Despite the fact that all of the Detroit firms are actively trimming their dealer ranks, the National Automotive Dealers Association (NADA) is calling on the federal government to guarantee dealer floorplan loans. According to Automotive News [sub] NADA is requesting “anybody and everybody” in the government step up and prevent (once again) a necessary downsizing in the auto business. NADA spokesfolks say the auto retail industry’s $100 billion in annual floorplan credit is drying up, and “the cost to government for guarantees would be little or nothing.” Ipso facto. And yet the $25 billion in “136” loans took $7.5 billion to guarantee. NADA is bringing its somewhat short-on-the-details message of hope to Congress, the White House, the Treasury Department, the Federal Reserve, and the Small Business Administration this week.

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This Jackson Citizen Patriot editorial sums up Detroit’s pro-bailout stance perfectly.

A bailout-weary public has every right to be skeptical of General Motors and Chrysler. The price tag to keep these pillars of American automaking alive soon will reach $39 billion. That comes to $127 for every U.S. citizen.

The expensive reality is that the federal government will—and should—lend more money to these companies while demanding progress on the road to profitability.

The alternative—the loss of hundreds of thousands of U.S. jobs—is too much to fathom today.

GM and Chrysler are asking to borrow $21.6 billion on top of $17.4 billion they received in December. Think of it as Bailout 2.0. As the public’s patience wears thin, it also might be the last time they could get taxpayer help.

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Jerry Flint in his latest Forbes columm:

Layoffs, product cancellations and product postponements in America’s once great auto industry are way beyond cutting into fat. ‘Amputation’ is a better description. Even as the government spends billions to save the American manufacturers—with billions more aid to come—it is fair to ask if there will be anything left to save.

Despite generously admitting that “Chrysler may survive,” Flint believes the Pentastar has far better chances under Marchionne’s Fiat than under Feinberg’s Cerberus. Not because Americans will fall madly in love with Italian cars, but because “Chrysler has thinned its employee ranks so severely that it probably cannot create new cars on its own.” And it’s a trend that Flint is seeing across the industry.

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This is a concept for now, but glass roof aside it’s the near-production look of a new Kia mini MPV in the continental style. And now I’m curious what it would take for this Kia to sell, say 50k units per year in the US. I’m talking MSRP, gas prices, Kia’s new stop-start system (euro only, 15 percent better efficiency), suicide doors, whatever. Keep in mind, Honda sold nearly 80k Fits last year. Kia 2008 sales are here for comparison.

In response to Jack Baruth’s editorial, Mike Stone writes:

I have been making the same 60-mile round trip commute for many years, my route consisting of rural 2 lane roads and expressways. During the course of every winter, regular as clockwork, I see 5 to 10 vehicles that have run off the road in icy, snowy or wet conditions. Some of these are clearly a result of excessive speed but on two occasions, I have been behind a vehicle that was travelling at or below a safe speed when it simply lost control. What could cause such a thing? A clue lies in a well-documented statistic that 93% of all traffic accidents are the result of human error.

The Freep reports that Chrysler’s cash reserves will fall well below the $2.5 billion the firm needs to survive sometime in March. Based on a liquidation analysis in Chrysler’s latest viability plan, Auburn Hills will be down to $1.3 billion by the first of April. According to the same analysis, Chrysler would need $25 billion in Debtor-In-Posession (DIP) financing to survive through Chapter 11 reorganization, a process the firm expects to last two years. And if the private sector won’t provide it (it won’t) and the government won’t cough up DIP financing or more loans (it shouldn’t), Chrysler will begin to liquidate its assets in April. After all, why should Cerberus lift a damn finger? But if liquidation does occur, Chrysler would dump $2 billion in pensions and $20 billion in health care obligations on the government, not to mention defaulting on the loans it currently owes the government. Meanwhile . . .

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Benjamin Franklin said it’s better to be a pessimist and pleasantly surprised than an optimist and constantly disappointed. Followers of Motown’s meltdown—and the wider malaise affecting the entire auto industry—know it’s going to be a long time before the pleasant surprise part of the equation. Bloomberg reports, “Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars. The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today.” Lest we forget, the housing bubble begat the auto bubble which begat the collapse which lit up the turbos on Detroit’s decline, as it powered unthinkingly on its Thelma and Louise trajectory. So how’s that housing thing going? Do you really want to know?

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Anybody who knows how the auto industry ticks (as long as its clock hasn’t run out) sees the next two items as a given:

1.)    Cars will be more and more crammed with electronics. Already, some modern cars have more computers and networks than a small business.

2.)    Keeping track of the software and its bugs turns more and more into a nightmare.

So far, most large automakers have used their own proprietary solutions, which makes the nightmare even bigger. Many common parts cannot be fitted unless their internal software is “flashed” to be (hopefully) compatible with the car being repaired. Something’s gotta be done. And, finally, it is.

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Two hundred people, one car, twenty seconds. As an auctioneer, my job is to use my powers of persuasion to create the urgency to buy. Quick glances, fidgeting, eye contact, folding of the arms. Your body language and uncontrolled behaviors often tell me more than you can ever imagine even before the bidding starts. Don’t worry though. I’m really no hero and hopefully no villain. I’m simply keeping the score in a game where subtlety and nuance will eventually dictate my every move.

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What to do with all of GM’s brands? That’s one of the big questions that will vex the Presidential Task Force on Automobiles, as it makes its final determination on Chrysler and GM’s fate. Robert Farago’s branding guru Al Ries thinks The General should give Buick, Saab, Saturn, Hummer and Pontiac their discharge papers. Keep Saturn for entry level cars, Chevy for the mass market, Cadillac for luxury cars and GMC for trucks. Coincidentally, while RF was talking to his marketing maven, I was exchanging emails with Paul Earle, president and founder of River West Brands. Earle specializes in revitalizing distressed, orphaned and ghost consumer brands.

For the time being, China’s central government will say “bu hao” (not good) to any moves of its government-backed automakers to do any overseas mergers and acquisitions, International Business Times reports via Gasgoo. It’s not that the Chinese government is against the idea. They think, global asset prices will continue to drop, and better terms can be reached for offshore acquisitions by waiting. “The State-owned Assets Supervision and Administration Commission hopes the manufacturing companies, will adopt a wait-and-see attitude to purchasing global assets,” said commission chief Li Rongrong in a recent internal meeting. A mole in the commission said “Beijing won’t approve of automakers and banks to purchase overseas assets in the near future unless the buyers can prove the strategic importance of securing the deals.” Meaning what?
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Automotive News [sub] reports that the Swedish government is setting up the bailout smorgasbord for Volvo.

Sweden’s Industry Ministry state secretary Joran Hagglund said the government is due to approve an application from Volvo Cars likely to be filed to the European Investment bank (EIB) next month, financial daily Dagens Industri reported.

The government would guarantee 90 percent of a 5-billion-kronor (573 million dollar) loan, Hagglund said.

The remaining 10 percent would be secured from other sources.

Don’t look at me. So why is Sweden happy to go to serve-up plates of köttbullar for Volvo, yet won’t touch Saab with a ten foot stolpe?

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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 Beijing until further notice.

Chinese government orders consolidation: The Chinese government issued its plan to consolidate the auto sector. It includes decisions to merge the country’s major auto-making groups to from 14 to 10, and to subsidize rural buyers of new vehicles, China Securities Journal reports via Gasgoo. According to the plan, the current 14 Chinese carmakers, which together hold 90 percent market share, will be reduced to 10 or less through mergers. The government wants to see two or three big Chinese groups with annual production each exceeding 2 million vehicles, plus four or five groups making over 1 million vehicles.

Japan going down, down, down: Japan’s domestic auto sales may fall below 3 million vehicles this year, the Nikkei [sub] reports. Japan Automobile Dealers Association Chairman Yoichi Amano predicts Japanese sales could sink to the lowest level since 1971. “The projection made last year that sales would decline below 3 million vehicles some time between 2015 and 2020 might come true as early as this year,” Amano told a general meeting of association members, expressing concern that the economic downturn may further depress demand.

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For most American enthusiasts, the Mercedes-Benz 190E 2.3-16 will always live in the shadow of the mighty E30 M3. Although Mercedes was first to the sixteen-valve party, the US variant of the “Cosworth Benz” was slower, more expensive and infinitely more staid-looking than the iconic four-cylinder Bimmer. History’s verdict regarding the two cars is written on the Internet—the E30 has high residuals, fanatical owners and its own Special Interest Group of the BMWCCA. The 2.3-16 languishes in Craiglist ads, covered in rust, fraught with deferred maintenance. Shame.

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Once the feds bailed out GMAC—despite the failed lender’s inability to meet federal regulations—there wasn’t an industry expert who seriously believed that GM could convince its bondholders and union reps to swap $30 billion worth of GM debt for $30 billion of worth GM equity. (No sniggering.) Who cares that the swap was required as part the conditions of the automaker’s $13.4 billion “emergency bridge loans?” Nobody. To its credit, GM played the requisite game of charades, holding “marathon” negotiations with the bondholders and union reps. To no avail. According to Dow Jones, Uncle Sam reacted to the missed deadline with a stern, “Never mind!” And “Chrysler LLC, which received a $4 billion loan, was subject to the same terms as GM and also failed to reach deals with the UAW or debtors, although talks still continue.” See? As long as they’re talking, there’s hope! So . . . back to your smoke-filled room! And no more deadlines for you, Mister! Obviously, there’s more important game afoot: the MSM feeding frenzy over the whips driven by the presidential automotive task force. Question: when did the media and our elected pols become such wimps, weasels, scoundrels and patsies?