Auto news highlights – June 3, 2009

Chinese company to buy Hummer
GM plans to sell the Hummer to China’s Sichuan Tengzhong Heavy Industrial Machinery Co. Under Tengzhong, Hummer would continue to be run from America, with H3 and H3T production continuing in Louisiana take over Hummer’s dealership and will continue to work with GM to build the vehicles. [New York Times]

Cash for clunkers agreement
The Senate closes in on the  “cash for clunkers” bill, which is designed to provide up to $4,500 credit to car buyers who trade in a gas guzzler for a new car with better fuel economy. [Detroit News]

Opels coming to Canada
Magna International, the auto parts manufacturer who led an effort to buy GM’s European Opel/Vauxhall operations, plans to overhaul the company’s model lineup, according to Bloomberg News. AutoBeat Daily also said that the company plans to begin selling imported Opels in Canada by the end of this year and begin building electric vehicles in Canada within three years. GM’s bankruptcy agreement prevents Opels from being sold in the U.S. for now. [Bloomberg]

Auto sales “less awful”
According to Automotive News, car sales inched up in May, topping 900,000 for the first time this year. Ford’s sales were off by about 26 percent, compared with May 2008, which is its lowest decline since last July. Ford’s vice president of sales and marketing,  Ken Czubay, framed this as “less awful” than expected, according to Bloomberg News.

Execs face Senate over dealer closings
Chrysler president Jim Press and GM CEO Fritz Henderson faced a heated Senate Commerce Committee during a probe into measures to their efforts to reduce their dealer body today. [Detroit News]

Ticking down to GM bankruptcy, announcement expected Monday

As the clock ticks down to an expected GM bankruptcy filing on Monday, the pieces for a potentially smooth restructuring process are falling into place.

On Saturday, a majority of GM bondholders, holding a little more than 50 percent of GM’s debt, agreed to a plan to exchange their debt for an ownership stake in the company, according to the New York Times. The bondholders will initially get 10 percent, but will eventually be able to increase the stake to 25 percent. This is expected to streamline the bankruptcy process, with expectations that GM could emerge within about 60 to 90 days. (See: “GM counts down to ‘B Day’” and “Concerned about GM’s bankruptcy?”)

Meanwhile, across the Atlantic, an agreement was reached for GM to sell a majority stake of its European operations, including the German Opel and British Vauxhall brands, to a group led by the Canadian auto-parts manufacturer, Magna International. With this plan in place, Opel is expected to be placed under a trust, which will shield it from the U.S. auto bailout and, again, help make the restructuring process go more smoothly. According to Canada’s Globe and Mail, Magna will become Canada’s first major automaker since 1918 and has said that it wants to build Opel cars in Canada.

While many Americans aren’t familiar with Opel, its cars have begun to trickle into our market in recent years as GM has been using them to develop new Saturn models. The current Saturn Astra and Vue, for example, are rebadged versions of the Opel Astra and Antara, respectively. (These links go to the model overview pages with ratings, road tests, and more, available to online subscribers.)

How have they done? In our tests, we found the Astra agile to drive with good steering and a composed ride, but its acceleration is lackluster and fuel economy is so-so for its size. The Astra scored midpack in our hatchbacks ratings, but is not recommended because we don’t yet have reliability data on it.  
While the Opel-based Vue is a big improvement over the previous version, with a comfortable ride and quiet, well-finished cabin, we found its braking and fuel economy disappointing. The Vue is not recommended because of poor reliability.

Meanwhile, elsewhere on the restructuring front, a U.S. bankruptcy judge is expected to issue an opinion on Monday on the sale of Chrysler to Fiat. This would clear the way for the new Chrysler to emerge from bankruptcy soon. (Read: “As GM bankruptcy looms, new Chrysler set to emerge.”)

To get answers to the most common questions and concerns about Chrysler’s and GM’s bankruptcy, check out our Auto Crisis hub. And follow the latest happenings in our Cars blog. Definitely more to come.

—Rik Paul

Concerned about GM’s bankruptcy?

GM has announced that it will hold a press conference on Monday, June 1, in New York City. While the company has not specified what will be discussed, many industry analysts believe it will announce that it is filing for Chapter 11 bankruptcy. (The U.S. Bankruptcy Court in New York is handling Chrysler’s bankruptcy.) Even while using a similar streamlined approach as that being used with Chrysler, the federal government has reportedly said that GM would need at least 60 to 90 days to emerge from bankruptcy. (Read: "GM counts down to B Day.")

In the meantime, a lot of car buyers and owners are unclear about how this will affect them. To help answer these questions, we’ve created a special Auto Crisis hub that looks at the common consumer concerns we’re hearing, from warranty and service questions to what you can do if your local dealer closes its doors.

The latter concern is becoming ever more relevant to current GM owners since, according to Automotive News, GM has also said that on Monday it will begin notifying hundreds of dealerships (beyond the approximately 1,100 it has already notified) that the company will not extend their franchise agreements beyond October 2010. This is another step in GM’s plan to reduce its dealerships from about 6,000 to about 3,600.

The next few days promise landmark events in the auto industry, so follow the latest happenings both in our Cars blog and in our Auto Crisis hub.

We’re also interested in hearing what your main concerns are with Chrysler’s and GM’s restructuring efforts. Leave a comment below.

—Rik Paul

Chrysler bankruptcy affecting lemon-law payments

Some consumers who have lemon-law claims are being left on the side of the road during Chrysler’s bankruptcy.

As reported in the Los Angeles Times, some checks that Chrysler sent to consumers as reimbursement for lemon-law claims have bounced.

“There is no excuse for consumers getting bounced checks,” says Rosemary Shahan, founder of the Consumers for Auto Reliability and Safety, in Sacramento, CA.

Chrysler has said that it will back warranty claims on its cars while in bankruptcy. But Shahan says, "Lemon claims and warranties are one and the same. A warranty is worthless if all [consumers] get are unlimited repairs and no refunds.”

Sergei Lemberg, of Lemberg & Associates, LLC, Stamford, CT, is an attorney who represents eight people who had agreed to settle their claims and received lemon-law payment checks prior to the April 29, 2009 bankruptcy filing. So far, two found their checks bounced after the filing. “Hardly any other industry has lemon laws,” he said, making these “uncharted waters.”

He says that Chrysler’s initial response to his cases was that, because of the bankruptcy, existing settlement checks would not be mailed or honored by Chrysler’s bank, and all checks that have bounced would not be replaced or honored.

On the 13th of May, Lemberg sent a letter to the U.S. Trustee and on May 15, Lemberg said that Chrysler notified him that it would now pay pending settlements and honor pre-bankruptcy claims.

When we contacted Chrysler later that day, Michael Palese, a Chrysler spokesperson said, "All aspects of business relating to distributing checks were affected - payroll, suppliers, vehicle, and consumer claims - by the matter of bankruptcy closing accounts payable.” He added that “Funds were not granted to pay obligations until the bankruptcy court approved Chrysler to pay the obligations. All paper checks were impacted, but EFT (electronic fund transfers) were not affected.”

Chrysler is in the process of reissuing checks, he says, adding that Chrysler would reimburse consumer’s bank fees for bounced checks on a case-by-case basis. He adds that consumers should talk with their banks to see if they will waive the fee. If not, they should contact Chrysler Customer Care at 800-992-1997.

All payments that have already been sent will be honored, he said. However, any claims that have not had a check sent are now in limbo. "Lemon claims,” he said, “are currently stayed by the bankruptcy court."

When Shahan recently met with the government’s Auto Task Force, she says that the group was unaware of this issue. Hopefully, consumer protection will be given more prominence in Chrysler’s bankruptcy proceedings, and in GM’s should it also pursue a Chapter 11 filing.

We will continue to monitor this fast-moving story, reporting here in the Cars blog and also updating advice and news on the Auto Crisis hub.

—Jon Linkov and Rik Paul

Watch for these problems from a failing or closing dealership

Between the approximately 1,900 dealerships that Chrysler and GM have announced that they are disenfranchising and the many more that will likely fail because of dismal auto sales (more than 900 dealerships shut their doors in 2008), a lot of car buyers could encounter unexpected problems when buying a car.

That’s because when a dealership suddenly goes out of business, loose ends that hadn’t been wrapped up can simply be dropped in mid process, leaving the car buyer dangling.

Some car buyers, for instance, never received a factory rebate to which they were entitled. Or service or modifications that had been agreed to as part of the negotiations were never completed. Or a dealer didn’t pay off the loan on the trade-in as promised. This leaves the customer having to pay two car payments: one for the new car and one for the trade-in that he or she no longer owns.

To avoid these kinds of problems, we recommend you take these precautions:

• Use a credit card to make a down payment, order parts or accessories, or pay for service. This way, you can challenge the payment with your card issuer if a failing dealer doesn't come through.
• Never let a dealer roll over your existing auto loan into a new car loan. It’s a bad financial move and can set you up for possible problems. We recommend that you pay off your existing loan before you trade in your car.
• If a dealer has agreed to fix something or provide a service or accessory for your new car, make sure it's done before you take the car home.
• If you do get caught short, contact the automaker's customer-service department to see what recourse you have.

We will continue to monitor this fast-moving story, reporting here in the Cars blog and also updating advice and news on the Auto Crisis hub.

—Rik Paul

Best new car values: It’s more than dollars and cents

In last year’s April issue we introduced our owner-cost estimates, which tell you approximately how much a car will cost you to own during the first five years. The data, which took several years to develop, is based on: depreciation, fuel cost, insurance, interest on financing, maintenance and repairs, and sales tax.

This allows us to predict which models are the least expensive to own (subscribers to ConsumerReports.org can see owner-cost estimates based on three, five, and eight years of ownership). 

This is good information, but it is just a piece of the overall puzzle. After all, some of the cars that are the least expensive to own aren’t ones that we would recommend you buy. For instance, the five least expensive small cars in last year’s issue were the Toyota Yaris (manual), Chevrolet Aveo (manual), Honda Fit, Toyota Yaris (auto), and Chevrolet Aveo (auto). Of those, only the Honda Fit meets our requirements for being recommended. The Aveo, for instance, is one of the lowest rated cars in its class.

So, in this year’s Consumer Reports annual auto issue, we took the next logical step. We wanted to show which models are the best values; in other words, which give you the most bang for your buck. And for that, owner costs are only part of the picture. In fact, we found that some of the models that are least expensive to own are not good values.

To determine the best values, we looked at three factors:

• Our five-year owner cost estimates
• The overall road-test scores from our comprehensive test program
• Our predicted-reliability ratings.

Our road-test scores, which are based on more than 50 individual tests and evaluations, reflect whether a car is works well in daily life. And our reliability ratings are based on the problems reported to us on more than 1.4 million vehicles in our latest Annual Auto Survey.

Here’s the formula that we applied to more than 300 vehicles. First, we divided each car’s owner-cost estimate by its overall road-test score to get, what we call, its “bucks per bang” cost; or the cost of each point in its test score. Then, we filtered out any models that don’t have better than an average reliability rating.

Using this formula, the vehicles that rise to the top are good all-around packages that did well in our road tests, have relatively low owner costs, and have very good or excellent reliability records. In other words, they give you the most for your money.

Here are top models in several popular categories:

Best Overall: The Prius Touring came in with the best bucks-per-bang cost thanks to one of the lower owner-cost estimates in the list—$26,250 over five years—and a relatively high road-test score of 80 points out of 100. (The base Prius earned 68 points.) The Prius Touring doesn't have the least expensive sticker price in its class, but its excellent fuel economy of 42 mpg overall and solid resale value help give it a low owner cost that nearly matches the less expensive Honda Civic EX. With a higher overall test score than the Civic, the Prius stands out as the Best Value.

Best Value Small Cars: Honda Civic EX, Honda Fit (base), Hyundai Elantra SE, Toyota Corolla LE, and the Honda Civic Hybrid

Best Value Family Cars: Toyota Prius Touring, Toyota Camry Hybrid, Toyota Prius (base), Hyundai Sonata (4-cyl.), and the Honda Accord (4-cyl.)

Best Value Small SUVs: Toyota RAV4 (4-cyl.), Toyota RAV4 (V6), Honda CR-V, Mitsubishi Outlander (4-cyl.), and the Nissan Rogue

Best Value Midsized SUVs: Hyundai Santa Fe, Toyota Highlander, Toyota Highlander Hybrid, Nissan Murano, and the Honda Pilot

See the complete list with costs in “Most bang for the buck.”

Not all values are valuable

We have seen Web sites present their own take on value, using different data and criteria. It is clear, that not all values are created equal.

For example, in a recent value-focused press release, Edmunds cites “industry leaders” with the “lowest five-year owner costs” that include several models that frankly are not good cars and do not meet our criteria for being Recommended. For instance, the Chevrolet Aveo. Like Edmunds, we find the Aveo5 to have much better than average owner costs. But it scored just 31 points out of 100 in our exhaustive testing. (See our Aveo sedan video road test.) We found the engine to be rough, the handling clumsy, and the ride jumpy. Further, it returns worse fuel economy than several, more capable cars. And, its predicted reliability is also below average. In total, we don’t think the Aveo5 is a good car, and therefore don’t recommend it as a good value, let alone a Best Value. (Learn how Consumer Reports tests cars.)

Edmunds also cites the Jeep Patriot in their release, a vehicle we likewise consider to have better than average owner costs. And again, cannot Recommend it because of its middling 55 out of 100 point score. The featured Chevrolet HHR also scores a 55, and it too has less than stellar fuel economy for its class and only average reliability. (Read the take from the LA Times.)

There are many ways to rank vehicles, including by owner costs. We believe our comprehensive approach with Best Values, which takes into account the merit of the car, provides an enlightening view of today’s standout models.

You can create your own list filtered and sorted by the factors that matter most to you by using the Consumer Reports New Car Selector. When you look at someone else’s lists, make sure you understand the criteria. And remember, we present our unbiased findings without fear or favor, as Consumer Reports does not accept advertising and works solely for the consumer.

—Jeff Bartlett and Rik Paul

CES 2009: HD Radio now broadcasting real-time traffic

Real-time traffic information, which is quickly becoming a point-of-entry feature for portable GPS navigators, is normally received through a cell-phone network, FM signal, or satellite radio service. Now, Clear Channel Radio is sending the data over the signals of HD Radio stations.

Ibiquity Digital, the company behind HD Radio, says that the broader bandwidth of HD Radio allows it to transmit data significantly faster and pack more in than a normal RDS feed. Plus, there’s no subscription fee for the service.

One of the first portable GPS navigators to take advantage of this is Dual Electronics’ NavAtlas XNAV43HD, which incorporates a HD Radio receiver. This allows the unit to receive free lifetime traffic info. Plus, users can also listen to HD Radio broadcasts. It also provides the iTunes tagging feature that lets you tag songs you hear on the radio so you can download them from iTunes later.

The unit includes a 4.3-inch touch-screen display and provides spoken street names through its text-to-speed function. The XNAV43HD will retail for $280 when it goes on sale in late March or early April.

In addition to traffic info, iBiquity says that nav devices with HR Radio receivers will also be able to receive services such as gas prices, movie listings, sports scores, stock quotes, school closings, and emergency alerts.

For more on info on real-time traffic info, see our GPS guide.
For more on HD Radio, see our Mobile Electronics guide.

--Rik Paul

See all our automotive-related coverage from the Consumer Electronics Show (CES), as well as CES coverage from the Electronics team. Learn more about mobile electronics in our complete guide.

CES 2009: Chrysler to offer OnStar-type telematics system

While meeting with Hughes Telematics, I got a demonstration of a new safety/security system that the company developed. It will debut in the 2010 Dodge Journey when it goes on sale this July. Called Uconnect Guardian, the system provides emergency aid services that are similar to GM’s OnStar system.

If a driver needs roadside assistance, for example, he or she presses a button located on the underside of the rearview mirror. A person at a call center responds and confirms the car’s location, based on GPS coordinates. The call center will then arrange to send the appropriate aid to the vehicle with an estimation of how long it will take.

If an air bag deploys, the vehicle automatically places a call to the center. Someone at the center will first attempt to call the driver through the system. If there is no answer, he will contact a local 911 operator in the car’s area to deploy an ambulance to the scene. The center will be able to detect how many air bags deployed, thereby being able to tell if there was a front-seat passenger.

Other features could also be offered, such as the ability to remotely unlock the doors (helpful if the keys are locked inside), sound the horn, or flash the lights (helpful if you’ve forgotten where you’ve parked in a large parking lot).

According to Hughes Telematics, this initial system has the potential to evolve into a much richer system in following years, perhaps with features similar to Ford’s latest SYNC system.

--Rik Paul

See all our automotive-related coverage from the Consumer Electronics Show (CES), as well as CES coverage from the Electronics team. Learn more about mobile electronics in our complete guide.

CES 2009: Coming of the eBikes

One of the highlights for me at this show was the chance to take a quick spin on an electric-powered bicycle called the Ultra Motor A2B. This new eBike, which was designed in Germany for the U.S. urban market, was among several models being shown at the ELV Motors booth. The A2B, which costs about $2,700, is a seven-speed bike with full front and rear suspension and disc brakes. It houses a 36-volt Sanyo lithium-ion battery in its rectangular downtube and has a 500-watt electric motor in its rear wheel assembly. The bike weighs 72 pounds. You can pedal the A2B normally or, by flipping a switch, ride it like an electric scooter.

Electric motors inherently provide a lot of torque and, when you twist the throttle on the right handgrip, the A2B responds well. The bike has a top speed of 20 mph and can get there pretty quickly. You can pedal while the motor is running and, in my short stint, I was able to make seamless transitions between using the pedals and motor. The compact throttle assembly didn’t seem like it would get in the way during normal biking, and the motor shuts off automatically if the hand brakes are used.

The company estimates that a 160-pound person on flat terrain could go about 20 miles on electric power alone. A second battery can be added to the rear, which extends the range about another 20 miles. ELV Motors estimates that this would run you only about 5 to 10 cents in electricity.

It takes about 3.5 hours to recharge, and the company estimates that the battery can be recharged about 700 to 900 cycles before needing replacement. A new battery is expected to cost about $350 to $400.

ELV Motors, which was exhibiting in the show’s Greener Gadgets area, sells a range of electric bicycles and scooters. They can be ordered online and are shipped fully assembled (except for attaching the front wheel on some models). All parts are also available through their web site.

Meanwhile, Schwinn was making big news at the show with its new Tailwind eBike, which is priced at $3,200 and will be available at U.S. dealers later this month. Using an advanced Toshiba lithium-ion battery, which is carried on the rear rack, this bike boasts a speedy recharge time of about a half hour, which the company says is the fastest recharge time for any electric bike. The battery can be quickly detached for charging and is said to provide a minimum of 2,000 cycles (a spokesman says that it’s been tested to 6,000 cycles). The bike weighs 50 pounds.

The Tailwind uses a 250-watt motor, located in the front wheel hub and an eight-gear rear hub, which can be shifted while standing. The electric motor is engaged by pedaling the bike, and the power cuts out when coasting and when the brakes are applied. There are three power settings, which affect top speed and range. At full power, the Tailwind can go up to about 18 to 19 mph for an average of about 25 to 30 miles, depending on the rider and terrain. On the mid-power setting, it can go about 15 mph for about 10 to 15 miles. And on the low setting, it can go up to 12 mph, for 40 to 50 miles. Including the Tailwind, Schwinn is offering seven eBike models this year.

According to the Electric Bikes Worldwide Report, sales of eBikes are expected to hit 220,000 units in 2009, an increase of 83 percent over 2007 sales. And because of their limited speed, they typically don’t require a license or registration.

--Rik Paul

See all our automotive-related coverage from the Consumer Electronics Show (CES), as well as CES coverage from the Electronics team. Learn more about mobile electronics in our complete guide.

CES 2009: Turn your car into a rolling hotspot

Last summer, Chrysler announced its uconnect web service for Chrysler, Dodge, and Jeep vehicles, which provides broadband access inside the vehicle. Well, you don’t have to buy a Chrysler to get this service. Autonet Mobile, the company behind Chrysler’s system, also sells it directly to consumers for installation in any vehicle.

The system sets up an in-car Wi-Fi network similar to those in homes and businesses, allowing users to connect to the Internet through laptops, smart phones, PDAs, etc. The car, itself, can’t connect to the Web directly, as happens in some telematics systems.

A router is professionally installed in a vehicle’s trunk or cargo area, which can connect to the Internet over various cellular data networks. When connected to the company’s 3G network, the router provides download speeds averaging 400 to 800 kbps and upload speeds ranging from 128 to 300 kbps. When not on the 3G network, the average speed drops to an average of 50 to 100 kbps, download, and 120 to 200 kbps, upload. Autonet Mobile’s 3G network is available in most major metro areas, as shown on the company's Web site.

The router also provides a range of about 100 to 150 feet, so you can connect when outside the car, as well.

The hardware retails for about $400 and the service starts at $29 per month. To get it, you can sign up through the company’s web site and it will direct you to the nearest dealer for installation. Alternately, the system is being sold through various auto dealerships, car audio shops, and retailers.

--Rik Paul