July Auto Sales Strong Despite Economic Jitters

From The LA Times
The economic news remains mixed but that hasn't slowed car buyers down this month. With another weekend to go, industry analysts say sales remain comparatively strong and it is consumers who are fueling the industry. It's not the roaring market of a decade ago, but it is healthy by post-recession standards.

Market-research firm J.D. Power & Associates estimates that retail sales of new vehicles will reach about 969,200 this month. Although that's a slight dip from June, it's still an 18 percent gain from a year earlier.

"Retail sales got off to a fast start in July, and while they've slowed down a bit as the month has progressed, through the first 16 selling days, they're still up 15.1 percent, compared to July 2011," said John Humphrey, senior vice president of global automotive operations at J.D. Power.

"The positive growth has continued to build, as July is looking strong across most vehicle segments, as well as for many of the major manufacturers."

Total vehicle sales will reach almost 1.2 million this month, July, which includes what is sold to car-rental companies, commercial customers and government agencies. That equates to a seasonally adjusted annual sales pace of about 14.1 million.

Auto-information company Kelley Blue Book is forecasting new-vehicle sales to hit a 14-million seasonally adjusted annual rate this month.

"Midsize cars remain the top-selling segment in July. The redesigned Toyota Camry has been a favorite among consumers since launching earlier this year, and we expect the redesigned 2013 Nissan Altima to add further fuel to the fire this month," said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book.

Midsize cars, or family sedans, look as if they will account for about 19 percent of all sales, making the category the largest segment of the industry. Compact cars were second at a little more than 13 percent, Gutierrez said.

Ford To Recall 485,000 Escape SUVs To Fix Throttles

No decision on recalling Mazda Tributes — which are identical to the Escape and built by Ford

2012 Ford Escape — Recall is focused on 2001 to 2004 models

Ford is recalling nearly 485,000 Escape SUVs to fix sticking gas pedals that can cause crashes.

The worldwide recall covers Escapes from the 2001 through 2004 model years that are powered by 3-liter V-6 engines with cruise control. It comes just over a week after U.S. safety regulators began investigating the small SUVs.

The U.S. National Highway Traffic Safety Administration has received 68 complaints about the problem, including 13 crashes, nine injuries and one death. A teenage girl died when an Escape crashed in Arizona in January.

It's the third recall in just two weeks for the Escape, which was the top-selling SUV in the U.S. last month. A week ago Ford recalled 11,500 of the all-new 2013 models with 1.6-liter engines because the fuel lines can crack and leak gasoline, causing fires. A few days before that, it recalled 10,000 2013 Escapes to fix carpet padding that could interfere with braking.

On the older Escapes, which are completely different from the 2013 models, the cruise control cables can snag on the plastic cover atop the engine and cause the gas pedals to stick, Ford said. For the problem to happen, the pedals must be pushed to or near the floor, and the cruise control cables must have been bent or moved from their original position, Ford spokeswoman Marcey Zwiebel said. Cable positions can be changed when the SUVs are serviced, she noted.

"This is not a situation where the engine would accelerate or go into a wide-open state on its own," she said.

Dealers will replace the fasteners on the engine cover, raising it so there's plenty of room for the cruise control cable. Zwiebel said it will take a few weeks to distribute the parts. In the meantime, Escape owners can take their vehicles to dealers, who will disconnect the cruise control and eliminate the risk of the problem happening, Zwiebel said.

On July 17, NHTSA announced that it was investigating complaints about sticky throttles on Escapes and Mazda Tributes. Tributes are identical vehicles built by Ford for Mazda. It was unclear whether Tributes would be recalled.

NHTSA said investigators would look into whether the sticky throttles could have been caused by repairs made as part of a 2004 recall. About 590,000 Escapes and Tributes were recalled in December of 2004 to fix an accelerator cable defect, and NHTSA documents say the repairs could have damaged the cruise control cable.

The agency said late Thursday that the Escape investigation remains open until it can review Ford's recall documents.

While Ford said it moved quickly to fix the cruise control problem, Clarence Ditlow, executive director of the Center for Auto Safety, a consumer group, accused the company of knowing about the issue since 2005, but failing to take action until the government began its investigation.

Some Ford dealers had told the company that cruise control cables were damaged during 2004 recall repairs, but Ford did not know until recently that the damage could cause throttles to stick, Zwiebel said.

The Escape has been one of Ford's most popular vehicles since it went on sale in 2000. More than 2.1 million have been sold. It was the top-selling small SUV in the country in three of the four years covered by the recall.

The latest recall affects 421,000 Escapes in the U.S. The rest are in Canada, Mexico, Europe, Asia and some smaller markets.

Recalls can often be signs of quality problems in cars, especially if there are several during the first model year. Both recalls of the 2013 Escape, which just arrived in showrooms in June, occurred in the same week earlier this month.

Ford CEO Alan Mulally told reporters that the company quickly recalled the 2013 Escape to take care of customers. "I wouldn't characterize it at all as a more fundamental issue in the quality," he said.

Two recalls in one week are unusual, but more likely a coincidence than a sign of quality problems, Ditlow said. He questions a vehicle's quality if it has three recalls in a year.

Jaguar, Land Rover On A Roll With New J.D. Power Rankings

Jaguar ranked second among all nameplates in appeal

Range Rover Evoque rated "Most Appealing" in APEAL Study

• Range Rover Evoque ranked Highest Entry Premium Crossover SUV
• Jaguar second highest scoring brand in industry-wide survey
• Jaguar XJ second in the large premium car segment

Range Rover Evoque

According to J.D. Power and Associates 2012 Automotive Performance, Execution and Layout (APEAL) Study released recently, Jaguar ranks second industry wide among nameplates in vehicle appeal and the Range Rover Evoque is most appealing in the Entry Premium Crossover SUV segment. For the second year in a row, Jaguar ranks second out of 34 brands measured in the industry - with the Jaguar XJ scoring as second highest large premium car. Land Rover placed sixth (in a tie) among 34 brands, and the new Range Rover Evoque receives the award for Most Appealing Entry Premium Crossover SUV.

"The J.D. Power and Associates APEAL study simply indicates how much your customers like their vehicles’ design, performance and features, and clearly our customers are quite smitten," says Andy Goss, President of Jaguar Land Rover North America, LLC. "Jaguar Land Rover is dedicated, as a premium automotive company, to providing the customers of both our brands with quality vehicles that deliver extraordinary performance, innovative technology, and desirable styling."

Jaguar XJ

Jaguar is the second most improved nameplate. The gain is primarily driven by the Jaguar XJ with 901 points - one of only three models in the industry to score above 900. The Jaguar brand was also the most improved, and tied for 2^nd highest in the industry, in the J.D. Power and Associates 2012 Initial Quality Study (IQS).

Land Rover placed sixth overall in the industry in a tie, showing that its lineup of luxury SUVs is well regarded by its customers. Leading the Land Rover lineup is the new Range Rover Evoque, which in its first year in the survey scored higher than all other Entry Premium Crossover SUVs. According to the survey, customers of the award-receiving Range Rover Evoque most appreciate its design and fuel economy, compared to its segment. The Range Rover Evoque combines class-leading performance with dynamic and agile handling across all terrains. This is the 102^nd global award for the Range Rover Evoque.

The J.D. Power and Associates APEAL study examines how gratifying a new vehicle is to own and drive based on owner evaluations of more than 80 vehicle attributes. The study's unique approach to measuring owner satisfaction and how much a customer likes or dislikes virtually every aspect of their new vehicle provides a powerful tool to manufacturers to influence future product development.

The 2012 APEAL study is based on responses gathered between February 2012 and May 2012 from more than 74,000 purchasers and lessees of new 2012 model-year cars and trucks who were surveyed after the first 90 days of ownership.

Toyota Recaptures Global Sales Lead From GM

Toyota bounced back from safety recalls and natural disasters, selling 4.97 million vehicles globally in the first half of the year to retake its crown as the world's top automaker from General Motors Co.

The Japanese company sold about 300,000 more cars and trucks than GM did in the first half of the year, a lead large enough that it will be difficult for GM to catch Toyota in the final six months of 2012.

GM said it sold 4.67 million vehicles during the first half. Both companies released their numbers this week.

For Toyota Motor Corp., the numbers underline a powerful rebound from a period of dismal sales, and the resilience of its brand as it gains traction in new markets such as China and Southeast Asia while clawing back lost market share in the U.S.

Both companies have said in the past that they don't care about the global sales leadership and are focusing on making profits. But the crown is a matter of corporate pride for both automakers.

GM doesn't plan to drop out of the race, though. The company's sales and market share grew in China, and Chevrolet, its largest brand, has seen record growth for seven straight quarters, spokesman Jim Cain said. GM sales should rise because 70 percent of its U.S. models will be refurbished or all-new in the next two years, said Cain.

"We are in the early days of the most aggressive rollout of new products in our history, which will help us press our advantage in the U.S. and China and grow profitably around the world," he said, declining to comment on whether the company expects to pass Toyota in the second half.

Toyota's production was hit by the earthquake and tsunami in northeastern Japan last year and then by flooding in Thailand, an important production base for the automaker. Before those disasters, its sales were dented by massive U.S. safety recalls, totaling more than 14 million vehicles since the quality control problems emerged three years ago.

But the company's factories and sales recovered faster than expected, making it very hard for GM to catch Toyota between now and the end of the year, said Jeff Schuster, senior vice president of forecasting at the LMC Automotive consulting firm in Troy, Mich.

Also, GM has a bigger presence than Toyota in Europe, where auto sales have fallen dramatically, and China, where the economy is starting to slow, Schuster said.

GM was No. 1 in world auto sales last year on strong performances in the U.S. and China, its two biggest markets. The Detroit company held the global sales crown for more than seven decades before losing it to Toyota in 2008 as GM's sales tanked while it headed toward financial ruin. In 2009, GM filed for bankruptcy protection, needing a U.S. government bailout to survive.

Volkswagen AG was in third place in the global sales race. The company said earlier this month that it sold 4.45 million vehicles in the first half. It came in second after GM in global vehicle sales last year.

GM had already trailed Toyota for the first quarter of this year at 2.28 million cars and trucks across the globe, while Toyota sold 2.49 million vehicles. Toyota has forecast that it will sell 9.58 million vehicles in 2012, up 21 percent from last year. GM has not given a full-year forecast.

Chizuko Satsukawa, auto analyst for Standard & Poor's in Tokyo, said Toyota faces intense competition not only from GM and Volkswagen but from other automakers, including Hyundai of South Korea.

Toyota is counting on its next surge of expansion in Southeast Asia, following other high-growth markets such as China, India and Brazil, she said.

"Toyota's rebound is impressive," said Satsukawa. "But what's even more important than the numbers is profitability."

Satsukawa said Toyota was at a disadvantage because of a strong yen, compared with European and South Korean makers that have the perk of a weak currency that raises earnings from exported vehicles. That makes gaining sales numbers critical for Toyota, she said.

Doing well in North America was also critical because that rich market is where many automakers, including Toyota, can hope to rake in hefty profits.

After the recall fiasco, Toyota President Akio Toyoda acknowledged that the automaker needed to go back to its roots and strengthen quality rather than pursuing rapid growth at any cost. But in recent months, he has changed his tone slightly, promising growth for Toyota, although he has stressed it will do so with good products.

Ford's Q2 profits Dragged Down by Weak European Markets

From AP

Just three years after Ford revived its American business, the company must pull off an even trickier turnaround in Europe, where mounting losses weighed down its quarterly results.

Ford's second-quarter net income fell 57 percent to $1 billion, largely because of a $404 million loss in Europe. Car sales there have tumbled to 20-year lows because shoppers are worried about the region's debt crisis and economic slowdown. Ford expects to lose more than $1 billion in Europe in 2012, double its estimate from the beginning of the year.

"This is a very serious situation," Chief Financial Officer Bob Shanks said after Ford announced earnings Wednesday. "It's going to take quite a long time for Europe to work through these issues."

Europe is vital to Ford. A quarter of the company's sales and profits come from the region, its largest market after North America. Four straight quarters of losses in Europe are taking a toll.

The company is trying to stem the losses by laying off temporary workers, slowing line speeds and shortening factory shifts. It has also cut advertising and sponsorships.

But analysts say Ford will have to go much further.

Layoffs and plant closures are inevitable, they say, although the company wouldn't give details about its restructuring plans on Wednesday.

Morgan Stanley auto analyst Adam Jonas estimates Ford is using only 63 percent of its plant capacity in the region. That means the company is paying to keep facilities open even though 40 percent of their space isn't being used. Ford wouldn't confirm that number.

Of Ford's six plants in Europe, Jonas thinks there are two likely candidates for closure: The Southampton, England, plant where 1,000 employees make the Transit commercial van, and the Genk, Belgium, plant where 4,000 employees make the Mondeo sedan and other products. Three plants in Germany likely wouldn't be touched, he said. Ford also has plants in Spain and Romania.

Jonas said the European turnaround will be slow, in part because Europe has larger, more powerful unions than the U.S. that make it more difficult to close plants. Of 220 plants in Europe, only nine have closed in the last 15 years, he says. Ford's current contract in Germany, for example, requires any reductions to be voluntary through 2016.

"If Ford wants to do something they'll have to pay a lot of money and wait a long amount of time," Jonas says.

It's unclear what a restructuring would cost or how long it would take until Ford releases details. But Shanks suggested that Ford's U.S. turnaround will be the blueprint.

"We know what to do in a tough situation," he said.

In the fall of 2006, Ford took out a $26 billion loan and used it to close six U.S. factories, lay off thousands of workers and redesign vehicles that have become big moneymakers, like the Ford Fusion and Ford Explorer. It took three years from that time for the company to start reporting consecutive quarterly profits.

That restructuring has turned Ford's North American region - which accounts for 47 percent of its sales - into an earnings powerhouse. Ford posted a $2 billion profit in the region in the second quarter thanks to higher pricing and highly anticipated new vehicles like the Ford Escape. Earnings rose 5.3 percent from a year earlier.

But losses elsewhere swamped those gains. Ford earned $1 billion, or 26 cents per share, in the quarter, down 57 percent from $2.4 billion, or 59 cents, a year earlier.

Quarterly revenue fell 6 percent to $33.3 billion.

Ford's $404 million loss in Europe compared with a profit of $176 million a year ago. Sales of cars and trucks in the region fell 15 percent. Ford also lost market share as it refused to ramp up deals to lure buyers, as many German automakers have.

Europe is struggling to contain a crisis over too much debt in some countries. Fears that Spain may need a bailout from other governments, or that Greece may leave the euro, have weighed on consumer demand in many markets in Europe, and a financial implosion could deepen what is already a mild slowdown in the region.

Shanks said industrywide auto sales have been falling in Europe for the last four years, but Ford continued to make money in the region until last year, when the declines got even more dramatic. Now the company doesn't think the European market will return to normal for at least five years.

Ford's stock price has fallen 32 percent in the past year, and hit a 52-week low earlier this week.

Ford joined a string of other multinational companies — including UPS and Xerox Corp. — in cutting its profit forecast for the full year because of weakness in Europe.

The automaker still expects a "strong" overall operating profit in 2012, but it will be lower than the $8.7 billion it made in 2011. Previously Ford had expected to make about the same amount as 2011.

If Ford's operating profit falls, it will be the first time since 2008 that Ford hasn't seen a year-over-year gain in operating profit.

Other regions also were weaker. Ford lost $66 million in Asia, where it is in the midst of a multiyear plan to increase production and introduce 10 new products. Profits also fell in South America, where it is being hurt by rising tariffs and the cost of developing and marketing several new products.

DO NOT Try This With Your Own Car!

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www.youtube.com/watch?v=LuDN2bCIyus&feature=player_embedded

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Great Fun! Billboards From GM

This is part of a series of billboards that were posted all around Detroit some time back. We thought you might enjoy them. We'll post some of the others as time goes on.