The Indianapolis Business Journal reports that Indiana’s E85 subsidiy slush fund has run out of cash just three months into that state’s fiscal year. High demand for E85 in the summer months when regular gas cost over $4/gal caused the state subsidy of 18 cents/gal to rapidly run through its earmarked funds. Now, with gas under $2/gal, E85 demand is tanking just as the subsidy ran out, leaving ethanol boosters in a tough spot. “In June or July, we could sell E85 blindfolded,” says Jim Gentry, fuel purchasing manager for Greenfield-based GasAmerica, one of the first firms to sell E85 in the Indianapolis area. “Back in the summer, we didn’t need the 18-cent [state tax] credit.” Now? “We blew through that money,” admits Kellie Walsh, executive director of the Central Indiana Clean Cities Alliance. “I am anxious to see whether gasoline prices dropping has our flex-fuel customers continuing with E85 or if they’re going back over.” One E85 retailer says his firm hasn’t given up on E85 yet. “That being said, that’s not to say it’s the smartest business decision at this point in time,” says Ed McClure, CEO of Marionbased McClure Oil Corp. Except that Indiana still offers a $20k grant to install E85 pumps even though such conversions can be done for as little as $15k.
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Poor Gina Proia. Not only does she have a last name that she can never leave for the order takers at Panera, but she also has to defend GM. AND look herself in the mirror in the morning. But plucky lass that she is, Gina (may I call you Gina?) is doing her best to fend off media enquiries about the debt-for-equity swap at troubled (as in death rattling) lender GMAC. The company needed to convert 75 percent of its $38b of issued debt into preferred stock to raise $30 billion in capital to become a bank. The deadline for the swap– upon which GMAC’s transformation into a bailout-rescued bank depends (no matter what Gina says)– expired Friday at 11:59pm. Since then, not a peep from the participants. Especially Gina. On Sunday, she played the inscrutability card: she’d let us know in the “near term.” Today, she told Bloomberg “Once the results are finalized, we will disclose that information.” Is she asking us to believe GMAC doesn’t know if it lives or dies or gets Uncle Sugar to change the rules? This could be much ado about nothing. Or it might be time for GM CEO Rick Wagoner to bone-up on his King Lear. So to speak.
Google’s recent release of its Android operating system is keeping the telephones-do-everything trend alive and well. Google already supplies its Google Map data to third-party navigation developers, but Android’s open development strategy is fueling the car-phone fusion like never before. And as with all tech innovations (especially the open development kind) there are as many head scratchers as killer apps among the Android car programs previewed by the Headlight blog. One concept that makes a lot of sense is the KEI, which uses 128-bit encrypted connectivity to connect your car with your phone. KEI allows your Android-equipped phone to unlock or start your car wirelessly, with a wide range of diagnostic functions also possible down the road. Everyone loses a key at some point, so merging phone and key functions makes tons of sense. Which must be why Delphi has already previewed a similar app for the iPhone.
Thanks to stringent libel laws and gag orders, they used to do this crap all the time in the UK: run a media story about another media story without telling you what was in the original media story. In this case, it’s an pro-Detroit, anti-Toyota viral email that’s grabbed the attention of The Detroit Free Press‘ numero uno propagandist, Mark Phelan. The columnist is incensed– incensed I tell you– that someone is making the right case for Motown’s teat suckle using spin and, gasp, twisting facts. And just in case this amateur apologist needs some helpful hints, Phelan’s lede takes a shot at a certain southern senator. “With friends like these, who needs Alabama Sen. Richard Shelby? Shelby, of course, became the public face of contempt for Detroit’s automakers with his staunch opposition to congressional aid. Some of the Detroit Three’s would-be supporters may now inadvertently further damage the industry’s cause. There’s a slick viral ad making rounds by e-mail that attempts to defend Detroit’s automakers by showing that foreign brands aren’t all they’re cracked up to be. Riddled with distortions and lies, it could do more harm than good.” So spill sister! Some quotes please. Only one, but it’s a doozy.
I’m sorry to keep harping-on about this. But I am flabbergasted by Fortress Detroit’s reaction to the bailout. Today’s the day that GM and Chrysler actually get their checks. And today’s the day that the doyenne of Motown media Keith Crain continues his incessant, indignant whining. The headline of his Automotive News [sub] column asks “Does it matter anymore?” Intriguing. Does what matter anymore? The $60b or so Uncle Sam’s pissing away to sustain a brace of unsustainable automakers? That would, of course, make sense. As the Brits might say, those of you looking for sense should look away now. “Across the globe, governments are reaching out to help their auto companies survive. Other governments are giving assistance without any of the theatrics that the Detroit 3 had to endure to get bridge loans. And General Motors and Chrysler will be required to return to Washington for more hearings so all the politicians can have more TV time, which they find invaluable.” Yeah, ain’t democracy a drag? There’s more of Crain’s paranoid passive aggressive paternalistic pandering after the jump…
OK, so I’ve changed the video. Doctor V-8 pointed out that the Avalate conversion debuted back in the 1940’s. The new video raises a more interesting question: why make these things even more powerful? Why not you say? Yes, I know: God bless America. If Corvette modifiers didn’t exist, Massachusetts wouldn’t have a warehouse Italian restaurant chain called Vinny T’s. And a damn fine spaghetti vongole they make too. Still, you gotta wonder. What’s with the gloomy music? Didn’t muscle cars come of age with Doo-Wop? Just sayin’.
“Screw you, Steve McQueen and your fancy Mustang! I wanna ‘Vette!” I shouted (to no one) while tearing a rift in the space-time continuum through the peaceful pastoral Texas countryside. Clearly, I was imbibing heartily from a bottle of Chateau Corvette, vintage 2008. But I forgot myself. And my objectivity. I was there to perform a head-to-head comparison between said ’08 Chevy hardtop and an ’08 BMW 335i. Unlikely rivals, to be sure. But both are answers to the same question spoken in the quintessential voice of their respective source countries, America and Germany. Both are powerful sports cars designed to appeal to aging upper middle class drivers that can afford to treat themselves to something sporty and nice, just not too expensive. In this case, both cars were available at CarMax for just under $40K.
According to Denmark’s Børsen.dk, “General Motors is now giving Saab Automobile 3-Months To Find Buyer, in discussing this with Eric Geers, Global Communications for Saab Automobile AB in Sweden.” Hüsker Dü? That’s the same three month deadline when GM returns, pre-pubescent Mark Lester-style, to Congress– or just the President of the United States, as is the way of things these days. The Danish report is semi-confirmed by a previous CNNMoney report on GM’s Marketing Maven’s pep talk to dealers. “LaNeve said the auto maker expects to announce significant developments in efforts to sell its Saab and Hummer brands by the end of March 2009.” So, who would buy Saab in this sales climate? And what if they don’t sell the brand? What then? Well, I suppose they could always slip the closing cost into the receipts submitted to Uncle Sugar on the day…
Previously, on “We Can Confabulate the Managerial Incompetence Behind Motown’s Meltdown and Federal Cash Grab by Raising Issues About Race, Regionality, Class and (it’s coming) Religion,” we saw how the Detroit News encouraged hometown supporters to boycott the South (provided, presumably, those supporters aren’t in the South). I was laboring under the impression that we’d could tick the race thing of the list as well, as African American automotive carmudgeon Warren Brown had previously postulated that Detroit deserved the bailout bucks by dint of its contribution to the creation of America’s black middle class. But I guess The DetN couldn’t resist adding fuel to the pyre. “Auto woes rock black work force” makes the case that Detroit’s tough times are tougher on blacks than white folks. And here’s proof:
Even as we await word on whether GMAC lives or dies, it’s increasingly clear that GM is using the lender as a hit man to decimate its dealers. Bloomberg clues us in on the motivation: “A U.S. dealership glut is damping the retailers’ profits, crimping spending on marketing, facilities and vehicles, GM and Chrysler say. GM set a goal of closing 1,750 showrooms, or 27 percent, over four years while Chrysler said it wants to thin its 3,300 dealerships, without setting a target… ‘In a number of states there’s these very elaborate procedures that you have to go through to shut dealerships,’ University of Chicago law professor Douglas Baird said in an interview. ‘In some states you just can’t do it at all.'” Philly.com shows us that GM has the means: “A half-dozen trailers rolled up to Eckenhoff Cadillac Buick Pontiac GMC in Jenkintown bright and early and wiped the lot clean of $8.4 million in inventory – Hummers, Cadillacs and all… GMAC, the beleaguered financing arm of General Motors Corp., had called the loan that had enabled Scott Eckenhoff to stock new and used vehicles. Big trailers carted away the collateral from a Big Three retailer that had been hanging on by a thread.” Opportunity? The current Motown meltdown. My question: what the Hell is GMAC going to do with all that inventory? Put another way, who’s going to bury the bodies? [thanks to Stein X. Leikanger for the tip!]
Automotive News [sub] ain’t committing themselves on this one, using typography to highlight that this is a list of ten small cars that could be coming our way. But they’re right to flag these cars as potential U.S. imports. When the U.S./world economy recovers, the price of gas is sure to ascend. Yes, when. Remember: automakers need to plan on a five-year timeline. To NOT plan for a recovery would be a mistake. And, as Detroit should have learned at least once in the last twenty years, any full-line carmaker worth more than $3b should not place all its eggs in a single vehicular basket. It’s an interesting list, but wouldn’t you really rather have a full-size Honda Accord or Toyota Corolla or, well, anything? And of course, I don’t mean you in the Chervolet Camaro sense. I mean you, as in 100k+ units per year. Or, put another way, how many competitors does the MINI need?
A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. For the next two weeks, WAS will be filed from Tokyo.
GMAC to announce real soon now. GMAC “expects to soon announce the results of a debt exchange offer that is key to North America’s largest auto finance company’s capital levels,” says Reuters, citing a GMAC spokesperson. The successful swap is crucial for GMAC to become a bank, and to get under the TARP. The debt swap deadline expired Friday as planned, spokeswoman Gina Proia said, adding that the company expects to put out the results in “the near term.” Sounds like Farago’s Option A.
Charge! Carmakers worldwide are turning into Energizer bunnies, and enact plan B as in batteries. Nissan and NEC will invest 100 billion yen or more to manufacture enough large-capacity lithium ion batteries to equip a total of around 200,000 electric and hybrid vehicles a year in 2011 or later, The Nikkei (sub) writes. Honda and GS Yuasa Corp. plan to construct a factory in Kyoto for lithium ion batteries. Toyota and Panasonic are working on a joint-venture mass production of lithium ion batteries at a Shizuoka factory in 2009. Mitsubishi will start manufacturing lithium ion batteries in partnership with GS Yuasa. Volkswagen plans to develop automobile lithium ion batteries with Sanyo.
Getting real about EV: Taking the contrarian view, Bosch chief Bernd Bohr borrowed a line from Greenspan and cautioned against “irrational exuberance” when it comes to electric vehicles. “We should not tell the consumer that there will be an electrical vehicle in 2010 which is affordable and meets market demands” he said according to Automobilwoche (sub.) He expects small production runs before 2015, “but all will be heavily subsidized, either by the government or by companies that sell below cost.” Bohr figures, 80m units will be built worldwide in 2015. Of those, only 2.5m to 3m will be hybrids, and only 800K pure plug-ins.
GMAC. Bank or bust? We still don’t know. As we’ve reported at least twice previously, if the troubled lender failed to make the leap to hyper-suckle by Friday at 11:59 pm (i.e. get investors to swap out enough debt for equity to morph into a bank and scarf $6.3b or so from the Trouble Asset Relief Program, and a bunch more as federally secured debt), then the whole house of cards known as the domestic auto industry will come crashing down. Automotive News [sub] reports that GM spinmeister Gina Proia said the company expects to put out the results of the debt-for-equity swap in “the near term.” Let’s call that option C. Option A? GMAC did the deed but remained tight-lipped for the last two days because majority owners Cerberus never met a cloak of invisibility they didn’t wrap around their operation like Christo covering the Arc de Triomphe. After all, this is the same privately-held company that owns Chrysler, which expects Uncle Sugar to “lend” it $4b, despite the fact that we don’t know how Cerberus paid for it in the first place and/or who owns the paper on what now, after the sale and (presumably) deep borrowing against assets. And now, option B…
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