General Motors Job Cuts
July 8, 2008
AP - A person familiar with the company’s discussions said Monday all the options are being considered as General Motors tries to cope with the dramatic shift in consumer buying habits from trucks to cars and crossover vehicles.
The person asked not to be identified because no decisions have been made.
General Motors shares dropped briefly Monday afternoon to $9.92, tying their lowest point since Sept. 13, 1954, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.
Later in the afternoon, the stock rebounded and rose 11 cents to $10.23. It has traded as high as $43.20 in the past year.
General Motors announced last month it would close four truck and sport utility vehicle plants and boost production of several existing car models. Its sales are down 16.3 percent this year.
Further job cuts could be considered by General Motors’s board of directors when it meets in early August, The Wall Street Journal reported Monday.
Company spokeswoman Renee Rashid-Merem would not comment on potential job or brand cuts, but said the company has made it clear that action would be taken if the U.S. auto market worsened.
“If conditions persist or deteriorate, then we’ll continue to take aggressive actions,” she said Monday.
General Motors’s stock price tumbled to its previous 53-year low of $9.96 on Wednesday after Merrill Lynch analyst John Murphy wrote in a note to investors that a General Motors bankruptcy “is not impossible if the market continues to deteriorate and significant incremental capital is not raised.”
The next day, JPMorgan analyst Himanshu Patel called the bankruptcy fears overblown but predicted General Motors will burn through $18 billion in 2008 and 2009 as it struggles with depressed U.S. sales.
General Motors has $24 billion in cash and $4.6 billion in credit on hand, he said, so it doesn’t need to raise more money immediately. But he predicted the automaker will try to raise another $10 billion in the third quarter of this year by mortgaging trademarks, international operations and other assets.
Critics have said General Motors still has too much fat in its middle management, despite cutting white-collar employment to 32,000 last year from 44,000 in 2000. They also say the engineering, manufacturing and marketing costs are too high for it to keep all eight of its brands.
Over the years, analysts have suggested cutting or selling the Buick, Saab or Saturn brands, perhaps jettisoning them like General Motors did with Oldsmobile in 2004. Chevrolet and Cadillac remain the company’s strongest sellers.
Buick sales are down 21 percent so far this year, while Saab is down 29 percent and Saturn sales are off nearly 19 percent. Saab, the Swedish automaker, sold only 12,068 vehicles during the first half of 2008. Saturn sales have declined nearly 19 percent for the year even though its model lineup has been completely revamped.
General Motors already has decided to study the sale of its Hummer brand. The big trucks aren’t the right product for consumers facing $4 per gallon gasoline.
Something New at Prius hybrids
July 8, 2008
Reuters - Toyota Motor Corp plans to install solar panels on some Prius hybrids in its next remodeling, responding to growing demand for “green” cars amid record-high oil prices, a source briefed on the matter said on Monday.
The panels, supplied by Kyocera Corp would be able to power part of the air-conditioning on high-end versions of the gasoline-electric Prius, the source said.
“It’s more of a symbolic gesture,” said the source, who asked not to be identified. “It’s very difficult to power much more than that with solar energy.”
Toyota is due to launch the third-generation Prius next year.
Big automakers are racing to come up with alternative solutions to using fossil fuels to appear ecologically conscious and to lure consumers looking to save money at the pump.
But solar power is not seen as a viable solution to power cars. Solar panels are expensive due to rising silicon prices and storing energy is difficult, the source said. It was unknown how much the solar panels on the new Prius cars would cost, or how many solar-mounted versions Toyota would build.
A Toyota spokesman declined to comment, saying the company does not talk about future product plans.
Mazda Motor Corp briefly offered a solar panel option on two car models, the Eunos 800 and Sentia, in the early 1990s to ventilate the sedans while parked on hot summer days. The expensive option was unpopular and discontinued after a few years.
Kentaro Endo, a director at Japan’s Ministry of Economy, Trade and Industry who specializes in renewable energy, said the application of solar energy was severely limited in vehicles.
“Even if you laid solar panels out on the entire roof of a house, you only generate enough energy to run two hair dryers,” he said.
“It’s an interesting idea, but it would be very difficult to power a whole car, even with technological advances.”
Toyota has struggled to keep up with demand for the Prius as soaring gasoline prices put consumers off of gas-guzzling sport utility vehicles and pickup trucks. Rival Honda Motor Co will also step up its hybrid push with a new, low-cost model early next year, followed by several other gasoline-electric cars.
Automakers have teamed up with battery makers to develop and produce lithium-ion batteries to store more energy in smaller packages to extend cruising distances.
Toyota has partnered with Matsushita Electric Industrial Co while Nissan Motor Co has a joint venture with the NEC Corp group. Mitsubishi Motors Corp is working with GS Yuasa Corp.
The Prius, the world’s first mass-produced gasoline-electric hybrid car, first went on sale in Japan in late 1997 and in other markets in 2000. Cumulative sales have topped 1 million units worldwide.
Toyota has a goal of selling at least 1 million hybrid cars a year in the early part of the next decade by offering the fuel-saving system on more vehicles.
Toyota shares ended 1.4 percent higher at 4,990 yen as the dollar rose against the yen. Kyocera lost 0.1 percent to 9,740 yen, while the Nikkei average gained 0.9 percent.
