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2014 was a year marked by some grim auto industry news. Most notably by two major safety defects that cost dozens of lives, and billions of dollars to top automakers. But the year also brought product innovation, and an upward trend in sales that can hopefully continue into 2015. Here’s a look at some of the top automotive headlines that shaped the year.
Falling Oil and Gas Prices
2014 saw a fast drop in oil and gas prices, leaving consumers relieved but the U.S. oil industry reeling. The 2015 forecast for the national average price for a gallon of regular unleaded will be $2.60, according to the Energy Information Administration (EIA). Is it good or bad news for the auto industry? A little bit of both. Positive impact was apparent in sales at the end of the year: the auto industry had its best November in a decade. The surge in consumer demand for pickups and SUVs proved that Americans’ taste for gas-guzzlers has not faded. Yet downward trends in fuel prices could spell trouble in the auto industry: particularly for automakers who have based their strategies on higher fuel prices and tightened emission standards.
GM’s Ignition Switch Recall
General Motors expects to spend upwards of $400 million in compensation claims for those injured or killed by the now-recalled Chevrolet Cobalts, Saturn Ions, and other cars with defective ignition switches that can inadvertently disable engine power, power steering and air bags. The GM ignition switch defect has been linked to at least 42 deaths. In May, the company paid a record-setting $35 million fine to the National Highway Traffic Safety Administration for the delayed ignition switch recall, and agreed to up to three years of monitoring. The delayed recall has prompted investigations from the Justice Department, Congress, 48 state attorneys general, the Securities and Exchange Commission and U.S. and Canadian regulators.
Toyota fined $1.2 billion for Acceleration Problems
In another stunning safety recall this year, the Department of Justice levied a $1.2 billion penalty against Toyota— the largest penalty of its kind ever imposed on an automotive company — after admission that it misled U.S. consumers by concealing and making deceptive statements about two safety issues causing unintended acceleration. The DOJ has also imposed on Toyota an independent monitor to review and assess policies, practices and procedures related to Toyota’s safety-related public statements and reporting obligations.
Google Unveils Self-Driving Car
In May, Google unveiled its prototype self-driving car, controlled by an app but no physical controls, and announced the first fully-functional version this week. It’s one of seven companies to have won approval from California’s Department of Motor Vehicles to begin testing driverless cars on public roads since September. Over the next few years, Google hopes to test the pod-like vehicles on a widespread scale, with the goal of making a mainstream, commercially available self-driving car for the masses.
Subprime Auto Lenders Under Fire
State banking regulators, the U.S. Department of Justice, and the Consumer Financial Protection Bureau (CFPB) brought the hammer down on subprime auto lenders throughout 2014. Among the concerns: lenders engaging in predatory practices, discrimination, and inaccurate credit reporting. In September, the CFPB announced its oversight reach into nonbank auto lenders, and has since launched in-depth investigations of about 40 large auto lenders to determine whether the firms are following federal consumer-protection laws. Car dealers, who originate loans sold to auto lenders, have already had to adjust to the CFPB’s growing reach, and industry experts are expressing concern that the agency’s actions could drive up the cost of credit to consumers.
Federal Government Loses Billions on Auto Bailout Loans
In a final tally of the automaker bailout loan repayment, the U.S. government lost $9.26 according to the US Treasury Department. In its final report released this week, the treasury said it recovered $70.43 billion of the $79.69 billion it gave to General Motors Corp., Chrysler LLC and auto lending arms Ally Financial Inc. and Chrysler Financial. The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. Automotive industry analysts have argued that government losses paled in comparison to the impact that would have followed a collapse of GM and Chrysler, and the Obama administration continues its applause of the successes of the TARP program, which became a key part of Obama’s re-election.
US Auto Sales Best Year Since 2006
The U.S. auto industry ultimately came out ahead in 2014, with an estimated 16.4 million vehicles sold — the best total since 2006. Industry experts attribute the surge to a number of factors that worked in favor of the auto industry: falling gasoline prices, decrease in unemployment, low interest rates and an industry revival in production.
Wishing you a successful and happy 2015!