TOP 100 TRANSPORTATION AND LOGISTICS SITES
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| Chrysler: The Noose Tightens Tom Lindmark submits:Nine days to go and it looks like any deal to save Chrysler from bankruptcy is a long way off. The banks have told the government they won’t write-down the value of their debt nearly as much as the government has requested.From the WSJ:Complete Story » seekingalpha.com |
Nasty Implications of the UAW Owning Too Much of the Auto Industry Rising Dividend Investing submits: Many observers charge that the US government, in its attempts to clean up the auto industry mess, has used strong-arm tactics to force speedy bankruptcies for Chrysler and General Motors (GMGMQ.PK). In doing so, the rule of law and our country's reputation as a safe place to do business may have taken a very bad hit that will resound for years.The State of Indiana, representing its state retirement plans which hold secured Chrysler bonds, has filed suit in the Chrysler bankruptcy case. Indiana claims laws were broken when the US Government gave the United Auto Workers ((UAW)) 55% of the ownership of the post bankruptcy company, far in excess of the UAW's secured interests. Indeed, the deal the government struck with the Chrysler assets appears to go against all existing legal precedents and statutes. The secured bondholders were thrown from the train in favor of the mostly unsecured union claims.The fact that President Obama was widely supported by the UAW brings some clarity to the situation. Political spoils, however, should not extend to rewriting bankruptcy laws on the run.Complete Story » seekingalpha.com |
Northrop Grumman Corporation Q2 2009 Earnings Call Transcript Northrop Grumman Corporation (NOC)Q2 2009 Earnings Call TranscriptJuly 23, 2009 11:30 am ETComplete Story » seekingalpha.com |
Oil, Telecom Dealings With Russia? 'Relax and Enjoy It' Craig Pirrong submits: In what has to be considered a marriage made in hell, Norwegian telecom firm Telenor (TELNY.PK) has agreed with perpetual litigation adversary Alfa Group agreed to merge their Russian and Ukrainian telecom operations and list the new company in the United States.This has to be considered a surrender by Telenor, inasmuch as (a) the deal was done on terms very similar to what Alfa had proposed some time back, and (b) Telenor was losing battle after battle in a Kafkaesque ordeal in the Russian legal system (where it was facing having to pay 9 figure fines on a farcical 10 figure judgments).Complete Story » seekingalpha.com |
Did Cash for Clunkers Cost Too Much? October US Census sales estimates are in, so a better analysis of Cash for Clunkers can be done. Popular estimates have ranged from $24,000 per vehicle - done by the economists of Edmunds - to $4,600 by the economists at NADA. The Edmunds analysis means that only 18% of vehicles were incremental, while the NADA estimate means that 92% were incremental.Our analysis, which is done like an irritating MBA brand manager would do, arrives at an estimated cost per vehicle of $7,924, which is offset by average gas savings of up to $15,000 over the life of the vehicle.While it’s understandable that the National Automobile Dealers Association would want to lowball the cost, it’s a mystery why Edmonds would think it’s in the best interest of their readers and industry to overestimate the cost.Both groups should ask themselves; “Have you no shame?” as the biases in their projections are embarrassingly transparent. Below is a chart of their projections without Cash for Clunkers compared to the actual U.S. Census Bureau report on auto sales. Comparisons are made against 2006 to give a stable baseline. The NADA estimate assumes auto sales fall off a cliff, while the Edmunds forecast assumes sales take off without any stimulus. (Note: NADA's is based on their estimate of 1.6 million vehicles in July and August.) To get a reality-based forecast, U.S. Census Retail Sales Excluding Motor Vehicle and Parts Dealers were used as a baseline. The forecast using the retail sales trend is shown in the chart below. Using Retail Sales establishes a trend that appears to continue the pre-Cash for Clunkers trend. Fifty-three percent of the Cash for Clunkers sales were incremental based on the Retail Trend Forecast. Data is available on the Cash for Clunkers site that shows the average rebate was $4,209, resulting in an average cost of $7,924 per incremental vehicle. A number of alternative forecasts were done as cross checks and all showed results in this range.Calculating the savings in gasoline was quite a bit more complicated. Mileage savings are based on the trade-in vehicle as well as the new vehicle. The total pool of new vehicles versus traded vehicles had an average mileage increase of 9.2 miles per gallon. Using the average mileage per year on the vehicles that were traded in of 10,822 miles and an average vehicle life of 13 years gives a savings per vehicle of $8,135 if gas is $2.50 per gallon. Applying this only to the 53% of incremental vehicles results in a benefit of $15,349 per incremental vehicle.A number of factors could reduce the actual savings, so the $15,349 should be taken as a maximum. For example, these vehicles would have been traded in over time, which might reduce the mileage benefit. However, the fact that only 15% of the traded vehicles were cars versus the normal trade-in rate of approximately 50% cars indicates there were significant mileage savings even in this case.As a brand manager analyzing this program, I would say it was a success that generated significant incremental vehicles that resulted in a long-term gasoline savings that may have fully offset the cost of the program. The additional benefits of job creation, which are not included in this analysis, make Cash for Clunkers a definite success.No need for NADA to lowball the numbers to make a case for more stimulus.Disclosures: None for this ArticleComplete Story » seekingalpha.com |