ProfessorBainbridge.com

Another Obama "green" company in trouble

President Obama's "green" industrial policy took a huge hit when Soyldra went down the tubes amidst charges of crony capitalism and so on. Now another beneficiary of centralized "green" planning is in trouble. Autoweek reports that:

Work on the Fisker Nina family sedan has temporarily halted at the Fisker Automotive plant in Wilmington, Del., while the carmaker and the federal government hash out details of the company's $529 million Department of Energy loan. The interruption has resulted in the layoff of 26 people at its Delaware plant and a number of contract engineers at Fisker's Anaheim, Calif., headquarters.

And the WSJ reports that:

Fisker spokesman Roger Ormisher said ... his company wasn't in peril. "We are still continuing to raise equity. We raised $260 million in the last three or four months," he said. The company said in a statement that it had raised $850 million in equity from private sources. But the future of the Nina and the 2,500 jobs in Delaware will depend on whether Fisker can revive the federal loans, or replace them, Mr. Ormisher said.

"There comes a point where you say, 'We can't keep putting money into that project,' " he said.

At the very least, it's another bump in the road for industrial policy.

The 100 worst cars ever

Edmunds announces their list of the 100 worst cars of all time. Sadly, I've owned two of them. Four counting cars that belonged to my parents but got handed down to me when I was a lad.

Musing about my next car

Long time readers know I'm a car nut. I'm currently driving a Mercedes E 550, which I like a lot in many ways, but isn't exactly the sportiest car I've ever driven. (I miss my 911 a lot. Trading it was the right choice at the time, for complicated reasons, but still....)

I occasionally ponder what to do when the lease expires next year. There was an interesting article in today's WSJ on Euro concept cars, which got me thinking. I thought the Volvo was especially attractive (but for the clam-shell doors).

As long time readers know, I've been a coupe guy for quite a while. The 911 was preceded by a M3 convertible, which was proceeded by the X5 error, an interregnum over which it is best to pass quietly, which was proceeded by a 328 convertible, which was proceeded the Jeep Cherokee error (another era about which the less said the better), which was proceeded by a Mazda RX7, which was proceeded by the lamentable Ford station wagon (yes, the one with the portholes).

Unfortunately, I find myself at a stage of life at which 4 doors is at least convenient and arguably essential. So I've been pondering the new 4 door coupes, like the Mercedes CLS, the Audi A7, or the VW CC. I've concluded that they represent an ideal blend of fun, looks, and practicality.

I'd like (read need) to go a lot cheaper than the Mercedes and the Audi, and would prefer to go American. I was thinking that a Lincoln 4 door coupe based on the Taurus SHO would be a real halo car for that brand and a car I'd definitely need to consider when the lease on my E550 expires. The Mustang-based MKR concept from 2007 would likewise fit the bill.

 

But is anybody in Detroit listening?

Of course, in the unlikely event that Corporate Governance After the Financial Crisis hits the NY Times best seller lists when it comes out in a month or so, maybe I'll have to start looking at Panameras. I'm not counting on it, of course, but you could do your part by preordering your copy today.

Obama and the automakers

The Hill reports that:

The country’s automakers should ditch their focus on SUVs and trucks in favor of smaller, more fuel-efficient vehicles, President Obama said Monday.

“You can’t just make money on SUVs and trucks,” Obama said during a town hall forum in Cannon Falls, Minn. “There is a place for SUVs and trucks, but as gas prices keep on going up, you have got to understand the market. People are going to try to save money.” ...

The president said his administration “turned around” the U.S. auto industry and is calling on automakers to change the way they do business. “They are gaining market share for the first time in years, but what we said was, ‘If we are going to help you, then you have also got to change your ways,’ ” he said.

(1) So the community organizer who has never made a payroll or run a business thinks he knows better than the market what cars people wnat to buy?

(2) Obama didn't turn around the automakers. Ford did fine all by itself. Chrysler got a foreign savior. GM and Chrysler both got to screw their creditors and other stakeholders without having to go through an orderly bankruptcy reorganization.

Hybrids don't necessarily help the environment

Autoweek reports that:

Car buyers who think they are helping the planet by choosing a hybrid vehicle to aid in cutting emissions don't always get the biggest bang for their buck, according to an environmental interest group.

A report from the Union of Concerned Scientists shows that some hybrids come at a much higher price tag than their similarly equipped, conventional-powertrain counterparts, yet offer little in the way of environmental gain.

These not-so-green hybrids compromise their value or eco-friendliness in a variety of ways.

For example, rarely is the hybrid powertrian offered on a vehicle's base model. That forces customers to take premium features that are packed with the hybrid version, adding to hybrid's price disadvantage.

Other times, a hybrid might not be built to achieve fuel-saving performance in the most cost-effective manner.

Well, duh, as fans of Top Gear have long known:

Toyota gets a partial win

Inside Line reports:

In a major victory for Toyota, the federal judge overseeing the multidistrict litigation over alleged acceleration defects in Toyota vehicles has drastically limited the number of claims against the automaker.

The ruling says that only California car owners — not those in other states — can take advantage of the state's favorable consumer-protection laws. The action drastically cuts the size of a potential class action against Toyota filed on behalf of consumers and calls into question speculation that the Toyota litigation could cost the automaker upward of $3 billion if it lost the federal case....

U.S. District Judge James V. Selna ruled on June 8 that consumers who relied on Toyota's guarantees of reliability and safety should not be allowed to pursue economic damages under California's state law if they lived or purchased their vehicles in another state. California laws could conflict with those of other states, said the ruling. In addition, California's statute of limitations for the economic-loss claims is more generous than many other states.

The suits stem from a recall of more than 8 million vehicles worldwide, mainly related to complaints of sudden acceleration. Toyota has used a NASA and National Highway Traffic Safety Administration study to argue that the lawsuits are without merit.

On May 13, Selna refused the automaker's request to dismiss the litigation, saying that Toyota owners had alleged enough facts establishing overpayment, loss in value or loss in usefulness with regard to the vehicles in question.

That last paragraph is the one that caught my eye. Basically what the judge is saying is that plaintiffs can prevail under California law against a mostly innocent manufacturer where negative publicity and resulting price declines are caused by an unholy combination of anecdotes about driver error, rapacious plaintiff lawyers, and an unscrupulous mainstream media. What a great state I live in!

Washington Post blasts Obama's auto accounting

The Washington Post (of all places) fact checked Obama's claims about how successful his auto industry bailout has been and concluded

What we found is one of the most misleading collections of assertions we have seen in a short presidential speech. Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.

Ouch. But it gets better (or worse, I suppose):

"weasel words"

"sleight-of-hand accounting"

"chicanery"

"another impressive-sounding but misleading figure"

"quite a straw man"

It sounds like something from Red State, not the MSM, which makes it doubly impressive.

Skeel on the Auto Bailout

Law professor David Skeel's one of the smartest guys I know and a leading expert in bankruptcy law, so when he publishes a major op-ed in the WSJ, I pay attention. Today, the Journal gave him many column inches to unravel the Obama administration's claims re the auto bailout:

If the government hadn't stepped in and dictated the terms of the restructuring, the story goes, General Motors and Chrysler would have collapsed, and at least a million jobs would have been lost. The bailouts averted disaster, and they did so at remarkably little cost.

The problem with this happy story is that neither of its parts is accurate. Commandeering the bankruptcy process was not, as apologists for the bailouts claim, the only hope for GM and Chrysler. And the long-term costs of the bailouts will be enormous.

Skeel goes on to make his case in considerable detail. Great stuff. Go read the whole thing.

Government Motors a bust

Edmunds:

Taxpayers may never get back about $16 billion of the bailout money extended to Ally Financial, Chrysler, Chrysler Financial, General Motors, auto suppliers and used to guarantee warranties, says a new White House report entitled "The Resurgence of the American Automotive Industry."

If the White House is willing to admit that losses could hit $16 billion, imagine how big the real numbers probably are. Meanwhile, Ford keeps going from strength to strength without having taken a taxpayer dime, which calls into question the Obamabots' claim that our fearless leader saved the American auto industry by throwing taxpayer dollars at the problem.

Ford Pinto turns 40--those that didn't blow up, anyway

Autoweek:

As proof that there's a group of enthusiasts for just about everything, owners of the lowly Ford Pinto are taking to the roads in celebration of the car's 40th birthday.

Pinto owners are driving from Denver to the Carlisle Ford Nationals in Pennsylvania this week, a journey of approximately 1,600 miles.

I must confess that I owned one, which looked pretty much like this:

It actually was a pretty well made car. I drove it into the ground over 9 years of college, grad school, and law school, and until the very end it never needed anything other than (often skipped) routine maintenance. But what was Ford--what was I?--thinking when it came to that stupid porthole?

Democrats: The do as I say not as I do party

It figures:

The new chairwoman of the Democratic National Committee was criticizing Republicans who opposed President Obama's bailout of the American automakers union, oh, no, make that American automakers.

"If it were up to the candidates for president on the Republican side," said Rep. Debbie Wasserman Schultz of Florida, "we would be driving foreign cars. They would have let the auto industry in America go down the tubes."

So Michael O'Brien of The Hill newspaper went and checked what kind of automobile loyal-American-car-supporter Debbie Wasserman Schultz owns.

Yup, you guessed it -- Japanese.

Drive as she says, not as she does.

More interesting E-type news

The 50th anniversary of the Jaguar E-type (which for the benefit of those of you joining us late was/is one of the two iconic sports cars for which I yearned as a lad) is prompting all sorts of interesting news. Here's another one that caught my eye:

British company Eagle makes a business of selling and restoring E-types. Its latest project takes the classic sports car and upgrades it with some modern technology.

Eagle plans to roll out the Jaguar E-Type Speedster Lightweight at the Salon Privé in London on June 22.

Eagle founder Henry Pearman says the car has been reworked to take out weight and give it more muscle to match the performance of a contemporary supercar. From the outside, it is identical to the original 1960s version.

The car's 4.7-liter inline-six produces 310 hp and 340 lb-ft of torque. The car's curb weight of 2,204 pounds gives it a power-to-weight ratio similar to that of a Porsche 911 Turbo, Pearman says.

The Salon Privé show and concours d'elegance will be held at the Syon House in west London. Visit www.eaglegb.com for more information on Eagle.

Very cool. When I learned that the Eagle costs about the same as a brand new Aston Martin or Ferrari, of course, purchase plans went out the window. Sigh.

The Jaguar E-Type: An Appreciation

High on the list of cars I'd like to own someday would be a Jaguar E-Type. Preferably a coupe. Preferably right hand drive. Preferably in British racing green. Preferably a Series I from about 1965 or so.

Apropos of which, Autoweek has posted an appreciation of the E-Type that set the old ticker to palpitating once again:

Jaguar's stunning E-type defined 'car' for an American generation

You could start with the stunning good looks that make the Jaguar E-Type a permanent fixture at New York's Museum of Modern Art or with the style and character that defined an era. You could start with the technological innovation, the impressive performance or the value that the E-type's contemporaries simply could not match. ...

It's enough to say that at its unveiling in Geneva, no less a car guy than Enzo Ferrari called the E-type “the most beautiful car ever made.” Clearly, the people who created the E-type had some innate grasp on the dynamics of visual pleasure. ...

There's no science to measure precisely the E-type's impact on car culture in America or on the culture at large. We'd quite arbitrarily estimate that each of the 72,000 E-types was responsible for creating 10 or 20 Jaguar people and 40 or 50 car people whose tastes, demands and outlooks were shaped by this piece of modern art. If you're still reading, you're probably one of them.

Indeed.

The coming car sticker price shock, courtesy of your friendly federal government

Autoweek reports that:

New federal fuel economy and emissions rules took effect Jan. 1, requiring automakers to hit 35.5-mpg corporate average fuel economy by the 2016 model year.

But automakers and regulators from the EPA, the National Highway Traffic Safety Administration and the California Air Resources Board already are haggling over a tougher proposal initiated by President Barack Obama last October. That plan calls for a CAFE range of 47 mpg to 62 mpg by the 2025 model year. ...

"That would require a market that's 64 percent plug-in hybrids -- that's the only way we can get it to 62 mpg," said McAlinden, chief economist and executive vice president of the Center for Automotive Research in Ann Arbor, Mich.

New-vehicle prices would rise by an average of $9,970, McAlinden said. Other estimates are lower; the alliance cites a possible price increase of "as much as $6,400." Either way, industry groups say they fear that sticker-shocked consumers would hold on to their old cars.

To be sure, the ecomentalists claim the increased costs will be lower and offset by fuel savings. But suppose Obama goes forward with the proposal to tax drivers based not on how many gallons of gas they use but the number of miles they drive. That would negate much (all?) of the fuel savings claimed by the ecomentalists. As of now the administration is disavowing its trial balloon, but it's clearly an idea that's going to keep recurring if fuel consumption goes down and gasoline tax revenues stagnate.

Forcing us all into plug-in hybrids is going to impose another major cost; namely, retrofitting houses to provide decent charging stations. A Chevy Volt takes up to 15 hours to charge on regular 115-to-120-volt house current, after all.

And where's the electricity going to come from? The ecomentalists are using the Japanese nuclear accident as an excuse to kill off nuclear power once and for all. Renewables remain a minor portion of the energy system. So we'll be burning fossil fuels to power these cars one way or another.

Finally, it's sort of sad that we might be the last generation to know the joy of putting your foot down on a massive V8.

I really, really want an E-type

When I was a kid, there were two iconic sports cars after which I lusted: The Porsche 911 and the Jaguar E-type. I was lucky enough to scratch my 911 itch a few years ago. But video by AutoWeek associate publisher Dutch Mandel celebrating the E-type's 50th anniversary has brought the E-type itch raging back to the fore:

Gawd, that's a gorgeous car. I'm not a car collector. But I would dearly love to find a E-type in driver condition to tool around the Southern California canyons on the weekend. In an ideal world, it'd be a right hand drive version in British Racing Green.