For Automakers, Strong Sales in October

NY Times

DETROIT — October was the best month for new-vehicle sales in more than two years, outside of the government rebate program in mid-2009, and General Motors surpassed expectations, but still lost market share in the United States ahead of its public stock offering.

G.M. said Wednesday that its sales rose 3.5 percent last month from a year ago, compared with a gain of about 13.4 percent for the industry over all. G.M.’s market share fell to 19.3 percent from 21 percent a year ago.

The Ford Motor Company said its sales were up 19.2 percent, and Chrysler reported a 37 percent increase from a mediocre October 2009. Several smaller companies, including Hyundai, Kia and Subaru, set new October records, with increases of at least 25 percent.

Toyota was the only major automaker to report a decline. Its sales fell 4.4 percent. The industry’s seasonally adjusted annualized selling rate was projected to hit at least 12 million for the first time since September 2008, when auto sales began to collapse. Sales bottomed out in early 2009, but automakers have struggled to gain much traction since then.

“Signs are there that the recovery continues and that it will be sustained,” Don Johnson, G.M.’s vice president for United States sales operations, said. “We don’t see a big risk at all of a double dip.”

For all of 2010 so far, G.M.’s sales are 5.7 percent higher than in the first 10 months of 2009, when the company shed four brands after a brief trip through bankruptcy protection. Excluding those brands — Pontiac, Saturn, Hummer and Saab — G.M.’s sales are up 22.1 percent this year.

G.M. executives will highlight the company’s rising sales as they begin a traveling “road show” to court investors starting this week. The company is expected to initiate its initial public offering in mid-November, allowing the federal government to begin selling its 61 percent stake.

Ford, which avoided bankruptcy, said sales were up 25 percent for its trucks and 23 percent for its passenger cars, but only 10 percent for its utility vehicles. The company sold 3,846 of its new subcompact car, the Fiesta, with 62 percent of buyers replacing a non-Ford vehicle.

“The consumer is crawling back, particularly in the more affluent and higher-quality credit segments, which could provide upside to our 2011 outlook,” Brian A. Johnson, an analyst with Barclays Capital, wrote in a recent note to clients.

Jesse Toprak, vice president for industry trends and insight at TrueCar.com, which tracks vehicle sales and pricing, said the improving performance of automakers showed that “a recovery is under way,” even though the growth had been slower than anticipated.

“If the trajectory continues in the same path, we could have a strong finish to the year,” Mr. Toprak said.

GM expects IPO to Reduce Taxpayers' Stake to about 43%

USA Today

The initial offering of General Motors stock is expected to raise about $10 billion in a sale that will cut the U.S. government's stake in GM to below 50%, three people briefed on the sale said.

GM common stock is expected to sell for $26 to $29 a share when the IPO takes place, tentatively Nov. 18, according to the three people, who asked not to be identified because they are not authorized to speak on the matter. That would value the company at more than $46 billion, roughly the same as Ford Motor.

U.S. taxpayers, who bailed out GM last year, would see their ownership drop from 61% to about 43%, not including any extra shares bankers could offer if there is strong demand, the people said.

GM has wanted to shed government control, contending that it hurts the company's sales and public image. The government will get most of the $10 billion and recoup another chunk of the more than $50 billion GM rescue.

GM will not make any money from the sale of the 365 million common shares that will make up the IPO but will sell roughly $3 billion in preferred stock that will convert to common stock in 2013, the people said. Preferred shares pay a set dividend and are more like bonds. GM will use that money to repay loans and make pension payments.

Terms of the sale are not final because GM's board could still change them, one of the people said. GM's final registration filing with the government is expected by today.

GM and its bankers then will begin a "road show" to woo investors, primarily pension and mutual funds, but also some large individual investors. Common shares worth roughly $2 billion would be sold to investors in the Middle East, Europe and Asia, one of the people said.

Bankers leading the sale are recommending that the final share price be revealed Nov. 17 and the sale take place a day later, according to the people.

GM is now a private company owned by the U.S. government, a United Auto Workers retiree health trust, the Canadian and Ontario governments and former GM bondholders.

The Canadian governments are expected to cut their stake from 11.7% to 9.6%, while the UAW trust would cut its stake from 17.5% to 15%, two of the people said.

GM has repaid or plans to repay a total of $9.5 billion in government loans, and the government hopes to recoup its remaining $40 billion investment with the initial stock sale and several follow-up sales.

The four owners hold about 500 million shares total, but the total shares for sale in the IPO and subsequent sales will be increased with a 3-to-1 or 4-to-1 stock split, one of the people said. The split, which will take place before the IPO, will create about 1.6 billion shares of GM common stock, one of the people said.

Ford bets big in Digital Marketing Departure

Reuters

Forget the Super Bowl: Ford's marketing chief Jim Farley says he can get more for less on Facebook, Twitter and YouTube.

If Farley is right, millions of hits for Ford Motor Company on social media websites will dwarf the impact of ads broadcast during the National Football League's February championship game -- high-profile space selling for $3 million for 30 seconds.

"Customers are spending as much time with the mobile smart phone or online as they are watching TV now, so our advertising dollars have to flow to where the people are," Farley told Reuters in an interview.

Under Farley, 48, who joined Ford from Toyota Motor Co in 2007, the No. 2 U.S. automaker has bet bigger on the emerging category of digital advertising including websites and social media than any of its rivals.

Farley has taken the approach credited with the early success of the youth-oriented Scion brand he launched at Toyota and applied it to the makeover of an established auto brand.

He is betting Ford can use Facebook and Twitter to accelerate the word-of-mouth recommendations long familiar to the auto industry and help the blue-oval brand connect with younger and richer people.

Farley said he learned at Scion that the only way to push past consumer skepticism is "to break into their world."

"You have to shove your way in there. The way we do that is to break down myths. The great thing about Americans is they are always hungry for something new," he said.

Ford's U.S. sales are up almost 22 percent so far this year, twice the growth rate of the industry overall.

Farley's term at Ford has coincided with a sharp turnaround in its image. ALG, a firm that tracks consumer perceptions, said in a report issued on Monday that Ford cars and trucks lead all brands in gains in perceived quality since 2008.

FORD SEEKS FACEBOOK FRIENDS

Farley, who is seen as a potential successor to Ford Chief Executive Alan Mulally, called the Super Bowl, "a fantastic advertising opportunity" -- for unknown brands.

"If you are a company that wants to launch a new product that no one has ever seen before, it's a great venue."

Under Farley, Ford has spent 25 percent of its advertising budget on digital media in 2010, the same proportion as in 2009. That ratio is twice what J.D. Power and Associates says will be the average digital media spend in 2012.

Farley would not disclose the dollar amount of that spending.

One of the first experiments in Ford's new approach was its 2009 move to recruit Web-based "agents" who would help promote its launch of the Fiesta subcompact. In a follow-up, Ford used Facebook to reveal key aspects of the Explorer SUV rather than wait for an established auto show.

Now, Ford is seeking "bloggers, social media mavens and Facebook friends" to submit video applications to be one of 100 who will drive the 2012 Focus around southern France or Spain early next year, ahead of the car's launch.

The effort, called "Ford Focus Global Test Drive" seeks to create buzz ahead of the launch of a vehicle central to Mulally's vision for a streamlined product lineup.

Farley said that the Fiesta campaign had boosted consumer awareness of the Ford subcompact over direct competitors like the Honda Fit or the Toyota Yaris. At the same time, Ford only spent one tenth of what it would have through traditional media, including television, he said.

Farley's moves mark something of a contrast with the approach by cross-town rival General Motors Co.

Under its new marketing chief Joel Ewanick, GM is pushing back into advertising at the kinds of high-profile, high-cost events like the Super Bowl that it had abandoned in its slide toward bankruptcy.

In one example, last week GM rolled out a campaign for Chevrolet that plays to its base -- patriotic Americans with memories of the days when Chevy dominated.

By contrast, Ford is playing up the new elements in its product line-up, both new vehicles and new technology like the MyFord Touch system for navigation, entertainment and communications in campaigns that include videos for Google's YouTube.

Charlie Vogelheim, executive editor of Intellichoice, a consumer auto consultant, said Ford had pushed beyond its rivals in the way that it is building online buzz.

"Everyone is involved in digital marketing. The extent that Ford is doing it, wrapping it around events and utilizing the media with its launches, that is where Ford is taking leadership," he said.

Opinion: Legislature should revisit State Insurance Law

Lansing State Journal

 

Blue Cross Blue Shield of Michigan now faces the Justice Department in federal court over its pricing tactics. But this conflict should have the full attention of the next Michigan Legislature, too.

To that body's members comes this question: Based on the information coming to light about the Blues, are the people of Michigan still served by Public Act 350 of 1980 and Blue Cross' operation under it?

A privatized Blue Cross competing for customers and business just like other health insurers - and free of the dictates of PA 350 - has long been an appealing goal. The accusations made by the federal government - and they are only accusations at this point - provide more motivation to reconsider PA 350.

In the antitrust lawsuit, federal attorneys state, "Blue Cross' use of MFNs (special provisions) has reduced competition in the sale of health insurance in markets throughout Michigan by inhibiting hospitals from negotiating competitive contracts with Blue Cross' competitors."

The Blues can do this because of the firm's huge market share - 60 percent statewide and 70 percent in Greater Lansing, the feds say. (Blue Cross says the figures are lower.)

Mid-Michigan may recall a bitter dispute between Sparrow Hospital and the Blues a few years back. The federal lawsuit, joined by Attorney General Mike Cox's office, states, "Sparrow Hospital, the largest hospital in Lansing, where Blue Cross' contract requires the hospital to charge some of Blue Cross' significant competitors at least 12.5 percent more than the hospital charges Blue Cross."

Blue Cross' defense, so far, has been to argue that it has special responsibilities under PA 350 and its deals save its customers billions of dollars.

But anti-competitive practices, if they are proven, are not good for the insurance industry or Michigan. As the federal lawsuit puts it, "By reducing competition in this manner, the MFNs are likely raising prices for health insurance in Michigan."

Blue Cross has long complained that the intersection of PA 350 and state insurance law has put it in an impossible financial position. The insurer has argued that its responsibilities have led to huge losses — losses that far exceed the value of the state tax breaks it receives under PA 350.

The courts will decide if the Justice Department is right. But only the Legislature can decide to rewrite state law to reflect the realities of 21st century health care.

American Legion Post ordered to comply with Smoking Ban

The Detroit Free Press

A renegade American Legion post in Michigan’s Upper Peninsula has been ordered to implement Michigan’s ban on smoking in public places, at least temporarily, pending the resolution of a lawsuit filed by the vets seeking an exemption.

An injunction ordering an end to smoking at Post 444 in Baraga was issued earlier this week by Houghton County Circuit Court Judge Charles Goodman and, after a clarification hearing Thursday, the post erected no smoking signs at its doors and removed ashtrays, Commander Rick Geroux said in a statement today.

“We are troubled by this ruling because we expect it will have a severe economic impact on our operations,” Geroux said, citing facilities owned by Indian tribes exempt from the ban, one only a few blocks away.

Geroux said he remained hopeful the injunction will be lifted following additional court proceedings.

A spokeswoman for the Campaign for Smokefree Air, which lobbied the Legislature to approve a smoking ban, praised the ruling.

“A majority of Michigan residents have accepted the new law with open arms,” Judy Stewart said.

Hope for surviving Cancer from Detroit Study

The Detroit Free Press

Troy grandmother takes a positive approach to triple-negative diagnosis

Carol Palombit is facing her diagnosis of a particularly aggressive type of breast cancer with a sense of good fortune. She is the first person in the nation enrolled in what could be a groundbreaking clinical study -- offered only in Detroit -- that hopes to improve the prognosis of women like her, newly diagnosed with triple-negative breast cancer.

That type of tumor isn't as responsive to chemotherapy, and patients like Palombit have a poorer prognosis. And yet, she feels lucky to have family, friends and health insurance to get her through the treatment she needs.
"Nobody gets through life without a tragedy," said Palombit of Troy, a retired schoolteacher, runner, former aerobics teacher, mother of two grown children and a first-time grandmother. "This just happened to me at the right time."

As many as 1 in 5 women with breast cancer have a triple-negative tumor, according to the Triple Negative Breast Cancer Foundation and an organization called Living Beyond Breast Cancer.

Younger women, particularly African Americans, are more likely to have triple-negative breast cancer, for reasons not yet known.

Women with triple-negative tumors are more likely to have their cancer return because they lack receptors for three targets of chemotherapy -- the hormones estrogen and progesterone, as well as a human epidermal growth factor called HER2. That makes them less likely to respond to standard cancer treatments.

Palombit, 64, is the first of 40 women to be followed in a new federally funded study at the Barbara Ann Karmanos Cancer Institute in Detroit to test an approach called targeted T cell immunotherapy. The process was developed by Dr. Lawrence Lum, scientific director of the bone marrow transplant and immunotherapy division.

It takes a woman's own T cells -- the body's disease-fighting cells -- and grows them in a sterile laboratory with antibodies and a cancer drug until they "generate an army" of cancer-fighting killer cells, as Lum likes to call them. The aim is to create a boosted immune response, like a vaccine, to stop cancer in its tracks.

The boosted T cells are frozen and stored until a woman completes standard chemotherapy and is tested to see if the treatment has shrunk the tumor. Then, the patient gets four infusions of boosted T cells, followed by surgery to remove the tumor and obtain tissue samples. If there is no sign of cancer, the patient would need no further treatment, though she would undergo regular tests to check whether she remains free of cancer.

"This potentially could be a home run," said Lum, who earlier this year was awarded patents on his precise immunotherapy process. "Our goal is to double from 20% to 40% the number of women who are in remission."

The National Institutes of Health this year gave Lum nearly $3 million for a five-year study. Lum also has a separate four-year, $2-million federal grant to study the approach in women who lack the HER2 growth factor and whose disease has spread beyond the breast -- so-called Stage IV or metastatic cancer.

Nationwide, immunotherapy approaches hold hope for treating blood cancers such as leukemia, lymphoma and multiple myeloma, as well as an aggressive type of brain cancer called neuroblastoma. Because the boosted cells grow quickly once harvested -- from some 14 billion cells gathered to 160 billion in 10 to 14 days, the therapy may cost as little as $8,000, Lum said.

Side effects from the therapy are predictable, typically chills that begin "almost right on the clock" 55 minutes after the infusion begins, followed by fever, Lum said. Nurses give the drug Demerol to control the reactions, which typically subside in 5 to 10 minutes, Lum said. "With each infusion you feel like you have the flu," he said, a reaction that lessens with each round of immunotherapy.

Palombit says she is buoyed by the support and prayers she has received from family and friends.

She worked as a speech pathologist with autistic children in Farmington and Fraser, then taught kindergarten and second grade at Quarton Elementary in Birmingham. She retired in June, the day after she learned she had cancer. It was happenstance. She already had planned to stop teaching so she and Pete, her husband of nearly 40 years, who also is retired, could travel and visit their grandchild.

A self-described Type A personality, she considers cancer a blessing because it has made her slow down and appreciate life -- the smell of roses in her backyard, and the change of color of fall leaves along the Troy hiking path where she and Pete walk each day, except for a few days after she gets a cancer treatment in Detroit.

"I'm a happier person," she said. "I have so much to be grateful for." Since August, when she began cancer treatment, she's seen children with advanced cancer, and a patient with an oxygen tank getting into a taxi on her own after completing cancer treatment.

In those moments, it's clear to her how fortunate she is.

"I've got everybody helping; it's very humbling," Palombit said.

As diligent as she was about getting yearly mammograms, Palombit skipped her own breast self-exams.

A mammogram in 2009 found no trace of a tumor. But within a year, the cancer grew to a lump in her left breast that she thinks she might have caught if she'd done monthly exams herself.

She tells women: Check your breasts. Get mammograms. See a Detroit cancer specialist if you think anything is wrong.

"I feel very lucky," she said. "I'm lucky to have all the choices I have."

What You Should Know About The Chevy Volt

Forbes

Five points to clear up some of the misinformation about the new electric car.

The Chevy Volt is generating a lot of interest, and no wonder. GM has often been content to follow the trends, and it's suddenly coming out with a car that's far ahead of the pack. By all means visit your local GM dealer (soon to have solar electric vehicle charging) and kick the tires, but here are some critical facts to remember:

1. It's not all-electric. There was a big hoopla on the Web about this, with angry bloggers saying that GM had "lied" when it said that the car is all-electric, all the time. It's really a tempest in an oil can. At 70 mph, with the battery power depleted, the gas engine drives the wheels. In all other circumstances, including the first 25 to 50 miles, it is always electric. GM, which was trying to protect a trade secret, shouldn't have been so insistent about the car being 100% electric, but its choice in this case makes sense and improves its overall sustainability.

2. Results will vary. The mileage you'll get out of the battery pack will vary, depending on how you drive--and that's true of all electric cars. First GM said the Volt (a four-, not five-seater, by the way) got 40 miles on the pack, then 50, then 25 to 50, but in fact you may get all of these outcomes. Nothing depletes a battery pack faster than highway driving. The Volt is probably best described as a plug-in hybrid, but there are key differences. The Toyota  ( TM -  news  -  people ) Prius plug-in hybrid I'm testing now becomes a standard Prius after 13 miles of electric driving. The Volt starts its gas engine, but uses it as a generator to supply power to the electric motor; you're still in an electric vehicle. Plug-in hybrids don't offer many benefits to people with long commutes because most of your travel will end up on the gas engine. The Volt, with its unique drivetrain (only the Fisker Karma is similar), will thrive under such conditions and stay electric.

3. It's not cheap, but there are options. At $41,000, the Volt is nobody's idea of an economy car (though it will sip fuel). The best bet is the three-year, $350 a month lease, which matches the deal on the much-cheaper Nissan Leaf. You'll need to put down $2,500 to get the lease, but that seems reasonable enough. And remember that the Volt is eligible off the top for a $7,500 federal tax credit. Is it also eligible for a $5,000 California rebate? No, because it's not an AT-PZEV. That stands for Advanced Technology Partial Zero Emission Vehicle, and for 2011 the Volt will be only a ULEV, or ultra-low emission vehicle. But GM is promising that the car will qualify for AT-PZEV sometime in 2012, and cars after that should be eligible for the rebate (if any money remains in the state's depleted coffers).

4. Only some of us can buy them. The Volt will roll out at the end of the year, in seven states: California, New York, Michigan, Texas, New Jersey, the Washington, D.C., area and Connecticut. Fifty-state availability is on the horizon, and GM will introduce new launch markets over an 18-month period. Nissan has adopted a similar strategy with the Leaf, and the Coda will be in California only. That gives stealth electric vehicle carmakers like Wheego a chance to sell its LiFe vehicle in all 50 states for at least a year, until the big guys get there.

5. There's no range anxiety. After the 25 to 50 all-electric miles, there are 300 more miles on tap with the generator supplying electricity to the motor. This is one of the crucial differences between the Volt and battery electrics, and it gives the Volt range comparable to any other car on the road. GM has been heavily touting this as a market advantage over cars like the Leaf, but time will tell if it really matters all that much. GM's own studies purport to show that 78% of American commuters travel less than 40 miles a day. Range anxiety might fade as familiarity with electric vehicles grow, in which case the advantage might not seem as pronounced as it does now.