TOKYO - With a solid lineup of small cars and superflexible factories that can quickly shift from SUVs to subcompacts, Honda Motor (HMC) has prospered lately. In June the Japanese automaker saw its sales jump by 14% even as its biggest rivals slumped.
But Honda's satisfaction with its results is tempered by the knowledge that they might have been far better if the carmaker had gotten its hybrid strategy right. While the company was the first major automaker to offer a hybrid in the U.S.—the Insight, introduced in 1999—Honda's efforts have long been overshadowed by Toyota Motor's (TM) success with the Prius. Honda misread what customers wanted, acknowledges research and development chief Masaaki Kato. As a result, the company has sold just 277,000 hybrids to date, compared with Toyota's 1.5 million. Honda stopped making the two-seat Insight in 2006 and last year ditched an unpopular Accord hybrid. Today, the company sells only one hybrid model: a version of the Civic compact. "I must admit that Toyota was better with its strategy of focusing on the Prius and trying to build an environment-friendly image," he says.
Now, Honda is fighting back. By early next decade, it aims to sell 500,000 hybrids annually, up from just 55,000 in 2007. Next year it expects to offer a new compact in the U.S., Japan, and Europe that, like the Prius, will be sold only as a hybrid. Honda has high hopes for the car, and wants to sell 200,000 units a year eventually. In 2010, Honda will launch a hybrid sportster based on a sleek concept car called the CR-Z that it unveiled at the Tokyo Motor Show in October. That same year, Honda will likely release a new hybrid Civic, and it's planning to market a hybrid version of the Fit subcompact soon thereafter.
As sales pick up and Honda gets better at making hybrids, the company expects to reduce costs sharply. R&D boss Kato says he can bring the price differential between a hybrid and an equivalent gasoline-only car below $2,000. While not as powerful as Toyota's hybrid technology, the Honda system is lighter and less complex, so its new models may offer better gas mileage. Honda hasn't disclosed pricing, but the compact hybrid due next year could retail for around $18,000-$3,000 less than a Prius, reckons Tatsuo Yoshida, an analyst at UBS (UBS) in Tokyo. He adds that while selling 500,000 hybrids a year will be a challenge, the new cars could also help Honda steal some of the green limelight back from Toyota. "Publicity-wise, the new hybrids are very good news for Honda," he says.
RISKS OF THE ROAD
Honda is less interested in hybrid technology for heftier vehicles. Unlike Toyota, which makes hybrid versions of the Highlander SUV and some large Lexus models, Honda believes cleaner diesel is more appropriate for bigger cars. Next year, it's planning to add diesels to its Acura luxury line. Kato says Honda could introduce larger hybrids in the future, but its lighter hybrid system is less suited to big vehicles than Toyota's technology is. And he says he's skeptical of plug-in hybrids, which can be recharged using home electricity. Battery technology, Kato says, simply isn't ready.
Honda's rapid hybrid expansion has its risks. First, there's no shortage of potential competition in greener cars. By late 2010, Toyota plans to introduce five new hybrid-only models in the U.S., including a revamped Prius, a minivan, and a new Lexus-some of them plug-ins. "Without focusing on measures to address global warming and energy issues, there can be no future for our auto business," Katsuaki Watanabe, Toyota's president, said at an environmental forum in Tokyo on June 11. European automakers have a slew of new, cleaner diesels in the works, and GM is developing the electric-powered Chevrolet Volt. Even Nissan Motor (NSANY) chief Carlos Ghosn, once skeptical about hybrids, is promising electric vehicles for the U.S. and Japan for 2010.
LOWER MARGINS
Selling more hybrids could also eat into Honda's profits. Small cars typically offer lower margins than bigger vehicles, and adding hybrid technology is expensive. That means Honda will earn less on its new hybrids than it does on most of its current range of models, at least until it can pass on the full cost of the technology to customers. "They're finally getting the strategy right in terms of how they're going to position their hybrids in the market, but do the numbers add up?" asks Andrew Phillips, an analyst at KBC Securities in Tokyo. "They're going to have to be really careful on the cost and achieve their volume targets."
source: http://www.businessweek.com/magazine/content/08_30/b4093062857546.htm?chan=rss_topStories_ssi_5
Sonic Automotive cuts outlook as car market drops
by David Bailey
DETROIT, July 14 (Reuters) - Sonic Automotive Inc (SAH.N: Quote, Profile, Research), the No. 3 U.S. auto retailer, warned on Monday that its full-year earnings would be lower than previously expected due to significant declines in the new and used vehicle market.
Sonic, whose shares fell more than 12 percent in after-market trade, said the sales rate has trended significantly lower from what it expected when it set the original forecast, and markets are expected to remain difficult the rest of the year.
Automakers and dealers have seen U.S. light vehicle sales drop for a third consecutive year amid a weak economy, and consumer demand has shifted toward smaller vehicles and away from pickup trucks and SUVs due to soaring gas prices.
Sonic originally had expected U.S. sales at a 15.5 million annual rate in 2008. However, sales have trended far below that rate in recent months and analysts and automakers have cut their full-year estimates to about the 15 million range.
In June, for example, light vehicle sales dropped to a 13.6 million unit seasonally adjusted annual rate from 15.7 million a year earlier, the weakest result in 15 years.
The car retailer said its cash flow and liquidity remain strong, and it is actively reducing costs and taking steps to increase demand in the higher-margin segments of its business.
Sonic said it now expects earnings from continuing operations of $1.65 to $1.85 for the year, down from a prior forecast for $2.35 to $2.50 per share. Analysts on average expect Sonic to earn $2.21 per share for the year, according to Reuters Estimates.
Sonic said it expects second-quarter earnings of 48 cents to 50 cents from continuing operations, with the retail market for new and used vehicles lower than expected. Analysts expect the company to earn 55 cents per share in the quarter.
Sonic shares fell to their lowest level in more than seven years on Monday. In after-hours trade, the stock tumbled to $9.05 from its close at $10.30 on the New York Stock Exchange
DETROIT, July 14 (Reuters) - Sonic Automotive Inc (SAH.N: Quote, Profile, Research), the No. 3 U.S. auto retailer, warned on Monday that its full-year earnings would be lower than previously expected due to significant declines in the new and used vehicle market.
Sonic, whose shares fell more than 12 percent in after-market trade, said the sales rate has trended significantly lower from what it expected when it set the original forecast, and markets are expected to remain difficult the rest of the year.
Automakers and dealers have seen U.S. light vehicle sales drop for a third consecutive year amid a weak economy, and consumer demand has shifted toward smaller vehicles and away from pickup trucks and SUVs due to soaring gas prices.
Sonic originally had expected U.S. sales at a 15.5 million annual rate in 2008. However, sales have trended far below that rate in recent months and analysts and automakers have cut their full-year estimates to about the 15 million range.
In June, for example, light vehicle sales dropped to a 13.6 million unit seasonally adjusted annual rate from 15.7 million a year earlier, the weakest result in 15 years.
The car retailer said its cash flow and liquidity remain strong, and it is actively reducing costs and taking steps to increase demand in the higher-margin segments of its business.
Sonic said it now expects earnings from continuing operations of $1.65 to $1.85 for the year, down from a prior forecast for $2.35 to $2.50 per share. Analysts on average expect Sonic to earn $2.21 per share for the year, according to Reuters Estimates.
Sonic said it expects second-quarter earnings of 48 cents to 50 cents from continuing operations, with the retail market for new and used vehicles lower than expected. Analysts expect the company to earn 55 cents per share in the quarter.
Sonic shares fell to their lowest level in more than seven years on Monday. In after-hours trade, the stock tumbled to $9.05 from its close at $10.30 on the New York Stock Exchange
SUV love story comes to sad end
by: BILL McAULIFFE
The golden age of the big sport-utility vehicle has come to a rapid end.
Surging gas prices are making tens of thousands of Americans reconsider their desire for ever-bigger SUVs, with the largest fuel-hungry vehicles turning from status symbols to expensive burdens.
Sales of full-sized utility vehicles in the past three months dropped to less than half what they were at their national peak in 2002 and lower than they have been in at least 13 years. As recently as three years ago, light trucks and SUVs made up 55 percent of the new-vehicle market.
Tom Libby, senior director of industry analysis for J.D. Power and Associates, said high gas prices are forcing a "pretty permanent change" in the vehicles Americans choose to drive -- away from the full-sized SUV to smaller ones, and even back to cars.
It feels much like lost love for those who in some cases have spent a generation using their SUV to tow snowmobiles, store multiple strollers and carpool kids to soccer games.
Six years ago, the Chevy Tahoe was just the thing for Mike Bendickson and his wife -- big enough to haul fishing gear, with four-wheel drive for snow and ice, and enough seats for what would someday be a young family.
Then came $4 gas, each gallon of which moves his Tahoe only about 17 miles.
"It used be, I'd fill up and it would cost me maybe $50 or $60," said Bendickson, a marketing director who commutes from St. Louis Park to downtown Minneapolis. "Now it's over $100. It hurts."
Those who want to sell their vehicles are finding fewer and fewer takers. Bendickson said he wouldn't even try to sell his Tahoe right now.
"I've come to the realization that I'm driving this thing until it dies," Bendickson said.
Market reversal
Last month, sales of the Ford Explorer were down 52 percent from a year ago. The nation's No. 3 seller in 2001, the Explorer now isn't among the top 50, Libby said. But sales of compact SUVs in the first quarter were 62 percent higher than three years ago.
Among cars, sales of the diminutive Ford Focus hit a monthly record in May, up 53 percent over the year before, while the Honda Civic had its biggest U.S. sales year for any Honda model, ending the Ford F-150 pickup's 17-year reign atop the best-seller list.
Meanwhile, used SUVs have been selling for an average of $6,000 less in the first half of 2008 than in 2007, according to the Wall Street Journal. And they were staying on the market for more than two months, up from 49 days the year before.
"Two years ago a Tahoe would be gone in five minutes," said Greg Evans, a salesman at All Wheels, a neighborhood used-car lot on E. Lake Street in Minneapolis. "Now we'd be lucky if it goes in five months."
For Bob Stamos of Robbinsdale, it has been that long since he posted his 2006 Jeep Commander for sale on the online car market CarSoup.com. He's had one caller. A dealer offered him $16,000 for it, but he'd have to pay $20,000 to get out of his lease. Online he's asking $21,700, "which I'll never get," he said.
"I love it," he said of the Commander, which gets about 16 miles per gallon. "And another problem is, I'm kind of a big guy. I don't fit in these smaller cars, and safety is important to me."
It's not really a serious problem for Stamos. He's selling because he and his wife now have three vehicles, but if it doesn't move, he'll just drive it until the lease runs out.
Likewise, Bendickson and his wife, Carlene, are fond of their Tahoe. They prize its durability and space, particularly now that they have two kids, ages 3 and 1, who require strollers, car seats and other accoutrements. They'd like better gas mileage, but these days it's unlikely they could sell or trade the Tahoe, which has 145,000 miles on it.
That's what Rob Tregenza, a transportation consumer strategist for Iconoculture, a Minneapolis-based trend research firm, called a "behavioral holding pattern," with SUV owners facing a stalled market while waiting for more options from automakers.
New habits
Part of that dynamic, Tregenza added, is actually a behavioral change, with many people driving less -- either through commuting options, shorter-distance road trips, better-planned errand-running or all the above. Nationally, driving mileage was lower every month this year than it was in the corresponding month in 2007.
Diane Armitage of Minnetonka said she and her family are putting fewer miles on their 2002 Ford Explorer. That might involve fewer trips to the cabin, but also taking those trips in the family's other vehicle, a Toyota Prius hybrid.
"It's a nice blend," she said. "It's nice to have the SUV when we need it. But we aren't traveling as often."
That mirrored what Evans, the used-car salesman, has been doing. He owns a Cadillac Escalade. But what's he been actually driving?
"A '97 VW Passat," he said.
The repossession service that Brian Bowman runs out of La Crosse, Wis., operates in four states, including Minnesota. Last year around this time, he was getting five to 10 new orders a week; right now, it's more than 20. And most of the vehicles he's taking away are bigger ones, including a Cadillac Escalade on Thursday.
"I've talked to a lot of the people I'm repo-ing [repossessing] from," Bowman said Friday, and gas prices "are killing them." The owners are forgoing car payments to pay other bills, and selling the vehicle often isn't an option -- not only is demand down, but tighter credit markets also make it harder to find potential buyers, Bowman said.
The next bargain?
Auto industry observers noted that for now, the devaluation of the SUV means two things. First, trading or selling one to buy a more fuel-efficient car will often cost thousands more than the potential gas savings, so many won't or can't sell. (The online automotive information site edmunds.com has recently developed a "Gas-Guzzler Trade-In Calculator" to help people make the right call. Look under "Green news and info.")
Second, prices on both new and used SUVs are falling so steeply that soon SUVs may become a bargain.
Chuck Eck, managing partner of ABC Minneapolis auto auction, said SUV prices have fallen 25 percent in the past year and 10 percent to 15 percent in the past several months. But the big SUVs are still hard to move. Uncertainty about gas prices "has thrown a scare into the market," he said. "Nobody knows when cheap is cheap enough."
Bendickson doesn't buy the view that $4-a-gallon gas is the death warrant for the full-size SUV.
"The purist in me hopes it is. But I don't think it is," he said. "We're a cyclical bunch in America. We got away from big cars in the 1970s, but they all made it back. I hope this is the permanent change we need. But in the end I think we'll come back to the big vehicles again."
Paul Walser, CEO of Walser Automotive Group, said he thinks that the SUV market has been going through an "overreaction" to high gas prices, and that demand and price will move back toward a balance in several months.
Still, Walser added, full-sized SUVs are not likely to return to being the profit center for automakers or the dominant silhouette on the highways they were a few years ago. That, Walser said, is because fuel prices have reached the point where many people have misgivings about being seen driving a vehicle that gobbles so much gas.
"The country is concerned about our dependence on foreign oil. People want to see manufacturers put more emphasis on more fuel efficient products," Walser said. "I think that's the part of this that's here to stay. And I think that's probably good for all of us."
source: http://www.startribune.com/local/24556834.html?location_refer=Local%20+%20Metro
The golden age of the big sport-utility vehicle has come to a rapid end.
Surging gas prices are making tens of thousands of Americans reconsider their desire for ever-bigger SUVs, with the largest fuel-hungry vehicles turning from status symbols to expensive burdens.
Sales of full-sized utility vehicles in the past three months dropped to less than half what they were at their national peak in 2002 and lower than they have been in at least 13 years. As recently as three years ago, light trucks and SUVs made up 55 percent of the new-vehicle market.
Tom Libby, senior director of industry analysis for J.D. Power and Associates, said high gas prices are forcing a "pretty permanent change" in the vehicles Americans choose to drive -- away from the full-sized SUV to smaller ones, and even back to cars.
It feels much like lost love for those who in some cases have spent a generation using their SUV to tow snowmobiles, store multiple strollers and carpool kids to soccer games.
Six years ago, the Chevy Tahoe was just the thing for Mike Bendickson and his wife -- big enough to haul fishing gear, with four-wheel drive for snow and ice, and enough seats for what would someday be a young family.
Then came $4 gas, each gallon of which moves his Tahoe only about 17 miles.
"It used be, I'd fill up and it would cost me maybe $50 or $60," said Bendickson, a marketing director who commutes from St. Louis Park to downtown Minneapolis. "Now it's over $100. It hurts."
Those who want to sell their vehicles are finding fewer and fewer takers. Bendickson said he wouldn't even try to sell his Tahoe right now.
"I've come to the realization that I'm driving this thing until it dies," Bendickson said.
Market reversal
Last month, sales of the Ford Explorer were down 52 percent from a year ago. The nation's No. 3 seller in 2001, the Explorer now isn't among the top 50, Libby said. But sales of compact SUVs in the first quarter were 62 percent higher than three years ago.
Among cars, sales of the diminutive Ford Focus hit a monthly record in May, up 53 percent over the year before, while the Honda Civic had its biggest U.S. sales year for any Honda model, ending the Ford F-150 pickup's 17-year reign atop the best-seller list.
Meanwhile, used SUVs have been selling for an average of $6,000 less in the first half of 2008 than in 2007, according to the Wall Street Journal. And they were staying on the market for more than two months, up from 49 days the year before.
"Two years ago a Tahoe would be gone in five minutes," said Greg Evans, a salesman at All Wheels, a neighborhood used-car lot on E. Lake Street in Minneapolis. "Now we'd be lucky if it goes in five months."
For Bob Stamos of Robbinsdale, it has been that long since he posted his 2006 Jeep Commander for sale on the online car market CarSoup.com. He's had one caller. A dealer offered him $16,000 for it, but he'd have to pay $20,000 to get out of his lease. Online he's asking $21,700, "which I'll never get," he said.
"I love it," he said of the Commander, which gets about 16 miles per gallon. "And another problem is, I'm kind of a big guy. I don't fit in these smaller cars, and safety is important to me."
It's not really a serious problem for Stamos. He's selling because he and his wife now have three vehicles, but if it doesn't move, he'll just drive it until the lease runs out.
Likewise, Bendickson and his wife, Carlene, are fond of their Tahoe. They prize its durability and space, particularly now that they have two kids, ages 3 and 1, who require strollers, car seats and other accoutrements. They'd like better gas mileage, but these days it's unlikely they could sell or trade the Tahoe, which has 145,000 miles on it.
That's what Rob Tregenza, a transportation consumer strategist for Iconoculture, a Minneapolis-based trend research firm, called a "behavioral holding pattern," with SUV owners facing a stalled market while waiting for more options from automakers.
New habits
Part of that dynamic, Tregenza added, is actually a behavioral change, with many people driving less -- either through commuting options, shorter-distance road trips, better-planned errand-running or all the above. Nationally, driving mileage was lower every month this year than it was in the corresponding month in 2007.
Diane Armitage of Minnetonka said she and her family are putting fewer miles on their 2002 Ford Explorer. That might involve fewer trips to the cabin, but also taking those trips in the family's other vehicle, a Toyota Prius hybrid.
"It's a nice blend," she said. "It's nice to have the SUV when we need it. But we aren't traveling as often."
That mirrored what Evans, the used-car salesman, has been doing. He owns a Cadillac Escalade. But what's he been actually driving?
"A '97 VW Passat," he said.
The repossession service that Brian Bowman runs out of La Crosse, Wis., operates in four states, including Minnesota. Last year around this time, he was getting five to 10 new orders a week; right now, it's more than 20. And most of the vehicles he's taking away are bigger ones, including a Cadillac Escalade on Thursday.
"I've talked to a lot of the people I'm repo-ing [repossessing] from," Bowman said Friday, and gas prices "are killing them." The owners are forgoing car payments to pay other bills, and selling the vehicle often isn't an option -- not only is demand down, but tighter credit markets also make it harder to find potential buyers, Bowman said.
The next bargain?
Auto industry observers noted that for now, the devaluation of the SUV means two things. First, trading or selling one to buy a more fuel-efficient car will often cost thousands more than the potential gas savings, so many won't or can't sell. (The online automotive information site edmunds.com has recently developed a "Gas-Guzzler Trade-In Calculator" to help people make the right call. Look under "Green news and info.")
Second, prices on both new and used SUVs are falling so steeply that soon SUVs may become a bargain.
Chuck Eck, managing partner of ABC Minneapolis auto auction, said SUV prices have fallen 25 percent in the past year and 10 percent to 15 percent in the past several months. But the big SUVs are still hard to move. Uncertainty about gas prices "has thrown a scare into the market," he said. "Nobody knows when cheap is cheap enough."
Bendickson doesn't buy the view that $4-a-gallon gas is the death warrant for the full-size SUV.
"The purist in me hopes it is. But I don't think it is," he said. "We're a cyclical bunch in America. We got away from big cars in the 1970s, but they all made it back. I hope this is the permanent change we need. But in the end I think we'll come back to the big vehicles again."
Paul Walser, CEO of Walser Automotive Group, said he thinks that the SUV market has been going through an "overreaction" to high gas prices, and that demand and price will move back toward a balance in several months.
Still, Walser added, full-sized SUVs are not likely to return to being the profit center for automakers or the dominant silhouette on the highways they were a few years ago. That, Walser said, is because fuel prices have reached the point where many people have misgivings about being seen driving a vehicle that gobbles so much gas.
"The country is concerned about our dependence on foreign oil. People want to see manufacturers put more emphasis on more fuel efficient products," Walser said. "I think that's the part of this that's here to stay. And I think that's probably good for all of us."
source: http://www.startribune.com/local/24556834.html?location_refer=Local%20+%20Metro
Prices put the brake on SME car splurge
A leading economic consultant believes many small businesses are now suffering because they have borrowed money to buy expensive status symbols - including high powered utes and sports utilty vehicles - rather than using the money to help grow their businesses.
Martin North, co-author of a joint JP Morgan/Fujitsu Consulting report on SME confidence, says while 17% of the 25,000 small and micro businesses surveyed mentioned the need for extra working capital as the number one reason for borrowing, purchasing or leasing vehicles was the biggest combined category with 29% of all mentions.
The JP Morgan/Fujitsu report also reveals borrowing for vehicles far outstrips borrowing to buy commercial property or seeking loans to expand the business.
North thinks a lot of borrowed money has been ploughed into expensive status symbols, particularly due to tax changes surrounding depreciation.
''Much of the spending on equipment by SMEs seems to have been about - I want the latest and greatest, shiniest and biggest,'' he says.
Sales figures complied by the Federated Chamber of Automotive Industries in the six months to June 30 shows business driving sales growth.
Business spending on passenger cars rose 6.1%, light commercial vehicles grew 12.8%, while sports utility vehicles [SUVs] jumped 24.2%.
Across all vehicle categories, while government and private sales both contracted, business spending rose 11.6%.
In the light commercial category, where business is the biggest customer sales of four wheel drive utes, the rugged farm and mine workhorses were up a modest 3.7%.
While van sales shot up 30%, they are dwarfed in value terms by the pick up in two-wheel drive ute sales, which grew by 12 %.
Holden, which launched its revamped commodore-based VE ute range, including the 6 litreV8 powered SS V series in October 2007, says three out of every four VE utes it sold to businesses during that period were the more expensive variants - the SV6, SS and SS V Series.
The Holden SS V series super-ute (including ladder racks) costs $59,500 before on road costs.
Teresa Basile, GM Holden Marketing Manager for light commercial vehicles, says business owners sought to convey status andsuccess in their purchasing decisions
''During the week the Holden ute is functional, practical and makes a statement about the owner and their respective business,'' she says.
''But at the weekend it's the perfect transportation for their leisure time.''
BMW says around 40 % of its SUV sales are going to businesses. BMW spokesman Toni Andreevski said the sales growth of premium SUVs and utes is part of the same global trend. But he argues it is not all about conspicuous consumption.
''[Business] people are buying luxury cars as a reward for success (but) technical innovation is also a big motivator,'' he argues.
However with rising petrol prices many small business owners may now regret borrowing to buy a 6 litre V8 powered super-ute.
The JP Morgan/Fujitsu report identified rising petrol prices and interest rates are the two major factors battering confidence in the SME sector.
North says he was initially surprised that petrol ranked above rising interest rates as the key issue of concern for micro and small businesses in a recent survey.
''I expected interest rates to be the number one issue. But its not, it is petrol,'' he says.
He says the big splurge by SME owners on thirsty utes and SUVs may be a reason why rising petrol prices are a more visible and painful than interest rates.
But that may change.
JPMorgan's Brian Johnson says the potential interest burden now facing SMEs has been exacerbated by the huge ramp-up in SME debt between 2002 and 2007.
During that period SME borrowing trebled from $60 to $180 billion. Around 70% of SME borrowers were paying interest rates of less than 8%.
''As monetary policy tightened in 2006 and 2007, that proportion dropped to 40%, and today, it stands at 20%,'' says Johnson.
North says if the interest burden grows or the economy slows a lot of the show ponies may end up on the auction floor.
At that point, he says it may be very difficult to borrow money for a less glamorous, but more practical, workhorse.
by: Andrew Linden
source: http://smallbusiness.smh.com.au/managing/management/prices-put-the-brake-on-sme-car-splurge-914280049.html?page=2
Martin North, co-author of a joint JP Morgan/Fujitsu Consulting report on SME confidence, says while 17% of the 25,000 small and micro businesses surveyed mentioned the need for extra working capital as the number one reason for borrowing, purchasing or leasing vehicles was the biggest combined category with 29% of all mentions.
The JP Morgan/Fujitsu report also reveals borrowing for vehicles far outstrips borrowing to buy commercial property or seeking loans to expand the business.
North thinks a lot of borrowed money has been ploughed into expensive status symbols, particularly due to tax changes surrounding depreciation.
''Much of the spending on equipment by SMEs seems to have been about - I want the latest and greatest, shiniest and biggest,'' he says.
Sales figures complied by the Federated Chamber of Automotive Industries in the six months to June 30 shows business driving sales growth.
Business spending on passenger cars rose 6.1%, light commercial vehicles grew 12.8%, while sports utility vehicles [SUVs] jumped 24.2%.
Across all vehicle categories, while government and private sales both contracted, business spending rose 11.6%.
In the light commercial category, where business is the biggest customer sales of four wheel drive utes, the rugged farm and mine workhorses were up a modest 3.7%.
While van sales shot up 30%, they are dwarfed in value terms by the pick up in two-wheel drive ute sales, which grew by 12 %.
Holden, which launched its revamped commodore-based VE ute range, including the 6 litreV8 powered SS V series in October 2007, says three out of every four VE utes it sold to businesses during that period were the more expensive variants - the SV6, SS and SS V Series.
The Holden SS V series super-ute (including ladder racks) costs $59,500 before on road costs.
Teresa Basile, GM Holden Marketing Manager for light commercial vehicles, says business owners sought to convey status andsuccess in their purchasing decisions
''During the week the Holden ute is functional, practical and makes a statement about the owner and their respective business,'' she says.
''But at the weekend it's the perfect transportation for their leisure time.''
BMW says around 40 % of its SUV sales are going to businesses. BMW spokesman Toni Andreevski said the sales growth of premium SUVs and utes is part of the same global trend. But he argues it is not all about conspicuous consumption.
''[Business] people are buying luxury cars as a reward for success (but) technical innovation is also a big motivator,'' he argues.
However with rising petrol prices many small business owners may now regret borrowing to buy a 6 litre V8 powered super-ute.
The JP Morgan/Fujitsu report identified rising petrol prices and interest rates are the two major factors battering confidence in the SME sector.
North says he was initially surprised that petrol ranked above rising interest rates as the key issue of concern for micro and small businesses in a recent survey.
''I expected interest rates to be the number one issue. But its not, it is petrol,'' he says.
He says the big splurge by SME owners on thirsty utes and SUVs may be a reason why rising petrol prices are a more visible and painful than interest rates.
But that may change.
JPMorgan's Brian Johnson says the potential interest burden now facing SMEs has been exacerbated by the huge ramp-up in SME debt between 2002 and 2007.
During that period SME borrowing trebled from $60 to $180 billion. Around 70% of SME borrowers were paying interest rates of less than 8%.
''As monetary policy tightened in 2006 and 2007, that proportion dropped to 40%, and today, it stands at 20%,'' says Johnson.
North says if the interest burden grows or the economy slows a lot of the show ponies may end up on the auction floor.
At that point, he says it may be very difficult to borrow money for a less glamorous, but more practical, workhorse.
by: Andrew Linden
source: http://smallbusiness.smh.com.au/managing/management/prices-put-the-brake-on-sme-car-splurge-914280049.html?page=2
Chrysler aims to have electric cars in three to five years
By Poornima Gupta
DETROIT (Reuters) - Chrysler LLC is planning to launch all-electric vehicles in the next three to five years, the latest automaker to join the race to produce cars with fuel-saving technologies.
Chrysler's new Envi unit, which was created last September, is developing vehicles that are intended to run on battery power alone for about 40 miles, Chrysler spokesman Nick Cappa said on Monday.
"The group is looking to have a product available in the marketplace in the next three to five years," Cappa said.
Chrysler, which has lagged rivals in its hybrid strategy, is working on a new generation of hybrid vehicles with lithium-ion batteries that are lighter and store more energy than the nickel-metal hydride batteries now in wide use.
Chrysler has not yet announced any partnership for the project or for the development of the batteries.
General Motors Corp and Toyota Motor Corp are racing to develop rechargeable hybrid vehicles using lithium-ion batteries.
GM's all-electric Chevy Volt is scheduled to go into production in 2010 while Toyota has said it will be testing a rechargeable version of its Prius hybrid with fleet customers around the same time.
Ford, which is building 20 plug-in hybrid SUVs on a demonstration basis, has said it expects to have a mass-market car in five to ten years.
Lithium ion batteries are widely used in consumer electronics but automakers have faced a range of issues, including cost and the risk of overheating, in adapting them for use in powering cars.
Chrysler, bought by private equity group Cerberus Capital Management last August, showed three "green" concept cars in January during the Detroit auto show that featured electric motors intended to be powered by lithium-ion batteries -- Chrysler's ecoVoyager, Dodge ZEO and Jeep Renegade.
"Chrysler will produce technology similar to one of them or a combination of the three," Cappa said.
Chrysler's move comes as it is reeling financially from sinking sales of large SUVs and pickup trucks as domestic gasoline prices top $4 a gallon.
The Auburn Hills, Michigan-based automaker relies on sales of trucks and SUVs, such as the Dodge Durango SUV and RAM pickup truck, for almost 70 percent of its total sales at a time when U.S. consumers are increasingly demanding lighter and more fuel-efficient vehicles.
The rising popularity of gas-sipping hybrids is prompting automakers to invest in the development of hybrids and electric vehicles.
Toyota dominates the U.S. market for hybrid sales on the strength of the success of its Prius and expects to be selling over 1 million hybrid vehicles annually by early next decade.
source:http://uk.reuters.com/article/governmentFilingsNews/idUKN1446121020080714
DETROIT (Reuters) - Chrysler LLC is planning to launch all-electric vehicles in the next three to five years, the latest automaker to join the race to produce cars with fuel-saving technologies.
Chrysler's new Envi unit, which was created last September, is developing vehicles that are intended to run on battery power alone for about 40 miles, Chrysler spokesman Nick Cappa said on Monday.
"The group is looking to have a product available in the marketplace in the next three to five years," Cappa said.
Chrysler, which has lagged rivals in its hybrid strategy, is working on a new generation of hybrid vehicles with lithium-ion batteries that are lighter and store more energy than the nickel-metal hydride batteries now in wide use.
Chrysler has not yet announced any partnership for the project or for the development of the batteries.
General Motors Corp and Toyota Motor Corp are racing to develop rechargeable hybrid vehicles using lithium-ion batteries.
GM's all-electric Chevy Volt is scheduled to go into production in 2010 while Toyota has said it will be testing a rechargeable version of its Prius hybrid with fleet customers around the same time.
Ford, which is building 20 plug-in hybrid SUVs on a demonstration basis, has said it expects to have a mass-market car in five to ten years.
Lithium ion batteries are widely used in consumer electronics but automakers have faced a range of issues, including cost and the risk of overheating, in adapting them for use in powering cars.
Chrysler, bought by private equity group Cerberus Capital Management last August, showed three "green" concept cars in January during the Detroit auto show that featured electric motors intended to be powered by lithium-ion batteries -- Chrysler's ecoVoyager, Dodge ZEO and Jeep Renegade.
"Chrysler will produce technology similar to one of them or a combination of the three," Cappa said.
Chrysler's move comes as it is reeling financially from sinking sales of large SUVs and pickup trucks as domestic gasoline prices top $4 a gallon.
The Auburn Hills, Michigan-based automaker relies on sales of trucks and SUVs, such as the Dodge Durango SUV and RAM pickup truck, for almost 70 percent of its total sales at a time when U.S. consumers are increasingly demanding lighter and more fuel-efficient vehicles.
The rising popularity of gas-sipping hybrids is prompting automakers to invest in the development of hybrids and electric vehicles.
Toyota dominates the U.S. market for hybrid sales on the strength of the success of its Prius and expects to be selling over 1 million hybrid vehicles annually by early next decade.
source:http://uk.reuters.com/article/governmentFilingsNews/idUKN1446121020080714
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