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Auto Outlook: US Automakers Back in Game

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Detroit's former "Big Three" -- Ford, GM and Chrysler -- are on a roll thanks to new products and improved quality but they still lag behind the Japanese, the 2012 U.S. Dependability Survey released last week by J.D. Power & Associates indicates.

The survey looks at how vehicles hold up during their first 36 months on the road.

The winner for most dependable vehicles was Lexus, the luxury brand of Japan's Toyota, which replaced Lincoln at the top of the heap. Lincoln fell to No. 7 in the latest survey. In fact, the only U.S. brand in the Top 5 was GM's Cadillac, which improved to third.

"Despite facing immense challenges in 2009, automakers placed a keen focus on delivering outstanding levels of quality, which they understood would be essential to their long-term success," J.D. Power vice president of global automotive David Sargent said.

"Three years later, owners of these models are enjoying unprecedented levels of vehicle dependability and manufacturers are experiencing market recovery. This is good news both for owners -- who are holding onto their vehicles for longer than ever -- and manufactures, since perception of quality and dependability is a critical factor in vehicle purchase decisions."

The average passenger car in the United States is 11.1 years old, and dependability is paramount since the owners of those aging vehicles want to avoid constant repair bills. The longer a new vehicle can go with only routine maintenance the better, and millions of potential buyers will be checking out how their potential future vehicles have held up.

Ford led American brands at No. 8, an improvement of four positions from 2011, but Chrysler, whose sales have soared on the strength of its "Made in Detroit" ad campaign, dropped to No. 32 even though 2009 Dodges, Jeeps and Ram trucks had fewer problems per 100 vehicles than 2008 models.

"These results are based on cars sold three years ago," Doug Bets, senior vice president for quality at ChryslerGroup LLC, told The Detroit News. "Since that time, we have made significant changes to our product lineup and everything else about our company's structure and the way it develops cars."

The study found overall dependability averaged 132 problems per 100 vehicles, an improvement of 13 percent. Germany's Porsche ranked No. 2 trailing only Lexus, followed by Cadillac, Toyota, Scion, Mercedes-Benz, Lincoln, Ford, Buick, Hyundai, Acura, Honda, Chevrolet, Volvo, Audi, smart, Subaru, Nissan, Mitsubishi, BMW, GMC, Mini, Mazda, Suzuki, Kia, Volkswagen, Infinity, Jaguar, Ram, Jeep, Dodge and Chrysler.

GM reports record profit

General Motors Co. reported a record $7.6 billion profit for 2011, compared to $4.7 billion a year earlier, but the bottom line would have been rosier if fourth-quarter sales in Europe had kept pace.

GM made $500 million in the final quarter of 2011, about the same as the final four months of 2010, the company said. However, earnings of 39 cents per share disappointed Wall Street analysts who had forecast 41 cents per share.

"In our first full year as a public company, we grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world," GM Chairman and Chief Executive Officer Dan Akerson said in a statement Thursday.

Akerson said GM would build on its successful cars, crossovers and trucks, make changes to money losing operations in economically stressed Europe and improve sales in South America.

GM's European division had a net loss of $600 million in the final four months of last year.

GM, which emerged from bankruptcy in 2010, also announced plans to freeze traditional defined-benefit pensions for about 19,000 U.S. salaried workers hired before 2001 and move to more cost-effective defined-contribution 401(k) retirement plans.

The change takes effect in October, when the approximately 26,000 U.S. salaried white-collar employees get one extra week of vacation.

Obama mea culpa

When President Obama dropped by the Washington Auto Show a few weeks ago he spent all his time with U.S. manufacturers even though foreign carmakers were on hand.

Last week, Obama gave a nod to foreign companies that build millions of vehicles in the United States and employ tens of thousands of U.S. workers.

During a speech at Master Lock in Milwaukee Thursday, Obama praised Japan's Honda Motor Co. for investing $98 million in its Anna, Ohio, engine and transmission plant. In January 2011, Honda committed to nearly $800 million in U.S. investments to create more than 1,200 new jobs in Ohio, Alabama and Indiana.

The Obama administration -- which wants to see 1 million advanced technology vehicles on U.S. roads by 2015 -- has proposed hiking the tax credit for buying an electric vehicle to $10,000 from the current $7,500 maximum. The proposal would also expand the federal tax credit for purchasers of other advanced technology vehicles that run on alternative fuels.

The changes are part of Obama's fiscal 2013 budget plan, which is expected to meet tough resistance in Congress in an election year.

The tax credit would be gradually phased out by 2020.

Advance sales of Tesla Model X begin

Tesla, a Fremont, Calif., electric car maker, began taking orders for its all-new electric crossover, the Model X.

The vehicle, about the size of an Audi Q7 SUV, seats seven and is expected to be faster than a Porsche 911 Carrera sports car. Tesla estimates the performance version of the Model X will be able to hit 60 mph in less than 5 seconds.

Tesla hopes to build 10,000 to 15,000 of the sleek crossovers annually beginning at the end of 2013. Model X will feature dual all-wheel drive with the option of a 60 kilowatt or 80 kwh battery, but there was no estimate how far it can go between charges.

Gas mileage improving

With predictions of $4-a-gallon gasoline returning by summer, the University of Michigan Transportation Research Institute reports mileage of new vehicles sold in the United States in January averaged 23 mph, tying the record average monthly fuel economy for new cars, light trucks, minivans and SUVs set last March.

It was a 4 percent improvement from December.

Average sales per dealership as reported by the Detroit retail consulting firm Urban Science could reach 785 vehicles in 2011, up from 719 in 2011.

The company said the total number of U.S. auto dealerships rose by 100 last year, to 17,767, despite the loss of Ford's Mercury brand. Fiat added 135 dealers and Chrysler-Jeep-Dodge-Ram opened 50 more dealerships.

"To put this into perspective, in a normal year we see a 2 percent decline in the number of dealerships nationwide, which makes an increase, even a small one, very unusual," Urban Science Vice President John Firth told the Detroit Free Press.

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