Explaining Southern California's economy

August auto sales: A very good month for pickup trucks and Detroit

2013 Ford F-150

Ford

Ford saw double-digit sales increases from last August for its pickup trucks. Chrysler also sold a lot of pickups, as did GM.

A good month for pickup trucks means a good month for Detroit's Big Three — General Motors, Chrysler, and Ford. Although ironically, it was Ford and Chrysler reporting big gains in pickup sales from August of last year, while GM did well with its lineup of smaller, more fuel-efficient cars.

Longtime GM watchers are still scratching their heads at how a company that, pre-bailout and bankruptcy, had abandoned the small-car market to imports so it could concentrate on the fat profits that trucks and SUVs bring in. GM did okay with its main pickup, the aging Silverado. Just not as well as its Motown rivals.

Pickup truck profits are a good thing, for two reasons. Ford and Chrysler saw double-digit increases, while GM had to settle for the mid-single digits. That's money in the bank for Detroit 's carmakers. Meanwhile, pickups being sold means that contractors are trading in their aging wheels for new sheet metal — and that's a clear signal that the new-home market is regaining some strength. You can't haul stuff to the building site in a pickup that falling apart.

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GM posts record 2011 profit, with most coming from toughest auto market

Matthew DeBord

Don't think cool cars can some in small packages? No so. The new Chevy Sonic is proof that General Motors can finally do a tiny ride that commands attention.

Good news today for General Motors: it generated its highest annual profit ever in 2011. That's $7.6 billion. And yes, you read that first sentence right: highest annual profit ever. Higher than when GM owned half the U.S. market. Higher than when it was the largest industrial concern on the planet.

This is remarkable for two reasons, one obvious, one not. First the obvious: three years ago, GM had to be bailed out by the taxpayer before entering bankruptcy. It was under fierce attack in North America from Toyota and others. The future looked, if not completely dim, then not exactly luminous.

Now the not-obvious. Most of GM's 2011 profit came from North America. Some analysts have pointed to this as a problem and highlighted GM's struggles with its main European division, Opel, which it decided to hold on to rather than sell, post-Chapter 11. (Other observers, notably Slate's Matt Yglesias, have complained that all the rah-rah around GM suggests that America is still too close to the auto-industrial business model that built the country in the 20th century.)

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Honda electrifies City of Torrance with Fit EV

Honda

Honda delivers a 2013 Fit EV to the city of Torrance as a part of the Honda Electric Vehicle Demonstration Program.

I unfortunately missed the delivery of Honda Fit EVs (for "electric vehicles) to the City of Torrance last week. I regret that because this was actually an important move for Honda. As I pointed out in conversation with the Wall Street Journal's car critic, Dan Neil, on "AirTalk" as the Detroit Auto Show was kicking off, Honda is going through something of an identity crisis. It was hit hard by the 2011 earthquake and tsunami in Japan that roiled the global auto supply chain. But Honda has also struggled to retain customers and lost market share in the past year to Ford, Nissan, and Hyundai, as well as General Motors and Toyota. 

That's the bad news. The Fit, on the other hand, is the good news. This compact hatchback has been a big hit for Honda. It might be the best small car made by humans on Planet Earth (although Ford and Chevy have some excellent small rides these days, as well — the competition is fierce).

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Chinese carmaker BYD opens shop in Downtown LA

BYD-DowntownLA-MDB

Matthew DeBord

BYD — it stands for "Build Your Dreams" — is building a future in Downtown LA, new home to its North American HQ. Unfortunately, it's enduring something of a nightmare with its business at home in China, even with billionaire Warren Buffett invested.

In business, timing is everything. So what to make of a dignitary heavy ribbon cutting this morning at the new North American headquarters of Chinese carmaker BYD ("Build Your Dreams"), at a time when the company is facing business challenges at home — and challenges to deliver on ecomomic promises in LA?

This is from Bloomberg:

BYD America opened today about a year behind schedule with fewer workers than first targeted. The company, partly owned by Warren Buffett's Berkshire Hathaway Inc., has delayed plans to sell electric cars to retail buyers, citing limited availability of public chargers. Instead, it's focusing on solar panels, batteries, LED lighting and rechargeable buses.

[...]

Initial goals for the Shenzhen, China-based company's California arrival haven't been met either in BYD jobs or indirect business created. The delays reflect a combination of construction obstacles and an electric-car market that hasn't developed as rapidly as first expected.

In April 2010 when the deal was announced, BYD said it would open the office by the end of 2010, and have 150 employees by the end of this year. It now has 20 employees in Los Angeles, with plans to reach 30 by year-end and 100 by the end of 2012, according to Micheal Austin, the company's U.S. vice president.

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