The U.S. government has pumped more than $100 billion into Detroit over the past year to keep automakers General Motors and Chrysler alive. But some of the sector’s remaining capitalists are having a hard time stomaching a $25 billion Department of Energy loan program intended to spark new developments in electric cars. 

Start-ups Fisker Automotive and Tesla Motors have won about $1 billion in combined funding, while longtime players Ford and Nissan have received substantially larger loans from Washington to work on vehicle electrification — a technology the White House and many in the industry hope will reduce the United States’ dependence on imported oil and lower emissions of carbon dioxide, a leading greenhouse gas. 

Funneling federal money to new entrants to the automaking world does not sit right with Tim Leuliette, chief executive of parts supplier Dura Automotive. 

“If there’s a real market for electric vehicles, the OEMs will do it,” Leuliette said, using industry jargon for automakers. “We don’t need to have people who have never built a car in their life take $1 billion of our tax money and say ‘I can do it too.’” 

Government funding muddles market signals, Leuliette argued at the Reuters Autos Summit in Detroit.

“When government writes a check, it says the smart money investors are hesitant to fund it,” Leuliette said. “When markets say it’s now wise enough … there’s more than enough money.” 

For his part, the founder of Fisker Automotive — which aims to build plug-in hybrid cars at a former GM plant in Wilmington, Delaware — said government funding is a logical way to kick start a technology that private U.S. companies have been slow to focus on. 

“Do we just sit and wait for the Chinese and the Japanese or Europeans to develop this and then we join later? Or do we actually this time around, try to take the lead?” said Henrik Fisker, whose plug-in hybrids would be able to travel for short distances on just the electricity stored in their batteries, which can be charged off the electric grid. 

“This is a moment in time, we cannot let this pass. We already let the hybrid pass - Toyota in the consumer’s mind, invented the hybrid and owns the hybrid - the average consumer doesn’t know that GM has more hybrids than Toyota,” Fisker said. “If an American company comes first with a plug-in hybrid, and we will be followed closely by the Chevy Volt in another segment, I think that is where America then has a chance in the consumer’s mind to take the lead, and not only in the U.S., but worldwide.”

The world’s biggest carmaker, Toyota, will not follow the road of McDonald’s and abandon Iceland even though it is selling ‘very few’ cars there at the moment and its distributor has been seized by the banks as its owner went belly-up, Toyota Motor Europe President and CEO Tadashi Arashima told the Reuters Auto Summit in Paris on Tuesday.

“We have a big market share there, of 25 percent, and it is good for our after-sales,” Arashima said.

The banks are trying to sell the distributor but Toyota does not plan to take ownership like it does in its key European markets of Germany, France, Italy, Spain and the United Kingdom, and some Scandinavian countries.
 

Arashima said he believes the Russian market will recover sooner than many think, after the west European markets but well before the rest of East Europe — in 2011 or 2012.

In West Europe he does not see signs yet of a return of consumer confidence leading people to buy more expensive items such as cars and the showrooms remain quiet.

Europe traditionally had a low priority for Toyota, which mainly focused on the big U.S. market, and Arashima still has problems convincing  headquarters in Toyota City that Europeans like diesel engines which are far from popular in Japan and the States.

It now produces cars in Britain and France and makes some 60 to 70 percent of its sales locally.

But the Lexus luxury brand is not really taking off in Europe as it competes with German rivals that have diesel, and has rather big engines that Europeans have started to dislike.

In the U.S. however, big is still beautiful. “Even though Americans drive slowly they still love big engines,” Arashima said.

A few years ago, one of the guests at our annual Reuters Autos Summit — Tom Stallkamp from Ripplewood — pretty much stopped everyone dead in their tracks by predicting that auto sales in the United States was likely to fall to an obscenely low level of 14.5 million.

Those were the days.

Of course, Stallkamp was making that prediction at a time when U.S. car manufacturers were selling in the neighborhood of 16 to 17 million a year. If the number hits 14.5 million in 2010, people will be wild with enthusiasm as most now expect something in a range of 10 to 11 million.

That would be about flat to a little higher than sales this year.

On the first day of Reuters annual sojourn to Detroit for the Reuters Autos Summit, defining what the “new normal” is going to be for everything about the auto industry is much on everyone’s mind. What will happen with the big manufacturers, the dealerships, the suppliers.

It’s a lot to assess all at once.

Bob Carter, head of Toyota’s U.S. operations kicked things off for the summit by talking about what he sees for the coming year.

The Reuters Autos Summit runs through Thursday in Detroit and Paris. For an audio clip of Carter’s comments, please click this link (Toyota’s Bob Carter at the Reuters Autos Summit).

Remember the good old days where — if you lived in the United States anyway — people would talk about “emerging markets”?

We’d nod our heads knowingly, wishing these poor folks the best as they tried to accumulate the swell things we had bought for ourselves. We knew that residents of Mumbai or Caracas or somewhere would never attain the great things we had in such abundance here in the good old USA (Hummers; his and hers monogrammed dishtowels; zero down, 110% mortgages on houses we couldn’t afford … that kind of stuff), but we still wished them well.

So, here we are in 2009 and at this year’s Reuters Global Real Estate Summit we find that the new emerging market is … well, it’s right down the block.

According to our guest Tom Shapiro, president of GoldenTree InSite Partners private equity investment firm, the new emerging market in the real estate world is the United States.

Shapiro, in a lively discussion, spoke glowingly about his firm’s recent new business in Brazil and about other opportunities he was seeing outside the United States. But, while he said his firm had not made any investment in the U.S. in about two years, he was starting to look for opportunities and see some enthusiasm for deals to get done.

Shapiro said it was still to early to decide what inning the real estate meltdown was in, but he was starting to see some interest from the sidelines about what the “next big thing” would be — and with cities like New York, San Francisco and Boston as potential growth engines, he was a little hopeful.

Optimism this week has been pretty thin in the real estate world, so we need to take it where we can get it.

Shapiro was one of the featured speakers at this year’s global summit, which continues through the end of this week in New York, London, Shanghai and Kuala Lumpur.

For more of Shapiro’s comments, please click the link below and hear an audio clip:

Tom Shapiro, GoldenTree InSite

When it comes to shopping for bargains these days, retailers are expanding their window of possibilities the same way as increasingly price-conscious consumers.

While the concept of outlet malls and shopping centers was once considered a last-ditch way to unload excess inventory, Steven Tanger, chief executive at Tanger Outlet Centers, says the model is changing…and fast!

Tanger, speaking at the Reuters Real Estate Summit on Tuesday, said that many retailers who had previously shunned the outlet concept are starting to look at the option as more than just something for “the other guy.”

Mr. Tanger also gave us an update on how business conditions are looking overall — including how much the recent spate of lousy weather in New York is weighing on shoppers’ moods (it hasn’t helped our moods that much either, quite honestly!).

But Mr. Tanger was a bit more sunny than the New York weather has been – at least about his own space in the retail world. He sees companies and store concepts including Limited Brands, Victoria’s Secret and Restoration Hardware all expanding their businesses into outlets.

He even sees an outlet market for plastic shoes — as Crocs has entered the space.

Tanger, with outlets spread throughout the United States, sees this expansion as a plus for his business and a definite avenue for future growth. While Tanger is a very East Coast-centric concept right now, the map of the United States has a lot of room for growth for the company and Tanger said he and his team are looking for opportunities to expand right away.

Tanger was one of the featured speakers at this year’s annual real estate summit. This year the summit is a global effort with guests in cities including New York, London, Shanghai, Sydney and Moscow. The summit runs through this week.

For an audio sampling of Tanger’s comments, please click on the link below:

Steven Tanger, CEO Tanger Outlet Centers

The United States may fondly dream of independence from imported oil, but it would do well to remember that the traffic is not one way.
OPEC Secretary General Abdullah al-Badri told the Reuters Global Energy Summit he had been hearing for years that the world’s biggest oil consumer was seeking ways to avoid importing OPEC oil, but he was confident it would carry on burning fossil fuel for years to come.
“I am of an age when I can tell you I have been hearing this for the last 40 years,” Badri said. “We will see another president, with two terms, before we see any change.”
He also warned the U.S. it should be careful what it wished for.
“We would like to tell them they buy most of the resources of our member countries. We are sending them back more than 50 percent of that income to OECD countries, and the U.S. is one of them, to buy medicine, equipment, aeroplanes, spare parts, clothes.”
“Don’t forget the medicine,” he added.