“Dangerous innuendo” is CAW Prez Ken Lawenza’s sultry summary of Chrysler’s plan to interruptus its Canadian operations if labor won’t agree to further concessions, reports Bloomberg. Chrysler is holding out for wage and benefit concessions that are “considerably larger” than those given to GM. The current GM agreement, when applied to Chrysler, cuts just $7.25 an hour Canadian from the company’s labor costs, according to a document obtained by Bloomberg. The same document reportedly shows that Chrysler requires $11.75 Canadian an hour in additional savings to be competitive. Meanwhile, Automotive News [sub] reports that GM is playing a similar game in its UAW negotiations. CEO Rick Wagoner says Ford’s agreement with the UAW “does not meet our needs” and that GM is working with the UAW to “do something different.” But despite the bloodthirsty negotiations, all three Detroit automakers are standing by their union allies in DC and on the pages of the Freep, calling for an American cash-for-clunker program. Because, hey, even Malaysia is doing it, according to Ward’s [sub].
On Thursday, Audi of America president Johan de Nysschen will meet with journalists to explore the question “how has the international recession impacted Audi and the luxury segment?” The obvious answer: sinking sales. The not-so-obvious conundrum: what next? How does a luxury brand position itself for survival when class war is breaking out all over? Of course, the professional pundocrats aren’t using “C” word just yet. The euphemism du jour for the “where’s MY bailout” anger that may or may not be sweeping the nation– as taxpayer-owned AIG execs collect their bonuses and Bernie Madoff’s wife shelters in a penthouse funded by her husband’s ill-gotten gains– is “vengeful populism.” Whatever you call it, Audi and its luxury competitors are sitting in the cross-hairs of growing anti-conspicuous consumption. The recession/depression is going to kick the NSFW out of them.
As rumors filter in about GM’s Volt battery program, the faithful must be experiencing a certain amount of restless discomfort. After all, it’s not like this couldn’t be seen coming. Let’s just say that when I asked the guys from A123 systems (then bidding on the project) about the Volt battery development program at SEMA last October, they took full advantage of the fact that SEC silent periods don’t forbid eye-rolling. Though non-verbal communication can (and in this case, did) speak volumes, we like to get our facts in writing. Which, thanks to the truth-proof wall surrounding the Volt’s development, usually means going through GM’s PR-exercise interviews with reliable Volt boosters and mining them for some kind of meaning. And hey, there’s an interview at Volt cheerleader HQ gm-volt.com which suggests that the Volt’s battery development is being rushed. And engineers are complaining to blogs? Fancy that!
It’s hard to look at this old Saab and not get choked up. And it’s not just because this once proud and spunky company is on the ropes. Old Saabs just have a way of stirring my emotions. This is going to be a Saab story.
Yes, you read it right. Over a nice little breakfast with the good folks at The Christian Science Monitor [reported by The Detroit News], Rick “Bankruptcy Equals Death” Wagoner said a GM pre-packaged Chapter 11 might work. Apparently, GM has “carefully studied” the idea of a 30- or 60-day, pre-packaged bankruptcy and “pointedly didn’t rule it out.” The bottom line: “It could work. It might not work.” Yup, those are the two possibilities all right. Wagoner also “revealed” that “There is no (debtor-in-possession) financing other than the U.S. government because my administration has systematically destroyed or sold off all of General Motors’ assets.” Just kidding, although Wagoner did admit Uncle Sam was the only DIP-shit in town. Oh, and Wagoner also added that a bankruptcy would “likely cost the government far more money than the Detroit automaker has sought.” Likely? How likely? Numbers? And they say a Harvard MBA isn’t worth the paper it’s printed on. Speaking of collegiate carousing, “Wagoner said the company would pare back its dealers by 25 percent in a ‘measured thoughtful aggressive way’ to ensure it didn’t hurt sales. ‘This isn’t a meat cleaver deal.'”
Credit reporting agency TransUnion has released its analysis of the US’ auto loan situation and finds that, unsurprisingly, things have deteriorated. “The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) edged upward between the third and fourth quarter of 2008 from 0.80 percent to 0.86 percent. Year-over-year the delinquency rate increased 8.86 percent in the fourth quarter.” That works out to about one out of 116 auto loans being delinquent. “Delinquencies were highest in Mississippi, at 1.62 percent, followed by California, at 1.46 percent, and Louisiana, at 1.37 percent. The states with the lowest auto loan delinquency rates were Alaska, at 0.19 percent, North Dakota, at 0.34 percent and Wyoming, at 0.41 percent.” Oddly enough, these delinquency rates by state only roughly track unemployment rates.
Biologist Jared Diamond once wrote that worst mistake in the history of the human race was adopting agriculture. It allowed a greater population compared to hunter-gatherers, but at the expense of increased vulnerability to disease, pests and warfare. Diamond underestimated humanity’s capacity for blunder, for an even bigger mistake was tying our transportation system to petroleum.
Regular readers of this site know that I’m math challenged. To paraphrase Blanche Dubois (tragic heroine, not TV psychic), I have always depended on the calculations of strangers. Which is one reason I NEVER sign ANYTHING at a dealership without having my good friend Steven Lang give it the once over. Of course, that’s looking at the car sales paperwork from the customer side. Pity the poor Chevrolet dealer. Given the farrago of sales incentives, discounts, cash-back deals, financing offers, etc. how do they set a price? Seriously. Even a dealer who wants to give his customer the best possible deal has the devil’s own time establishing what that actually means. Check out this Top Secret(ish) Powerpointery and tell me that Roger Smith’s no-haggle Saturnalia wasn’t the way forward. Oh well, too late now. And, as we reported last night, there’s more post-bailout deals a brewin’. Good luck with that. [Thanks to you know who you are.]
There are a lot of places you’d expect to find a defense of trickle down economics (the idea that wealthy people create jobs for people further down the food chain). National Public Radio is not one of them. And yet there it is: the publicly-funded [via rich people] bastion of liberalism ran a piece thanking Mr. and Mrs. Moneybags for . . . buying the Tesla Roadster. Otherwise, Tesla wouldn’t have the capital to build cheaper Teslas for the rest of us (providing you exclude their applications for federal funding, paid for by rich people). “Using money from rich customers to fuel mass-market production is a fairly common business model,” NPR’s reporter reports. “Think of the Tesla Roadster as the $2000 cell phone of 1985,” Tesla spinmeister, Diarmuid O’Connell, suggests helpfully. Is it a coincidence that the DeLorean-lauding movie Back to the Future came out that year? Probably. Anyway, “O’Connell says we take for granted our easy access to cheap products, and forget the role of the rich in making it happen. He says we wouldn’t enjoy such low airfares today if it weren’t for the initial wealthy travelers.” Me, I worship first class passengers. Anyway, big news! New car!
The Financial Times carries the crazy news that General Motors is planning to celebrate its next bailout check by throwing more money–-your money—on the hood of its moribund metal. I repeat, GM wants to increase sales and reduce profits by using your taxes to reduce its prices to sell its cars that it wouldn’t be making–-couldn’t be making—if GM didn’t get some $30 billion of your tax money. This would [almost] explain GM’s otherwise inexplicable decision to increase production during the second quarter by 45 percent: they really do believe they’re going to sell a shit load of cars. Which they might if they slash, say, 50 percent off sticker. Hell, why not? It’s not their money. As TTAC, commenter lw points out, “the new owners are not interested in profits.” Wait! Don’t tell me! GM announces it’s “Thank You America” sale.
Inside sources reiterate what we’ve heard before: the mission critical battery for GM’s plug-in Hail Mary hybrid gas electric Volt is not achieving its performance requirements. Not even close. In fact, we’ve heard that the battery is failing to meet ANY of its targets: range, recharge time, battery life expectancy, cold weather performance, cost, nada. That said, this is a rumor [see: question mark above]. Therefore, we invite representatives of GM to contact TTAC (robertfarago1@gmail.com) to spin the story until we pass out from dizziness—I mean, assure GM’s many stakeholders that mass production of the single most important vehicle in their portfolio—if not the last—will begin on the date promised. Wait, what was that date again?
OK, guys, feel free to get it out of your system. No flaming TTAC policy switched off for this post. Yes, I know what you’re thinking: TTAC always finds the dark cloud outside the silver lining. Here we have unexpected good news: in V6 form [not shown, ’cause it’s rental car fodder], the new Camaro gets 29 miles per gallon highway. As The Detroit News giddily points out, “The brand initially estimated its highway mileage at 27 mpg but had provided a conservative estimate, said Troy Clarke, GM’s president of North America. ‘We did error on the side of caution,’ Clarke said. ‘This is at least three miles per gallon (more) than the (Ford) Mustang.'” When did error become a verb? See how that works? If TTAC isn’t criticizing GM’s turnaround plan—such as it isn’t—it’s trying to kill the ailing American automaker via death by a thousand cutting remarks. Well, two things: 1) GM should have never wasted money building this car and 2) Is anyone going to buy a Camaro over a Mustang or Challenger because the Chevy’s V6 gets better mileage? Oh, and 3) there’s something really creepy about this quote: “‘We need to seduce new customers,’ Peper said. ‘We feel (the Camaro) will have a very broad reach.'” Is that a reach around? Hey, it had to be said. OK, flameproof suit on. Gopher it.
If you’re in the automotive business and can understand German, then A M und S (as the cognoscenti know it) is the must-read bi-weekly. Auto Motor & Sport offers features with brilliant technical detail about the snazziest innovations and highest-tech automotive gadgets. For me, it’s always a chore, never a pleasure. The Stuttgart- based periodical is dour and relentlessly auto-centric. If something is pro car industry, then they like it, if not . . . they don’t. Reading AM&S is as about as much fun as a listening to a cocktail party-goer going on about the Swabian way of sweeping sidewalks. Anyway, here’s my beef . . .
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