SUV's and Shareholder Resolutions

It is well-known that the U.S. Auto makers rely heavily on the high-margin SUV/Truck categories. Unfortunately, with rising gas prices, consumers are shying away from the gas guzzlers. As I pointed out earlier, there is broad support among policy-makers for an increase in the gas tax. For the sake of the workers, I hope the U.S. Auto makers get their act together. From the NYTimes:

Despite gains at Toyota and Honda, declines at General Motors, Ford, DaimlerChrysler and Nissan kept vehicle sales in the United States flat in April, according to Ward's AutoInfoBank. General Motors recorded the biggest drop, selling 7.3 percent fewer vehicles than it did last April.

For the first time, Toyota became the nation's No. 3 car seller for the month, passing DaimlerChrysler. That marks a symbolic victory for Toyota, which occasionally outsells the Chrysler division but had never before outsold all of DaimlerChrysler in the United States.

The latest surge in gas prices poses a long-term problem for the domestic auto companies, which had been hoping that gas prices would moderate and make S.U.V. sales easier. Now, analysts warn it may be harder to get consumers to buy a gas-thirsty vehicle when the oil market remains so volatile.

"Last fall when we had this first spike, then people could write it off as a one-time deal," said Stephen J. Hoch, a professor of marketing at the Wharton School of the University of Pennsylvania. "The fact that it spikes twice means it can spike again. Now, this time people will say there's enough evidence that this is going to be a recurring if not frequent phenomenon."

Last month, big S.U.V.'s and pickup trucks were among the vehicles that had the sharpest sales drops. The Ford Explorer was down 42 percent compared with April 2005. Sales of the Jeep Grand Cherokee declined 41 percent. Sales of Ford's top-selling F-Series pickup fell about 9 percent last month, as did sales of the Nissan Titan. The Chevrolet Colorado pickup was down almost 30 percent.

The Christian Science Monitor has excerpts of a recent discussion on shareholder resolutions:

What trends are you seeing in shareholder resolutions?

Ms. Benton: One of the most exciting trends we're seeing right now is the level of responsiveness from the companies. They've gone from being resistant or unaware ... to working with us.

Ms. Alpern: There's a lot of activity around climate change. Ten years ago, companies could treat you like you were a little bit crazy for bringing up the issue. But now, it's taken very seriously as an economic issue.

Are there other trends?

Alpern: Political contributions have become a real issue over the last couple of years. There's an outfit in Washington called the Center for Political Accountability that has worked very closely with a shareholder coalition to put resolutions on company ballots that ask companies to disclose the kinds of contributions they're making. Although there's some kind of public disclosure already required by government, it doesn't tell the whole story.

Are you telling companies who to contribute to?

Alpern: No. At this point, we just want to know what they are doing and how they are handling the risks associated with political giving - the reputation risks when they might find out that some of their money has been diverted to some candidate or political independent 527 [group] whose views would alienate their employees, their customers, or their shareholders.