol from sugarcane and corn, which is being done in the US, is responsible for rise in food prices as a result of food supply shortage.

According to a recent Food and Agricultural Organisation (FAO)-European Bank for Reconstruction and Development report, the reliance of the expanding biofuels market on commodities such as sugar, maize, oilseeds and palm oil is a major reason for the global price rise in foodgrain.

Ecologists also argue that while biofuels reduce emissions, production of ethanol is resulting in large-scale deforestation across the world.

Officials in the petroleum ministry contest such criticism by saying that ethanol used for blending with petrol in the country will be indigenously procured.

X-Prize Foundation announces $ 10 Million award for most fuel efficient car

Source: http://allautomobile.blogspot.com/

An insurance company and a nonprofit group today announced plans to give $10 million to the team that designs, builds and brings to market the most viable and efficient vehicle that can get 100 miles per gallon of gasoline.

Progressive Casualty Insurance Co. and the X Prize Foundation jointly made the announcement at the New York International Auto Show.

The international competition, called the Progressive Automotive X Prize, was launched to help break the world's addiction to petroleum and stem the effects of climate change, according to the X Prize Foundation, a nonprofit group that sponsors contests encouraging innovation.

The foundation billed the contest as independent and technology-neutral. It is open to teams from around the world that can design green vehicles that people want to buy and that meet market needs for price, size, capability, safety and performance.

"The Progressive Automotive X Prize is a call to action to promote and inspire innovation," said Peter H. Diamandis, chairman and CEO of the X Prize Foundation, in a statement. "The environmentally friendly cars created as a result of this competition will affect everyone who drives in ways we can't even imagine today."

The foundation said that so far, more than 60 teams from nine countries have signed a letter of intent to compete. Four teams and their vehicles were on hand at the auto show during the announcement today.

"Development of a superefficient car would be a major step forward in the fight against global warming, and it would help us reach our goal of cutting greenhouse gas emissions in New York City by 30% by 2030," said New York City Mayor Michael Bloomberg, who attended the press conference today. "The Progressive Automotive X Prize is an excellent example of how the private sector can spur solutions to our most complex challenges."

The foundation will be accepting applications for the competition until midyear.

Teams and their plans will be examined for safety, cost, business plans and production feasibility. The teams that are accepted into the competition will race their vehicles across the U.S. in various legs in 2009 and 2010. Overall performance will be rated, along with emissions standards and their placement in the races.

Host cities for the races will be announced "soon," according to the X Prize Foundation.

In 2004, the X Prize Foundation awarded a $10 million prize in a global competition to design a private suborbital spacecraft.

French mfg of Lemon car to Outsource to China

Source: http://allautomobile.blogspot.com

Aside from the obvious quality control issues, you had better keep your kids away from the paint, there is sure to be lead in there. Not that the French are really known for making reliable cars in the first place. Shit, they can't even cook.

French carmaker PSA Peugeot Citroen plans to boost its sourcing of spare parts from China by the end of this decade, according to its local car joint venture.

The venture with Dongfeng Motor Corp, the nation's No 3 auto group, said yesterday that PSA Peugeot Citroen plans to procure 600 million euros of spare parts from China a year by 2010 for its production in Europe and South America.

The tie-up, based in the central city of Wuhan, said the French carmaker bought a total 350 million euros in spare parts from China during the 2004-07 period, without providing a figure for last year.

"Its China sourcing will be on a fast track in the coming years ... this is a big opportunity for our suppliers," the venture said.

The venture now has 326 suppliers in China.

PSA Peugeot Citroen set up a procurement center in 2004 in Shanghai. The venture said the center will double its staff to 100 by 2010.

A spate of other global automakers, such as Volkswagen, Ford and General Motors, are also increasing procurement from China, taking advantage of low costs and the improving quality of the spare parts industry here.

Meanwhile, the Sino-French venture said it plans to build a third car plant. But it wouldn't reveal the size of the investment, production capacity, location or a time frame for its opening.

The company has a 300,000-unit plant in Wuhan that makes Peugeot and Citroen small and medium-sized models. Its second factory, also in Wuhan, will be operational next year with an annual capacity of 150,000 larger sedans.

The venture said it plans to launch 20 all-new models before 2013, with five this year to woo Chinese buyers.

It expects to increase sales by 30 percent this year from 207,255 cars in 2007, the venture said.

PSA Peugeot Citroen last June signed a memorandum of understanding with China's main minibus producer Hafei Automobile Co to produce high-end vans. Hafei, based in Northeast China, is reportedly in merger talks with Dongfeng.

Sales of China-made vehicles rose by 19.27 percent year-on-year to 1.52 million units in the first two months of this year, according to data from the China Association of Automobile Manufacturers.

Full-year sales are predicted to hit 10 million vehicles, up from 8.79 million units in 2007.

Ford is recalling 470,000 Mustangs for Airbag problems

DETROIT - Ford Motor Co. said Wednesday it is recalling 470,000 Ford Mustangs from the 2005-2008 model years to recalibrate how forcefully the air bag deploys on the front passenger side of the car.

Internal testing showed the air bag could injure a small, unbelted passenger, said Ford spokesman Wesley Sherwood. The recall was posted on the website of the U.S. National Highway Traffic Safety Administration.

Sherwood said the fix would address "a very rare scenario," and there were no reports of injuries or accidents tied to the recall.

Nearly 435,000 of the recalled Ford Mustangs are in the United States, with most of the remaining vehicles in Mexico and Canada.

The Dearborn-based automaker will notify customers by mail in early March. Owners can take their vehicle to a dealer to have the air bag recalibrated to deploy at a lower force.

For additional details, owners can call Ford at (866) 436-7332 or visit the company's owner services Web site at http://www.ford.com/owner-services.

On the Net:
National Highway Traffic Safety Administration: http://www.nhtsa.dot.gov

GMC comes out with Hybrid Car Pick-up combo & Yukon SUV

I'm thinking a modern version of the El-Camino. Whatever it is, the thing is butt ugly. Why doesn't someone come out with a fuel efficient Pick-up truck. I mean a real one, not one of these pansy assed pimp mobiles.

All auto manufacturers are thinking "green" these days and many will showcase their fuel-efficient vehicles at the upcoming 2008 Chicago Auto Show. In this age of broken embargos and leaked specifications, it comes as no surprise that one of GM's vehicles to be showcased at the show was leaked early.

The new GMC Denali XT Concept is based on the same Zeta platform that forms the basis of the upcoming Pontiac G8 sedan and Chevy Camaro. The low-slung concept features a fully-independent front and rear suspension, 23" wheels and a 55" bed with Midgate. The Midgate feature -- similar in concept to the Chevrolet Avalanche and Cadillac Escalade EXT -- extends the bed to a full seven feet.

The most important part of the Denali XT Concept, however, is its advanced powertrain. The concept uses a brand new 4.9-liter, 326 HP small-block V8 engine with direct injection. The new 4.9-liter engine can be powered by regular gasoline or E85 ethanol and uses cylinder-deactivation to run on just four cylinders under light loads for better fuel economy.

In addition, the Denali XT concept features GM's two-mode hybrid system which can also be found on the 2008 GMC Yukon Hybrid, 2008 Chevy Tahoe Hybrid and 2009 Saturn Vue Green Line. GM's two-mode hybrid system allows lumbering behemoths like the Yukon and Tahoe achieve 20+ MPG in the city.

"Like all GMCs, the Denali XT is functional and capable, but it blends those traits with a more efficient, sporty driving experience," said GMC general manager Jim Bunnell. "It is a vehicle that exemplifies GMC's engineering excellence, as well as GM's commitment to hybrid and advanced technologies."

The GMC Denali XT Concept foreshadows the production model which could debut in the U.S. within the next year. Styling will no doubt be toned down somewhat for the production model, but expect to see many of the fuel-saving technologies to carry over to the road-going version.

Of course there is the Yukon which was just unveiled via the superbowl. Here is a picture of the environmentally "friendly" drug dealer car. Now who really needs something this fucking big?