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Archive for the ‘Autos’ Category

The Nielson Company provides valuable market research (demographic breakdowns of an audience, socio-economic factors) for any consumer driven company. Here’s an excerpt from their report on YTD 2009 Advertisment Spending:

U.S. ad spending fell 15.4% in the first half of 2009, according to data released today by The Nielsen Company. A total of $56.9 billion was spent on advertising in the first six months of the year, more than $10.3 billion less than the same time period in 2008.

The automotive industry was the top spender ($3.68 billion), despite a 31% cut over last year. Local auto dealerships – also a perennial top-10 spending category – cut its ad budget 26% through June this year.

ad-spend_4 Via Infectious Greed

A 31% drop in spending by the autos shouldn’t be surprising, but that’s brutal.

Finally, here are the type of Ads we can look forward to watching this football season:

Nielson

One has to wonder if businesses are moving away from TV advertising altogether, and relying on the “clicks” of Google to bolster business.

Here’s the full report.

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Halt trading – give these computer drone traders a vacation, and let them come back to reality. Let congress vote on the future of General Motors, Ford, and Chrysler; whatever the result may be, let it settle without any trading.

If they choose to let the Big 3 file bankruptcy, they should facilitate it such that the American Autos have temporary access to a credit line. This would allow them to carry on business as usual without closing their doors; as they try to keep creditors away, they can straighten out their business model and break the unions, all while preventing a Chapter 7 bankruptcy – which would lead to liquidation and 100,000 jobs lost.

From here – during the halted trading – the SEC should reinstate the uptick rule, which should temper the volatility going forward (as we saw, banning short selling on Financials is NOT the answer…as soon as it is lifted? Bombs away!)

There should be nothing hindering any of the above actions, except the bureaucratic nature of our government, which we no longer have time for at this juncture.

While we’re at it, we might as well consider an interest rate cut, as it should at least have a placebo effect on the markets…the reason I say that is the effective Federal Funds interest rate has been well below the targeted 1% for quite some time:

effective-fed-funds

As for Barack Obama, he should take preliminary action in appointing some cabinet members; get an all-star team of financial geniuses for a special committee – Buffett, Summers, Volker, Soros, Roubini – some of the smartest people in the world live in this country, and their talent should be utilized.

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That can sum up GM’s business structure; GMAC (which GM owns 49% of) is losing money on loans of all kinds, while GM is bleeding cash and will certainly default without government help.

General Motors Corp., seeking federal aid to avoid collapse, said it used $6.9 billion in cash in the third quarter and may fall below the minimum it needs to operate before the end of this year.

As one might imagine, their earnings weren’t too good either; they had a third-quarter operating loss of $4.2 billion, or $7.35 a share – which exceeds the value of their market cap. They had a non-cash one time gain which offset this number, leading to a net loss of only 2.5 billion.

The only thing we can do is wait and see how this works itself out – one way or another, it should be fast.

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I already talked about the ambiguity surrounding the Chevy Volt, but I saw something interesting in CNN Money today, concerning T. Boon Pickens’ ideals of a wind powered nation. In case you’re unfamiliar with the framework of his plan, here is a very brief synopsis, via CNN’s summary:

T. Boone Pickens, the billionaire oilman, has been hitting the airwaves, pitching a plan to use wind to replace all the natural gas that’s used to produce electricity, then using that saved natural gas to fuel cars.

While that’s interesting, it isn’t what caught my eye:

While automakers are betting on electric cars as the vehicle of the future, those electric cars will still need backup engines to recharge the battery on long trips, at least for the foreseeable future.

Those backup engines could run on natural gas, said Julius Pretterebner, a vehicles and alternative-fuels expert at Cambridge Energy Research Associates.

Pretterebner also pointed to a host of other reasons why natural gas in cars is a good idea: It’s about half as expensive as gasoline and 30% cleaner; the infrastructure to get it to service stations already exists; it’s relatively cheap to convert existing cars ($500 to $2,000 per car, he said); and natural gas can be carbon neutral, if it’s made from plants, a process he said requires no new technology.

That sounds pretty cool to me…the only problem I have is one which stems from lack of understanding (I’m not exactly a bio-chemistry whiz, so I’ll have to leave the dynamics of this study to the engineers back at Lehigh to explain to me). His thoughts are clear, but I find it peculiar that we haven’t heard this concession before…Did this guy just figure out that the infrastructure for natural gas has been available for use to the general public throughout oil’s 70% ascent year to date?

Other than that, the article highlights the short-term difficulty of converting to wind power, because the applicable tax credits expire every 2 years.

Regardless of the oil industry’s apologetic laws, like this tax credit policy, I think that with the right government, these issues get straightened out. Look at what was accomplished when our backs were against the wall under this regime of bad government? Hank Paulson pulled that bail out plan together pretty fast…

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There has been quite a bit of press lately about electric cars. The Personal Journal (yes, the same section of the WSJ I made fun of the other day) has an installment which features GM’s former CEO Robert Stempel, who had spent much of his career around this technology, and is coincidentally the same guy who approved GM’s famous EV1, the car which prompted the documentary “Who killed the electric car?”….he offers, as the article puts it, “some sobering words” which were not captured in this documentary.

“The business side of the case wasn’t there. The EV1 was too expensive…We were way off the cost target,”

Well that wasn’t clear to the users at the time, but in hindsight the cars were offered through a leasing program, where GM clearly didn’t recoup the cost of the car through the monthly lease payments. Honda is doing something very similar with their fuel cell vehicle.

Stempel also discusses how the commodity boom has negatively affected the pricing of the raw materials needed to make these contraptions work. Unfortunately, it looks like he is on the mark…

The GM Volt plug-in hybrid was supposed to hit showrooms in 2010 for $30,000. Well, apparently it’s not that easy to redesign wipers, stereos and other electrical accessories so they drain as little juice as possible from the battery. GM has announced that the first generation Volt will be “closer to $35,000”. The good news is that the late 2010 deadline hasn’t been officially pushed back, though GM says that if it can’t make it, the car might be delayed until the Spring of 2011.

-Treehugger.com

Well, that kind of sucks. I hope $35,000 is still cost effective for a plug-in hybrid. I am, however, curious to see what GM’s estimates are for the actual fuel economy of the Volt (once you use the 40 miles worth of electricity).

Luckily for us, GM is one of the worst run companies ever. They haven’t been profitable since 2004, and if it weren’t for continual government support, they’d be gone by now. That should offer a sigh of relief, since Honda and Toyota haven’t rushed their electric cars into production, and have enough of a life line to get this thing right…with time.

In last week’s edition of The Economist, they had an article about the future of SUVs. I saw a staggering statistic about how both the car dealer and manufacturer make better margins on the sale of 1 SUV than they do on the sale of nearly 10 compact cars (this was by no means a scientific study, it was coming from a car salesman). Still, if that number resembles anything close to reality, I think that is a pretty good reason why we see so many SUVs on the road; the sales people have monetary incentive (the best kind) to sell SUVs. Predatory salesmanship, anyone?

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