The state of automotive and transportation as the coronavirus pandemic unfolds

There are several unknowns shrouding a new virus identified three months ago in China and now seeing fear spread worldwide. The World Health Organization (WHO) reported as of March 15, that there have been 153,517 confirmed cases and 5,735 deaths worldwide of COVID-19 — with 81,048 confirmed and 3,204 deaths in China. It crossed a pivotal point over the past week with the WHO declaring on Wednesday that the coronavirus is now officially a global pandemic. That announcement was followed on Friday with President Donald Trump declaring it a national emergency.

What is appearing to become the largest global development in years will continue to remain shrouded in mystery for the unforeseen future. It will take quite a while until the public can rest assured that healthcare professionals can stop the spread and bring a cure — or at least arrest worsening of symptoms — for those infected with the contagious respiratory disease. It’s been causing panic among those crowding supermarkets to purchase bottled water, toilet paper, sanitary wipes, and in the past few days, nutritional basics such as canned soup, pasta, and bread. Governments around the world are placing severe restrictions on travel and public gatherings in attempts to quell panic and spreading of the infection and disease.

The global automotive and transportation sectors are starting the feel the impact first witnessed in China — and now spreading to every continent except for Antartica. The long-term impact is expected to be severe for governments pumping expenditures into testing for the infection, researching the virus in labs, and quarantining people who’ve tested positive for COVID-19 to their homes or to government-run facilities. Automakers and many other corporations are starting to take hits in stock market value, and many companies are expected to take huge financial losses. Some of that will come from revenue and profit loss as more and more events are being canceled if they have attendance of more than 50 people (or even less) — starting with sporting events being postponed and many other announcements such as Louisiana opting to postpone its April primary election; and schools telling students that classrooms will be closed for now and that universities will finish their semesters and quarters with online classes. Businesses around the country also have been shutting down over the past week.

There are many questions that will need to be answered in the weeks and months ahead…… Will people want to travel and take road trips, and will there be too many restrictions in place for it to work? Will their concerns for climate change and air pollution be anywhere near their fear of coronavirus spreading? As the economy is hit hard and job losses potentially get underway, will consumers be able to go check out new cars (including electric vehicles) and slap down their down payments? How will service-based sectors be impacted, such as auto sales and vehicle maintenance, public transit, and ride services, as the public will want less contact with others for fear of contagion? What will the oil price war between Saudi Arabia and Russia — intensified by the coronavirus news — mean long-term?

Here’s an overview of how the coronavirus is beginning to impact the automative and transportation sectors………….

Impact on China car sales:  Retail sales of new vehicles in China, the world’s largest auto market, plunged 80 percent in February, according to the China Passenger Car Association. BYD’s electric vehicle sales dropped 79.5 percent year over year during that month. BAIC BluePark, the EV division of BAIC Group, dropped about 65 percent. Volkswagen’s EV partner JAC saw its sales drop by 63.4 percent. Coronavirus also forced temporary closures of Tesla’s new Shanghai car plant and stores throughout the country.

EV battery supply tightening:   Many automakers are struggling to find adequate supplies of electric vehicle batteries. One of the factors is China being a major global leader in refining cobalt, a major ingredient in lithium batteries. The pandemic is expected to affect cobalt processing plants and EV costs. Prices are expected to be rise for automakers such as from Chinese lithium producer Ganfeng Lithium, which supplies Tesla and Volkswagen; although that cost increase has been by less than 10 percent so far.

What will oil price war mean?:  Saudi Arabia declared a price war on Russia’s oil industry on March 8. Russian President Vladimir Putin had refused to cut back oil production in the face of depressed prices caused by an unprecedented 3.5 million barrels per day fall in demand that was thought to be caused mainly by the coronavirus crisis. The Saudis are now flooding the oil market and unilaterally slashed their own prices enough to drive down prices on Monday, March 9, by 25 percent. That overall trend was being felt over time. Brent oil plunged from $68.44 per barrel on December 30 to $34.36 on March 9. WTI went from $61.68 to $31.13 during that time. Analysts fear a serious negative impact on the US shale industry. Stock analysts assign the oil price plunge as a factor in Tesla’s share prices failing over the past week. Overall, analysts expect that the oil supply will continue increasing. just reported that “the oil market is heading for the largest ever crude glut in the first half of 2020, which could be two to nearly four times bigger than the biggest surplus recorded so far.”

What about the economy?:  The Federal Reserve decided yesterday to drop its benchmark interest rate by a full percentage point to near zero, and promised to boost its bond holdings by at least $700 billion. Fed Chairman Jerome Powell told press by phone that the virus’s disruption meant second quarter growth would probably be weak and it was hard to know how long the pain would last. That’s why the Fed is advocating a clear role for fiscal policy to help cushion the blow. Stocks are still way down from recent highs on fears of coronavirus, an oil price war and travel bans, and the automakers have been hit particularly hard as supply-chain problems mount across the globe. The Dow Jones Transportation Average is down 11 percent as a flood of store, restaurant and event closings send shockwaves. Major publicly traded companies in trucking, airlines, auto, freight/logistics, and railroads, are down about 10 percent to 22 percent today.

Musk downplays risk of coronavirus:  Tesla and SpaceX CEO Elon Musk on Friday sent a company-wide email to SpaceX employees stating that evidence he had seen about COVID-19 “suggests that this is *not* within the top 100 health risks in the United States.” They have a higher risk of being killed in a car crash, he said. Days earlier, he’d tweeted that “the coronavirus panic is dumb,” which was liked by about a million of his Twitter followers. President Trump had taken a similar approach not long ago, stating that more people are likely to die from influenza than coronavirus. Trump has had to back off such comments, and has taken a few steps in the opposite direction since then including declaring the national emergency.

First US auto plant employee tests positive:  The first-known employee of a Detroit automaker to be diagnosed with the coronavirus in the US works at a Fiat Chrysler Automobile plant near Indianapolis, which was confirmed on Thursday. The unnamed male employee at the Kokomo Transmission Plant, located about 50 miles north of Indianapolis, was quarantined and received medical care, according to Fiat Chrysler and the United Auto Workers union. An undisclosed number of other people who may have come into direct contact with the person diagnosed with coronavirus also have been quarantined, according to the automaker. Production at the plant continued as normal, but was later idled out of fear spreading among workers.

Air travel hit hard by restrictions:  Major airlines have been particularly hit hard by the global pandemic, with the president’s new travel ban with Europe worsening it. The prospect of losing spring and summer bookings is another part of expected losses. British Airways’ chief Alex Cruz, told 45,000 staff on Friday, for airlines this is already bigger than the SARS epidemic, the aftermath of 9/11, or the 2008 financial crisis.

Delivery services still up and running:  Amazon says its Prime delivery service is experiencing delays, and it’s running out of stock on some household staples due to the coronavirus outbreak, CNBC reported. Food and grocery delivery services such as DoorDash, Postmates, Grubhub, Uber Eats, and Instacart are seeing a lot business. There is currently no evidence that COVID-19 can be transmitted through food or food packaging, according to the CDC and the FDA. A larger concern is possibly transmitting the coronavirus from delivery person to customer, or vice versa, through coughing, vaporized air particles, or other direct contact. Companies are urging drivers and shoppers to take extreme caution.

BYD becomes largest face-mask supplier:  BYD is becoming a major supplier of products that are now in extreme demand — face masks and disinfectants. Its new Shenzhen, China-based plant is able to product five million face masks and 300,000 bottles of disinfectants per day. It’s been done in response to severe shortages at hospitals and agencies across China since the COVID-19 outbreak. It started production on February 9, and now hundreds of employees are working day and night to fulfill orders.

Customers dwindling at dealer showrooms:  Auto dealers are hearing worrisome news such as automakers shuttering plants in Asia and Europe, and schools closing and major events shutting down in the US. Some dealers are reporting dwindling visitors and sales. John Luciano, managing partner with Street Volkswagen in Amarillo, Texas, and chairman of Volkswagen’s national dealer council, says that sales are definitely falling and that conditions are changing a little bit more every day; a sentiment echoed by several other dealers. Cox Automotive, which owns Kelley Blue Book, Autotrader, and Manheim, sees negative U.S. economic growth in the second quarter and has withdrawn its forecast for 16.6 million new-vehicle sales in the US this year. Morgan Stanley analyst Adam Jonas would like the Trump administration to consider rolling out another “Cash for Clunkers” program, which was a $3 billion federal program in 2009 that incentivized consumers to swap aging gas-guzzlers for new, more fuel-efficient vehicles. Editor’s note: The Colorado house of representative just passed a measure that would allow electric vehicle-exclusive manufacturers such as Tesla to sell directly to consumers if the automaker has no franchised dealers in the state. It still has a ways to go to be cleared and become a new law in Colorado.

Trucking feeling the squeeze:  West coast ports are starting to see a decline in cargo ships full of containers enter their ports, with the Port of Seattle seeing a recent decline akin to what usually happens over an entire years. The Ports of Los Angeles and Long Beach, collectively the nation’s largest port, is seeing a drop in ships entering the port and cargo containers being unloaded for truck transport. Much of that has been originating in China, where plants have been closed down for several weeks after the coronavirus outbreak became pervasive.

Automaker response to crisis:  Ford, General Motors, and Fiat Chrysler Automobiles (FCA) have told non-factory employees to work remotely in order to avoid contracting and spreading the coronavirus. Factory workers at plants in the US, however, are being told to remain in place — despite the United Auto Workers union announcing Thursday that a Fiat Chrysler employee at the company’s Kokomo Transmission Plant in Indiana tested positive for COVID-19. Other automakers operating in the US are notifying employees with warnings. Nissan, which operates factories in Tennessee and Mississippi, said that employees who feel symptoms should notify their health care provider and not come to work. In Europe, FCA, Peugeot, Volkswagen, and Audi stopped much of their production plant work today as they grapple with the coronavirus crisis and plunging demand.

South Korea and China recovering, not so for Europe and the US:  South Korea reported more recoveries from the coronavirus than new infections on Friday for the first time since its outbreak emerged in January. It’s raised hopes that Asia’s biggest epidemic outside China may be slowing. The Korea Centers for Disease Control and Prevention (KCDC) reported 110 new coronavirus cases on Friday compared with 114 a day earlier, taking the national total to 7,979 on that day. The death toll rose by five to 72 as of late Friday. China has seen a drastic drop in infections — from hundreds of cases per day in February, to less than 50 each day last week. The rate of resumption of work at its factories and provinces is slowly opening up. China had shut down most provinces in a bid to contain the outbreak, and roads, transportation networks as well as factories had been closed. Europe and the US are seeing their numbers continue to go up. Nearly 170 million people were under orders to remain in their homes this weekend as France and Spain joined Italy in placing strict quarantine rules on their entire populations amid alarming rises in coronavirus cases and deaths.

Facts about Coronavirus:   For those wondering about some of the terminology and what’s expected to come next…………

  • It’s now typically being called “novel coronavirus.” Why is that? Simply that it’s a new form of the coronavirus. As for coronavirus, the name covers a family of seven known viruses that can infect people, including the common cold and other respiratory infections.
  • The 2019 novel (new) coronavirus has been named SARS-CoV-2, and the disease it causes is called coronavirus disease 2019, or COVID-19.
  • The Centers for Disease Control and Prevention (CDC) defines the symptoms that may appear two-to-14 days after exposure as: fever, cough, and shortness of breath.
  • The CDC recommends that you immediate get medical attention if you have any of these emergency warning signs:
    —Difficulty breathing or shortness of breath
    —Persistent pain or pressure in the chest
    —New confusion or inability to arouse
    —Bluish lips or face
  • CDC recommends taking the following steps to protect yourself:
    —Clean your hands often
    —Wash your hands often with soap and water for at least 20 seconds.
    —You can also use a hand sanitizer that contains at least 60 percent alcohol.
    —Avoid touching your eyes, nose, and mouth with unwashed hands.
    —Avoid close contact with people who are sick.
    —Be particularly careful if COVID-19 is spreading in your community.

While some people dispel vaccine as a solution, there has been a lot of interest in when we’ll be seeing a vaccine available at medical offices, similar to the flu shots our doctors and nurses have been recommending in recent years. However, it won’t be showing up anytime soon for the novel coronavirus.

“A vaccine that you make and start testing in a year is not a vaccine that’s deployable,” Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said last week. The earliest it would be deployable, he said, is “in a year to a year and a half, no matter how fast you go.”

Reporter’s Notebook: The state of auto dealers at NADA 2015 in San Francisco

NADA 2015For franchised dealers and their suppliers, attending the National Automobile Dealers Association (NADA) Convention is a must. I attended NADA 2015 on Friday and Saturday with two colleagues from Automotive Digest at the Moscone Center in San Francisco. Here are a few thoughts from my notebook:

  • The industry seems to be healthy, with attendance at 22,000 to 24,000 people – up from last year and about 550 exhibitors in the three separate Moscone Center halls. As for car sales, NADA’s chief economist Steven Szakaly forecasted US new vehicle sales will go up from 16.5 million sold in 2014 to 16.9 million sold this year. Economic growth is behind it with an improving housing market and job expansion leading to a surge in demand; low gas prices are a factor and that should tip the scale to more demand for pickup trucks and SUVs.
  • Michelle Krebs, senior analyst at AutoTrader, expects electric vehicle (EV) sales to continue softening this year. Some of that has to do with internal combustion engines having stronger fuel economy and performance through stop/start systems, direct injection, turbocharging, and other factors. Limitations on EV charging stations are another part of it. As for hybrids, there’s still a lot of online shopper interest in them, but that’s many times diverted over to fuel-efficient vehicle purchases. Krebs was very impressed with the Consumer Electronics Show (CES) this month, where automakers for the first time played the dominant role. CES could be the leading auto show of the future, Krebs said. Mercedes stole the show on driverless cars, and BMW and Volkswagen stood out demonstrating their self-parking car systems. One AutoTrader survey showed that while consumers are not that supportive of self-driving cars, they do have interest in connected car technology features currently available on cars – and which are leading the way toward autonomous vehicles.
  • Jennifer Weaver of National Biodiesel Board said that the association’s annual conference this month in Fort Worth, Texas, was well attended. There’s still concern about the US Environmental Protection Agency’s (EPA’s) final ruling on the Renewable Fuel Standard (RFS) being delayed. Biodiesel is the only advanced biofuel on the RFS list of supported fuels that’s reached commercial scale production and sales. Nearly all diesel vehicles allow consumption of biodiesel, with much of that in the B5 to B20 range. While some biodiesel producers were hit hard by the EPA’s delay of its production schedule, there are several large and stable biodiesel companies, Weaver said. Having stringent ASTM fuel specifications has set a standard for bringing clean biodiesel to fueling stations. Fleets are gaining more interest in biodiesel since it reduces greenhouse gas emissions by more than 50% compared to petroleum diesel; the cost is comparable and sometimes less than diesel; you can run biodiesel without having to make any engine conversions; and public fuel dispensers providing biodiesel are becoming widespread throughout the US.
  • As for big news breaking at the convention, former Florida Governor Jeb Bush attacked the Consumer Federation Protection Bureau (CFPB) for coming down too hard on dealer sales tactics. Some think Bush is likely to announce his candidacy for president in 2016 – one year after keynote speaker and potential presidential candidate Hillary Clinton gave a keynote speech at the NADA convention. Another hot topic being discussed is what’s going to happen to dealer corporate buyouts and mergers now that Warren Buffett and Berkshire Hathaway have invested their way into the dealer world. Another interesting news development took place during NADA when billionaire investor George Soros, who has a lot of experience in auto industry capitalization, was said to be considering acquiring a dealer network.
  • John Krafcik, president of TrueCar, sees a strong correlation between gas prices and Toyota Prius sales, which continue to be down. Full-size pickups are doing much better than hybrids as gas prices stay down. On the subject of clean diesel passenger vehicles, Krafcik sees that greenhouse gas emissions present a strong challenge for diesel vehicles. Diesel vehicles release 14% more CO2 than gasoline; some of these clean diesel cars may be about 10% to 15% more fuel efficient than comparable gasoline engine cars, but they end up breaking even with diesel cars usually costing more than gas engine models.
  • Going mobile in San Francisco means accessing transportation alternatives such as riding in a cabled electric bus, or a BART train, or taking Uber across town. I rode with Uber to and from the airport to save money off the usual taxi fare of around $50 from SFO to the center of the city. One of my trips cost $34 and the fee on the return trip to the airport was only $16. Why that was so much cheaper the second time wasn’t explained to me.
  • Millennials are getting serious about buying cars. “Millennials, like other generations, see car ownership as a way to establish independence,” Berj Kazanjian, Senior Vice President of MTV’s Ad Sales Research, said about study findings at a presentation during NADA 2015. They “also see car ownership as a way to craft their unique adult identity.” (I would also remind you to keep in mind that several studies in recent years have shown young people have a lot of interest in plug-in electrics, hybrids, and other alternative fuel vehicles. Just make sure you can reach them on their mobile devices.)

Training program needed for dealer staff to answer questions from EV shoppers

dealer financeSales of electric vehicles (EVs) have been fairly impressive since their launch in late 2010, but the question of how to move those numbers up continues to plague the auto industry. A new working paper and brief by researchers at the Institute of Transportation Studies, UC Davis explores the issues. Aside from Tesla buyers, car shoppers and buyers of EVs are much less satisfied with the dealer purchase experience than are buyers of conventional vehicles. EV buyers have been dissatisfied with the level of support they receive from dealerships. The UC Davis team sees that EVs require innovation in how they’re retailed to customers during a time of change in what consumers expect from their car shopping and buying experiences. There’s a real need for a dealer training program to enhance the EV car shopping and buying experience – and Green Auto Market has a proposal on how to get that done.

Earlier this year, a Consumer Reports investigation came to similar conclusions. The magazine dispatched 19 mystery shoppers to 85 dealers across four states. One finding was that dealer staff knew little about the EVs they’re selling. In some instances, dealer staff discouraged EV purchases.  The UC Davis team conducted 43 interviews with six automakers and 20 new car dealers in California’s major metro markets for EV sales. They also analyzed national and state-level J.D. Power 2013 Sales Satisfaction Index (SSI) study data on customer satisfaction with new car dealerships and Tesla stores.

One of the challenges for EV success is that these vehicles need to be offered outside of California. Currently, 19 different EV models from 10 different automakers are available for purchase in California, but only three of these models are available nationally. While automakers have their part in getting national EV sales above and beyond 1% of all new vehicle sales, dealers play a very large part in meeting this goal. Legal battles between dealer associations and Tesla Motors present a real challenge for dealers to compete, but also an opportunity for franchised dealers to stand out. Nearly every automaker is offering an EV for sale now. It can be challenging for dealer management to get their sales representatives focused on selling EVs; they do need to spend more time these days answering car shopper questions on connectivity, infotainment, extended warranty coverage, etc. It might be attractive for a dealer sales rep to get the car shopper to focus on something other than EVs, especially if it takes a long time to answer their questions – and if the customer knows more about EVs than the sales rep.

Here’s what Green Auto Market and LeSage Consulting would like to offer automakers and dealer networks: a training model where dealer sales representatives can give a 10-minute presentation that answers questions car shoppers usually have about EVs. These questions might include:

  • Federal tax and state incentives and how they’re acquired
  • Home charging stations – how much they cost and how the building code inspection process and installation work
  • Driving range once the car is fully charged
  • Public charging stations and how they can be found on mobile devices
  • Cost of fueling compared to internal combustion engine cars
  • Maintenance process and services offered by the dealer

It would probably make the most sense to have a training program for dealer staff available on video with other presentation materials, such as a slide show and hand-outs. Whatever the method, it’s becoming more important now for the dealer experience to improve for EV shoppers – if automakers and dealers want to see those sale numbers increase and to build customer loyalty. For anyone interested in exploring this opportunity, I encourage you to send me an email.

Car dealers are getting better, but there’s still a ways to go

Toyota Prius - Sea Glass PearlEver since the economic collapse of the auto industry that started in 2008, dealers have been undergoing changes in how they do business. Dealers understand that they’ve got to become stronger in customer service to build loyalty and can’t just stick to old upselling methods. They’re accepting that women make the majority of family car purchase decisions; that young people are holding off purchases longer than Baby Boomers did after first getting their drivers licenses; and that there’s a lot more car shopper interest in green cars such as hybrids and electric vehicles (EVs). There has been a lot of concern expressed that dealer staff haven’t been supportive and informed enough about EVs – mainly because it’s a longer selling process and isn’t as profitable as typical gasoline-engine cars. Those sales reps are very tied into closing sales quickly in how they make their living – and they could use more training and education in answering consumer questions.

As I wrote about not long ago in Green Auto Market (and its then-sibling blog Green Machine Digest), I was one of those green-interested car buyers. Well, a few days ago, I had a painful reminder about what I don’t like about the dealer experience and what does work for me.

Last year, I said yes to an aftermarket car alarm system for my 2013 Toyota Prius. Was I duped into it? Not necessarily – the Prius is an attractive car in California and there’s probably thieves looking for them as profit center, or so I thought. Actually, they’re not appealing to car thieves, according to a study by the National Insurance Crime Bureau – the Prius theft rate is much lower than the typical car. There’s a couple of reasons for that – one is that the Prius has several unique parts that can only be used in other Priuses, which cuts down the stripped parts market potential (and which makes for a big part of the car theft market). Another reason is that the Prius doesn’t have a key – it uses a remote fob to open its doors. That also cuts down the appeal to car thieves who usually don’t get their hands on the Prius key fob.

I discovered the problem with my alarm system while attempting to start the parked Prius on Friday afternoon. As I pushed the start button, the left and right turn indicators simultaneously flashed and the engine wouldn’t start. I attempted to open the door, and the alarm went off – loud enough to get stared at by several people wondering why I had jumped out of the car desperately attempting to stop the alarm by pressing buttons on the key fob. Somehow it did stop, and I tried it again only to find the same thing – flashing lights on the panel and loud honking when I opened the door.

I called the dealer where I’d bought the car and had gone to for routine service a few times. The alarm system guy was gone and wouldn’t be back until sometime Saturday. I explained that I couldn’t start my car and drive home; all I received from the service department staffer was a phone number for the vendor who provides them with the alarm system. Nobody answered the phone at that office. So, I called Toyota corporate roadside assistance. They sent out a tow truck who got me to another Toyota dealer close to where I’d gotten stalled out. My choices were explained to me by the service department – have their service technician dismantle the alarm control box or go to my original dealer and have them deal with it. I told them to unplug the alarm system and I would have it fixed later or just live without it. Strangely enough, after the alarm control box was removed the beeping sound quieted down a bit when locking and unlocking the doors – another annoyance I can live without.

The customer service experience was positive at this Toyota dealer – including offering me a free shuttle trip home so that I wouldn’t have to wait around at the dealership for the repair to be completed. The service department assistant manager was very knowledgeable about the security system and about the Prius overall – which is one of the benefits of working with automakers and their dealer networks who have years of experience to go by.

The original dealer sales rep was very good with me about sitting in the car and answering my questions last year while I was shopping for the car – and giving me all the time needed to make the acquisition decision. The problem started with going to the Finance & Insurance rep and having to sift through the sales tactics. I do regret the alarm system purchase decision, but not the other ones. I do love my Prius and will look at the plug-in hybrid version later on. I do want to own an all-electric or plug-in hybrid EV, but the ownership costs and charging station accessibility need to improve. I would hope that the dealer experience goes in a similar direction.

Big Picture: More actions on Tesla stores in Ohio and Arizona, Toyota Financial Services starts up Asset-Backed Green Bond

Tesla direct salesIn the wake of New Jersey’s decision on Tesla Motors’ right to run corporate retail stores, there are two more states seeing developments. Ohio Gov. John Kasich has received a letter from General Motors expressing concern that the state would allow Tesla to expand beyond the two Ohio stores it currently has in operation. GM thinks the state should oppose legislation allowing Tesla to open more stores, as it would allow Tesla to compete under a different set of rule. “We understand discussions are ongoing over legislation which could provide a broad exemption for a single manufacturer, Tesla Motors Inc., to circumvent long-established legal precedent on how new motor vehicles are marketed, sold and serviced in your state,” Selim Bingol, GM’s senior vice president of global communications and public policy, wrote in the letter.

Arizona may allow Tesla to sell directly to consumers at retail stores within the state – if the company is willing to have a service center in the state to handle repairs and warranty issues. The state’s Senate Commerce, Energy and Military Committee voted three-to-two to push forward this bill in the legislature.  Arizona Senate Majority Leader John McComish called the bill a “pre-emptive strike” against future laws that outlaw Tesla’s direct-sale model. The bill will need to go before another committee for review, then would go to the full Senate.

And in other clean transportation news…….

  • Toyota has a very interesting offer through its Toyota Financial Services (TFS) captive finance arm – the auto industry’s first-ever Asset-Backed Green Bond; the company is outlaying $1.75 billion, which was upsized from $1.25 as institutional investors have expressed interest in this clean transportation investment opportunity.  TFS will use the proceeds from Green Bond toward the purchase of retail finance contracts and lease contracts for Toyota and Lexus vehicles that meet high green standards as established by three criteria: gasoline-electric hybrid or alternative fuel powertrain; minimum EPA estimated MPG (or MPG equivalent for alternative fuel vehicles) of 35 city / 35 highway; and California Low-Emission Vehicle II (LEV II) certification of super ultra-low emission vehicles (SULEVs) or higher, which would include partial zero emissions vehicles (PZEVs) and zero emissions vehicles (ZEVs). Qualifying models from Toyota include: Prius, Prius C, Prius V, Prius Plug-in, Camry Hybrid, Avalon Hybrid, and RAV4 EV. From Lexus, qualifying vehicles are CT 200h and ES 300h.
  • Producing more than 5,000 compressed natural gas (CNG) fueling tanks last year is one of several positive signs that Quantum Fuel Systems is on a turnaround that should continue, according to stock market analyst website Seeking Alpha; that’s more than double the amount of tanks that were produced in 2012. The company was close to collapsing 12 to 18 months ago, but a corporate restructuring has been completed and seems to have a brighter future. Quarterly earnings were reported earlier this month – positive earnings were reported for the first time in quite a while. The company’s share price has increased by more than 250% in the past 12 months. About 10,000 tanks are expected to be delivered in 2014.
  • The Energy Independence Summit will be taking place in Washington, DC, March 30-April 2. Leaders in clean transportation will be gathering to share best practices and educate federal policy makers about the benefits of the US Dept. of Energy’s Clean Cities program. The need for additional tools and resources to overcome barriers to the widespread use of clean vehicles and fuels will also be discussed.  You can contact Ken Brown at Transportation Energy Partners at or (202) 674-7777 if you have questions or would like additional information about the Summit.
  • The CHAdeMO electric vehicle fast charging protocol, which was initially adopted in Japan by domestic automakers, has been officially recognized as an international DC charging standard by electrical standards organization the International Electrotechnical Commission. The final draft international standards were approved by committees in January 2014, and were finally published last week on the IEC website. The number of CHAdeMO fast charging stations doubled in 2012 to more than 2,000 units are expected to grow, the association said last year.
  • Dish Network unveiled 47 new propane-powered vehicles at an event on Friday in Hawthorne, Calif. Roush CleanTech converted Ford E-Series vans for Dish Network, and the company’s goal is to deploy 200 of these alternative-fuel vehicles that will run on propane autogas.
  • Volvo Trucks is bringing its full range of alt-fuel vehicles to the 2014 Mid-America Trucking Show in Louisville, Ky. That lineup will include: Volvo VNL 300 CNG with 400-horsepower 11.9-liter Cummins Westport ISX12 G engine; Volvo VNL 300 LNG with 455-horsepower Volvo D13-LNG (compression ignition) engine; and Volvo VNL 300 dimethyl ether (DME) with 435-horsepower Volvo D13-DME engine.
  • BMW plants to produce more than 100,000 electric vehicles per year to meet tougher European emission standards that reach a key mandate level by 2020. CEO Norbert Reithofer told reporters that BMW will increase production levels of its i3 and i8 in 2018 in anticipation of getting up to 100,000 units annually in order to meet the stricter carbon dioxide emission standards. BMW was pleased to see that its i3 took 10,000 internet orders when it went online last fall.

New Jersey’s Tesla decision a watershed for dealer franchise vs. OEM corporate stores

Tesla store“This [the ban on Tesla] is a disturbing trend and deals a big blow to the future of automotive retailing. It also pushes the US behind the rest of the world. So far the resistance to Tesla and any kind of progressive thinking in auto sales had been relegated to the southern states. New Jersey’s decision could now influence states such as New York and Massachusetts, which have so far been more supportive of Tesla.” – Kumar Saha, senior industry analyst with Frost & Sullivan’s Automotive and Transportation research group.

On March 11, New Jersey Gov. Chris Christie’s cabinet members and appointees voted to block Tesla from direct sales. The administration ruled in favor of a state requirement that new cars must be sold through licensed franchises from a rule proposed last October by the New Jersey Motor Vehicle Commission; that happened around the same time Tesla opened two of its own stores in the state. Tesla CEO Elon Musk took a shot at Gov. Christie, accusing the expected 2016 Republican presidential candidate of making a “backroom deal” to keep Tesla out of the state. Musk put more pressure on Christie, whose administration has been taking heat for alleged bullying of opponents – the most notable event occurring last year when former high-ranking officials faced potential criminal charges after ordering lanes approaching the George Washington Bridge be closed, creating a traffic nightmare.

This dramatic decision by New Jersey follows several state-by-state battles in the direct OEM sales versus state franchise law battle. Auto dealers in Ohio, New York, Minnesota, and Georgia have fought Tesla. Texas dealers successfully backed a law setting the nation’s toughest restrictions on Tesla. Arizona, Colorado and Virginia also imposed limits.

In New Jersey, the New Jersey Coalition of Auto Retailers spent more than $155,000 on lobbying last year. Gov. Christie received about $65,000 in campaign contributions from people associated with the auto industry during last year’s primary and general election campaigns.

There’s a lot at stake in how these lawsuits and lobbying ventures play out. The legal history of state franchise laws protecting dealers are not too clear – that varies by industry with many retail sales transactions being conducted in corporate stores without any franchised operators in these branded networks. The state franchise laws are about a century old now, and other automakers have taken on the fight of breaking them long before Tesla Motors. Dealer networks have been very successful at lobbying in state legislatures and winning court battles.

Ford Motor Co. and General Motors Co. attempted to operate a few company-owned stores in the late 1990s and early 2000s as internet sales became more economically viable. Dealers won that battle – today you can shop for, and spec out, cars on OEM websites, but you have to buy or lease them through a dealership. experienced a similar experience after its 2011 Superbowl commercial promising the best local market price from dealer in their area. Dealers in several states attacked Truecar for allegedly violating laws regulating auto brokering, price advertising, and other legal issues. The onslaught hurt Truecar’s finances, as about 2,600 dealers bailed out of Truecar; it forced the company to spend much of the year overhauling its relations with dealers.

As Frost & Sullivan analyst Kumar Saha said, automotive retailing is changing fast. Dealers may be winning some of the state legal battles with Tesla, but may be losing a lot more business in the future as the business model changes.

Big Picture: Gobble, gobble….. A few clean transportation items before you leave for the holidays

turkeys driving a carAs you break for a long holiday weekend, here are a few happenings to read about…..

Things seem to be wrapping up for Fisker Automotive. Hybrid Technology Holdings, a Hong Kong-based investor group led by billionaire Richard Li, is buying the company’s assets for $25 million. That means the US Dept. of Energy will be losing about $139 on Fisker; the DOE will be overall be recovering about $53 million from its original $192 million disbursement.

Tesla Motors has lost it marketing leader – George Blankenship, who played a key role in setting up Apple’s retail stores and brought much of it over to Tesla, left the electric carmaker last month. As everyone knows by now, it’s a sensitive time for Tesla as NHTSA has decided to recall most of the Model S units for investigation and Tesla is working on overdrive to expand stores in North America, Europe, and Asia. Blankenship has been vague on his Linkedin page about why he’s leaving; he’s now 60 and is officially taking on the role of “Director of Smiles for the Blankenship Family.”

But there is some good news for Tesla. The automaker won a near-perfect score for its Model S, as it displaced the Chevy Volt at the top of Consumer Report’s annual vehicle owner satisfaction survey. It’s the best score the magazine has seen in years – 99 out of 100 points.

The Nissan Leaf is paying off for the automaker, according to Jose Munoz, Nissan’s senior VP of sales and marketing for the Americas. The Leaf is not the top reason customers are referred to the Nissan brand, he said, and the vehicle is now profitable.

Green Truck Summit is getting some ink – it will be March 4-5 in conjunction with The Work Truck Show 2014 in Indianapolis. It will offer attendees more than 20 educational sessions and a chassis OEM forum moderated by Indianapolis Mayor Gregory Ballard.

Luxury SUV buyers and non-luxury car shoppers are most likely to consider buying alternative fuel vehicles including EVs, hybrids, hydrogen-power, or CNG-powered vehicles. That comes from a Phoenix Marketing International study. About 50% of the survey respondents were neutral to alternative fuel vehicles, while the two aforementioned categories have the highest percentages of “very” or “extremely” to purchase an alt-fuel vehicle.

UPS was among the award winners at the NGV Achievement Award. United Parcel Service and Mike Scarpino, regional manager for DOE Clean Cities Coalition, were among the recipients of 2013 NGV Achievement Award held Nov. 20 in Atlanta. UPS was recognized for 25 years of exemplary NGV industry leadership. Eleven recipients were recognized during the gala and reception dinner at NGV America’s 2013 North American NGV Conference and Expo. Richard Kolodziej, president of NGVAmerica, was given a lifetime achievement award.

The cap and trade market is getting some play in California. California companies paid about $297 million for carbon allowances on the state’s carbon auction. On Nov. 19, California’s fifth auction took place, where companies such as Exxon Mobil and Dow Chemical paid $11.48 per allowance to release one metric ton of carbon as early as this year. That was a lower price than a previous sale in August, when it sold for $12.22 per metric ton. All together, the five auction events have raised $1.4 billion.

For those interested in real-time traffic data being readily available….. INRIX, Inc. introduced INRIX XD™ Incidents, which correlates real-time traffic flow data with information from nearly 400 public and private sources including media partners, departments of transportation, emergency responders, and community reports via mobile, and in-vehicle applications, as well as social networks like Twitter. The service offer traffic intelligence that reports more accidents, road closures, and other incidents across significantly more roads in more countries and at much greater speed than ever before.

Big Picture: Green car award winners to be named soon, plus a review of five significant award contests and what it all seems to mean

Green car of the year awardGreen cars – fuel efficient, plug-in, hybrid, and alternative fuel vehicles – now have enough sales volume and interest to garner annual awards.  I’ve counted five significant award contests being in place, with winners of two significant awards approaching. Here’s a review of finalists and winners so far for this year, and a few thoughts on what it all means…..

Green Car Reports just released five finalists for its Best Car to Buy award, all of them being 2014 models:

  • BMW i3
  • Chevrolet Cruze Diesel
  • Chevrolet Spark EV
  • Honda Accord Hybrid
  • Mazda 3

There have been other nominees and winners named this year, including the influential Green Car of the Year award that will be given out at the LA Auto Show this month. Here is Green Car Journal’s top five:

  • Audi A6 TDI
  • BMW 328d
  • Honda Accord (in four-cylinder, V-6, hybrid and plug-in hybrid versions)
  • Mazda3
  • Toyota Corolla

In April, Kelley Blue Book named its 10 Best Green Cars of 2013, all of them 2013 models and some coming in various versions including battery electric vehicles, hybrid, plug-in hybrid, diesel, and gasoline:

1. Nissan Leaf
2. Tesla Model S
3. Ford Focus
4. Chevrolet Volt
5. Toyota Prius Plug-in
6. Ford C-Max Energi
7. Volkswagen Jetta
8. Honda Fit
9. Toyota Avalon
10. Lincoln MKZ

As for the 2013 World Green Car finalists named earlier this year, the Tesla Model S, Renault Zoe, and Volvo V60 Plug-in Hybrid made the list that was announced at the New York International Auto Show; the Model S won the award. This award is presented by Bridgestone Corp. and looks at tailpipe emissions, fuel consumption, and use of major advanced power plant technology aimed at increasing the vehicle’s environmental responsibility.

Classic car buff magazine, Motor Trend, just named its top five hybrid and diesel cars in its analysis of fuel efficient vehicles:

  1. Volkswagen Jetta TDI
  2. Toyota Prius
  3. Volkswagen Jetta Hybrid
  4. Honda Civic Hybrid
  5. Chevrolet Cruze

Here’s what I get from studying the rankings:

  1. There’s still a wide split over the pragmatic present realities versus the long-term goals of clean transportation. Plug-in electric vehicles are embraced by many, but its influence is still quite marginal. The Chevy Volt took the Green Car of the Year award three years ago, but for all of the cars on the ranking this year for the most influential annual award, plug-ins have very little to do with it. Ron Cogan and the Green Car Journal team, along with its panelists, seem more supportive of highly fuel efficient gasoline and diesel internal combustion engine models.
  2. There are surprises, as well – especially Kelley Blue Book naming the plug-in Nissan Leaf as its No. 1 green car of the year. Battery electric and plug-in hybrid vehicles dominated its list, which is very interesting coming from a company focused on resale values.
  3. Diesel engine passenger cars, especially with turbocharged direct injection engines (TDI), are really taking off in the US. It doesn’t seem to matter that diesel is usually about 50 cents a gallon more expensive than regular gasoline these days. The fuel efficiency is great and driver experience and positive reviews are helping. German automakers have been selling a lot of diesel cars in Europe for many years, and the US market is now starting to open up (which Volkswagen seems to be counting on to earn its No. 1 sales spot in global auto sales). US automakers have started getting into the game, such as General Motors with the Chevrolet Cruze diesel version.
  4. Clean transportation shoppers have a lot of options today – whether you’re talking about fleet managers and purchase agents, government agencies and policy wonks, consumer organizations, environmental groups, or tire-kicking automotive journalists who go to all of the media days at car shows. Every green vehicle category has its hardcore advocates, but once all of the top five widely accepted industry standards are accepted – reduced emissions, fuel efficiency, safety, reliability, and performance – there’s a lot of competition in the market these days.

Aside from the awards, let’s take a look at top stories of the past week….

  • Plug-in vehicle sales were stronger in October than September, but not near the record level seen in August. The Chevy Volt saw 2,022 deliveries, up 14% from September; the Nissan Leaf was right behind it with 2,002 units sold, up 2.5% from September’s 1,953. Ford was thrilled to have its C-Max Energi and Fusion Energi plug-in hybrids collectively beat the Toyota Prius Plug-in Hybrid in sales numbers for the first time.
  • Tesla-Mania!:  The automaker saw its biggest drop in stock value during October – down 17% from its peak of $23.5 billion to $19.4 billion at the end of the month…. Daimler AG would like to do more with Tesla beyond receiving electric motors for is Smart ForTwo EV and the new Mercedes-Benz B-Class EV….. Panasonic Corp. has a contract now with Tesla to supply lithium ion cells for the Model S and Model X battery packs, and that could mean $7 billion in revenue for Panasonic…. Elon Musk’s associates have formed Hyperloop Transportation Technologies, a company seeking investors for the high speed rail network that will get from San Francisco to Los Angeles in just 30 minutes….. reported that the Tesla Model S is now the most-registered new car in eight of 25 wealthiest US neighborhoods tracked by zip code.
  • GreenLots is bringing its Sky open access network to the Vancouver area as part of the west coast’s DC fast charger corridor that so far extends through Oregon and Washington and will soon go up into British Columbia and down to California.
  • BYD Co. defended itself in a California court yesterday on charges that it didn’t comply with minimum wage laws for engineers working at its Lancaster, Calif., plant and its Los Angeles office. The Chinese company has a contract to make electric buses for the Los Angeles Country Metropolitan Transportation Authority.
  • Respected junior college training center Rio Honda Community College in California is offering a campus tour on Nov. 14 from 11:00 am until around 1:00 pm PST. Click here to learn more and register for the facility tour at what’s one of the most significant training grounds for future engineers and service technicians in: CNG; LNG; hydrogen fuel systems; hybrid, plug-in hybrid, and battery electric technologies; high-voltage storage and generation technology; and solar and wind energy technology.
  • Via Motors’ plug-in hybrid cargo van, built on the Chevrolet Express platform, passed its crash tests needed to be met before it can go on sale, according to the company. The van gets 35 miles on battery only, with a total range of 400 miles.
  • Ford recalled 2,618 Focus Electric cars due to potential loss of power to its wheels while in motion that’s related to software anomalies. Nearly all of these 2012 to 2014 models were sold in the US, and the automaker says there was one crash and no injuries related to the recall question.
  • Biofuel and oil industry lobbyists are quite busy in Washington as the White House and US Environmental Protection Agency prepare to issue a ruling on ethanol blending rules implementing the federal Renewable Fuel Standard.
  • While this TV ad campaign has been around since the summer, you may have noticed General Motors advertising that the GMC Sierra pickup is in league with the Hoover Dam’s smart grid hydropower. Fuel efficiency and performance are promoted as GM competes for truck sales head-to-head with the Ford F-Series pickups and its EcoBoost-powered engines.

Big Picture: Tesla Motors dealing with battery fire, September sales figures

Tesla Model S fireHave you seen the YouTube video that went viral a few days ago – where passengers driving down a street in Kent, Wash., view a Tesla Model S on fire? The car struck metal debris on Oct .1 in the town near Seattle – said to be a “curved section” that fell off a semi-trailer. First responders said that the fire occurred in the electric vehicle’s lithium-ion battery. “The geometry of the object caused a powerful lever action as it went under the car, punching upward and impaling the Model S with a peak force on the order of 25 tons,” Tesla CEO Elon Musk wrote in a statement. “Had a conventional gasoline car encountered the same object on the highway, the result could have been far worse.” The driver was safe and only had good things to say about the car. Tesla’s booming stock price dropped 10% over two days but looks like it could be coming back. It will most likely turn out to be similar to what Chevrolet went through with the NHTSA report on the Volt lithium battery catching fire in a test; or to Nissan going through the wringer last year over the Leaf’s battery life receding in extreme heat conditions in Arizona. The Volt and Leaf are doing just fine, and the Model S will probably come through in sales and reputation if handled the right way by Tesla Motors.

In other Tesla news, the automaker is moving forward to direct sales in Virginia. The Virginia Department of Motor Vehicles and the Virginia Automobile Dealers Association reached an agreement late last week to allow the automaker to apply for a single dealership license. Tesla withdrew a lawsuit and now needs to get approval from the Virginia Motor Vehicle Dealer Board, the state regulatory agency that oversees dealers in the state, before it can begin selling vehicles in Virginia. Tesla Motors has taken another step toward expanding its fast charger options for Model S drivers. For $1,000, you’ll soon be able to get a CHAdeMO fast-charger adapter. While the 50 kilowatt CHAdeMO stations aren’t nearly as fast of the 120 kW Tesla Superchargers, there are a lot more of them out there on the roads – primarily in the Pacific Northwest region.

Correction: California funding of 100 hydrogen fueling stations
As reported by a Green Auto Market reader close to the story…. The coverage of California’s governor approving bills last week incorrectly reported funding for 100 hydrogen fueling stations in the state. It wasn’t $20 million in one lump sum – it needs to be described as “either $20 million per year or a potential total of $220 million during the life of the extended program (until 2023).” My reporting assumed that hydrogen stations would cost $200,000 each but it’s actually costing a bit more than that amount. So, if you catch incorrect reporting, please let me know. If you completely disagree with what I wrote, please let me know. It could inspire and fuel another commentary from me.

September sales figures didn’t break records, but the metal was still moving
Electric Drive Transportation Association just released electric vehicle sales numbers for September 2013. About 8,127 plug-in vehicles were sold last month – 4,477 plug-in hybrids and 3,650 battery electric vehicles. The numbers weren’t as high as August’s record sales, but they do show a 40% jump over September 2012. Cumulative 2013 sales for plug-ins were 117% higher than they were by this time in 2012. There were 33,576 hybrids sold last month, which correlates with the overall downward sales trend in new vehicle sales in the US market. Long term, it looked better – total sales for hybrids in 2013 were 21% higher than they were in the first nine months of 2012.

New book follows the money trail shaping renewable energy
“Do you get the feeling that the energy industry and the Congress that it owns are deliberately lying to you? If so, you are 100% correct,” according to an announcement that Editor Craig Shields just had his third book published, Renewable Energy: Following the Money. The book features another set of interviews; the effects that economics and financial power have on the course of the energy industry are explored by high-ranking officers in the US military, lobbyists, scientists, economists, environmentalists, journalists, and heads of NGOs. I applaud Shields’ hard work and wide ranging perspectives on renewable energy and clean transportation. I admire how much he’s kept his word on staying in the trenches on where all of this is going as a business – whether that be through attending key conferences or interviewing experts of all genres for his books and blog. This new book digs into what I would describe as what “Deep Throat” ex-FBI official W. Mark Felt kept telling reporter Bob Woodward about the Watergate scandal: “Follow the money trail.”

CARB streamlines propane and NGV upfits, but Peter Ward calls for it to go further
The Cal­i­for­nia Air Resources Board (CARB) has stream­lined the process for propane auto­gas and nat­ural gas vehi­cle upfits through approv­ing changes to its rules. This brings the process closer to require­ments of the US Envi­ron­men­tal Pro­tec­tion Agency. Peter Ward of Alter­na­tive Fuels Advo­cates would like to see the process go fur­ther, where adjust­ments to the require­ments could be made with­out hav­ing to go to the Board each time. It’s the first substantial revision to the CARB rules in 18 years. Ward would like to see continued cooperation and mutual interest continued between CARB and the industry. “Keep the regulations nimble,” he said.

Highlights from Plug-In 2013 in San Diego

  • Debate continued by panelists on how public charging should be funded. Some say it should be essentially free to the public – paid for by retailers wanting to offer consumers incentives for showing up and staying a while. Some charger makers and others argue that most of the charging is happening at home and the EV drivers should just have to swipe their credit card to charge somewhere else. However, one-time processing fees could be a problem for acceptance of these systems by consumers. Then there’s the problem of too many people charging during peak hours when utilities are limited in how much energy should be flowing to charging stations. It’s likely there are not enough EVs out there yet for it to be a problem, but the worry continues.
  • Via Motors has a contract to build and deliver $20 million worth of plug-in hybrid pickups and vans to over 50 participating fleets. The fleets will also be sending real-time data to the US Department of Energy to study for improvements in fuel economy and emissions.
  • ABB launched the Terra 53 for North America. This 50 kW DC fast charging station meets both SAE Combo and CHAdeMO standards for battery electric vehicles, all in one station.
  • A coalition of US and German automakers unveiled a public combo charger at the Fashion Valley Mall in San Diego—in an eVgo Freedom Station. It uses the CCS plug and combines a J-1772 Level 2, 240-volt charge point with direct current (DC) fast charging.
  • Eaton released its Dual AC Level 2 charging stations for simultaneous charging of two EVS. The stations can charge electric vehicle batteries up to three times faster than traditional charging systems to offer a cost-effective solution.

And in other news during a busy week…..

  • Clean Energy Fuels released  its “Redeem” renewable natural gas fuel. The company says it is the first one to commercially distribute a renewable natural gas vehicle fuel made from waste streams such as landfills, large dairies and sewage plants directly to fleets around the country and at 35 public Clean Energy stations throughout California. Clean Energy says it’s 90% cleaner than diesel and comes from biogenic methane, or biogas – methane generated by decomposition of organic waste. The target is to produce and distribute 15 million gallons of Redeem in its first year.
  • General Electric Co, Whirlpool Corp, Eaton Corp and others are developing more affordable natural gas vehicle home refueling systems. For about a tenth of the price of current models, plus installation, they aim to sell the new units to the millions of homes across America that are already hooked up to natural gas pipelines. Energy providers in Georgia, California and Utah are working on distributing new refueling units in the next two years. Honda has also expressed interest in the new technology.
  • UK-based hydrogen fueling company ITM Power has a 4.45 million (pounds) project that will integrate its hydrogen energy storage and vehicle refueling system on the Island of Wight. It’s called EcoIsland Hydrogen Vehicle Refueller, which is supported by the UK’s innovation agency, the Technology Strategy Board.
  • General Motors is expanding its collaboration with the U.S. Army’s Tank Automotive Research, Development and Engineering Center (TARDEC) to develop hydrogen fuel-cell technology. It ties in with GM’s new fuel-cell development facility in Pontiac, Mich., which is about 20 miles from TARDEC’s new fuel-cell research lab in Warren, Mich. The two entities will focus on testing the durability and performance of fuel-cell materials. In related news, Daimler and GM will be investing in two other fuel cell projects aimed at advancing the vehicle technologies and building out the fueling infrastructure. Daimler is putting about $500 million into a network of hydrogen stations in Germany over the next 10 years.
  • The Toyota RAV4 electric version took the top ranking away from last year’s winner, the 2013 Lexus GS 450h in the Automobile Club of Southern California’s 2013 Green Car Guide. Results come from the organization’s Automotive Research Center, which has been a leading vehicular emissions test lab since the late 1960s. Testers look at how hybrid, alternative fuel, electric, fuel efficient, and extremely low emitting gasoline-powered vehicles on the market are performing following a number of patterns vehicles are typically experiencing.
  • Kia will release the 2015 Soul EV, the first electric car from a Korean automaker to be sold in the US beyond concept cars displayed at auto shows.
  • The US Environmental Protection Agency wants to make right with consumers to avoid future fuel economy rating meltdowns like the ones we’ve seen lately. EPA will be giving more information about its audits and data submitted by automakers. Results from 20 recent fuel-economy audits will be released soon to the public to start the changeover.

Solid used vehicle segment to reach: green cars

EPA used vehicle labelLooking for a profitable used vehicle market segment to reach? How about green cars – hybrids, electric vehicles, and fuel efficient vehicles? Franchised and independent dealers are seeing a lot of used inventory on the market today, and some of it, especially trucks, is seeing strong pricing. What we’re seeing though, such as in Manheim’s latest report, is that dealers are doing well by selling lots of used vehicle the right way. Prices might be down on small, fuel efficient cars and hybrids, but all things considered, they’re not bad – and selling a lot of them can be profitable.

There are two interesting announcements from last week that speak to the issue – one is that Nissan has added its Leaf electric car to its certified pre-owned vehicle list; and the other is an online tool for used cars rating fuel efficiency and emissions from the US Dept. of Energy (DOE) and Environmental Protection Agency (EPA).

Certified Leafs will get an extended warranty of seven years or 100,000 miles on both the electric system and powertrain. To be considered, the used Leaf must be less than five years old, have fewer than 60,000 miles, and have at least nine of 12 bars of battery capacity remaining on the gauge. It also needs to have a clean Carfax history report, and pass an inspection where 167 separate items are checked. Two warranties on the battery pack will remain in place – eight years or 100,000 miles, and five years or 60,000 miles, with a few performance indicators being checked on each warranty. The new certified program adds to the protections.

For the DOE and EPA offering, dealers and consumers can now place a used car label based on fuel economy and emissions performance. It’s a free online tool allowing for creation of a consumer-friendly label that lists gas mileage and CO2 emissions levels of used vehicles sold in the US since 1984.

Other indicators that used green cars is a viable market segment to reach include eBay’s Green Driving (which they say gets a lot of traffic); NADA Used Car Guide’s Plug-in Electric Vehicles: Market Analysis and Used Price Forecast; and ALG’s Alternative Powertrain Perceived Quality Study.