Citigroup reached an agreement early Monday morning to acquire the banking operations of the Wachovia Corporation after making a daring bid that pulled the deeply troubled company from the brink of collapse.
Citigroup will pay $1 a share, or about $2.2 billion, according to people briefed on the deal.
Federal regulators worked around the clock this weekend to orchestrate the sale, finally reaching an agreement at 4 a.m. on Monday morning. In the end, the government agreed to provide Citigroup with a financial guarantee on Wachovia’s most risky assets. It is similar to the deal that the Federal Reserve established with JPMorgan Chase’s emergency takeover of Bear Stearns.
Citigroup will assume the first $42 billion on losses tied to Wachovia’s riskiest mortgages and will pay the Federal Insurance Deposit Corporation $12 billion in preferred stock and warrants. In exchange, the F.D.I.C. will absorb all losses above that amount.
Federal regulators said the move was necessary to stave off what could have been the second big bank failure in less than a week. On Thursday, the government seized Washington Mutual and sold the bulk of its operations to JPMorgan Chase.
“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” said Sheila C. Bair, the chairwoman of the F.D.IC in a statement. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”
Wachovia customers should not notice any changes. “There will be no interruption in services and bank customers should expect business as usual,” Ms. Bair added.
The deal further concentrates Americans’ bank deposits in the hands of three banks: Bank of America, JPMorgan Chase and Citigroup will control more than 30 percent of the industry’s deposits.
Together, they will have unrivaled power to set prices for their loans and services. The institutions would probably come under greater scrutiny from federal regulators, given their size and reach. And some small and midsize banks, already under pressure, might have little choice but to seek suitors in order to compete.
The deal highlights just how bad the banking industry’s problems have gotten as well as the progress that Citigroup after being one of the first to suffer huge losses. Citigroup’s chief executive, Vikram S. Pandit, has recently been making the case to employees and investors that Citigroup is a “pillar of strength” in turbulent times. If he is successful, this transaction could be an important milestone.
Under the deal, Citigroup will buy all of Wachovia’s assets and liabilities — a move that should protect Wachovia’s bondholders. It will also acquire Wachovia’s big retail operations as well as its corporate and private banking. It will also takeover Wachovia’s relatively small investment banking operations, which have catered to real estate and medium-size corporations. Citigroup is leaving behind the A.G. Edwards retail brokerage operations and Evergreen Investments, Wachovia’s money management arm. Senior management decision have not been worked out, according to people involved in the talks.
With Wachovia’s branch network, Citigroup will now have one of the biggest retail banking franchises in the country after years of false starts. That should give Citigroup a larger platform to sell home loans and credit cards, and would give it access to more than $400 billion in more stable customer deposits. The bank has been aggressively trying to reduce its dependence on outside investors for funds.
The risk is that Citigroup could be saddled with tens of billions of dollars in losses tied to Wachovia’s giant loan portfolio. Wachovia has been hurt badly by its 2006 purchase of Golden West Financial, a California lender specializing in so-called pay-option mortgages. And the bank also faced mounting losses on loans made to home builders and commercial real estate developers.
To pay for the deal, Citigroup expects to raise more than $10 billion by issuing new shares of its common stock. It will also slash its dividend to 16 cents a share, the second time in the last year.
Another risk is that Citigroup has had a poor track record of putting together mergers, although it now has a new management team. Citigroup shares were essentially flat in late morning trading on Monday.
Last week, Wachovia held discussions with Citigroup, Wells Fargo and Banco Santander of Spain, before the foreign bank’s interest cooled. But the talks intensified this weekend as lawmakers worked in Washington to hammer out the details of a $700 billion bailout plan. Wachovia executives, meanwhile, huddled in the Seagram Building offices of Sullivan & Cromwell on Park Avenue.
Robert K. Steel, a former top lieutenant of Henry M. Paulson Jr. at both Goldman Sachs and then the Treasury Department, who took over as Wachovia’s chief executive in July, arrived in New York to handle the negotiations in person, along with David M. Carroll, the bank’s chief deal maker. At 8:15 am. on Saturday, Citigroup and Wells Fargo took their first peek at Wachovia’s books.
Regulators pressed the parties to move quickly. Senior officials at the Federal Reserve in Washington, and its branches in New York, Richmond and San Francisco held weekend discussions with all the banks involved. Top officials at the Federal Deposit Insurance Corporation and the Treasury were also in the loop.
Timothy F. Geithner, the president of the Federal Reserve Bank of New York, personally reached out to executives involved in the process to assess the situation and spur it along. Citigroup and Wells Fargo pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu, or provide some sort of financial guarantee, as regulators did with JPMorgan’s acquisition of Bear Stearns, according to people briefed on and involved with the process.
Both Citigroup and Wells Fargo were deeply concerned about absorbing Wachovia’s giant loan portfolio, which is littered with bad mortgages, these people said. Bankers had little time to assess the risk.
Citigroup executives considered Wachovia a make-or-break deal for their consumer banking ambitions. With Wachovia, Citigroup would gain one of the pre-eminent retail bank operations after struggling to build one for years. It would also give Citigroup access to more stable customer deposits, allowing it to rely less heavily on outside investors for funds. If it failed to clinch a deal, Citigroup’s domestic retail operations would be far behind Bank of America and JPMorgan Chase. Mr. Pandit, the Citigroup’s chief executive, was personally overseeing the talks
Now, the challenge for Mr. Pandit will be making the deal work. Citigroup said on Monday it expected the deal to add to earnings in the first year, excluding a $3.7 billion restructuring charge. It also expects to reap about $3 billion in annual cost savings, though it did not disclose possible layoffs. If Citigroup can pull it off, it would be a symbolic victory of sorts. For Citigroup, the deal is the largest acquisition since the merger of Citicorp and Travelers Group forged the company a decade ago.
Although Citigroup has racked up nearly $50 billion in losses since the crisis began last summer and has watched the value of its shares sharply decline, the bank was also among the first to raise large amounts of capital. Mr. Pandit may point to the Wachovia deal as a sign of progress and an indication that the worst for the bank is behind it.
The deal will also be seen as a stamp of approval from regulators. Only a few years ago, the Federal Reserve took the unusual step of banning Citigroup from making "significant acquisitions." Gaining their approval to do a big deal on such short notice will probably be viewed as a big vote of confidence in Mr. Pandit’s management team.
Monday, September 29, 2008
Citigroup Buys Bank Operations of Wachovia
Citigroup reached an agreement early Monday morning to acquire the banking operations of the Wachovia Corporation after making a daring bid that pulled the deeply troubled company from the brink of collapse.
Citigroup will pay $1 a share, or about $2.2 billion, according to people briefed on the deal.
Federal regulators worked around the clock this weekend to orchestrate the sale, finally reaching an agreement at 4 a.m. on Monday morning. In the end, the government agreed to provide Citigroup with a financial guarantee on Wachovia’s most risky assets. It is similar to the deal that the Federal Reserve established with JPMorgan Chase’s emergency takeover of Bear Stearns.
Citigroup will assume the first $42 billion on losses tied to Wachovia’s riskiest mortgages and will pay the Federal Insurance Deposit Corporation $12 billion in preferred stock and warrants. In exchange, the F.D.I.C. will absorb all losses above that amount.
Federal regulators said the move was necessary to stave off what could have been the second big bank failure in less than a week. On Thursday, the government seized Washington Mutual and sold the bulk of its operations to JPMorgan Chase.
“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” said Sheila C. Bair, the chairwoman of the F.D.IC in a statement. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”
Wachovia customers should not notice any changes. “There will be no interruption in services and bank customers should expect business as usual,” Ms. Bair added.
The deal further concentrates Americans’ bank deposits in the hands of three banks: Bank of America, JPMorgan Chase and Citigroup will control more than 30 percent of the industry’s deposits.
Together, they will have unrivaled power to set prices for their loans and services. The institutions would probably come under greater scrutiny from federal regulators, given their size and reach. And some small and midsize banks, already under pressure, might have little choice but to seek suitors in order to compete.
The deal highlights just how bad the banking industry’s problems have gotten as well as the progress that Citigroup after being one of the first to suffer huge losses. Citigroup’s chief executive, Vikram S. Pandit, has recently been making the case to employees and investors that Citigroup is a “pillar of strength” in turbulent times. If he is successful, this transaction could be an important milestone.
Under the deal, Citigroup will buy all of Wachovia’s assets and liabilities — a move that should protect Wachovia’s bondholders. It will also acquire Wachovia’s big retail operations as well as its corporate and private banking. It will also takeover Wachovia’s relatively small investment banking operations, which have catered to real estate and medium-size corporations. Citigroup is leaving behind the A.G. Edwards retail brokerage operations and Evergreen Investments, Wachovia’s money management arm. Senior management decision have not been worked out, according to people involved in the talks.
With Wachovia’s branch network, Citigroup will now have one of the biggest retail banking franchises in the country after years of false starts. That should give Citigroup a larger platform to sell home loans and credit cards, and would give it access to more than $400 billion in more stable customer deposits. The bank has been aggressively trying to reduce its dependence on outside investors for funds.
The risk is that Citigroup could be saddled with tens of billions of dollars in losses tied to Wachovia’s giant loan portfolio. Wachovia has been hurt badly by its 2006 purchase of Golden West Financial, a California lender specializing in so-called pay-option mortgages. And the bank also faced mounting losses on loans made to home builders and commercial real estate developers.
To pay for the deal, Citigroup expects to raise more than $10 billion by issuing new shares of its common stock. It will also slash its dividend to 16 cents a share, the second time in the last year.
Another risk is that Citigroup has had a poor track record of putting together mergers, although it now has a new management team. Citigroup shares were essentially flat in late morning trading on Monday.
Last week, Wachovia held discussions with Citigroup, Wells Fargo and Banco Santander of Spain, before the foreign bank’s interest cooled. But the talks intensified this weekend as lawmakers worked in Washington to hammer out the details of a $700 billion bailout plan. Wachovia executives, meanwhile, huddled in the Seagram Building offices of Sullivan & Cromwell on Park Avenue.
Robert K. Steel, a former top lieutenant of Henry M. Paulson Jr. at both Goldman Sachs and then the Treasury Department, who took over as Wachovia’s chief executive in July, arrived in New York to handle the negotiations in person, along with David M. Carroll, the bank’s chief deal maker. At 8:15 am. on Saturday, Citigroup and Wells Fargo took their first peek at Wachovia’s books.
Regulators pressed the parties to move quickly. Senior officials at the Federal Reserve in Washington, and its branches in New York, Richmond and San Francisco held weekend discussions with all the banks involved. Top officials at the Federal Deposit Insurance Corporation and the Treasury were also in the loop.
Timothy F. Geithner, the president of the Federal Reserve Bank of New York, personally reached out to executives involved in the process to assess the situation and spur it along. Citigroup and Wells Fargo pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu, or provide some sort of financial guarantee, as regulators did with JPMorgan’s acquisition of Bear Stearns, according to people briefed on and involved with the process.
Both Citigroup and Wells Fargo were deeply concerned about absorbing Wachovia’s giant loan portfolio, which is littered with bad mortgages, these people said. Bankers had little time to assess the risk.
Citigroup executives considered Wachovia a make-or-break deal for their consumer banking ambitions. With Wachovia, Citigroup would gain one of the pre-eminent retail bank operations after struggling to build one for years. It would also give Citigroup access to more stable customer deposits, allowing it to rely less heavily on outside investors for funds. If it failed to clinch a deal, Citigroup’s domestic retail operations would be far behind Bank of America and JPMorgan Chase. Mr. Pandit, the Citigroup’s chief executive, was personally overseeing the talks
Now, the challenge for Mr. Pandit will be making the deal work. Citigroup said on Monday it expected the deal to add to earnings in the first year, excluding a $3.7 billion restructuring charge. It also expects to reap about $3 billion in annual cost savings, though it did not disclose possible layoffs. If Citigroup can pull it off, it would be a symbolic victory of sorts. For Citigroup, the deal is the largest acquisition since the merger of Citicorp and Travelers Group forged the company a decade ago.
Although Citigroup has racked up nearly $50 billion in losses since the crisis began last summer and has watched the value of its shares sharply decline, the bank was also among the first to raise large amounts of capital. Mr. Pandit may point to the Wachovia deal as a sign of progress and an indication that the worst for the bank is behind it.
The deal will also be seen as a stamp of approval from regulators. Only a few years ago, the Federal Reserve took the unusual step of banning Citigroup from making "significant acquisitions." Gaining their approval to do a big deal on such short notice will probably be viewed as a big vote of confidence in Mr. Pandit’s management team.
Citigroup will pay $1 a share, or about $2.2 billion, according to people briefed on the deal.
Federal regulators worked around the clock this weekend to orchestrate the sale, finally reaching an agreement at 4 a.m. on Monday morning. In the end, the government agreed to provide Citigroup with a financial guarantee on Wachovia’s most risky assets. It is similar to the deal that the Federal Reserve established with JPMorgan Chase’s emergency takeover of Bear Stearns.
Citigroup will assume the first $42 billion on losses tied to Wachovia’s riskiest mortgages and will pay the Federal Insurance Deposit Corporation $12 billion in preferred stock and warrants. In exchange, the F.D.I.C. will absorb all losses above that amount.
Federal regulators said the move was necessary to stave off what could have been the second big bank failure in less than a week. On Thursday, the government seized Washington Mutual and sold the bulk of its operations to JPMorgan Chase.
“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” said Sheila C. Bair, the chairwoman of the F.D.IC in a statement. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”
Wachovia customers should not notice any changes. “There will be no interruption in services and bank customers should expect business as usual,” Ms. Bair added.
The deal further concentrates Americans’ bank deposits in the hands of three banks: Bank of America, JPMorgan Chase and Citigroup will control more than 30 percent of the industry’s deposits.
Together, they will have unrivaled power to set prices for their loans and services. The institutions would probably come under greater scrutiny from federal regulators, given their size and reach. And some small and midsize banks, already under pressure, might have little choice but to seek suitors in order to compete.
The deal highlights just how bad the banking industry’s problems have gotten as well as the progress that Citigroup after being one of the first to suffer huge losses. Citigroup’s chief executive, Vikram S. Pandit, has recently been making the case to employees and investors that Citigroup is a “pillar of strength” in turbulent times. If he is successful, this transaction could be an important milestone.
Under the deal, Citigroup will buy all of Wachovia’s assets and liabilities — a move that should protect Wachovia’s bondholders. It will also acquire Wachovia’s big retail operations as well as its corporate and private banking. It will also takeover Wachovia’s relatively small investment banking operations, which have catered to real estate and medium-size corporations. Citigroup is leaving behind the A.G. Edwards retail brokerage operations and Evergreen Investments, Wachovia’s money management arm. Senior management decision have not been worked out, according to people involved in the talks.
With Wachovia’s branch network, Citigroup will now have one of the biggest retail banking franchises in the country after years of false starts. That should give Citigroup a larger platform to sell home loans and credit cards, and would give it access to more than $400 billion in more stable customer deposits. The bank has been aggressively trying to reduce its dependence on outside investors for funds.
The risk is that Citigroup could be saddled with tens of billions of dollars in losses tied to Wachovia’s giant loan portfolio. Wachovia has been hurt badly by its 2006 purchase of Golden West Financial, a California lender specializing in so-called pay-option mortgages. And the bank also faced mounting losses on loans made to home builders and commercial real estate developers.
To pay for the deal, Citigroup expects to raise more than $10 billion by issuing new shares of its common stock. It will also slash its dividend to 16 cents a share, the second time in the last year.
Another risk is that Citigroup has had a poor track record of putting together mergers, although it now has a new management team. Citigroup shares were essentially flat in late morning trading on Monday.
Last week, Wachovia held discussions with Citigroup, Wells Fargo and Banco Santander of Spain, before the foreign bank’s interest cooled. But the talks intensified this weekend as lawmakers worked in Washington to hammer out the details of a $700 billion bailout plan. Wachovia executives, meanwhile, huddled in the Seagram Building offices of Sullivan & Cromwell on Park Avenue.
Robert K. Steel, a former top lieutenant of Henry M. Paulson Jr. at both Goldman Sachs and then the Treasury Department, who took over as Wachovia’s chief executive in July, arrived in New York to handle the negotiations in person, along with David M. Carroll, the bank’s chief deal maker. At 8:15 am. on Saturday, Citigroup and Wells Fargo took their first peek at Wachovia’s books.
Regulators pressed the parties to move quickly. Senior officials at the Federal Reserve in Washington, and its branches in New York, Richmond and San Francisco held weekend discussions with all the banks involved. Top officials at the Federal Deposit Insurance Corporation and the Treasury were also in the loop.
Timothy F. Geithner, the president of the Federal Reserve Bank of New York, personally reached out to executives involved in the process to assess the situation and spur it along. Citigroup and Wells Fargo pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu, or provide some sort of financial guarantee, as regulators did with JPMorgan’s acquisition of Bear Stearns, according to people briefed on and involved with the process.
Both Citigroup and Wells Fargo were deeply concerned about absorbing Wachovia’s giant loan portfolio, which is littered with bad mortgages, these people said. Bankers had little time to assess the risk.
Citigroup executives considered Wachovia a make-or-break deal for their consumer banking ambitions. With Wachovia, Citigroup would gain one of the pre-eminent retail bank operations after struggling to build one for years. It would also give Citigroup access to more stable customer deposits, allowing it to rely less heavily on outside investors for funds. If it failed to clinch a deal, Citigroup’s domestic retail operations would be far behind Bank of America and JPMorgan Chase. Mr. Pandit, the Citigroup’s chief executive, was personally overseeing the talks
Now, the challenge for Mr. Pandit will be making the deal work. Citigroup said on Monday it expected the deal to add to earnings in the first year, excluding a $3.7 billion restructuring charge. It also expects to reap about $3 billion in annual cost savings, though it did not disclose possible layoffs. If Citigroup can pull it off, it would be a symbolic victory of sorts. For Citigroup, the deal is the largest acquisition since the merger of Citicorp and Travelers Group forged the company a decade ago.
Although Citigroup has racked up nearly $50 billion in losses since the crisis began last summer and has watched the value of its shares sharply decline, the bank was also among the first to raise large amounts of capital. Mr. Pandit may point to the Wachovia deal as a sign of progress and an indication that the worst for the bank is behind it.
The deal will also be seen as a stamp of approval from regulators. Only a few years ago, the Federal Reserve took the unusual step of banning Citigroup from making "significant acquisitions." Gaining their approval to do a big deal on such short notice will probably be viewed as a big vote of confidence in Mr. Pandit’s management team.
Monday, September 15, 2008
Peugeot shows new 908 HY diesel-hybrid Le Mans racer!
In the current world of big time international endurance racing, two cars stand head and shoulders above the rest, the Audi R10 TDI and the Peugeot 908 HDi. Put these two Le Mans Prototype class 1 cars, both powered by 5.5L turbo diesel V12s, on a wide open track and nothing can run with them. With Formula 1 introducing hybrid kinetic energy recovery systems (KERS) in 2009 and the American Le Mans Series introducing a Green Challenge award, Peugeot has decided to take the next step with its program. The French manufacturer is using the last race of the 2008 Le Mans Series at Sliverstone to unveil a demonstrator called the 908 HY which may foreshadow the next generation of its Le Mans challenger. The 908 HY adds a 60 kW electric motor, a set of lithium ion battery packs and corresponding power electronics. The diesel hybrid system will allow the car to operate in electric-only mode in the pits, and get a power boost on the track thanks to recaptured kinetic energy. The current demonstrator has a net weight gain of 45 kg (99 lbs) compared to the standard car. Whether Peugeot runs a car based on this powertrain depends on the ACO, the organization that sets the rules for Le Mans.
New Honda City unveiled in Thailand - is this the look of the new Insight?
The new Honda Insight concept was teased last week in advance of the vehicle's unveiling at the Paris Motor Show next month. We don't know that the production version will look like, but it'll be similar in some ways to the concept and different in others. That's a cop out, sure, but what else is there to know? How about by taking a look at the 2009 Honda City, which was just unveiled in Thailand and is based on the Fit/Jazz. An anonymous poster wrote to Carscoop that, "We'll definitely see a variant of this in the US. It'll have a slightly different profile from the c-pillar back, be a hatchback and will be called the 'Insight.' Due at dealers in April..."
Last year, Honda became one of the first international automakers to take advantage of Thailand's financial aid packages to get more green cars built domestically. As to what the local vehicles might reveal about Honda's global line-up, go ahead and compare the two cars in high-resolution galleries below. Do you think that anonymous is right? Thanks to Rob for the tip.
Last year, Honda became one of the first international automakers to take advantage of Thailand's financial aid packages to get more green cars built domestically. As to what the local vehicles might reveal about Honda's global line-up, go ahead and compare the two cars in high-resolution galleries below. Do you think that anonymous is right? Thanks to Rob for the tip.
Mercedes-Benz S400 hybrid to launch in June 2009 in Europe
Mercedes-Benz hasn't publicly announced an official on-sale date yet for its first hybrid models beyond the first half of 2009. However, BusinessWeek is reporting that the S400 BlueHybrid will go on sale in Europe in June 2009. The big gas-electric luxury sedan is due to arrive on U.S. roads one year from now. The S400 will use a lithium-ion battery pack and will likely be the first from a major automaker to do so. With a current U.S. base price of $86,700 for an S550, it's not quite clear where the hybrid will fit in the U.S. lineup. The S400 will pair the 3.5L V6 that is not available in the U.S. S-Class with the Daimler/BMW mild hybrid system. BusinessWeek reports the system will command a premium of less than €10,000 (I should hope so, since that's almost what Lexus charges for the full hybrid system on the LS600h). On the plus side, the Mercedes should get significantly better fuel economy than the Lexus. Mercedes is claiming 29.8 mpg (U.S.) for the hybrid although it remains to be seen how it will fare on the EPA cycle.
Rain Supreme: Big surprises at soaked Italian Grand Prix (SPOILER ALERT)
Racing fans are used to tuning in on the Saturday of a grand prix weekend to find the words "Scuderia" and "Ferrari" at the top of the qualifying list. But interrupted by the words "Toro Rosso"? Never. But that was only the first of many surprises at this weekend's Italian Grand Prix.
Sebastian Vettel shockingly secured his first pole position thanks to some exceedingly brilliant driving joined with good strategy on the part of his Ferrari-powered Scuderia Toro Rosso team, which wisely stuck with the extreme wet tires on the rain-soaked Monza circuit while others experimented with intermediate treads. The young German's unprecedented qualifying performance put him in the record books as the youngest driver ever to secure a pole position, supplanting Fernando Alonso's previous record. But with so many other drivers with more experience and backed by teams with immensely bigger budgets, surely Vettel's lead would quickly be stolen by an established front-runner. Wouldn't it? Follow the jump to find out.
First official Porsche Panamera Gran Turismo teaser revealed
It's not like Porsche has done a very good job keeping the Panamera, its upcoming four-door sports sedan coupe, a secret. We've seen more spy shots of the Panamera undergoing testing than pics of Britney doing something unseemly in public, and that's a lot. But rather than just show us the final production form of the Panamera, the name of which is now officially followed by "Gran Turismo", Porsche has decided to do a full blown marketing roll out using the just launched Panamera Online Magazine as the medium through which we'll see the production Panamera bit by bit. The first issue is out and contains a few not-very-revealing sketches of the car as well as an image that will be used in upcoming advertisements in which the Panamera peeks its nose out of a garage. Unfortunately, the front end of the car looks pretty much like every other Porsche. Nevertheless, the roll out has begun and sooner rather than later we'll be able to pass judgment on Porsche's first four-door passenger car. Porsche says the Panamera's official debut is scheduled for next spring (probably the Geneva Motor Show in March), with sales to commence in late summer or early fall of 2009.
[Source: Porsche]
Spy Shots: 2010 Chevy Cruze spotted in the wild
A couple of weeks ago, GM released the first official photos of the new Chevy Cruze compact and we've been seeing camouflaged examples for months. Now, one of our readers has spotted an almost completely uncovered Cruze in a parking lot in Rochester, NY. The Cruze will make its auto show debut next month in Paris and we expect to see it Monday in Detroit. The only disguise on this example is some duct tape over the bow-tie on the grille. The Cruze will be available globally starting Europe (why do they always get the good stuff first?) next spring. This will be the first car coming off the next-generation version of GM's Delta compact platform that will be shared with the next Astra, the Orlando MPV and, of course, the Volt. Thanks to Kyle for the tip!
[Source: Photobucket]
Bad credit hurting sales more than fuel prices
The auto industry is in a bad sales slump, and while trucks and SUVs are being hurt particularly by fuel prices, the rest of the market has an even bigger problem. The tight credit market is making it much harder for dealers to sell you transportation, and the problem isn't relegated to just those with poor credit. Banks want higher cash-to-debt ratios, larger down payments, and then they're still charging higher interest rates on top of all that. GM's Mark LaNeve estimates his company is losing between 10,000 and 12,000 sales per month due to the credit crunch, which is close to a full point of market share.
Chrysler dealers are likely struggling even more, as the Pentastar recently removed company-financed leasing as a fall back option for those who cannot afford to buy. Chrysler's sales have been down 34% this year through August, and leasing went from 23.5% of the business to just 2%. With the latest rash of bad news hitting the banking industry in the U.S., we don't expect this trend to reverse itself any time soon.
Chrysler dealers are likely struggling even more, as the Pentastar recently removed company-financed leasing as a fall back option for those who cannot afford to buy. Chrysler's sales have been down 34% this year through August, and leasing went from 23.5% of the business to just 2%. With the latest rash of bad news hitting the banking industry in the U.S., we don't expect this trend to reverse itself any time soon.
First Drive: 2009 Volkswagen CC
Is "four-door coupe" an oxymoron or a clever twist on automotive design rules? That was a popular question among the 50 or so journalists invited to drive Volkswagen's new CC from Atlanta to Nashville last week.
The seemingly contradictory term was apparently first used to describe the Rover P5 Mark II in 1962, but was revived more recently when Mercedes introduced its CLS in 2004. In both cases the cars' low rooflines defied conventional saloon styling and needed a unique descriptor for marketing pizazz.
When rumors of the VW CC began to leak out, some speculated the CLS would be its main target. But Volkswagen learned from the disappointing U.S. acceptance of the Phaeton: Luxury buyers pay for brand cache as much as they do for supple leather and high-tech gadgets. This time around, says Brett Scott, VW's product planning manager, they expect many of their customers to be Camry and Accord shoppers attracted to the CC's stand-out styling.
Mitsubishi releases ambiguous teaser ahead of Paris debut
Mitsubishi has announced its Paris Motor Show line-up, and along with the world debut of the Lancer Sportback and the Dakar-ready Racing Lancer, it has provided a tease of an unnamed model/concept.
The image above doesn't give us any clear indication about what Mitsubishi will be showing off, but the new face of Mitsu is present and accounted for, along with a set of toned-down headlamps that blend the automaker's slanted lenses with round lights.
We won't know anything definitive until Mitsubishi's press conference on October 2nd, but speculation ranges from the production version of the Concept cX to the new Colt. Stay tuned and check Mitsubishi's press release after the jump.
The image above doesn't give us any clear indication about what Mitsubishi will be showing off, but the new face of Mitsu is present and accounted for, along with a set of toned-down headlamps that blend the automaker's slanted lenses with round lights.
We won't know anything definitive until Mitsubishi's press conference on October 2nd, but speculation ranges from the production version of the Concept cX to the new Colt. Stay tuned and check Mitsubishi's press release after the jump.
Rumormill: Veyron GT with 1,350 HP and 264 mph top speed coming
If you are one of the 200 or so people to already own a $1.4 million dollar Veyron, you reportedly won't be left out in the dark, either. According to the alleged memo, all Veyrons will be able to be retrofitted with the upgrade. The memo states that the Veyron GT would be available March 2009 and be the last iteration before the next-gen Veyron arrives around 2012.
[Source: Motor Authority]
RM to auction off classic pedal cars
By the time I was old enough to care, pedal cars were decidedly out of favor. Instead, the venerable Power Wheels electric riders had a firm grasp on this particular youth's fantasies. It wasn't until I was a bit older that I realized the merits of pedaling for myself, and by then I was on two wheels. Now, though, I can look at the old pedal cars that were popular when my parents were kids and appreciate them, especially the kind seen in the gallery below, which will be auctioned off by RM along with the AACA (Antique Automobile Club of America) alongside the Kruse Hershey Auction in Pennsylvania. There are eleven self-powered cars in total and we have pics of six of them, each built atop the bones of a classic replica. Take a good look at some of the craftsmanship that went into these little machines. It's hard not to be impressed.
Kandi looking to enter U.S. market
Over the last few years, there has been an amazing influx of Chinese motorcycles, scooters and all terrain vehicles. Many of the products coming in from overseas have a horrible record for quality, but there have been a few gems along the way as well. With this in mind, our eyes were drawn to an article on Automotive News regarding a new Chinese company we were not yet familiar with. Though we've become accustomed to finding these manufacturers on scooter forums and news sites, it is still rare to see them in the mainstream automotive media. We have no way of knowing what kind of quality its vehicles are, but Zhejiang Kangdi Vehicles Co. may be making some inroads into the U.S. market with its line of two, three and four-wheelers in both gas and electric versions. The company appears to be calling itself Kandi. A Seattle company is importing the vehicles and fifteen franchises have already been purchased.
We took a look at the company's web site and we see some of the normal scooters and motorcycles. We also see some carts with an eerie resemblance to the smart fortwo. One model really caught our attention -- a three-wheeled scooter powered by what appears to be the ubiquitous GY6 150cc engine and CVT transmission. We'll see if Kandi vehicles come up any more in the coming weeks and months. It's just as possible that we never hear the name again. Will Kandi begin offering EPA-certified vehicles? Stay tuned.
We took a look at the company's web site and we see some of the normal scooters and motorcycles. We also see some carts with an eerie resemblance to the smart fortwo. One model really caught our attention -- a three-wheeled scooter powered by what appears to be the ubiquitous GY6 150cc engine and CVT transmission. We'll see if Kandi vehicles come up any more in the coming weeks and months. It's just as possible that we never hear the name again. Will Kandi begin offering EPA-certified vehicles? Stay tuned.
Honda claims similarity between Insight and Prius a coincidence
Vehicle aerodynamics are a strange thing. While you can create perfect aerodynamic models using math, there is no ideal aerodynamic shape for a vehicle because there are so many variables - including style, which is constantly updated. Still, certain shapes are slipperier than others and the Toyota Prius' iconic egg-shaped look is quite good at moving through the air without disrupting things too much. So, is it that big a surprise that the new Honda Insight looks a lot like the Prius? According to Honda, the look is the result of making a vehicle with low drag, not one that takes on the Prius' style. Honda spokesman Chuck Schifsky told the Detroit Free Press that, "It was done that way because it was the most aerodynamic design, and we were going for fuel economy." I'm inclined to believe Honda on this, but you can't dismiss the similarities. Take a look in the galleries below.
Four-door Audi A1 headed to Paris
The small car market is heating up fast, even for upmarket brands like Audi, Mercedes-Benz and BMW, the latter of which has the majority of the market cornered with its MINI sub-brand. The Bimmer competitor from Ingolstadt plans on attacking that market with its A1 subcompact, but unlike the Metroproject concept from Tokyo, the new A1 due to be unveiled at the Paris Motor Show will sport four doors. Europeans are likely to get a production model spawned from the concept, which will likely be built in Brussels, Belgium and be introduced as a 2009 model. An electric model could follow shortly thereafter. Will the U.S. be blessed with another Germanic mini car? Audi's elusive Magic 8-Ball currently says "Not Likely," but with sales of the MINI going strong it's entirely too early to count it out completely.
[Source: Automotive News - sub. req'd]
Top Gear reviews ZR1, hard to get past Corvette looks
Let's not beat around any shrubbery with this: Top Gear magazine has reviewed the Corvette ZR1, and the quotes you need to know are, "The dynamics are better than an Aston DBS...," and "...[M]ake no mistake. What we have here is one of the truly great supercars."
Of course, there are caveats: it looks like a Corvette, the interior doesn't match those of its supercar rivals and the steering could use more feel. The latter quip is why you get other critiques like "...you don't get the precision of a 599." To have a UK magazine critique a Corvette against a 599 is probably the opposite of the insult it might appear to be on the surface. But don't take our word for it, follow the link and read for yourself how the ZR1 has "the performance and the chassis to match an SLR 722." It's not a bad way to start the week...
Of course, there are caveats: it looks like a Corvette, the interior doesn't match those of its supercar rivals and the steering could use more feel. The latter quip is why you get other critiques like "...you don't get the precision of a 599." To have a UK magazine critique a Corvette against a 599 is probably the opposite of the insult it might appear to be on the surface. But don't take our word for it, follow the link and read for yourself how the ZR1 has "the performance and the chassis to match an SLR 722." It's not a bad way to start the week...
Gallery: First Drive: 2009 Corvette ZR1
[Source: Top Gear]
Tuesday, September 9, 2008
Economy cars, Prius score poorly in IIHS crash tests
There is a lot of stuff that needs to be considered when purchasing a car for its economy. Obviously, being AutoblogGreen and all, we are concerned with fuel efficiency. Still, a car's mileage or how green it actually may be aren't the only things to consider when it comes to choosing your next vehicle. For instance, when a car is involved in a low-speed accident, how much damage does it sustain? Why does this matter? Besides the obvious dollar amount you would have to spend on getting your car repaired, more damaged parts mean more junk that's sent off to be disposed of or recycled. So, with that in mind, how do economy cars compare?
Ford's latest Focus scores the highest by the Insurance Institute for Highway Safety, requiring minimal repairs both front and rear after head-on and offset crash tests. The Hyundai Elantra and Volkswagen Rabbit don't do so well. Neither does the Prius, which can surely keep you safe and save you in gas. As a demonstration, the IIHS made a few simple changes to the Prius' front bumper and greatly mitigated the damage caused by a small accident. Check past the break for a full rundown of all the cars tested.
SEMA Preview: ASI's 800hp Tetsu GTR Bentley Continental GT
What does SEMA mean to you? For most of us, it's a place for the country's top tuners to show their wares to a power-hungry public. But the dark side of SEMA never ceases to rear its ugly head, and further proof will be available at the Toyo booth where the Tetsu GTR Bentley Continental GT will be displayed.
The unholy brainchild of Japanese tuner ASI features a custom carbon fiber wide-body kit that makes ASMA's unfortunate creations look demure in comparison. The two-tone paint scheme... uhhh... compliments the massive haunches, deep side skirts and GT-style wing, while 22-inch blingalicious rollers prove that chrome is still in high demand... unfortunately.
According to Modified Luxury and Exotics, only 29 Tetsu GTRs will be produced, each putting out over 800 hp. We'll be on hand to provide live shots of the other five vehicles featured at the Toyo stand, assuming our camera lens doesn't crack when we zoom in on the GTR's gaudy fascia.
[Source: Modified Luxury and Exotics]
ABG speaks with PowerGenix about NiZn batteries
We recently got on the phone with Dan Squiller from PowerGenix, a company which hopes to "revolutionize the battery industry" with its new nickel-zinc batteries. The firm's batteries will soon make an appearance in power tools and in lawn and garden machinery, with ebikes, scooters and consumer AA-sized units shipping shortly thereafter. Of course, the company also sees huge room for expansion in hybrid cars and has plans to sell its technology to a major manufacturing company in the near-term future.
What makes the company think its product is so good? Read on past the break for the story.
Paris Preview: 2010 MINI Crossover Concept
Click either image for a gallery of the MINI Crossover Concept
It's finally arrived folks... and it's not the coming apocalypse. MINI has released the first official images of the Crossover Concept, proving that BMW not only has a sense of humor, but that it's serious about bringing an all-wheel-drive MINI to market in 2010.
These initial images give us a clear indication of how future MINIs will be styled, and if BMW's reputation for making only a few revisions from concept to production hold true, this is very close to the finished product.
Measuring about six inches wider and taller than the Clubman, the Crossover Concept features a five-door body style, but that's where the similarities end. The right rear door has a conventional hinge, but the left door slides out and back, minivan-style. The rear hatch ditches the Clubman's dual doors and is instead fitted with a single panel that opens to the right. Sources suggest that the concept's door arrangement might be nixed in favor of something more traditional when it reaches production.Power specifications and exact trim levels have yet to be revealed, but expect the Crossover to carry the same naturally aspirated and turbocharged 1.6-liter four-cylinder engines as its Cooper counterparts, BMW's Efficient Dynamics system (with start-stop tech) and naturally, all-wheel-drive.
It's likely that the Crossover won't be spending much time off road, but with a higher ride height, more space, a comfy interior and MINI's iconic styling, we're sure we'll see several on the highways and byways both here and abroad.
Read all the details in MINI's press release after the jump.
Rendered Speculation: Ferrari 430 Scuderia Spider
Click for more 430 Scuderia Spider renderings in hi res
Lies. Damn lies and speculation. Rumor would be another way to put it, as word of a potential convertible version of the 430 Scuderia spreads across cyberspace. Tentatively referred to as the 430 Scuderia Spider, the roadster would naturally be based on the lightweight, Enzo-rivaling 430 Scuderia supercar, but with the roof chopped off.
Various reports have given conflicting information about what kind of roof mechanism would be fitted to the Spideria, including a retractable hard-top similar to that found on the new California, a manual cloth roof to keep weight down, or the same automatic fabric top from the conventional F430 Spider. Or maybe no roof at all, who knows. The wide range of speculation leads us to chalk this up to pure rumor. The removal of structural rigidity and the addition of weight would seem antithetical to the Scuderia's entire raison d'etre. However the prevailing reports suggest that the Spider will also get the California's new seven-speed dual-clutch gearbox, be produced in a limited series of 300 and be unveiled on November 5 at the Ferrari Challenge weekend in Mugello... the same event where Ferrari unveiled the FXX Evoluzione last year. Jon Sibal, the skilled supercar illustrator we've come to know and trust, has presented a few renderings of what the 430 Scuderia Spider could look like, which in our eye looks right on the money and you can see for yourself in the gallery below.
Gallery: Ferrari 430 Scuderia Spider renderings
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