A reader writes:

Several weeks ago, I took my 18-year-old daughter to Pennsylvania to find her a used car (I don’t believe in buying a new car for a kid). We found a Honda dealership that had a nice, clean 1998 Civic for about $4000. My daughter had $3000 saved up from working at the mall. We gave the salesman the cash and I asked if I could get a loan for the balance. “No loans”, he replied. “We had a guy in here this morning that had an 800 credit score that had to walk away from the car because he couldn’t get approved.” I then agreed to give the salesman a personal check from my account and we were able to buy the car (which, by the way, has been a real gem). The Honda dealership is right across the road from a Cadillac store. “I sold more Hondas myself in December than all the salesman over at Cadillac combined,” he told me. I think this experience is a good indicator of what’s happening in car sales in the USA right now. It’s a bloodbath.

Or so goes the logic of Brent Snavely and friends over at the Detroit Free Press. Sales down 37.1 percent? The lowest seasonally adjusted annual selling rate (SAAR) since 1982? No way is it going to get worse before it gets better! “This is not real. This is artificially low,” says Jesse Toprak, executive director of industry analysis for Edmunds.com, who goes on to warn that “the industry might not recover without some sort of external stimulus.” Not here, not now! And yet in the midst of all this turmoil, a strained and unconvincing optimism abounds. Well, at the Freep anyway . . .

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Reading GM’s FastLane Blog sometimes feels like watching the images generated by an underwater camera cruising through the Titanic’s sunken remains. Yes, I know, GM hasn’t cracked in two yet, never mind hit the ocean floor. But the blog’s extended periods of silence strikes this jaded journalist as, well, creepy. A sense of impending doom that’s also reflected by the editorial mix: half-assed attempts to address the key questions vexing GM’s “turnaround plan” (as bulkhead after bulkhead buckles under pressure), interspersed with exec-sourced, over-optimistic appraisals of GM’s prospects. And now, it looks like GM’s just given up, surrendering the floor to “resource analyst” Amory Lovis’ mob over at the Rocky Mountain Institute. Abundance by design™! ‘Cause austerity sucks, right?

Here’s a surprise: American cars hold their value much better than other major markets, including Japan and Europe. Cost of ownership is the culprit. In the US, owning a car generates relatively little in the way of year-to-year expenses. Registration is usually about $30. Inspections are infrequent and rarely costly. While the repairs required to keep a “beater” on the road can reach four figures, they rarely exceed the value of the vehicle itself. As a result, it’s unusual to see a used vehicle in America (even “heaps”) listed below $1k. Also as a result, the cash for clunkers proposals, as envisioned, are a horrible idea.

Ever since bailout measures for the auto industry were first mooted, free market detractors whispered: “WTO.” Nobody took it seriously. True; according to the World Trader Organization’s rules, direct subsidies are not allowed. But it’s equally important to note that the 153-member quango has never put a single issue to a vote since its birth in 1995. Consensus governance means that as long as nobody complains, and especially, as long as everybody plays the same game, the WTO hangs fire on principle. Auto industry “loans”? They’re all doing it. Still there is a line a WTO member mustn’t cross. And America almost crossed it.

An 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 Tokyo this week.

GM flirting with FAW: GM is holding discussions with major Chinese automaker FAW Group to form a partnership for light commercial vehicles, Reuters reports. The two parties have already registered a name with the State Administration for Industry and Commerce, which is the first step of Chinese joint venture courtship. GM already makes light commercial vehicles in China in a three-way tie-up with SAIC and Liuzhou Wuling. GM manufactures Buicks in Shanghai with SAIC, China’s largest auto maker. FAW, one China’s three biggest automakers, operates car manufacturing ventures with Volkswagen and Toyota. SAIC is also in a joint venture with VW. SAIC and FAW have been considered bitter rivals, although there are reports of a thawing. GM said its commercial vehicle venture in China sold 19.7 percent more vehicles in January than a year earlier, helped largely by sales of the Wuling Sunshine minivans.
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When a car salesman tells you an expensive model’s pointless, nine times out of ten, it’s pointless. If he proffers this opinion in the depths of a recession, with new car sales lower than Bernie Madoff’s morals, it’s a dead cert. I’ve experienced this vehicular vertigo twice in the last week. First, when contemplating a zero-mile Honda Civic Mugen Si gathering dust in an otherwise empty former Saturn showroom. Second, whilst sitting in an Acura RL, moments away from an extended test drive. The salesman told me flat out that the Acura TL is a better car than the RL, hinting that anyone who buys an RL is a sap. As I’ve rated the TL as a one-star car, where do you go from there?

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Automotive News [sub] reports that General Motors pulled tooling from 50 parts makers during its winter shutdown. The pullout took place after GM was awarded $13.4b in TARP bailout money in December. GM spokesman Dan Flores reveals that one such supplier was metal stamping firm SKD, but refused to reveal other names. “Based on SKD’s financial distress and uncertainty, GM had to take action to protect our business interests,” said Flores. Hello? Pot? Kettle? Anyone? Bueller? But it’s all good in the hood. Remember folks, this is 2009. The worse the news, the bigger the bailout.

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For the eighth year in a row, the MVP of the Super Bowl has received a free Cadillac of their choice. This year, Pittsburgh Wideout Santonio Holmes picked out Caddy’s priciest SUV, an $85k Escalade Hybrid Platinum. But instead of presenting the ‘llac at an on-field postgame ceremony, the terms of Cadillac’s sponsorship were fulfilled behind closed doors. Why? “Given the current business environment, it was much more appropriate we not do that,” Caddy spokeswoman Joanne Krell tells the New York Daily News. “We made the decision not to actively participate in the Super Bowl. We congratulate the MVP, it is a great achievement. We are very sensitive to the federal assistance loan we have received and we want to carry on our fiduciary responsibility. The Super Bowl was not a place for us to be this year. That is not to say it’s not a great platform.” But GM still gave a man who makes over $2m per year an $85k vehicle after having received $7.4b in government bailouts. From a PR perspective that’s not great, and from Deadspin on down, people are taking notice. And based on the fact that Caddy defends the decision on the basis of the bailout being a loan that will be repaid, it’s obvious that they realize how bad this looks.

Curious about the price tag on the current round of auto industry bailout mania? An updated TTAC Bailout Scorecard (pdf) is now available.

Point three of Barack Obama’s ethics pledge to the American people is that “no political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration.” Obviously that’s a high standard, and one that seems increasingly important as the lines between government and industry are blurred by rampant bailouts. And clearly not everyone makes the cut. But as Obama assembles a team to “restructure” the auto industry, the spirit (if not the letter) of his ban on revolving door hiring seems to be falling by the wayside.

In fourteen days, GM and Chrysler will submit realistic plans for viability to Congress. See what I did there? With January’s sales slaughter revealed, it’s obvious neither automaker can survive without a huge and ongoing injection of working capital from the nation’s working capitol. Even if Uncle Sam provides this staggering amount of money– more than enough to start a car company from scratch– GM and Chrysler wouldn’t make enough profit to pay the interest and the principal during the loan’s term. The plans the automakers are about to present to your elected representatives are a fictional moon shot– with a make-believe launch vehicle that couldn’t propel a chimpanzee ten feet.

You know, this sounds crazy, but this MicroFueler thing might just work. I’m no fuel expert (I just play one in the autoblogosphere), but flex fuel vehicles are ready to rock and roll on any mix this bad boy can brew. And now E-Fuel, the maker of the home pump, is expanding beyond the home brew market to… the micro brewery market. CNET’s Green Tech reports, “The inventor of the EFuel100 MicroFueler home ethanol maker has signed on Sierra Nevada Brewing to make ethanol from beer dregs.” I would have thought that waiting around for drinkers to leave the dregs would be a time-consuming business, but then that’s just a bad joke isn’t it? Here’s the real deal…

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