Tag Archives: auto industry

Automobile Recalls Affecting Insurance Rates

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The United States has one of the largest vehicle markets in the world. There are over 260 million registered passenger vehicles according to a 2007 Department of Transportation (DOT) study. With vehicles outnumbering licensed drivers, the automobile has become an integral part of American life.

With the amount of work that goes into vehicle design, it is not surprising that flaws occur. If you have been paying attentions to vehicle recalls, it seems like there is a new one coming out almost every day. Since the safety of a vehicle is a factor in determining insurance rates, it would seem logical that if a vehicle has had safety recalls, the insurance rate on the recalled vehicle may raise.

In general, car insurance premiums can be increased every time the policy is up for renewal. While an insurer may do this for a number of reasons, a mechanical defect of the vehicle cannot be controlled by the consumer. But, if the policy holder does not follow the recall notice in a timely manner, and ends up getting into an accident because of a failure of the recalled part, they could be held responsible for the damages. If you do not respond to a recall notice at all, an insurance company may drop you altogether. Another way your insurance rates can be affected by recalls, is the recalls decrease the resale value of the vehicle. If the replacement value of a vehicle decreases the insurance rates should decrease as well.

Safety issues that cause accidents and damages, can hold the car manufacturer responsible and may recoup money from them. In this case the insurance company does not need to gain more money from its policyholders since the car manufacturer is paying for what they are responsible for.

Dealing with the auto insurance industry is never easy and, when the vehicle manufacturers gets involved, it just adds to your problem. For now, there should be no cause of concern so long as you pay the premiums on time and take the vehicle in for repair as soon as you get the recall notice. If you believe your premiums have been raised unfairly or in error, you do have some recourse. Most insurance companies have procedures in place through which a customer can file a complaint. When all else fails, a customer can sign up with a competing insurer. Take precautions however: an auto insurance policy is a legally binding contract between you and the company. You need to give advance notice of cancellation and make certain your new policy is in effect. Don’t just stop paying your premium, or you could be penalized.

Californias 2010 Los Angeles Auto Show

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2010 LA Auto Show
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The Los Angeles Auto Show is the last major auto show of the year. This year turned out to be one of the biggest and best seen in a while. Over 1,000 cars, trucks and SUVs were displayed, consisting of electric vehicles, hybrids, high performance super cars, and one of a kind concept cars.

The 2010 show was especially successful with a record number of debuts: 20 world and 30 North American debuts. Many of the car manufacturers debuts showed environmentally friendly and fuel efficient electric and hybrid vehicles. The Chevrolet Volt received much attention, winning the 2011 Green Car of the Year award.

LA Auto Show Speeds Into The Electric Car Era

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The sales of electric cars may not be doing as well as first hoped, but the displays at this years Los Angeles Auto Show hopes to change that. GM’s Chevrolet Volt, the 2011 Green Car of the Year, is one of several displays that hope to spark interest in the sales of green cars. The Volts rival, the Nissan leaf, along with Tesla’s Toyota RAV4 EV, the Fisker Karma, the Mitsubishi I-MiEV, and every other car maker’s electric or hybrid car will be there vying for the green consumers interest.

This year’s show will feature a record of debuts with fifty new vehicles unveiled on press day. This year’s show features more elaborate and interactive exhibits and more manufacturers, making it one of the most dynamic LA Auto Shows in years. The annual event, held at the Los Angeles Convention Center and will be open to the public November 19-28.

Demand For GM Stocks Increase Offering

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A perceived demand for GM stocks has led the company to bump up the price of its upcoming share offering. The previous estimate of $26-$29 has increased to $32-$33. The automobile manufacturer has also increased the size of its preferred shares offering from 60 million to 80 million. At the current pricing, GM could raise nearly 18 billion dollars, which would help repay some of the 50 billion dollar taxpayer bailout.

According to Michelle Krebs, senior analyst at Edmunds.com, “The increased share pricing is a vote of confidence in the company and in the stock it is offering. It is a sign that the management of General Motors has done an extremely good job pitching the stock to investors and highlighting its positives over its challenges.” Strong sales on new cars and trucks helped General Motors earn $2 billion in the third quarter. Boosted by higher prices from newly introduced models and from overseas sales, the third quarter earnings nearly matched the first two quarters of the year combined.

Not everyone feel that the stock offering is ready. Consumer advocate Ralph Nader and two other consumer groups are asking that the government delay the offering in hopes of getting a better return. They say the offering is oversubscribed and a plague of accounting errors by GM, pose a risk factor to the IPO.

According to an Automotive News source, Chinese companies are among a handful of firms looking for a stake in GM. Others include European industrial groups, private equity firms and sovereign wealth funds. GM CEO Fritz Henderson acknowledged talks are ongoing between GM and six Opel/Vauxhall suitors, but couldn’t reveal any names because of a confidentiality agreement.

Are Electric Cars Being Forced On Consumers?

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With over twenty electric car models arriving at dealerships over the next three years, auto manufacturers feel that the battery powered cars will be the next big seller. The Obama administration is giving more than five billion in tax credits to buyers, and subsidized loans and grants to automakers in an effort to meet the goal of one million hybrids or electric cars on U.S. roads by 2015. But skeptics feel that hybrid and electric vehicles don’t make sense for most drivers, even with tax credits. Electric cars are too expensive, take too long to recharge and don’t provide enough driving range to be practical for most Americans. They feel that only 3% of drivers will actually buy the vehicles, because in order for electric cars to be cost effective for buyers, gas prices will have to rise to almost nine dollars a gallon.

Nonetheless, some of the biggest manufacturers in the auto industry are rushing to produce EVs. Honda recently pledged to put out an EV in 2012. Toyota is creating an electric version of its RAV4 sport-utility vehicle with Tesla Motors and a subcompact electric car based on its tiny IQ. Ford plans an electric version of its Focus compact and an electric van. BMW is building the MegaCity electric vehicle, which will feature carbon-fiber body panels to reduce weight and boost driving range.

Much of this is spearheaded by California’s laws that are requiring that the top six auto makers in California offer a zero-emission model by 2012 or face potentially huge fines. The only other alternative is to build electric models under the U.S. Environmental Protection Agency’s clean-air and fuel-economy standards, which are set to get tighter in 2012, and receive government credits.

The Emerging Automobile Industry In China

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Since the end of 2009, China has become one of the largest auto manufacturers and markets in the world. The number of registered vehicles on the road in China reached 62 million in 2009, and is expected to exceed 200 million by 2020. Almost half of the cars manufactured and sold in China are Chinese vehicles, the rest are being produced by joint ventures with foreign car makers such as Volkswagen, General Motors, Hyundai, Nissan, Honda, Toyota,… etc.

The negative impact of cars in Chinese cities is already obvious. Congested roads, car accidents, fuel shortages, air pollution, parking difficulties,…etc, have already become issues. Government officials warn that overcapacity of the market will lead to negative market competitiveness, a loss in enterprise efficiency, factory stoppages and other problems. Analysts feel that the development of green energy vehicles is the best way for China to reduce the environmental impact the exploding auto industry will have on their country.

The green industry in China may seem like a good market to get into, but the hope that American workers will see their products exported to this rich foreign market are not good. China will only do business with companies who share their intellectual property and who manufacture in their country. A foreign company must enter a joint venture with a Chinese firm, and that the firm has to have substantial ownership of the intellectual property, otherwise, there will be a duty on making the car in China.

The White House has already got a jump start on electric technologies by encouraging construction of plants that make electric cars, batteries and parts that go into them. According to the Obama administration, the United States is on track to produce 40 percent of the world’s battery technology by 2015. The industry expects the American market to gobble up most of that supply. In order to keep jobs here, U.S. demand for EV components must rise, otherwise the risk of exporting yet another industry away from U.S. soil will be the result.

Here Come The Electric Vehicles

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As states across the country brace for the wave of electric plug in vehicles to hit the streets, utility companies warn that there could be glitches. A smarter electrical grid has been developed to accommodate the surge in power usage, and utility companies have been working with the automakers to ensure a smooth transition, but too many drivers trying to charge their vehicles at the same time, could lead to low voltage situations.

Executive vice president and chief operating officer of Novi-based ITC Holdings Corp., said that as plug-in use grows and more public charging stations are installed, substations or lines may need to be upgraded. Experts, however, don’t believe electric vehicles will be widespread until 2020, giving utilities at least a decade to figure out ways to handle new loads and educate consumers about scaling electricity during peak times.

For now, utilities are installing smart meters in homes and businesses to help consumers better manage electricity use. The meters allow utilities to charge rates based on peak and off-peak use and track that data. This will encourage drivers to charge in off peak hours as well as give information on where upgrades need to be made. As technology advances, cars plugged in for recharges could actually help the grid, said Scott Miller, director of Coulomb Technologies’ ChargePoint America. “These can act as remote storage units, transferring some of the energy from the cars back to the electrical grid in times of need.”

Chinese Company Seeks G.M. Stocks

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G.M. is planning to hold its first public stock offering in late November, giving the Treasury Department its first opportunity to begin selling off the 61 percent stake in G.M. How many shares the government decides to sell will be determined by the price offered. In order to break even, the Treasury Department estimates that the stock must sell for almost $135.00 per share.

Last week, the Treasury Department said it would not seek special deals with large investors to buy big chunks of its stake to ensure that small investors get a fair chance at buying GM stocks. “We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or unusual treatment.” the Treasury said.

But concerns about foreign influence over the largest American automaker are growing as Chinese automaker, the SAIC Motor Corporation, expresses interest in buying a stake in GM. The Shanghai-based company has had a longtime partnership with G.M. in China. They are one of China’s largest automakers and recently bought half of G.M.’s India division.

There was no comment from the Treasury about the possibility of a foreign company buying a big stake in G.M.