Chinese Car Sales to Set a New World Record

Going into 2010, no nation exceeded the number of cars sold in the US in 2000, roughly 17 million. This year China is on target to match the 2000 US figure, and China should top 19 million next year. This is according to Autonews.com. Right now, it looks like the total US light vehicle sales for 2010 will come out to about 12 million, so China is blowing away US sales right now.

In the short term, the growth in the Chinese market is good news for General Motors. GM can use profits from China to pay off pension and other obligations in the US. In the long term, though, the growth of the Chinese market is problematic. Over the next 20 years, Chinese car sales could hit 50 million per year. Keep in mind that although most US car sales replace a vehicle taken off the road, in China, most of the new cars sold will become an additional vehicle in service. This means that each vehicle sold in China will amount to more competition for the global oil supply and will produce more emissions contributing to global warming. In short, the closer China comes to US consumption patterns, the more Americans will have to conserve to keep from outstripping our resources.

Also, as China produces more units than the United States, China will increasingly see new economies of scale and will benefit from the learning curve cost declines on new technologies. In short, the same advantages that the US automakers had until recently will start working to the advantage of chinese manufacturers. This would be in addition to lower cost labor and newer factories. It will increasingly be difficult to maintain a domestic automobile industry while following a free trade economic policy.

Happy Halloween

Here's an excellent version of Time Warp from Glee's version of the Rocky Horror Picture Show. This post is dedicated to Pat K., my friend from high school and college, who found fame maybe not fortune as Riff Raff in West Lafayette, Indiana in the early 1980s. The Glee Horror show can be watched for a while on Hulu.com at this link.

Gran Turismo 5 - Fast But Late

When I was trying to figure out which game console to get "for my son" last year, there were three reasons I picked the Playstation 3: (1) Blu-Ray; (2) Free online play and (3) Gran Turismo 5. Gran Turismo 5, or GT5, is an uber racing game with graphics to die for. There's only one catch: it was supposed to be out about two years ago, but it's still MIA. As of the summer of 2010, it was supposed to be released November 2, 2010, then October 13 release was set for "this holiday season". Even though ads from Sears & Target, etc. say to pick up the game there on November 2 (Tuesday), the latest word on the streets is that the game won't be available before January 1, 2011. Despite the lack of Indycars in the initial release (serious bummer), I'll probably lay my money down anyway (for my son, don't you know).

How to Kill a Pontiac

You can count me among the dissenters who never thought General Motors should have killed the Pontiac division in the first place. If you are going to kill a Pontiac, you should do it with style, so this is how GM should have done it, with a 1,200 pound pumpkin.

Allied Interstate Settles with the FTC
Agrees to Pay $1.75 Million Fine

More good stuff from collectionscreditrisk.com, Allied Interstate, Inc., one of the biggest collection agencies, agreed to pay $1.75 million, one of the biggest administrative fines for violating the Fair Debt Collection Practices Act. Specifically the fine was tied to efforts to collect debts from the wrong person, but the consent decree covers other practices as well.

I most commonly run into Allied Interstate when I have a client who has a dispute with DirecTV. After I dispute the matter with DirecTV, they send it to collections, often to Allied Interstate. Usually after a follow-up dispute and request for validation to Allied Interstate or the other collection agency, the claim goes away. Sometimes you have to pick it up again at the credit reporting level, and that gets to be a hassle. IMHO, the company the FTC should be going after is DirecTV. Their advertising, sales, billing, and collection practices are atrocious.

On the subject of debt collections: Our Video of the Day is this clip on abusive debt collections from ABC's 20-20. (By the way, if there's one thing these calls have in common it's that the consumer was smart enough to record the call and save the recordings. If you didn't tape it - they didn't say it.)

It's Chevy Volt Week

This week marked the end of the press embargo on driving impressions of the Chevrolet Volt extended-range-electric vehicle. Just about every auto site has a Volt review. Here's one of the better ones from autoblog.com. I'd love the chance to drive one, but I don't want to work for auto-writer wages.

Credit Card Companies Are Thriving Despite Card Act

When Congress was considering tightening the leash on credit card companies with legislation that eventually became the Card Act, the credit card companies whined about how limitations on their practices and default fees would cause massive financial losses. Here we are a few months down the road past the effective date of most of the Act, and in fact the credit card companies are thriving. According to Collections and Credit Risk, charge-off's (losses from defaulting accounts) have gone down by double-digits at major lenders.

I think what the lenders are seeing that if you are fair with the customers, the customers will to their best to make sure that you get paid. If you are unfair, John Q. Public will get mad and give up or get even. We may be seeing some of that sentiment in the mortgage markets. People who got screwed by mortgage brokers and lenders are getting payback by squatting in the homes for months without paying. These same borrowers would likely pay a reasonable rental or mortgage payment for the home based on the home's current value, but since that's not offered, the borrowers don't pay at all.

Happy 40th Birthday Chevrolet Vega

The Chevrolet Vega was introduced 40 years ago this year, and Popular Mechanics has a feature story called How the Chevy Vega Nearly Destroyed GM. Here's the quick and dirty: the Vega sold really well because it was cheap and kind of looked like a junior Camaro, but it was underengineered and poorly assembled. It was an early example of the "top-down" management that ruled General Motors at least until the recent bailout.

My family never had a Vega, but they did have a Pontiac Astra with the "iron duke" engine that replaced the prone-to-failure Chevrolet 2.3 liter Vega engine. Not all Vegas had this engine. My college roommate had a late model Vega with a v-8 engine. The car still wasn't particularly fast, but it never came within shouting range of 20 MPG. It also ate tires.

China is Playing Games with Rare Earth Metal Supply

China appears to be playing games with the supply of rare earth metals either to the entire world or selected countries. (They appear to be especially ticked at the Japanese right now.) Rare earth metals are a key component of batteries for electric cars and hybrids, so without the rare earths, the Prius would be prostrate,the Volt would be vanquished and the Leaf would be left. Overall though, somehow, I think we'd still be able to carry on even if the Chinese cut off the rare earth supply. On the other hand, if they cut off the supply of zinc oxide, this would happen:

Pinsent on Beiber

The laugh track ruins it.