Lighter Car News: Latest Bailout Losses, Ethanol Follies, Chinese SUV Survives Outback
Our semiregular roundup of the latest automotive news and musings from around the Web.
This is the Lighter Car News, a semiregular roundup of news stories from around the Web that we can’t help but share.
In today's edition, we look at General Motors' latest never-to-be-paid debt to the U.S. Treasury, how the national ethanol mandate may need a temporary suspension and how in the world a Chinese SUV survived Australian sand dunes, plus complain about kids who still refuse to get a driver's license.
Stay with us for the next 10 minutes. We promise this will be fast and fun.
Don’t worry, we only lost $25 billion
That’s the latest amount the Treasury said it expects to lose from the 2009 automotive bailouts, which were promoted in part by Treasury Secretary Timothy Geithner, above. Among the many pointed fingers, one thing is certain: We can blame GM for most of that amount. (Chrysler repaid its government loans early and in full, but its bankruptcy proceedings still ate about $1.3 billion in taxpayer funds.) GM incurred $49.5 billion of the government’s total $85 billion bailout for the two automakers and their various loan arms. The Treasury, which still owns 32 percent of GM, knew from the start it would lose money -- $44 billion was the first estimate. GM’s stock price would have to more than double for the Treasury to break even. To make matters worse, The Detroit News thinks this Treasury estimate, based on GM’s stock price from May 31, is still $850 million short.
Everyone’s favorite fuel additive may need a rest
A historic drought devastating the Midwest corn crop may cause the White House to impose a temporary ban on the ethanol mandate, which calls for increasing ethanol production to 36 billion gallons a year by 2022. The “everyone” in "everyone's favorite fuel additive," of course, refers to the U.S. corn lobby, which is now converting more corn to fill our fuel tanks than to feed livestock, according to a Sunday editorial in The Wall Street Journal. As we’ve already pointed out, ethanol’s worst-case scenario is that it drives up food prices in poorer parts of the world -- and that’s exactly what might happen again with a serious global corn shortage and most of the world's supply coming from the U.S.
For years, the U.S. has been under pressure from various bodies, including the World Trade Organization, to end its ethanol subsidies, which it did in December. But while ethanol tax credits and subsidies have expired after more than 30 years, U.S. law still requires corn producers to make more than 2.5 times the amount of ethanol we have now within just 10 years. It’s now on the Obama administration to decide whether it should overrule the Environmental Protection Agency.
Kid, get your driver’s license, already
I recently met a couple at a dinner party whose 18-year-old son had no interest in getting a driver’s license. “He’s in the city, he figures he doesn’t need it,” the wife said. “We don’t care that he feels like that, we just want him to get an ID.” Shocked, I walked off and downed two sangrias.
This isn’t news, of course. The reports of today’s younger generation -- my generation, apparently -- eschewing driver’s licenses or getting them at later ages keep repeating themselves. The economy is still lackluster, and colleges cost nearly $60,000 a year. Plenty of New Yorkers in their 30s brag about forgetting how to drive. There are new iPhones and iPads to buy every year. I get that.
In 2010, the University of Michigan pegged the number of licensed 20- to 24-year-olds at 81 percent in 2010, compared with 92 percent in 1983. Another study from the University of Michigan found that only 60 percent of people ages 17 to 19 have a license, down 20 percent from 30 years ago. Huh? Even if you live in a city, it’s not as if a driver’s license costs hundreds of dollars or requires great skill. For the price of “Warcraft III” and a few hours of easy tests, the U.S. government will permit a dumb 16-year-old to travel anywhere -- barring certain limitations for first-time drivers -- in something completely awesome and totally dangerous. Perhaps the rest of us who’ve grown up with cars need to send a big group text to the unlicensed. You can stay out till whenever. You don’t need to stand outside the movie theater like a middle schooler waiting for your ride. You can have sex in the car. Yes, sex in a car. Wait -- do we need to explain how that works, too?
Chinese SUV tackles the Australian outback, somehow survives
The Sydney Morning Herald has challenged the build quality of Chinese cars as no other publication has ever done. The paper bought a used Chinese SUV and drove it nearly 3,000 miles across the Australian outback, a lonely wilderness that doesn’t take kindly to unreliable machinery. Automotive editor Toby Hagon took off in a Great Wall X240, mashed the little 4-cylinder up sand dunes and across riverbeds, and came back with the car still running. No, the Great Wall wasn’t nearly as good as a Land Cruiser or a Land Rover, but somehow, it got the job done without falling apart. However, after putting only 5,000 kilometers on the odometer, Hagon saw the Great Wall’s value drop by more than half. “It seems buyers aren't too keen on trying largely unknown brands, especially when they have 47,000 kilometers on the clock,” he said. [via China Car Times]
Sorry Johnny Guns, but you are obviously clueless about bankruptcy laws and what Obamao did. He did NOT save the US Auto industry nor did he and Geithner save GM. They did save the UAW members even if it meant screwing everyone else, including non union workers at the Delphi plant that provided the parts needed to build and maintain those GM vehicles. They DID put hundreds of family owned dealerships out of business and thousands of workers at those dealerships out of work. Had GM gone through normal Chapter 11 bankruptcy, the Saturn and Hummer brands would've been sold off to the highest bidder and possibly kept open. The Union Contracts would've been cut to a more manageable and reasonable level and the bond and shareholders (including all of those pension plans like the Indiana State teachers' pension plan that Obamao called their fund manager greedy for wanting more than 29 cents on the dollar for their shares) would've been protected.
Instead, the Saturn brand was priced so high as to be unsaleable ($5 billion for the brand name, but no designs, physical plant, or anything else that would allow production to proceed for years and without significant capital investment) with the result being those workers at the "right to work" Tennessee plants were fired, the equipment for the factory was shipped to the union friendly Michigan to be used to build trucks and SUVs, and the Hummer Brand was sold to China. Non union workers had their pensions eliminated while the UAW members took no loss whatsoever despite their outrageous contracts being a major cause in GM's financial problems. All in all, the country, GM and Chrysler ALL would've been better off had Billions of tax payer dollars NOT been dumped into them. Unfortunately, the people who voted for Obamao are too poorly educated in actual business operations to understand that. They do what feels good instead of what is right. Now millions of retirees have seen their pension payouts decimated. It's called unintended consequences. Before idiots in government take action, they are supposed to calculate what the fall out will be, but when you have idiots who insist you have to pass a law BEFORE you find out what is in it, the country is in for a a world of hurt.
I am not "moaning" about saving GM. I am complaining about the fact that they are prospering but will not be paying back the billions of dollars that they borrowed.
If that doesn't upset people....THEY need to get a clue!
It certainly didn't take me 10 minutes to read those articles.Then again,I didn't click on every link provided..
GM..what a disappointment! The company has been on the rocks since the 80's and has decided to put profits before any product quality. It didn't use to be this way. Thanks to greedy CEO's and their cronies for todays GM standards. Now with the govt. having their back,..they are once again free to pillage the unsuspecting consumer. Beware..
Ethanol...what a mistake.Even at 10% volume,it is destroying fuel systems with corrosion from moisture absorption,and it hurts fuel mileage! Time to go back to 100% petroleum.
Hey Obama..while you are at the EPA's throat to back off ethanol content, (won't happen anyways)have them ease up on small diesel emissions,allowing the inexpensive diesels from Europe to be sold here,and we won't need alternative fuels (or useless battery cars)for years!
The bailout was necessary so that Obama could pay his union cronies back for electing him in 2008 It's ignorant left wingers like you who don't see the destruction Obama's fiscal policies are having on our nation......
Just keep swilling the left wing kool-aid as our country flushes down the toilet!
Let's see, buy from GM and support thousands of over paid UAW workers and now thousands and thousands of Chinese people....hmm.
This is the very reason that I do not feel at all bad about purchasing Japanese vehicles. Yes, my purchases send about $2k from each vehicle to Japan (when purchasing US made car) but the remainder goes into the US economy. It's no different than buying a GM and having the bulk of the purchase money go into our economy and a few thousand dollars go to foreign countries for parts and assembly labor. The one major difference is that Japan is actually our Ally and China is not.
Breaking news........Japan subsidizes Toyota to the tune of billions
Pull your head out of your backside hypocrites....you know who you are
Unemployment stats from the The Bureau of Labor Statistics:
8.2%(p) in Jun 2012
8.6%(p) in Jun 2012
Hey look frosty... your running neck and neck with one of the many states you would like to see people`s quality of life suffer, promoting employment in American cities with your propaganda.
My last few cars: 4th generation Honda Civic, Nissan 240SX, Mazda Miata, Chevrolet Cobalt, Mazda RX-7, and Acura RSX, I would have to say for me, it works poorly.
If intercourse in your vehicle is a key purchasing criterion, I would recommend a truck, SUV, Crown Vic/Grand Marquis, Avalon, but NOT a Miata.
You can try your best to insult me or hurt my feelings Mac but your opinion of me means absolutely nothing to me. Even less than nothing. You would be far better off (receive more childish satisfaction) to aim your drivel at a target that you might be able to affect. Insults from a person of your caliber are simply laughable to me. I actually pity you.
Also, you knock my local economy when it is amongst the strongest in the country and felt the recession less than about 95% of the rest of states?? Yup, we're doing it wrong I suppose, LOL!
Wow, frosty finally found a couple of friends that buy into his propaganda. There are a few, but just a few. Ever notice how many thumbs down frosty gets with his skewed point of view
Maybe they should move to his little Rocky Mountian enclave where Japan`s economy takes priority over America`s. Isn`t that what they teach at the little private school your employed at!
EXPLORE NEW CARS
MORE ON MSN AUTOS
ABOUT EXHAUST NOTES
Cars are cool, and here at MSN Autos we love everything about them, but we also know they're more than simply speed and style: a car is an essential tool, a much-needed accessory to help you get through your day-to-day life. What you drive is also one of the most important investments you can make, so we'll help you navigate your way through the car buying and ownership experiences. We strive to be your daily destination for news, notes, tips and tricks from across the automotive world. So whether it's through original content from our world-class journalists or the latest buzz from the far corners of the Web, Exhaust Notes helps you make sense of your automotive world.
Have a story idea? Tip us off at email@example.com.