The Truth About Cars » stock http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 11 Sep 2014 23:24:13 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 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 » stock http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Tesla Is World’s Most Important Auto Maker, Says Tesla Debt Underwriter http://www.thetruthaboutcars.com/2014/06/tesla-is-worlds-most-important-auto-maker-says-tesla-debt-underwriter/ http://www.thetruthaboutcars.com/2014/06/tesla-is-worlds-most-important-auto-maker-says-tesla-debt-underwriter/#comments Mon, 23 Jun 2014 11:00:59 +0000 http://www.thetruthaboutcars.com/?p=849946 A recent research note from Morgan Stanley dubbed Tesla the “world’s most important auto maker”, on account of its innovation in the area of electric vehicles, autonomous cars and connectivity. Could there be another reason for such enthusiasm? Observers will remember that earlier this year, Morgan Stanley raised its share price for Tesla to $320 […]

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A recent research note from Morgan Stanley dubbed Tesla the “world’s most important auto maker”, on account of its innovation in the area of electric vehicles, autonomous cars and connectivity. Could there be another reason for such enthusiasm?

Observers will remember that earlier this year, Morgan Stanley raised its share price for Tesla to $320 per share, amid talk of Tesla disrupting the energy sector with is new battery-producing gigafactory. One day after that, Tesla announced a $1.6 billion debt offering underwritten by…Morgan Stanley.

In the case of the $320 share price target, analyst Adam Jonas was wildly optimistic about Tesla, even suggesting that the company could help bring about a “utopian society” by 2026. Jonas is also the same analyst labeling Tesla as the most important car maker…in the wuurrlld.

Coincdence? A massive breach of the Chinese Wall? Or a symptom of a press corp that is near-universal in its reluctance to “disrupt” Tesla’s brilliant PR narrative (hip, successful entrepeneur from Silcion Valley looking to topple one of Industrial America’s most sclerotic, antiquated industries)? Likely a combination of all three. Or, tell me why I’m wrong in the comments.

 

 

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Government Reports $9.7 Billion Loss On GM Shares http://www.thetruthaboutcars.com/2013/10/government-reports-9-7-billion-loss-on-gm-shares/ http://www.thetruthaboutcars.com/2013/10/government-reports-9-7-billion-loss-on-gm-shares/#comments Tue, 29 Oct 2013 17:04:30 +0000 http://www.thetruthaboutcars.com/?p=637081 With the vast majority of the government’s General Motors shares sold, the U.S. government is reporting a $9.7 billion loss, according to a Congressional report cited by the Detroit News. With the government’s stake now down to about 7 percent, the report states that “Because the common stock sales have all taken place below Treasury’s […]

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With the vast majority of the government’s General Motors shares sold, the U.S. government is reporting a $9.7 billion loss, according to a Congressional report cited by the Detroit News.

With the government’s stake now down to about 7 percent, the report states that

“Because the common stock sales have all taken place below Treasury’s break even price, Treasury has so far booked a loss of $9.7 billion on the sales,” 

The United States Treasury would have to get $147.95 to break even on its GM stake – an unrealistic proposition given that the stock currently trades at $35.80. Once the government unloads the last of its stake (worth about $3.6 billion), the total loss should amount to $10 billion.

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Analysis: VEBA, The UAW And The Warren Walkout http://www.thetruthaboutcars.com/2013/03/analysis-veba-the-uaw-and-the-warren-walkout/ http://www.thetruthaboutcars.com/2013/03/analysis-veba-the-uaw-and-the-warren-walkout/#comments Mon, 04 Mar 2013 18:45:12 +0000 http://www.thetruthaboutcars.com/?p=479965 The 12-person protest that took place at Chrysler’s Warren, Michgan truck plant got little notice in the automotive news cycle, save for a couple of mentions on the usual aggregators. In truth, it’s not the juiciest story to sell in this click-driven wasteland, though these stories tend to raise the most interesting questions. This example […]

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The 12-person protest that took place at Chrysler’s Warren, Michgan truck plant got little notice in the automotive news cycle, save for a couple of mentions on the usual aggregators. In truth, it’s not the juiciest story to sell in this click-driven wasteland, though these stories tend to raise the most interesting questions. This example highlights an issue that is going to dog the UAW for some time – how will the UAW control their workers when they are also the owners?

For the sake of context, let’s recap the story. 12 workers decided to protest a recently implemented schedule at the Warren plant, which is building the 2013 Ram 1500. As the Detroit News explains it

The new system — which has already sparked controversy at other Chrysler factories in Michigan — would split the workforce into three shifts, each working four 10-hour days a week. Those shifts would be staggered over six days, meaning that many workers would have to work Saturdays. 

Saturdays, of course, means time-and-a-half pay. If you believe the Detroit News, then the rank-and-file are unhappy about the move and are determined to fight it. But the UAW is distancing itself from the protest, noting that the move to the current schedule was first approved a decade ago.

The protest coincided with a report by the Detroit News, citing leaked internal documents that show rampant quality problems with the new Ram 1500, a crucial product for Chrysler that is enjoying a lot of momentum in a very competitive segment.

During the first hour of production Thursday, workers at the Warren truck plant built 58 pickups. But only 16 of those vehicles passed final inspection, according to company documents. Quality improved as the day went on, but just over half of the trucks assembled by the first shift were approved for shipment. A company source told The News that number should be at least 78 percent and higher than that to meet the plant’s quality goals.

Wednesday’s numbers were similar, and many employees were ordered to stay late to repair the defective vehicles, according to the source. But the number of problem pickups in the plant’s lots continued to grow. Though nearly 200 vehicles were repaired overnight, there were still 1,078 trucks parked outside the plant Thursday morning that could not be shipped because of defects, according to a company document.

The same report made sure to preface that “…morale problems sparked by the new shift schedule are only making these problems worse…”, adding another barb to a series that is uncharacteristically critical considering that the Detroit News is the hometown paper for Chrysler.

It would be tempting to ascribe more sinister motives to nefarious factions within Chrysler, the UAW or both, but the reality is that the issues plaguing Warren are really just a perfect storm of bad circumstances. On a base level, human are notoriously bad with change. Having chatted with former union members in domestic auto plants, it’s evident that these sorts of shift changes are often presented in a manner that glosses over the ugly details so that the union bigwigs can get the measure approved. When it comes time for the changes to be implemented, the rank-and-file are inevitably unhappy (though our source notes that the blame cuts both ways; caveat emptor and all that).

So, take a bunch of disgruntled workers adapting to a new shift schedule and throw in a new model launch. What did you expect? Workers and management singing kumbaya around the camp fire? It’s hard to think of a bigger recipie for disaster, save for having Bob King ride into Chattanooga on an organizing drive while piloting a Chinese-built Wrangler with a Romney/Ryan bumper sticker. Combining the shift change with a new model launch and production ramp-up may have been a poorly judged move, but in all likelihood, the defect rate will settle down in a month or two.

Meanwhile, the UAW, through the VEBA health benefits organization, currently owns roughly 41 percent of Chrysler. While Fiat is currently attempting to buy the remaining stake from the VEBA, the retiree health benefits of the union members are largely dependent on auto maker stock as well as the overall financial health of the companies. The two parties are currently locked in tough negotiations over the remaining stake, but this is likely too far removed from quality defects at one plant to have any effect on potential stock prices or the respective bargaining position of either side. What is in the mutual self-interest of both parties is the continued success of Chrysler’s auto sales – and with Ram and Jeep being the two pillars holding Chrysler up right now, the UAW knows which side their bread is butter on.

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Canadian Governments Hoping For GM Buyback Of Shares http://www.thetruthaboutcars.com/2012/10/canadian-governments-hoping-for-gm-buyback-of-shares/ http://www.thetruthaboutcars.com/2012/10/canadian-governments-hoping-for-gm-buyback-of-shares/#comments Sat, 06 Oct 2012 20:47:33 +0000 http://www.thetruthaboutcars.com/?p=462828 Shares of General Motors held by the Canadian federal government and the government of Ontario may have difficulty unloading their $9 billion stake in General Motors, according to a report by Bloomberg. The chief concern is that a sudden sale of GM stock in mass quantities would be a tough sell; expectations of “flat performance” […]

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Shares of General Motors held by the Canadian federal government and the government of Ontario may have difficulty unloading their $9 billion stake in General Motors, according to a report by Bloomberg.

The chief concern is that a sudden sale of GM stock in mass quantities would be a tough sell; expectations of “flat performance” and the sudden liquidation of the shares have sparked fears that demand would be weak.

Canada GEN Investment Corp, the entity responsible for overseeing the government stake in GM, is apparently hoping to sell the shares directly to GM itself. Matthew Stover of Guggenheim Securities LLC told Bloomberg

“They’ve got a ton of cash on their balance sheet, so I would personally imagine the company to be a big buyer of the stock.”

Unfortunately, most of the documents pertaining to the stock sale were censored, which makes it difficult to glean any further information or context. But Canada GEN seems to be betting big on GM’s willingness to buy back their stock.

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Piston Slap: The Re-Stocking Fee? http://www.thetruthaboutcars.com/2012/08/piston-slap-the-re-stocking-fee-2/ http://www.thetruthaboutcars.com/2012/08/piston-slap-the-re-stocking-fee-2/#comments Mon, 20 Aug 2012 11:02:50 +0000 http://www.thetruthaboutcars.com/?p=457371 Aaron writes: Sajeev, I currently own a 2007 WRX Wagon with a little over 100,000 miles on it. I love this car, even enough to overlook getting merely 21mpg. Anyways. As is true with many import car owners who love too much, I started modifying the car almost as soon as I got it. It […]

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Aaron writes:

Sajeev,

I currently own a 2007 WRX Wagon with a little over 100,000 miles on it. I love this car, even enough to overlook getting merely 21mpg. Anyways.
As is true with many import car owners who love too much, I started modifying the car almost as soon as I got it. It currently has a 3″ exhaust, a tune, and some miscellaneous other engine bits, with suspension components on order. The car is my current project, and I plan on keeping it for some time. There’s a slight problem though.
My problem is easy to spell: BRZ. Probably in a year or 18 months, I will give into temptation, and pull the trigger on a BRZ or FR-S (or some other cool thing that exists by then). So here’s my question (I’m getting to it, bear with me): Is it worth returning the car to stock? By the time I sell it, it will be 6 or 7 years old, and probably have north of 140,000 miles on it. The exhaust may be worth a few hundred bucks, the sway bars might be worth something, but very few other things will net any money at all. The real question is about the resale value of the car. I’d expect to get maybe 8k at best for a 140k+ mile Subaru, and that’s probably optimistic. Will the bolt-ons really push it down further?

Thanks in advance,
Aaron

Sajeev answers:

I hope there’s a good power adder for the BRZ/FR-S at that time, because you are taking a serious hit in performance from your current Subie.  I haven’t had time to rant about the new RWD wonder, but since you opened that door for me…at least I’ll be brief:

  • 2012 Subaru BRZ torque peak = 151 lb-ft @ 6000 rpm
  • 2011 Ford Ranger Duratec I-4 torque peak = 154 lb-ft @3750 rpm
  • BRZ-LSX-FTW:  think about it.

Well then! One way or another, the next owner of your WRX needs those stock parts.  They add value and show that you aren’t a stereotypical WRX hackjob type of person. You know, one of those warranty-voiding, drive line punishing type of owner.  Even if you are! But that’s not the point…

I don’t know which parts are the most valuable on the Subie forums’ classifieds section, but I’ll wager that the swaybars and the exhaust need to go up there.  If you want the next owner to have the opportunity at having them, first offer it for sale with the stock parts in the cargo area.  If that fails, return back to stock and offer the aftermarket parts for another $500-1000…or whatever sounds right to you. If that fails, sell as stock as possible and offer the bits to the forum.

Now if you’re just gonna trade this into a dealership or Carmax, forget everything I said: return it to stock. They always lower the value when they see non-stock stuff.  Perhaps you should just give the aftermarket bits to someone so you can enjoy the better karma…why let the dealership give someone else that pleasure?

 

Send your queries to sajeev@thetruthaboutcars.com. Spare no details and ask for a speedy resolution if you’re in a hurry.

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Daimler Dumps New York Stock Exchange http://www.thetruthaboutcars.com/2010/05/daimler-dumps-new-york-stock-exchange/ http://www.thetruthaboutcars.com/2010/05/daimler-dumps-new-york-stock-exchange/#comments Fri, 14 May 2010 14:50:21 +0000 http://www.thetruthaboutcars.com/?p=356541 One of the last vestiges of the Daimler-Chrysler union is being swept away, as Daimler has announced that it will delist from the NYSE. Daimler initially listed itself on Wall Street in 1993, as it began its “marriage made in heaven” with Chrysler. Since then, Daimler says advances in electronic trading make it easier for […]

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One of the last vestiges of the Daimler-Chrysler union is being swept away, as Daimler has announced that it will delist from the NYSE. Daimler initially listed itself on Wall Street in 1993, as it began its “marriage made in heaven” with Chrysler. Since then, Daimler says advances in electronic trading make it easier for traders to buy and sell its Frankfurt listings, and that the low volume of NYSE trading isn’t worth all the financial regulation that comes with a Wall Street listing. According to the company, less than five percent of its trading volume comes through its US listing. This means no more SEC filings from the German firm, although it insists that the US market remains important to its business and that it wants to maintain open communication with American investors who own 17 percent of Daimler’s shares. And it definitely has nothing to do with the company’s recent settlement of a bribery investigation by the DOJ. Or the fact that Chrysler could find itself back on the exchange within another year.

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Ford Completes $13.2b Health Care Liability Transfer To VEBA http://www.thetruthaboutcars.com/2010/01/ford-completes-13-2b-health-care-liability-transfer-to-veba/ http://www.thetruthaboutcars.com/2010/01/ford-completes-13-2b-health-care-liability-transfer-to-veba/#comments Mon, 04 Jan 2010 23:04:17 +0000 http://www.thetruthaboutcars.com/?p=340712 Ford has wrapped up some much-needed financial wrangling today, as it struggles with with its monstrous pile of debt. According to Automotive News [sub], Ford transferred $13.2b in debt and about $4b in cash to the UAW-run health care trust fund, completing a long-awaited liability consolidation. $1.4b of the transfer was a scheduled payment on […]

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(courtesy:hannahautosound.co.uk)

Ford has wrapped up some much-needed financial wrangling today, as it struggles with with its monstrous pile of debt. According to Automotive News [sub], Ford transferred $13.2b in debt and about $4b in cash to the UAW-run health care trust fund, completing a long-awaited liability consolidation. $1.4b of the transfer was a scheduled payment on a $6.7b note, while $500m more was a prepayment on that note. Ford paid $610m (cash) on another $6.5 billion note, transferred $620m from a temporary account and $3.5b from an internal VEBA fund and handed over warrants to purchase 362 million shares of Ford common stock at $9.20 per share. All together, the move reportedly adds $7b in debt to Ford’s balance sheet.

Ford’s CFO hailed the move, which culminates a process began with the 2007 UAW contract, saying it “will significantly improve our competitiveness in the US.” If nothing else, the move does show that Ford is less worried about its liquidity than we may have thought: both the pre-payment and the use of cash rather than stock to pay the scheduled VEBA payment indicate confidence in the balance sheet. And unlike the huge amounts of “equity” in GM and Chrysler owned by VEBA, Ford’s stock is actually worth money. In fact, Ford’s stock is currently worth about a dollar more per share than VEBA’s $9.20 option price, meaning VEBA will probably convert them soon for a quick profit. After all, they’ll be waiting quite a bit longer for their GM and Chrysler stock to be worth more than the paper it’s printed on.

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Spyker Stock Soars On Saab Speculation http://www.thetruthaboutcars.com/2009/12/spyker-stock-soars-on-saab-speculation/ http://www.thetruthaboutcars.com/2009/12/spyker-stock-soars-on-saab-speculation/#comments Mon, 21 Dec 2009 16:04:11 +0000 http://www.thetruthaboutcars.com/?p=339805 Shares in the Dutch boutique automaker Spyker soared 23 percent today, reports Reuters, as the firm’s last-ditch bid for Saab goes down to the wire. Spyker, which sold only 43 cars last year and had a market capitalization of only €26.6m as of last Friday, will hear back from GM on its Saab bid by […]

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Slouching to the grave?

Shares in the Dutch boutique automaker Spyker soared 23 percent today, reports Reuters, as the firm’s last-ditch bid for Saab goes down to the wire. Spyker, which sold only 43 cars last year and had a market capitalization of only €26.6m as of last Friday, will hear back from GM on its Saab bid by 5pm today. According to Reuters, Spyker has restructured its ownership structure in order to alleviate GM’s concerns about its backing from allegedly mobbed-up Russian financier Alexander Antonov. GM had previously canceled its Opel sale in part because of concerns about its latest technology landing in the hands of Russian investors. Furthermore, Spyker says it that its new offer eliminates the need for a European Investment Bank (EIB) loan approval prior to year end. “We’re very confident we have put forward a proposal that can convince GM in time,” says Spyker CEO Victor Muller. From a more sober vantage point, Swedish Prime Minister Fredrik Reinfeldt warns “we should be careful about fueling new hopes in a situation where the people in Trollhattan, and at Saab and their subcontractors are thrown between hope and despair.”

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GM Increases Truck Production. Or Not. http://www.thetruthaboutcars.com/2009/02/gm-keeps-on-truckin/ http://www.thetruthaboutcars.com/2009/02/gm-keeps-on-truckin/#comments Tue, 03 Feb 2009 17:36:51 +0000 http://www.thetruthaboutcars.com/?p=237341 Despite looking at a half-sized Q1 production plan, GM says it will bump truck production in the month of March. Production will be restored and escalated in March at GM’s Flint and Arlington truck plants, meaning there will be more Silverado, Sierra, Tahoe, Yukon and Escalade models. So, uh, why? “As far as our 2008 and 2009 mix […]

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Despite looking at a half-sized Q1 production plan, GM says it will bump truck production in the month of March. Production will be restored and escalated in March at GM’s Flint and Arlington truck plants, meaning there will be more Silverado, Sierra, Tahoe, Yukon and Escalade models. So, uh, why? “As far as our 2008 and 2009 mix goes, we’re significantly down on 2008 models, where most of our competitors have a lot of 2008 to get rid of. So anticipating a spring selling season, we’d like to increase our 2009 inventory,” GM’s Pete Ternes tells Automotive News [sub]. GM’s truck inventory has dropped noticeably, from a 122-day supply on December 1. But with 90 days of light truck supply, there’s still no real reason to increase production. Most industry-watchers consider a 60-day supply ideal. So what’s up?

Theory One: GM is making dealers take on more inventory in order to qualify for incentive cash. Having long ago become addicted to cash on the hood and seasonal blowout sales, The General’s binge-and-purge production model is just business as usual in Detroit.

Theory Two: This is production vaporware: a play at creating feel-good vibes for GM’s most important “customer” of all: the United States Congress.

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