U.S. auto sales tumbled, Proton to develop hybrid car?

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Aug 03 2008
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One of the biggest items on the table for next week is definitely the FOMC meeting and its policy announcement slated for Aug 5th at 2:15 ET. The Bernanke boys are expected to do nothing and let the rate unchanged at 2.00 percent. There’re hundreds of companies that would be releasing their earnings and amongst the big boys are Cisco System, Warren Buffett’s Procter & Gamble, Whole Foods, Transocean and Archer Daniels Midland.

It would be a bumpy week after General Motors Corp. which is burning a whopping of US$1 billion in cash every month reported a $15.5 billion second-quarter loss last Friday, the third-worst quarterly performance in its nearly 100-year history. GM blamed its July sales which fell 26 percent on high gas prices. Nissan Motor Co. also reported slower sales – its net profit for the quarter dropped 42.8 percent while BMW AG reported a 33 percent profit decline. U.S. auto sales slumped to a 16-year low in July as automakers failed to keep up with consumers’ growing demand for smaller, more fuel-efficient vehicles.

While everyone is on the mood for the Beijing Olympic Games 2008 scheduled to start on 08-08-2008, economists and analysts are still debating whether the demand for oil will fall after the event. However a member of Kuwait’s top oil council, Khaled Boodai, said despite the falling prices from record $147 to $125, the black oil is unlikely to fall below $100 per barrel as strong demand from economies such as China and India would provide the support. Boodai also said Kuwait’s proven oil reserves stood at 100 billion barrels and not just 48 million barrels as reported by industry newsletter Petroleum Intelligence Weekly (PIW) in 2006.

On the local front, Malaysia PM Abdullah Badawi claimed that national carmaker Proton Holdings Bhd (KLSE: PROTON, stock-code 5304) is developing a new, fuel-efficient hybrid car to beat rising costs and address environmental concerns. Fighting a survival series to stay on power, Badawi also claimed he had already test-driven the car and urged the company to continue researching energy-saving techonologies. Well, I’m surprise that Proton has the “local” knowhow and expertise to develop hybrid cars when it can’t even fit all its models with the standard life-saving feature – Airbag. But then how hard could it be to import such (hybrid) technologies elsewhere.

Of course everyone hope Proton could really develop something on its own this time around but the next question would be the maintenance cost. Would such hybrid car cost more to maintain after the recent controversial Proton Perdana V6 scandal which shows the maintenance cost was higher than the car’s price after the fourth year?

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