Auto loan picture grim

A $23.9-billion quarterly loss is hard to see around. But lost in all the heartburn over the effect that subprime mortgages had on Wachovia Corp.'s third-quarter results was the fact that the bank didn't get much help from automobile loans either.

The soon-to-be unit of Wells Fargo & Co. reported that 2.89% of its $27.5-billion auto-loan portfolio was delinquent by 30 or more days, up about half a percentage point from the same period a year ago. That's $795 million in past-due loans, compared to  $581 million a year ago.

Meanwhile, the value of Wachovia's nonperforming auto loans, generally defined as those that are 90 or more days delinquent, reached $93 million, up from $69 million a year ago.

Most tellingly, the bank charged off — essentially giving up hope of collecting on — $195 million in auto loans in the third quarter, a whopping 99% increase over  a year earlier.

As a result, the bank said it had tightened lending standards, raising the average FICO score for a new car loan to 673, and cutting way back on long-term auto loans, which can have a terrible effect on borrowers and lenders. At one point, 6.5% of Wachovia's new auto loans were for seven-year terms, a number the bank hopes to reduce to 2% of its originations. Wachovia also reduced overall originations of auto loans by 30% compared to the second quarter, to just $2.6 billion.

Of course, some of that reduction could be because fewer people are looking to buy a car in this down economy. But the figures also shed light on why consumers are complaining that they're having trouble getting financing for a new purchase.

Wachovia's auto woes are hardly unique...

Rock, rides and GAS

The auto industry is alive, well and rocking in Van Nuys. Galpin, the world’s most successful Ford dealership (according to Galpin) held a party Saturday night at its Roscoe Boulevard HQ. At least 2,000 people showed up to celebrate Galpin Auto Sports, one of the shiniest jewels in the company's crown. The bar was sponsored by Absolut, the event was catered by Wolfgang Puck, and the entertainment came from rapper Xzibit plus a rock supergroup, Camp Freddy.

This motley crew included guitar hero Dave Navarro (Jane’s Addiction and a spell with the Red Hot Chili Peppers) and drummer Matt Sorum (of Velvet Revolver, and formerly of Guns ’n’ Roses), with guest spots by Macy Gray, Cypress Hill, Ozzy Osbourne and Slash (pictured below with Galpin Auto Sports President Beau Boekmann).

Galpin Auto Sports (GAS) is the vehicle customization facility that capitalizes on the success of the MTV series "Pimp My Ride," in which GAS oversees all the various remodeling, personalization and, well, pimpin’. In its showroom was a relatively understated Jaguar XK convertible with baby-blue carbon fiber trim and matching oversized wheels, but there also were more outlandish creations, including some from the godfathers of the Kustom Kulture scene: Ed "Big Daddy" Roth, George Barris and Von Dutch.

Signs of weakness in collector car auction market

A sale of Impressionist paintings at Sotheby's or Christie's is typically preceded by a round of white-glove collectors' previews, and occasionally accompanied by a glass of white wine.

A Barrett-Jackson auction of collector automobiles strikes a slightly different tone. Its most recent sale, at the Mandalay Bay hotel on the Las Vegas Strip last weekend, was ushered in with a performance by Robosaurus, which ate a car. A beach party followed. During the three-day auction, Robosaurus came back seven more times to breathe fire and eat more cars.

Considering the state of the stock market (Dow down another 514 points today), bidders at the sale must have been eating fairy dust.

All told, they dropped $29,216,290, including a 10% buyer's commission, on the sale's 533 lots. That averages out to about $54,814 per car, all of which were sold without a reserve price. The company's previous sale in April in Palm Beach, Fla., hammered down $23 million on 510 cars, which works out to a mere $46,100 per lot.

Show organizers touted the results as evidence of a recession-proof industry niche. "Economic uncertainty was nowhere to be found," a Barrett-Jackson news release states. But looked at it another way, perhaps the sale wasn't that strong.

Honda decides: I shoulda had a V-8!

No major carmaker has weathered 2008 better than Honda,* and there's little debate as to why: small, efficient cars like the Civic and the Fit. In fact, it's been a point of pride at Honda that the company has never made a production engine larger than six cylinders.

That's about to change. Honda officials have confirmed long-running rumors that the company is working on its first production V-8 engine, intended for use on its Acura RL flagship sedan. On top of that, the Japanese company is going to put a 10-cylinder monster into the unnamed car that will replace its NSX, due out in 2010.

Honda didn't give a release date for the amped-up RL, but speculators put that at late 2010 as well. Putting a big motor in the RL makes sense on one level, since the current front-wheel drive model, with a 3.7-liter V-6, is out of step with the trend in luxury cars: rear-wheel drive with a V-8. That's a bandwagon Hyundai jumped on this year with its 4.6-liter V-8 Genesis sedan, and one that competitors like Lexus (with three different V-8s in its sedans) have been riding for a while.

Honda's CEO, Takeo Fukui, told reporters Monday that it was a matter of matching the competition. "I don't think that the Acura RL 3.7-liter is sufficient. We can't compete with other premium brands." Through September, sales of the Acura RL have declined 23% compared with last year, worse than Acura's overall decline of 15%. That, in turn, is worse than the 13.8% decline for imported luxury cars in general.

Still, the idea that Honda is going to build the very kind of gasoline-sucking engine that has been such an albatross around much of the industry's neck is a bit of a surprise....

The (temporarily) old man and the Lambo

The world is getting older. In many industrialized countries, such as the U.S. and Japan, the median age is rising fast, a fact that challenges car designers and engineers to accommodate an increasingly achy and inflexible clientele. It doesn’t help that many car designers are young punks who think sciatica is some goth band. (Darn kids, get offa my lawn!)

To the rescue – slowly – comes Nissan, which has created a special “aging suit” to help designers better appreciate the infirmities of age.

“It's not always practical to recruit older motorists for product research,” said Nissan design engineer Etsuhiro Watanabe. "[The suit] allow[s] Nissan's engineers and designers to come up with solutions that make car use a safer and more positive experience."

A couple of weeks ago Nissan sent me the suit – in a big Halliburton case – and invited me to try it out. The suit is actually a collection of ergonomic appliances designed to restrict movement and inhibit sensory acuity. To mimic a spreading middle-aged girth, for example, the suit uses a thick waist-belt with 11 pounds sewn into it. The belt makes it harder to enter or exit a car and can even cramp an engineer's movement behind the steering wheel in poorly designed seating.

Special raised-toe sandals simulate an older person’s uncertain balance. Cloudy and tinted goggles simulate loss of peripheral vision and loss of color sensitivity. Large elastic bands around the knees and elbows simulate the loss of flexibility that comes with age. Gloves limit dexterity. Earplugs restrain hearing. In the 20 minutes that it took me to don the suit I aged from 48 to approximately 75 years old.

But it occurred to me that getting into a cushy Nissan Armada or even a Maxima wouldn’t be much of a test. So I decided to try the suit out in the least elder-friendly car known to man: The Lamborghini Murcielago.

Lambo takes the same approach to ergonomics that Torquemada took to gentle persuasion. This car – a 632-hp, $380,000 rocket ship – is only 44 inches tall at the windshield, about the height of a good cane. To gain access, drivers have to limbo under the scissor doors.

What happens next? Click the video to find out.

-- Dan Neil

Diamond-encrusted Hot Wheels: Do NOT lose under the couch

It's bling, in teeny-tiny letters. This week, at the Petersen Automotive Museum's Hot Wheels Gallery, Mattel is displaying a one-of-a-kind, $140,000, diamond-encrusted miniature (a Dodge Charger, I think) that will be auctioned off on Saturday by Bonhams and Butterfields to benefit Big Brothers Big Sisters of Greater Los Angeles and the Inland Empire.

The Saturday event, the sixth annual Bonhams and Butterfield's motoring sale at the Petersen, will also feature effects once belonging to Steve McQueen, from the private collection of his former wife, Niele McQueen Toffel. (A pair of Persol sunglasses said to have been McQueen's went for $75,000 a couple of years ago.) Cars owned by Bruce Willis will be headlining the list of vehicles offered, including a 1968 Shelby GT-500 convertible, 1968 Pontiac Firebird 400 convertible and a 1957 Chevrolet Corvette convertible.

Mattel's diminutive, diamond-slathered toy was commissioned to celebrate the 40-year heritage of Hot Wheels and the production of its 4 billionth die-cast vehicle. According to the news release: "The car is adorned with $140,000 worth of white diamonds, colored diamonds, and rubies set as taillights. The car’s body is composed of 18k gold, white gold and enamel. Covering the vehicle are nearly 3,000 round brilliant and baguette cut diamonds, with a total weight of 22.94 carats, designed and set by Jason Arasheben, president and CEO of Jason of Beverly Hills."

The car includes a custom-built presentation case embellished with 40 bezel-set diamonds and designed with a rotating base on which the car rests. If that's not enough, an LED display in the case projects images of the car’s production.

For more info, click here.

-- Dan Neil

The Petersen Automotive Museum is located at 6060 Wilshire Boulevard, Los Angeles, California 90036-3605. Enclosed parking and the museum entrance is just south of Wilshire on Fairfax Avenue. For  general information, call (323) 930-CARS or visit the museum’s website at www.petersen.org

Azure thing

The next fashionable car color will be blue. That’s according to automotive paint supplier PPG. Every year, the Troy, Mich.-based company gives its predictions of upcoming trends, taking things like interior design and consumer products into account. The Ferrari California pictured here shows that even a company famous for producing red machines is embracing the cooler hue.

“Blues, particularly more vibrant, richer, complex blues, will take on a more important role in car styling,” says Jane Harrington, PPG's manager of color styling for automotive coatings. “It’s one of those colors that complements vehicle shapes. It’s a globally acceptable color. It doesn’t have any bad connotations.”

That other big name in paint, DuPont, agrees. “The source of the trend is influenced by ecological concepts, as we talk about sky, water,” says Karen Surcina, color manager for DuPont. “You can also talk about blue as a sophisticated look.”

PPG has developed more than 130 color concepts for its clients to consider for the 2011 to 2012 model years, including one called Lights Out -- a deep, dark blue accented by sparkling glass flakes.

However, the ubiquitous silver isn’t on its way out quite yet. Among existing cars, it continues to be the most popular color in North America. According to PPG, it’s been the choice for 20% percent of new cars purchased so far in 2008. White comes second with 18%, followed by black at 17% and red at 13%.

Harrington’s explanation for the popularity of silver? “It’s a neutral color that works on just about any car. Black, white and silver are core colors.”

-- Colin Ryan

Photo: Ferrari

2009 EPA Fuel Economy: The Best and Worst

This week, the U.S. Environmental Protection Agency released its annual Fuel Economy Guide, detailing the car industry’s gas sippers and guzzlers.

It shouldn’t be a surprise that the 48-miles per gallon (city) Toyota Prius hybrid topped of a mix of compacts and eco-conscious cars on the list of the vehicles with the best mpg ratings. But it has some new company on the list, including the now 50-state friendly Volkswagen Jetta diesels. The 2009 Honda Fit, a critical darling that gets 27 to 28 mpgs in the city and 33 to 35 on the highway, didn't make the cut.

The Ferrari 612 Scaglietti sports car and other rides aimed at drivers who probably don't even look at the price of gas made up the lion's share of the gas-guzzler list. One American vehicle was among them -- the Jeep Grand Cherokee.

This is the second year of the EPA’s revised testing methods, which strive to bring their “estimates closer to consumers' actual fuel economy by including factors such as high speeds, quicker accelerations, air conditioning use, and driving in cold temperatures.” These changes may produce lower fuel economy estimates, particularly in vehicles more susceptible to these conditions.

For a look at what 2009 vehicles have the best and the worst fuel economy according to the EPA, click on the links below.

<< EPA's Fuel Economy Leaders in 2009 >>

<< EPA's Fuel Economy Laggards for 2009 >>

-- Whitney Friedlander

Photo: Toyota

Singing road's encore

As if there weren’t already enough funny noises coming from the underbelly of your car, starting today, you can again hear the "William Tell" overture when you drive over a strip of road in Lancaster.

The city’s first strip of singing pavement was constructed for a Honda ad in September. It used strategically placed grooves -- similar to rumble strips on highways -- spaced so that a series of pitches resembling Rossini's famous composition played when a car drove over the road. But neighbors complained about the strange noises and the crazy behavior of the people driving in the area. So Lancaster covered over the grooves after 18 days, rather than 18 months as originally planned.

The city vowed to construct a new road, and Mayor R. Rex Parris said that corporate sponsors were jockeying to pay for it. But the new road, on Avenue G between 30th and 40th West, doesn’t have a sponsor’s name on it. That’s because Honda didn’t want another company’s name on the road they pioneered, said Bob Green, interim director for Lancaster’s Parks, Recreation and Arts Department. Sponsors will instead pay for special events and programs having to do with the road, he said.

The new singing pavement won’t cause the same problems as it did before, he said, because it’s on a three-lane road in a less residential area. “There are no houses nearby,” he said. “And it actually sounds much better than it did previously anyway.”

-- Alana Semuels

Photo: Steve Bao

Westward Ho, Hummer Nation!

It’s just the thing to park in the driveway of the Ponderosa. But actually it’s parked on a London street, outside the Royal Academy of Arts, while the fifth Zoo Art Fair takes place. Even in the wild world of modern art, British-born Matthew Harrison seems to be something of a maverick, if this Hummer H3 fitted with real wooden wagon wheels is any indication. And no, you can't drive it.

This, um, sculpture takes an icon from America’s past and combines it with one from its present to make a statement. “The Good, the Bad and the Arty” perhaps? Or maybe that’s all up to the onlooker, because, for Harrison, the crux of this piece -- entitled (imaginatively) “Hummer” -- is “formed by both its ‘being’ and its afterlife,” he says. Yeah, right.

At least Hummer has taken it all in good spirits. “We were thrilled to be approached by Matthew and glad to be supporting his work,” says the company’s spokesman, Corin Richards. Incidentally, the H3 has 245 horsepower. 

Might this be the first in a series? What are the chances of “The Lone Range Rover” or the “Jeep Cherokee Nation”?

-- Colin Ryan

Photo: Zoo Art Fair/General Motors