CDC: Highway Fatalities Cost $41 Billion Annually

Road fatalities do more than take away loved ones, coworkers, and community members; they also leave an economic impact.

For the first time, the Centers for Disease Control and Prevention (CDC) has released state-by-state fact sheets that highlight individual state costs due to motor-vehicle crashes.

The announcement was timed at the kickoff of the United Nations Decade of Action, an international effort to save five million lives by working cooperatively toward greater road safety through 2020.

Across the U.S., vehicle motor-vehicle fatalities result in about $41 billion dollars in medical costs and work loss, according to the organization, and half of our national costs related to vehicle crashes are attributed to just ten states.

The data is useful as it includes not only the highway fatality rates, which vary significantly from state to state, but the work loss costs of removing that person from the economy. And when including those work-loss costs, the costs of highway fatalities roughly parallels what the U.S. DOT spends on our highways annually. In short, auto accidents cost us all in economic welfare.

On a state-by-state basis, the cost data varies widely—but it's not always in proportion to the fatality rate (which on a national level, has been at record lows). For instance, in California traffic fatalities cost a total of about $35.8 million, according to the CDC, while in Massachusetts they cost $6.5 million. Yet per capita, the cost in Massachusetts cost is only about half that in California—perhaps due to the New England state's lower per-capita highway fatality rate, but also potentially due to other factors that states should individually address.

The CDC has four recommendations to the states to help save lives and money: primary seatbelt laws; strong child passenger safety policy (child and booster seats); comprehensive graduated driver licensing (GDL) systems; and universal motorcycle helmet laws.

Here are the ten states with the highest medical and work costs from vehicle accidents:

1. California ($4.16 billion)
2. Texas ($3.50 billion)
3. Florida ($3.16 billion)
4. Georgia ($1.55 billion)
5. Pennsylvania ($1.52 billion)
6. North Carolina ($1.50 billion)
7. New York ($1.33 billion)
8. Illinois ($1.32 billion)
9. Ohio ($1.23 billion)
10. Tennessee ($1.15 billion)

See the CDC's state costs page to get more information on the cost of motor-vehicle deaths—including a breakdown by age and type of accident.

[CDC]

View the original article here

GM’s $3.2 Billion Earnings: Profit Over Market Share

Seven years ago, General Motors executives wore lapel pins bearing the number “29.” Market share had just dipped behind that number, and Rick Wagoner was trying to encourage his minions to work harder and push market share back above that number.

Didn’t happen, of course. Four-and-a-half years later, GM’s share had sunk to the low 20s and “29” would have meant the year the stock market and economy were emulating.

Thursday morning, GM announced $3.2 billion in net profits for the first quarter of 2011, with $1.5 billion of that attributed to sale of Delphi preferred shares and of its Ally Bank, its reconstituted GMAC financing arm. Including those special items, this marks GM’s best quarterly profit since 1990, according to Bloomberg Business Week. With or without the Delphi interest/Alphi sale, it’s GM’s fifth consecutive quarterly profit. Net revenue was $36.2 billion, $4.7 billion better than the first quarter a year ago.

GM says it did this with 19.0 percent share of the U.S. market, a full 10 points below the hapless plea of those executive lapel pins from 2004. North American share was 18.3 percent in the first quarter and its global market share is 11.5 percent.

Who cares about market share? GM made money as gasoline in the U.S. crept up toward $4 per gallon. Like everyone else in the U.S. market, GM still has way more margin on body-on-frame trucks and SUVs, but Wagoner promised us years ago as CEO that the company would make money on the Chevy Cruze, thanks to reduced fixed costs and the 2007 United Auto Workers contract.

He wasn’t allowed to stick around long enough to see how a U.S. Treasury and Canadian/Ontario bailout, a Section 363 bankruptcy reorganization and more concessions from the UAW would help make the small car profitable for the company.

And I can’t avoid mentioning the Chevrolet Cruze’s latest recall, announced the same morning as the fifth consecutive quarterly profit. Chevy is recalling 154,112 of them, which includes 99,860 sold in the U.S. since last year, plus Cruzes sold in Canada and those still on the ground, from factory to showrooms. This’ll cost GM, though recalls affect every brand in the industry. These days, as long as you don’t handle recalls the way Toyota did in early 2010, you’ll probably get through them okay.

GM Chairman and CEO Dan Akerson, though he’s no stranger to victory lap hyperbole, called the Q1 results “steady progress, but with more work to do.” On Tuesday, GM reported that it has as 48-day supply of cars, a 52-day supply of crossover utilities and a 111-day supply of trucks. By Thursday, Automotive News reported GM would cut production of its full-size pickups to reduce stock. That means some variable cost cuts, potentially reduced incentive expenditures and lower net revenues. It can’t be overemphasized how profitable big trucks and SUVs are. Even with big incentives GM can make big money on Chevy Silverados, Tahoes, Suburbans, GMC Sierras and Yukons, etc.

It could mean another downward blip in market share, but again, who cares?

Wall Street cares. Its analysts are the most concerned about market share, because it is  “metric” they can understand. I’ve been saying for several years that the U.S. market is becoming more like Western Europe’s, not in terms of what we buy so much as what shares we buy. It’s the “18, 18, 18”rule, in which the top three automakers each hold about 18 percent market share. With 19 percent, GM actually has an advantage, even after shedding Pontiac, Saturn, Saab and Hummer. Ford and Toyota both are in the mid-teens.

The three keys, as Renault/Nissan’s Carlos Ghosn once said, as well as nearly every auto exec with a pulse since his statement, are product, product, product. The Chevy Cruze sells for an average transaction price some $3,000 to $4,000 above the old Chevy Cobalt’s. Launching the Cruze here some 18 months after it went on sale in Europe didn’t hurt, as the development costs, which usually are front-loaded at the beginning of the product cycle, were at least partially accounted for by the time of the North American launch.

The next thing GM must do, beyond getting through the current quarter while cutting truck production, is to accelerate its product cycle to match Ford’s newly aggressive mid-cycle updates. Even though GM is a much smaller company than it was before the summer of ’09, it’s still larger than Ford, probably with more remaining waste and bureaucracy. The advantage to being larger, though, is that GM still has a broader range of products than Ford, including future rear-wheel-drive platforms. Cadillac is still in the luxury game and Buick, even if its cars are less well equipped and priced lower than Lincolns, can be considered competitive with that brand.

Good as Thursday’s numbers are, they’re small beer next to the $37 billion or so in U.S. Treasury loan guarantees that GM hasn’t paid back. When Treasury sells off its remaining 26 percent of GM, it will take much more than Thursday’s closing stock price of $32.02 per share in order to break even. You can calculate that out, but your calculations won’t take into effect the 1 million+ jobs the automaker bailouts saved, not to mention the question of whether we’d be in the middle of the Second Great Depression, now.

Forget “29.” Don’t worry much about “19” except that it’s higher than 18. Fact is, U.S. manufacturing, as represented by GM, Ford and Chrysler, not Microsoft, Intel, Apple and Dell, is making money, for now. I’ll take black ink over 29 percent market share any day.

View the original article here

Can the Company Declare Victory, Yet? GM’s First Annual Profit Since ’04 Is $4.7 Billion

In the year it issued a record $23 billion initial public offering, thus reducing U.S. Treasury (our) ownership from 61.8 percent to less than 27 percent, (plus 7 percent for Canada) General Motors posted its first full-year profit since launching the Holden-based Pontiac GTO in the U.S. Net profit totaled $4.7 billion. In 2004, GM made $3.6 billion and infamously had lost much more in the years between. GM earned money in all of its regions last year, except Europe, which lost $1.8 billion.

Chairman and CEO Dan Akerson summed it up as, “Good start, a lot more work to do.”

Earnings were $2.89 per share for the year, and 31 cents for the fourth quarter, when net profit slowed to half a billion dollars. This time, Wall Street analysts listened to GM’s warning its fourth quarter earnings would slip because of heavy spending on new cars and trucks. Analysts didn’t heed such warnings for Ford, which reported net income of $6.6 billion for fiscal year ’10, with $190 million in the fourth quarter. At GM, a total of $4 billion in payments to voluntary U.S. pension contributions affected the automotive operations free cash flow. It has reduced its underfunded pension obligations from $16.2 billion to $11.5 billion.

Analysts sent Ford stock bouncing up and down last month, because they expected more. They had expected about $5 billion in net income from GM Thursday. GM’s net cash from operating actions fell by $1.7 billion in the fourth quarter, the first drop since the fourth quarter of ’09. In the third quarter, net cash rose $2.6 billion, versus $3.8 billion in the second and $1.9 billion in the first.

GM, Ford and their competitors face “headwinds,” as Wall Street likes to call them, potentially as frustrating as what they faced in the summer of 2008. Libyans are trying to overthrow Qaddafi, sending crude oil above $100 per barrel worldwide, while gasoline was expected to crest $4 per gallon this summer even before large sections of the Middle East began to fight for democracy.

Steel prices also are rising, and the conservative-leaning U.S. Supreme Court Wednesday ruled that Mazda could be sued for failing to provide seatbelts pre-2007 that would have gone beyond the minimum government standards, sending auto stocks falling Wednesday.

GM is in good shape, this time, to weather another oil shock. Even if it can’t make and sell more Chevrolet Volts than the fewer than 10,000 it has promised in the first year, it has a poster child halo car for $4+ gas, and it’s selling boatloads of Chevy Cruzes and Equinoxes, with Buick Veranos and Chevy Sonics on the way. It even claims it can make money on these cars, which is far more important than any market share. With four North American brands to foster rather than eight, just a couple of models like the Cruze and Equinox can make the difference between success and failure.

GM reports its worldwide employment fell from 215,000 at the end of ’09 to 202,000 at the end of ’10, while it added 2,000 North American salaried employees. The North American operations have been busy hiring engineers and designers to make up for deep cuts during the bankruptcy. They’re busy trying to catch up on all the product programs that were put on hold from 2008 on. If re-opening the product floodgates brings on more successful products like the Chevy Cruze and Equinox, GM should have plenty of good financial news through the middle of the decade.

View the original article here