GM Bankruptcy Appears Likely

General Motors bondholders have until midnight to accept equity exchange.  UAW reaches agreement to reduce retiree benefits. Here's the latest from CNBC's Phil LeBeau.



Also, the Wall Street Journal reports the UAW tells its reporters the federal government will provide massive additional financing assistance to GM to fund the VEBA (Voluntary Employee Beneficiary Association).

News: Several Top GM Executives Dump Stock

The Wall Street Journal reports six top General Motors executives have liquidated their stock holdings in the struggling company.  GM stock is down sharply on the New York Stock Exchange, quickly approaching $1 a share.  GM stock hasn't been this low since the early 1930's according to CNBC.

According to WSJ reporter Matt Phillips, Vice Chairman Bob Lutz was the biggest seller shedding more than 81,000 shares netting nearly $131,000.  Putting that in perspective, Lutz' shares were worth about $1.7 million a year ago.

News: GM CEO Updates Restructuring

General Motors President and CEO Fritz Henderson held a media conference call this morning to provide updates on the company's restructuring efforts.  The headlines are as follows:

• Bankruptcy is still very probable.
  
• Negotiations continue with two potential buyers for HUMMER.  Deal could happen within two weeks.
  
• Several parties are interested in Saturn.  No deal imminent.
  
• GM is looking at the possibility of moving its headquarters out of Detroit's Renaissance Center.
  

The HQ note is quite a surprise.  The Detroit Free Press reports Henderson dodged answering specific questions about a possible move.  GM moved into the RenCen in 1996 and immediately spent $500 million to upgrade the complex which was originally built by the Ford Motor Company's real estate arm and opened in 1977.  GM financed the upgrades and leased the building from the lenders.  When the lease expired on May 1, 2008, GM bought the building for $626 million in cash according to documents filed with the Securities and Exchange Commission.

If GM is seriously considering selling the RenCen, how much could the company get on the still struggling Detroit real estate market?  And, what building would GM move headquarters operations into?

News: Ford to Build Next Generation Focus at Former SUV Plant

Ford Motor Company is making a major investment that will bring its Michigan Assembly Plant in Wayne back to life with a new mission.

Ford announced it is investing $550 million to transform Michigan Assembly into a "lean, green and flexible manufacturing complex" that will build Ford’s next-generation Focus global small car, including a new battery-electric version of the for the North American market.

The plant, formerly the production site for Ford Expedition and Lincoln Navigator SUVs, is one of three light truck plants Ford is retooling to build fuel-efficient global small cars in the coming years. The new Focus will begin rolling off the line next year and the battery-electric version – Ford’s first all-electric passenger car – debuts in 2011.

“The transformation of Michigan Assembly Plant embodies the larger transformation under way at Ford,” said Ford President and CEO Alan Mulally. “This is about investing in modern, efficient and flexible American manufacturing. It is about fuel economy and the electrification of vehicles. It is about leveraging our expertise and vehicle platforms around the world and partnering with the UAW to deliver best-in-class global small cars. It is about skilled and motivated teams working together in new ways to create the future of automobile manufacturing in the United States.”

As part of the retooling, Ford will consolidate its operations from Wayne Assembly Plant. When production launches in 2010, approximately 3,200 employees will be building the new Focus at Michigan Assembly Plant.

News: Chrysler Offers New Incentives

Beginning today, Chrysler is launching a new campaign to keep current customers and attract new ones.

"Chrysler LLC is building a new car company, and we are asking consumers to come see what we are building for you as we begin a vibrant new phase of our company," said Steven Landry, Executive Vice President North American Sales and Marketing, Global Service and Parts — Chrysler LLC. "Consumers are telling us that the net purchase price of the vehicle is the most important factor right now, so we are pleased to introduce incentives that address what the consumer is looking for."

Chrysler is offering up to $4,000 Consumer Cash on 2009 model vehicles, $1,000 Owner Loyalty for current Chrysler vehicle owners that is good towards most 2008 and 2009 Chrysler, Jeep and Dodge vehicles and up to $1,000 Credit Union Bonus Cash for qualified members who finance their new vehicle purchase through a participating credit union. The new incentives are valid through June 1, 2009.

More than 1,500 credit unions, representing 40 million members in all 50 states, are participating in the "Invest in America" program, which offers low-rate financing on new vehicle purchases for approved members, and the additional bonus cash of up to $1,000 mentioned above is available.

Chrysler, LLC is currently working through Chapter 11 bankruptcy proceedings in advance of a merger with Italian automaker Fiat.

Discussion: US Auto Sales

I just read an interesting blog article online concerning the current state of the US auto industry. The writer asks a very good question about sales. When I go to the mall and look for bargains, I’m looking for at least 30% off the regular price—emphasis on “at least.” Upwards of 40% - 50% is much more likely to get me reaching for the wallet. Why don’t car dealers, who are retailers just like the folks at the mall, hold what most consumers would consider a real sale? Clearly, I don’t expect to walk on to a car lot and see 40% OFF signs on vehicles, but 15% - 20% off doesn’t sound ridiculous.

Another good question, found in the blogosphere, is this—why don’t GM, Ford and Chrysler cut out the middle men and offer direct sales to consumers? I’m not trying to put people out of work or sound anti-business, but this is the 21^st century and direct sales sounds like a winner to me. Dealers would still have the lucrative used car and service markets.

What do you think?

News: Buy A New Vehicle, Write Off Sales Tax on 2009 Return

WASHINGTON (IRS Newswire) — The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.

“For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”

The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.

The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.

News: Certain Plug-In Electric Vehicles May Qualify For Tax Credit

WASHINGTON (IRS Newswire) — Plug-in electric vehicles using certain types of batteries may qualify for a new tax credit if purchased this year, the Internal Revenue Service said.  

The Emergency Economic Stabilization Act of 2008 (EESA) and the American Recovery and Reinvestment Act of 2009 (ARRA) created two new tax credits for various types of electric vehicles, which may include what are commonly referred to as neighborhood electric vehicles.

ARRA creates a tax credit for low-speed or two- or three-wheel electric vehicles, such as motor scooters, purchased after Feb. 17, 2009, and before Jan. 1, 2012. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500. To qualify, a vehicle must be either a low-speed vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 4 kilowatt hours or be a two- or three-wheeled vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 2.5 kilowatt hours.

EESA created a tax credit for vehicles that have at least four wheels and draw propulsion using a rechargeable traction battery with at least four kilowatt hours of capacity. For 2009, the minimum credit is $2,500 and the credit tops out at $7,500 to $15,000, depending on the weight of the vehicle and the capacity of the battery.

During 2009, low-speed, four-wheeled vehicles manufactured primarily for use on public streets, roads and highways (neighborhood electric vehicles) may qualify both for the EESA credit and, if purchased after February 17, 2009, for the ARRA credit for low-speed electric vehicles. A taxpayer may not claim both credits for the same vehicle. Vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify for either credit.

The Internal Revenue Service is working on guidance regarding certification procedures for both of these credits.

News: GM Moving Forward With Plans To Sell Saturn Brand

General Motors says it is proceeding with plans to sell the Saturn brand by later this year.  In a release this morning, GM says "a number of potential buyers have surfaced and expressed interest" in Saturn.  The company is not identifying any of the interested parties but will review all offers and look to reach an agreement with one later this year.

Saturn has 400 retailers across the country including Saturn of Columbia here in the Midlands.

Photo: Columbia's First 2010 Chevrolet Camaro

Karen Livingston sent me this photo of her brand new Chevrolet Camaro via the WACH-TV website.

 

Congratulations, Karen!!!  Let us know your thoughts about the car.

Auto Test: 2009 BMW X6 xDrive50i

The Crossover Redefined

Small sport utility vehicle, modified minivan, or new age station wagon. Any of these might describe what is commonly referred to as a crossover vehicle. None of them describes the BMW X6. The company that claims to produce the ultimate driving machine has created the ultimate new-style crossover in the X6.
Where the typical crossover looks like a sport utility vehicle and feels like a car, the X6 looks like a car and feels like a sport utility vehicle; a truly refreshing concept that BMW calls the “Sports Activity Coupe.” Keep in mind that what every other automaker calls a “utility” vehicle, BMW calls an “activity” vehicle.

The X6 comes in two models: the six cylinder xDrive35i and the eight cylinder xDrive50i . Both are produced at BMW’s Spartanburg, South Carolina assembly plant alongside the X5 model. BMW delivered an eight cylinder version for me to evaluate.

One word can express my feelings about this ride on many levels—WOW! But, since I’m sure you would like more than that, here are some detailed thoughts based on my week in the vehicle.

Appearance

At first glance, the X6 appears imposing and aggressive. It is both. Upon closer inspection, you discover it is also elegant and well mannered. Its footprint is large. My X6 test model, with its wide stance and tall profile, was only made more imposing by its massive 20-inch wheels with fat, performance tires.

The body commands attention, especially the sloping rear. It’s sleek, sporty and like no other crossover on the market. The X6 comes in ten available colors including eight metallic choices.

Power

Under the hood, a 4.4 liter twin turbo V-8 engine producing 400 hp and a peak 450 lb-ft of torque available between 1,750 and 4,500 rpm. BMW says the X6 will vault you from 0-60 mph in 5.3 seconds. If you’re not a numbers person, suffice it to say this vehicle is quick. The engine packs pure power and the exhaust note is melodically muscular. Get yourself a good radar detector. Before I knew it, the heads-up display showed the number 92 on the windshield. An indication that I needed to slow down or at least do a peripheral scan to make sure “Smokey” wasn’t lurking nearby ready to pounce with an expensive citation since I had just passed a sign with the number 60 beneath the words “speed limit.”

Of course, all of the exhilaration comes at the expense of fuel efficiency. The X6 xDrive50i gets an EPA estimated 12 MPG in city driving and 18 MPG on the highway. My actual mileage pretty much matched the estimates. I got 11 in the city and 17 on the highway. The six cylinder model gets an estimated 15 MPG in the city and 20 MPG on the highway. Both require premium gasoline.

Comfort

Inside, the X6 has what you would expect from a luxury coupe: front and rear, heated leather bucket seats; automatic, digital dual-zone climate control and premium sound system among many features. The cabin is very quiet. You hear minimal road noise and maximum engine rumble. I like that.

Seating is outstanding. The 20-way power multi-contour fronts can adjust in so many ways, it should be nearly impossible to get seat fatigue even on the longest of road trips. Leg, head and shoulder room are more than ample, even in back where you might think head room would be tight due to the sloping roof. You do need to watch your head getting in and out of the rear, but once inside passengers fit nicely into bucket seats that look and feel just like the fronts.

Features

The X6 comes with a long list of standard features including BMW’s xDrive all-wheel-drive system, Dynamic Stability Control, Xenon Adaptive headlights which swivel the lights in the direction the car is steering, front and rear Park Distance Control, GPS navigation and more. BMW’s iDrive on-board computer is also standard. Highly criticized when first introduced in 2001, iDrive has been greatly improved. I would prefer direct access buttons to reach features more quickly, but iDrive is user friendly enough. The test model is fully loaded with every option available. Among them-- a 6-disc DVD changer and LCD screen attached to the center console to keep rear-seat passengers entertained during road trips; high-definition radio; iPod and USB adapter (the system can read your music library and give you full access through iDrive); rear-view camera and the aforementioned head-up display.

Visibility

One thing that suffers, noticeably, in the X6 is visibility. Your view of the road through the windshield and front windows is superb. But the vehicle’s high stance, sloping roof and low-slung rear windshield make the rear view seem limited. Also, the wide b-pillars greatly limit your over-the-shoulder view out of the side windows. You are forced to rely almost entirely on the more than adequately large side-view mirrors.

Summary

I’m back to my one word description—WOW! When it comes to European cars, I’ve always preferred Germany’s other big brand. Now, it’s a toss-up. Clearly, BMW has an edge in this “new” SAC category. We’ll see if other automakers decide to compete and whether any try to create a similar vehicle at a more universally affordable price. The X6 is expensive by the average buyer’s standard. The starting price for the xDrive50i is $66,550. The test model, fully loaded topped $84,000! The xDrive35i starts at $55,900. Pricing aside, I think it will be hard for anyone to match what BMW has done with the X6. It gets two “thumps up” and a hearty “high five” from me.

BMW X6 xDrive50i Website

Auto Test: 2009 BMW X5 xDrive35d

This is a Diesel?

I very distinctly remember my father’s 1979 Oldsmobile Toronado with a 5.7 liter V-8 diesel engine. If we were outside playing in the driveway, we could hear Dad arriving home from work when he was still two or three blocks away. Thirty years ago, that was the norm for diesel engines. They were large and loud. Not anymore. When the new 2009 BMW X5 xDrive35d arrived in my driveway the first thing I said to the delivery driver was, “this is a diesel?” I was already impressed because it was so quiet.

The X5 xDrive35d is one of two diesel powered models BMW sells in the United States. Joining the oil burning sports activity vehicle is the 335d sedan. Both part of the automaker’s growing Advanced Diesel lineup. Advanced Diesel uses new technology to meet strict federal standards regarding diesel emissions, which in the past were always black, sooty and smelly. Ultra low sulfur diesel fuel with 97-percent less sulfur content—15 parts per million compared to 500 parts per million previously—burns much more cleanly but still produces nitrogen oxide and soot. Through the use of a urea solution, which is injected into the catalytic process, nitrogen oxide is greatly reduced and soot is captured and burned away in the particulate filter. What comes out of the tailpipes is no dirtier and no more harmful than gasoline exhaust. This is a major step forward for diesel engines.

I stood behind the X5 xDrive35d thinking I would see, at least, some exhaust. Much to my surprise, I did not. I also could not smell any exhaust. No noise, no smoke, no smell. Impressive. Here are my thoughts on the X5 xDrive35d after spending a week with the vehicle.

Appearance

The diesel powered X5 looks no different than the gas powered X5. Its outward appearance is that of a luxury SUV, or in this case, SAV. Aggressive, yet elegant. The look is unmistakably BMW. The test model is equipped with 19-inch wheels and matching performance tires which provide a smooth, quiet ride.

The X5 comes in ten available colors including eight metallic choices.

Power

If you are unfamiliar with diesel engines, don’t let the relatively low 265 horsepower figure fool you. Torque is plentiful at 425 lb-ft which means the X5 has plenty of get-up-and-go. BMW claims the 3.0 liter twin-turbocharged inline six cylinder engine will catapult you from 0-60 MPH in 6.9 seconds. The vehicle accelerates quickly. So quickly, I forgot it was a diesel for a while.

Fuel efficiency is the diesel engine’s best attribute. The X5 xDrive35d has an EPA fuel economy rating of 19 MPG in the city and 26 MPG on the highway. My actual mileage easily matched those estimates, under spirited driving conditions.

Comfort

Inside, the X5 has what you would expect from a luxury vehicle: front and rear leather seating for five people; automatic, digital dual-zone climate control; more than ample leg, head and shoulder room; all in a nice, quiet cabin. Once sealed inside, outside noise is held to a bare minimum while driving.

Features

Standard features include all-wheel drive, dynamic stability control, tire pressure monitor and rain-sensing windshield wipers among several others. The test model was well equipped with option features including premium sound system, active ventilated driver’s seat, rear-view camera and navigation system among other options. I think this vehicle had every possible option package added. While that certainly created a comfortable ride, it also created an additional $20,720 dollars in sticker shock. I do like the full iPod integration feature. I’ve never had true compatibility in a vehicle and the ability to access my full library through the car sound system is great. Also, BMW has apparently made great improvements to the iDrive vehicle information system. When first introduced, the system was not well received. It’s still a bit more difficult to navigate than I would like, but it is manageable.

Summary

Nice vehicle. But I prefer a true sports utility vehicle. The X5 is a wonderfully engineered road handler but since it looks like an SUV, it should act like an SUV. The diesel engine is a winner. I would love to drive the 335d and take advantage of its 36 MPG highway rating.

BMW X5 xDrive35d Website

Going Green: Clean Diesel Technology

As America works to reduce and eventually eliminate its dependence on foreign oil, there is a push to bring alternative fuel vehicles to market. Electric, compressed natural gas and hydrogen fuel cell vehicles are under development but will not be major players for several years. Diesel, while derived from oil, can serve as a bridge because of its efficiency. Vehicles travel farther on diesel, thus consuming less oil.

Diesel has not been popular on the U.S. consumer market because the engines were significantly noisier and produced smelly, soot-filled exhaust. However, new federal guidelines have produced new technology that nearly eliminates all of those concerns.

I recently tested the 2009 BMW X5 xDrive35d, a clean diesel powered sports utility vehicle. Compared to its gasoline powered version, the X5 diesel is much quieter than expected, produced no noticeable odor, and achieved significantly better fuel economy.



Clean Diesel Information

BMW Advanced Diesel

BMW offers diesel engines in the 335d sedan and X5 xDrive35d activity vehicle.

Mercedes Benz BlueTEC
Mercedes Benz offers diesel engines in ML, GL and R class models.

Volkswagen Clean Diesel

Volkswagen offers diesel engines in the Jetta, Jetta Sportswagon and Touareg 2 models.

Auto Test: 2008 GMC Yukon Hybrid

The 2008 GMC Yukon Hybrid, along with its Chevrolet Tahoe Hybrid cousin, is the world's first full-sized hybrid sports utility vehicle. Nearly identical to the gasoline powered version, the hybrid Yukon is equipped with a 6.0 liter V-8 engine mated to electric drive motors to create a two-mode powertrain that allows the vehicle to perform like a full-sized SUV and achieve 20 mpg in both city and highway driving.

I tested the vehicle in May 2008 and found that it performed up to specs. While it was certainly comfortably roomy for people and cargo, it is not designed to be a true off-road vehicle. Also, the hybrid technology makes the vehicle a bit pricey, starting in the mid-$50s, but GM is offering incentives to move product that bring the price down.

Going Green: Plug-In Hybrid Cars

With unstable oil prices and increasing damage to the environment from burning fossil fuels, the effort to convert from gasoline powered vehicles to those powered by alternative fuels continues. Automakers are introducing more gasoline-electric hybrid models which burn far less fuel than their all-gasoline versions. They are also developing plug-in hybrids which will have certain ranges over which they can drive without using a drop of gasoline. Engineers say these cars could achieve as much as 100 miles per gallon.

In April 2008, I spoke with a plug-in hybrid advocate who made a presentation to the Columbia City Council.