Chrysler announced a new sales incentive plan Wednesday as the carmaker seeks to spur sales while it works through bankruptcy and restructuring.
Chrysler is immediately offering up to $4,000 in cash rebates on 2009 model year vehicles. Actual cash rebates will vary by model and location. Chrysler could not immediately provide specific examples.
Additionally, current owners of Chrysler, Dodge and Jeep vehicles can get $1,000 more toward a new Chrysler vehicle.
While these offers are good, potential Chrysler customers who were expecting blow-out deals now that the automaker is officially in bankruptcy may be disappointed.
"This is not that, certainly," said Jack Nerad, editorial director for Kelley Blue Book, which provides pricing data.
There is also nothing fancy about Chrysler’s new incentives. The company is not offering to cover car payments in case of job loss; nor will it compensate buyers for losses in car value should the automaker be forced out of business.
"Consumers are telling us that the net purchase price of the vehicle is the most important factor right now," Steve Landry, Chrysler vice president for sales said in a press release. "So we are pleased to introduce incentives that address what the consumer is looking for."
Job-loss based incentives may have worked for Hyundai, which was first to offer a payment-protection plan, they didn’t have the same effect for General Motors (GM, Fortune 500) or Ford (F, Fortune 500), Nerad said. That’s because the newness factor of the protection plans had already worn off by the time the American automakers announced their versions creditreport.
"If you figure you’re going to lose your job, or the odds that that’s going to happen, you’re pretty unlikely to be considering a new car purchase in the first place," Nerad said.
Buyers who finance their vehicles through participating credit unions can also get another $1,000 toward their purchase. More than 1,500 credit unions with members in all 50 states are participating in a special low-rate financing program, the automaker said.
These rebates are expected to be combined with dealer incentives. Chrysler gives such sweeteners to dealerships, rather than to the customers, but dealers often pass on the savings by reducing the purchase price of vehicles.
A Chrysler spokeswoman would not discuss dealer incentives, which are generally not made public.
Chrysler’s "Employee Pricing Plus Plus" incentive program, which ended yesterday, offered customers up to $6,000 on Chrysler, Dodge and Jeep vehicles, including 2008 models, as well as 0% financing.
Chrysler has been the biggest spender among all auto manufacturers on incentives in the U.S. market. Last month, Chrysler spent $4,288 per vehicle on incentives, according to auto data Web site Edmunds.com.
The next highest spender was GM, which is also undergoing a government-driven restructuring and may declare bankruptcy later this month. GM spent $4,063 per sale.
South African manufacturing probably fell for a fifth consecutive month in February, possibly exceeding the previous month’s record decline, as the global recession slashed demand for exports, a survey showed.
Production tumbled 12.9 percent after dropping 11.1 percent in January, according to the median estimate of four economists surveyed by Bloomberg. The statistics office is scheduled to publish the data at 1 p.m. local time on April 8.
Manufacturers such as ArcelorMittal South Africa Ltd., Africa’s biggest steel producer, and Volkswagen AG, the country’s second-biggest automaker, have cut output and jobs as sales plunged. Factory output, which makes up 16 percent of the economy, may continue to contract as indicated by the Investec Purchasing Managers Index, which fell to a record low of 36 in March.
“It is virtually impossible to see a recovery in the manufacturing sector soon,” Danelee van Dyk, an economist at Standard Bank Group Ltd., Africa’s biggest lender, said in a note to clients. “Closure of many production facilities in April, for instance in the automotive and nonferrous steel sectors, will exacerbate production losses in the sector.”
Recessions in the U.S., Europe and Japan, which together take 60 percent of exports, have undermined manufacturing and contributed to the economy’s first contraction in a decade in the fourth quarter health insurance.
The Reserve Bank will publish foreign currency reserves data tomorrow. Gross reserves rebounded to $33.8 billion after the price of gold gained, the central bank said on March 6.
On April 8, the South African Chamber of Commerce and Industry will publish the business confidence index for March.
Market Rally
In political news, the National Prosecuting Authority is scheduled to announce its decision on whether to drop corruption charges against Jacob Zuma, leader of the ruling African National Congress, today. Zuma is the ANC’s presidential candidate for elections taking place on April 22.
Last week, the benchmark FTSE/JSE Africa All Share Index advanced 2.3 percent, with Investec Ltd. gaining 17.1 percent, the biggest increase of the top 40 companies in the index. Aspen Pharmacare Holdings Ltd. climbed 17 percent on speculation GlaxoSmithKline Plc is in talks with the largest maker of generic drugs in the southern hemisphere about buying a stake in the company.
Some 400 acres of agricultural land could be carved out of southwestern Hillsborough County to make way for a new multi-modal facility that its developers say would add $624 million to the local economy and directly create 1,800 jobs over the next decade.
Inland Port Systems has chosen a site just north of the Manatee County line to build its Tampa Bay Multi-Modal Center, a facility near Port Manatee that would provide a distribution hub directly to consumers using rail and trucks, taking advantage of its proximity to shipping from the Panama Canal and busier Gulf of Mexico transportation traffic.
“When we were looking for the right site, two of the absolute keys we were looking for was its proximity to both rail and highways,” said Dick Ellison, a principal for Inland Port Systems, that is leading the project. “This land was just off [U.S.] 41, which is not heavily traveled at this point in time, but it may be. Interstates 275 and 75 were very close to the site, which means we have some direct points to Tampa, Miami, Jacksonville, Orlando, and Atlanta.”
Construction of the multi-modal center would take approximately 10 years and include 2.6 million square feet of warehouse space, enough to accommodate between 15 and 25 companies. It also is expected to generate some $89 million in total labor income once complete, representing an average annual salary of $49,400 business cards. It’s expected to contribute $6.7 million each year in gross ad valorem property tax income to Hillsborough County, according to projections by WilsonMiller.
But to become reality, it will need to clears some governmental hurdles over the next two to three years, including zoning changes and a necessary amendment to the county’s comprehensive plan, Inland Port Systems plans to spend $125 million in labor alone for construction of the facility. Ellison wouldn’t share how much build out for the Bay area center is expected to cost, but a typical multi-modal center sitting on 500 acres of land with 7 million square feet of structures – more than double of what’s planned near Port Manatee – would have a total value of $750 million, according to an investor presentation on the Inland Port Web site.
Inland Port is expected to present its project to the Hillsborough County City-County Planning Commission April 7. However, it will need approvals at both the county and state level before any work can begin.
A federal judge in Delaware ruled Tuesday that the U.S. Fish and Wildlife Service should not have permitted growinggenetically modified crops in a national wildlife refuge. The judge said the agency should have run studies to determine whether farming with such crops was compatible with habitat preservation. Farming with genetically modified crops is common on other refuge lands, including the Big Muddy National Wildlife Refuge along the Missouri River, with hundreds of acres of genetically modified soybeans and corn planted; and Crab Orchard National Wildlife Refuge in Southern Illinois with more than 2,000 acres in engineered crops paydayloans. The case had added implications in the St. Louis region because most genetically modified crops are sold or licensed by Monsanto Co. of Creve Coeur. =”clear:both”>
The days of cheap gas are retreating into the rearview mirror, as prices continue to roll uphill, flirting with the $2-per-gallon mark.
The national average price for a gallon of unleaded gasoline reached $1.952 Thursday, according to the motorist group AAA. This is bad news for the growing ranks of jobless Americans, who are pinching pennies and looking for ways to cut costs.
The current price would have been welcomed by summertime drivers, because it’s less than half the all-time high of $4.114 per gallon, achieved last July 17.
But since gas prices slumped to a low of $1.616 per gallon on Dec. 30, they’ve jumped more than 20%. At their current rate, prices could easily eclipse $2 per gallon by early next week.
This is occurring as crude oil prices head in the opposite direction, falling below $35 a barrel.
"I think what you’re seeing now is a backlash of a period, from the end of the summer until the end of the year, when refiners were selling gas into the consumer market at a discount to crude oil," said Ben Brockwell, director of data pricing for OPUS.
Brockwell said refineries lost money last year, despite the surge in gas prices. The refineries in the latter half of 2008 were paying top dollar for oil, and then producing gasoline in a low-demand economy, he said. Now, refineries are producing less, driving up prices in even this low-demand economy, while stockpiling discount oil, he said.
It’s hard to tell how this impacts Americans, who have been cutting back on driving since last year, and who have avoided the gas-guzzling larger vehicles, said Moody’s chief economist John Lonski payday loan help.
"You’d rather see energy prices lower, but it doesn’t serve right now as one of the primary worries that affects consumer spending," said Lonski. "I would think that of the list of things to worry about, it does not yet rank as high as it did this spring or early summer, when gas prices were at stratospheric levels."
Robert Sinclair, spokesman for AAA in New York, where the price of unleaded averaged $2.09 a gallon, said, "Driving levels are already pretty low, with the downturn on the economy and people holding onto their pennies and worrying about the future."
But gas prices will probably keep going up, as they often do in late winter and early spring, when refineries traditionally conduct annual maintenance on their facilities, said Peter Beutel of energy risk firm Cameron Hanover.
The silver lining for consumers is that, because of lower demand, prices are unlikely to return to their sky-high levels from last year, according to Beutel.
"I think this market is going to have a very tough time getting over $2.35 [per gallon of unleaded by Memorial Day] just because there are so many people out of work and the economy is having such as difficult time going forward," he said.
Wells Fargo & Co, the fourth-largest U.S. bank, on Thursday increased the size of its previously reported fourth-quarter loss by 7 percent because of a new investment losses.
The San Francisco-based bank recorded a $328.4 million pretax charge for losses on perpetual preferred securities, citing unspecified “credit events” that took place after it announced year-end results on January 28.
Wells Fargo said the charge boosted its quarterly after-tax loss to $2.73 billion, or 84 cents per share, from a previously reported $2.55 billion, or 79 cents.
Full-year profit was reduced to $2.66 billion, or 70 cents per share, from $2.84 billion, or 75 cents.
Wells Fargo said it carried the securities at fair value as of December 31 and had classified losses on the securities as unrealized losses on securities available for sale.
The announcement means Wells Fargo will not record the charge in the first quarter, the first full three-month period since it acquired troubled rival Wachovia Corp on December 31.
Wells Fargo received $25 billion of taxpayer funds as one of the original recipients under the Treasury Department’s $700 billion Troubled Asset Relief Program direct lender payday loans.
It disclosed the loss one day after Chief Executive John Stumpf was one of eight bank chief executives to testify before a critical Congress about lending and compensation practices and how they are using taxpayer infusions.
Julia Tunis Bernard, a bank spokeswoman, declined to elaborate on Thursday’s announcement or its timing.
As of September 30, Wells Fargo had perpetual preferred securities available for sale and carried at fair value that cost $2.53 billion, and had a fair value of $1.65 billion, according to a U.S. Securities and Exchange Commission filing.
The bank is set to file its annual report on February 27.
Wells Fargo shares fell 52 cents to $16.28 in after-hours trading following the announcement. The shares had fallen 70 cents to $16.80 during regular trading. They ended 2008 at$29.48.
(Reporting by Phil Wahba and Jonathan Stempel; Editing by Andre Grenon)
Investors will return Monday for the final few trading days of the year, and with all three major indexes on track to suffer their worst declines in decades, it’s easy to understand why the market is eager to close the books on 2008.
The Dow Jones industrial average has tumbled 36% and is on track to suffer its worst annual decline since 1931.
The S&P 500 is off a whopping 40.5% this year, and is headed for its worst performance since the large-cap index was created in 1957. As it stands, this year’s decline is already much worse than the previous record decline of 29.7% in 1974.
The Nasdaq is down 42.5% versus last year. While the tech-heavy index is on the path to its worst annual performance in its 37 year history, the Nasdaq has seen much darker days. In the 12 months that ended March 2001, it fell nearly 60% as the dot.com bubble burst.
"This has been a year of superlatives," said Hugh Johnson, chairman of Johnson Illington Advisors, an Albany, N.Y.-based firm with nearly $700 million in assets under management. "[2008] has been dark and dismal, but if I had to sum it up in one word, it would be: historic."
Underlying these historic declines has been the worst economic shock since the Great Depression, and a full-blown recession that is now entering its second year.
What started as a "downturn" in the housing market, grew into a "mortgage-meltdown," which wreaked havoc on the "global financial system" and ultimately spawned a "credit crisis."
Of course, the popping of a massive energy bubble didn’t help matters.
As the problems on Wall Street spilled over to Main Street, the two became locked in a "negative feedback loop," said Johnson.
In other words, concerns about the health of the economy put pressure on the stock market, which further undermined the economy, driving stocks down further and putting more strain on the economy.
While these things played out, the nation lost nearly 2 million jobs.
In response to these historic events, governments around the world have taken unprecedented steps, including drastically lowering interest rates and making direct investments in some of the largest financial institutions payday cash advance.
Given the extraordinary challenges facing the world economy, what can investors expect going into 2009?
"The current consensus is that the economy will recover in the second half of 2009," Johnson said. "But the consensus tends to be wrong."
Based on historical patterns, however, an economic recovery could come suddenly and dramatically, Johnson said.
"Turning points can be very sharp and completely unexpected," he said. "Very few will see it coming."
As for next week, trading is expected to be choppy, with the market closed Thursday and many market participants on vacation. But investors will have a few economic reports to digest.
On Tuesday, the Conference Board will release its December index of consumer confidence, which is expected to rise to a reading of 45.2 from 44.9 in November. That would still be at the low end of the index on a historic basis, which reached an all-time low of 38.3 in October.
The Labor Department will report on weekly jobless claims Wednesday, after a 26-year high of 586,000 initial filings in the week ended Dec. 20.
Investors will get a fresh reading on the manufacturing sector Friday when the Institute for Supply Management releases its December survey of purchasing managers. The ISM index is expected to fall to a reading of 35.4 from a 26-year low of 36.2 in November, according to consensus estimates compiled by Briefing.com.
In corporate news, two of the nation’s top automakers, General Motors and Chrysler LLC., will take possession on Monday of the first part of the $13.4 billion in emergency loans from the government.
According to the terms of the Deal, Chrysler and GM will each recieve $4 billion on December 29. Then on January 16, 2009 GM will recieve the second payment - $5.4 billion. Finally, GM will get a third installment of $4 billion on February 17, 2009.
Trading could be volatile next week due to low volume and selling related to year-end tax loss strategies.
– CNNMoney.com’s David Goldman contributed to this report.
Electricite de France SA (EDF.PA: Quote, Profile, Research, Stock Buzz) offered to buy a 50 percent stake in Constellation Energy Group Inc’s (CEG.N: Quote, Profile, Research, Stock Buzz) nuclear business for $4.5 billion, in an attempt to scuttle a $4.7 billion takeover by Warren Buffett’s MidAmerican Energy Holdings Co.
EDF, the world’s largest nuclear utility, said on Wednesday the deal will also include an option for Constellation to sell up to $2 billion in non-nuclear power assets to the utility.
The French company made the offer in a letter to Constellation’s board, which argued the MidAmerican deal was too low.
It said it would also make an immediate $1 billion cash investment to address Constellation’s liquidity needs, but that would be credited against the $4.5 billion payment for the nuclear plants.
Under the terms of the deal, Constellation would remain a standalone company.
Still, completing the deal could be difficult for EDF, because it has to contend with stringent breakup terms set in Buffett’s agreement to buy Constellation, as well as doubts previously voiced by Constellation about the certainty that an EDF-backed deal could close.
“Constellation is fundamentally strong and EDF, like many others, believes that the proposed MidAmerican transaction significantly undervalues Constellation and its future opportunities,” EDF Chairman and Chief Executive Pierre Gadonneix said in a statement.
EDF, Constellation’s largest shareholder with nearly 10 percent of the company’s common shares, could stand to gain more from the deal than just the power generation assets — it might be able to buoy the value of its stake in Constellation above the $26 credit score.50 a share level set in the MidAmerican deal.
EDF claims its deal values the company at around $52 per share. Approval from the Maryland Public Service Commission would not be necessary, EDF said, and it expects to be able to close the deal within six to nine months of the MidAmerican deal’s termination.
It plans to finance the transaction through corporate funds and credit facilities. JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) is the exclusive financial advisor to EDF.
BUFFETT’S HAUL
Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz) subsidiary MidAmerican agreed to buy Constellation in September, rescuing a company that was on the brink of bankruptcy.
The company faced liquidity issues due in part to ties of its trading business to Lehman Brothers (LEHMQ.PK: Quote, Profile, Research, Stock Buzz), and its shares fell as low as $16.70, down from nearly $108 in January.
As part of its deal, MidAmerican gave the power company an immediate $1 billion cash infusion.
If the deal falls through, Constellation would have to issue about 20 million common shares to MidAmerican, or about 9.9 percent of its outstanding shares and pay it about $593 million in cash.
Japan will benefit from a strong yen because it will hold down prices for raw materials, said Eisuke Sakakibara, formerly Japan's top currency official.
“I still believe a strong yen is in the national interest of Japan, particularly in this situation when raw material prices will increase,'' Sakakibara said yesterday in an interview with Bloomberg Television in Singapore. The yen may rise to 80 per dollar as so-called carry trades unwind, said Sakakibara, who was dubbed “Mr. Yen'' during his 1997-1999 tenure at the Finance Ministry because of his influence over currency markets.
The yen's 15 percent gain against the dollar this year and 32 percent advance versus the euro prompted Japan's government to say last month it may buy or sell currencies to influence exchange rates as the world's second-largest economy stumbled. Gross domestic product shrank an annualized 3 percent in the second quarter as exports dropped 2.5 percent, according to government data.
The yen traded at 97.27 versus the dollar as of 1:21 p.m. in Tokyo, from 97.75 late yesterday. It was quoted at 123.85 per euro from 124.29. Against the Australian dollar, the yen was at 64.92 from 66.35, and it traded at 57.21 versus the New Zealand dollar from 58.53.
Japanese exporters are competitive even if the yen rises to between 80 and 85 per dollar, Sakakibara said.
Property Bubble
The last time the yen climbed over 80 per dollar was in April 1995 when it reached as high as 79.75 as the bursting of a stock and property market bubble prompted the nation's investors to bring money home. At that time, Sakakibara was director- general at Japan's International Finance Bureau.
“You have to differentiate between balance sheet and competitiveness,'' he said. “On the balance sheet, a high yen will cut into their profits but as far as competitiveness is concerned, they are competing quite well with Ford or General Motors.''
The yen has surged since August as the global credit crunch threatened to push the world's economy toward a recession, damping investor confidence and prompting money managers to pull out of carry trades everyone approved 1 hour payday loans.
In such trades, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves can erase those profits. The Bank of Japan's benchmark rate of 0.3 percent compares with 1 percent in the U.S., 3.25 percent in Europe, 5.25 percent in Australia and 6.5 percent in New Zealand.
`Probably Overshoot'
“The unwinding of yen carry trades will probably continue and they will probably overshoot, and the yen going to 80 to the dollar is possible,'' Sakakibara said. “We also must note that the Bank of Japan may intervene when it breaks 90. I don't know if it will be successful. It may be effective in the short term but in the longer term, we have to see.''
The Bank of Japan's decision last week to cut its benchmark policy rate by 20 basis points, or 0.2 percentage point, was surprising, Sakakibara said.
“Probably they didn't want to cut and the market was expecting 25 basis points,'' he said. “So cutting by 20 basis points was probably due to resistance to market pressure and political pressure.''
The rate reduction wasn't aimed at weakening the yen, Sakakibara said, calling it a “symbolic move.''
Sakakibara said he also doubted the Bank of Japan or the Federal Reserve would reduce benchmark policy rates to zero.
“No chance,'' he said. “Cutting interest rates by another 30 basis points doesn't matter. Zero interest rate policy is something no central bank wants to do as that implies that the short-term money market doesn't function.''
The Fed may lower its benchmark policy rate by a further 25 or 50 basis points at the most, he said.
Sakakibara, 67, currently a professor at Tokyo's Waseda University, is a member of the Asia-Pacific advisory board of Bloomberg LP, the parent of Bloomberg News.
Borrowing by consumers slipped in July to the weakest pace in seven months, reflecting a big slowdown in demand for car loans.
The Federal Reserve reported Monday that consumer borrowing grew at an annual rate of just 2.1% in July, the slowest pace since a 1.9% rise last December.
The slowdown reflects a tiny 0.5% rate of growth in the category that includes auto loans, down from a 6.1% surge in this category in June. Automakers reported that demand for cars fell in July to the lowest level in 16 years.
The category that includes credit cards grew at an annual rate of 4.8% in July, up from a growth rate of 3.5% in June.
The 2.1% growth rate for total credit represented an increase of $4.5 billion, far smaller than the $8.8 billion increase that economists had been expecting and down from a gain of $10.96 billion in June.
Consumers this year have been forced to charge more of their purchases to credit cards as banks have tightened lending standards cash advance loan no fax. That has curtailed use by consumers of home equity loans to finance their spending.
The concern is that all types of consumer spending will slow dramatically in coming months as the boost from $106.7 billion in economic stimulus payments wears off.
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