No not much at all.
Yes Dan. The hybrid cycle is upon us today. Right now.
I don't think there will be a single gas only engine plant operating in the
US by Monday next.
There might be but I think you see my point.
Not with gas at $4.00 per gallon they won't or at least not for long or in
Four year old stuff. It takes about that long and it current generation
The generation after that, which is what's in development and testing today,
is what poeple will really put their money into because it won't be
Same difference. A transition to hybrids and then all electric is one thing.
There isn't the time or energy to revamp our energy infrastructure
completely more than once. What is realy bizarre is the willingness to incur
ill will among an established customer base that has their own fueling
stsaions. CNG's are a fleet vehicle Dan and I guess I can only conclude that
it's been decided that CNG isn't significant as an interim solution. OOPS!
"John R. Carroll" wrote in
Actually John, the next step is GDI or TGDI. These are already either in
production or in testing and development. (Gasoline Direct Injection or
Turbo Gasoline Direct Injection). These engines are 20% or better more
efficient than today's gasoline engines.
Part of the efficiency comes from the greatly increased compression ratios
allowed by GDI on pump gas. This has been a goal of engine designers for a
long time, but the injector technology wasn't there to allow reliable
production. It is now. Both Bosch and Siemens have dead-reliable GDI
injector systems now.
By injecting fuel directly into the combustion chamber (aka like a diesel),
you get a major cooling effect as the fuel evaporates. This allows
compression ratios of 12:1 or higher on regular unleaded fuel without
This efficiency increase allows a downsized engine for the same KW output,
resulting in a major fuel savings over the life of the vehicle.
You will soon see 2.0L engines with >300 hp as a normal "base" engine, 1.5L
engines with >200 hp. Plenty of power to please your right foot when you
want to, while miserly sipping fuel for 80% of the time it's running.
These engines will sport completely variable valve trains, variable intake
tracts, variable output turbo chargers and other features that will make
you think you are running a large V6 or even a V8, while only having 2.0L
and 4 cylinders under the hood.
Yeah, Audi (?) has been racimg a single rail diesel for a while now.
You left out something Anthony.
These things cost an arm and a leg and when they break you can't afford to
have them fixed.
It makes more sense to scrap them out. I'll bet the only thing imported will
be $70,000 roadsters from Porsche/Audi and Mercedes.
The warranty costs alone on these vehicles will have to start at $10K per
vehicle if the warranty lasts any meaningful length of time.
This is one of the other difficulties I see with the model that North
American builders and others are running for this market.
When I was a kid, a new Corvette cost about what a journeman tool and die
maker made in 520 hours. The new, at that time, Nova SS was 500 hours of
what two year apprentices were making. Auto loans were limited to three year
terms. Either car was lucky to last more than 100K miles without serious
mechanical surgery and they were showing significant signs of wear at 60K.
Today, those same vehicles, the Vette anyway, costs about 3390 hours for a
ZR1 or 2000 hours for the base model.
This is an extreme example. You can buy a Camry for 700 hours (220 for the
apprentice) and it will last 250K miles without breaking the bank but the
costs of keeping a roof over ones head have skyrocketed from 400 hours of
labor per year all the way to about 800 or more.
The future of the Auto industry will follow what the markets dictate. The
largest market today, and the ones that will be growing both sustainably and
significantly, are in India and China, not North America. The Chinese have a
40 percent sales tax on passenger vehicles that they are waving if you buy
either a hybrid or all electric. Autogas is as dead as a post. The other
advantage of getting the hell away from oil and on to renewable resource
energy is price stability. The last 40 years of oil prices have been a real
roller coaster that has impacted every aspect of life in America and around
the world. What sane person would want to continue to subject their economy
or livfe to that going forward when there is a viable and affordable
alternative? This might well be the biggest driver.
I'm hearing about real changes to Americas auto safety standards in the
works. You can't bring small cars into the US or even build them here today
because the can't be made to meet current safety test standards affordably,
or in some cases, at all. Our regulations are dictated by 3000 lb vehicles
with enough air space to crush. We need to look at a 1500 lb model and I
believe we will.
Should domestic builders not be able to bring an all electric 1500 lb four
passenger vehicle to market for under $15K they will be run out of business
on a rail by the manufacturers that can, and are, doing so in their own
domestic markets today.
I'm sure somebody is out there making pistons and valve trains for the
vehicles you described. They won't amount to more than a flash in the pan
and a large investment with a pretty meager and short lived payoff. Ten
years from now somebody is going to look back and wish all of that
engineering had been invested elsewhere. In the time it takes for the worlds
economies to recover this technology will have become obsolete, never having
fulfilled its promise.
"John R. Carroll" wrote in
GDI engines are on the road today. Moreso in Europe and Australia than the
US, but many models are imported to the US now. All of the US automakers
either are now or are almost in production with GDI engines. Many of the
Japanese have them already, or are about to. This engine technology will be
the dominant force for the next 10 years or so. There are too many
problems with electric vehicles right now, although the investment is being
made, the technology isn't there yet. It will be at a minimum 10 years
before electric or other alternative vehicles will be mainstream.
I didn't know that anyone was building and selling a 350 bhp 2.0 liter aito
Who is it?
"All of the US automakers either are now or are almost in production with
GDI engines. Many of the Japanese have them already, or are about to. "
Let's take a breath and do some math.
Current landed and domestic passenger auto inventory in the US is currently
between five and six million units.
You'd think it would be easy to nail this down but folks aren't honestly
reporting their numbers these days.
It's come down to what the meaning of "is" or in this case "inventory usold"
The same sort of Voodoo is going on with actual and projected sales. The
consensus number for North America seems to be between 10 and 11 million
units projected for 2009, two million of those have been built and aren't
showing up in inventory but if you look at reported sales figures, there are
about 1.2 million floating around somewhere. BTW, I think all of this
mystery is related to the grooming going on to put the proper complexion on
the market by GM and Chrysler as well, to some lesser extent, by the others,
and sales for the year will come in at about nine million units. A death
knell, in other words.
Let's now have a look at the employment/customer side of the equation.
Between now and the end of June, the US economy alone will shed another two
million jobs which will bring the total reduction of the work force for 2009
in at a loss of 4.4 million or perhaps even five or six million.
I doubt, under these circumstances, that there is room for additional
production beyond about two million additional vehicles to fill the balance
of the demand in 2009. That future production you menioned, which BTW is
most of it, will never be built.
Ford, GM, Chrysler, Toyota, Honda, Hyundai, Audi, Volkswagen, and all of the
rest are going to be fighting over so few units that they will be able to
pat themselves on the back if they only lose their ass in 2009.
This is why I don't think either Chrysler or GM will emerge from bankruptcy.
They can't present a credible plan to get them through what I believe will
be a three year run of six to eight million unit years. The government won't
be able to come to the American public with a three year plan. Folks won't
stand for it for an instant.
So here we are, and if you entertain the notion that the North American
market for passenger vehicles if dead until 2012, what you have to do is get
ready for 2013, which means tossing your existing product out and focusing
on what the future will look like from 2015 or so on and preparing to build
those as quickly and as well as you can. Under ordinary circumstances your
ten year theory is entirely plausible.
Given current realities and recognizing honestly what the industry will have
to work with for the next five years yields a very different result.
A high tech buggy whip would have been great eight or ten years ago and
IIRC, Volkswagen had the stuff you are talking about then.
Five years from now the buggy whip market will be dissapearing or have
largely dissapeared, and there will not be a legacy foot hold because nobody
is going to buy thing ONE for the nest three or so years. Absent any
momentum TDI and the rest will just die on the vine.
Like I said, what you are talking about is as likely to be promise unfilled
because it was overtaken by events.
Things could be worse, and they might be. A wave of modest social unrest
that wasn't much in North America might unfold around the world due to the
consequences of the economic downturn. That would add significantly to
I'll bet the Germans and Japanese see things about like this when they
aren't kidding themselves and the Korean's came right out a couple months
ago with a pretty similar vision. Sometimes it takes relity a while to catch
up with perceptions and attitudes Anthony. Especially when things change as
rapidly and significantly as they recently have.
Just ask Murphy if you think I'm kidding or wrong about that.
I might be way off on the rest, but not that.
"As for the "missing" inventory, some of it (tens of thousands of
vehicles) are squirreled away on parking lots in California with no
buyers in sight....with the depreciation ticking away."
No, those are easy to count, and there is a total of nearly three million of
them parked all around the ports.
Importers have been leasing every square inch of space they can in the Long
Beach Port/Los Angeles Basin area for eight months.
I've heard of similar behavior around the port at San Fransisco and that
there are 50,000 cars out near Tracy somewhere.
There are also a couploe of airplane grave yards here. One of them is
covered bumper to bumper with unsold Beamers, another Lexus's.
Mercedes was just shipping their arriving inventory to dealers for a while
but they have now sropped that practice. I don't know where the Mercedes
bone yard is but there is one, I saw a news report an hour ago that showed a
runday full of shiny new Mercedes.
Looked like the Palmdale area.
I wanted to photograph the landscape from the middle of the bridge to
Terminal Island last December but didn't do it.
The United States has a significant problem just getting [and
keeping] their head out of their a$$.
While I do not agree that a "consumer society" is a "good thing,"
if we have one, it is critical that the people earn enough to
consume. Clearly this has not been the case for at least 20
years based on the falling inflation adjusted disposable per
The fall back position to maintaining high consumption rates
without rising incomes is credit availability at all levels. As
we have seen over the last 18-24 months, this requirement has not
been met. Indeed, much of the existing credit structure was
"burned to the ground," in a search for immediate, short-term
personal gain, by the same people that are now telling us how to
Economic recovery/expansion depends on the growth of high value
added operations [to generate real income] which in turn depends
on long-term credit availability in significant amounts (or
forced draft industrialization on the Soviet model).
The Chrysler bankruptcy where the normal/customary rules of asset
allocation are being nullified and even the secured creditors
with colatteral/liens on real property are being "stiffed,"
possibly in the interest of some indefinite search for social
justice, shows how even this is being sabotaged. The impending
General Motors bankruptcy is likely to amplify and expand this
What investor in their right mind will lend money to a
corporation with no assurance that at least most of it will be
paid back, or that their collateral would be "redistributed" in
the case of bankruptcy for the "greater good" despite black
letter law to the contrary.
Assuming an end of government [taxpayer] finance, look for an
expansion of no-interest, no-colatteral, no-lien financing where
the only way for a corporation to raise large amounts of
long-term money is to sell their hard assets such as land and
building, and to then rent these back under tenant-at-will [no
lease to avoid leasehold problems] with ownership legally
transferred, with an agreement to purchase the asset for some
nominal sum after successful completion of the [20 year] rental
agreement, i.e. "rent to own" on an industrial scale. The
imputed "interest rate" will be very high, interest will not be
deductible because there is no interest, and the other tax
benefits, e.g. depreciation, will shift to the "lender." The
corporate "assets" will also take a hit. While this will limit
recover/expansion, it may well lead to much more honest
Unka' George [George McDuffee]
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).
"Why not? We've seen people buying houses with no money."
They had income, that's why.
New research by the Federal Reserve and Boston University of credit spreads
of 900 non-financial companies from 1990-2008 predicted changes in the
economy 'phenomenally' well. Based on their initial research on low to
medium risk corporate bonds with more than 15 years to maturity, the
researchers went back to 1973 and found the analysis still worked well. With
the massive widening of corporate bond spreads last fall, the researcher's
model predicts the economy will lose another 7.8 million jobs by the end of
2009, and industrial production will fall another 17%. In the spirit of
optimism, let's assume this 'phenomenal' model is off by 35%, due to the
extreme nature of this credit crisis. That still results in another 5.1
million lost jobs, and an 11% drop in industrial production. In that
scenario, the unemployment rate climbs to near 12.5%, the underemployment
rate breaches 20%, and another 500,000-750,000 foreclosures result.
The International Monetary Fund (IMF) now estimates the U.S., European, and
Japanese financial sectors face losses of $4.1 trillion. Banks are
confronting losses of $2.5 trillion, insurers $300 billion, and other
financial institutions $1.3 trillion. To date, the banking sector has
written down $1 trillion of expected losses. The IMF estimates that U.S. and
European banks need to raise $875 billion in equity by next year to return
to pre-crisis levels.
Over the last week a number of banks have reported first quarter earnings,
which was a pleasant surprise. Citigroup said it made $1.6 billion. One of
the ways Citigroup achieved this gain was booking a profit of $2.7 billion
on the decline in Citi's own debt. Say what? Under accounting rules, Citi
was allowed to book a one-time gain equivalent to the decline in its bonds
because, in theory, it could buy back its debt cheaply and save $2.7 billion
over time. Of course, Citi didn't actually do that. Even though more
consumer loans went bad in the first quarter, Citi reduced its loan loss
reserve from $3.4 billion in the fourth quarter to $2.1 billion in the first
quarter, thereby picking up another $1.3 billion of 'earnings'. And the
recent change in mark to market accounting enabled Citi to book an
additional $413 million in 'profit' on impaired assets. Without theses
one-time adjustments, Citi's $1.6 billion in first quarter profit becomes a
$2.8 billion loss.
According to a Wall Street Journal analysis of Treasury Department data, the
19 banks that received tax payer funds made or refinanced 23% less in new
loans in February versus last October. Why lend money when all you've got to
do is make a few adjustments and make even more money.
Between 2000 and 2008, the major credit card companies increased the number
of credit cards issued to small businesses from 5 million to 29 million.
During that period, many small business owners increasingly relied on their
cards to provide short term financing for their business. Spending on small
business credit cards increased from $70.4 billion in 2000, to $296.3
billion, according to the Nilson Report. Over the last 15 months, business
bankruptcy filings have risen faster than consumer bankruptcies, with the
average charge-off rising to $11,000 from $7,000, according to Equifax, Inc.
In response, the card issuers have been aggressively scaling back, and have
reduced available credit lines by almost $500 billion. Just another example
of how the availability of credit to the economy is evaporating, despite all
the Fed's efforts.
Industrial production fell 1.5% in March, and is down 12.8% from a year ago.
Capacity utilization fell to 69.3%, the lowest since records began in 1967.
Excess capacity is a powerful dynamic. Companies are forced to reduce or
eliminate budgeted investments in new equipment, compete for every dollar of
revenue, even if it means accepting thinner profit margins, and reduce costs
through job cuts. The amount of excess capacity that has been created by the
depth of this economic contraction is unprecedented. What most inflation
bugs and investors fail to understand is how long it will take to work off
the current over hang of excess capacity. If the output gap grows from the
current 7% to 10% next year, Goldman Sachs estimates it could be 2015 before
all the excess capacity is used up, and that's if GDP grows 4.75% per year!
Ironically, one of the reasons the economy is not likely to grow that fast
is that business investment will be weaker than in prior business cycles.
With so much excess capacity, businesses won't need to materially increase
business investment for the next 2 or 3 years.
The economy needs to create 125,000 jobs each month, just to absorb the
number of new entrants into the labor market. If job growth were to average
325,000 per month in coming years, it would still take four years to replace
all the jobs lost in this recession. With so much excess labor capacity,
wage growth will be weak for the next few years, which will make it harder
for consumers to increase savings and spending. The combination of less
credit availability, weaker business investment and consumer spending will
be headwinds whenever the economy emerges from this recession.
Only problem, and it is a HUGE problem in all of north America, is
the ENTIRE electrical generation infrastructure and the ENTIRE grid
that supports it will need to be totally modernised, updated, upgraded
and upsized before any conversion to electrical transportation can
even be CONTEMPLATED, much less implemented.
EVEN IF all the vehicles weighed 1500 lbs.
That is not going to happen in 25 years.
25 years of TGDI engines would be a good run if it was combined with
the downsizing that will be required to go electric. No reason North
America can't commute with 360cc turbo direct injection gasoline
powered vehicles TODAY.
That isn't a problem, it's an opportunity just as rural electrification was
in the US seven decades ago.
In fact, it's exactly the same opportunity now that it was then and one of
the relatively few investments the government could make that would produce
jobs NOW and yield a return for decades.
No, the major portion will be running by 2016 and the entire mess done by
Sure there is.
Nobody's buying and the market is flooded with inventory that will
increasingly be discounted - all the way to zero if required.
The upside of that is that it won't mean diddly that the electrical grid
isn't ready to go now, as long as we get to work with a serious effort.
It's the war we ought to be fighting instead of the two that we are.
You aren't one of those limp wristed pansy's are ya'
Suck it up Buttercup!
And there is NO GUARANTEE house prices will go up over time.
The Boomers are retiring and downsizing, and dying. The GenXers and
the Echo are a smaller number, with significantly less disposable
income due to a MUCH reduced economy.(particularly the lack of high
paying unskilled or semiskilled manufacturing jobs which have
virtually ALL been exported).
Who will be buying the 1.5 million dollar mansions?
They will, by and large, be bought by those who can afford 750,000
dollar homes - for $750,000.
Who will buy the 750,000 homes? Those who can afford 350,000 homes -
for $350,000. The 350,000 homes will have a larger market, as many
more will be able to afford 200,000 dollars, and the low end 200,000
homes will hold their value steady around 150 grand, and so on down
the line. The tarpaper shack will be the only one that holds it's
value, or possibly even gains. (my brother got over ten times what he
paid for a shack in Saskatchewan, just 5 years after buying it)
It will take a lot of good years before the demand (and ability to
finance) the more expensive homes will improve to the point they
regain their current, muchless 2007 values - and even longer before
the low end will catch up.
There are SOME cars that are worth more today, evenin real dollars,
than when they were built. Very few to be sure.
The reason cars depreciate? They wear out, and styles change.
Sadly, much of todays housing stock also wears out due to poor build
quality (build it as cheap as possible, load it up with extras, and
sell it for what you can get.)
The LAND is all that has the potential to appreciate.