A TTAC commentator who wishes to remain anonymous raises a good point about Chrysler’s sales: “imagine Chrysler’s sales last month if ex-employees didn’t ‘buy’ their cars with Chrysler’s money. People who took the buyouts all got a free car as well. You know how people will ask… would you take a Chrysler car for free? (well, you still gotta pay the tax since Uncle Sam hates freebies). The answer is a resounding Yes! Because you can still flip the car for another brand and come out ahead after all the taxes. Anyway, approximately 5,000 of those Chrysler sales last month were paid for with Chrysler’s own money. Most were Wranglers, Grand Cherokees, and LX cars since those vehicles let you extract the most value out of your ‘free’ car.”
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The New York Times’ Dealbook blog takes it to the GMAC bailout with TTAC-like zest today, methodically doling out blame to all sides of the deal. Many of their points have been covered in TTAC’s ongoing coverage of the deal, but the Dealbook post does a good job of summarizing everything there is to hate about the handout. For one thing, there’s the fact that (unlike other TARP packages) the Treasury failed to secure warrants backed by GMAC common equity. This means that we the American taxpayers have no upside to the deal beyond earning back our money with eight percent interest. Furthermore, the warrants that Treasury did receive are worth only five percent of our $5b investment in GMAC, far less than the 15 percent warrants required of other TARP borrowers. Oh yeah, and the $1b that GM received to invest in GMAC is secured only by GM’s stake in GAMC. Not only do these considerations increase taxpayer risk, they also destroy the “our bailout is better/more fair than theirs” relativism that the auto biz rode into Bailout City.
If a fish had brains and saw someone holding a shotgun, would it choose to swim in a barrel? Why then would Mike Accavitti, director-Dodge marketing, say this to Ward’s Dealer Business, which has all the sales data on everything. “Accavitti notes the ’09 Ram, which he describes as Chrysler’s ‘bread and butter,’ is grabbing more market share than its ’08 predecessor. Since the October sales launch to mark the ’09 model year, the Ram owned 4.1% of the light-duty truck market, an increase of 0.2 share points over the ’08 model year, according to Ward’s data.” Yes, well, the article was written before December’s sales results; where Ram sales tanked by 48 percent vs. last year, down 31 percent for the year. I wonder how much that market they own now. In any case, it appears Dodge blew the launch.
When Porsche, led by Wendelin Wiedeking and his CFO Holger Härter engineered the classical short squeeze, when they drove the VW share into the stratosphere and hedge funds into deep losses, the men received applause. Hedge funds are supposed to know what they are doing. And no kittens were harmed.
Yesterday evening, a 74 year old man walked in front of an oncoming train near the German city of Ulm. He used to be a billionaire. He used to be on the 94th place of Forbes’ list of richest people. Adolf Merckle had placed his bets on the wrong side of the Volkswagen game.
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Finishing 2008 with positive sales growth was basically unheard of this year in the US car market. Titans like Toyota, hot brands like Audi, nobody is safe from the sales downturn that is crunching the biz. Except Subaru. The all-AWD boys managed a narrow 0.3 percent sales bump for 2008, as strong Forester sales (up 62.8 percent in December, 36.4 percent on the year) helped limit December bloodletting to a 7.7 percent downturn. So even though Subaru literally sold only 491 more cars in 2008 than it did in 2007, you can’t help but call it a win. Unsurprisingly, Tribeca and Outback are the big losers, dropping 52.1 and 30.3 percent in December and 34.6 and 22.8 percent on the year. And Subaru’s short-term positioning continues to look good. Though the summer gas shock had consumers scurrying for Fits and Priora, leveling prices and a harsh winter make Subaru’s products look like a smart step for the downsizing SUV-as-luxury crowd. Subaru’s out of the WRC championship, and the Toyobaru coupe has been canceled (it should have been the Tribeca!), but in the US market Subaru looks as good as can be expected.
The post-apocalyptic analysis of December’s sales results continues, as pundits and producers attempt to make sense of the crater that’s replaced the U.S. new car market. Obviously, the situation will have the greatest impact on the Chrysler and GM. The domestic automakers have just finished their first suckle on Uncle Sugar’s taxpayer teat, with GM auguring-in for its second go mid-month. And both companies face a congressional grilling when they return for more money in March. So, what to do? What to do? For answers to that question, for the manufacturers’ spin, we turn to their unofficial mouthpiece, The Detroit News. “Auto sales skid: Recovery rests on stimulus” starts with good news! “After barely making it through the worst year for auto sales since 1992, Detroit’s Big Three expect consumer demand to remain very weak in the first half of 2009 but begin to recover in the second half.” I’d like to point out that a general “sales” recovery does not necessarily mean Chrysler or GM’s recovery. But that would kind of ruin the flow, if you know what I mean. To wit…
Carscoop! is breaking European brochure pics of the 2009 Insight, Honda’s rival to the Toyota Prius, the gas – electric hyrbid that’s gone from hero to zero [percent financing] in less than six months. Coincidentally enough (if only just), the Priusalike makes its appearance a few days before the denuded Detroit Auto Show (“Now with 100 percent less Nissan“). That’s where the 2010 Prius also makes its debut. Unfortunately, we only get the pics from Honda brochure; the text would have provided welcome insight into the Insight’s marketing angle. Will HoMoCo promote the Insight on price or performance? The green hot rod angle is not entirely inconceivable; the now extinct Accord hybrid was the fastest of its breed. Carscoop! has three pictures of the Insight’s speedo; at 20, 24 and 42mph. So, no, then.
Crap. You know, I went to Coachmen Industries website to check for a list of RVs. The RV site didn’t some up. Just kept on a spinning, then timed out. And I saw that the main site was all about pre-fab housing. But I thought, oh well, the RV site’s down. But as bluecon points out in a comment below, Coachmen Industries is out of the RV business as of Boxing Day. Doh! But at least TTAC’s Best and Brightest spotted my lack of reportorial due diligence and properly revealed willingness to take Edmunds and Autoblog’s posts at face value. My bad. Lesson learned. And according to previously stated policy, I will not take this post down. Well, not the headline and the comments. The text is toast, ’cause there are limits to my prostration. And props to Warren, ’cause, as Kurt pointed out, this kind of housing is sure to find favor in the coming months and years ahead. Never a truer word was spoken in jest. Oh, and Buffett already owns an RV maker– that bought Coachmen’s assets.
Automotive News [sub]: “The magazine normally recommends cars in its April issue. But it singled out eight Detroit 3 vehicles early because consumers may be concerned about reliability while General Motors and Chrysler LLC seek federal assistance, said David Champion, the magazine’s chief car tester. ‘We’re only about halfway through our testing, so it’s not a complete list,’ he said. ‘But because of the public interest, we thought it would be useful.”” Huh? Since when is it Consumer Reports’ job to allay consumer fears about the reliability of the products produced by a small group of automakers, especially in response to an industry-wide event? In other words, why the special treatment? Even if it’s all about catering to a public need– remembering that Consumer Reports is a non-profit organization and there is no statistical data to support this position– CR’s special issue increases the psychological polarization between domestic and import-branded vehicles. And that’s not a good thing– for the domestics. If nothing else, the D2.8’s abject inability to identify the difference between quality relative to each other and quality compared to the wider car market has contributed to their failure. Anyway, the “winners” in the gallery below and/or after the jump.
The US Court of Appeals for the Seventh Circuit yesterday issued a ruling in defense of the lucrative red light camera program in Chicago, Illinois. Mayor Richard Daley (D) has made it clear that expansion of the existing 136 cameras, which so far have generated $110 million, is designed to increase the number of citations issued and close a gap in the 2009 budget. The three-judge federal court panel found this to be a good reason to install cameras. “A system of photographic evidence reduces the costs of law enforcement and increases the proportion of all traffic offenses detected; these benefits can be achieved only if the owner is held responsible,” Chief Judge Frank H. Easterbrook wrote for the unanimous panel. “That the city’s system raises revenue does not condemn it.”
The United States new car market is dead in the water. Sales are down 36 percent across the board. Carmakers selling (or not) in The Land of the Free could stop production for a month– at least– without threatening to reduce inventory levels to demand. Only, of course, they can’t. The car business works best when every part of the fabrication process, from mining iron ore to slapping on the Monroney sticker, is flowing simultaneously. Stopping and starting production is a bitch. And expensive. What’s more (LOTS more), fixed costs like equipment amortization and labor don’t go away. So carmakers are powerless, and bleeding out. The strong ones have lots of blood and relatively small wounds. The big ones had no platelets to begin with, and the arterial spray is like a Las Vegas fountain. One thing is for sure: it’s a great time to buy a car! Of course, it’ll be even better next month. And the month after that. And the month after that. If you feel sorry for the carmakers, a simple question: why? Isn’t it better for all concerned when the customer is King?
Last Saturday, we asked the B&B: “What will be Monday’s SAAR?” You know, that funny Seasonally Adjusted Annual Rate, where they look at the sales for a month and then act as if it’s the whole year. Bloomberg had asked a bunch of high paid analysts, and they had it all wrong. Most of them guessed too low. Only Christopher Cearso came kind of close with 10.2m for December.
Our own Mikey iced it: 10.4! That’s exactly what Automotive News has as the, well, not quite official, but officially “preliminary 10.4 million seasonally adjusted rate.” Congratulations, Miky! The title of AFB&B (AbsoNSFWingly Best & Brightest) is deserved well. Second places go to confused1096 with 10.1m and MikeInCanada with 10.7m. Both were only a smidgen of 300K off. And both were still doing much better than Bloomberg’s analysts. We call you the B&B for a reason.
A week ago, AP cited an article in the Nikkei that wasn’t there. That article that didn’t exist was about an all solar car that didn’t exist. Under the headline “Toyota Secretly Developing Solar Powered Green Car” the AP “news” about the article and car that only existed in imagination was reprinted 164k times, as Google has it.
Not only had the original Nikkei article not been printed. TTAC’s B&B also opined that a solar powered car would be total bunk. “There is no way you are going to power anything like a conventional car on a normal duty cycle with only the PV modules on roof of the car,” wrote B&B RedStapler. He was not alone. WIRED wrote that “a chorus of online skeptics have begun dismissing reports that Toyota’s “top secret” solar concept would ever see the light of day.”
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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. WAS is being filed from Beijing.
Toyota Motor Corp halts production at Japanese plants: They’ll do that for 11 days in February and March, Reuters reports. A 37 percent slump in December sales in Toyota’s biggest market U.S.A. was its sharpest fall in more than a quarter of a century and worse than General Motors and Ford Motor.
Porsche owns more than half of VW: Porsche has raised its stake in Volkswagen to more than 50 percent, and as a result they may end up with a truck company they do not want, writes Reuters. A Porsche spokesman confirmed that the sports car maker still planned to increase its stake in VW to 75 percent at some point this year, given a favorable market environment. As a result of its stake hike on Monday, Porsche now has indirect control of Swedish truck maker Scania, in which Volkswagen holds about 69 percent of the voting rights. Porsche is required by Swedish law to make a mandatory takeover offer, but the German sports car maker said it had no strategic interest in Scania and was not interested in acquiring Scania shares. It said it was not bound by pre-acquisition prices and was only obliged to offer the minimum price prescribed by law.
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