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Inside this issue
GM, Ford Financials Could Veer in 2nd Half
Senator Wants GM to Explain $400M Compensation Estimate
Nissan Reports Hefty Profit Rise
'Cash for Clunkers Opened Up the Floodgates'
A Crush of Crossovers From Japan's Big 3
Millennials Drawn to Car-Sharing Services, but Eventually, They Buy
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
GM, Ford Financials Could Veer in 2nd Half

While General Motors' second-quarter profits were hammered by the costs of its massive recall, across town Ford Motor Co. reported a robust profit bolstered by a record second quarter in North America. But fortunes could change for the two Detroit carmakers as they head into the second half of 2014.
Source: Automotive News
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Senator Wants GM to Explain $400M Compensation Estimate

Sen. Richard Blumenthal wants General Motors Co. to explain how it estimates that it will spend $400 million to $600 million to pay death and injury claims linked to its recall of 2.6 million older cars for ignition switch problems. The Connecticut Democrat wrote GM CEO Mary Barra on Friday. He called on the Detroit automaker to release the basis for estimating that $400 million to $600 million will be paid to victims through the compensation fund administered by lawyer Ken Feinberg.
Source: The Detroit News

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Nissan Reports Hefty Profit Rise

Strength in overseas markets offset decline in domestic sales

Nissan Motor Co. said Monday that sales gains in North America, China and Europe offset weakness in Japan and some emerging markets, pushing fiscal first-quarter net profit up 37%. The result was better than many analysts expected, but showed that Nissan remains dependent on hefty sales incentives in North America, its biggest market. As a result, its profit margin—5% in the quarter—remains well below the 8% goal that Chief Executive Carlos Ghosn has set as a midterm target. Joji Tagawa, corporate vice president, said Nissan was taking steps to reduce incentives. The company recently dropped so-called stair-step bonuses, which provide dealers with escalating payments based on how many units of a particular model they sell every month. Nissan is replacing this with full-year sales goals.
Source: The Wall Street Journal
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'Cash for Clunkers Opened Up the Floodgates'

Program provided a lifeline for the industry

It's hard to imagine that words like "U.S. sales bonanza" were ever used to describe anything that happened in 2009. But they were. The Car Allowance Rebate System, also known as cash for clunkers, was a lifeline at a desperate time in the U.S. auto industry. Consider this: When U.S. vehicle sales fell 28 percent in June of that year, the drop wasn't seen as being so bad. Every other month that year had been worse. "We were getting our teeth kicked in," recalled Paul Lunsford, a Toyota dealer in Orange County, Calif. Cash for clunkers changed that, if only for a couple of months. Nearly 700,000 vehicles were traded in through the $2.85 billion program, which provided consumers as much as $4,500 each to trade in an old gas guzzler for a more fuel efficient new model. Cash for clunkers turned July and August 2009 into bright spots during what was otherwise a year that most in the industry would rather forget. The idea was seen as a way to encourage consumer spending and reduce carbon emissions -- a priority for the new Obama administration.
Source: Automotive News
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A Crush of Crossovers From Japan's Big 3

Already well positioned in the red-hot crossover segments, Honda, Toyota, Nissan and their luxury-brand offshoots are eager to hold their ground. Several key launches are in works for Japan's Big 3, including big, small and medium-sized crossovers. Honda's Fit-based HR-V small crossover -- about 9 inches shorter than the CR-V -- arrives this summer. In November, Lexus' NX compact -- derived from the Toyota RAV4 platform -- debuts. Nissan's redesigned, third-generation Murano will reach showrooms at the end of this year as a 2015 model. Further out, Toyota is studying a low-slung Scion crossover, smaller than a RAV4, based on a modified Corolla platform in all-wheel-drive setup. It would arrive in 2016 or 2017.
Source: Automotive News
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Millennials Drawn to Car-Sharing Services, but Eventually, They Buy

Car- and ride-sharing programs -- called upon via smartphone applications -- are changing the way city dwellers get around and the way millennials think about car ownership. The convenience is indisputable. Pull up the app for Zipcar or Car2Go and reserve a nearby car for short-term use. Or use the Uber app to summon a driver and a car. But do these services pose a serious threat to the traditional automotive market? The short answer is no, most observers say. The trend is mostly urban, and millennials still buy cars, but they're typically waiting until they start a family to do so. Still, the industry acknowledges that younger drivers are postponing car ownership in favor of less expensive memberships with urban car-sharing and ride-sharing services.
Source: Automotive News
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Quotable

"I was proud that the team faced the facts, brutal as they were, and I think they formulated a plan of recovery and I think that's something to be proud of. I can't think of a better leader than Mary [Barra]."

   --- Former GM Chairman and CEO Dan Akerson, commenting on how the automaker has handled its recent recalls, The Detroit News, July 28

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