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from Breakingviews:

GM can find small comfort in Toyota’s ride

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By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

General Motors can find some small comfort in Toyota’s recall ride. Before Chief Executive Mary Barra was hauled up to Capitol Hill on Tuesday, the U.S. automaker summoned more vehicles back into the shop and doubled the estimated cost of fixing safety issues in the first quarter. Toyota’s expensive accelerator fiasco suggests GM’s costs will probably rise from here, but ultimately the financial fallout should be manageable. Culture may be the harder repair.

The problems that afflicted Toyota from 2009 to 2011 have cost at least $3.2 billion so far. That includes the $1.2 billion Toyota agreed to pay last month to settle a Department of Justice probe, $1.1 billion in recall-related expenses that Toyota estimated in 2010 and roughly $900 million of lost sales. Omitted is the cost of ongoing civil litigation and harder-to-measure items like any possible damage to Toyota’s reputation. The sum is nevertheless a safe starting point for GM.

To date, Toyota’s recall has cost it 1.5 percent of 2013 sales. If GM’s experience is similar, its costs before civil litigation would amount to about $2.3 billion, or three times the upwardly revised figure GM just released as an estimated first-quarter charge.

from India Insight:

Organised players, growing acceptance boost India’s used car market

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One would expect the former head of India’s No. 1 car maker to drive a glitzy new SUV or an imported luxury car, but Jagdish Khattar thinks differently. The industry veteran who spent 14 years at Maruti Suzuki now buys only second-hand cars and drives a used Volkswagen Passat.

"Rich people buy new cars, intelligent people buy second-hand cars," said Khattar, the founder of Carnation Auto, a service and used-cars company he started in 2008 after leaving Maruti. The used car market, he said, is the future of automobiles.

from Breakingviews:

GM’s dividend hits right spot on multiple levels

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

General Motors is hitting the right spot on several levels with its return to paying a common stock dividend. The $1.7 billion annual payout looks punchy at some 30 percent of what analysts reckon the company’s net income will be for 2013. Ford Motor, after all, restarted its shareholder payouts at a more cautious 10 percent of profit just over two years ago and only last week took it up to around a third. But GM looks positioned to handle it.

from Breakingviews:

Chrysler deal gives Fiat a new year’s turbo boost

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By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Sergio Marchionne could not have wished for a better start to 2014. On the first day of the new year, the boss of both Fiat and Chrysler managed to strike a deal allowing the Italian firm to become the sole owner of Detroit’s third-largest automaker. And the $4.3 billion two-part pact he has made with Chrysler’s union trust fund puts him on top.

from Breakingviews:

GM navigates smart route to CEO succession

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By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

General Motors has navigated a smart route to succession. Dan Akerson, who has run the company since mid-2010, is stepping down in January. Replacing him as chief executive is Mary Barra, who despite 33 years of service at the automaker, has mostly sidestepped the taint of pre-bankruptcy failures. GM, freshly liberated from the U.S. government on Tuesday, also appointed an independent chairman for good governance measure.

from Breakingviews:

Chrysler IPO delay edges Fiat into driver’s seat

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By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Fiat may have slipped into the driver’s seat. An autoworkers fund that owns 41.5 percent of Chrysler has been pushing for an initial public offering of the company as part of talks with its Italian partner. Chrysler’s board has now decided to delay the stock sale until next year, suggesting Fiat’s negotiating position has improved.

from Breakingviews:

Chrysler needs $18 bln valuation to justify IPO

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Chrysler’s valuation needs to hit $18 billion to justify an initial public offering. That’s the point where the union trust fund that owns 41.5 percent of the Detroit automaker would reap more than it could get from controlling shareholder Fiat. But it’s also way more than either owner has ever considered to be a reasonable price.

from Breakingviews:

Sum worth more than parts in U.S. auto parts deal

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The sum is worth more than the parts – auto parts, that is. Advance Auto’s $2 billion takeover of rival General Parts International resulted in the acquirer gaining $1 billion in market cap. That’s bang in line with the net present value of promised cost savings. Nobel Prize winner Eugene Fama’s efficient markets hypothesis may be flawed, but when it comes to the nitty-gritty of corporate finance, it often seems to work just fine.

from Breakingviews:

Memo to Fiat on Chrysler listing: Drop it!

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Fiat’s Chief Executive Sergio Marchionne passes for a tough and canny negotiator. These skills have brought him control over 58.5 percent of Chrysler at a bargain basement price of less than $2 billion. However, in his attempt to buy the remaining 41.5 percent currently owned by VEBA, a healthcare trust affiliated with the United Auto Workers, Marchionne may over-egg the pudding.

Fiat and VEBA have been embroiled for more than a year in a spat about Chrysler’s appropriate valuation. The tussle, which already involves a court case, may lead to the listing of a 16.6 percent Chrysler stake in the coming months.

from Expert Zone:

The BMW 1 Series is coming to India

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

When BMW sold Rover in 2000, the British car brand was working on Project R30. There were rumours that BMW would use badge engineering to introduce the R30 as its 1 Series but that wasn’t to be.

The R30 may have been an inspiration but the BMW 1 Series was designed from the ground up. When American Chris Chapman worked on the 1 Series, he was led by Chris Bangle - a designer known for his peculiar styling - which explains the eccentricities of its design.

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