The Truth About Cars » High Finance http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 23 Apr 2015 20:00:25 +0000 en-US hourly 1 http://wordpress.org/?v=4.0.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » High Finance http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com/category/news-blog/high-finance/ Norway Set To Review EV Incentives Amid Soaring Sales http://www.thetruthaboutcars.com/2015/04/norway-set-review-ev-incentives-amid-soaring-sales/ http://www.thetruthaboutcars.com/2015/04/norway-set-review-ev-incentives-amid-soaring-sales/#comments Tue, 21 Apr 2015 16:00:50 +0000 http://www.thetruthaboutcars.com/?p=1049953 The law of unintended consequences has found another victim in Norway as the nation re-assesses its electric vehicle incentives amid soaring sales. Monday marked the 50,000th EV sold in Norway since the nation implemented incentives in 2012 meant to encourage electric-vehicle adoption among its citizens. The incentive includes toll and parking fee exemptions, free use […]

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Tesla Model S delivery to Høyres Nikolai Astrup in Norway

The law of unintended consequences has found another victim in Norway as the nation re-assesses its electric vehicle incentives amid soaring sales.

Monday marked the 50,000th EV sold in Norway since the nation implemented incentives in 2012 meant to encourage electric-vehicle adoption among its citizens. The incentive includes toll and parking fee exemptions, free use of charging stations, and bus-lane usage in addition to the usual tax credit scheme, Reuters reports. The milestone arrived three years earlier than expected by the government, whose official data shows that one-fifth of 2015 new-car sales in Norway are of electric models. Norway, a nation of 5.1 million, now accounts for one-third of all battery-powered vehicle sales in Europe based on 2014 sales figures.

As such, the nation’s finance ministry is looking to revise those incentives, especially in light of losing kr3 billion to kr4 billion ($380 million to $510 million USD) in revenue, as well as complaints about increased sales of the Tesla Model S, which made up 3 percent of overall EV sales last year. The latter issue has led to calls from critics to remove the incentives for wealthy consumers.

The finance ministry will present the outcome of its review when the revised budget is presented May 1.

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Ford To Announce $2.5B Investment In Mexico On 90th Anniversary http://www.thetruthaboutcars.com/2015/04/ford-announce-2-5b-investment-mexico-90th-anniversary/ http://www.thetruthaboutcars.com/2015/04/ford-announce-2-5b-investment-mexico-90th-anniversary/#comments Wed, 15 Apr 2015 14:00:15 +0000 http://www.thetruthaboutcars.com/?p=1044762 This Friday, Ford will announce a $2.5-billion investment plan for two of its factories in Mexico. According to Reuters, Ford will spend $1.3 billion to expand its engine production facility in northern Chihuahua for two new diesels, with the remaining $1.2 billion to go a transmission plant in Guanajuato. A government representative said the Chihuahua […]

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Ford Chihuahua Plant in Mexico

This Friday, Ford will announce a $2.5-billion investment plan for two of its factories in Mexico.

According to Reuters, Ford will spend $1.3 billion to expand its engine production facility in northern Chihuahua for two new diesels, with the remaining $1.2 billion to go a transmission plant in Guanajuato. A government representative said the Chihuahua investment would create 4,000 jobs as a result.

The announcement will be made in Mexico City in celebration of Ford’s 90th anniversary in Mexico, with Mexico president Enrique Peña Nieto set to attend. Ford’s previous major investment occurred in 2008, when the automaker spent $3 billion to update the Cuautitlan plant for production of the Fiesta.

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Reedy: CarMax Lending Arm Won’t Fully Play In Subprime Market http://www.thetruthaboutcars.com/2015/04/reedy-carmax-lending-arm-wont-fully-play-subprime-market/ http://www.thetruthaboutcars.com/2015/04/reedy-carmax-lending-arm-wont-fully-play-subprime-market/#comments Thu, 09 Apr 2015 12:00:40 +0000 http://www.thetruthaboutcars.com/?p=1041145 Though CarMax’s lending arm will press forward with its subprime lending test program, it won’t be a major player in the subprime game. According to Automotive News, CarMax CFO Tom Reedy said as much during an earnings call with the media and analysts this month, stating that the company has three partners already doing well […]

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Carmax

Though CarMax’s lending arm will press forward with its subprime lending test program, it won’t be a major player in the subprime game.

According to Automotive News, CarMax CFO Tom Reedy said as much during an earnings call with the media and analysts this month, stating that the company has three partners already doing well for CarMax in the subprime market; thus, no reason for CarMax Auto Finance to take a greater role in said market like it does in the prime lending market.

For now, the lending arm will continue loan originations at 5 percent of subprime vehicle sales for the duration of the testing period, which began January 2014. The arm originated $72.2 million of receivables under the program through the end of February 2015.

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ChemChina, Finanzaria Buying Pirelli In €7.1B Takeover Deal http://www.thetruthaboutcars.com/2015/03/chemchina-finanzaria-buying-pirelli-7-1b-takeover-deal/ http://www.thetruthaboutcars.com/2015/03/chemchina-finanzaria-buying-pirelli-7-1b-takeover-deal/#comments Tue, 24 Mar 2015 11:00:41 +0000 http://www.thetruthaboutcars.com/?p=1028233 Should things go as planned, China National Chemical Corp. — ChemChina — will buy into Pirelli in a €7.1 billion ($7.7 billion USD) deal. Automotive News reports the deal could bring premium-tire technology to ChemChina, while giving Pirelli a huge jump in the Chinese domestic market. However, the chemical company’s bid of €15/share last weekend […]

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Pirelli F1 Tire Range

Should things go as planned, China National Chemical Corp. — ChemChina — will buy into Pirelli in a €7.1 billion ($7.7 billion USD) deal.

Automotive News reports the deal could bring premium-tire technology to ChemChina, while giving Pirelli a huge jump in the Chinese domestic market. However, the chemical company’s bid of €15/share last weekend may be the beginning of a protracted takeover as it and Pirelli’s largest investor, Cam Finanziaria, attempt to secure 90 percent of the stock to take the tire company off of the trading floor; the share price climbed to €15.76 Monday.

The terms of the deal would give ChemChina 50.1 percent of the company, Finanziaria 49.9 percent, and would begin with the former paying €15/share for Finanziaria’s 26.2 percent of Pirelli, followed by a public tender for the rest of the company at the same price. Should that fail, however, ChemChina could merge its 66 percent with Finanziaria’s holdings to force a delisting. Pirelli chair and CEO Marco Tronchetti Provera would remain CEO under the deal, while ChemChina will seek a new chair.

The Sino-Italian buy-in is part of a number of takeovers of Italian companies by Chinese buyers, and would be the fifth-largest deal by a state-owned enterprise.

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More US Consumers Signing Long-Term Auto Loans http://www.thetruthaboutcars.com/2015/03/us-consumers-signing-long-term-auto-loans/ http://www.thetruthaboutcars.com/2015/03/us-consumers-signing-long-term-auto-loans/#comments Fri, 20 Mar 2015 14:00:23 +0000 http://www.thetruthaboutcars.com/?p=1025785 In the past, six-year auto loans were few and far between. Today, more of those loans are being issued, with seven- and eight-year loans gaining popularity. NPR reports such loans are helping to fuel a boom in U.S. new-car sales, with one-third of the loans lasting 74 months and beyond. AutoPacific analyst Ed Kim says […]

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Signing his life and wallet away for the next six or so years with a long-term auto loan agreement

In the past, six-year auto loans were few and far between. Today, more of those loans are being issued, with seven- and eight-year loans gaining popularity.

NPR reports such loans are helping to fuel a boom in U.S. new-car sales, with one-third of the loans lasting 74 months and beyond. AutoPacific analyst Ed Kim says the cars are one of the reasons for the long loans:

Consumers are demanding a lot more technology in their vehicles, infotainment technologies. There’s also a lot more safety features that are in vehicles right now. Emissions and efficiency technology that are in vehicles right now, that are making vehicles cost a lot more.

Kim adds that the main driver is that most consumers are still crawling out of the Great Recession, which Experian Automotive’s Melinda Zabritski says isn’t much of a problem as far as lending goes. She says that while it would be sensible to take on 36- or 48-month loans on a new vehicle, “the average consumer just can’t afford that.”

Critics counter that the long-term loans could hurt consumers and automakers alike in the near- and long-term. Consumer advocate Mike Sante states that those who are taking out those loans have no business doing so in the first place, and should buy a less expensive new or used vehicle with a loan of no more than four years. Honda Executive Vice President John Mendel, whose company offers 36- and 48-month loans, says loans beyond five years are too long, and adds that he hopes his competitors come to their senses.

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House Republicans Gunning For End Of Auto Technology Loan Program http://www.thetruthaboutcars.com/2015/03/house-republicans-gunning-end-auto-technology-loan-program/ http://www.thetruthaboutcars.com/2015/03/house-republicans-gunning-end-auto-technology-loan-program/#comments Fri, 20 Mar 2015 11:00:04 +0000 http://www.thetruthaboutcars.com/?p=1025721 Should Republicans in the U.S. House have their way, the loan program meant to foster development of advanced automotive technologies would be killed. The Detroit News reports the $25 billion Advanced Technology Vehicle Manufacturing Program, which issued loans between its establishment in 2008 and the last fulfilled request in 2011 to companies like Tesla, Nissan […]

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US Rep Tom Price with Republican Members of US House Budget Committee

Should Republicans in the U.S. House have their way, the loan program meant to foster development of advanced automotive technologies would be killed.

The Detroit News reports the $25 billion Advanced Technology Vehicle Manufacturing Program, which issued loans between its establishment in 2008 and the last fulfilled request in 2011 to companies like Tesla, Nissan and Ford, would see the remaining $16.5 billion be rescinded as part of the House Budget Committee’s budget proposal:

The budget rescinds all unobligated balances from the president’s stimulus green energy programs. The government cannot recover taxpayer dollars from failed projects like Solyndra, but it can protect taxpayers from being on the hook for future boondoggles.

Said “boondoggles” include the aforementioned solar panel startup Solyndra ($536 million received; failed in 2011), Fisker ($529 million; now under new ownership), and Vehicle Production Group ($50 million received; U.S. Department of Energy sold the loan to AM General for $3 million). On the other hand, Ford ($5.9 billion), Nissan ($1.4 billion) and Tesla ($465 million) have done well with their loans, with Tesla paying off its loan nine years early.

The effort to kill the program has been ongoing since the collapse of Solyndra, but until now, the House Republicans haven’t had support from the Senate. Now under Republican control, however, Congress could do away with the program barring a veto from President Barack Obama.

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US New-Truck Leases Rise Thanks To Higher Residuals, Transactions, More Content http://www.thetruthaboutcars.com/2015/03/us-new-truck-leases-rise-thanks-higher-residuals-transactions-content/ http://www.thetruthaboutcars.com/2015/03/us-new-truck-leases-rise-thanks-higher-residuals-transactions-content/#comments Wed, 18 Mar 2015 10:00:01 +0000 http://www.thetruthaboutcars.com/?p=1023753 Forget about leasing Benzes and Lexuses: trucks are the new hotness, thanks to higher residuals and transaction prices, as well as more content. Automotive News reports leases accounted for 14 percent of light-duty truck sales in the United States, which is smaller than the 20 percent overall figure for U.S. new-car leases, as well as […]

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Forget about leasing Benzes and Lexuses: trucks are the new hotness, thanks to higher residuals and transaction prices, as well as more content.

Automotive News reports leases accounted for 14 percent of light-duty truck sales in the United States, which is smaller than the 20 percent overall figure for U.S. new-car leases, as well as the ~50 percent figure for luxury vehicle leases.

For automakers, this means they can continue to ride the strongest streak in sales the light truck market has experienced in current times, while also bringing customers into showrooms every three years. In exchange, they also gain less profit from leases — even with higher residuals — and more risk on whether or not the resale value will be strong in three years’ time, especially with external factors like fuel prices and the strength of the economy when the leases are up.

Factors driving the current leasing boom in the light-duty truck segment include higher average transaction prices — hitting a new average high of $41,029 in 2014 — the aforementioned residuals that are several points higher now than in 2010 — leading to more cash on the hood and other deals for potential lessees — and more content and features, like Wi-Fi, luxurious materials and advanced connected-vehicle systems.

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Ally Financial Offering 84-Month Loans Amid Industry Risk Concerns http://www.thetruthaboutcars.com/2015/03/ally-financial-offering-84-month-loans-amid-industry-risk-concerns/ http://www.thetruthaboutcars.com/2015/03/ally-financial-offering-84-month-loans-amid-industry-risk-concerns/#comments Thu, 12 Mar 2015 14:00:02 +0000 http://www.thetruthaboutcars.com/?p=1020481 Though most lenders aren’t comfortable with the idea of 84-month auto loans, Ally Financial is going full steam ahead with such loans. Automotive News reports the former financial arm of General Motors — joining Toyota Financial Services in the seven-year lending game — is taking on 84-month loans because, per CEO Jeffrey Brown, the lender […]

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Ally NYSE Trading Floor

Though most lenders aren’t comfortable with the idea of 84-month auto loans, Ally Financial is going full steam ahead with such loans.

Automotive News reports the former financial arm of General Motors — joining Toyota Financial Services in the seven-year lending game — is taking on 84-month loans because, per CEO Jeffrey Brown, the lender hadn’t taken enough risk over the past two to three years. Representative Gina Proia adds that the loan terms would be offered to well-qualified consumers in 24 states in 2015 as part of Ally’s commitment “to offering competitive products designed to help dealers provide their customers with a variety of options that meet a range of consumer credit needs and monthly payment preferences.”

However, Ally and Toyota Financial are among the only ones to offer such terms, as most lenders want their customers to come back more often. Financial observers, meanwhile, are watching longer-term loans with a cautious eye, citing concerns of risks to the United States economy down the road if things were to follow the same path as the housing bubble in 2007 and 2008.

Moody’s Analytics senior director Cristian deRitis is among those observers, though he isn’t worried about the risks attached, citing higher lending standards for 84-month loans, the small market size compared to the overall auto financing market, and the consumer base for most of the loans coming from credit unions, whose members don’t fall into delinquency often.

Speaking of the overall market, the average length for an auto loan is 66 months for new vehicles in Q4 2014, 62 months for used models. Both figures are up one month over the same period in 2013.

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Auto Lending Rising As Access To Credit Opens Up http://www.thetruthaboutcars.com/2015/03/auto-lending-rising-access-credit-opens/ http://www.thetruthaboutcars.com/2015/03/auto-lending-rising-access-credit-opens/#comments Tue, 10 Mar 2015 14:00:37 +0000 http://www.thetruthaboutcars.com/?p=1019490 With auto lending easier to come by these days, bank regulators and analysts are keeping their eyes open for potential signs of trouble. According to The Detroit Bureau, the Federal Reserve Bank of Cleveland found that newly originated auto loans in Q3 2014 reached $105 billion, the highest level of originations since 2005. The high […]

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Discussing some auto financing

With auto lending easier to come by these days, bank regulators and analysts are keeping their eyes open for potential signs of trouble.

According to The Detroit Bureau, the Federal Reserve Bank of Cleveland found that newly originated auto loans in Q3 2014 reached $105 billion, the highest level of originations since 2005. The high level of originations are attributed to an increased demand for vehicles and easing lending standards.

Researchers Emre Ergungor and Caitlin Treanor add that those with good and bad credit scores are landing the loans, with banks taking the higher-rated consumers and finance companies going for all levels of risk, especially the subprime consumers.

Other factors driving the new credit boom include increased consumer confidence, job opportunities, and the brief respite in fuel prices. However, the boom has attracted the federal regulators, who are planning to go through the standards and practices of several large lending companies for potential liability and discrimination issues.

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Study: Millennial Fastest-Growing Auto Lending Segment http://www.thetruthaboutcars.com/2015/03/study-millennial-fastest-growing-auto-lending-segment/ http://www.thetruthaboutcars.com/2015/03/study-millennial-fastest-growing-auto-lending-segment/#comments Thu, 05 Mar 2015 15:00:01 +0000 http://www.thetruthaboutcars.com/?p=1015978 Alleged to not be interested in cars or driving them, millennials are the fastest-growing segment of car buyers as far as lending goes, per a new study. According to Automotive News, credit-reporting company TransUnion found the group represented 27 percent of overall auto loans and lease originations made in 2014, up from just 16 percent […]

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hipster lyft millennials

Alleged to not be interested in cars or driving them, millennials are the fastest-growing segment of car buyers as far as lending goes, per a new study.

According to Automotive News, credit-reporting company TransUnion found the group represented 27 percent of overall auto loans and lease originations made in 2014, up from just 16 percent in 2009. Senior vice president and automotive business leader Jason Laky says this is due to both an improving economy and millennials’ entering into the next phase of their lives:

They’re maturing into their adulthood. They’re getting to the point where they’re employed, they’re having families, they’re moving to a place where they’re financing just like previous generations.

Meanwhile, Gen Xers were the largest segment in auto lending, accounting for 34 percent of loans and originations in 2014. Boomers followed close behind with 32 percent, down from 34 percent in 2013. Average balances per generation are $21,779 for Gen X, $21,055 for boomers, and $18,678 for millennials, the last group experiencing the largest jump in average outstanding balances at 4.1 percent.

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Buffett, Soros Boost Stakes In General Motors In Q4 2014 http://www.thetruthaboutcars.com/2015/02/buffett-soros-boost-stakes-general-motors-q4-2014/ http://www.thetruthaboutcars.com/2015/02/buffett-soros-boost-stakes-general-motors-q4-2014/#comments Thu, 19 Feb 2015 14:00:11 +0000 http://www.thetruthaboutcars.com/?p=1004058 While Harry J. Wilson wants General Motors to buy-back $8 billion in shares, Warren Buffett and George Soros have boosted their stakes in the company. The Wall Street Journal reports Buffett’s Berkshire Hathaway increased its stake in GM 1 million shares to a total of 41 million during Q4 2014. Meanwhile, Soros Fund Management added […]

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GM First Day as a Public Company Celebration

While Harry J. Wilson wants General Motors to buy-back $8 billion in shares, Warren Buffett and George Soros have boosted their stakes in the company.

The Wall Street Journal reports Buffett’s Berkshire Hathaway increased its stake in GM 1 million shares to a total of 41 million during Q4 2014. Meanwhile, Soros Fund Management added 728,938 shares in the same period, boosting overall holdings to 4.9 million.

Both purchases were made prior to Wilson’s announcement that he would not only call for the buyback — citing concerns about how the automaker isn’t spending its $25-billion “fortress balance sheet” — but to also push for a seat on its board to help further the cause. Wilson was hired by President Barack Obama to help GM in its bankruptcy proceedings in 2009.

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WSJ To Tesla: Cast Aside Corporate Welfare To Improve Image http://www.thetruthaboutcars.com/2015/02/wsj-tesla-cast-aside-corporate-welfare-improve-image/ http://www.thetruthaboutcars.com/2015/02/wsj-tesla-cast-aside-corporate-welfare-improve-image/#comments Tue, 17 Feb 2015 14:00:51 +0000 http://www.thetruthaboutcars.com/?p=1002850 Despite its visions of having a valuation on par with Apple within a decade, Tesla’s subsistence on subsidies may be hard for some to swallow. The Wall Street Journal said as much in an opinion piece following Tesla CEO Elon Musk’s proclamation to grow his company 50 percent annually, with a stock valuation of $700 […]

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Despite its visions of having a valuation on par with Apple within a decade, Tesla’s subsistence on subsidies may be hard for some to swallow.

The Wall Street Journal said as much in an opinion piece following Tesla CEO Elon Musk’s proclamation to grow his company 50 percent annually, with a stock valuation of $700 billion to come in 10 years’ time; the company is currently valued at $27 billion. The publication points out that its $108 million loss in Q4 2014 — thought to be linked to delivery issues, a strong dollar and manufacturing issues — would have been much worse had it not taken $86 million from selling federal carbon credits that quarter.

Continuing with the train of thought, WSJ noted those credits were the result of Tesla’s lineup falling in line with federal and state fuel-efficiency and ZEV mandates, the surplus of said credits being sold to other automakers whose own lineups may be lacking in the green department. In 2014 alone, Tesla sold $216 million in credits, matching 7 percent of what the company sold in EVs.

Other points noted include the $1.5 billion in tax breaks bestowed upon the automaker in its native California and in Nevada, where its Gigafactory battery-pack production facility, as well as the $7,500 federal tax rebate consumers receive upon purchasing a Model S. The publication concluded by urging Musk to “turn off the taxpayer tap,” on the premise that by so doing, he and his company would gain more friends “for the long haul,” whomever they may be.

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Tesla’s Q4 2014 Sees $108M Loss Despite Strong Demand For S, X http://www.thetruthaboutcars.com/2015/02/teslas-q4-2014-sees-108m-loss-despite-strong-demand-s-x/ http://www.thetruthaboutcars.com/2015/02/teslas-q4-2014-sees-108m-loss-despite-strong-demand-s-x/#comments Thu, 12 Feb 2015 00:05:04 +0000 http://www.thetruthaboutcars.com/?p=997306 Tesla’s Q4 2014 didn’t go so well despite strong demand for its Model S, losing $108 million in earnings over the quarter. The Wall Street Journal reports the automaker has 10,000 booked orders for the premium EV sedan, as well as 20,000 for the Model X crossover now expected to hit the showrooms in Q3 […]

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Tesla’s Q4 2014 didn’t go so well despite strong demand for its Model S, losing $108 million in earnings over the quarter.

The Wall Street Journal reports the automaker has 10,000 booked orders for the premium EV sedan, as well as 20,000 for the Model X crossover now expected to hit the showrooms in Q3 2015. However, the loss is attributed to both a lag between production and fulfillment of the Model S P85D, and a strong dollar.

Sales in Q4 2014 fared better than in Q4 2013, with 9,834 units sold over 6,892. The sales figure also bests Q3 2014’s results, when 7,785 vehicles left the showroom. Overall deliveries for the outgoing fiscal year amounted to 32,733 — short of the 33,000 Tesla hoped to move that year — with 55,000 global sales projected for the upcoming year.

Q4 2014 revenue jumped to $956.6 million over the previous year’s $615 million, while operating expenses almost doubled over the same period, hitting $336.5 million. Capital spending for the upcoming year is expected to hit $1.5 billion, divided between Gigafactory investments, production increases, readying the Model X for production, and sales and service. Cash supply dropped from $2.4 billion in Q3 2014 to $1.9 billion in Q4.

As for the stock price, Tesla shares closed at $212.80 Wednesday, having recovered from CEO Elon Musk’s comments in January about Chinese sales and when his company would become profitable; the stock price then fell to $177.22. That said, it’s still lower than the peak of $291.42 achieved last September.

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Wilson: $8B Stock Buyback Would Boost General Motors’ Value http://www.thetruthaboutcars.com/2015/02/wilson-8b-stock-buyback-boost-general-motors-value/ http://www.thetruthaboutcars.com/2015/02/wilson-8b-stock-buyback-boost-general-motors-value/#comments Wed, 11 Feb 2015 15:00:48 +0000 http://www.thetruthaboutcars.com/?p=996682 The man who helped General Motors restructure in 2009 now wants the automaker to buy back $8 billion in shares to help boost its value. Bloomberg reports Harry J. Wilson is asking to not only for a seat on GM’s board, but for the automaker to also agree to said buyback in June, with execution […]

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Maeva Advisors LLC Founder and CEO Harry Wilson Interview

The man who helped General Motors restructure in 2009 now wants the automaker to buy back $8 billion in shares to help boost its value.

Bloomberg reports Harry J. Wilson is asking to not only for a seat on GM’s board, but for the automaker to also agree to said buyback in June, with execution to take place the following year. The move is meant to provide more value for its shareholders, who are frustrated with the automaker’s reluctance to spend some of the $25 billion it has to withstand another recession if necessary.

Wilson believes the automaker could part with $8 billion and still withstand an economic blow like the one that landed it in bankruptcy court six years prior, and is working with four investment funds that hold a total of 34.4 million shares to help make it so. Wilson was tapped by President Barack Obama to help with GM’s restructuring during said bankruptcy.

That said, GM may still be reluctant to spend that much money. Per Morningstar senior equity analyst David Whiston, the company has to be careful amid a weak industry outside of North America. GM also faces the spectre of a large fine paid to the U.S. Department of Justice due to the former’s handling of the February 2014 ignition switch recall, as well as building up its lending arm GM Financial to boost the automaker’s credit rating.

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Lenders: Subprime Auto Lending Increase Not A New Bubble http://www.thetruthaboutcars.com/2015/02/lenders-subprime-auto-lending-increase-not-new-bubble/ http://www.thetruthaboutcars.com/2015/02/lenders-subprime-auto-lending-increase-not-new-bubble/#comments Wed, 11 Feb 2015 11:00:41 +0000 http://www.thetruthaboutcars.com/?p=996522 Though subprime auto lending is growing, lenders believe a new credit bubble isn’t on the horizon as it was in the runup to the Great Recession. Bloomberg reports 20 percent of all auto-loan originations are in the subprime category, compared to the peak of 30 percent prior to the financial collapse seven years ago. Originations […]

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Subpime Lending MS Powerpoint Style

Though subprime auto lending is growing, lenders believe a new credit bubble isn’t on the horizon as it was in the runup to the Great Recession.

Bloomberg reports 20 percent of all auto-loan originations are in the subprime category, compared to the peak of 30 percent prior to the financial collapse seven years ago. Originations climbed to $97.2 billion in 2014, compared to $86.7 billion in 2013 and $41.3 billion in 2008. Of those, $30 billion to $40 billion subprime loans were packaged into asset-backed securities; $203 billion of those loans are outstanding.

That said, Wells Fargo securities managing director Chris Pink claims those figures aren’t a sign that “the ABS market is driving a resurgence of subprime.” Ford director of long-term funding and securitization Sam Smith adds those securities differ from the ones in the mortgage industry, stating that auto lenders aren’t “originating contracts just so [they] can securitize them.”

The move to temper those concerns comes as the U.S. Justice Department began investigating the market for subprime securities, with a focus on preventing a repeat of the housing bubble that led to the Great Recession.

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Credit Suisse Picks Tesla As One Of Its Favorites For 2015 http://www.thetruthaboutcars.com/2015/02/credit-suisse-picks-tesla-one-favorites-2015/ http://www.thetruthaboutcars.com/2015/02/credit-suisse-picks-tesla-one-favorites-2015/#comments Mon, 09 Feb 2015 13:00:07 +0000 http://www.thetruthaboutcars.com/?p=994858 Looking for new stock to add to your portfolio in 2015? Credit Suisse has one for your consideration: Tesla. Bidness Etc reports the investment firm’s analyst picked the Californian EV automaker as its one of its favorites in the Auto and Auto Parts Industry category. Dan Galves, who led the investment research on Tesla, says […]

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2013 Tesla Model S P85 Fishing boat

Looking for new stock to add to your portfolio in 2015? Credit Suisse has one for your consideration: Tesla.

Bidness Etc reports the investment firm’s analyst picked the Californian EV automaker as its one of its favorites in the Auto and Auto Parts Industry category. Dan Galves, who led the investment research on Tesla, says the automaker’s biggest selling point for the medium term is its Gigafactory and lithium-battery pack technology. He and his fellow analysts believe the main goal of the factory — to reduce production costs — is probable, with parity compared to coventionally powered vehicles to come by 2017.

Credit Suisse also projects the Model X — when it finally does arrive — “will be a potential positive catalyst in the process of slowly shifting the industry toward EVs.” Increased production volume visibility during H2 2015 is also expected to provide a view of the automaker’s EBIT margin potential, with the firm bestowing an Outperform rating and a $325 price target on the stock.

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Tesla Share Price Plummets After Musk’s NAIAS 2015 Visit http://www.thetruthaboutcars.com/2015/01/tesla-share-price-plummets-musks-naias-2015-visit/ http://www.thetruthaboutcars.com/2015/01/tesla-share-price-plummets-musks-naias-2015-visit/#comments Fri, 16 Jan 2015 11:00:44 +0000 http://www.thetruthaboutcars.com/?p=984225 Tesla shareholders felt lighter Wednesday after the automaker’s stock price fell from just over $200/share to $186.09/share after CEO Elon Musk’s announcement at the 2015 Automotive News World Congress in Detroit — held during the 2015 Detroit Auto Show — that his company wouldn’t be profitable until the start of the 2020s. Business Insider adds […]

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Elon Musk

Tesla shareholders felt lighter Wednesday after the automaker’s stock price fell from just over $200/share to $186.09/share after CEO Elon Musk’s announcement at the 2015 Automotive News World Congress in Detroit — held during the 2015 Detroit Auto Show — that his company wouldn’t be profitable until the start of the 2020s.

Business Insider adds that another bombshell dropped at the start of his presentation likely helped to take the wind out of the sails: sales of the automaker’s Model S in China were down in Q4 2014. Musk put the blame on perception among Chinese consumers regarding the charging infrastructure for Tesla’s sole model, explaining that not only had the issue been handled, but that the Supercharger network was expanding; the rate of said expansion, however, is slower than that of Europe or the United States.

Further into the presentation, Musk proclaimed that Tesla would sell “a few million” vehicles by 2025 by going for volume over being a niche luxury player, likely built on the back of the upcoming Model 3. Meanwhile, the Model X due sometime this year is already sold out for the entire year despite the company’s best efforts to manage demand, such as steering would-be X owners into the driver’s seat of the S.

Finally, Musk urged the majors in the audience to continue their investments into electrification, stating that they all need to do more to change the public’s perceptions on EVs and hybrids.

Since the plunge, Tesla shares have recovered some of their lost value, closing $191.87/share Thursday afternoon.

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Honda Investing $340M For Increased Fuel-Efficient Engine Production http://www.thetruthaboutcars.com/2015/01/honda-investing-340m-increased-fuel-efficient-engine-production/ http://www.thetruthaboutcars.com/2015/01/honda-investing-340m-increased-fuel-efficient-engine-production/#comments Thu, 15 Jan 2015 14:00:55 +0000 http://www.thetruthaboutcars.com/?p=983825 Honda announced Tuesday it would invest $340 million into its Anna, Ohio engine plant to help increase production of its family of fuel-efficient engines. Bloomberg reports the automaker added a new assembly line at the plant for production of its new VTEC turbo-four engine family. The engines, which increase efficiency with variable valve technology, are […]

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1995 Acura Integra VTEC engine

Honda announced Tuesday it would invest $340 million into its Anna, Ohio engine plant to help increase production of its family of fuel-efficient engines.

Bloomberg reports the automaker added a new assembly line at the plant for production of its new VTEC turbo-four engine family. The engines, which increase efficiency with variable valve technology, are set to arrive in vehicles later this year.

Other clean-vehicle projects in the works by Honda include the production version of the FCV Concept seen at this year’s Detroit Auto Show for 2016, the Acura NSX hybrid exotic car due later in 2015, and both a PHEV and an EV by 2018.

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US Treasury: Over $9B Lost In Auto Industry Bailout http://www.thetruthaboutcars.com/2014/12/us-treasury-9b-lost-auto-industry-bailout/ http://www.thetruthaboutcars.com/2014/12/us-treasury-9b-lost-auto-industry-bailout/#comments Tue, 30 Dec 2014 15:00:28 +0000 http://www.thetruthaboutcars.com/?p=969969 The final tally is in: American taxpayers lost $9.26 billion from the Bush II/Obama-led rescue of the U.S. auto industry. The Detroit News reports the loss comes out of a total investment by the U.S. Treasury of $79.69 billion used to bail-out General Motors, Chrysler Group, Ally Financial and Chrysler Financial. The department recovered $70.43 […]

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The final tally is in: American taxpayers lost $9.26 billion from the Bush II/Obama-led rescue of the U.S. auto industry.

The Detroit News reports the loss comes out of a total investment by the U.S. Treasury of $79.69 billion used to bail-out General Motors, Chrysler Group, Ally Financial and Chrysler Financial. The department recovered $70.43 billion in profit through share sales, loan repayments, dividends and interest.

The reported final figure comes on the heels of the Treasury’s sale of its last 11.4 percent stake in Ally, the automotive lender and bank-holding company formerly known as GMAC Financial. Accounting rules, however, state the government — and thus, the taxpayers — lost $16.56 billion on the bailout, as interest and dividends paid by those rescued were not applied to the principal owed.

The $9.26 billion lost was much lower than the $44 billion projected early in 2009, as well as the $30 billion predicted later that year. Per the Center for Automotive Research and others who supported the bailout, the loss was much preferable over the total collapse of GM and Chrysler, with the former stripping the industry of 1.2 million U.S. jobs, $17 billion lost in Social Security and income taxes for 2009, and $79.5 billion in personal income tossed into the fireplace.

While the government is now out of the automotive business, it still has a small presence in the finance industry: out of 700 institutions who were accepted into the $700 billion Troubled Asset Relief Program in the early days of the Great Recession, 35 are still in the program today. $426.4 billion was invested overall, with the government recovering $441.7 billion; accounting rules, however, state the Treasury has taken $35 billion in losses.

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Ally Leaves Government Ownership, US Treasury Exits Auto Industry http://www.thetruthaboutcars.com/2014/12/ally-leaves-government-ownership-us-treasury-exits-auto-industry/ http://www.thetruthaboutcars.com/2014/12/ally-leaves-government-ownership-us-treasury-exits-auto-industry/#comments Mon, 22 Dec 2014 11:00:27 +0000 http://www.thetruthaboutcars.com/?p=963794 With its GMAC Financial leather jacket burning in the closet while a supermodel lip-syncs in the tub, Ally Financial is at last free from government ownership. The Detroit News reports the U.S. Treasury sold its remaining 11.4 percent stake in the lender Friday, six years to the day the Bush II administration made the decision […]

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With its GMAC Financial leather jacket burning in the closet while a supermodel lip-syncs in the tub, Ally Financial is at last free from government ownership.

The Detroit News reports the U.S. Treasury sold its remaining 11.4 percent stake in the lender Friday, six years to the day the Bush II administration made the decision to rescue the automotive industry from certain doom; the Treasury held 74 percent to start. The sale — 54.9 million shares at $23.25 per share — brought in $1.3 billion, adding to the $19.6 billion recovered from three separate investments totalling $17.2 billion.

Overall, the bailout recovered the $60 billion invested under the Obama administration, though said administration didn’t include the $10 billion lost in that time, nor the initial $25 billion pumped into the ailing industry in the final days of the Bush II era.

The stake sale also follows a similar action a year earlier, when the department sold its last shares in General Motors. The sale drew a loss of the aforementioned $10 billion from a total investment of $49.5 billion.

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Trucks, SUVs Best Premium Sedans In Over $50K US Segment http://www.thetruthaboutcars.com/2014/12/trucks-suvs-best-premium-sedans-50k-us-segment/ http://www.thetruthaboutcars.com/2014/12/trucks-suvs-best-premium-sedans-50k-us-segment/#comments Mon, 15 Dec 2014 14:00:03 +0000 http://www.thetruthaboutcars.com/?p=961313 Keep those Benzes, BMWs and Audis in the garage, son: $50,000-plus trucks and SUVs are where it’s at for the ballers and players these days. TrueCar says trucks and SUVs account for six of the top 10 best-selling vehicles in the United States market, specifically the segment where transaction prices of $50,000-plus are the norm. […]

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Keep those Benzes, BMWs and Audis in the garage, son: $50,000-plus trucks and SUVs are where it’s at for the ballers and players these days.

TrueCar says trucks and SUVs account for six of the top 10 best-selling vehicles in the United States market, specifically the segment where transaction prices of $50,000-plus are the norm.

The biggest of them all? The Ford F-150, whose projected 2014 volume of 189,776 “will likely surpass total U.S. volume of luxury car benchmarks including BMW’s combined 3, 5 and 7 Series sales or total deliveries for the Audi brand this year.” The Blue Oval will see revenue of $10.8 billion from those high transactions, making up a third of an estimated $33.2 billion for the overall F-Series portfolio.

The demand for looking California and feeling Minnesota is helped in part by a recovering U.S. economy, improved vehicle quality, and a growing supply of cheap gasoline, which is helping the $50,000-plus transaction segment, as well: approximately 8.1 percent of total 2014 sales will transact at that level, up from 6.6 percent in 2013.

Finishing out the podium per TrueCar is Fiat Chrysler Automobiles’ Ram truck lineup, with sales of 76,266 at the $50,000 transaction level, Mercedes taking third with its E-Class at 67,006.

TrueCar 2014 50K USD Transaction Table

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Richardville: Michigan Doesn’t Allow ‘Predatory Lending’ http://www.thetruthaboutcars.com/2014/12/richardville-michigan-doesnt-allow-predatory-lending/ http://www.thetruthaboutcars.com/2014/12/richardville-michigan-doesnt-allow-predatory-lending/#comments Mon, 15 Dec 2014 12:00:40 +0000 http://www.thetruthaboutcars.com/?p=961257 Michigan Senate Majority Leader Randy Richardville of Monroe, the senator behind the bill that would allow auto title loan companies to do an end-run around the state’s title loan ban by posing as pawnbrokers, proclaimed the 276-percent interest loans the title companies would provide consumers weren’t predatory. The Detroit News reports the outgoing senator said […]

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Randy Richardville, King of Financial Slavery in Michigan Since 2014

Michigan Senate Majority Leader Randy Richardville of Monroe, the senator behind the bill that would allow auto title loan companies to do an end-run around the state’s title loan ban by posing as pawnbrokers, proclaimed the 276-percent interest loans the title companies would provide consumers weren’t predatory.

The Detroit News reports the outgoing senator said as much before reporters last week during the state legislature’s lame-duck session, adding that he isn’t trying to “ram the bill” through said session, despite introducing it the day after Election Day, and making sure it could bypass committee on the way to the floor for vote.

Richardville also said bank and credit union representatives were meeting with those in the pawn industry to reach a compromise on the bill, which was news to one of the bill’s opponents, Michigan Pawnbrokers Association president Mark Aubrey:

The Michigan Pawnbrokers Association has not been contacted by any agency for compromise. There is no middle ground here. Title lending has no place in the Pawnbroker Act and no place in the pockets of Michigan’s consumers.

Should the bill — No. 1138 in the Senate, No. 5954 in the House — pass, a loan of $1,000 that adds $360 of interest in 12 months — based on a cap of 3 percent per month — would pull in $2,760 within the same period at an interest rate of 276 percent annually, thanks to a 20 percent so-called “usage fee” charged monthly.

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Aston Martin Plans To Raise Financing For Portfolio Expansion http://www.thetruthaboutcars.com/2014/12/aston-martin-plans-raise-financing-portfolio-expansion/ http://www.thetruthaboutcars.com/2014/12/aston-martin-plans-raise-financing-portfolio-expansion/#comments Mon, 15 Dec 2014 11:00:10 +0000 http://www.thetruthaboutcars.com/?p=961225 Aston Martin is preparing to crowdfund the old-fashioned way — shares and bonds — its portfolio expansion, per sources close to the automaker. Reuters reports the funds will be used to expand the Aston portfolio to include crossovers, hybrids and premium sedans, as well as add three years to the company’s ongoing recovery plan, with […]

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Aston Martin is preparing to crowdfund the old-fashioned way — shares and bonds — its portfolio expansion, per sources close to the automaker.

Reuters reports the funds will be used to expand the Aston portfolio to include crossovers, hybrids and premium sedans, as well as add three years to the company’s ongoing recovery plan, with the planned deadline to come in 2020. The fundraising plan — based on debt- or equity-raising options made to current investors — would bring in £100 million – £150 million ($156 million – $234 million USD).

The news comes as Aston Martin bids farewell to 2014, which began with a recall of 17,590 units over counterfeit accelerator pedals from a Chinese supplier. Last month, the automaker was granted an exemption from United States safety regs for the DB9 and Vantage. It also gained a new CEO this year, when Andy Palmer left Renault-Nissan to take up where Ulrich Bez left off upon retirement in 2013.

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GM Investing $5B To Modernize, Double Mexican Production http://www.thetruthaboutcars.com/2014/12/gm-investing-5b-modernize-double-mexican-production/ http://www.thetruthaboutcars.com/2014/12/gm-investing-5b-modernize-double-mexican-production/#comments Fri, 12 Dec 2014 14:00:04 +0000 http://www.thetruthaboutcars.com/?p=959265 General Motors will invest $5 billion through 2018 into its Mexican facilities to help double production capacity. Reuters reports $1.4 billion of the $5 billion has spent, according to GM Mexico president Ernesto Hernandez, with the rest coming over the remaining three years. The investment will add 5,600 jobs, and help modernize the subsidiary’s facilities […]

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General Motors will invest $5 billion through 2018 into its Mexican facilities to help double production capacity.

Reuters reports $1.4 billion of the $5 billion has spent, according to GM Mexico president Ernesto Hernandez, with the rest coming over the remaining three years. The investment will add 5,600 jobs, and help modernize the subsidiary’s facilities in Coahuila, San Luis Potosi, Mexico State and Guanajuato.

The investment raises the total figure invested into the nation’s booming auto industry in the first two years of Pena Nieto’s presidency, now at $19 billion. Mexico is currently the seventh largest producer in the world, up from eighth place in 2013.

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Ferrari May Follow FCA Out Of Italy For Fiscal Reasons http://www.thetruthaboutcars.com/2014/12/ferrari-may-follow-fca-italy-fiscal-reasons/ http://www.thetruthaboutcars.com/2014/12/ferrari-may-follow-fca-italy-fiscal-reasons/#comments Thu, 11 Dec 2014 14:00:50 +0000 http://www.thetruthaboutcars.com/?p=958433 Just as Fiat Chrysler Automobiles left Italy to escape the tax man, Ferrari is considering the same as it moves closer to leaving the nest by next October. Bloomberg reports the automaker is also considering remaining in Maranello, though a change in its fiscal address wouldn’t affect manufacturing and engineering operations. A final decision either […]

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Just as Fiat Chrysler Automobiles left Italy to escape the tax man, Ferrari is considering the same as it moves closer to leaving the nest by next October.

Bloomberg reports the automaker is also considering remaining in Maranello, though a change in its fiscal address wouldn’t affect manufacturing and engineering operations. A final decision either way could come in the next few months, per the publication’s anonymous sources.

Such a move would prove devastating to Italy beyond the nation’s economy, as Ferrari is considered a national treasure. Milan Bicocca University professor of public finance Ugo Arrigo said the move would show investors and companies alike that the country and its fiscal system as uncompetitive; Italy’s corporate rate is 31.4 percent, whereas the United Kingdom — where FCA calls its fiscal home — has a rate of 21 percent, soon to be 20 percent.

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