Now that April Fool’s Day is finally done, I can report with confidence that GM CEO Fritz Henderson did, in fact, say the following [via Daniel Howes at The Detroit News]: “People ask, ‘What changes are you going to make in management, in the organization,'” he says. “None. That would be a waste of time. We don’t have time. There are mechanisms to get this done. You just have to drive them hard.” And put them away wet, I suppose. Only Danny isn’t buying it, ’cause there’s that pesky little matter of all the other GM “stakeholders.” “The constituencies Henderson needs to drive hardest have reasons to balk. United Auto Workers leaders, strong backers of the Obama administration, figure their allies will protect them. Bondholders operating in Bailout Nation figure the feds are more likely to help them (and protect labor) than force GM into bankruptcy and risk the collateral damage to the shaky economy.” And so the countdown to GM’s C11 continues, steady-as-she-goes-down style, with the company’s caretaker taking care . . . of his own.
One of our moles has emailed ALL the dealer paperwork on GM’s Total Confidence program. Blogger, editorialist and aspiring car reviewer (knees must) that I am, I shall leave it to you, our Best and Brightest, to dissect the offer and how GM dealers might sell the plan (or simply give up and sign the opt-out sheet). Michael Karesh, former TTAC partner and ongoing TrueDelta operator, has done some stellar work uncovering the flaws in the residual guarantee part of the Total Confidence program. If you want the inside skinny via Michael’s Delta force, click here. If you want the read the real deal, jump.
Now you may think that Tesla Motors, makers of the $109K+ lithium-ion powered Roadster, are acting in good faith re: taking deposits for their recently revealed Model S sedan. If so, GreenTech Media’s report that the Musk-scented company has secured 520 advance orders for the vehicle is a good thing: a sign of early adopters’ faith in Tesla’s ability to design, build and, eventually, sell the all-electric foor-door. Leaving aside Tesla’s past history of missing deadlines and changing announced specifications. With eyes wide shut, the fact that Tesla has collected $5K per car from 520 prospective customers, generating some $2.6M, is a good thing. Nothing wrong with raising a little—and in the car business $2.6 million is microscopic—working capital. The fact that Tesla’s first model, the Roadster, isn’t profitable, and that the new money may be helping to prop-up THAT side of the business, is neither here nor there nor the subject of a court case. So . . . good news! There may be more money on Tesla’s table!
Now that President Obama’s played a short clip of “Dr. Strangelove; or How I Learned to Stop Worrying and Love a GM Chapter 11” at his auto-related press conference, GM’s remaining stockholders have cottoned on to the inevitability of a GM Chapter 11. As TTAC’s Ken Elias predicted many moons ago, it’s only a question of time before the New York Stock Exchange de-lists GM. When Wagoner resigned and Obama opined, the zombie automaker’s share price began its final glide path. The stock plunged 25 percent on Monday and 28 percent on Tuesday. Yesterday, the price hit $1.58—before rebounding to $1.93, off 1 cent for the session. No surprise there. When the feds pull the plug, the stock will be worth precisely $0. The LA Times reveals the reason GM’s stocks are still publicly traded, by anyone. “Long-time GM shareholders may well figure there’s no point in selling now. If the stock becomes worthless, they can write it off for tax purposes at that point. Until then, it’s just a lottery ticket with extremely low odds of a payoff.”
The morning after U.S. new cars sales fell prey to the ides of March, ToMoCo’s MD sent General Motors a get well card. Yasuhiko Ichihashi told the AP that “Toyota was only hoping for an overall recovery for the U.S. auto industry, including GM.” Mr. Rising Tide Lifts All Boats (a.k.a. We’re All In This Together-san) said what’s bad for the U.S. auto business is bad for Toyota, as they share parts-makers. (A popular meme amongst the Bailout Buffet crowd.) What’s more, Ichihashi reckons GM’s collapse would depress “consumer sentiment.” GM’s filed for C11, I’m too bummed to buy a Toyota? Huh. Not mentioned: GM sets the floor for U.S. car prices and quality. If The General takes a powder, Toyota’s prices will fall, profits will sink and quality would have to rise. Honda had nothing to say about yesterday’s bloodletting, but previously, on “who wants to enlarge its U.S. market share,” HoMoCo president Takeo Fukui noted, “[it] has been a rare exception among Japanese auto executives in acknowledging publicly that weaker competition could in the long run present an advantage for Honda.” Ya think?
If this is a dead cat bounce, then it is a dead cat on steroids: German new car registrations jumped an unbelievable 40 percent in March. This according to data released by the Verband der Internationalen Kraftfahrzeughersteller (VDIK). Taking the Easter holidays in to account, which were in March in 2008, the gain still is a very impressive 20 percent, Automobilwoche [sub] writes. In the same month, sales in the USA continued to crater. The German sales blitzkrieg comes on the heels of a 22 percent jump in February.
The main reason for the incredible increase is the cash-4-clunkers Abwrackprämie. Buyers of a new car receive €2.5K if they retire their old one. Sellers of small cars profited most. French and Italian cars dominate this segment. In Germany, volume manufacturers Volkswagen, Ford, and even Opel profited. Even makers of luxury wheels see some improvement: Porsche reports an increase of 15 percent. Even BMW sees “first signs of an improvement.”
I’m down with Eddie on this one: how can you tell the difference between April Fool’s Day and the normal cavalcade of pap? The above bon mots arrive courtesy Jim Press, via theDetroit Free Press. The paper reassures its remaining readers with the news (well it’s news to me) that the shockingly bad March sales numbers—down 36.8 percent overall—are actually good. “Industrywide auto sales are usually about 20% higher in March than in February, largely because March is a longer month and people begin to buy more cars as the snow melts and spring arrives. But this year, industry-wide auto sales increased 24.5% from February to March, according to Autodata Corp. of Woodcliff Lake, N.J.” That’s what I call a stretch. Reuters journeys all the way to Italy to find its silver lining, revealing that the government’s market distortion has created a 0.24 percent rise in new car registrations. And The Gray Lady feels compelled to dignify the Chrysler–Fiat link with pre-pack PR. “‘We’re not doing this because we’re good Samaritans,’ Mr. Marchionne told a New York Times reporter in an interview this year.” Sometimes old news is the only good news, I guess.
Seriously, who can tell anymore? Is there a sad robot somewhere that is programmed to lavish praise on used Sebrings? Surely, in this economy, Tacoma Dodge could find a human being desperate enough for cash to talk up a nice silver ’bring for the camera. Then again, even the robot sounds like it deals with a lot of professional self-loathing. Moving on, GMAC doesn’t really want to spend $5B of its $6B bailout on “subprime auto lending,” does it? That’s got to be a joke, right? And is Carl Levin for real when he tells the DetN that the mere discussion of Chapter 11 for Chrysler and GM is “self-defeating”? Or is the Senator from Michigan in posession of a sharper sense of humor than he is typically given credit for? Now I’m seeing that Automotive News [sub] is running a headline that reads “Wagoner Gets Pension, But That Is All.” Because he somehow deserved more than $20 million? What a bunch of kidders. Yikes! What’s gotten into people? Did the CAW just really tell GM to go NSFW itself? Is Obama’s new Director of Recovery for Auto Communities and Workers’ actually comfortable with openly telling Michigan that he will be a devoted stimulus wetnurse to that great state? Humor just doesn’t need this kind of competition from reality.
The New York Times is reporting a deal struck by the Treasury Department and Cerberus Capital Management which will lead to Chrysler’s second failed marriage in three years. Cerberus (and the co-investors it convinced to come along for the wild ride) will give up their 80.1 percent stake in the company. Anyone who thought Rick Wagoner got the bum’s rush at GM can now say, Wow. Obama’s kicking out the whole freakin’ parent company. Cerberus stands to lose billions. Just how many is tough to glean at the moment. Plans to shore up GMAC and Chrysler Financial—Cerberus’ other Detroit darlings—might help them turn some kind of profit in some kind of future. The dog would like to merge the two lenders into a new hybrid financial institution. The feds aren’t all that thrilled with the idea, but who knows. The word “hybrid” usually gets their attention.
I know, huh? And there I was thinking that easy credit and bad loans were a main contributory factor to our current economic doldrums (aren’t euphemisms grand?). But after the Fed changed its rules at the eleventh hour (behind closed doors) so that GMAC could avoid bankruptcy and become (of all things) a bank, after Uncle Sam pumped $6B worth of taxpayers’ money into the privately-held company’s coffers ($1B of which went straight to GM), the failed “bank” has reversed its reversal of its lax lending practices and opened the taps. “We want to do our part to support both the U.S. auto industry and individuals in the market for a car or truck,” said GMAC President Bill Muir, in a prepared statement. “GMAC now finances a broad spectrum of auto buyers, similar to traditional levels.”
Why, that news is so good that the Freep is happy to throw ChryCo the irony-free headline. April Fools! Sales are actually down 39 percent compared to March 2008. It’s just that Chrysler hasn’t topped 100k monthly sales since September. Does this look like a turnaround to anyone? Bueller? Jim Press? “The market is starting to show small signs of life which need to be nourished like seedlings.” What a touching image. Tiny seedlings struggling to life under a pile of government cash. Please, describe these plucky little plants for us, Mr. Press. “The fact that we exceeded 100,000 units for the first time since last fall is encouraging, and evidence that our improved quality, improved mileage as well as value represented in Employee Pricing Plus Plus are just what the doctor ordered for recession-wary customers who are reluctant to make long-term purchases. It’s too early to see a trend, but spring shows signs of hope.” If showing signs of hope is your job description, perhaps. But how did the federal proclamation (PDF) of “the poor quality of [Chrysler’s] existing product portfolio” affect the sales seedlings?
And once again, the big T (via PRNewswire) proves to not be invulnerable to the weak sales environment. Toyota division sales were down an even 36 percent, but Lexus swooned slightly more, shedding 40 percent of its sales compared to last March. Scion models dropped between 50 and 60 percent, while Corolla proved more resilient than Honda’s Civic, dropping only 7 percent. Similarly, RAV4 and Lexus RX were off only 4.5 percent and 17 percent respectively, compared to 40-75 percent drops for nearly every other Toyota truck and SUV. Sequoia was also a surprising “could be worse” example, with sales staying over 2k monthly sales, falling only 20 percent compared to last March. Still, with sales like this it comes as no surprise that Toyota is dropping its second-half dividend.
GM’s March sales (PDF chart) slid 45 percent compared to last March. As usual, the official press release is crawling with standard-issue PR equivocation. 156,380 deliveries in March? Why in a total contextual vaccuum, that sounds downright mediocre! Compared with February’s pity party, “7 of 8 GM brands saw total sales increases with total volume up 23 percent.” And Mark “Rough Chuckles” LaNeve hears a slow, government-backed turnaround coming. “We had a strong close at the end of the month as customers responded to strong incentives, President Obama’s positive statements about GM, and the government backing domestic warranties,” soliloquizes GM’s S&M masochist-in-chief.
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