The Consumer Reports Cars team spent the past week at the annual auto show in New York City. Here are the videos they produced with Consumer Reports Television.
Click here to see our complete coverage of the New York Auto Show, and, as always, keep up with the Consumer Reports Cars Blog for all the latest automotive news.
As we search for alternative fuels for our cars and trucks, the use of corn-based ethanol, which can reduce emissions from gas-burning engines, continues to grow in the U.S. In 2008, consumption of ethanol exceeded 9 billion gallons, but not without related costs, a new Congressional Budget Office study found.
The CBO paper, released today, measures relationship between ethanol, food prices, and emissions.
The CBO estimates that one-quarter of all corn grown domestically is now used to make ethanol, and the CBO found that production is pushing up food prices.
Beyond the one-year period that ended in April 2008, food prices are likely to be higher than they would have been if the United States did not use ethanol as a motor fuel. However, ethanol’s effect on future food price inflation is uncertain because the forces determining that impact move in opposite directions.
The after-effects of those food price increases end up costing the federal government hundreds of millions of dollars in food assistance programs in the coming year, the CBO estimates.
The CBO did find a reduction in vehicle emissions from the increased ethanol use. CBO Director Douglas Elmendorf wrote on the agency's blog:
Consumer Reports has tackled the ethanol debate before. In October 2006, CR testing determined that E85--the blend of 85 percent ethanol and 15 percent gasoline--will cost consumers more money than gasoline, raising concerns about whether the government’s support of FFVs is really helping the U.S. achieve energy independence.
For the latest news on the search for alternative fuels and low-emission vehicles, check out CR's Cars Blog.
Even though gas prices are down significantly from recent highs, the cost of owning and operating your car is probably about the same as it was last year, according to AAA.
The cost of driving a new sedan 15,000 miles was an estimated $8,095, the AAA "Your Driving Costs" study found for 2009, only $26 less than last year's estimated cost of $8,121. That works out to 54 cents per mile of driving.
If you own an SUV, AAA says you're probably seeing a bigger benefit from low gas prices because the bigger vehicles use more gas. The estimated cost of ownership for an SUV dipped 1.3 cents per mile to 68.4 cents, or $10,259, AAA found.
AAA found that minivan drivers probably saw their costs jump this year "due to cost increases in every area except fuel and included the largest rise in depreciation of any vehicle class."
Minivan drivers are paying about 12 cents per mile more this year than last year, AAA estimates.
"While motorists are experiencing relief at the pump, those savings have been countered by revised Environmental Protection Agency fuel economy estimates and increases in vehicle ownership costs such as insurance premiums, depreciation, finance charges and other fees and taxes," AAA Automotive Vice President Marshall L. Doney said in a statement.
In our annual Auto Issue, Consumer Reports added a new category in 2009 to measure which models offer the most bang for your buck.
The Toyota Prius is one of the best values you can buy, CR found, followed by the Mini Cooper, Volkswagen Rabbit, Honda Civic EX, and Honda Fit. (Click here for our ratings based on overall value.)
Continue reading "AAA study finds cost of driving holds steady" »
As President Barack Obama announced today, his administration believes that General Motors can restructure and be successful, but the president said Chrysler needs a partner to survive.
If you're wondering what, in the White House's opinion, separates the two companies' pursuits of success, there are several answers.
Chrysler is a smaller company, while GM has "a much more substantial collection of assets," a senior administration official told reporters on a conference call this weekend.
Here's one measure the government's auto task force used to determine the value of those assets that Mike Allen of the Politico called the "Consumer Reports Factor."
"If you look at things like Consumer Reports' ranking of cars, you'll see very great differences between those two companies," the White House official said. "Chrysler has zero cars, no cars that are recommended by Consumer Reports."
That administration official was correct, no Chrysler, Dodge, or Jeep models are recommended by Consumer Reports.
To be Consumer Reports recommended, a vehicle must have performed well in CR's tests, have average or better reliability, and, if crash-tested, provide good overall safety. This safety rating is a composite of accident avoidance from our testing and crash protection, based on insurance-industry and government crash tests. (Watch our videos about how CR tests cars.)
But CR's car experts did find some bright spots for Chrysler. In our Report Card for Detroit, Chrysler got this assessment:
That might have begun. Our initial impressions of the redesigned 2009 Dodge Ram pickup we're testing are mostly positive, and the ride is markedly improved. Newer Chrysler models, such as the Dodge Journey and Ram, have higher-quality interiors.
On the other hand, several recent GM models have performed well in Consumer Reports testing and have average or better predicted reliability.
The Chevrolet Avalanche was a Consumer Reports Top Pick in the pickup truck category, and other models fare well in their classes.
However, just 17 percent of the GM models tested meet the criteria to be recommended.
By contrast, 70 percent of models from Ford, Detroit's least endangered car company, are recommended by Consumer Reports.
The Report Card's look at GM's future:
The company is developing more efficient gasoline engines, using direct injection and turbocharging to help achieve a better balance of power and fuel economy. Its more fuel-efficient two-mode hybrid technology is expected to be available on more models. And it's investing heavily in electric powertrains, such as that in the forthcoming Chevrolet Volt, and in fuel-cell technology.
GM's next generation of small cars, including the Chevrolet Cruze, looks promising. And the company is active in developing interactive traffic-safety systems, wireless service checks, and other advanced applications.
If you're looking for the best makes from domestic companies, our 2009 list of American top picks is here.
Visit the Consumer Reports Cars page for all of our testing results, recommendations, and buying advice.
President Barack Obama broke the bad news to the General Motors and Chrysler, officially announcing that neither of the struggling companies will be given the money they need to survive without the government stepping in.
Plans submitted to the Obama administration by the two auto giants did not meet the White House's expectations for restructuring, the president said today, and neither Chrysler nor GM warrants "the substantial new investments that these companies are requesting."
However, funds will be provided to allow time for a more aggressive plan to be developed. (See the good and the bad Consumer Reports found from Chrysler and GM.)
GM did get a slightly more upbeat appraisal from the president, sending the struggling automakers to go back to the drawing board.
"While GM has made a good faith effort to restructure over the past several months, the plan they have put forward is, in its current form, not strong enough," Obama said. "However, after broad consultations with a range of industry experts and financial advisers, I’m confident that GM can rise again, provided that it undergoes a fundamental restructuring."
The government will give GM enough cash to operate for another 60 days, but there are strings attached. Rick Wagoner, the company's CEO and chairman, will step down. (Read more about GM’s executives on CR’s Cars Blog.)
GM will have to work with the White House's autos task force to come up with a plan to meet four points:
Chrysler got a less hopeful review from the White House.
"It is with deep reluctance but also a clear-eyed recognition of the facts that we have determined, after a careful review, that Chrysler needs a partner to remain viable," Obama said. "Recently, Chrysler reached out and found what could be a potential partner – the international car company Fiat, where the current management team has executed an impressive turnaround."
The president said that Chrysler has 30 days to make a Fiat deal happen. The government will hand out enough money for Chrysler to keep running in that time. If the two can make a partnership happen, the government will "consider lending up to $6 billion to help their plan succeed."
Obama left open the option that one or both of the companies may have to declare bankruptcy. He did try to make that prospect less threatening for employees, consumers, and shareholders.
"I know that when people even hear the word 'bankruptcy' it can be a bit unsettling, so let me explain what I mean," Obama said. "What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold. What I am not talking about is a process where a company is broken up, sold off, and no longer exists. And what I am not talking about is having a company stuck in court for years, unable to get out.”
The president also said that the government will back GM and Chrysler warranties. That may or may not alleviate the fears of car buyers, 78 percent of whom said they were unlikely to consider buying a new car from an automaker in bankruptcy, according to a recent Consumer Reports survey.
Wagoner, a G.M. employee for 31 years, presiding over losses totaling $82 billion during his eight-year tenure as C.E.O.
The President will announce tomorrow whether General Motors will receive $16.6 billion in requested government aid. The company is currently operating on a $13.4 billion infusion from the federal government.
On CBS' Face the Nation Obama this morning said that automakers faced significant challenges.
"They’re not quite there yet," he said, adding: "That’s going to mean a set of sacrifices from all parties involved, management, labor, shareholders, creditors, suppliers, dealers. Everybody is going to have to come to the table and say it’s important for us to take serious restructuring steps now in order to preserve a brighter future down the road."
Chrysler, which has also requested government aid, is expected to keep their C.E.O., Robert Nardelli. It is not yet known who will take the helm at General Motors.
Continue reading "Obama goes online to talk about the economy" »
As the CR Cars Blog noted last week, car manufacturers aren't the only part of the auto industry left reeling in these difficult economic times. The suppliers that provide everything from whole interiors to transmission and axle assemblies to Detroit are on front lines of the carpocalypse.
Today, the Treasury Department announced a $5 billion plan aimed at rescuing those suppliers.
"The Supplier Support Program will help stabilize a critical component of the American auto industry during the difficult period of restructuring the lies ahead," said Treasury Secretary Timothy Geithner in a statement. "The program will provide supply companies with much needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need."
The basics of the plan, according to the Treasury Department:
For more details, check out the Treasury's Fact Sheet (PDF).
A proposal that aims to take older, less fuel efficient cars off the streets by encouraging Americans to trade up to new models has been revived in Congress.
Rep. Betty Sutton of Ohio introduced the Consumer Assistance to Recycle and Save (or CARS) Act which would give "consumer purchase incentives for turning in vehicles that are 8 years or older to buy more fuel-efficient vehicles or to obtain a transit voucher," according to a news release from Sutton's office.
"The CARS Act will achieve many goals: consumers will finally get a break to purchase more fuel-efficient vehicles; we will all benefit from a reduction of CO2; and the auto industry will get a jumpstart to spur sales," Rep Sutton said in the release.
The proposal offers $3,000 to $5,000 incentives to put toward new cars or transit payments.
Sutton's proposal was endorsed Tuesday by Detroit's Big Three automakers and the United Auto Workers, reports the Detroit News.
A version of "cash for clunkers," as the plan is often referred to, was proposed by Sens. Dianne Feinstein, Susan Collins, and Charles Schumer in February, but never made it into the massive economic stimulus bill after the UAW raised concerns about subsidizing cars made overseas.
The Sutton measure offers higher payments for vehicles produced in the U.S. than for those made in Canada and Mexico. Overseas makes wouldn’t qualify, Bloomberg reports.
The House Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection held a hearing this week to examine the challenges facing consumers in the used car market.
Chairman Bobby Rush compared the problems plaguing the used car market to those that imperiled the housing market.
"Evidence suggests that fraudulent practices with regard to both the condition and financing of used cars are on the rise," Rush said. "When it comes to the condition of vehicles, consumers are too often unaware of previous damage inflicted on the vehicle.”
Last year a lawsuit forced the Department of Justice to develop a National Motor Vehicle Title Information System (NMVTIS) to provide consumers with instant access to the salvage history of their potential vehicle. Only 13 states are taking full advantage of the system, while 14, including California, provide data to the federal government but bar their citizens from using it as a resource.
The Subcommittee questioned the effectiveness of the Federal Trade Commission's rulemaking process. The FTC is responsible for the Used Motor Vehicle Trade Regulation Rule, otherwise known as the Used Car Rule, which requires to dealers to disclose on a sticker basic information including whether or not they provide a warranty.
Rush was particularly interested in the effects of the digital divide, and whether low-income consumers would be able to access and benefit from the database. As a remedy, Rush suggested that the FTC include a provision in the Used Car Rule requiring dealers make vehicle history reports available at the time of sale.
Rush also probed the relationship between dealers and creditors, which can often burden consumers with higher prices and unfavorable terms. "Too often the dealership and the creditor work together to needlessly saddle customers with high interest loans or exorbitant fees," he said. "Such discretionary practices known as “loan packing” and “dealer markups” have a disparate impact on people of color, particularly African American and Latino consumers."
The industry defended the practices as beneficial to "credit-impaired" consumers.
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