Back when Daimler was flogging Chrysler, Canada's Magna Corporation was supposedly hot to acquire the [soon to be ailing] American automaker. Given today's news– Chrysler is suing Magna for damages over defective seat heaters–  look for Frank Stronach's boys to help Chrysler out of a jam– by kicking Cererbus' bitch down the stairs. The background… For some time now, ambulance-chasers have been lining-up to suck some cash from Chrysler after heated seats in 1999 and '00 Chrysler minivans [allegedly] burned some butts. In a latter to the National Highway Traffic Safety Administration in '04, "DaimlerChrysler said it had received 221 customer complaints about minivan seats overheating. Of those complaints, 26 were allegations of minor injuries and 33 were alleged fires. Five complaints resulted in lawsuits." That was then. As Automotive News [sub] reports, Chrysler spinmeister Michael Palese now says his employer had "only one reported case of injuries caused by the defective minivan seats." Chrysler's lawsuit demands that Magna take responsibility (i.e. pay for) for the recalls, after Magna "disputed any obligation to reimburse Chrysler for costs incurred in remedying the allegedly [?] defective heated seat assemblies." Palese was plenty testy on the advisability of suing a key supplier: "We're not a charity. If we deserve compensation or consideration, we will pursue it." As will the lawyers suing Chrysler, whether they deserve it or not.

We've heard a lot about U.S. corn-based ethanol production lately, what with E85 boosters saying it ain't got nothin' to do with rising food prices. In search of some reliable stats on this issue, TTAC's opened its wallet and bought some hard facts to fuel the debate. Industrialinfo.com [sub or PPV] reveals that "the United States now has 156 operational ethanol plants capable of producing a whopping 8.8 billion gallons of the renewable fuel. With an average of 2.6 gallons of ethanol per bushel of corn, that translates to more than 3.4 billion bushels of corn going toward fuel production. Earlier this month, the U.S. Department of Agriculture released numbers that estimate the 2008 corn crop would be about 11.7 billion bushels, meaning that about 24% of the crop will go straight toward ethanol production." I'm not sure who did their math, but when I divide 8.8b gallons by 2.6 gallons/bushel, I get almost 3.4b bushels, which equates to about 29% of the crop. Either way, that's a lot of Fritos. And just in case you want to know whose Senators are behind the .51 per gallon federal subsidies for the corn go-juice, check out this handy little chart. Question: does America actually consume all this ethanol? Hell no. Ethanol Producer Magazine reckons we burned 414k barrels of E85 per day in '07. Round that up to 500k for increased E85 use, and that's 182,500,000 barrels, or 7.6b gallons, per year. I make that 1.2b gallons worth of E85 overproduction, so far. Somebody add some subsidies, quick!

The Wall Street Journal carries a rare interview with Honda CEO Takeo Fukui. Ever the cagey character, Fukui claims to be completely uninterested in the fact that his company just passed Chrysler for the number four slot in the U.S. sales race. "It doesn't really matter if you come in fourth or fifth or first. What's important for us is that our production is going at full capacity and production is balanced with sales." Yeah right, the former Honda motorcycle race team manager doesn't care about the score. When the subject is the delicate matter of how Toyota pulled the green carpet out from under Honda's environmental image, Fukui turns a bit more… combative. "Honda's image was better but has evened out with [Toyota] because of the strong image of one single model, the Prius, which Honda feels is a problem. Next year, we will come up with a dedicated hybrid vehicle. We feel this model will have to overwhelm and overtake Prius. That is key for us." (The hyrdogen fuel cell-powered Clarity? Not so much.) Ladies and gentlemen, start your electric engines! 

I was reading about Mercedes in the last issue of Auto Motor und Sport. Apparently, the German automaker's learned that the introduction of the A-Class negatively affected their premium brand image (Doh!). Things will be different for the entry-level mini-Merc come 2011. MB will ditch the sandwich platform and modular interior, and aim the newbie at a younger clientèle. With a dynamic silhouette, the new A-Class will appear as a coupe, intended to compete against the BMW 1-Series and the Audi A3 (the current CLC is sort of a C hatchback; bigger and more expensive than the other premium hatches). The cheapest of Merc's new platform is still under debate; MB officials are negotiating with VW, Fiat and BMW for a joint-venture for a cheaper front wheel-drive underpinnings. My rendering puts all that together and adds a dynamic sloped back, descending front window, new grille (seen on latest concepts) and the high-tech headlights we can expect for 2011. 

[For more Avarvarii photochopistry, click here]

At some point in our recent automotive history, all wheel-drive (AWD) replaced front wheel-drive as the paranoid consumer's drivetrain of choice. The safety advantages of high quality snow tires (as needed) and a low center of gravity (in all cases) got lost in translation. Ready to capitalize on the AWD's popularity: the economy-oriented Toyota Matrix and the Subaru Impreza. Both diminutive scramblers aren't nearly as cheap or efficient as their front-wheel-drive cousins, and they won't off-road, tow a boat or carry seven passengers. Still, both cars offer a [potential] extra safety margin and [potentially] better handling. So if you had to choose one…

Honda has started Japanese production of their spiffy-looking, highly-hyped hydrogen fuel cell-powered Clarity. And while the Clarity's a high tech halo machine destined for 200 carefully-selected customers, the same could be said of Tesla's EV Roadster. Of course, when Honda says production's begun, production's actually begun. More to the point, both companies are delighted to point-out their vehicles' zero emissions; and neither is particularly interested in discussing the full environmental impact– as in where does the power come from to charge the batteries or create liquid hydrogen? "Fuel-cell vehicles, which don't use fossil fuels and don't produce carbon dioxide, are necessary for the environment. We would like to make them more popular," Honda Chief Executive Takeo Fukui told Reuters. Methinks the media doth protest too little. "Fuel-cell vehicles are widely considered the ultimate longer-term alternative to today's conventional cars as they run on an inexhaustible and cheaper source of fuel — hydrogen, have no harmful tail-pipe emissions, and do not compromise driving performance." But here's the real news. "Among the first five customers for the FCX Clarity [who cleared the exhaustive qualification process] are actress Jamie Lee Curtis and U.S. filmmaker Christopher Guest." It's a sad day for Ed Begley Jr. and his wife, the over-spelled Rachelle Carson. 

Tony Posawatz is the corporate QB looking to deliver GM’s Volt-shaped Hail Mary. In a pre-game chinwag with Reuters, the senior engineering executive sheds some light on GM’s playbook. Production will be ramped up slowly “to make sure everything [the battery pack] is bulletproof.” Meanwhile, GM will be lobbying utilities to offer rebates or cheaper off-rate charging rates, and other forms of tax relief. GM is also planning on selling used battery packs to utilities as power storage systems. Posawatz acknowledges that financial losses are inevitable: “to make this thing a sustainable business, we have to drive it to volume.” So, a low price then? “The nature of this technology is that it’s going to be expensive, and we will not underprice this vehicle.” Ah, BUT– GM is may build a 20-mile range version as “part of an effort to cut the cost of such vehicles by half or more.” Translation: the 40 mile-range Volt will be an expensive ($45k and up) low-volume “halo” vehicle for GM’s bragging rights. It will take several more years of cost (and range) cutting before something resembling an actual Prius competitor hits the streets. The loyal cheerleaders at Volt-nation are apoplectic, calling for Posawatz’s head. Their hopes for GM’s populist electric Model T are fading as fast as GM’s cash reserves.

Let's start with the end of The Detroit News' HUMMER-related "analysis" and work our way backwards. "So, does Hummer stay or does it go? Right now, your guess is probably as good as GM Chairman Rick Wagoner's." WTF? If the man at the helm of GM, an executive pulling down $14.4m per year (plus) doesn't know whether or not he's killed HUMMER, let's hope his bankruptcy-prof health care bennies include Alzheimer's medication. Meanwhile, columnist Mark Phelan needs to adjust his own meds, or whatever it is that stops him from facing reality (his paycheck?). "With dealers in 37 countries and assembly in South Africa as well as the United States, 'the potential for global growth is a huge opportunity. It's one of Hummer's strengths,' spokeswoman Joanne Krell said. Developing markets in Asia, Central and Eastern Europe look particularly promising." Once again, GM is spinning the idea that its foreign ops will save North America. Once again, Phelan is happy to broadcast the corporate line (hook and sinker included). Phelan also forwards the idiotic idea that HUMMER could be re-jigged to build green vehicles, and the possibility of an overseas buyer. Let it go Mark. Just let it go.

A grand jury investigating a "charity" run by Revered Al Sharpton– the National Action Network (NAN)– has uncovered an extortion racket that set its sights on the U.S. auto industry. "A General Motors spokesman told The [New York] Post that NAN had repeatedly – and unsuccessfully – asked for contributions for six years, beginning in August 2000. Then, in December 2006, Sharpton threatened to call a boycott of the carmaker over the closing of an African-American-owned GM dealership in The Bronx, and he picketed outside GM headquarters on Fifth Avenue. Last year, General Motors gave NAN a $5,000 donation. It gave $5,000 more this year, a spokesman said, calling NAN a 'worthy' organization." The General wasn't the only automaker wetting Big Al's beak. "In November 2003, Sharpton picketed DaimlerChrysler's Chicago car show and threatened a boycott over alleged racial bias in car loans. 'This is institutional racism,' he bellowed. In May 2004, Chrysler began supporting NAN's conferences, which include panels on corporate responsibility and civil rights and a black-tie awards dinner to honor Martin Luther King Jr. Last year, Sharpton gave Chrysler an award for corporate excellence." Honda? "In 2003, Sharpton targeted American Honda for not hiring enough African-Americans in management. 'We support those that support us,' wrote Sharpton… Two months after American Honda execs met with Sharpton, the carmaker began to sponsor NAN's events – and continues to pay "a modest amount" each year, a spokesman said."

The Wall Street Journal reports that Chrysler is bumping-up list prices on their new Chrysler, Dodge and Jeep vehicles by two percent, effective June 16th. I fail to see the point when dealers are slapping cash on the hood in ever higher piles amidst a crash in demand. Not to mention the fact that Chrysler has yet to announce their much-ballyhooed across-the-board-model cuts. The official justification for the price hike: "[Chrysler spokesman Stuart] Schorr said at the beginning of this model year Chrysler put in an average increase of $1,200 in content per vehicle without raising prices," Automotive News [sub] reports. Just in case you were thinking Schorr was referring to significantly upgraded interiors, "the executives said increasing commodity prices, including steel, pushed the company to raise prices." Yes, well, you have to wonder just how many more 2008 Chrysler products are going to come out of the factories between June 16th and the start of 2009 model year production. This all seems like a bizarre going-through-the-motions exercise, perhaps intended to convince a future buyer that Chrysler is what's commonly referred to as a "going concern." Tick tock.

So, now that the feds are forking-out $30m of your hard-earned tax dollars to GM, Ford and Chrysler/GE for plug-in hybrid battery technology research, auto industry observers are asking the obvious question: what the Hell's that going to do? As reported previously, GM's paying $3b in a year interest on their loans. Ford's in hock up their logo (no, really). Chrysler's so hard-up for cash they're stiffing their suppliers. Our friends at Wired make the kvetch from deep left field. "What'd it do — scrounge change from couch cushions in the Pentagon? EV advocates were quick to thank Uncle Sam for the money but said it's going to take a whole lot more than that to wean us from oil — which, by the way, will collect $17 billion in tax breaks during the next decade." BTW? C'mon, you know what comes next (assuming you've read the headline). "David Sandalow, a senior fellow at the Brookings Institution and former Clinton Administration official, says we could transform the nation's vehicle fleet if we spent about $18.5 billion over the next decade." We're talking $5b for "retooling," $12b for plug-in hybrid buyer tax credits, $1b for 30k plug-in hybrids per year for 10 years for Uncle Sam's fleet and $500m to "underwrite warranties on lithium-ion batteries until the technology is proven." And if your business needs new investment to compete? Ha! 

Last night, I commented on the fact that Autoblog reported on Pamela Anderson's Viper sale– without postng a shot of her breasts. I was a little, uh, "under the weather" at the time. In fact, my alcohol-fueled analysis of AB's mammary aversion tested the limits of the phrase "in vino veritas." It was such a vituperative effort that Frank did something he's never done before: he pulled my post back from "published" to "draft" (ironically enough). For that I thank him. I have no business calling anyone anyone else's bitch, or pointing out that the words "I think" completely undermine a car reviewer's credibility. And just for the record, I never didn't sleep with a college girl because she had a poster of a saucer-eyed puppy on her wall. Anyway, I [now] applaud Autoblog for showing the editorial restraint that clearly evaded me in the wee hours. It's just one more reason TTAC will never be the autoblogosphere's "newspaper of record." In our defense, I bet we have WAY more fun than they do.

Earlier today, TTAC commentator Joe ShpoilShport asked if we had any good news. Here it is [via Business Week]: "If the company [GM] can gut it out through today's miserable car market, GM will reap billions in savings from last fall's landmark labor contract and come out a real moneymaker in about three years." Unfortunately, that's the theory. In practice… "Since last fall, its hoard has shrunk from $30 billion to less than $24 billion. And given the accelerating decline in sales of pickup trucks… one analyst figures that GM's cash pile could dwindle to $14 billion by the end of 2009. That's not much more than GM needs monthly to buy the parts and materials to keep its assembly lines rolling." Our spies tell us GM's set to top-up its cash hoard by $10b– which would raises its debt to $50b. Yes, GM owes $40b. It pays $3b a year in interest. BW floats the "Delphi strategy" (mooted here previously): hive-off GM's international ops and throw NA into C11. Meanwhile, in the magic year 2010, GM will have to pay $4.7b into its union's $37.5b health care VEBA. "Company insiders say GM might get the union to agree to let them pay its bill at a later date." And if you believe that, you'll believe that COO Frederick A. "Fritz" Henderson's contention that GM will learn to "generate bigger profits on smaller vehicles."

The AP reports America's second largest automotive hauler is giving up. Thanks to a Teamster's strike, Performance Transportation Services (PTS) is calling it quits. PTS was already operating under Chapter 11 reorganization caused by the double whammy of imploding demand and skyrocketing fuel costs. Perhaps the fact that PTS was not a participant in the "national car haulers contract" with the Teamsters are negotiating with other major suppliers had something to do with what went down. CEO Jeff Cornish concluded that "the leadership of the union had a different agenda [other than PTS' workers' paychecks]." Oh well. The company that "delivered more than 4 million new and used cars annually from 24 facilities nationwide with its fleet of 1,800 trucks" is now gone for good. Expect to see more cars on freight trains. Or maybe Toyota wants to mop-up some of it's extra cash and put 1800 rolling billboards on the highway with it's own-branded delivery fleet. The four Horsemen of the Apocalypse continue to gallop through the American automotive industry's supplier base.

One of my stated goals in life is to never spend a minute in a courtroom. However, if I had a child at El Camino High School in Oceanside, CA, I would be suing the teacher's lounge out of the district and the donut holes out of the CHP. On a Monday morning last month, 20 classrooms received visits from uniformed California Highway Patrol officers who informed them that 26 of their classmates had been killed in drunk driving accidents over the weekend. As was to be expected, many of the students became hysterical. But here's the catch — it was a joke. Ha ha, fooled you! The plan was to keep the hoax up all day and announce the deception at a lunchtime rally. The best laid plans of mice and men… Turns out the students were so traumatized by the hoodwink, many teachers began telling them the truth. Though, not all. Especially students who weren't in the one of the twenty classrooms "participating" in the "lesson" — these students heard about their fellow classmates' deaths in the hallway between classes and had all day to ruminate on them. One 15-year-old, who I am sure speaks for both the school district and the cops, puts it this way, "You feel betrayed by your teachers and administrators, these people you trust. But then I felt selfish for feeling that way, because, I mean, if it saves one life, it's worth it." Oh yeah, totally worth it.