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June 11, 2009
U.S. Takes On the Insular G.M. Culture
By MICHELINE MAYNARD

DETROIT — Fiat will set a new direction at Chrysler, which finished its tour through bankruptcy court Wednesday, completing its deal to join forces with the Italian automaker.

At Ford, a chief executive brought in from the aircraft industry is helping to shake up the company.

But it will be up to the federal government, which will own a majority of General Motors when it emerges from bankruptcy, to tackle what is perhaps the most difficult challenge in Detroit: transforming G.M.’s insular culture — at times as bureaucratic as the government’s — to make the company more competitive.

If the effort fails, the Treasury may never recoup the $50 billion it has provided G.M.

“Addressing cultural issues is just as fundamental to our assignment as addressing the balance sheet or financing,” said Steven Rattner, the lead adviser to the White House on the automobile industry.

In just one example, whenever a top G.M. executive was called to appear before lawmakers in Washington, staff members would prepare a briefing binder as thick as a Manhattan phonebook and hold multiple meetings to strategize over five minutes of testimony (Fritz Henderson, the new chief executive, has told employees to stop doing that).

In a Senate hearing Wednesday, Ron Bloom, another adviser on the auto task force, also talked about the need for G.M. to break longstanding habits that have made the company, with its bloated structure, lose a step to more nimble competitors.

“General Motors has been kicking problems down the road for a long time,” Mr. Bloom said.

Mr. Rattner and other government of

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cars

In Overhaul, G.M. May Look to Its Far-Flung Arms
By HEATHER TIMMONS

GURGAON, India — What will New G.M. look like?

Part of the answer may be found at the India headquarters of General Motors, a new sandstone and tinted-glass building surrounded by dirt roads and corrugated tin shacks. On the walls are reminders of the company’s past, including photos of the 1953 Corvette. But sports cars are the last thing that G.M. India is planning.

This week in Delhi, G.M. India will unveil its first clean-burning liquefied natural gas car. Later this year, it will introduce a minicar built for the Indian market, with the help of 1,500 frugal-minded engineers.

As G.M. painfully reorganizes in the United States and Canada, and spins off its European business, the company’s operations in emerging markets like China, India and Brazil have survived virtually unscathed, so far.

Unlike G.M.’s United States business, these operations have been growing. Sales increased 10 percent last year in Brazil, 9 percent in India and 6 percent in China. Recent numbers in some areas are even better — G.M.’s sales in the Asia Pacific region were up 44 percent in May compared with the year before.

In these markets, G.M. has often acted like an entirely different company from the one that is collapsing in Detroit. In China, G.M. has spent years emphasizing fuel economy and affordability. In Brazil, it created flexible-fuel engines that run on ethanol or gasoline, and compact pickup trucks. In India, the new tiny car may be priced to compete with Tata’s $2,500 Nano.

Cheap labor in these markets helps to bolster profit margins, while millions of people who do not yet own a car make sales growth easy.

The so-called New G.M. may rely on these emerging markets for a chunk of its business (emerging markets made up roughly 40 percent of G.M.’s sales in 2008 when Europe is not counted in the total). And these international businesses, which are barred from receiving funds from the government investment, will need to be self-sustaining until the comp

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cars

GM to sell Saturn brand to Penske chain

By Dan Strumpf and Tom Krisher, Associated Press | June 6, 2009

NEW YORK - General Motors Corp. has a tentative deal to sell its Saturn brand to auto racing magnate Roger Penske's dealership group, both companies said yesterday.

Penske has signed a memorandum of understanding that would give his dealership chain, Penske Automotive Group, Saturn's 350 dealerships, the companies said. Penske said that he expects to offer all the dealers new franchise agreements and will retain all 13,000 Saturn employees for now. "I would expect that the model that we're putting together, the distribution model, will be profitable day one," Penske said in an interview with the Associated Press. "We'll have less costs. We'll not be in the manufacturing side."

Neither Penske nor GM would say how much Penske is paying for the brand. Penske said he expects the deal to close in the third quarter. Initially, GM will continue to produce on a contract basis the Saturn Aura sedan as well as the Vue and Outlook crossover vehicles. But Penske said he is in talks with global car manufacturers about building Saturn cars in the future. The sale marks a new chapter for Saturn, which GM had been trying to sell since earlier this year as part of its turnaround plan.

GM chairman Roger Smith first unveiled the Saturn brand in November 1983, describing it as a revolutionary new way to build and sell small cars in America. But the project was slow to develop and the brand did not officially launch until 1990. It featured the iconic tagline "a different kind of car company."

GM's hope was that Saturn would attract younger buyers with smaller, hipper cars. It built a new plant in Spring Hill, Tenn., devoted to Saturn production

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cars

G.M.’s New Owners, U.S. and Labor, Adjust to Roles
By STEVEN GREENHOUSE

For decades, the United Automobile Workers had a simple strategy for getting what it wanted from the carmakers — it would go on strike. The tactic proved so successful that the mere threat of a walkout often won better wages, benefits and job security.

Now, with General Motors and Chrysler in bankruptcy and the union a major shareholder in both through its retiree health fund, life has become a lot more complicated for the U.A.W.

The union, which was born of labor strife, has pledged not to go on strike against the two companies before 2015, as part of the rescue plan hammered out by the Obama administration. Whether this brokered peace helps end the antagonistic relationship between union and management could determine the future not only of G.M. and Chrysler, but also of the U.A.W. itself.

With the union’s health fund set to own 17.5 percent of G.M.’s shares and 55 percent of Chrysler’s, the U.A.W. will both represent workers and be an owner, a novel dual role.

“We don’t run corporations. We represent people,” said Brian Fredline, president of the local representing 3,000 workers at a G.M. plant in Lansing, Mich.

Some industry experts predict that the union, far more than before, will help management increase profitability — with the goal of pushing up the automakers’ stock prices. A higher share price could mean billions more for the retirees’ health plan, helping to ensure ample funding for decades to come.

But other experts say the union will stick to its traditional truculence, focusing on preserving jobs rather than maximizing profits and share price. As evidence, these experts point to the union’s recent, successful campaign, directed at G.M. and the Obama administration, to prevent the automaker from importing small cars from China, a move that would have increased G.M.’s profits while very likely reducing the number of domestic automobile jobs.

“I don’t think the union is going to act that different,” said Harry C. Katz, dea

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cars

After Many Stumbles, the Fall of a Giant
By MICHELINE MAYNARD

It is a company that helped lift hundreds of thousands of American workers into the middle class. It transformed Detroit into the Silicon Valley of its day, a symbol of America’s talent for innovation. It built celebrated cars, like Cadillacs, that became synonymous with luxury.

And now it is filing for bankruptcy, something that would have been unfathomable even a few years ago, much less decades ago, when it was a dominant force in the American economy.

Rarely has a company fallen so far and so fast as General Motors. And while its bankruptcy appeared increasingly likely in recent weeks, the arrival of the moment is still a staggering blow, particularly for anyone with ties to the company.

“I never ever could have believed that one day this thing would go that way,” said Jim Wangers, a retired advertising executive who was part of the team that developed the Pontiac GTO, and the author of “Glory Days,” about Pontiac’s heyday in the muscle-car era of the 1960s. “We were so successful,” he added.

Founded in 1908, G.M. ruled the car industry for more than half a century, with a broad range of vehicles, reflecting the company’s promise to offer “a car for every purse and purpose.”

The expression “What’s good for General Motors is good for the country” entered the lexicon, even though it was a slight misquotation of Charles E. Wilson, G.M.’s president in the early 1950s.

But then G.M. began a long and slow process of undermining itself. Its strengths, like the rigid structure that provided discipline early on, became weaknesses, and it lost its feel for reading the American car market it helped create, as Japanese automakers lured away even its most loyal buyers.

Only eight months ago, Rick Wagoner, then its chief executive, stood before hundreds of G.M. employees to celebrate the company’s 100th anniversary. “We’re a company that’s ready to lead for 100 years to come,” Mr. Wagoner said.

Instead of leading, G.M. will instead be following other fa

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cars

Obama makes his big move on GM
Automaker to seek protection today; President to lay out turnaround scenario

By David E. Sanger and Jeff Zeleny, New York Times | June 1, 2009

WASHINGTON - President Obama will send General Motors into bankruptcy protection today, making a risky economic and political bet that by nationalizing for a period of years the onetime icon of American capitalism, he can save at least a diminished automaker that is competitive.

The bankruptcy case, to be filed in New York, marks a significant turning point for an industry that was once at the heart of the US economy. It is the culmination of a remarkable four months of confrontation between Washington and Detroit that is expected to result in a dramatic downsizing of the company. It also places the government in uncharted territory, as a business owner.

Reflecting the government's extraordinary intervention in industry, aides say, Obama plans to tell the nation that he believes GM can be brought back from the brink of insolvency, even if the company looks almost nothing like the titan of old.

He will spell out a strategy in which the shrunken GM can make money even if new car sales remain at a sluggish 10 million a year in the United States and even if GM, once the giant of the industry, holds only a 13 percent share of sales.

But to get there, American taxpayers will invest $30 billion more in the company, atop the $20 billion already spent to keep it solvent.

The company will also have to shed 21,000 union workers and close 12 to 20 factories, steps that most analysts thought could never be pushed through by a Democratic president allied with organized labor.

Forty percent of the company's 6,000 dealers will close; the workers' union will be forced to finance half of its $20 billion healthcare fund with stock of uncertain value in the restructured GM; and bondholders, including many retirees, will be forced to take stock worth 10 cents for every dollar they lent the company.

The company's last steps toward bankruptcy took place

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economics cars

For an icon of America, a sudden reversal

By Micheline Maynard, New York Times | June 1, 2009

It is a company that helped lift hundreds of thousands of American workers into the middle class.

It transformed Detroit into a symbol of the industrial prowess of the United States. It built iconic cars, like Cadillacs, that became synonymous with luxury.

And now it is filing for bankruptcy protection, something that would have been unfathomable even a few months ago, much less decades ago, when it was a dominant force in the US economy.

Rarely has a company fallen so far and so fast as General Motors.

"I never ever could have believed that one day this thing would go that way," said Jim Wangers, a retired GM executive who was part of the team that developed the Pontiac GTO and the author of "Glory Days," about Pontiac's heyday in the muscle-car era of the 1960s. "We were so successful."

Founded in 1908, GM ruled the car industry for more than half a century, promising "a car for every purse and purpose."

The expression "What's good for General Motors is good for the country" entered the lexicon, even though it was a slight misquote of Charles E. Wilson, GM's president in the early 1950s.

But then GM began a long and slow process of undermining itself. Its strengths, like the rigid structure that provided discipline early on, became weaknesses, and it lost its ability for reading the market it helped create, as Japanese automakers lured away even its most loyal buyers.

Only eight months ago, Rick Wagoner, then its chief executive, stood before employees to celebrate the company's 100th anniversary. "We're a company that's ready to lead for 100 years to come," Wagoner said.

Instead of leading, GM will be following other failed companies on a well-worn path into bankruptcy court.

GM factories sprang up all around the country, from Massachusetts to California, from Wisconsin to Louisiana. They churned out family cars, pickup trucks, and memorable muscle cars that were rolling displays of American DNA.

A GM p

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economics cars

General Motors files for bankruptcy protection

By Dan Strumpf and Kimberly S. Johnson, AP Auto Writers | June 1, 2009

NEW YORK --General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

"The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many," GM Chairman Kent Kresa said in a written statement. "Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world."

As it reorganizes, the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

The Detroit automaker said warranty coverage, service and customer support will continue uninterrupted, and employees and essential suppliers will continue to be paid. GMAC Financial Services said in a statement that it will continues to provide automotive financing to GM and Chrysler dealers and customers.

GM will follow a similar course taken by smaller rival Chrysler LLC, which filed for Chapter 11 protection in April. A judge gave Chrysler approval to sell most of its assets to Italy's Fiat, moving the U.S. automaker closer to a quick exit from court protection, possibly this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receivin

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cars economics

Magna Said to Reach Deal for G.M.’s European Unit
By NELSON D. SCHWARTZ and CARTER DOUGHERTY

FRANKFURT — Negotiators from General Motors, Magna International and the German government reached a tentative agreement on Friday that would see Magna take a major stake in G.M.’s European operations, a person briefed on the talks said Friday.

Following a marathon meeting on Wednesday night and Thursday morning, officials reconvened in Berlin on Friday and hashed out a deal that included bridge financing of 1.5 billion euros or $2.1 billion that would sustain Opel, the German operations of G.M., through a bankruptcy of the parent company in the United States.

The preliminary agreement came after Fiat boycotted the meeting, saying the financial burden being demanded by the German government of the Italian automaker was too great.

Magna’s original offer for G.M.’s European operations, which also include the British brand Vauxhall, would leave Magna with 20 percent of Opel and Sberbank, a state-controlled Russian bank with 35 percent, while parent G.M. would retain 35 percent and 10 percent would go to Opel employees. It also foresees a cooperation with the Russian automaker Gaz.

A meeting is scheduled later Friday in which German officials, including Chancellor Angela Merkel, would formally bless the deal, which must still be formalized in a memorandum of understanding, the person briefed on the talks said, who requested anonymity because the deal was not yet complete.

The chief executive of Fiat, Sergio Marchionne, shrugged off the reports, telling Reuters that his main priority was on completing the company’s deal for Chrysler, the American auto maker reorganizing through bankruptcy protection.

“I think we will just keep on focusing on what we have, and we’re in the final days of restructuring of the Chrysler transaction, and I think that our objective is to close that deal,” Reuters quoted Mr. Marchionne as saying. “If the Opel transaction is not available to Fiat, life will move on.”

Carter

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cars

May 29, 2009
G.M. Plan Gets Support From Key Bondholders
By MICHAEL J. de la MERCED and MICHELINE MAYNARD

DETROIT — As General Motors moved closer to a bankruptcy filing, possibly early next week, attention on Thursday turned again to the bondholders, the most important group that the company has yet to win over for its efforts to start fresh.

Early Thursday, G.M. proposed a deal in which bondholders would receive up to a 25 percent stake — a bigger share than G.M. offered the autoworkers union — if they do not oppose its bankruptcy reorganization, and then said that a group representing many of the largest bondholders had accepted the offer.

The proposal came as administration officials and G.M. began to discuss how the carmaker would look once it emerged from a court reorganization. The company is expected to seek bankruptcy protection by Monday, the deadline set by the Obama administration to restructure outside bankruptcy.

In a regulatory filing, G.M. set Saturday afternoon as the deadline for other bondholders to support the plan. In addition to an ad hoc committee that supports the G.M. plan, which represents about 20 percent of G.M.’s debt, people with knowledge of the discussions said a second group, with about 30 percent of G.M.’s debt, was in talks with the Treasury.

Administration officials said they considered the development positive. While the officials said there was no specific threshold for approval by the bondholders, a person briefed on the matter said that G.M. was seeking support from investors holding about 50 percent of G.M.’s $27 billion in bond debt.

G.M. and the Treasury will re-examine the results after 5 p.m. on Saturday to gauge support before deciding how to proceed. Administration officials said Thursday that 15 percent of bondholders approved the first debt-for-equity swap. (G.M. had wanted 90 percent.) With that group added to the 20 percent represented by the ad hoc committee, which had opposed the earlier offer, officials believe they have a good starting point.

In a reg

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economics cars

x-Duracell Chairman to Lead New Chrysler
By NICK BUNKLEY

DETROIT — Chrysler, the automaker reorganizing under court protection, said on Wednesday that C. Robert Kidder, the former chairman of Duracell International and Borden Chemical, would become chairman of the restructured company after it begins its alliance with Fiat.

Mr. Kidder, whose only automotive experience was 30 years ago as a consultant to Ford, will succeed Robert L. Nardelli, the former Home Depot chief who has been running Chrysler since August 2007.

In New York, lawyers for three Indiana state funds filed objections to the proposed Chrysler sale, arguing that the federal government had illegally abrogated the funds’ rights as secured creditors.

The bankruptcy court judge in the case, Arthur Gonzalez, denied the funds’ request for a stay of the sales proceedings.

Chrysler, the smallest of the three Detroit automakers, filed for bankruptcy protection on April 30 and is seeking to sell most of its assets to a new company that will be called the Chrysler Group. Other assets, like closed factories, will be sold.

At that point, the Italian automaker Fiat will own 20 percent of Chrysler, while 55 percent will be held by the United Automobile Workers union’s new retiree health care trust.

“I am confident that Chrysler will emerge from Chapter 11 a lean and powerful competitor, combining its own rich history of innovation with Fiat’s technology and expertise to invigorate the American car market and to challenge other car companies around the globe,” Mr. Kidder said in a statement.

Michael J. de la Merced contributed reporting from New York.

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www.nytimes.com/...21auto.html - Preview

cars

Open-Book Management’s Lessons for Detroit
By DARREN DAHL

When the United Automobile Workers union was granted a 55 percent ownership stake in Chrysler as part of the company’s plan to save itself under a bankruptcy filing, more than a few eyebrows went up. In Detroit, after all, there has long been a distinct line between owners and workers.

To assess what these changes might mean, I recently spoke with Jack Stack, a leading figure in both the open-book management and employee-ownership movements. At 19, having already been kicked out of both college and a Catholic seminary, Mr. Stack took a factory job with International Harvester. In 1982, he led a management buyout of a failing Harvester plant in Springfield, Mo., eventually turning the factory into SRC Holdings, a collection of 11 holding companies, 26 employee-owned businesses, and 1,200 employees that make, among other things, auto engines and home furnishings.

Along the way, Mr. Stack, now 60 and the chief executive of SRC, has become an apostle for open-book management, which encourages company owners to open up their books and expose their financial results to their employees in the belief that the employees will make better decisions and be more committed. He is the author (with Bo Burlingham) of two books, “The Great Game of Business” (Broadway Business, 1994) and “A Stake in the Outcome” (Broadway Business, 2003), that stress the value of empowering employees. A condensed version of our conversation follows.

Q. What’s your reaction to the U.A.W.’s becoming the majority owner of Chrysler?

A. I think you have an interesting chemistry of cultures. It will be interesting to see if they collaborate or collide. For a long time it was the union’s position that ownership is the bad guy. There is a long history of confrontation there.

Q. Don’t you think that making the employees owners can be a good thing?

A. Yes, but they face challenges.

Q. Such as?

A. The first thing they have to realize is that they need to create a sense of accountability before

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economics cars

As Political Winds Shift, Detroit Charts New Course
By JOHN M. BRODER and MICHELINE MAYNARD

WASHINGTON — Why, after decades of battling, complaining and maneuvering over fuel economy standards, did carmakers fall in line behind the tough new nationwide mileage standard President Obama announced Tuesday?

Because they had no choice. The auto industry is flat on its back, with Chrysler in bankruptcy, General Motors close to it, and both companies taking billions of dollars in federal money. Foreign automakers are getting help from their own governments. Climate change legislation is barreling down the track, and Congress showed last fall that it had no appetite to side with Detroit any more.

Simply put, Detroit and the other companies need Washington’s help, and they are powerless to block the rules Washington dictates.

“They can feel the political winds changing,” said David Doniger, a lawyer with the Natural Resources Defense Council who has faced the car companies in court many times. “They need government aid to stay in business. When you have your hand out for help, it’s hard to use the same hand to thumb your nose at the federal government.”

It is a clear victory for the president, who introduced fuel economy legislation as one of his first acts as a senator, and it is the latest blow in a four-year decline in Detroit’s influence in Washington.

In 2005, car companies were able to stop fuel economy legislation. By 2007, with the country awakened to the realization that global warming was a threat, they were forced to go along with higher standards but managed to water them down.

This time, they arrived at the table so debilitated they could extract only the barest of concessions. The primary gift carmakers received from Mr. Obama in Tuesday’s proposal was the certainty of one fuel economy standard from California to Maine, rather than the patchwork that would have resulted from two sets of regulations, one by the 18 states that wanted tighter standards, and another for everywhere else.

“We understood th

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cars environment

Driving While Texting Remains Popular–And Dangerous
By Matt Richtel
Mobile

Despite widespread research indicating that texting while driving can cause dangerous–even deadly–distractions, the behavior remains rampant, according to a new survey.

The survey is the work of Vlingo, a company that makes software that translates spoken messages into text or email on mobile phones. Yes, that gives Vlingo a vested interest in establishing that DWT (Driving While Texting) is rampant, and that an alternative is preferable.

Nevertheless…

The company’s survey – drawn from a sample of 4,800 online participants – found that 26 percent of respondents send texts while driving. That’s about the same returns as last year, when the company
found that 28 percent DWT.

Not surprisingly, the behavior varies by age group. About 60 percent of people 16 to 19 reported TWD, compared to 49 percent of people 20 to 29, and 13 percent of people over 50.

The behavior also varied by state. The states with the highest percentage of text drivers: Tennessee (42 percent), New Jersey (35 percent), Alabama (34), Idaho (33) and Oklahoma (31.7).

There is a growing body of research that shows that texting while driving causes serious distraction–not just because it can take the hands off the wheel and eyes off the road, but also because driver
attention is directed away from wielding a multi-thousand-pound steel car.

But the research also might undermine Vlingo’s hopes that speaking into a phone is a safer alternative. A considerable body of research shows that even when people use hands-free technology, their attention spans are considerably divided–making them four times more likely to be involved in a crash than when not engaged in a virtual conversation.

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gadgets safety cars

12 Mass. dealerships hit as Chrysler cuts 789 outlets

By Erin Ailworth, Globe Staff | May 15, 2009

A dozen Chrysler dealerships in Massachusetts are among the 789 nationwide scheduled to be eliminated by the troubled automaker, a move that could cost the state hundreds of jobs and shutter businesses that have been fixtures in their communities for decades.

Chrysler LLC said in a bankruptcy filing yesterday it plans to cut ties with 25 percent of its 3,181 franchise dealerships next month as part of an attempt to survive by downsizing and partnering with Italian automaker Fiat. The closings in Massachusetts account for 20 percent of the state's 60 Chrysler dealerships, and 2.6 percent of its 460 new-car outlets. The company said it will help the affected dealers move their remaining inventory to other franchises.

"I'm still bewildered," said Charles Bickford, owner of Westminster Dodge in Dorchester, after receiving a letter from Chrysler yesterday notifying him that the business, which opened in 1927, was on the closing list. He hoped his family's franchise might be spared because it is the company's only dealership in Boston.

"We thought sure as heck that Chrysler would want somebody representing them here," Bickford said. "I've got 50 employees, and they've been here for years and years."

But George Dimopoulos, 70, said he was not surprised to learn his family's Salisbury dealership was on Chrysler's list.

"We were ready to surrender anyway," said Dimopoulos, who estimated that the business, which he started in 1973 in Danvers, lost about $1.5 million during the last few years as sales declined. He said his two sons, who now run the dealership, were prepared for the end - one will manage the family's auto body and repair shop, while the other plans to enter the restaurant business.

"They'll do all right," Dimopoulos said.

Other dealers said they will try to reinvent themselves as used-car dealers or service centers, or attempt to rent their properties.

Chrysler spokeswoman Kathy Graham said jettison

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cars

Toyota, Too, Is Looking to Cut Costs
By MICHELINE MAYNARD

WOODSTOCK, Ontario — When Toyota opened its newest North American assembly plant here last fall, it was chock full of the company’s very latest thinking and innovations for building a car efficiently.

But with the global automobile industry mired in its worst crisis in a quarter-century, even Toyota’s latest standards for lean manufacturing are not good enough.

Now, employees are huddled in a war room at the plant — called an obeya in Japanese — charged with finding upward of $100 million in annual savings from the Woodstock factory, where Toyota builds RAV4 crossover vehicles, and a nearby plant in Cambridge, Ontario, where Corollas, Matrix hatchbacks and Lexus crossovers are produced.

Among the ideas: instead of spending $16,000 to hire a contractor to build a conveyor belt for delivering bins of parts to a section of the assembly line, workers designed and installed their own, for $700.

The search for savings is under way at every Toyota plant, large and small, in every part of the world. Last week, Toyota announced a net loss of $7.7 billion in the first three months of 2009, even more than General Motors lost last year and projected an even bigger shortfall for 2009.

The stumble, after years of record profits, has forced Toyota to make changes at every level, from its plants to its dealerships to the top of the company, where Akio Toyoda, grandson of the company’s founder, takes charge in June.

The problems have been deeply felt in the United States, where Toyota faces a twofold challenge. It must restart its sales, which are down 38.4 percent this year, and navigate a changing political climate in which President Obama, a longtime critic of Detroit automakers, has become a cheerleader. When he announced that Chrysler was filing for bankruptcy, he urged consumers to “buy an American car.”

It is a surprising reversal of fortune for a company that became an industrial-size perpetual motion machine, fueled by profits, quality and political power.

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cars economics

Tracking Down Auto Warranty Callers
By Azadeh Ensha

On Sunday, Senator Charles E. Schumer held a news conference to complain about car warranty telemarketing calls.

Mr. Schumer said he had received several of these warranty renewal robo calls — the latest taking place last Wednesday.

“I’ve had enough,” Mr. Schumer said. “These are scam artists.”

Mr. Schumer is not alone. Consumers across the country are flooding Web sites with complaints about these calls and are looking for ways to stop them. Officials in 40 states are investigating the companies behind the calls, and the Better Business Bureau said it received more than 140,000 complaints about the car-warranty calls last year.

Mr. Schumer has asked the Federal Trade Commission to investigate and put an end to the calls.

The warranty calls usually begin with an automated voice stating that your vehicle’s warranty has expired or is about to expire. The caller is next prompted to press 1 to speak with a representative or another number to be removed from the list. But consumers say that the calls — which are made to both land lines and cellphones — continue even after they’ve asked to be removed and that adding their names to the Do Not Call Registry hasn’t stopped the calls.

I received a warranty robo call last Thursday from a 989 area code. The automated voice told me that this was my final notice concerning my soon-to-expire auto warranty, which was news to me since I take public transportation and don’t own a car. A search on whocalled.us reveals similar complaints originating from other numbers.

Part of the difficulty in tracking down these companies is that they change their numbers and names often, and they use technology that prevents consumers from calling them back.

One phone number used to call New Yorkers was traced to a disconnected phone in Nebraska that belonged to an illegal immigrant who was arrested in a raid on a meatpacking plant and was deported.

A representative for the Better Business Bureau in St. Louis, where several of these co

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cars

In German Suburb, Life Goes On Without Cars
By ELISABETH ROSENTHAL

VAUBAN, Germany — Residents of this upscale community are suburban pioneers, going where few soccer moms or commuting executives have ever gone before: they have given up their cars.

Street parking, driveways and home garages are generally forbidden in this experimental new district on the outskirts of Freiburg, near the French and Swiss borders. Vauban’s streets are completely “car-free” — except the main thoroughfare, where the tram to downtown Freiburg runs, and a few streets on one edge of the community. Car ownership is allowed, but there are only two places to park — large garages at the edge of the development, where a car-owner buys a space, for $40,000, along with a home.

As a result, 70 percent of Vauban’s families do not own cars, and 57 percent sold a car to move here. “When I had a car I was always tense. I’m much happier this way,” said Heidrun Walter, a media trainer and mother of two, as she walked verdant streets where the swish of bicycles and the chatter of wandering children drown out the occasional distant motor.

Vauban, completed in 2006, is an example of a growing trend in Europe, the United States and elsewhere to separate suburban life from auto use, as a component of a movement called “smart planning.”

Automobiles are the linchpin of suburbs, where middle-class families from Chicago to Shanghai tend to make their homes. And that, experts say, is a huge impediment to current efforts to drastically reduce greenhouse gas emissions from tailpipes, and thus to reduce global warming. Passenger cars are responsible for 12 percent of greenhouse gas emissions in Europe — a proportion that is growing, according to the European Environment Agency — and up to 50 percent in some car-intensive areas in the United States.

While there have been efforts in the past two decades to make cities denser, and better for walking, planners are now taking the concept to the suburbs and focusing specifically on environmental benefits like red

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U r going 2 hurt someone

May 13, 2009

DISTRACTION turned into disaster Friday, as a 24-year-old MBTA subway operator who was text-messaging his girlfriend rear-ended another Green Line train near Government Center. The accident sent dozens to the hospital, broke a vital link in Boston's transportation system, and caused an estimated $9.6 million in damage.

The incident was only the extreme manifestation of a broader social trend. One insurance industry study indicates that, of drivers under 30 who own cellphones, 40 percent admit to texting behind the wheel. The act is plainly reckless; a driver has to look away from the road or railway ahead and refocus on a tiny screen. In September, a train operator in Los Angeles was texting just before a crash that killed him and 24 other people. A similarly distracted motorist caused an accident that killed a Taunton boy the previous December.

Maybe young texters will grow out of the habit; that hope explains calls to raise the minimum age for MBTA vehicle operators. Or maybe, as the medium grows in popularity, the number of middle-aged Americans who text while driving will increase.

Because the texting phenomenon has emerged quite recently, Americans have yet to summon the social and legal opprobrium to root it out. An education campaign could help, and insurers could consider special penalties for texting-related accidents. At the least, though, Massachusetts needs a law against texting while driving.

Changing drivers' bad habits is no easy job. Michael Siegel, a professor in the Department of Behavioral and Social Sciences at the Boston University School of Public Health, says people who text while driving suffer from what's called an "optimistic bias" - the view that they are careful about their texting, and that accidents only happen to those who aren't. In such cases, education and persuasion only go so far.

"If you want to change people's behavior while driving," he says, "you need to have the force of law behind it." Even if drivers are unlikely to be tickete

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Why won't they take credit at tollbooths?

By Peter DeMarco | May 10, 2009

The e-mails arrived one after another last week, all posing the same question: Why can't I pay with a credit card at the tollbooth?

"My wife traveled to Italy this year," wrote one reader, Whitney Carter of Beverly. "She doesn't speak Italian, or read signs in Italian very well, but was able to use a US bank debit card as a toll payment with virtually no issues. Almost as easy as buying a Dunkin' Donuts coffee and a muffin without signing a thing. They even knew how to exchange from dollars to the euro!"

Our last column on tollbooth rules certainly stirred some readers. So this week, we reach into the mailbag for discussion.

Credit or debit?
If you can pay with a credit card at the McDonald's drive-through, as one reader noted, why not a tollbooth?

France, Italy, Spain, and South Africa do indeed take credit and debit cards at some tollbooths, according to the International Bridge, Tunnel & Turnpike Association, based in Washington. But very few US tollbooths do, and the ones I did find were located in either rural, low-traffic areas or border crossings with Canada, where the speed of a credit card transaction doesn't matter so much when you're already stopped for customs.

Neil Gray, director of government affairs for the international association, said plastic isn't popular because ATM-like toll machines can't always read the strip on someone's weathered credit card. And when a machine breaks, the only way to fix it is to shut down the toll lane.

If tollbooth operators take your credit card, there's the chance for fraud or theft, Gray said. Or maybe the card just slips from the collector's hands, falling onto the highway.

Beyond that, whoever runs the tollbooth would have to pay credit-card processing fees. For transactions as small as 50 or 75 cents, "it becomes a financial issue," Gray said.

Still, such obstacles aren't always deal-breakers. Toll stops in Puerto Rico accept credit cards, but drivers are charged only once at t

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