GM: Shutting Hummer Down?

The surging fuel prices hit GM hard, so much so that they’ve decided to close four truck plants; not only that, they are also considering discontinuing the Hummer brand or putting it up for sale. But since no sane company would ever dream of buying that brand during this present time, the former is more imminent than the latter.

Ken Bensinger of the Los Angeles Times reported that: For GM, pickups and SUVs have been deeply problematic for some time. But by far its worst division has been Hummer. Through April, Hummer was the worst-performing vehicle brand in the country, with sales down 29.6% from a year earlier, putting it below runners-up Mercury, Chrysler and Bentley.

"At this point, we are considering all options for the Hummer brand," Wagoner said. "Everything from a complete revamp of the product lineup to partial or complete sale of the brand."

No possible buyer has been named for the division, which was for a few years -- when gasoline cost less than $3 a gallon -- one of GM's strongest. Last week, GM stock hit a 26-year low, falling to $17.38. At 11:15 this morning [June 3, 2008], the stock was unchanged at $17.43.

This is straight out of necessity because the sales slump that the Hummer brand hit will ultimately strike GM very hard if it continues to worsen. And it came at a highly inopportune time – the release of the 2008 Hummer H2 and the highly-anticipated debut of the 2009 Hummer H3T and the Hummer HX, which was one of the attention-catchers during the 2008 NAIAS. But it’s inevitable.

According to a press release on Al Jazeera online, Earlier this year GM reported a $38.7 billion loss for 2007, the largest ever annual loss for an automotive firm, following a slump in the North American market due to US economic turmoil.

It also said it was to offer voluntary redundancy or early retirement options to about 73,000 unionised workers in a bid to cut labour costs.

And in September last year more than 74,000 GM workers went on strike over healthcare costs and job security, returning to work after a deal was struck between the company and the United Auto Workers union.

The four plants to be closed are in Oshawa, Ontario, in Canada; Moraine in the US state of Ohio; Janesville in the US state of Wisconsin and Toluca in Mexico.

An estimated 2,500 workers at each of the four facilities will be affected, Wagoner told AP.

GM’s sales during the month of May dropped about 28%, and the decision to close four truck plants in order to focus on more consumer-friendly cars is a step in the right direction, albeit a highly disappointing one for Hummer fans.

Mark Fellows of the Michigan Business Review wrote: The moves will save the company $1 billion per year starting in 2010. Combined with previous efforts, GM will have cut costs by $15 billion a year, Wagoner said.

"From the start of our North American turnaround plan in 2005, I've said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth," Wagoner said in his announcement.

"Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix," he said.

It seems the effect of the rising oil prices as well as the weak economy is snowballing. First there was Ford, and now GM. Chrysler and even Toyota is not far behind. The damage can no longer be averted. All they can do is a lot of damage control.

NHTSA Proposes Two-side Roof Strength Test

It’s a bit surprising, even for me, that rollover crashes account for about 10,000 deaths annually. I always thought it was side-impact collisions that caused more casualties. As I was reading the automotive news online, I chanced upon a couple of write-ups about a proposed rewriting of decades-old regulations that deal with roof strength standard. And I thought to myself that it isn’t a bad idea; in fact I fully support it. It addresses the problem of rollover crash casualties. The problem is, there is conflict between a number of groups, and this proposed action may not even come to fruition. I say, just give it a try. Anyway, you can read the article I’m talking about below, or you can visit the site by clicking here.

David Shepardson reported for the Detroit News Washington Bureau:

NHTSA has been grappling with updating the current regulation for more than a decade. In January, it stiffened its August 2005 proposal to require a two-sided roof strength test, which would have the effect of requiring tougher roofs. Automakers oppose the double-sided test, saying it is unnecessary. They have also sought more time to comply, noting the expense of redesigning vehicles.

A Senate panel on Wednesday featured sharp criticism from senators who argued NHTSA's proposal is inadequate, saves too few lives and shouldn't pre-empt the ability of vehicle owners to file lawsuits in state courts.

Safety advocates also argued NHTSA's proposal is inadequate, noting it is expected to save only up to 44 lives and 800 serious injuries a year.

"If there were as many fatalities in plane crashes as there are in just rollover crashes, there would be overwhelming public outcry," said Joan Claybrook, a former NHTSA administrator and head of Public Citizen, a group that lobbies for auto safety regulations.

Toughening vehicle roofs is aimed at helping people survive rollover crashes, which account for more than 10,000 deaths annually, according to federal reports. Rollovers represent 3 percent of crashes, but account for one-third of all vehicle deaths.

NHTSA is considering making its final proposal tougher than its amended proposal issued in January, officials said. NHTSA is planning to issue a final rule by the congressional deadline of July 1. NHTSA's current proposal would require that a roof withstand a force equal to 2.5 times the unloaded vehicle weight while maintaining sufficient head room for a buckled-in average-size adult male to avoid being struck, up over the current 1.5 times standard. NHTSA also would extend the requirements to vehicles up to 10,000 pounds, from the current 6,000 pound requirement.

NHTSA is considering at least one alternative proposal: a single-sided test with a stronger overall roof strength of around 3 times. NHTSA said in 2005 that a 3-times standard would cost automakers at least $1.1 billion more than the $95 million annually for the 2.5 requirement.

Sen. Mark Pryor, D-Ark., chairman of the subcommittee on consumer protection, insurance and automotive safety that held the hearing, told NHTSA that it's "overstepping" its bounds by including pre-emption, which makes it harder for consumers to sue in state courts. "I would strongly encourage NHTSA to back off," he said. Other senators also were critical of that aspect. "Why does NHTSA feel compelled to crush the rights of states?" asked Sen. Claire McCaskill, D-Mo.

Sen. Tom Coburn, R-Okla., said NHTSA should back a tougher standard or Congress should write its own.

James Ports, NHTSA's deputy administrator, said the agency had made no final decisions on the roof strength regulation.

General Motors Corp. and Ford Motor Co. essentially wrote the regulation that's been in effect since 1973 after their fleets failed NHTSA's first proposed standard in 1971.

The Alliance of Automobile Manufacturers, the trade group representing Detroit's Big Three, Toyota Motor Corp. and others, said automakers should have a multi-year phase-in schedule to comply, rather than meeting the complete requirements beginning in the 2012 model year or later. It also argues the double-sided test isn't necessary.

NHTSA has maintained that of the 10,000 rollover deaths annually, stronger roofs would save about 476 lives, compared to as many as 5,000 lives saved through electronic stability control, which would prevent many rollovers from happening. Safety advocates contend that roof strength plays a role in a greater proportion of rollover deaths and injuries.

Crash-Testing: How IIHS Does It

If you’ve browsed through my posts, you probably saw an entry entitled “The Safest Cars of 2008”. As you may have guessed it’s a list of all the cars that came out this year that have aced safety standard tests, or if not, at least rated better than other vehicles. It’s a list put out by the Insurance Institute for Highway Safety or IIHS, which is an organization dedicated to reducing the number of deaths associated with car-related accidents. Before I only had an idea of how they did the tests because I once saw something like it being done on the Discovery channel, but today I ran across a post in SearchChicago – Autos, detailing how the tests are done. Kirk Bell, a contributor, wrote:

The IIHS advocates measures to avoid a crash, but accidents are inevitable, so the Institute conducts crash tests to evaluate front, side and rear crashworthiness. A vehicle can earn one of four ratings in each test: good, acceptable, marginal and poor.

Frontal Offset Test: The frontal test is a 40 mph offset crash with a dummy representing an average size adult male in the driver’s seat. Forty percent of the front of the vehicle strikes a barrier on the driver’s side. The barrier is made of aluminum honeycomb, and the IIHS says the forces in the test are similar to those in a crash between two vehicles of the same weight, each going about 40 mph.

The vehicle is evaluated based on measurements of intrusion into the occupant compartment, injury measures recorded on the dummy and slow-motion film analysis of how well the restraint system controlled dummy movement.

The dummy’s head, neck, chest, legs and feet are assessed for injury. The slow-motion film shows how well the seat belts, airbags, steering column, head restraints and other restraint features control dummy movement. Keeping the dummy from moving too much prevents another, interior collision or a partial or complete ejection from the vehicle. Intrusion on the safety cage is measured in 10 places in the driver seating area, and the front crush zone is evaluated for how well it managed the crash energy.

Side Impact Test: The IIHS’s side crash test involves a vehicle with dummies in the driver’s seat and the rear seat behind the driver. The dummies represent fifth percentile females or 12-year-old children.

The vehicle tested is struck perpendicularly in the side by an SUV-height barrier that weighs 3,300 pounds moving 31 mph. The Institute’s ratings are based on injury measures recorded on the dummies, assessment of head protection countermeasures, and the vehicle’s structural performance during the impact.

The injury measures determine the likelihood that either occupant would sustain serious injury to the head, neck, chest, abdomen, pelvis or femur. How the dummies’ heads move and if they contact any surfaces are also evaluated. Structural performance is determined by how far the side pillar intrudes into the occupant compartment.


Rear Impact Test: The rear impact test measures the effectiveness of a vehicle’s seats. Rear crashes aren’t as likely to cause life-threatening injuries as front and side impacts. The main injury is whiplash, which can be prevented with a head restraint that stays close to the head.

The IIHS assigns a seat/head restraint geometry and a dynamic rating that combine for an overall rating. If the seat/head restraint geometry rates good or acceptable, the seat is subjected to a dynamic test. Seat/head restraints with marginal or poor geometry aren’t tested dynamically because they don’t protect taller people in rear-end crashes. These seats are given a poor overall rating.

For a seat/head restraint to receive a good or acceptable geometric rating, the IIHS says the head restraint should be no more than 9 centimeters (3.5 inches) below an average-size male’s head and sit back no more than 10 centimeters (4 inches).

For the dynamic test, a dummy with a realistic spine and neck is placed in the seat. All restraints are used and the seat/head restraint is bolted to a sled. The sled is shot forward, mimicking a stationary vehicle being struck from behind by a vehicle of the same weight doing about 20 mph.

This test assesses how well the seats support the torso, head and neck by measuring torso acceleration, the time for the head to contact the restraint and forces on the neck. Better seats allow the head to contact the restraint quicker and exhibit slower torso acceleration. Neck forces are classified as low, moderate and high. A seat must have low neck forces and either low torso acceleration or a quick time to head restraint contact to earn a good rating.

Finally, the geometric and dynamic ratings are combined to determine and overall rating. It usually matches the dynamic rating.

Tesla Roadster: Slowly Edging Out Hybrids

Tesla is giving hybrid-manufacturers a run for their money with the 2008 Tesla Roadster and the much awaited 2009 model. It is the first high-performance electric car ever; that means it uses nothing but electricity. Yes! No gasoline! Plus, it can go from 0 to 60 mph in just 3.9 seconds. With that much power, you would think that it uses rocket fuel, but it does not. And to think that this is Tesla’s first ever production car.

Here’s a look at what powers the Tesla Roadster, courtesy of Howstuffworks:

Unlike a traditional gasoline-powered car, the Tesla Roadster doesn't contain hundreds of moving parts. It's powered by just four main systems:

• The Energy Storage System (ESS)
• The Power Electronics Module (PEM)
• An electric motor
• A sequential manual transmission

In place of an internal combustion engine, the Tesla Roadster sports a bank of batteries -- the Energy Storage System (ESS). In developing a power source befitting such a high-performance car, Tesla went with technology proven in the laptop computer field -- rechargeable lithium-ion batteries. The Roadster contains 6,831 of them. They weigh about 1,000 pounds in total, and Tesla claims that they provide "four to five times the energy-density stores of other batteries". The batteries fit into 11 sectors with 621 batteries each. A separate computer processor controls each sector to make sure all of the charging and discharging is handled smoothly.

The Power Electronics Module (PEM) is a power inverter and charging system that converts DC power to AC power using 72 insulated gate bipolar transistors (IGBTs). This results in a marked increase in power output compared to first-generation electric cars. Under peak acceleration, the batteries can crank out 200 kW of energy -- enough to light 2,000 incandescent light bulbs.

In addition to controlling charge and discharge rates, the Power Electronics Module controls voltage levels, the motor's RPM (revolutions per minute), torque and the regenerative braking system. This braking system captures the kinetic energy usually lost through braking and transfers it back into the ESS. The efficiency and integration of the battery, PEM and motor systems is between 85 and 95 percent, allowing the motor to put out up to 185 kW of power. Aluminum heat dissipation fins and a rear-mounted ventilation port keep the power transistors from overheating.

You can recharge the Roadster in two different ways. An electrician can install a recharging station in your garage. This 220-volt, 70-amp outlet allows for a full recharge in 3.5 hours from a completely dead battery. Tesla likens charging your car to charging your cell phone; you can plug it in at night and have a fully-charged car in the morning. There's also a mobile kit that allows recharging at any electrical outlet, no matter where you are. The length of time it takes to charge using the mobile kit depends on the outlet configuration that you're using (110-volt or 220-volt).

Although auto owners have been driving around for decades with tankfulls of volatile, flammable gasoline in their cars, having 1,000 pounds of batteries behind their head gives some people pause. The recent recalls of lithium-ion batteries used in laptop computers have increased those fears. Tesla has gone to great lengths to ensure the safety of the Roadster's energy system. First, the battery system was extensively "catastrophe tested," which involved heating individual cells until they burst into flames. Each cell is isolated enough from adjacent cells to prevent any damage to them. If one cell overheats, it will not start a chain reaction explosion.
A host of sensors detects acceleration, deceleration, tilt, temperature and smoke. If one senses an abnormal event, like a crash, it immediately shuts down and disconnects the power system. Similar anti-fault protections and sensors are part of the charging system.

That’s just a sneak peek at the Tesla Roadster. If you want to read more about this high-performance electric car, click here.

Discounted Cars, Anyone?

Automotive sales forecasts are not very promising. Summer is slowly creeping up. You know what that means, right? Buying season! Well, not really. Unless if automakers are selling 30-40 mpg vehicles, I’d say there’ll be a huge sales slump. It was good during the first quarter, but we’ve seen a lot of oil price increases in the world market, and the economy is just not doin’ well. GM just closed 4 of its plants, those that manufactured SUVs and trucks. That’s a step in the right direction. They plan to start focusing on fuel efficient cars, which is what other automakers should be doing. And those that are not planning on doing that are employing various marketing strategies to get those chunky SUVs and trucks out of the dealer lots.

We’ve seen a lot of incentives being offered to consumers nowadays. There’s free gasoline for a specific period of time. There are a few who offer discount cards. Probably the most popular options are low financing and rebates. There’s a quiet desperation in the way automakers are offering these cars to the buying public.

In an article entitled “Top 10 Deeply Discounted 2008 Cars”, Terry Jackson highlights ten highly marketable cars (before oil prices soared through the roof, that is) that are offered at a significantly discounted price. It’s unbelievable, but if you’ve been to the gas pumps recently, I’m sure you’ll know why.

Top 10 New-Car Discounts

• Chrysler 300C. The full-sized sedan comes with either a $3,000 rebate or financing ranging from zero percent to 4.9 percent.


• Dodge Ram 1500. Dodge's full-sized pickup truck carries either a $5,000 rebate or zero percent to 1.9 percent financing.


• Ford Explorer. Once the most popular sport utility vehicle, the Explorer carries rebates from $3,000 to $4,000 and financing from 0.9 percent to 6.9 percent.


• Mercury Grand Marquis. A large sedan that can carry six people and their luggage, it can be had with a rebate of $5,500 to $6,500 or financing of zero percent to 3.9 percent.


• Cadillac DTS. The large sedan in the Cadillac lineup is not as quick a seller as the new, smaller CTS. So, GM is offering a $3,000 rebate or 5.9 percent to 7.9 percent financing.


• GMC Envoy. This midsized SUV has been packed with a $3,000 rebate or 2.9 percent to 5.9 percent financing.


• Nissan Pathfinder. Nissan, which is not enjoying the same sales success as some other Japanese manufacturers, is offering deals on this SUV that include rebates of $2,250 to $3,250 or 1.9 percent to 2.9 percent financing.


• BMW 7 Series. While not offering direct-to-customer rebates on its luxury 7 Series sedan, BMW is giving dealers $3,500 to $5,000 in incentives. Such incentives should be a part of a buyer's price negotiations.


• Land Rover LR2. Land Rover is offering a $3,000 incentive on this SUV.


• Lexus RX 350. Lexus is being a little stingier than some other manufacturers when it comes to incentives, but is offering dealers as much as $2,000 on the RX 350.

If you do a double-check you’d notice that almost all of the largest automakers are on the list. In fact, during a research it was determined that over 150 models are offered on discounted prices. Some incentives are directly offered to buyers, but most are offered to the dealers. It’s their choice if they want to use that during buyer’s price negotiations, which they should if they want to have those dealer lots vacant by the end of summer and spring. All in all, it’s a good list. I bet BMW and Cadillac will have the most sales. We’ll see.

Source: Bankrate