German Volkswagen Group expects to sell more than 800,000 vehicles in China this year, encouraged by its strong sales in the first half.

The projection, made by Volkswagen's China chief Winfried Vahland, is up from 711,298 units it moved in the world's fastest-growing major auto market in 2006. Its January-to-June sales on the mainland and Hong Kong rose 24.6 percent year-on-year to record 431,369 units, including 379,705 Volkswagen-brand cars, 49,267 Audi vehicles and Skoda 2,274 units.

The German company's record sales figure is likely to help it remain the top seller in China's passenger car segment though its rivals, such as the General Motors Corp. and the Toyota Motor Corp., have yet to disclose their first-half results in the territory. "This (record sales) indicates that our 'Olympic Program' has been yielding good results in China," Vahland said in a recent interview in Beijing.

Volkswagen, the sole automotive partner of the Beijing 2008 Olympics, flagged off the program in 2005 to launch 12 to 14 new models by 2009 in China. The automaker also intends to cut costs by 40 percent by 2008 and to improve sales and service networks.

Vahland predicted that China's entire passenger car market would reach five million units this year, up from the company's previous forecast of 4.6 million units. In 2006, 4.2 million passenger cars were sold in the country. "However, we will not slacken our efforts to cut costs and improve customer satisfaction, although we performed well in the first half," he said. He warned that interest rate rises and soaring oil prices in China are likely to have a negative impact on the car market.

The VW turn signal alerts the automaker to a greener pasture. The German automaker now runs a joint venture with First Automotive Works Corp in the northeastern city of Changchun. The venture is responsible for the production of Bora, Caddy, Jetta, Golf and Sagitar, as well as the Audi A6 and A4. Additionally, the venture will launch a 1.8-liter turbo Magotan sedan next week.

The Mangotan also features Fuel Stratified Injection in nearly every petrol version. It ranges from 1.6 to 3.2 L, but the multivalve 2.0 L TDI is the most sought out version in Europe. In the United States, it features a 200 horsepower 2.0 L turbocharged I4 as the base engine, or a 280 horsepower 3.6 L VR6 engine as the upgrade and six-speed manual and automatic transmissions.

An Tiecheng, the venture's general manager, said that it plans to roll out at least two new models under the Volkswagen and Audi marques annually in the next five years to lure increasingly sophisticated auto purchasers.

The VW Mangotan, also called the Passat, follows the latest design philosophy first introduced on the VW Phaeton luxury car. The new styling is a dramatic departure from the styling of the B5.5 Passat. Although the new design using improved VW parts is somewhat controversial, sales have improved over the old model.

For the full year, VW, which operates car manufacturing ventures with leading Chinese auto maker SAIC Motor Corp. and FAW Group, aims to increase its sales by roughly one-fifth and maintain its 17 percent share of the world's second-largest auto market, a senior company executive said.

The venture will have a "minimum" profit growth of 25 percent this year from 2006, said Joachim Wedler, its vice-president in charge of finance. But Wedler did not reveal how much the firm, in which FAW holds a 60 percent stake and Volkswagen 40 percent, will earn this year.

The Wolfsburg-based company is one of the world's biggest producers of passenger cars and Europe's largest automaker.

About the Author

Anthony Fontanelle is a 35-year-old automotive.buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.

I’ve been reading more and more about the threat of deflation. What’s deflation? I can’t find a better definition for it than what’s in the Barron’s Finance and Investment Handbook*:

DEFLATION decline in the prices of goods and services. Deflation is the reverse of inflation; it should not be confused with disinflation, which is a slowing down in the rate of price increases. Generally, the economic effects of deflation are the opposite of those produced by inflation, with two notable exceptions: (1) prices that increase with inflation do not necessarily decrease with deflation—union wage rates, for example; (2) while inflation may or may not stimulate output and employment, marked deflation has always affected both negatively.

In other words, deflation is not a good thing even though price declines sound wonderful to the shopper!

Here’s a great little deflation tutorial if you’re interested: What is Deflation and Why is it Worrisome?

Are we headed for deflation? I have no idea. I think we’ve already seen it in housing and oil prices. Will we see it in other areas? I don’t know. I think it depends on how high unemployment goes.

Nouriel Roubini is expecting stag-deflation (stagnation/recession + deflation)…that doesn’t sound so good.

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In my mind, Ben Stein will always best be remembered as the teacher from the classic 80’s movie “Ferris Bueller’s Day Off”.

But beyond his acting career, Ben Stein is a lawyer, economist and former presidential speech writer. He’s a smart guy and a good writer. I don’t always agree with his conclusions, but I think he nails it in his latest piece.

In his latest writing — an article in the New York Times — he asks, “Where Are the Grown-Ups When You Need Them?”

This is a great article which tells it like it is. Click here to read it.

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If you’re covered by a health plan, you’ve probably encountered the words deductible, co-pay, and co-insurance a number of times when examining your bills, paying your doctor for a visit, or simply looking at the benefits package from your employer. These terms can be a bit confusing, and with all of the limits, maximums, and different coverage options, it is important to understand what they mean so you can obtain the best coverage for the right price.

When looking at your health insurance options, it’s important to go beyond the premium. The premium is the amount you pay each paycheck or month just to have the coverage. Obviously, you want the lowest premium you can get for the coverage you want, but you really need to look beyond that. Saving $20 a month on your insurance premium may end up costing you hundreds of dollars in co-pays or out-of-pocket expenses. So, let’s take a look at how you can make sense of all these terms.

Defining the Terms

Deductible

This is probably the most straightforward, and easiest ways to change the premium on your policy. The deductible is the amount that you need to pay for a claim before the insurance kicks in. If you have a $50 deductible and you are billed for $500 in services, you’d need to pay $50 out of pocket before the remainder is sent off to the insurance company.

Obviously, the higher the deductible you choose, the lower your premium will be since you’ll be covering more of the expenses out of pocket. So, you have to be careful. If you choose a high deductible in an effort to keep premium costs down, a period of poor health or unexpected medical treatments could add up quickly.

Don’t forget the maximums. Deductibles usually have an annual maximum, for both individuals and families. When comparing plans or options within your plan, determine how likely it would be that you’d reach those maximums, and if two plans have different maximums, think about which one provides the best cost-to-benefit ratio.

Co-pay and Co-insurance

The co-pay is probably another common term you’ve heard, and have probably paid a number of times without thinking much of it. Co-pay and co-insurance are basically the same thing, but cover different items. In either case, this is the amount of money you have to pay for a claim or service rendered. The difference is that a co-pay is typically a flat dollar amount for a specific item such as an office visit, exam, or prescription. Co-insurance is typically based on a percentage. This means that you’re responsible for a certain percentage of a claim, and the insurance provider is responsible for the rest.

Again, when comparing plans, the co-pay amount or co-insurance percentage can play a big role in how much your premium is. A plan with an 80/20 co-insurance (insurance company pays 80%, you pay 20%) will have a higher premium than a 50/50 plan, and so on.

Compare All the Numbers

So, when you’re exploring your health insurance options, it pays to look at more than the premium. While the premium directly affects your bottom line, saving a few dollars on the premium could cost you much more in the long run, and paying a higher premium for coverage you might not need may also cost an unnecessary bundle.

This is especially important if you have a certain condition that requires specific tests or drugs, or if you are planning on having a baby, as the amount of coverage provided for these items may require digging a little deeper than glancing at your premium. So, take the time to completely understand your health benefits, and you can be sure that you’re getting as much coverage as you need, and paying no more than you have to.

Comparing Deductible, Co-Pay, and Co-insurance When Looking at Your Health Insurance Benefit Options

Buy books that are used. Most are in good condition. You’re buying the book for the words so don’t worry that the spine is a little bent or the pages are a bit folded. I just bought a $35 dollar book on Amazon.com for $15 bucks used.

Some people are irked by buying books used. They’re afraid that the previous owner had abused and neglected their book before putting it on the market. Rest assured: They’re nothing wrong with most used books. The previous owner is selling it because they need the money. Or they do what I do and buy books and then not read them.

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Who’s to blame for the worst economic crisis since the Great Depression?

Warning… long rant ahead.

Have you heard the latest bad joke around? Okay not this bailout crisis joke I wrote about a week or so ago but the one on how we’re socializing our financial markets by making the taxpayers bail out all our financial institutions. As someone put it, “this is a form of wealth distribution alright, the government robbing from the poor to give to the rich….”.

So when will this nightmare of a crisis end? Sure we’re shoring up our failing banks and institutions right now, and even possibly certain vital industries that are the heart and pulse of our nation. But, I also see the flip-side, which is the fact that we (and our kids, and maybe even our grandkids) will be paying off for this till kingdom come, with the whole thing financed by our debt to foreign interests (e.g. Chinese).

This soap opera can’t be without its sorry cast of characters.

Golden Sach’s Bailout Man: Henry Paulson and George W. Bush, by Buckfush

Big 3 take private jets to grovel for cash, by Daily News

Capitalism Gone Awry

I wonder: how naive have I been? I am big on capitalism and believe wholeheartedly in rewarding anyone for the work they’ve done and value they’ve produced. I’ve always been of the mind that, if a CEO does well by his company and makes me happy as a stockholder, I have no qualms in approving a commensurate pay package for the geezer.

I’ve always been a proponent of self-regulation and a laissez faire economy, but this very thing has led to the disasters we’re seeing today. Now with the government sweeping in to save “the big guys” from themselves and their gross mistakes, I see that apparently, self-accountability is optional in this free market. Very interesting what this blog has to say:

Now consider: finance is a necessary function, but is represents a tax, a drain on the productive economy, just as defense and lawyers do. It is ironic that free market fundamentalists have so vociferously argued for unfettered markets, without understanding (or perhaps understanding all too well) that the house always wins.

The whole crisis has caused a very large swing from one extreme to another, the moving pendulum leaving behind much collateral damage: credit’s gone from very loose to extremely tight overnight.

Some people who had access to a lot of credit will correctly have a lot less, and that on dearer terms. But there are also perfectly worthwhile businesses and individuals who are also caught in the meat grinder of indiscriminate reduction of loan balances. Times are bad, and any efforts to extract more revenues from customers, even if it is blood from a turnip, or worse, even if it puts a viable business under, is warranted.

Silly me to have been so gullible, as I now stand confused about what should be done and how the economy should be run. It doesn’t help that I keep reading stuff like this to feed my migraines and sour stomach bouts.

How This Economic Crisis Is Breaking Financial Rules

What stance do I take now, as a die-hard pro-business supporter? I had placed my faith in the “powers that be” and didn’t think I’d ever see these levels of corruption, unchecked greed and blatant mismanagement in a first world country on this grand a scale (yes, I say this as someone who’s no stranger to the machinations of the third world, where corrupt ineptitude is rampant). This stuff happens, sure enough, but it happens in another world, and under the covers.

But there’s no hiding the ugly anymore. All I can see now is just how the ruling class has done a number on the working masses. And for the millions of people who followed the financial rule book throughout their lives to meet a horrible end to their futures because of the incompetent, morally degenerate few — well, I can say I’m beyond disappointed, and have crossed the line to feeling outrage and disgust.

Yes, this crisis is breaking all sorts of rules, including those I’d consider as long-standing successful personal financial tenets. Responsible approaches to personal finance don’t have a chance against a crisis of tsunamic proportions:

So let’s see — doing the right thing by scrimping, saving, investing, diversifying, doing proper asset allocation, avoiding market timing, indexing, and hedging against inflation through equities, even doing your job well will no longer guarantee you a splendid, worry-free financial future. Not when a “once in a century financial event” can just come by and rob you off the stuff you worked so hard for; not when someone “up there” can change the rules for you, just like that.

I didn’t necessarily see it coming, but some of my readers here have: I see just how observant readers have been, as they’ve shared their insights on the causes and consequences of the subprime mortgage financial crisis, the pros and cons of financial bailouts, and the relevance of market timing during a stock market bear and the current investment climate.

The Economic Crisis Calls For Faith: Do You Have Any To Spare?

Perhaps I’ve placed far too much faith in the integrity of our political and business leaders and trends in modern history to believe that our financial system was strong enough (and people were smart and honest enough) to absorb any shakeups, shocks and imbalances that happen. I still have hope, but recent events continually call to question my position in this matter.

Not long ago, I had asked: who’s to blame for the subprime mortgage mess? I said then that everyone here had a hand in this (from the mortgage lenders to the developers to the Fed to ignorant homeowners), but in reality, I’m now seeing where the bulk of that blame should go. It should be clear by now who should bear the brunt of your harsh judgment: follow the money.

Sure we (as the little people) can’t really do much about this (except whine, rant and call the villains out), but with more discussion, we can spread awareness of these ridiculous affairs. What I got out of this is that there’s little out there we can count on and few people we can trust when it comes to our finances. A sobering thought. Do you think there are really any lessons and takeaways here for the future? Do we even have much of a future the way it’s been mortgaged?

I welcome your thoughts on this matter. Fire away!

This is a post from The Digerati Life.

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In a clear sign the federal government is far more concerned about the financial health of mortgage finance giants Fannie Mae and Freddie Mac than its public comments indicated as late as Friday, the U.S. government Sunday night announced what some are calling a “massive aid” package to the two shareholder owned and run companies officially cementing a government relationship that till now was only implied but never admitted to.
According to a Reuters dispatch, the plan, which will require swift approval from Congress, is designed to “head off a potential meltdown in financial markets.”

Here’s what the government is offering Fannie and Freddie:

1. Access to its emergency cash–the so-called discount window
2. A huge “temporary” increase in the line of credit available
3. The U.S. Treasury will, for the first time ever, purchase equity in both companies should it be needed
4. Investigation by the Securities and Exchange Commission to stop the spread of “false information.”

Both Fannie and Freddie are vital to the housing market–they buy mortgages from banks and other lenders and either keep them or repackage them into securities that are sold to investors.

“Welcome to the socialist state”

Strong words from some critics are already greeting the government plan. Josh Rosner, the managing director at Graham Fisher in New York told Reuters, “It’s outrageous. It’s offensive. Welcome to the socialist state. In capitalism, winners are supposed to reap rewards and losers are supposed to take losses for bad risk management. These are private companies.”

But others are deeply concerned that should Fannie and Freddie fail–though they both say they are well capitalized–the shockwaves would cause a financial meltdown world-wide.

The most troubling part of the government plan,perhaps, is the possibility the Treasury might buy equity in Fannie and Freddie. Some critics charge this could end up costing taxpayers enormous sums of money.

It will be interesting to see whether Wall Street gives the plan a thumbs up or thumbs down during Monday’s trading.

Here are 2 more articles worth reading:

• Government as the Big Lender
• Treasury Acts to Save Mortgage Giants

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This Post is from the BiggerPockets Real Estate Blog. Copyright © 2008 BiggerPockets, Inc. All Rights Reserved.

FEDS BAIL OUT FANNIE AND FREDDIE; EMERGENCY MEASURES TAKEN

Fidelity offers Age-Based 529 investments. Just pick a year.

The best time to save for your children’s college tuition is when your child is born. A small investment now will help them cover their college costs in the future. Say you invest $10,000 when they’re born. Assuming a 12% annualized return, it will grow to about $80,000 by the time the kid’s 18 years old and ready for college. $10,000 investment to pay for $80,000 in school costs? Not a bad price to pay for college at all.

Watch out though: You don’t want a bear market to challenge your kid’s future. You’ll want to secure that fund as cash as the child gets older. Use an age-based 529 investment to save for college.

Age-Based 529 Plans automatically adjust from aggressive (mostly stock investments) to conservative (mostly bonds and cash) as the child comes closer to their project college years. All you have to do is pick a projected year and the fund will handle the rest. The downside is that you pay a bit more in management fees since it’s an actively managed funds. The upside is that you get to spend more of your time playing with your kid instead of balancing their investments.

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If you’ve purchased a used car from a dealership in the past few years, you’ve undoubtedly encountered the extended warranty option. To be clear, while most of these are described by the salesmen as warranties, most are actually service contracts. A warranty is built into the price of the vehicle, whereas a service contract costs extra and is purchased in addition to the vehicle itself. A warranty and service contract both generally achieve the same goal, just keep in mind that if you have to purchase it on top of the vehicle itself, it’s probably a service contract.

On the surface, the added protection of covering your vehicle for an extended amount of time seems like a good idea, but before you jump in, make sure you understand what you’re getting yourself into. These are products that are pushed because they make money for the dealer and salesperson. There are times when buying the service contract can be a great idea and save you money, but there are plenty of situations where it is completely unnecessary and will just end up costing you money. And worst of all, there are actually some companies that are little more than scams.

Consider Your Situation First

Before you decide on whether or not you could use an extended warranty or service contract, consider your situation. First, does the vehicle you’re intending to buy have an existing manufacturer’s warranty that will carry over to you? If so, how many miles or years are left before it expires? Many auto manufacturers are including longer warranties that in most cases are transferable. So, if you’re buying a car with a 70,000 mile existing warranty and it has 15,000 miles on it when you plan on buying it, that’s entirely different than buying the same car with 65,000 miles on it. In the first scenario, buying the extended warranty would be a bad idea with so much life left in the existing warranty, whereas the second scenario might point to an opportunity.

Consider the Cost

To be blunt, many of these service contracts are expensive. That doesn’t automatically mean they are all a rip off, but you do need to consider the likelihood of needing repairs, what those repairs would cost, and then determine if it makes sense. Depending on a number of factors such as what is covered (i.e. is it comprehensive, or just powertrain?), the deductible, and the length of contract, prices can vary from just a couple hundred dollars to a couple thousand dollars.

What you’re ultimately doing is placing a bet that you think your repair costs over the length of the contract will be more than you paid for the contract itself. For instance, if you paid $800 for coverage that will last you about two years, you have to ask yourself if there is a good chance that over the course of those two years you’ll need to have $800 or more worth of work done. If it isn’t very likely, you might as well save your money. But if you think that is clearly a possibility, it might make sense. It’s like buying insurance. You never know if you’re going to need it, and if you don’t use it, it feels like wasted money. But if you do need it, you’re sure glad you have it.

Other Benefits to Consider

Another thing to consider with these types of service contracts or warranties are the possible other benefits. Many will offer a free loaner car when you have to bring your vehicle in for service. That can be extremely helpful if you’re in a situation where you need a car or don’t have many options for sharing a ride. Some may also pay for the cost of a rental car as well. So, if you’re in the shop for a few days, this can be a nice benefit to have.

In addition to getting a spare car when yours is in for repairs, some contracts also provide free towing service in the event you break down. While this isn’t as big of a concern if you have AAA or some sort of roadside assistance, if you don’t have these, it can be a fantastic benefit. Again, it’s something you hope to never have to use, but if you do, you’ll be thankful you have it.

Dealership Repairs vs. Mechanic

One thing you need to consider is the cost difference between dealership repairs vs. having your local mechanic handle it. Obviously, the dealership is going to charge more for parts and labor. It’s what they do. And if you buy a service contract, that generally means you have to take it to the dealer, or at least an approved location in order to have the work covered. Of course, if you have the coverage, you’re not paying for it out of pocket, so you don’t think much of it.

But, that’s where you have to decide if it’s really a value or not. If you’re shelling out money for additional coverage, what would happen if you took your vehicle in to a local mechanic instead? You would have to pay out of pocket, but since you’d be paying less for the same repairs, it still might end up cheaper than buying the service contract to begin with.

My Personal Experience

I’ll give you an example with a personal experience I’ve had with used cars and service contracts. We have two used vehicles. In one case, it was clear that buying additional coverage would be a waste. With the other, it was a little bit harder of a decision. With the second car, it had 23,000 miles, and the manufacturer’s warranty only went to 30,000. Since I would be the one driving and I put on around 18,000 miles a year, the prospect of running out of coverage after just three months from the purchase was the first indication we might want to consider adding coverage.

Then we had to decide what type of coverage we wanted. Just powertrain coverage, or something more comprehensive that covered everything from a broken door latch to the electrical system. Looking back at my scenario, I do a lot of driving, on rough roads, and harsh winters. The chances are pretty good that there will be more than a couple repairs needed over the coming years, so comprehensive was looking like a better option, but that all depends on price.

After all said and done, we were able to get a 100,000 mile service contract for $1,500 with a $50 deductible. Sound expensive? Yep. But, that’s where you have to decide whether or not you think you’ll need $1,500 or more in repairs over the course of 77,000 miles, or in my case, a little over four years. If you’ve ever had to pay for car repairs out of your own pocket, you know just how fast things can add up. So, I felt it was a pretty safe bet given the situation.

Sure enough, after about 8 months, we had a problem with the transmission. Total bill? Around $1,200. A year later, a few more problems developed. The radio wasn’t working right, the seat didn’t recline properly, and just a few other little misc. problems. Another $500. And just a few weeks ago, took it in for a terrible clicking problem with the master relay, a rapidly deteriorating wheel bearing, a leaking axle seal, and a leaking exhaust manifold, for another $1,800.

Now, that $1,500 + $150 in deductibles doesn’t look so bad considering the $3,500 in repairs, and the loaner car for about the 10 total days it’s been in the shop. Could the work have been done cheaper than that by taking it somewhere other than a dealer? Probably. But I also would have been in a situation where I would have had to rent a car, and a small shop may have required more time to get the repairs done. Of course, we could have been “lucky” and the car could have never had any problems, and it would have felt like throwing money away. You just never know.

The Verdict?

You have to be very careful. Any dealer is going to try and sell you one of these. They will make it sound like a great deal, but it’s up to you to do the research to determine whether or not it’s really worth it. I’d say that for most people, given the cost, these warranties or service contracts aren’t going to be worth it. But, if you do the math and find out that it could be beneficial, then it might be worth considering. But don’t let the salesman bully you into a contract.

A better option for most people would be to set aside a “vehicle fund” to work as your own extended warranty. If you put $1,000 or $2,000 into a high-yield savings and sort of earmark that for unexpected vehicle repairs, your money can actually earn interest while it’s there and ready in the event you need it. While you might miss out on some of the added benefits of buying coverage, you’re in better shape if you’re fortunate enough to have a car that doesn’t need any, or only minor repairs.

The bottom line? Generally, these are unnecessary and costly. In some cases, if your situation warrants it and the price is right, it can be worthwhile. Just make sure you know what you need, how much it will cost, and what you’ll actually get out of it before rushing into a decision. And most of all, read all of the fine print! Make sure you know what’s covered, what isn’t covered, and what all of the limitations are. This is where a lot of inexpensive contracts snag you. They offer a good price, but you find that a lot of stuff isn’t really covered and you really are just throwing money away.

Is an Extended Warranty on a Used Car Worth It? The Good, Bad, and Ugly of These Service Contracts

Andrew Lahde, manager of a hedge fund that profited enormously by speculating on the failure of firms that made major bets on sub-prime mortgages, has called it quits.

His "so long, and thanks for the fish" comes in the form of this letter.

Enjoy.