Neither rain,nor sleet,nor gloom of night, our daily round-up of the news that happened in other continents and time-zones must go through. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Note: I’m in Germany on business and will post as time allows. Last night’s news kept me sleepless, so you get WAS on time.
GM and Chrysler ready for ultimate sacrifice. GM and Chrysler executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, says Bloomberg. “Staff for three members of Congress have asked restructuring experts if a pre- arranged bankruptcy – negotiated with workers, creditors and lenders – could be used to reorganize the industry without liquidation.” Bloomberg quotes Lynn LoPucki, who teaches bankruptcy law at Harvard: “The Democrats’ goal of preserving a U.S. auto industry is not doable without a bankruptcy.”
China mulls GM’s default consequences: The Chinese government is also beginning to think aloud about the consequences of a possible GM default. Gasgoo quotes Xu Changming, Director of Information Resources Department under China’s State Information Center. He feels, not surprisingly, that “if a global company failed in management in its headquarters, impact will be felt by its Chinese business.” According to the Chinese, Chapter 11 would “have limited effects on Shanghai GM. The technical center built by GM and its partner SAIC will be running as usual.” However, if GM would go C7 “then Shanghai GM couldn’t produce Cadillac, Buick and Chevrolet and GM is likely to sell their 50% share in its Chinese JV.”
Volvo China unfazed, hopes for Chinese buyer: Gasgoo quotes a source at Volvo China that said that production of Volvo cars at the Chongqing plant will not be affected by the possible sale of the brand by its US parent. “Volvo Car’s Chinese partner, Changan Ford Mazda Automobile (CFMA) will start production of Volvo S80 next year, and this plan is unlikely to be affected by the change,” says Gasgoo. They also felt compelled reiterating that Bloomberg had said that an industry insider had said that Chinese automakers are among possible bidders for Volvo. Gotta read between the lines in China. And if that’s not enough …
Saab (still) CEO wants government as a buyer. The Swedish government should temporarily buy a stake in Saab, Jan-Ake Jonsson, the (current) head of the Swedish automaker told Dow Jones Newswires via CNN Money. “Fat chance” (or more polite Swedish words to that effect) said Sweden’s Industry Minister Maud Olofsson. She does not foresee Sweden taking over, or buying a stake in either Saab or Volvo.
China’s car imports way up. From January to October, China imported more than 340,000 completed vehicles and chassis, up 39.7 percent, says Gasgoo. They aren’t importing cheapos: The total import value reached $12.7b, a 51.5 percent increase from a year earlier. Sales of Mercedes-Benz S series in the first ten months surged by 50% to 12,000 units, which made China the largest market for Mercedes-Benz S series in the world. Nissan’s Infiniti saw sales up 100 percent up in China.
Nissan China way up: Dongfeng Nissan, a JV between China’s Dongfeng Motor Corp. and Nissan, sold 276,891 in the first then month of 2008, up 27.39 percent Gasgoo reports, citing sources at the factory. The sales volume makes Dongfeng Nissan #6 in China’s auto industry.
The East sees red: China’s November passenger vehicle sales fell about 15 percent from one year earlier, says Gasgoo, quoting a research report of Nomura International. The drop was the second biggest year-on-year monthly plunge in the past four years. China, the world’s second-largest auto market, is expected to face difficulties in the first few months of next year, the report says.
Gloom reaches Porsche. Porsche predicts “seriously lower sales” for the current fiscal year which ends on July 31, 2009. This according to their Director of Sales, Klaus Berning. Automobilwoche (sub) has details. Klaus is unable to make “a serious prediction,” but the matter sounds serious enough. Lower prices? Incentives? Not at Porsche. Remember, they are a bank with a small subsidiary that makes cars.
Loans? How un-American: Even in this cash-constrained environment. Nissan raised $475m through asset-backed securities in the local market for the first time in roughly six months, says the Nikkei (sub.) The securities are backed by Nissan Motor Acceptance Corp. The securities obtained a preliminary AAA rating from Standard & Poor’s. We usually wouldn’t mention stuff like that, but suddenly, this is news …
Your plug-in gets greener: Toshiba has developed a system that can capture carbon dioxide generated at coal-fired power plants, the Nikkei (sub) reports. A test plant will begin operating in August. The pilot plant is designed to capture 10 tons of CO2 a day from boiler flue gas using chemicals. If someone develops batteries that are affordable and not a nightmare to dispose off, the plug-in’s future will be green
German government wants their veggie diesel: Their consultants told them to go the plug-in route, but German Minister of the Environment, Sigmar Gabriel, sees veggie diesel as the solution to make car owners and farmers happy, and (unsaid, but intended) make the power plant lobby unhappy. The power planters are already talking about building new nuclear stuff, which is unpopular amongst the green contingent. Automobilwoche (sub) has more.
COA makes dire predictions: The German Center Of Automotive (COA) has polished their crystal ball, says Das Autohaus. What they see doesn’t surprise even the most casual B&B. For 2009, they predict lower sales in NA, Western Europe and Japan to the tune of 5 percent. In the BRIC states (Brazil, Russia, India, China) they see slower growth or flat sales for 2009. They see the worldwide market of 2008 come in at 10 percent less than 2007. As the winner of the crisis, they see Volkswagen, as biggest losers they see GM, Ford, and Chrysler. Details (in German) here. Let’s hope nobody pays them for these predictions, as they come at no charge and timelier at TTAC.
Other body experience: Swedish researchers found a method to manipulate the human mind to create the perception of having another body, Reuter’s reports. According to reliable sources close to the matter who requested anonymity, the method will be used during the Washington hearings. There, the researchers will trick Richard Wagoner into thinking he’s Richard Nixon. He will say “I am not a crook,” wave, climb into a helicopter, and leave. He will be replaced by Ford.
Prepackaged or not, if there’s a bankruptcy for GM or Chrysler, there will be anti-import xenophobia on a scale that I’ve never seen before. And since my whip is a 2001 Civic sedan, I’m getting worried…
I’ll add a little view from Detroit, which has gone fishing in Europe. Neil Winton offers a European perspective – finding that GM is in trouble, while Ford may find a foothold in the old country.
And there is such a thing as a Professor Dudenhoeffer – who states what TTAC stated at the time – that building Cadillacs at Trollhättan, while moving Saab production to Rüsselsheim, was just about the stupidest thing ever. “I’ve not seen a successful management decision at GM in Europe in 5 years.” Damning words, indeed.
http://www.detnews.com/apps/pbcs.dll/article?AID=/20081125/OPINION03/811250303/1362/OPINION0339
According to Professor Ferdinand Dudenhoeffer, newly appointed to the chair of automotive economics at the University of Duisburg-Essen in Germany, said a Chapter XI filing for GM in the U.S. would pose big problems for GM Europe. Ford Europe is in a much better position to ride out the storm, even if its parent declared bankruptcy.
GM Europe owns Opel, Vauxhall and Saab of Sweden. Ford still owns Sweden’s Volvo, and sold British luxury subsidiaries Jaguar and Land Rover earlier this year.
“GM Europe would have to go into the European equivalent of Chapter XI. In my opinion, nobody would want to buy the whole of it. They would wait for bankruptcy to be filed, then they won’t have to take on the legal and social and pension liabilities and can start with the employees they want. Maybe a Chinese company would want to buy the Opel brand, or maybe Toyota, which is not so strong in Europe,” Dudenhoeffer said.
No hope
“Saab is a mess and there’s no indication it will improve in the future. Making Cadillacs at Saab was a decision that went extremely wrong. I’ve not seen a successful management decision at GM Europe in 5 years. It didn’t decide to close any plants in Europe and that was wrong,” Dudenhoeffer said. “It faces a very tough story for the future and I personally don’t see any hope that it will manage to turn around.”
BTW – that Cadillac in Trollhattan thing: I’m convinced this was the last hold-over decision of the geniuses who originally bought Saab, with the goal of converting it into a luxury brand, after having failed in acquiring Jaguar.
Having likewise failed in turning Saab into luxury, instead of maintaining its performance cachet, they at least wanted the vindication of building a luxury car (in their minds) at Trollhattan … thus are momentous corporate decisions made.
Dudenhoefer is a dolt. Even his assertion that he’s “not seen a successful management decision at GM in Europe in 5 years” would be debated amongst the B&B, who would probably plead for an extended time-frame.
Dudy has a way of sprouting lines which even the most simplistic scribe can understand, hence, no article complete in Deutschland without a quote of Dudenhöfer. He must be answering the phone all day. He’s at the wrong school. He should be Dean of the Dale Carnegie College of Blatant Self-Promotion. He has very little experience with cars.
After completing his studies, he survived for exactly two years at Opel. Then he did three years of unsuccessful market research at Porsche, a company that puts as much credence in market research as Luzifer in the immaculate conception. Then he took the route of unsuccessful executives: He started teaching.
For nearly 20 years he was professor at the FH in Gelsenkirchen, the German equivalent of a community college. In the German auto industry, he’s regarded as an embarrassment.
ferrarimanf355:
Could you elaborate about your worries?
Thanks!
From the article: “Bloomberg quotes Lynn LoPucki, who teaches bankruptcy law at Harvard:”
What, exactly, is Harvard training students to be?
@Bertel
Great to know!
Remember, they are a bank with a small subsidiary that makes cars.
Reminds me of Cerberus…
Tanta, the mortgage banking blogger who died recently, called Detroit: finance companies with a sideline in cars …
“ferrarimanf355 wrote:
Prepackaged or not, if there’s a bankruptcy for GM or Chrysler, there will be anti-import xenophobia on a scale that I’ve never seen before. And since my whip is a 2001 Civic sedan, I’m getting worried…”
No there won’t be, I don’t understand how anybody would think that way. People in America don’t really care that much about Detroit anymore. This isn’t the 1970’s, people have gotten over the whole import “rice burner” attitudes towards Japanese cars. The fact that Detroit is partners with Japanese companies means it won’t happen too. I don’t think people driving Mazda based Fords, or Japanese and Korean based GM cars like the Vibe or the Aveo are going to complain about imports, not to mention the Australian and German based GM cars that Pontiac and Saturn sell, or the Honda V-6 in the Saturn Vue.
People would have to be huge hypocrits to complain about imported cars when they’ve got Asian produced televisions, stereos, game systems, cell phones, computers, appliances, shoes, and clothes in their homes.
ferrarimanf355:
If the big-3 are indefinitely bailed out with taxpayers’ childrens’ money I would be afraid to be driving a domestic.
The mafia, company ruining UAW workers can’t screw with me because they have more to lose – if one of them vandalizes my used Civic I’ll vandalize his bass boat, speed boat, Corvette and dually.
If the big-3 management want to vandalize imports they can start with the ones they drive.
KixStart: Lynn is teaching at Harvard Law School which educates graduate students in the laws of our country. He does not teach at Harvard College which educates undergraduates, nor, for that matter at Harvard Medical School which educates graduate students in medicine.
Bankruptcy Law (Title 11 of the United States Code) is a normal subject for upper level law students. It is important for those law students who wish to specialize in commercial law.
I know Lynn and he is good guy.
1169hp:
Some dude’s probably going to take a baseball bat to my poor car in a wave of anti-import xenophobia, and I don’t think I can afford replacing all of my Civic’s glass and caved-in body panels…
And to the two above posters: don’t be so sure. It could happen in the Rust Belt, the south, places where there’s a higher concentration of domestics.