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As auto sales cool, there are great deals to be had — and worries of a lending bubble

Heather Milne Barger and her husband knew it was about time to replace their 12-year-old Honda Civic hybrid this year — not only because it was showing its age, but because they knew there were bargains to be had.

“There were a lot of deals that dealerships were having, and cheap financing,” said Milne Barger, 44.

Sure enough, when the La Mesa couple bought their new Subaru Outback in February, the dealership knocked $2,300 off the $29,400 list price — and offered them a no-interest loan.

Indeed, there’s rarely been a better time to buy a car or truck.

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Why a hard hat's paycheck isn't what it used to be

Caption Why a hard hat’s paycheck isn’t what it used to be

Hart Keeble, business manager of the Ironworkers Local 416, tells the story of how construction unions lost ground.

Hart Keeble, business manager of the Ironworkers Local 416, tells the story of how construction unions lost ground.

Roughly a quarter of that debt is owed by borrowers with subprime credit scores, according to the Federal Reserve Bank of New York and credit bureau Equifax. Although that’s a smaller percentage of overall auto debt than during the run-up to the recession, it’s a record amount. And a growing number are falling behind on their loans.

Two percent of subprime auto loan borrowers were more than 90 days behind — considered seriously delinquent — in the third quarter, up from 1.4% at the end of 2012, according to the New York Fed.

As those borrowers drive up delinquency rates overall, some lenders, especially banks, have tightened their credit standards, requiring higher scores and larger down payments. But others, particularly finance companies that specialize in loans to subprime borrowers, are moving in the opposite direction.

Paul Kerwin, chief financial officer of Westlake Financial Services, a Mid-Wilshire auto lender that specializes in high-interest loans to customers with weak credit, said many of Westlake’s competitors have been too willing to offer risky loans.

Instead of Westlake’s typical loans for $10,000 or $12,000 that are paid off in four years or so, some lenders are offering much larger loans and longer terms.

“When lenders loosen, you get a $20,000 loan and a 72-month term, and now that’s just coming back to bite everyone,” Kerwin said. “A lot of it is putting a customer in too much car.”

In December, the average new car sold for a record $35,309, an increase of nearly $1,000 over the average paid in December 2014, according to auto information provider Kelley Blue Book. The firm cited a sudden shift toward trucks and sport utility vehicles as the key factor driving up prices.

That has given rise to a worrisome trend: Americans are trading in their cars for less than they still owe on their car loans.

Now, they need loans to cover the cost of their new vehicle and the remainder of what they owed.

Ivan Drury, an analyst at Santa Monica car-buying site, found that in the first two months of this year, about 33% of new-car buyers who made a trade-in were underwater, owing an average of $5,195 more than their old vehicle’s trade-in value. That’s the highest percentage and dollar figure on record.

“People who are trading in these cars, they’ll either have to pay off their last car loan on the spot, or they’re going to tack another $5,000 on to a $34,000 car loan,” said Drury, who suspects these customers are indulging desires rather than filling needs. ”You’re seeing some wild behavior.”

There’s an added wrinkle. All these years of new-car sales have dumped millions of vehicles into the used-car market, leading to a steep decline in used-car values.

According to data compiled by, 3-year-old compact cars sold in early 2014 fetched an average of $12,194. In the first two months of this year, 3-year-old compacts were selling for an average of $11,173.

That’s part of what’s pushing carmakers to offer generous incentives on new cars, but it could be a problem for buyers hoping to trade in a car. It’s also problematic for lenders: When borrowers default and lenders repossess and resell their vehicles, lenders can expect to take bigger losses.

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Good News for Auto Makers Can’t Sway Investors

Auto makers have had much to cheer about lately, but investors don’t seem to care. The U.S. market remains a cloud on everyone’s horizon.

BMW released key elements of its first-quarter results Thursday, ahead of schedule, because they were much better than analyst forecasts—as is required by German stock-market rules. Volkswagendid the same Tuesday, following the lead of Mercedes-owner Daimler earlier this month. This would seem to…

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Top Cars of the 2017 Shanghai Auto Show

The Shanghai auto show is a good look at where the car world is headed: small, space-efficient, energy-efficient, electrified or plug-in — plus honking big SUVs for the elite who can afford the taxes. The US may get a four-year respite under the Trump administration, but by 2021 we’ll be back to concerns about efficiency and climate change.

Shanghai is the last major stop for the international auto shows until they pick up in September with the odd-years-only Frankfurt auto show. Here are the most significant cars of Auto Shanghai 2017, which runs (public days) April 21-28.

China as leading indicator for the world

The world’s population tends to move from rural areas to big cities where pollution and parking are problems. China has 15 megacities, areas with more than 10 million population. Shanghai leads with 35 million people.

As a result, electric cars and plug-in hybrids are important. So are small cars. At the same, the market for premium cars is surging. At Auto Shanghai, Audi CEO Rupert Stadler predicted 50 percent growth in the premium segment over the next decade to about 3 million cars. The buyers will be private sector entrepreneurs. Audi is currently the top-selling premium brand in China, although Mercedes-Benz is catching up.

China also sees cars differently than others do. Buick is already perceived as a desirable premium brand, while Buick is working hard to take its US image further upmarket. The majority of Buick’s worldwide sales are in China: 1.2 million last year, or five times as many as the 230,000 Buicks sold in the US.

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Star Cars of the Shanghai Auto Show 2017


Industrial Decline Fuels French Political Extremes

4/20/2017 8:36AM

In Amiens, hometown of presidential candidate Emmanuel Macron, Whirlpool’s decision to shut a factory is the latest in a wave of
closures pushing voters to embrace extremist parties, mainly Marine Le Pen’s far-right National Front. WSJ’s Matthew Dalton reports from Amiens. Image: WSJ/Getty Images

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General Motors says Venezuela illegally seizes auto plant

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General Motors said on Wednesday that Venezuelan authorities had illegally seized its plant in the industrial hub of Valencia and vowed to “take all legal actions” to defend its rights.

The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has already roiled many U.S. companies.

“Yesterday, GMV’s (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations. In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities,” the company said in a statement.

It said the seizure would cause irreparable damage to the company, its 2,678 workers, its 79 dealers and to its suppliers.

Venezuela’s Information Ministry did not immediately respond to a request for information.

Venezuela’s car industry has been in freefall, hit by a lack of raw materials stemming from complex currency controls and stagnant local production, and many plants are barely producing at all.

In early 2015, Ford Motor wrote off its investment in Venezuela when it took an $800 million pre-tax writedown.

The country’s economic crisis has hurt many other U.S. companies, including food makers and pharmaceutical firms. A growing number are taking their Venezuelan operations out off their consolidated accounts.

Venezuela’s government has taken over factories in the past. In 2014 the government announced the “temporary” takeover of two plants belonging to U.S. cleaning products maker Clorox which had left the country.

Venezuela faces around 20 arbitration cases over nationalizations under late leader Hugo Chavez.

AUTO REVIEW: Volkswagen’s hot-hatch reigns supreme

Photo Courtesy of Volkswagen


1-5 stars, 5 being best

Powertrain: ****

Interior: ****

Handling: *****

Styling: ***

Overall: *****

Good: Super-direct steering, right-now throttle response, right in the sweet spot for hot hatches

Bad: Interior shows its Golf roots, not all that good at bopping around town

Bottom line: Fast, fun, squirty

hed: Twist Wheel, Squeeze Throttle, Go

2017 Volkswagen GTI Sport

Base price: $26,415 (including destination)

Price as tested: $28,815

Drivetrain: turbocharged 2.0-liter four cylinder, 220 hp @ 4,700 rpm, 258 lb.-ft. torque @ 1,500 rpm; six-speed manual or six-speed dual-clutch automated manual transmission, front-wheel drive

Curb weight: 2,963 pounds

Assembly: Mexico

One of my favorite things to do in a car is shoot through holes in traffic. But for it to be really fun, you’ve got to have the right car, a fast car, one with quick, responsive steering.

Volkswagens, especially sporty ones, excel at this sort of hooliganism. Take for example this morning’s commute to work. We were putzing along behind a bright red Pontiac and a box truck in the left lane. Traffic cleared in the other lane, and bam, we were there to fill the emptiness ahead. Flick the steering to the right, downshift to second gear and plant your right foot. Feels like a rocket ship taking off as you leave the slowpokes behind.

The turbocharged GTI Sport is the best car for this mission. Turbo engines can exhibit lag in certain circumstances, such as off-the-line acceleration. But in this scenario, the turbo is already spinning, so it’s ready to provide boost right away, catapulting the car forward.

In addition, the Sport version of the GTI produces an extra 10 horsepower compared to the base GTI. Interestingly, there is no fuel economy penalty. Both engines are rated at 24 mpg city and 34 highway. We saw 25 mpg in admittedly heavy-footed driving and a lot of freeway cruising.

We drove a Tornado Red 2017 GTI Sport with a six-speed manual transmission. The Sport carries a $2,400 premium compared to the base GTI. Besides the uprated engine, it also includes bi-xenon headlights and keyless access and push-button start, and most important, a limited-slip differential. Without a single option on it’s sticker, this is also the cheapest way to get maximum performance from a GTI. Including destination charges, our GTI priced out at $28,815.

Well, unless we opted for Volkswagen’s superb dual-clutch automated manual gearbox. VW calls it DSG and it actually improves on the standard transmission’s performance.

But folks who want to feel the strongest connection to the car will opt for the three-pedal version. They’ll find a light clutch pedal that is easy to modulate, but the shifter is notchy.

While the GTI’s excellent throttle response makes for great fun when pushing the car, it makes it difficult to drive smoothly when puttering around town. It prefers to be pushed. In fact, the car begs for it.

A real surprise is the engine’s lack of low-end grunt. You’ll want to downshift a gear or two when accelerating on the freeway. That’s not a complaint. Because the engine wants higher revs to produce power, more rowing of the gears is required. That’s unusual for a turbo motor that produces peak torque at 1,500 rpm.

The GTI also doesn’t care much for highway cruising. The car’s relatively wide 225/40 tires on 18-inch wheels tend to follow every groove in the road, causing it to wander a bit. More of that driver involvement.

The tradeoff for the GTI’s razor-sharp handling is a sharp response to the bumps on Michigan’s cratered roads.

VW created the hot hatch genre with the original GTI in the late ‘70s. The idea was to take a garden-variety econobox, give it a horsepower boost, stiffer suspension and dress it up with a few body enhancements.

Buyers get a fun car, but one that still has the utility of lesser models. Adults can sit in the back seat and there’s enough space for everyone to bring their luggage for a weekend away. Try that with a Subaru BRZ.

The downside is many cars in the hot hatch category suffer from excessive torque steer. The front wheels are simply not where you want to send big horsepower because the powerful engine tries to take control of the car. Torque steer is a significant problem for the Ford Focus ST and the MazdaSpeed 3, which is currently out of production. Those cars produce more horsepower than the GTI and are faster in a straight line.

The GTI Sport’s 220 horsepower might represent the upper limit for power among hot hatches. Anymore, and it just becomes unseemly.

The GTI’s interior is all business, in fact, maybe a little too much business. Everything works well, the materials are all high quality, but there aren’t many differences compared to the regular Golf hatchback. VWs have always had conservative interior design, but it would be nice if VW would give the GTI more unique touches. It has a racy GTI steering wheel with red stitching, red-trimmed floormats, red accent lighting on the doors and of course, traditional-for-the-GTI Clark plaid inserts in the cloth seats. Other than that, it’s standard issue upper-trim Golf.

One unique feature is the Performance Monitor built into the GTI’s infotainment system. It tracks cornering force, turbo boost pressure and other stats that car geeks care about.

The front seats are deeply bolstered. With grippy cloth upholstery, there will be no sliding about. Even those packing some extra pounds will find them comfortable. Rear-seat passengers have good headroom and won’t have to cram their knees against the front seatbacks if those in the front row are of normal height.

Of course, the GTI offers the latest electronic features, many as options. Smartphone integration is standard on the GTI. Optional features include blind spot monitoring, rear traffic alert, adaptive cruise control, parking assist and lane assist.

In the hot-hatch category, the GTI is the original and in many ways, still the best.

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Shanghai auto show: Lincoln unveils 1st gas-electric hybrid – WGBA

Ford Motor Co.’s luxury brand, Lincoln, has unveiled its first gasoline-electric hybrid, a version of its MKZ midsize sedan, at the Shanghai auto show.

Lincoln said the MKZ will go on sale this year in China starting at 329,800 yuan ($47,900).

The company also displayed a concept version of its first full-size SUV, the Navigator. It said sales will begin late this year.

The total of 1,400 sedans, SUVs, minivans and other vehicles displayed at the show include 63 electric or gasoline-electric hybrids from global brands and 96 from Chinese manufacturers, according to the organizers.

More news from Auto Shanghai below



Volvo Cars, the Chinese-owned Swedish automaker, has announced plans to produce a pure-electric car in China for sale worldwide starting in 2019.

Volvo said the car will be based on the economy-size CMA platform shared with Chinese automaker Geely, which bought the Swedish brand from Ford Motor Co. in 2010.

Volvo has two factories in China and in 2015 became the first automaker to export Chinese-made cars to the United States.

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At Shanghai Auto Show, brands balance green push and SUV demand

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China’s government wants more electric vehicles (EV) on the roads but consumers remain hungry for sports utility vehicles (SUVs), forcing foreign automakers to get innovative with their offerings.

Late last year, the mainland proposed automakers should make new energy vehicles account for 8 percent of total car fleets by 2018 despite booming demand for SUVs — first-quarter SUV sales rose 21 percent on-year to 2.4 million, according to data from the Associated Press.

At this year’s Shanghai Auto Show, global brands were eager to show their adherence to Beijing’s calls, while still catering to customers of the world’s largest car market.

Jaguar Land Rover showcased its first all-electric SUV on Wednesday, Audi debuted its electric SUV-coupe, the E-tron Sportback, and PSA Group unveiled its Citroen C5 Aircross, a SUV with two electric motors.

Growth in SUV segments and new energy vehicles, especially electric cars, can help the Chinese car market expand 8 percent per year, Francois Provost, senior vice president and Asia-Pacific chairman at Renault, told CNBC on the sidelines of the show.

“There is a clear regulation by the Chinese government … so the whole automotive industry is moving towards the petrol-electric vehicle.”

Wednesday saw Renault premiere the RS2027 concept car, a model with electric motors that the firm hopes will be the future of Formula One race design.

Jaguar CEO Ralf Speth meanwhile told CNBC the luxury brand was focused on refining internal combustion engines, both diesel and petrol, as well as simultaneously preparing for electrification.

“This is an unbelievable time of change in the auto industry,” the German executive said.

The new Mercedes S class S680 at an event ahead of the 17th Shanghai International Automobile Industry Exhibition in Shanghai on April 18, 2017.

Fellow luxury carmaker McLaren, known for high performance cars such as the new 720S model that debuted in China on Wednesday, is planning to expand its range of electric products over the long-term.

“We need to respond to legislation changes on emissions … Towards the end of the decade, we will introduce hybrid cars across the range. By 2022, more than 50 percent of our cars will be hybrid,” CEO Mike Flewitt told CNBC. However, one major challenge will be ensuring the firm’s hybrid offerings are of compatible weight to its existing range of sports cars, Flewitt continued.

Aston Martin, James Bond’s car brand of choice, aims to lead the luxury EV sector and has teamed up with Beijing-based technology company LeEco to develop an electric sedan, the Aston Martin RapidE, which is expected to hit markets in 2019, CEO Andy Palmer told CNBC.

More than 1,000 companies showed off their wares at the biennial Shanghai Auto Show —testament to the power of mainland consumers and the industry’s cut-throat nature.

“The Chinese market is becoming more competitive. From July 2015, there have been significant price wars that put enormous pressure on profitability of operations,” explained Carlos Tavares, chairman of PSA Group. Transaction prices, or what customers are paying at dealerships, went down by 10 points, he continued.

Eunice Yoon


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N.Y. Auto Show puts ‘cool’ planet-killing tech on display

As rites of passage go, this one is all wrong.

Yes, I took my son to the New York International Auto Show on Monday, as my dad did before me (and as his dad probably would have done before him, if the shtetl Jews of Williamsburg had coveted Buicks not blintzes).

“Wow, dad, it’s so cool!” my 9-year-old spawn said about 100 times during the course of the day at the Javits Center: he said it when he saw an LED-covered Lexus; when he caressed a Swedish-made Koenigsegg, with its distinctive single wiper; when he played with the electric reclining driver’s seat on a Mercedes Benz GLE Coupe, which can be adjusted eight ways; when he saw a Jaguar racecar hanging vertically; when he participated in a simulated drag race in a muscular Dodge Charger; and when he got to sit behind the wheel of a GMC Yukon Denali (ironically named after two ecosystems that will be destroyed by the GMC Yukon Denali).

The author's son thinks the Auto Show is cool. Here, he fawns over an LED-covered Lexus.

The author’s son thinks the Auto Show is “cool.” Here, he fawns over an LED-covered Lexus.

(Gersh Kuntzman/New York Daily News)

Cool? Try cruel.

Yes, my car-loving son went to the show looking for thrills. But I – a cyclist who, yes, still believes, against all propaganda from the White House, that global warming is a threat to our way of life – went looking for some reassurance that the automobile-political complex hadn’t reverted back to its central faith that the gasoline will never run out, the exhaust that spews out of the twin elliptical tailpipes won’t choke us to death, and that everything is going to be fun, fun, fun because no one is going to take our T-birds away.

The Nissan Rogue Warrior Trail Project truck. the automobile-political complex’s central faith is gasoline will never run out, the exhaust won’t choke us to death, and everything is going to be fun, fun, fun.


So my son said, “Cool.” And I thought: “Worst dad in the world,” as I guiltily passed on the love of cars to another generation.

Sure, there are a few nods to environmentalism at the auto show: An electric car crammed in among a murder of sports cars, or some guy from Subaru giving about four seconds of lip-service to the company’s efforts to recycle its manufacturing materials. But mostly, the auto show is one big tribute to the internal combustion engine.

Car manufacturers like to tout the safety of their vehicles by revealing how they do in crash tests. But those tests only consider the safety of the driver and the passenger, not the rest of us!

Car manufacturers like to tout the safety of their vehicles by revealing how they do in crash tests. But those tests only consider the safety of the driver and the passenger, not the rest of us!

(Gersh Kuntzman/New York Daily News)

I get it, it’s a car show, not a “save-the-planet” expo, but do automakers have to be so cruel with the irony? Best example: Honda has a turbo-charged engine that it calls “Earth Dreams,” that, despite its name, still burns petroleum and exhales toxic gases. I’m willing to bet that when Mother Gaia rests her weary head at night, she’s not dreaming of this 174-horsepower powerplant.

Worse, there’s virtually no talk about making cars safer for anyone except the operators. As I entered, two Toyota sales reps were doing a spirited presentation about the positive attributes of the new Camry, playing the roles of the hot-and-intelligent car babe and the nerdy-and-slightly-little-less-attractive car dude. The babe kept using a “come-hither” voice to tout the Camry’s performance specs, while the dude played the role of middle-aged dad to pitch the car as sensible. In their final showdown, the babe touted the “dual exhaust system” while the dude tried to get support from the crowd by championing the “dual safety cameras.” Hearing crickets, he conceded the fight. “I guess she wins again!” he said in mock offense.

The 2017 Ford GT. Mostly, the auto show is one big tribute to the internal combustion engine.


A woman in a slinky dress told me that the Lexus LS500 can anticipate what the driver is thinking before he or she does. I hoped she was talking about accident prevention – you know, like a driverless car – but the mind-reading was about affluence, not assurance: all four seats, she gushed, provide automatic shiatsu massages (and here I was only worried about drivers who text! Now I have to worry about drivers who fall asleep at the wheel because the massage is soooo relaxing).

Almost all the cars tout their safety with signs heralding the vehicle’s “five star” crash test rating. Here’s the problem: those ratings only cover the driver and his or her passenger, not the seven billion of us on the outside of the car.

The Star Wars Rogue One-themed Nissan Rogue, if you need to take off due to planetary climate change.

The Star Wars Rogue One-themed Nissan Rogue, if you need to take off due to planetary climate change.


I almost got optimistic when I wandered over to the Jaguar booth and noticed that some of the British carmaker’s vehicles have a “perimetric alarm and immobilizer.” That sounded like some sort of warning system to alert the driver when he is about to veer into the bike lane rather than slow down to avoid a turning car on Smith Street, plowing right into me and leaving me bloody on the pavement (which happened, by the way).

So I asked the only company rep who wasn’t wearing a tight-fitting dress what a “perimetric alarm and immobilizer” was – it turns out, it’s a keyless locking system that makes it really hard to steal the car.

It's a car show, not a save-the-planet expo, but do automakers have to be so cruel with the irony?

It’s a car show, not a “save-the-planet” expo, but do automakers have to be so cruel with the irony?

(Theodore Parisienne/for New York Daily News)

Oh, by the way, it goes from 0-60 in 5.4 seconds.

“Cool,” my son said.

The NY International Auto Show continues through April 23. For info, visit

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