Ah, Delphi. I remember predicting—what, two years ago?—that parts maker Delphi’s collapse would drag GM into bankruptcy. Well, just as GM is falling into C11 on its own accord (so to speak), it seems the ghost of subdivisions past are about to . . . drag GM into bankruptcy. The Detroit News reports that GM’s sent up an emergency flare. “In light of adverse developments in the industry, at GM and at Delphi, GM has been in negotiations with Delphi and its lenders to arrive at solutions that would ensure GM’s source of supply under fair and reasonable terms,” GM said in a statement today. “While GM has proposed a potential solution that would allow for the successful and rapid resolution of Delphi’s bankruptcy case, its lenders have rejected this proposal.”

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Unnamed sources tell the New York Times that the Treasury has agreed “in principle” to protect UAW pensions and retiree health care when Chrysler files for C11 “as soon as next week.” Protect with what? Fifty percent new Chrysler stock and 50 percent new Chrysler profits. Or, uh, more Treasury money. Fiat, say the sources, will “complete its alliance” with (i.e., pick the carcass of) Chrysler during bankruptcy. The only loose thread for the sources who “were not authorized to discuss the case,” is the bondholder brigade which recently turned down the Treasury’s haircut offer. Which leads one to believe that this revelation comes from someone negotiating opposite Chrysler’s bondholders (the Treasury) as a none-to-subtle bargaining gambit. Jump, or we file.

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Britain’s new budget, recently presented by Minister of The Exchequer Alistair Darling, contains a vehicle scrappage incentive that makes Old Blighty the final major European economy to jump on the alleged “green stimulus” bandwagon. 13 other European nations, including France, Germany, Italy, Spain and Poland have introduced similar measures, which provide government incentives to new car buyers who scrap an older vehicle. But will Britain’s new program (which offers up to $2,900 in incentives) have the same salutary effects on new car sales as France (March sales up 8 percent) and Germany’s (March new registrations up 40 percent)? Closer to home, how will the solidified Euro-consensus on scrappage schemes affect the chances of a similar program in the US? Although the schemes have already been hailed as the saviour of European new car-sales, such plans don’t always translate well across different markets. Under a critical lense, issues with the latest British plan indicate a number of problems in bringing such a program stateside.

And the deals, they keep on coming. Bloomberg reports that the Porsche and Piech families “plan to sell their main car assets to Volkswagen AG under a plan that would tighten Porsche SE’s grip on Europe’s biggest automaker.” Hold it right there: Haven’t they just BOUGHT Volkswagen? Are we confused yet? This is how it works:

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One of our Best and Brightest sent me a link (farago@ttac.com) to an article in The Charlotte Observer about GMAC’s move away from the Bank of America (BofA) and into the credit card business. As one of the few media commentators who knows enough not to report stories about which I don’t have a fucking clue, I pinged our man William C. Montgomery for some analysis. In addition to reviewing cars for TTAC, Bill works for a large credit card company. He knows his onions. While his reply reveals that there’s nothing untoward here, and TTAC’s core concern is GMAC’s car loan biz, I thought it sufficiently interesting to share with you, our highly informed (now more so) audience. Forgive the digression.

Let me tell you the state of the credit card industry right now. We expect the default rate this year to be about 15% (up from about 6% during normal years). This means that for every dollar we lend, only eight-five cents will get paid back. Plus, it costs us about another 6% to borrow the money, print and mail statements, maintain customer service call centers, etc. In other words, we’d need to be earning 21% in finance charges just to break even. On top of this, new credit card lending rules make it much harder to raise interest rates. In other words, no bank want’s to be in the credit card business right now. Just about every bank I know of is looking to unload their credit card receivables so that they can lesson their exposure to the sky high credit losses we are experiencing in the current economy.

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The Globe and Mail reports that the Canadian government is negotiating (with whom?) to provide $6 billion in post-bankruptcy financing to Chrysler and GM. It gets worse/better. The six bil represents a fixed percentage of a larger post-bankruptcy fund, currently under construction over at the US Treasury. That would be 15 percent. Which puts the size of the US fund at $40 billion. A pittance, apparently. “The companies had initially proposed that governments lend or guarantee a staggering $125 billion in bridge or long-term loans, but the number was whittled down over months of difficult negotiations led largely by Treasury officials in Washington. In recent weeks, sources said, talks shifted to a plan for the governments to provide financing and guarantees for debtor-in-possession, or DIP, loans. These are used for day-to-day operations while companies restructure their debt under the protection of court supervision.”

Michael K writes:

I have 2008 Corolla with manual shifter. There is almost no engine braking power when I downshift. I know it’s not a malfunction (it’s how it’s designed), but I would like to understand why.

For example, when I’m approaching a red light and I downshift, the car barely slows down. Even if I downshift to even a lower gear to keep the RPMs high, there is still very little braking power provided by the engine. Or, going downhill and downshifting to keep the car’s speed stable without touching the brakes works only on small hills. On a steeper downhill the car continues accelerating. Of course, it’s not as bad as if the car was in neutral, but still…

Before this Corolla I had a 97 Suzuki Swift with manual. One of the cheapest cars on the road, but the braking power of the engine was good.

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As GM’s journey to bankruptcy nears its conclusion, the punditocracy is busy contemplating the company’s afterlife. The current line of thinking: the feds will cleave General Motors in two. Bad GM gets Buick, GMC, HUMMER, Pontiac, Saab and Saturn. Good GM “buys” Chevrolet and Cadillac. It emerges from Chapter 11 unencumbered by outdated production facilities, warring management, befuddled marketing, over-priced labor, restrictive union work rules, astronomical pensions and onerous health care obligations. Chevillac rises from the ashes to steal share from both mainstream and luxury brands, repay its debts and thumb its nose at Bailout Nation’s critics. But here’s the thing: good GM is “saving” the wrong brands.

Fiat wants to get its hands on Opel, and the Opel workers don’t like it at all. Opel workers council chief Klaus Franz confirmed today that Fiat is in intensive negotiations to take over Opel. A memorandum of understanding may be signed as early as this coming Tuesday, reports Automobilwoche [sub]. Franz is very much against it:
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Just for bowel movements and mirth (PC version), I like to visit eBay’s “No Reserve” section. Where is it? Well, there actually isn’t one, but if you type in a given car or model year and then type “No Reserve,” “NR” or “N/R,” you can actually find some very interesting deals. Clicking on Completed Items will show you the market. The many (Police Interceptors), the few (Oldsmobiles), or the one (Grand Marquis). The ones with the green Sold marks and multiple bids are the ones worth a look and, of course, the deals are all over the map. But a lot of the offerings inevitably hit right around the Average Manheim Market Value. Take for instance this 2009 Lincoln Town Car with 3400 miles.

Huh? Is there anyone inside or outside of GM who seriously believes that all hell will break loose on or around June first, the federal deadline for the zombie automaker’s “restructuring”? At this point, GM planning for a summer production shutdown is roughly akin to a customer readying a garage charge point for his/her plug-in hybrid gas – electric Chevy Volt. This is the company that’s expected to kill somewhere between two and six brands. And yet, there it is, via The Detroit News: “General Motors Corp. is expected to announce Friday it’s cutting about 170,000 vehicles from its planned production this year, closing factories for as long as nine weeks this summer as the automaker works to dramatically toughen its restructuring plan before a June 1 government deadline.” Shouldn’t that be “melodramatically toughen”? If you want real drama, wait ’til the Presidential Task Force on Automobiles pulls the plug (or doubles down) on Chrysler. Then we’ll see whether or not an ocean of blood on the carpet is enough to convince GM’s stakeholders to let Uncle Sam add their scalp to his collection. I mean, take a haircut.

Now, is that a 30-mile range with the iPod plugged in?

Thanks to kamikaze2b for the link

It is often said that a man’s home is his castle. The Supreme Court has upheld this rule many times. Police may only search upon probable cause or a warrant from a Judge. When, however, can the police search your car incident to a traffic violation? Just about always, claimed the police. Not so fast, rules the Supreme Court. In a close decision, the nation’s highest court reined back the ability of police to make warrantless searches in auto stop cases. Make no mistake, you are not “home” when you are in your car, no matter how much time you spend there or what you do there. Indeed, you have a greater right to privacy walking down a street.

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Automotive News [AN, sub] reports that GM won’t even try to make a $1b debt payment due on June 1st. The non-move virtually guarantees that the firm will enter bankruptcy protection. GM CFO Ray Young says the General is “hoping” for a successful debt-for-equity exchange with its bondholders. If that effort somehow fails (as every other GM debt-for-equity swap has so far), Young says GM will enter bankruptcy protection to reduce its unsecured debt load. My, we’ve come a long way from the Voldemort days, no? Meanwhile, AN also reveals that an Italian union official claims the Fiat-Chrysler deal is “90 percent complete.” In fact (or theory), it could be signed as soon as this afternoon—an assertion that Fiat has flatly denied.

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