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AutoLine: Episode 279 – Saab On Its Deathbed, China Sales To Soar, Most Drivers Ignore Recalls

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Runtime 7:11

Swedish luxury automaker Koenigsegg announced that it was pulling out of its deal to buy Saab. Auto sales in China are expected to grow by 1 million units per year for the next 10 years. Why most consumers will ignore Toyota’s latest recall. All that and more, plus German Chancellor Angela Merkel waits for her thank-you letter from General Motors.

Transcript and Story Links after the jump . . .


Here are today’s top headlines. Saab is on its deathbed. Sales will soar in China for years to come. And why most consumers will ignore Toyota’s latest recall.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, November 25, 2009, and now, an important message. Before we dive into the news, do me a favor … vote for us in the Podcast Awards. Like the old saying goes from the shady side of Chicago politics, Vote early and often. Go to PodcastAwards.com, scroll down to the Business category and vote for Autoline Daily. Now to the news.

Let us pause here for a very somber announcement. Saab may be on its deathbed. Yesterday Koenigsegg announced that it was pulling out of the deal to buy Saab. The AP reports that as negotiations went on, it finally dawned on Koenigsegg that it was not going to be able to make money on Saab. Chinese automaker BAIC, a minority investor in the deal, said it might reconsider bidding on its own again. But GM rejected the Chinese automaker’s bid a few months back. I think what everyone is realizing is that the Saab brand is going nowhere, and has been on life support ever since GM bought it. Last year Saab sold 93,000 cars worldwide, which is the equivalent of one-half of one assembly plant. And no car company, unless its selling very high-priced cars, can survive on such small volume.

More bad news for Toyota. The company is recalling around 110,000 Tundra pickups because the rear crossmember can rust away, causing the spare tire to fall off, leading to a potential road hazard. Excessive corrosion can even affect the rear brakes, leading to a loss of stopping power. As we reported, Toyota is recalling 3.8-million vehicles to shorten the gas pedal. But if this is like most safety recalls, most owners will simply ignore it. That’s the dirty little secret of safety recalls. If the car is working, most people figure they don’t have the time to go to the dealership.

And this next story does not directly involve Toyota but it is related. GM is suing Japanese supplier JTEKT for defective steering columns used on the Chevy Cobalt and other small vehicles. Customers complain about excessive noise and vibration when driving over certain road surfaces, which has been traced to excessive gear backlash in the assembly. JTEKT is a new company formed from Toyota subsidiaries.

Fitch Ratings says automotive suppliers will see a slight recovery next year. According to the AP, higher production and growth in emerging markets like China, Russia and Brazil will help suppliers. But Fitch warns that the weak economy and lower sales in Europe will stunt any recovery there.

And because a number of suppliers are in a weak position, French supplier Faurecia says it will look to buy out some of its rivals. According to Bloomberg, the company says the industry needs to consolidate and it would like to do so in order to cut costs and expand its customer base. The company which is an affiliate of Peugeot doesn’t plan to expand beyond its four, core businesses, which are car seats, exhaust systems, and interior and exterior parts.

After the break. Car sales are expected to skyrocket in China for years to come. And one Chinese automaker is going gangbusters with a brand of its own.

In China, Gasgoo.com reports that auto sales in the country are expected to grow by a staggering 1 million units per year for the next 10 years! The forecasted buying frenzy is spurred-on by low car ownership and economic prosperity. Sales in 2009 are expected to hit 13 million units – nearly a 40-percent increase over last year. Interestingly, more than 60 percent of Chinese consumers are first-time car buyers and more than 90 percent of them pay with cash.

SAIC, China’s biggest automaker, aims to sell around 90,000 of its own-branded vehicles this year, which is nearly twice as many as it initially thought. Gasgoo reports that the company expects that number to double again in 2010. One of SAIC’s most popular models is the Roewe, a sedan developed from technology acquired from defunct British marque MG. Sales of Roewe- and MG-branded vehicles are up 267 percent. By the way, including its partners, SAIC will make 2.6 million vehicles this year, meaning its turning into a significant car company.

OK, we couldn’t do a news report without something from Opel, could we? The latest there according to the AFP, is GM is now saying it will not close one Opel plant in Germany.

Perhaps that decision is in response to the next story. According to the AFP, German Chancellor, Angela Merkel, says she’s waiting for her thank-you letter from GM for helping keep Opel alive. GM paid back every euro the German government loaned it, and Merkel notes it didn’t cost the taxpayer anything and also said Opel wouldn’t be alive today without the loan.

Ok, since we won’t be here Friday, due to the holiday, we’re going to announce the winner of this week’s trivia quiz. We asked you to name the make and model of this car. And the correct answer is, it’s the Kaiser Darrin. As always we randomly selected this week’s winner from the pool of correct responses. And the winner is, Chuck Grenci of Mount Pleasant, South Carolina. Congratulations Chuck, you’ve just won this collector’s-edition Autoline Detroit coffee mug.

And that’s it for today’s top news in the global automotive industry. And remember what I said at the top of the show, go to PodcastAwards.com and vote for Autoline Daily. Vote early and often, have a happy Thanksgiving, and we’ll see you next week.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, WardsAuto.com and WWJ Newsradio 950

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