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Auto re-vamp comes at a cost

Saturday, October 25, 2014 - 01:56

The big U.S. auto makers reported better-than-expected results- but still face a number of obstacles including vehicle revamps, and trouble in Europe.. Bobbi Rebell reports.

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No shortcuts for the big US automakers - growing pains a concern for investors as they re-tool to revive their businesses - with a firm eye on 2015. Both Ford and General Motors reported earnings that while better than forecasts - also highlight the challenges they are facing. Reuters Paul Lienert says the coming year is a question mark: SOUNDBTE: PAUL LIENERT, REUTERS GLOBAL AUTO TEAM LEADER (ENGLISH) SAYING: "It's perhaps not so much about the economy but there is a growing sense that car sales are cooling off. So, I think I am hearing more and more of a wait and see attitude from analysts and people who watch the industry. " Ford will be re-introducing its flagship F-150 with an aluminum body. General Motors also redesigning its midsize pickup trucks. Right now most of their profits come in the high margin truck category - which works well given how cheap gas is right now - but we've seen this story before says John Krafcik, President of TrueCar: SOUNDBITE: JOHN KRAFCIK, PRESIDENT, TRUECAR (ENGLISH) SAYING: "What happens when oil prices go up again, which they will and gasoline prices go up again which they will. That is going to shift their mix back to passenger cars where probably now its probably fair to say the industry really isn't making money on cars, traditional sedans and even hybrid vehicles." And while the US markets looks strong - global risks are a big concern: SOUNDBITE: JOHN KRAFCIK, PRESIDENT, TRUECAR (ENGLISH) SAYING: "Europe is quite a challenge right now for a lot of different reasons: the impact of Russia, the impact of the macro economic slowdown in big countries like Germany, and for the mass market brands. The fact that premium brands are driving their products down, are able to realize premium pricing that the mass market brands aren't able to capture with their level of brand strength. " One thing hopefully in the rear view mirror - massive recalls. General Motors earnings report's most noteworthy ommission - there was no financial charge for safety recalls.

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Auto re-vamp comes at a cost

Saturday, October 25, 2014 - 01:56