Americans are buying record numbers of hybrid and electric cars as gas prices climb and new models arrive in showrooms, giving the vehicles their greatest share yet of the U.S. auto market.
Consumers bought a record 52,000 gas-electric hybrids and all-electric cars in March, up from 34,000 during the same month last year.
The two categories combined made up 3.64 percent of total U.S. sales, their highest monthly market share ever, according to Ward’s AutoInfoBank. The previous high was 3.56 percent in July 2009, during the Cash for Clunkers program.
And while their share of the market remains small, it’s a big leap from the start of the year, when hybrids and electrics made up 2.38 percent of new car sales.
Buyers were drawn by new models like the Toyota Prius C subcompact, the Prius V wagon and Camry hybrid. Gas prices near or above $4 per gallon added to the cars’ attraction.
Stronger sales of the Chevrolet Volt and the Nissan Leaf were a positive sign for electric car makers. The two have struggled to gain acceptance from buyers worried about how far they can drive on a battery charge.
Another concern: Volt maker General Motors Co. had to change the car’s charging system because its batteries caught fire after government crash tests.
GM sold just 7,671 Volts last year, below its goal of 10,000. But in March, it set a new monthly record of 2,289 for the Volt, an electric car with a small backup gas engine personal loan for poor credit. Sales of the all-electric Leaf nearly doubled to 579.
Gas prices helped sales. The nationwide average for a gallon of gas jumped 19 cents in March, from $3.73 to $3.92, and it crossed the $4 mark in California even earlier. The $4 mark was a significant psychological milestone, said Paul Lacy, who forecasts sales trends for consulting firm IHS Automotive.
Lacy expects hybrids and electrics to make up about 4 percent of U.S. sales this year, although sales could drop if gas prices fall or if buyers get more accustomed to higher prices.
Lacy predicts hybrids and electrics will double their market share to 8.5 percent by 2017, in part because there will be more options on the market. Last month, 35 hybrids and electrics were on sale, double the number from 2008.
The proliferation of models will also bring down costs. Hybrids cost around $2,000 to $4,000 more than their gas counterparts, which can make them less attractive. Edmunds.com estimates it takes 11 years’ worth of gas savings to recoup the $4,595 premium on the Honda Civic hybrid, or 5.2 years to make back the $3,400 premium on the Toyota Camry hybrid.
Toyota Motor Co.’s Prius hybrid cars were the runaway best-sellers last month. They made up 57 percent of all hybrids and electrics sold.
Walgreen Co. has already suffered punishing losses since December, when it ended its contract with Express Scripts after a bitter public dispute over pharmacy reimbursement rates.
And with this week’s merger of Express Scripts and Medco Health Solutions Inc, Walgreen will have to contend with an even larger giant.
Now commanding more than 40 percent of the pharmacy benefit management market, north St. Louis County–based Express Scripts Holding Co. likely will likely demand big concessions from other drug store chains and grocery markets that operate pharmacies.
Walgreen standoff with Express Scripts provides a telling test case of industry fears that the now super-sized Express Scripts, the nation’s biggest PBM, wields too much market power. Critics of the merger have contended the merger will give Express Scripts unchecked ability to force untenable contracts on retail pharmacies, while pushing consumers into getting their drugs by direct mail.
For now, Express Scripts plans to operate Medco as a stand-alone business. Express Script “absolutely will have more negotiating gower in dealing with both the chains and the independents,” said Jeff Jonas, a stock analyst at Gabelli & Co, an investment management firm in Rye, N.Y. “But they need to integrate the companies first, which could take up to 18 months.”
Jonas estimates that Walgreens stands to lose $4 billion in revenue in 2012 — about 6 percent of its total revenue — due to lost prescription sales from the Express Scripts contract, and could lose another $3 billion in 2013.
Walgreen Co. Vice President Michael Polzin said the company intends to honor its existing contract with Medco, but would not disclose when that contract is set to expire. Express Scripts spokesman Brian Henry also declined comment on the specifics of the Medco-Walgreens contract.
Employers contract with pharmacy benefit managers to cover their workers’ drug benefits. PBMs then deliver drugs through the mail or reimburse pharmacies for filling prescriptions.
From Walgreen’s perspective, the only thing worse than losing the Express Scripts deal would have been taking it.
“We firmly believe that this decision was in the long-term interests of our customers, employees, and shareholders,” said Michael Polzin, a Walgreens vice president. “We expect the short-term impact to lessen over time. If the same terms are offered to us by another company, it still wouldn’t be in our long-term interest to accept those terms.”
In the meantime, Walgreen will pursue a strategy of aggressively seeking deals with small and mid-sized pharmacy benefit managers and remaking its stores to offer a wider array of health and wellness services to consumers. And it’s trying to get lean for the challenges ahead, cutting costs at its corporate offices in Deerfield, Il., which began several months ago and will continue, probably including layoffs, Polzin said.
Walgreen has largely shied away from public comments about the Express Scripts-Medco merger, but other drug store and supermarket representatives have asserted that consumers will lose as Express Scripts drives up prices and profits.
Express Scripts, which has built its business on cutting health costs, counters that economies of scale resulting from the deal will in fact drive down consumer prices. “We have a robust and competitive industry, by any analysis,” said Express Scripts’ Henry. “We’re going to have to compete against a large number of PBMs who have their own special niche in the marketplace. … We believe we have a very healthy relationship with over 60,000 retail pharmacies and that will only continue.”
Walgreens dropped its contract with Express Scripts on Jan. 1 after months of stalled talks, and has seen its rivals — including CVS Caremark, WalMart, and Rite-Aid, along with supermarket pharmacies — openly advertise that their readiness to fill prescriptions of Express Scripts members. And those competitors have picked up a sizeable chunk of Walgreens’ business.
The drug store chain reported March sales of $6.02 billion, a decrease of 4.3 percent from the previous year.
“The negative impact on comparable store prescriptions filled due to no longer being part of the Express Scripts, Inc. pharmacy network was 10.7 percentage points,” Walgreens disclosed Thursday in a news release.
Meanwhile, Moody’s Investors Service on Thursday downgraded Walgreen’s credit rating by one small notch. The rating service voiced concern about the drug chain’s ability to win back Express Scripts customers.
So the conventional wisdom is that the Express Scripts-Medco merger puts Walgreens over an even deeper barrel. Walgreens might get along without Express Scripts but probably can’t afford to lose Medco, said Judson Clark, a stock analyst at Edward Jones & Co. in Des Peres.
“It’s in the best interest of Walgreens to get a deal done,” Clark said.
Walgreens “made an attempt to play hardball with Express Scripts and it didn’t work. It looks like it’ll be difficult for Walgreens to grow with this hanging around their neck.”
Meanwhile, Walgreens is expanding its health-related business beyond the traditional pharmacy. Since November 2010, Walgreens has opened about 200 “wellness format” stores in Chicago, Indianapolis, and through its subsidiary, Duane-Reade locations, in New York.
The stores offer immunizations, health testing, disease management progreams, and the treatment of minor ailments such as skin rashes, with the goal of lowering overall healthcare costs. The stores accept insurance payments but also have cash prices.
“We’re looking to focus overall on health, pharmacy and wellness. To help people live well, stay well, and get well,” Polzin said. “And that means creating a new pharmacy and health experience … Expanding fresh healthy food offerings in the store. Bringing more beauty and cosmetic services.”
— Jim Gallagher of the Post-Dispatch contributed to this report
Fisker automotive executives said Wednesday the company is open to building its new Atlantic electric car someplace besides the former General Motors factory in Delaware where they originally planned the car’s assembly.
While they say they are still committed to the former GM plant, Fisker spokesman Russell Datz told CNNMoney that the company is flexible enough to make the car elsewhere, should a better offer materialize.
Company chairman Henrik Fisker told CNNMoney on Tuesday that the automaker has secured about $400 million in private equity financing.
Prior to Tuesday’s announcement, Fisker had been waiting on funding from a $529 million U.S. government loan so it could begin retooling the Delaware factory. The plant used to make the Pontiac Solstice, Saturn Sky and Opel GT convertibles for GM (, Fortune 500).
Fisker has already received $193 million of the government money and recently began selling its luxury, $103,000 plug-in "range extended" electric car called the Karma.
But the rest of the money has been held up due to what Fisker says were some missed production targets with the Karma guaranteed pay day loans.
The Karma is assembled in Finland.
Vice President Joe Biden, Delaware Gov. Jack Markell and Fisker CEO Henrik Fisker were together in 2009 to announce plans for the Delaware production facility.
At the time, union workers were promised the chance to fill many of the 2,000 factory jobs producing the plug-in electric sedan.
Besides the money issues, Fisker has experienced other problems of late.
They include a battery recall and some less-than-positive reviews of the Karma. Critics say the car does not perform as well as it should to justify its price.
The DOE has also come under intense scrutiny for its loan program in light of Solyndra, the failed solar panel maker that got a $535 million government backed loan.
CNNMoney’s Peter Valdes-Dapena contributed to this report.
Nearly five months after some $1.6 billion in customer money went missing at bankrupt brokerage MF Global, the question remains: Will anyone be held responsible?
A congressional subcommittee will take up the issue on Wednesday in the latest hearing on Capitol Hill to focus on the firm’s collapse. Watching anxiously will be the 38,000 former MF Global customers who are still missing money and are waiting for someone to be held accountable.
"We’ve been arguing for a long time that at a minimum, this was larceny," said John Roe, a partner at BTR Trading Group who has advocated on behalf of MF Global customers. "This was a company appropriating money that wasn’t its own."
While the case had been quiet in recent months, that changed last week when the subcommittee released a memo detailing a critical $200 million transfer out of an account holding customer funds.
The memo has reignited questions about who at MF Global knew that customer money had been appropriated and how that information could influence a possible criminal case.
It cites an email from MF Global assistant treasurer Edith O’Brien saying the transfer, to resolve an overdraft of an account at JPMorgan (, Fortune 500), came "Per JC’s [Jon Corzine’s] direct instructions."
The memo does not say, however, that Corzine ordered that the transfer use customer funds, in violation of industry rules.
Futures brokers like MF Global can hold their own cash in customer accounts along with that of their clients, and money belonging to the firm may be transferred out freely.
Testifying under oath before Congress last year, Corzine denied ordering the use of client money, saying he received assurances "both orally and in writing" that the transfer had been lawful.
Corzine’s spokesman also said last week that the former New Jersey governor had not specified from which account the transfer was to be made
No one from MF Global has been formally accused of wrongdoing, though the FBI and federal regulators are investigating.
In a criminal case, prosecutors must prove there was a deliberate intent to appropriate customer funds, or failing that, that there was "willful blindness" by Corzine or others to the fact that such funds were at risk, said Michael E. Clark, an attorney with the law firm Duane Morris and a former federal prosecutor.
"The practical problem is that, if there were instructions given to move the money from customer accounts, can they establish a direct link or is this going to be more circumstantial?" Clark said. The testimony of lower-level employees, he added, could be crucial to building a case.
Finding charges that stick: Shortly after the transfer to JPMorgan, the banking giant requested that O’Brien sign a letter certifying that the transaction complied with industry rules on the protection of customer funds. O’Brien was "reluctant" to sign this letter, according to the memo from the subcommittee, and it was never returned.
In addition, Terry Duffy, the head of exchange operator CME Group (), has accused MF Global of falsifying accounting statements in the week prior to its bankruptcy to conceal its use of customer funds.
O’Brien has been summoned to appear at Wednesday’s hearing along with several other former MF Global staffers, though she is expected to refuse to testify, invoking her Fifth Amendment right against self-incrimination.
Leaving aside the issue of the missing money, there are other ways prosecutors might pin charges on MF Global executives.
MF Global was felled after its disclosure of billions of dollars worth of bets on risky European debt sparked a panic among investors. Trading partners called for increased margin payments and clients began taking their business elsewhere, leaving the firm scrambling for cash to make good on its obligations.
Less than two weeks before MF Global went bankrupt, however, executives assured staff from ratings agency Standard & Poor’s that the firm was in good health. A week before the bankruptcy filing, CFO Henri Steenkamp told S&P that the firm was in "its strongest position ever as [a] public entity."
"Let’s ignore the missing $1.6 billion for a second and let’s talk about securities fraud, because you have the CFO running around telling ratings agencies that the company had never been in a stronger position, and that clearly wasn’t the case," said Roe, the customer advocate.
Again, a fraud charge would require proof that misstatements by MF Global executives about the health of the firm were intentional. Lawyers for Steenkamp and Corzine did not respond to requests for comment.
There’s also the Sarbanes-Oxley Act of 2002, which requires corporate officers like those at MF Global to certify that the internal risk controls at their firms are adequate. Ironically, Corzine helped write this law while serving in the Senate.
Sarbanes-Oxley violations can carry prison terms of up to 20 years. While the law has seldom been used in this context over the years, Clark said it could be part of a broader case against MF Global executives.
"I would hate to be in their shoes," he said.
International Monetary Fund Managing Director Christine Lagarde urged policy makers to be vigilant as oil prices, debt levels, and the risk of slowing growth in emerging markets threaten global economic stability.
TORONTO
Euro-area finance ministers signed off on a second Greek bailout, clearing the way for the first payment from the 130 billion-euro package ($170 billion) to be made this month.
Efforts to find a diplomatic solution to Iran’s disputed nuclear program appeared to get a boost Tuesday when world powers agreed to a new round of talks with Tehran, and Iran gave permission for inspectors to visit a site suspected of secret atomic work.
The two developments appeared to counter somewhat the crisis atmosphere over Iran’s nuclear program, the focus of talks in Washington between President Barack Obama and Israel’s visiting prime minister.
EU foreign policy chief Catherine Ashton said the five permanent members of the U.N. Security Council and Germany agreed to a new round of nuclear talks with Iran more than a year after they ended in failure. Previous talks have not achieved what the powers want _ an end to uranium enrichment on Iranian soil.
The U.S. and its allies say Iran is on a path that could eventually lead to the production of a nuclear weapon. Iran denies that, insisting that its program is for energy production and other peaceful purposes.
Ashton said in a statement that the EU hopes Iran “will now enter into a sustained process of constructive dialogue which will deliver real progress in resolving the international community’s long-standing concerns on its nuclear program.”
The time and venue of the new talks have not been set.
In Washington, National Security Council spokesman Tommy Vietor said Iran must comply with U.N. Security Council resolutions and stop uranium enrichment. “We still believe diplomacy coupled with strong pressure can achieve the long-term solution we seek,” he said in a statement.
Britain’s foreign secretary, William Hague, said in a statement that the onus would “be on Iran to convince the international community that its nuclear program is exclusively peaceful.”
German Foreign Minister Guido Westerwelle called for a diplomatic solution. “A nuclear-armed Iran must be prevented,” he said.
Ashton was responding to a February letter from Iranian nuclear negotiator Saeed Jalili, in which he proposed new discussions.
This week Obama warned the U.S. would use military action to protect its interests if necessary, while appealing for time for sanctions against Iran to show their affects. In his public statements during a visit to Washington, Israeli Prime Minister Benjamin Netanyahu thanked Obama for his support but did little to counter concerns that Israel might go ahead on its own with an attack on Iran. Israel considers Iran an existential threat because of its nuclear program and its references to destruction of the Jewish state low fee payday advance.
The U.N.’s International Atomic Energy Agency last year published a report that included what it said was evidence of Iranian activity that could be linked to weapons development. The head of the IAEA, Yukiya Amano, said Monday that his organization has “serious concerns” that Iran may be hiding secret atomic weapons work, singling out the Parchin military complex southeast of Tehran.
On Tuesday, Iran appeared to respond partially to those concerns, granting long-sought permission to IAEA inspectors to visit the Parchin compound. Iran describes the site as a military base, not a nuclear facility.
The semi-official ISNA news agency stated a key condition: such a visit would require an agreement between the two sides on guidelines.
“Given that Parchin is a military site, access to this facility is a time-consuming process, and it can’t be visited repeatedly,” ISNA quoted the Iranian statement as saying. It added that following repeated IAEA demands, “permission will be granted for access once more.”
Inspecting Parchin was a key request by senior IAEA teams that visited Tehran in January and February. Iran rebuffed those demands at the time, as well as attempts by the nuclear agency’s team to question Iranian officials and secure other information linked to the allegations of secret weapons work.
The Parchin complex has been often mentioned in the West as a suspected base for secret nuclear experiments _ a claim Iran consistently denies. IAEA inspectors visited the site in 2005, but only one of four areas on the grounds, reporting no unusual activities.
Last year, IAEA’s report said there were indications Tehran has conducted high-explosives testing to set off a nuclear charge at Parchin. Iran denied the atomic activity and insisted that any decision to open the site rests with the armed forces.
“We have our credible information that indicates that Iran engaged in activities relevant to the development of nuclear explosive devices,” Amano said told reporters Monday outside a 35-nation IAEA board meeting in Vienna, describing his sources as “old information and new information.”
Tehran has dismissed the charge, saying it was based on “fabricated documents” provided by a “few arrogant countries,” a phrase Iranian authorities often use to refer to the U.S. and its allies.
Newspapers need to prioritize digital advertising sales if they expect to thrive, according to a Pew Research Center study released Monday.
As advertisers shift spending from traditional print media to the Internet, newspapers are failing to make up for the decline in print advertising revenue with gains in online ads. Pew studied 38 large and small newspapers and found that for every $7 in print ad revenue declines, the companies only generated about $1 in new digital advertising sales.
The study suggests, however, that newspapers have the power to change _if they alter their approach to advertising sales. Papers with the largest circulations and biggest sales forces do a better job increasing online ad sales. But even newspapers with a daily circulation of less than 25,000 printed copies show hefty digital gains with a properly aligned sales force, training and commissions that encourage online ad sales.
“The notion that you can only have success in digital if you’re bigger is not what we found,” said Tom Rosenstiel, director of the Pew’s Project for Excellence in Journalism. “You can have success even at small papers if you’re willing to change the culture.”
The newspapers provided Pew with financial data for its study, on the condition that they would not be identified. One newspaper, with a circulation of about 20,000 copies and over $8 million in annual print revenue, managed to boost its annual online ad revenue by 63 percent to more than $500,000 in 2010 payday advance lenders. In 2011, its digital ad revenue grew about 33 percent.
The newspaper’s publisher told Pew researchers that the company had aggressively sought to hire ad salespeople who focused on online ads _ mainly display and classified ads. Now, “almost everything we sell has a digital component,” the publisher told the center.
For all the newspapers that participated, print ad revenue fell 9 percent while digital ad revenue grew 19 percent. Since print ads still account for about 92 percent of ad revenue, the small decline in print has had a much bigger impact on than the digital gains.
The huge chunk of revenue that still comes from print ads can also skew the behavior of salespeople, many of whom work on commission.
Many newspapers are attempting to transform. Pew found that three quarters of the newspapers it studied had changed their commission structure to encourage more digital ad sales. One newspaper now pays a 20 percent commission on digital ads but just 8 percent on print ads.
Powered by WordPress -- XHTML 1.0