The Truth About Cars » Insurance

Big Brother Eyes Pay-Per-Mile

Edward Niedermeyer — Mon, 20 Jul 2009 16:49:01 +0000

Electronic monitoring of motorists is gaining legitimacy, as the federal government explores a pay-per-mile road tax and California mulls pay-per-mile insurance. But will the possibility of improved efficiency and use-based taxation convince drivers to accept on-board electronic spies? Secretary of Transportation Ray LaHood has already expressed his fondness for pay-per-mile road taxation, and the Chicago [...]

GM To Sell Suzuki Stake, Pay A Week Worth Of Bills

Edward Niedermeyer — Mon, 17 Nov 2008 15:56:44 +0000

The Associated Press is reporting that General Motors now plans to sell back its 3.02 percent in Suzuki for $230m. Buckingham Research Group's Joseph C Amaturo gets credit for pointing out that "while the sale is indicative of GM's near-term liquidity challenges, the proceeds are not very meaningful." In other words, it takes a lot of $230 millions to fill a $5b hole. "GM is expected to burn $4 billion to $5 billion in (the fourth-quarter) or roughly $1.5 billion per month. Hence, the cash proceeds from the sale of its equity stake will not even cover one week of expected cash burn," Amaturo said. Not that it's bothering Suzuki. "We fully understand the necessity for GM to raise cash," Suzuki chairman and chief executive Osamu Suzuki noted dryly, adding that GM and Suzuki would continue to pursue a business partnership. Joint development of hybrid vehicles and a joint venture building sports utility vehicles in Canada are said to be on the collaboration agenda. The two automakers are also joint stakeholders in GM's currently-stalled South Korean operations, GM-DAT. GM has owned portions of Suzuki since 1981, only selling off 17 percent in 2006. The saddest part of this story? It decreases the likelihood that GM will help bring Suzuki's current (well-received) Swift to the states. Not that they needed a competitive small car or anything.

Higher Insurance Costs Whack Small Car, Hybrid Buyers

John Horner — Thu, 23 Oct 2008 13:57:54 +0000

Buying a small car or hybrid to save money at the pump? Be warned, Big Insurance might get your cash instead of Big Oil. Today’s Wall Street Journal chronicles the tales of woe being told by recent automotive down-sizers. “A 40-year-old male driver would pay an average of $1,704 to insure a 2009 Mini [...]

Insurance Companies Close Track Day and Training Loopholes

John Horner — Mon, 20 Oct 2008 11:48:50 +0000

I’m willing to wager that a fair percentage of TTAC’s Best and Brightest take their cherished whip to the race track every now and then to drive the car as God and his engineers intended. If so, be warned: your car insurance may no be on the hook should something untoward– or straight toward– [...]

Daimler Mans The Barricades

Edward Niedermeyer — Thu, 07 Aug 2008 18:00:44 +0000

Fears of takeover, foreign or otherwise, figure large in the minds of many European auto execs. These fears ostensibly caused the Porsche-VW shotgun marriage collegial partnership. Schaeffler's "sneak-up" takeover of Continental is fuelling a whole new round of paranoia. Daimler's market value has declined by 45 percent on the year; the weakness [...]

Congressional Support for $25b Motown Handout Growing

Frank Williams — Mon, 28 Jul 2008 14:50:16 +0000

The automakers whining lobbying in Washington seems to be paying off. The Detroit Free Press reports that 71 members of the House of Representatives have said they'll support the Advanced Technology Vehicles Manufacturing Handout Initiative. The $25b program's meant to help the domestic automakers catch up with the transplants meet the 2020 [...]

Small Trucks Pickup Poor Crash Test Ratings

Edward Niedermeyer — Thu, 24 Jul 2008 18:13:41 +0000

With full-sized pickups taking a hosing, manufacturers may be looking towards smaller trucks to stem the bleeding. But a recent test of five compact pickups by the Insurance Institute For Highway Safety (IIHS) shows that they don't share the crash safety advantages of their full-sized brethren.The IIHS' first-ever side-impact test of compact pickups shows [...]

Chinese Panda Clone Banned From Europe

Edward Niedermeyer — Fri, 18 Jul 2008 20:02:39 +0000

Automotive News [sub] reports a Turin [Italy] court has banned the Great Wall GWPeri from European sales. The court agrees with Fiat's assessment that the car "is a (Fiat) Panda with a different front end." The court ordered Great Wall to pay Fiat about $24k for the first imported model, and [...]

GMAC OnStar Insurance Deal: “no additional data is gathered or used for any purpose other than to help manage transportation costs”

Robert Farago — Wed, 02 Jul 2008 14:18:21 +0000

According to their press release, GMAC Insurance wants to "help you cut costs on the road." To that end, they offer the same five gas-saving tips offered by every auto-related PR firm in the entire country. Oh, if you've got an inactive OnStar button in your car (ah, but is it REALLY inactive?), you can also reduce your motoring expenses by signing-up for their Low-Mileage Discount. Providing you live in one of 34 non-paranoid, insurance industry-dominated states, doing so earns you some ~~time~~ money off for ~~good behavior~~ not driving. Here's how it works: "With the subscriber's permission, the odometer reading from his or her monthly OnStar Vehicle Diagnostics email is forwarded to GMAC Insurance. Based on those readings, the company will adjust the premium using discount tiers corresponding to miles driven. Information sent from OnStar to GMAC Insurance pertains solely to mileage, and no additional data is gathered or used for any purpose other than to help manage transportation costs. Customers who drive more than 15,000 miles per year are not penalized. In fact, all OnStar customers receive an insurance discount simply for having an active OnStar subscription." So, unlike OnStar, GMAC Insurance is promising NOT to provide law enforcement officials with OnStar data; you know, if you're suspected of a crime or in the event of a crash. And if you believe that, GM's got a high mileage hybrid SUV they'd like to sell you.

Telematics For The [Insurance] People

Edward Niedermeyer — Thu, 26 Jun 2008 19:34:53 +0000

Our own Jonathan Locker has wondered aloud whether big brother-like aspects of remotely-monitored telematics systems make them worthwhile. But even the Gadsen Flag crowd might be tempted to allow a spy in the trunk if it means saving up to 60 percent on car insurance. The Wall Street Journal documents how insurance companies like Progressive and GMAC Insurance are using telematics to determine customers driving styles-- and offer discounts or surcharges accordingly. The Progressive self-reported (non-GPS) mileage program is currently offered in Michigan, Minnesota and Oregon. A staggering 34 percent of customers in those markets have been using the system to save money since 2004. GMAC's program is tied to GM's OnStar system; it costs $199 to $299 after a 12 month free introductory period. But with up to 54 percent in "good driver" discounts available, GMAC reports a 200 percent rise in subscriptions since last year. But these discounts are only available if telematics tell your insurance company that you use your gas and brake pedals within their "safe use" parameters. Brake too hard, drive to many miles, or drag race someone at a stop light and you could be looking at up to nine percent surcharges.

Banking Crisis Guts Successful Supplier

Martin Schwoerer — Wed, 25 Jun 2008 19:18:24 +0000

Does anybody need a reminder that the credit crisis is hurting our economies? Case in point: German car-industry supplier Schenk Plastic Solutions. Schenk is a small but basically healthy company that relies on Daimler for 60 percent of sales. They have a patented new product named SkinForm which was developed for premium car interiors. It's been reported that SkinForm is unique and has no real competition, since it offers superior quality at a super-low price. Mercedes wants Schenk to supply SkinForm for one million cars per year. In 2005, Schenk sold a majority interest to a private equity company named Argantis to finance their expansion plans. Surprise! Argantis is connected to IKB, a German bank which is basically bankrupt after investments in subprime U.S. real estate. So IKB pulls the plus on Argantis, which subsequently pulls the plug on Schenk. A great company with good products and healthy customers is forced to declare its insolvency. As these things go these days, the Indians come to the "rescue." Automobilwoche reports that the Ashok Minda Group, based in Uttar Pradesh, will be buying Schenk. Globalism wins, Daimler is happy and the West's industrial base is eroded a little bit more.

Auto Club Offers Married Gay Couples Free Memberships

Robert Farago — Tue, 24 Jun 2008 12:12:39 +0000

The Better World Club differentiates itself from other roadside/travel services by dint of its "dedication to preserve the environment." We're talking discounts on hybrid rentals and green hotels/eco-travel; the nation's only bicycle roadside assistance ("service for you and your bicycle up to 30 miles annually with a maximum of two service calls per covered member, per year"), free Carbon Credits with auto insurance, one percent of revenues (gross? net?) donated to environmental cleanup/advocacy and "a unique policy agenda includes supporting state attempts to regulate autos to reduce greenhouse gases." And just in case that isn't politically correct enough-- and I'm thinking it is-- Better World is now proud to offer married gay couples free membership. "We want to congratulate all the same-sex partners who are taking the big step," says Mitchell Rofsky, BWC President. "We didn't think you'd ever get married!" Don't worry if you're a gay couple in a state without gay marriage, or a breeder. BWC will "even" offer opposite-sex couples the same wedding present. "Gay marriage is good for everyone, so we're including all the June brides... grooms... spouses... whatever!" says Rofsky. In other words, BWC's using gay marriage to generate a fundamentally generic press release to lure media coverage. Mission accomplished.

Analyst Predicts $12 a Gallon Gas

John Horner — Thu, 22 May 2008 16:06:59 +0000

The Wall Street Journal [sub] reports: "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Previously, the International Energy Agency had forecast an ever-increasing supply to match ever-increasing demand. Oops. The U.S. Energy Department's own forecasting shop, the Energy Information Administration, has long adhered to the same demand-driven scenario. Now, both agencies have been caught with their analytical pants down. While some blame oil speculators for rapidly rising fuel costs, most economists and oil analysts point to increasing world-wide demand combined with the difficulties of finding new oil and oil suppliers unwillingness to spend the money to find more of the stuff. Speaking on CNBC's Squawk Box, Dr. Robert Hirsch, Management Information Services Senior Energy Advisor, fueled speculators' speculation. "The prices that we're paying at the pump today are, I think, going to be 'the good old days,' because others who watch this very closely forecast that we're going to be hitting $12 and $15 a gallon, and then, after that, when world oil production goes into decline, we're going to talk about rationing."

Smart Deemed Safe. Kinda.

Glenn Swanson — Wed, 14 May 2008 16:22:36 +0000

According to the AP [via Yahoo! News], the diminutive 2008 smart fortwo received an Insurance Institute for Highway Safety (IIHS) rating of "good" in both front- and side-impact testing. It's the IIHS' highest rating. However, the IIHS pointed out that "the front-end test scores can't be compared across weight classes, meaning a small car that earns a good rating isn't considered safer than a large car that did not earn the highest rating." Still, "all things being equal in safety, bigger and heavier is always better," says IIHS president, Adrian Lund. Meanwhile, U.S. government crash tests gave the fortwo five stars in side-crash testing, BUT the driver door unlatched and opened. Government regulators say the incident requires them to note a "safety concern," which will appear on the cars' window stickers. More than 6.1k smart cars have been sold in the U.S. through April 2008. "America has never seen a car this size before and their first question usually isn't about (fuel) economy, it's about safety," says the president of smart USA, Dave Schembri. "And that's why we think these results are so very important." So now you know: the clown car is a safe ride. As long as you stay out of the way of Tahoes and Expeditions.

Obama: Ford Granada “Worst Car Detroit Ever Built”

Edward Niedermeyer — Wed, 07 May 2008 20:01:49 +0000

Barack Obama is something of a car guy. According to The Detroit News, one of Obama's (likely numerous) regrets about running for President: the Secret Service won't let him drive. "It's a drag because I actually enjoy driving." But it wasn't always so. "The car I learned to drive on was my grandfather's Ford Granada," Barack told Indianapolis radio station WFBQ. "It may be the worst car that Detroit ever built... This thing was a tin can. [Detroit was] trying to compete with the Japanese. They wanted to keep the cars big, so they made them out of tin foil... You basically couldn't go over 80 (miles per hour) without the thing getting out of control." Their perfidy didn't end there, though. "Detroit ended up making investments in SUVs and large trucks because that's where they perceived a competitive advantage," Obama told Meet the Press. "And that's where they felt they could make the most profit... I think it was a mistake for them not to plan earlier, and now we're seeing a huge growth in fuel-efficient cars that is benefiting the Japanese automakers and Detroit is getting pounded." For all of Obama's Motown-mauling, the Senator from Illinois' one with the the industry's belief that the gas tax is probably a good thing. Still, Hillary's desperate offer of an industry bailout probably makes her the top Dem choice for industry types. We're waiting to hear her take on malaise-era metal.

BP Surprised by $7.2b Q1 Profit

Edward Niedermeyer — Tue, 29 Apr 2008 15:42:48 +0000

With gas heading for $10/gal (maybe), automakers aren't raking in the bucks. But oil companies are. Marketwatch reports that British Petroleum and Royal Dutch Shell both released 1Q profit numbers yesterday, and the results would make any automaker drool a little. BP made $7.2b in the last three months, beating analysts expectations by over a billion bucks. Shell boasts a whopping $9.08b in profit this quarter, also beating market expectations by over a billion. Neither BP nor Shell increased production by more than one percent; they received between 52 and 66 percent more per barrel sold than last year. Even the oil companies are scratching their heads-- all the way to the bank on these numbers. "We don't understand the oil price at this stage," Shell CFO Peter Voser tells The International Herald Tribune . "The fundamentals will not justify an oil price as we see it at the moment." Voser added that Shell "was not investing money in projects that would require oil prices to remain high to be profitable." (That's the job of SUV makers.) ExxonMobil and Chevron are expected to announce their own knee-weakening profits later this week.

Beijing Auto Show Reflects New World Order

Glenn Swanson — Tue, 22 Apr 2008 15:20:36 +0000

"Automakers wage war for market share," reads the headline over at China Daily. The current battlefront of that war can be viewed at the 2008 Beijing International Automotive Exhibition, which runs through April 28th. With 890 vehicles on display in the 1.9m square foot arena, the nine-day event is expected to attract more than 600k visitors. The spoils of war can be lucrative, too, with Chinese vehicle sales up 21.4 percent year-over-year, which translates to 2.58m cars sold in the first quarter. Total sales are predicted to surpass the 8.79m units sold in '07 and reach 10m vehicles in 2008. While the suspected recession in the U.S. has tempered car sales here, the prospects in China offer a respite: Ford's Chinese sales have "rocketed" by 47 percent in the first quarter. GM's Rick Wagoner figures China will account for more than 40 percent of global auto sales growth in the coming decade. Meanwhile, Mercedes-Benz launched its C-Class sedans in China last month and Ulrich Walker, the chairman and CEO of Daimler Northeast Asia Ltd., is amazed at China's transformation. In a single generation, a population simply striving to own a "Flying Pigeon" bicycle now strives to own a "big Benz." "In the history of the world, no country has changed as much as China in the past 30 years," says MB's Walker.

Tesla Motors Sues Fisker for Stealing EV Secrets

Frank Williams — Tue, 15 Apr 2008 15:05:21 +0000

It's hard to keep track of what's going on between Tesla and Fisker. But if you've got the time... First, Tesla mouthpiece Daryl Siry trash talks Fisker's range-extended vehicle, the Karma. After Fisker unveils their EV prototype at the Detroit Auto Show, Siry wonders if his rival's got what it takes to make it so. Next, Tesla's hires Henrik Fisker to design Tesla's Whitestar sedan. And now CNet News reports that Tesla is taking Fisker to court for stealing trade secrets and copying design ideas. Tesla's suit alleges that Fisker accepted the design contract "to gain access to confidential design information and trade secrets, then announced a competing vehicle." Fisker's brief had no comment on the case, other than "the firm's policy [is] not to comment on litigation." Meanwhile, Tesla says they've scrapped Fisker's design for the Whitestar in ~~a fit of pique~~ favor of... something else. On the positive side, this intra-vaporware legal contretemps will provide Tesla for a convenient excuse when the Whitestar doesn't appear as promised. And for us, the case could expose the reality behind Tesla's endless hype. [Props to JT for the link]

IIHS Rates Malibu, Avenger, G35, Optima, Galant, Aura and Altima Safety

Frank Williams — Thu, 10 Apr 2008 13:52:52 +0000

The Insurance Institute for Highway Safey (IIHS) released the results of their tests on seven midsize sedans today: Malibu, Avenger, G35, Optima, Galant, Aura and Altima. All but the Optima received good ratings in front and side crash tests. The Optima was rated acceptable in front and side tests while it received a good rating in rear crash testing. Four of the cars-- Malibu, Aura, G35 and Altima-- were considered "marginal" in rear crash tests; the Galant was rated poor and Avenger was rated adequate. The Detroit News points out IIHS test standards are more stringent than those NHTSA uses for their "star" ratings, but NHTSA says they'll have stricter standards in effect for the 2010 model year. Mitsubishi and GM were quick to say they design their vehicles to meet federal standards, displaying their usual "if 65's a pass, 66 is overkill" mentality.

Britain Orders Industry Report

Edward Niedermeyer — Mon, 07 Apr 2008 18:21:43 +0000

The Financial Times reports that the UK is following former colony Australia's lead in ordering a government investigation into its flagging auto manufacturing industry. Minister for Business and Enterprise Affairs Baroness Shriti Vadera has put former Ford man Richard Parry-Jones in charge of the 10-member committee charged with tackling the twin challenges of competition from low-cost manufacturing centers and emerging low-carbon technologies. The committee will make recommendations to the government, which has vowed to use "all levers of government, both regulatory and fiscal" to address Britain's moribund auto industry. Once home of a thriving auto industry, with dozens of brands and world-class products, Britain has seen nearly every one of its domestic brands swallowed up by companies from countries like Germany, the United States, India, China and Indonesia. Although nobody expects Britain's car industry to return to its 1960's zenith, here's hoping the Parry-Jones committee comes up with solutions which are a little more inventive than simply writing checks to Toyota.

Smart Car Crash Tested

Edward Niedermeyer — Fri, 04 Apr 2008 15:48:10 +0000

YouTube has carried some hilarious footage of smart fourtwo crash tests (including hitting a wall at 70mph) for a while now. Well, the NHTSA has finally crashed a few smarts in the name of ~~insurance ratings~~ safety and the verdict is in: the smart is safer than you might think. The diminutive German car gets four stars for driver safety and three stars for the passenger in the frontal crash test. Side impact testing revealed five-star performance, although a door did open during the test, "increasing the likelihood of passenger ejection." Granted, "starflation" has been an issue for the NHTSA, but like an underachieving politician, the smart is simply playing the expectations game. The fact that the tiny ride didn't explode into a million pieces of wound-irritating fiberglass is probably enough to surprise the average American consumer, who likely sees the smart as a small step up from a Segway scooter in terms of safety. Bring on the Hummer side impact test!

Chrysler Cutting Life Insurance

Edward Niedermeyer — Tue, 01 Apr 2008 15:52:48 +0000

It's one of those stories that makes you remember it's April Fools Day. The Free Press is reporting that Chrysler has cut life insurance to 14,000 white-collar retirees, offering a one-time pension increase in return. Chrysler will pay out $1k-4k to its non-union retirees, depending on time of service and length of time since retirement. Chrysler VP for Compensation, Benefits and Corporate Services (oxymoron, anyone?) Thomas Hadrych explains that Chrysler looked at the practices of other Forbes 1,000 companies and found that only 60 percent offered retiree life insurance. "This is in part a reaction to kind of our own internal situation, but it's also a reaction to what the competitive landscape across the full spectrum of companies in America offers," says Hadrych. As if this weren't a compelling enough reason to pull the rug out from under retirees, Hadrych also has an upcoming UAW payout to blame. Hell, he even made a call to MetLife on behalf of the recently-cut-off. "The company has made arrangements with MetLife to provide current retirees with a one-time opportunity to purchase life insurance at special group rates through the MetLife Voluntary Retiree Life Insurance Plan," says Hadrych, suggesting retirees use their one-time payout to buy insurance there. As cold-blooded as this all sounds, it's obvious that Chrysler has to cut somewhere. The fact that retirees don't build cars might be a sign that Chrysler actually does care more about cars than PR.

Oil Prices are Falling. Really!

Mike Solowiow — Thu, 20 Mar 2008 14:37:00 +0000

Is the oil bubble about to burst? Oil prices have fallen below $100/barrel and my dad, who is an oil engineer for Occidental Petroleum, has said prices will probably level off again in the $65/barrel neighborhood. That's where the big oil companies are predicting prices will go during the next six months to a year, too. Whoever predicts when the big fall will happen can make a lot of money playing the market. Demand and supply have been stable for about 6 months. That means oil is trading on speculation only and when they run out of suckers to buy expensive oil, the price will drop to more reasonable levels.

Safety Advocates Accuse NHTSA of “Starflation”

Robert Farago — Wed, 12 Mar 2008 17:21:24 +0000

Jack Gillis reckons the National Highway Traffic Safety Administration's (NHTSA) crash test ratings are misleading. "It's impossible for car buyers to separate the truly good performers from those at the bottom of the list," asserts the Director of Public Affairs for the Consumer Federation of America (CFA). Gillis points out that nearly every new vehicle sold in the U.S.-- some 96 percent of them-- are blessed with a four or five star NHTSA front crash rating. His Car Book provides a guide to the non-invidious distinctions between models, and our podcast clarifies Gillis' call for new testing standards. Meanwhile, here's the best/worst from the CFA's safety list, which combines front and side NHTSA ratings for an overall ranking.

Category/Best/Worst

Subcompact/Hyundai Accent/Toyota Yaris
Compact/Chevrolet HHR/Chrysler PT Cruiser
Intermediate/Toyota Avalon/Pontiac Grand Prix
Large/Acura RL/Cadillac DTS
Minivan/Kia Sedona/Kia Rondo
Small SUV/Jeep Liberyty/Jeep Compass
Midsize SUV/Volvo XC90/Cadillac SRX
Large SUV/Chevrolet Tahoe/Chevrolet Trailblazer

IIHS Call for Stronger SUV Roofs Could Increase Roll-over Risk

Edward Niedermeyer — Wed, 12 Mar 2008 16:20:38 +0000

Current federal regulations require that car and truck roofs support 1.5 times their vehicle's weight. According to The Detroit Free Press, the Insurance Institute for Highway Safety (IIHS) is recommending that this standard be upgraded to 2.5 times the vehicle's weight on the driver's side. The industry-sponsored safety campaigners released a study concluding that the strongest existing SUV roofs reduce the risk of injury by 39 to 57 percent. The Chevy Blazer fared the worst in their roof crush test, while Nissan's X-Terra, Jeep's Liberty and third-gen Ford Explorers scored the highest. (Both the Explorer and the Grand Cherokee showed significant improvement in newer models vs. previous generations.) The new study does not deal with the impact of seat belt use (or lack thereof)-- judged by "real world" analysis to have greater impact on rollover deaths than roof strength. Also, as TTAC's Bob Elton pointed out back in '06, reinforcing SUV roofs would raise the vehicle's center of gravity, potentially increasing the likelihood of a rollover. Although the IIHS called for active handling for all SUVs, the laws of physics cannot be ignored-- or revoked.