Canadian Funding Corp looks at auto industry

Fiat's Sicily factory to end car production in 2011
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Fiat Group Automobiles announced Thursday that it would stop car production in its Termini Imerese plant, near Palermo, Sicily, in 2011. Production at Fiat's five other car assembly plants in Italy will not be affected, the company said in a statement.

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Miata Designer Matano, T. Boone Pickens Part of Start-up Car Company

Posted by Canadian Funding Corp

Mazda Miata designer Tom Matano and Texas billionaire investor T. Boone Pickens are key figures behind a car plant being established in Louisiana to build environmentally friendly vehicles by a start-up company that has never before built cars.

V-Vehicle Co., of San Diego, is a start-up company being financed by California venture capitalists. Its CEO is Frank Varasano, a former executive vice president of Oracle Corp. who is described as the project's visionary.read more HERE

Moish Alexander Auto Report

May 2009
Used Vehicle Value Index

Wholesale Prices Jump Up Again in May

May marked the fifth consecutive monthly increase in wholesale used vehicle prices on a mix, mileage, and seasonally adjusted basis. The Manheim Used Vehicle Value Index now stands at 109.1, which resulted in the first year-over-gain in pricing since October, 2007. see more

Canadian auto industry

Canada is currently the 9th largest auto producer in the world, down from 7th a few years ago. Brazil and Spain recently surpassed Canadian production for the first time ever. Canada's highest ranking ever was 2nd largest producer in the world between 1918 and 1923. The Canadian auto industry traces its roots to the very beginning of the automobile. The first large-scale production of automobiles in Canada took place in Walkerville, near Windsor, Ontario in 1904. In the first year of operations, Gordon McGregor and Wallace Campbell, along with a handful of workmen produced 117 Model "C" Ford vehicles at the Walkerville Wagon Works factory.

Through marquees such as Brooks Steam, Redpath, Tudhope, McKay, Galt Gas-Electric, Gray-Dort, Brockville Atlas, C.C.M., and McLaughlin, Canada had many domestic auto brands. In 1918 McLaughlin was bought by an American firm, General Motors, and was re-branded as General Motors of Canada.

Driven by the demands of World War I, Canada's automotive industry had grown, by 1923, into the second-largest in the world, although it was still comprised of relatively inefficient plants producing many models behind a high tariff wall. High consumer prices and production inefficiencies characterized the Canadian auto industry prior to the signing of the 1965 Automotive Products Trade Agreement with the United States.

The 1964 Automotive Products Trade Agreement or “Auto Pact” represents the single most important factor in making the Canadian automotive industry what it is today: a strong, successful industry that has a significant positive impact on the Canadian economy. Key features of the Auto Pact were the 1:1 production to sales ratio and Canadian Value Added requirements.

Today, the Canadian auto industry is closely linked to that of the U.S., due to the Automotive Products Trade Agreement and later the North American Free Trade Agreement (NAFTA). There are five firms manufacturing automobiles in Canada, all in the province of Ontario: General Motors of Canada, Honda Canada, Chrysler Canada, Toyota Canada, and Ford of Canada. True Canadian domestics have long since gone under or been absorbed into the US "Big 3". The auto industry is Canada's biggest sector, and the province of Ontario surpassed Michigan in 2006 to become the largest auto-producing jurisdiction on the American continent. In addition to production facilities, 3,500 car dealers employ 140,000 individuals.

Magna International is Canada's biggest domestic firm in the sector, and is the world's third-largest auto parts firm, producing entire vehicles at its Magna Steyr plant in Austria.Canadian Funding Corp is a lender to the auto industry view more here

Obama to launch landmark auto emissions standards

President Obama is moving to regulate, for the first time, one of the world’s biggest sources of greenhouse-gas emissions: the cars and trucks on US roads.

That plan, as outlined in news reports Monday, would represent a major regulatory shift affecting the environment, a struggling industry, and millions of American consumers.

Mr. Obama is expected to announce the details Tuesday, calling for both a reduction in carbon emissions and a stepped up timetable for improving traditional fuel economy. US fleets will have to average 35 miles per gallon by 2016, four years faster than currently planned. The current average is 27.5 miles per gallon.

The president’s plan is also designed to bring the whole country under a single standard, moving away from a patchwork system that could become increasingly difficult for car manufacturers. California and 12 other states had already attempted to set up their own regulatory standard for greenhouse-gas emissions.

Together, the moves highlight the importance of two priorities for the Obama administration: improving US energy efficiency and acting to control climate change.

At the same time, the effort poses challenges for another key White House goal: reviving the economy. It promises to add to sticker prices at car dealerships at a time when car sales – an important part of the US retail economy – have plunged 40 percent in the past year. And the move will demand new investments by carmakers, even as those firms are shedding tens of thousands of workers and fighting for survival.

“One positive is that they are looking at a federal rule, as opposed to a state-by-state patchwork,” says Rebecca Lindland, an auto industry analyst at IHS Global Insight in Lexington, Mass.

That should simplify planning for the struggling manufacturers, although the cost of the new regulations could mitigate that benefit.

Obama has long argued that the goals of having a greener economy and a thriving one are not contradictory.

In the car industry, he hopes that federal aid will help the automakers fund new technologies, and that federal tax incentives will help consumers buy cleaner cars. In a speech last month in Iowa, he pointed to a new tax credit of up to $7,500 to encourage Americans to buy more fuel-efficient cars and trucks.

Obama's plan couples for the first time pollution reduction from vehicle tailpipes with increased efficiency on the road. It would save 1.8 billion barrels of oil through 2016 and would be the environmental equivalent to taking 177 million cars off the road, senior administration officials said Monday night.

The plan also would effectively end a feud between automakers and state legislatures over emissions standards — with the states coming out on top but the automakers getting a single national standard and more time to make the changes.

The plan still must clear regulatory hurdles at the U.S. Environmental Protection Agency and the Transportation Department.

New vehicles would be 30 per cent cleaner and more fuel efficient by the end of the program, according to officials familiar with the administration's discussions. The officials spoke on condition of anonymity because the formal announcement had not been made.

Administration officials said consumers were going to pay an extra $700 for fuel-consumption standards that had already been approved. The comprehensive Obama plan would add another $600 to the price of a vehicle, a senior administration official said.

The better fuel consumption would come at roughly a five per cent increase each year. By the time the plan takes full effect, at the end of 2016, new vehicles would cost an extra $1,300.

In a battle over emissions standards, California, 13 other states and the District of Columbia have urged the federal government to let them enact more stringent standards than the federal government's requirements.

The states' regulations would cut greenhouse gas emissions by 30 per cent in new cars and trucks by 2016 — the benchmark Obama planned to unveil for vehicles built in model years 2012 and beyond.

The Obama plan gives the states essentially what they sought and more, although the buildup is slower than the states sought. In exchange, though, cash-strapped states such as California would not have to develop their own standards and enforcement plan.

Instead, they can rely on federal tax dollars to monitor the environment.

Canadian Funding Corp. Review of the Canadian and US Auto Industry Reports

Canadian Funding Corp Review and Comments by Moishe Alexander On the Canadian and Auto Industry Reports

December 22, 2008

Canadian Funding Corporation’s Review on the Canadian Auto Industry and the Effects it’s having on both the Canadian and US Economies and the taxpayers of both countries

In numerous recent articles across all the major papers, over the course of the last two weeks, a lot has been made of the automobile industry bailout anywhere form the bankruptcy of the Big 3 to the resistance of the union’s to reducing their union member’s wage packages to come in line with the foreign car maker employees.

The Canadian government ultimately provides a $4 billion temporary aid package to 2 of the major automakers. GM is to get $3 billion and Chrysler $1 billion. Prime Minister Harper says, “there may be more money as we go forward.”

However, Prime Minister Harper also says, “this is not a blank cheque.” Numerous restrictions, if they’re implemented on the automakers and the unions might bring this industry into a competitive position. However labour costs will have to be reduced to equal that of Honda and other similar small car manufacturers.

Some people have said that it would be better to simply allow the big auto manufacturers to go bankrupt and then with new ownership, rehire the employees at market-competitive wages and benefits. Then, give loans to retool these plants to produce energy efficient cars and other vehicles on the basis that the governments would have a stake and interest in these newly formed companies so that at least the Canadian and US taxpayers could ultimately get a return on their investment and have the loans repaid.

In Windsor, Ontario, the Windsor Family Credit Union has created a pool of $5 million to finance car purchases from local car dealers in order to assist the retail end of the auto industry in selling cars, which will ultimately benefit the automakers. However, more of the credit unions and banks need to take this initiative in order to create substantial purchases of new cars throughout Canada and the United States.

It’s also been reported that earlier last week, the US auto bailout was in jeopardy of collapsing when the UAW refused any demands for steep wage cuts.

However it appears that the UAW leadership has seen the light and are willing to recommend to their union members steep wage cuts in order to save their industry and union member jobs.

However their sister union the CAW threatened that if Canada did not substantially assist the auto makers, that a majority of the jobs in Canada would be replaced south of the border. Again, this is the union flexing its muscles. This leads me to believe that there might be some benefit in bankrupting these companies and dissolving these unions.

As we’re all aware, there would be substantial collateral damage if the auto industry even if properly retooled and rescued – especially in the after parts market. This has already been effected in Canada with over 15,000 layoffs.

The most stunning figure however is the 517,000 jobs that would be lost if the Big 3 automakers were to go bankrupt as reported in The Toronto Star. Even with the interim bailouts, Chrysler announced that it is shutting down its plants as of December 19, 2008 for a full month.

Many of the automaker suppliers say that it must be part of any bailout package that funds be made available to pay off the outstanding bills of the automakers, which in the case of General Motors exceeds $100 million. This obviously affects the small suppliers, which is further collateral damage to this crisis.

As part of any interim or long term bailout package, both Premiere McGuinty and Prime Minister Harper have stated that there will be pay cuts and job losses in order for any bail package to be approved and any sensible business plan be accepted.

These concessions have finally been accepted by the unions which was confirmed by Ken Lewenza, president of the Canadian Auto Workers who acknowledged that his members that work at GM, Chrysler and Ford in the US won’t be able to avoid concessions under the terms of the US rescue package. He also confirmed that the CAW will have to follow suit.

Clearly, if the auto industry as we know it today does not trim down, downsize it’s types of vehicles and the workers do not start being paid competitive wages and benefits, the industry will be doomed no matter how much money either government provides. It will only be a matter of time.