Auto Outlook: Drivers wanting better mileage look to foreign cars

Auto Outlook: Drivers wanting better mileage look to foreign cars
The Ford Logo is displayed at the 2012 North American International Auto Show at the Cobo Center in Detroit, January 10, 2012. UPI/Mark Cowan | License Photo

To avoid a meltdown in 2006, Ford Motor Co. mortgaged the farm putting up its assets -- including its Blue Oval logo, and F-150 pickup and iconic Mustang trademarks -- to secure $23.5 billion in credit.

The big gamble paid off and Ford was the only Detroit car maker that didn't accept government bailouts two years later. This week, Moody's Investors Service became the second credit rating service to raise Ford's credit from junk status back to investment grade. Fitch Ratings upgraded Ford's credit rating in April.


The upgrades move control of Ford's famous scripted Blue Oval -- first used on a Model A in 1928 -- back to Dearborn, Mich.

"The Blue Oval is back where it belongs with the Ford family of 166,000 employees around the world," said Ford executive chairman Bill Ford in a statement. "This is a great day for us and is the result of several years of hard work and progress by everyone associated with Ford."

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Ford used its line of credit to retool and develop the new products that are now selling well, but the automaker still had $16.6 billion in debt on its balance sheet at the end of March. It also had $23 billion in cash from its auto unit, CNNMoney said.


Ford President and Chief Executive Officer Alan Mulally praised Moody's evaluation and the resulting release of the debt's collateral.

"The key factor in our considering an investment-grade rating for Ford was whether or not the company would be able to sustain its strong performance. We concluded that the improvements Ford has made are likely to be lasting," said Moody's senior vice president Bruce Clark in a statement.

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Ford posted an operating profit of $2.1 billion in North America in the first quarter of 2012 and paid its first dividend to shareholders in nearly six years in March.

Just what do U.S. auto companies have to do?

Sales are up and GM, Ford and Chrysler have improved their products in almost every way -- cutting weight, improving designs and materials and retooling to get the most mileage they can from their bread and butter family cars without turning them into skateboards.

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Despite becoming more competitive, data compiled in the past three years by Polk Automotive indicates domestic automakers have lost market share to foreign imports in nine of the 10 largest U.S. states.

When Americans think luxury, they still think BMW and Mercedes not Cadillac or Lincoln, and when they think economical they look at Hyundai and Kia, a major victory for South Korean automakers.


Sales of European vehicles were up 3.3 percent in California, 1.9 percent in Texas, 2.2 percent in Florida, 0.5 percent in New York and 1.6 percent in Pennsylvania, data showed. Sales of the Detroit Three slipped 2.9 percent in California, 1 percent in Texas, 5.8 percent in Florida, 1.8 percent in New York and 3.1 percent in Pennsylvania.

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Asian brands picked up market share in 7 of the 10 largest states from 2008 to 2011, Polk said. Market share of American car companies shrank 1.4 percent nationwide during the same period while European brands gained 1.6 percent.

"This data show that while domestic automakers have improved in so many areas including quality, styling and safety, this is an extremely competitive market," Polk's senior automotive analyst Tom Libby told CNBC. "The reality is the domestic brands need to do more if they want to change this and gain market share.

"Frankly, to reverse this share loss, they are going to have move forward at a faster and more aggressive pace," he added. "The challenge is changing the perception to match reality. There is no doubt the U.S. brands make much better cars and trucks, but it takes years for the perception to catch up to reality."


A Consumer Reports survey found fuel economy is the No. 1 concern of buyers. Thirty-seven percent of people shopping for a new vehicle said mileage was the top issue, 17 percent said quality, 16 percent safety, 14 percent value and only 6 percent performance.

That's a major shift from the days of cheap gasoline when horsepower and 0-60 mph times ruled, and fuel efficiency was an afterthought.

The survey showed two-thirds of vehicle owners expect to get better mileage in a new vehicle.

Fuel economy of all new vehicles sold in the United States hit 24.1 mpg in March before slipping to 23.9 mpg in April, the University of Michigan's Transportation Research Institute said.

"These results make it clear that high fuel prices are continuing to impact driver behavior and influencing future purchase considerations," said CR deputy auto editor Jeff Bartlett. "While quality, safety and value are still important, this may be foreshadowing a market shift by folks seeking relief at the pump."

Despite the desire for better mileage, sales of hybrid and plug-in electric vehicles are lagging.

Toyota ended production of the Lexus HS 250 h compact hybrid in January because of poor sales. Lexus sold about 2,864 HS 250h sedans last year.


The $38,000 HS 250 h began life as a 2009 model and Lexus will offer the all-new ES 300h in 2013.

"The ES 300h is not replacing HS in our lineup," Lexus said. "It's merely part of the hybridization of many of our existing vehicles in the Toyota and Lexus lineups."

Does less traffic = a bad economy

If there's less bumper-to-bumper traffic during your daily commute you may have a slow economy to thank.

The New York Times says as much as drivers hate stop-and-go traffic, road congestion can mean a booming economy with more trucks and vehicles clogging the roads.

Inrix's Traffic Scorecard, which analyzes traffic data, says overall traffic congestion in the United States was down 30 percent last year from 2010 levels -- and 70 of the 100 largest U.S. cities saw a drop in traffic congestion.

"I think we're seeing it here in traffic numbers, the stop-and-go economy," Inrix President and Chief Executive Officer Bryan Mistele told the Times.

U.S. cities with the worst traffic were Honolulu, Los Angeles, San Francisco, New York and Bridgeport, Conn.

Russia key to Nissan's revival of Datsun brand

Japan's Nissan Motor Co. is hoping Russia will love its new Datsun.


Nissan plans to build low-cost, affordable Datsun vehicles in a joint venture with AvtoVAZ, Russia's top automaker. The new Datsuns also will be sold in the emerging markets of India and Indonesia, but will not be available in the United States.

Nissan has proposed buying control of AvtoVAZ with partner Renault SA in 2014 in a $750 million deal, The Detroit News said, and an executive said Datsun eventually could account for one-third of all Nissan sales inside Russia.

"Russia is Nissan's largest European market and is going to grow significantly in both size and importance," said Nissan executive vice president Colin Dodge.

Toyota's chief picks his favorites

Japanese automaker Toyota recently announced it has sold 4 million hybrids since the first gas-electric Prius liftback hit the streets in Japan 15 years ago.

U.S. motorists have bought 1.5 million Prius vehicles (Prii or Prius) since they reached U.S. shores in 2000. With success like that -- 65 percent of all U.S. hybrid sales were Toyotas -- it's surprising the little hybrid was not among company president Akio Toyoda's favorite Japanese vehicles.

On Toyoda's "fun to drive" Japanese vehicles list were the Honda NXS, Mazda Cosmo Sport, Mitsubishi Pajero, Isuzu Bellet and the Nissan Skyline, The Sydney Morning Herald reported. The Skyline is sold under the Infinity brand in the United States and soon will be available in Australia.


The Cosmo Sport, Mazda's first sports car, was the first Mazda with a Wankel rotary engine, Honda's NSX sports car is being revived as a performance hybrid, Mitsubishi's Pajero is a rival to Toyota's off-road LandCruiser and the Isuzu Bellet, popular in the 1960s and '70s, was succeeded by the Isuzu Gemini.

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