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Inside this issue
General Motors Recaptures Investment-Grade Credit Rating
Fiat Rethinks Alliance with Chrysler Amid IPO Filing
Should the U.S. Finance Alternative-Energy Startups?
Subaru Defies All Logic
Most Consumers Say They'll Steer Clear Of Self-Driving Cars, Survey Says
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Top Stories
General Motors Recaptures Investment-Grade Credit Rating

General Motors' debt is again rated investment-grade for the first time since May 2005, which will reduce its borrowing costs.

Moody's Investor Service raised GM's corporate rating from Ba1 to Baa3, reflecting the automaker's sustained profitability, its healthy U.S. product outlook and its growth in China. For GM, the announcement could lower its cost of issuing new debt and could attract more interest from investors. It comes nearly four months after the automaker returned to the Standard & Poor's 500 index, another milestone reflecting GM's significant financial progress since its near-death experience.
Source: Detroit Free Press
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Fiat Rethinks Alliance with Chrysler Amid IPO Filing

UAW trust puts pressure on Marchionne

Chrysler Group was forced to file paperwork for an initial public offering by its second-biggest shareholder -- the UAW retiree health care trust fund -- prompting Fiat to say it could scale back its commitment to the U.S. automaker. Fiat, which owns 58.5 percent of Chrysler, wants to take full control and buy out the rest of the stock owned by the UAW trust fund, but has balked at the more $5 billion being demanded. In response, the UAW trust exercised a right enshrined in Chrysler's 2009 government-financed bankruptcy to go forward with an IPO, stepping up pressure on Sergio Marchionne, CEO of both automakers, to reach a deal.
 
Bankers and analysts view the filing as a move by the UAW trust to extract a better offer from Fiat and many wager an IPO will never take place. Fiat responded angrily in Monday's filing, which raises critical questions about when and even if Marchionne can merge the two companies to form the world's seventh-largest auto group.
Source: Reuters

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Should the U.S. Finance Alternative-Energy Startups?

After some well-publicized failures, two experts debate whether the federal government should play this role.

The federal government has long been a player in the energy industry. On top of its regulatory role, the U.S. government extends tax credits to companies in fossil fuels, renewables and nuclear energy alike. In more recent years, partly in response to some very public failures, controversy has erupted over the Department of Energy's investments in clean-energy startups. The department has a $34 billion portfolio of loan guarantees to solar, wind, nuclear and other companies. The energy secretary reported in May that about 2% of the portfolio represents losses. Some of the biggest losses were linked to Solyndra, a maker of solar panels, and Fisker Automotive, an electric-car company. Richard W. Caperton, managing director of energy at the Center for American Progress, takes the position that government investment in clean-energy startups is essential. Douglas Holz-Eakin, president of American Action Forum, believes the government should not be in the business of investing in energy startups.
Source: The Wall Street Journal
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Subaru Defies All Logic

Subaru seems to be able to do the impossible. In an industry where conventional wisdom says an auto maker needs to produce 6 million vehicles a year to achieve the economies of scale necessary to survive, Subaru only sells about 750,000 cars. And yet Subaru is on a tear. For the last five years, the little Japanese auto maker has run from one sales record to the next. Someone forgot to tell it that the Great Recession had crippled the global economy. And when other Japanese automakers were struggling with exchange rates, Subaru consistently posted tidy profits. Compare that to Mazda, a Japanese automaker with twice the sales volume but struggling financially. All this success has triggered a deep debate inside Subaru. Should it remain a niche player? Or should it expand its production base and go after the big boys?
Source: WardsAuto
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Most Consumers Say They'll Steer Clear Of Self-Driving Cars, Survey Says

While the first autonomous vehicles with at least modest self-driving capabilities are expected to reach dealers' showrooms by decade's end, overcoming motorists' innate distrust of the concept could prove to be the biggest challenge ahead for automakers. According to a survey of 1,000 adults conducted by ORC International for the Chubb Group of Insurance Companies, only 18 percent of consumers queried said they'd purchase an autonomous vehicle. Why? Two-thirds admitted they wouldn't feel safe being a driver in name only, while only 22 percent would feel confident allowing their loved ones to ride in a self-piloted car. Obviously the notion of autonomous vehicles being inherently safer than human-piloted modes of transportation seems to be lost on the average motorist, who's clearly nervous about the prospect of taking their hands off the wheel.
Source: Forbes
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More Articles
 
Quotable
"Good things happen when you build great cars and trucks and deliver strong financial results. [Monday's] news from Moody’s further underscores that this is exactly what we are doing today."

    -- GM CEO Dan Akerson, commenting on Moody's Investor Service raising the automaker's corporate rating to investment grade, Detroit Free Press, Sept. 23
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