Main page | May 7, 2008 »

Backseat Driver: GM's Malibu hit by UAW strike

The United Auto Workers' trike against General Motors' Fairfax plant near Kansas City could not come at worse time for the company because it affects the production of the Chevrolet Malibu, won of the few bright lights on GM's radar screen.

Not only did the Malibu get rave reviews when it came out last year, but its sales were up a healthy 40 percent in April - when GM's overall sales were off 16 percent.

GM is already suffering from a strike at a plant in Delta Township, Mich., according to USA Today.

Meanwhile, a strike against American Axle has slowed production of its trucks and SUVs, but the company is taking advantage of the slowdown to reduce production of vehicles that are not selling well.

Posted by Peter C. T. Elsworth  at 4:47 PM to GM | Permalink | Comments 0

Backseat Driver: Chrysler's gas price guarantee carries risks

Chrysler's "Let's Refuel America" program which guarantees anyone buying one of its vehicles in the next few weeks gas at $2.99 a gallon for 12,000 miles a year for three years carries some risk for the automaker.

With the current turmoil in the crude oil market, Chrysler could find itself paying out alot more than the 60 cents or so difference between $2.99 and $3.60 that exists now.

Three years, after all, is a long time when you consider how oil prices have almost doubled to over $120 a barrel in just the last 12 months. And Goldman Sachs is now talking about oil at $150 to $200 a barrel!

While speculation has had a part in driving up oil prices, it is hard to imagine how the high prices are not going to filter down to the pump. And if gas prices do remain higher than $2.99 a gallon, the program will only cut further into the company's profits.

On the other hand, if the price of gas does fall to below $2.99 a gallon - and the gas cards become invalid - Chrysler will have a bunch of unhappy campers on its hands.

Either way there is a risk with oil and gas/diesel prices being as volatile as they have ever been.

And then again the incentive could be undermined if other car companies come out with their own incentive plans on top of existing discounts.

"This is really more about helping customers contend with uncertain economic news," Chrysler President Jim Press was quoted as saying.

Bunk, of course.

What it's more about is a company whose sales were off 23.5 percent last month following an 18 percent drop last year and which has no subcompacts and a limited number of compact/small cars - the Dodge Caliber and Chrysler PT Cruiser - on its books when only small, fuel-efficient cars are reporting increased sales.

- Peter C.T. Elsworth

Posted by Peter C. T. Elsworth  at 1:51 PM to Gas prices | Permalink | Comments 0

Chrysler has a deal for buyers: $2.99-a-gallon gas cards

As presidential candidates spar over how to roll back gasoline prices, Chrysler on Monday said that it has come up with its own plan to bring back $2.99 gas, which it hopes will spur lagging sales, according to USA Today.

Chrysler announced a month-long "Let's Refuel America" program that will give buyers of most of its vehicles a card good for purchases of gasoline or diesel fuel that locks in the price at $2.99 a gallon for three years.

Posted by Peter C. T. Elsworth  at 9:58 AM to Chrysler | Permalink | Comments 0

Oil hits record $120.93 on fear of tight supply

VIENNA, Austria -- Oil futures rose to an all-time high near $121 a barrel Tuesday with new concerns about a threat to supply and a weaker dollar, according to the Associated Press.

The surge in oil prices was also fueled by hopes that the U.S. economy will be spared a sharp downturn after the release of data Monday showing an unexpected expansion in the U.S. service sector in April, analysts said.

Posted by Peter C. T. Elsworth  at 9:55 AM to Crude oil market | Permalink | Comments 0