The Texas Department of Transportation (TxDOT) spends more than $10m a year on public affairs. Using documents obtained under the Freedom of Information Act, the San Antonio Express News found TxDOT assigned 63 employees to the Government and Public Affairs division, at an annual cost of $6.5m. Another 67 employees perform “media relations” duties, at a cost of $4m per year. The employee count does not include private contractors hired as lobbyists paid to wine and dine lawmakers in the hopes of landing earmarks, a controversial tactic that spawned at least one lawsuit. These efforts– indeed, the majority of TxDOT’s PR activities– have been primarily aimed at promoting toll roads. Last year, the agency delivered a report to the Texas legislature entitled “Forward Momentum,” designed to convince federal officials to give TxDOT the authority to toll existing freeways. Massive public protests, most prominently against the Trans-Texas Corridor, forced TxDOT to change tactics. Since May, they’ve backed off from promoting tolling as the solution to Texas’ transportation problems.

GM’s Board of Bystanders spent a good part of their Sunday reviewing their Chairman (and CEO’s) DC-bound turnaround plan. According to Bloomberg, Rick Wagoner’s new new new new new new new turnaround plan takes two forms: a 10- to 12-page public document and a “private, more detailed plan of about 80 pages with background material.” If the existence of a “private plan” to spend an estimated $12b of your tax money isn’t enough of an outrage– and I’m thinking it is– then ask yourself this: why is this plan different from all other plans? “The largest U.S. automaker also may ask to delay a $7 billion payment to a union retiree health fund, drop more brands and rework an accord with GMAC LLC to prove it can survive and repay the government, said the people, who asked not to be named because details haven’t been presented to Congress.” Don’t you just love fictional anonymous sources who always seem to state what common sense and pundits have already proclaimed? Neither do we. Anyway, as we’ve discussed umpteen times, the UAW’s Mother of All Health Care Plans was a non-starter before it started. GM can’t close brands willy-nilly; the lawsuits would make Oldsmobile’s termination look like a bris. And reworking an Accord is something GM should have done in 1976, not an escape clause fashioned by a terminally ill GMAC. Other than that, they’re good to go. C11. But shhh. Don’t tell that to GM’s Board. They’re thinking they’d better think it out again tomorrow.

There is a whole lotta bailout going on. More and more people are bailing on lending the Detroit dunces a helping hand. Last to bail: CNN founder Ted Turner. He went on NBC’s Meet The Press and said to Brokaw: “I saw it coming years ago that Detroit was headed for a crash, and it’s amazing to me that they didn’t see it either.”  Ted’s recommendation: “Let them go bankrupt and get Toyota to buy them out.” As if they would. The one who stands firm by the side of the bail bondsmen is United Auto Workers (UAW) boss Ron Gettelfinger. The AP (via MSNBC) reports that Big Ron says the UAW would be “willing to consider more concessions on wages and benefits” to secure a federal bailout. But then again, not so much. “Based on the changes we’ve made to our contracts, we are competitive already.” By the same token (or a different one, I’m not exactly sure), Gettelfinger told CNN that $70-an-hour UAW wages were a “myth.” And Chrysler, Ford and GM should tell Congress they’ll limit corporate pay, bonuses and severance packages in return for bailout bucks. In other words, some pigs are more equal than others.

This is so, so 2007. Remember the bad old days when a real man wanted a Hummer? Definitely not correct anymore. But in the strictly scientific interest of preserving history – good or bad – here it is. Last year’s ode to the Hummer. A focus group, discussing the merits of the H1 and H2. Warning: Feelings may be offended by pressing PLAY. PG17. STW (Serious Time Waster.) NSFW. But hey, it’s Sunday. And who still has a job anyway?

Nissan has unleashed a promotional video of its all new Z car – via YouTube. To the soundtrack of Nipponese techno we see inside and outside shots of the 370Z. Exposed to it, the hearts of true Z car zealots may beat a bit faster. “The video itself appears to be for Japanese markets,” says Luxvelocity. Is this a praise, or a cut? We are not sure. But if this is viral marketing, then the spread will remain relatively contained.

Sunday. Even  while God rests, the devils at TTAC perniciously prowl the news. While America Slept is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. Don’t let it ruin your well-deserved week-end.

Deutschland’s dealers found guilty of low car sales: J.D.Power, who’s fighting an uphill battle for the attention of Germany’s auto makers, may just have found the elusive key to their hearts and budgets: “Lack of attention from the salesperson is the most frequently cited non-price-related reason for customer rejection of European premium and volume automotive brands,” Power’s 2008 Germany Automotive Shopper Study says. We see all of Germany’s auto makers write the big checks for the study, and invite J.D.Power to conduct proprietary studies to further prove what auto makers deep in their dark hearts had suspected all along: The downturn is all the dealers’ fault. All dealers need to get fired.

Buick or bust: From the U.K., the Financial Times weighs in on the Detroit debate about D.C. dollar donations: “Congressmen mulling this request might want to visit their local Buick dealership. They should have no trouble finding one, with 2,751 nationwide the last time the National Automobile Dealers Association counted, more than double those selling Toyotas. As a result, only 88 Buicks a year are sold per dealer versus 1,821 for Toyota. Barring Chapter 11, multiple brands and excess dealerships can only be remedied with billions in dealer buy-outs due to state protection, as seen with Oldsmobile.”

Recession? Never heard of it: Honda announced that their production in Japan did set an all-time record for the month of October, The Autochannel reports. Even better, October worldwide production at Honda did set an all-time record for any month. What will they do with all those cars?

(Read More…)

Speculation is rife that GM plans on shutting down or selling Saab, Pontiac and/or another brand as a prelude to a federal bailout. Common sense and recent history suggest that any such move will create a raft of breach of contract claims by jilted dealers and suppliers. As Oldsmobile’s demise proves, there’s only one possible resolution to the resulting feeding frenzy: cash termination payments. If, however, GM filed for Chapter 11 bankruptcy, these breach of contract claims would become nothing more than unsecured claims– which are resolved within the debtor’s C11 reorganization. The claimants would be legally barred from costly state court litigation. In a stroke, GM would be transformed. How great is that? But wait, there’s more!

Last week, in south Essex, UK, speed camera protesters set a “scamera” alight with a gasoline-soaked tire. The fire destroyed the £40k ($60k) device on Long Road– despite the camera’s proximity to the Canvey Fire Station (whose inhabitants eventually managed to put out the blaze). According to the Echo newspaper, the incendiary incident follows a prior arson attack on a speed camera on the A127 in Southend. In the past year-and-a-half, eight south Essex speed cameras have been targeted by vandals. Meanwhile, in Queensland, Australia, on November 5, persons or persons unknown spray painted a new laser camera’s lense during testing on the Maroondah Highway in Croydon. Ten days later, three citizens tied a chain to the replacement camera and tore it from the ground.

(Read More…)

Over at The Huffington Post, ad man Adam Hanft argues that “Lousy Marketing – Not Lousy Cars – Killed Detroit.” Like most experts (and Buickman), Hanft suffers from blaming the bit he knows best (if you’re a hammer…). But he makes some good points. If Wal-Mart catches flack for paying so little, then why didn’t Detroit seek positive PR for paying too much? More broadly, Detroit’s ads have long been forgettably mediocre (at best) thanks to a stifling creative process. Many ads have targeted an America that no longer exists, if it ever did. Ditto Detroit’s un-fun dealerships. Sure, those for imports have often been at least as bad, but this gave Detroit an opening. Which it failed to take advantage of. Add numerous PR blunders to the mix, along with improving reliability scores, and it’s easy to see why Hanft blames marketing. Except that there’s more to cars than not breaking, and the cars have also had shortcomings. The problem hasn’t been the cars or the marketing. It has been both.

When USA Today carmudgeon James R. Healey pours hate on a vehicle, you just know it sucks. Healey’s evisceration of the oil-burning Bubba Benz ML320 BlueTec begins with a slam at the powerplant’s herky jerky acceleration, then mentions Merc’s obfuscation: “M-B, in fact, disputes about every gripe. The gripes are serious, so it’s appropriate to give them a word.” And that word is? California compliant. OK, so it’s two words, but at least it wasn’t the two I was expecting (fans of German management culture will know what I mean). Anyway, Healey lets rip in his own not-so-special way, chastising the diesel ML for mediocre mileage (19mpg), terrible ride (“surmounting a branch felt like a major dynamic event”), lagging brakes (“Push, push, push the brake pedal and just when you think something’s amiss, the brakes start to haul it down”), hard seats (“Not firm. Not stiff. Not you’ll-get-used-to-it Teutonic. Hard. Like a board, or slab of concrete”) and sub-par details (“climate control was too hot at 70 degrees, too chilly at 68”). Healey being Healey, the litany is followed by amorous amelioration. But not much. And not for long. “Fifty thousand bucks for an uncomfortable, not-so-classy machine that’s unpleasant and unsatisfying to drive. Wonder who signed off on that business plan?” Jimmy, are you saying that diesel dog won’t hunt? Uh-huh. “Overall: Nope.”

In a report to appear Monday, the German magazine Der Spiegel will write that “several law firms are compiling material for lawsuits to hold Porsche liable. They are working for hedge funds which had lost billions of Euros.” That’s news to Porsche CFO Holger Härter. He says he hasn’t heard of anybody who wants revenge or restitution. “I don’t even know who might have been hurt.” On Sunday, FAZ will publish an interview with Härter. First question: “When will the hedge fund called Porsche close its sheet metal factory?” Härter’s answer: “Our core business is and remains the automobile.” Everybody knows: not true. Porsche made more profits than sales in the last fiscal year. Of €8.6b in profits, only €1b were generated in that sheet metal factory. €7.6b were generated with derivatives. That was in the last fiscal year, which ended July 31. God, Härter and Wiedeking only know how much the Porsche hedge fund generated in the months thereafter, when the VW stock went wilder than girls at Mardi Gras. Härter now says they didn’t really mean it. Here is Härter’s version:
(Read More…)

Rick Wagoner lost control of General Motors this week. Forget about his title; game over for the embattled former Duke basketball wannabe. There’s a new sheriff at GM – and it’s a bunch of Wall Street guys that few on Main Street can name. It’s the hedge funds that have been acquiring GM’s bonds. So here’s how these guys will play The General to make a killing on the pending government bailout:

Beijing’s sizable German community congregated today at the annual Weihnachtsmarkt. At the German Embassy inside the People’s Republic of China, party-goers loaded-up on Bratwurst, Christstollen and got seasonably drunk. Volkswagen China, headquartered ’round the corner, sponsored a stand at the festival. Not to sell cars. No, they were hawking their fabled “VW-Currywurst,” a culinary delight served every Thursday to the working classes at Wolfsburg’s cafeterias. At the sidelines of the event, and under the influence of truth serums such as Radeberger Pilsner or Glühwein, leading Volkswagen of China execs reiterated what had been the talk around Sanlitun for months: VeeDub is defying gravity in China. In fact, they’ll probably sell more cars in China this year than their parent sells in Germany. According to Gasgoo, Jörg Müller, CFO of VGC (Volkswagen Group China) made the prediction in August. In October, VGC pronounced themselves over target.

(Read More…)

Thank God it’s the weekend-edition of While America Slept. That’s pretty much all we have reason to be thankful for. WAS is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. If you hate bad news, don’t tread it.

Japanese car market commits seppuku: Japanese domestic new car sales are likely to drop by around one-third in November, “raising the odds that the full-year tally will be the lowest since 1974,” writes The Nikkei (sub.) Folks, Japan has it worse than back home, so cheer up! Full-year sales of all types of cars, including mini vehicles, are forecast at around 5.1 million units — the lowest total in 28 years. Japan gave up its rank as the world’s second largest auto market to China in 2007, but remained the world’s second largest producing nation. It is expected to relinquish that rank also to China in 2008. That spells major itai (pain) for Nippon. Soon they’ll complain about exporting all those jobs to gaijin America.

It’s all in the brand: To add insult to injury, China’s Guangzhou Automobile Industry Group (GAIG) announced that its two subsidiaries “Guangzhou Toyota” and “Guangzhou Honda” will be renamed as “GAIG Toyota” and “GAIG Honda.” Harmless so far. Here comes the unusual part: Toyota and Honda will be required to pay for the honor of carrying the GAIG trademark, Gasgoo reports. It used to be the other way. The two brands will be sold through one “GAIG” sales channel. GAIG’s chairman Zhang Fangyou said his focus will “shift to brand marketing.” Of the GAIG brand.

GM says bondage no fun: GM is trying to talk their debt holders into exchanging bonds for stock, the WSJ (sub) says. That would help GM avoid C11. The proposal, along with the daring assumption that doubtful investors will accept it, will make its way into the business plan due in DC on Tuesday.

GM BOD to sacrifice Wagoner? The WSJ (sub) also picked up indications from GM’s BOD that the directors may be increasingly inclined to serve Wagoner’s head on a platter to mollify the angry gods of the Beltway. More than one-fourth of the automaker’s 14 directors have already privately expressed frustration with Wagoner, the WSJ says. COO Fritz Henderson is being floated as a successor.

(Read More…)

CNN Money’s Chris Isidore writes that if all the stars aligned, the Big Three could return to profitability by 2010. He qualifies his comments often, with phrases like “if they make it to 2010,” but the bigger issue is the specious nature of his explanations for how the companies would return to profitability. Isidore’s claims are essentially underpinned by the philosophy of “cutting your way to profitability” — as such, he highlights the Big Three’s smaller workforces, supposedly reduced pension obligations, and cuts in overcapacity. The only actual increase in income Isidore speculates about is increased new car sales, an argument barely more sophisticated than “they’re really bad now, so obviously they have to get a lot better.” This kind of journalism is dangerous, not just because it’s overly optimistic (in spite of its own acknowledgements to the contrary), but because it’s wrong. There is no reason to believe sales will be up to 14 million units in the US by 2010; there’s even less reason to believe that GM’s share of those 14 million units would be the same percent that it was in 2007. Isidore’s math on the potential savings from cost cutting is calling the glass 1/8 full at best, by assuming the UAW will allow GM to just defer its contribution to the pooled-benefit VEBA account to another year. That might work in accounting ledgers, but the bottom line is that this is the kind of nonsense that contributed to GM’s collapse in the first place.