The (un)amazing result is that today GM catalytic converters use less
PGMs by far than those of any other competitor, because GM alone has a
fully staffed laboratory and a quarter century of continuity in
designing the loading of catalytic converters. Everyone else overloads,
purposefully they say, to insure compliance and avoid the dreaded “R”
word, recall, for emissions problems.
Toyota [NYSE:TM], for example, which has spent a fortune building its
green image uses 1.5 grams of rhodium in a typical catalytic converter
servicing its V6 engines on cars sold in the U.S. In the same situation
of engine size and weight GM uses a maximum of 0.5 grams of rhodium.
You might think from just the information above that if the rhodium
price is not climbing due to being synchronized to the platinum price
then perhaps Toyota is in the market to correct a shortfall due, maybe,
to increased sales of large cars which were not predicted.
I think that the above explanation may be on the right track but it is the wrong train of which we are speaking.
The Ford Motor Company [NYSE:F] has an absolutely abysmal record of
losing money due to the inept sourcing of PGMs. Remember that it was
Ford in 2001, which entered into a ‘take-or-pay’ contract for
palladium, guaranteeing to pay for the metal in a price range in which
the lowest purchase price was $500 an ounce and the highest was $1,000
an ounce. This contract was entered into in the spring of 2001 when
palladium hit an all time high of $1,100 an ounce purely due to market
manipulation and speculation by producers and funds. In 2003-4 Ford
took a write down of one billion dollars to cover its losses incurred
by having to utilize $1,000 per ounce palladium when the market was
$250 per ounce.
Even as that fiasco was peaking Ford had already begun to outdistance
the industry in the amount of PGMs it used in each catalytic converter.
The 2004 Lincoln Navigator used, at 2004 prices, more than $1,400 worth
of PGMs. Even today, in January 2008, a scrap catalytic converter from
a 2004 Lincoln Navigator has a street (first sale from the actual
collector of the item) of $750!