Remember the whole “we do not want to run the automakers” routine? Cue up the laugh track. President Obama’s PTFOA has intervened to halve Chrysler’s ad budget during its taxpayer-funded bankruptcy, reports Automotive News [sub]. Chrysler had requested $134 million for advertising during its alleged nine-week bankruptcy. That request was halved by the PTFOA because that body “believed that it was not feasible to not spend anything on marketing and advertising for fear of eroding the image of the brand,” says Chrysler Chapter 11 consultant, Robert Manzo, in court documents. We knew Chrysler’s DIP budget was being drawn up “in consultation with the Treasury,” but this is the first glimpse of a struggle between Chrysler management and its government paymasters.
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Back in the day, I recommended Chapter 11 for GM and Chrysler. With court protection, the American automakers could ditch non-competitive union contracts, pare bloated dealer networks, terminate extraneous products and sell-off non-core brands. In ’05, consumer confidence was strong. All three automakers had plenty of cash and assets. If they had filed then, they could have reinvented themselves and. . . Forget it. I was wrong. These automakers are so poorly run that an earlier bankruptcy would only have prolonged the misery. How could I think otherwise when Chrysler and GM’s idea of a “surgical” bankruptcy is to swing an axe at the patient’s diseased limbs, laugh at their next of kin, storm out of the operating theater, hand the case over to another doctor and repair to Aruba?
GM’s CEO took a half hour out of his panic-packed schedule to chat with the GM Fastlane-reading public. He discussed CAFE, the Corvette, salaried benefits and more, via CoverItLive. There’s not exactly a wealth of new information, but it’s an interesting insight into the mind and typing skills of GM’s top dog. It also shows the lengths to which GM is going to communicate this week, even if it has nothing specific to announce. Speaking of which, The Detroit News is announcing the kickoff of the “Keep It Made In America” tour, which began at American Axle’s Hamtramack plant today. The Rev. Jesse Jackson, MI Senator Debbie Stabenow, and others reportedly exhorted crowds of UAW workers with chants of “Reinvest in our land” and “Keep hope alive.” Local mayors and union officials provided the requisite pro-union, pro-Detroit quotes, but the effort at feel-good flag-waving rings somewhat hollow, considering the antagonistic relationship that is developing between GM and the UAW as The General unwinds towards bankruptcy.
The $5 billion bailout of Detroit’s suppliers has “flopped” according to Automotive News [sub]. Even though the bailout funds were made available in mid-March, money has yet to be disbursed even to firms which have been blessed with OEM approval. Problems seem to be traceable back to the decision to use Citigroup to manage the funds. “All our paperwork has been in for weeks,” says one supplier CEO. “But Citibank does not return phone calls or e-mails.” With reports of Citi being “overwhelmed” by supplier applications (aka anyone owed money by GM or Chrysler) and rampant government red tape, what do Citi, GM, Chrysler and the Treasury say about the unfolding boondoggle? Nada. “A Treasury spokeswoman said the government has no information on how the car companies have disbursed the money or to whom. She referred all questions to GM and Chrysler.”
The magic and deadly mystery of the Porsche 911 is simply this: take a wooden baseball bat, preferably one of those thirty-five-ounce Louisville Sluggers like McGwire might have swung, hold your palm out, place the thin end of the bat there, and balance it vertically by moving your hand back and forth. See how you have to move your hand quite a bit, at unpredictable and rapid intervals, to keep the heavy end from falling? The heavy end of the bat is the 911’s engine. The thin end, where you are working, is the steering. Got it? Now run.
General Motors is is “open to considering moving its headquarters from Detroit, selling off U.S. plants and even renegotiating parts of its restructuring plan with its major union,” CEO Fritz Henderson told Reuters today in a conference call. The possible relocation and renegotiations are part of a last-ditch effort to restructure GM outside of bankruptcy, a move that Henderson admits is likely to fail. “It’s more probable that we would need to accomplish our goals in a bankruptcy,” says Henderson. “There’s still a chance for it to be done outside a court proceeding.”
President Bush’s imaginatively-named “Freedom Fuel Initiative” has been slashed by President Obama, cutting $100 million per year from hydrogen research funding according to DailyTech. Government spending on hydrogen fuel cell technology will drop from about $169 million per year to about $69 million, as a natural and healthy skepticism grows about hydrogen’s short-term potential. “The probability of deploying hydrogen fuel-cell vehicles in the next 10 to 20 years is low,” say Department of Energy spokesfolks, taking an early lead for understatement of the week.
Some vehicles are doomed from the start. Take the Acura RDX: a not-inexpensive CUV with aesthetically challenging looks nestling amongst Honda’s “Huh?” brand. The RDX seems carefully designed to appeal to the few, the proud, the pistonheads. You know: enthusiasts who absolutely must have a willing engine, a chassis that’s a suitable dance partner and the elevated driving position of SUV—all at a price that’s significantly higher than more sensible (if dull) alternatives made by brands whose street cred didn’t die with the Integra. You see how that doesn’t work?
nweaver, longtime TTAC commentator, writes:
Assuming GM does go Chapter 11 and kills off Saturn, what happens to part support? I doubt it matters for my case, as a ’95 is old enough and common enough that its pretty much junkyard/recycled/remanufactured for anything major at this point anyway, but what happens to those with newer models?
The Alabama state legislature this week sent a bill authorizing Montgomery’s use of red light cameras to Governor Bob Riley (R) for his signature. The city has been using automated ticketing machines since May 2008, but the local measure authored by state Senator Larry Dixon (R-Montgomery) and state Representative David Grimes (R-Montgomery) is designed to retroactively protect the city from any lawsuit challenging the legality of the first $1 million worth of tickets already issued without authorization. “The city, by Ordinance No. 10-2007, hereby validated ab initio, adopted the procedures authorized by this act,” Senate Bill 59 declares.
The Texas House of Representatives voted on Friday to bring an end to the use of red light cameras in the state. During consideration of a bill to reauthorize the Texas Department of Transportation (TxDOT), members debated over 180 amendments to the underlying legislation. Amendment Number 102 added a sunset clause to state approval for the use of automated ticketing machines. This provision passed by a vote of 107-36 and the underlying TxDOT reauthorization measure was adopted on a voice vote.
TheDetroitBureau.com (TDB) reports that GM’s lame duck Car Czar is a Chrysler creditor. The size and nature of Bob Lutz’ claim against the other zombie automaker is not yet known. But I reckon the ex-ChryCo exec’s pensions and bennies got sucked into the black hole. (Hey, I did warn him.) In fact, Lutz is going for a C11 triple: Exide, Chrysler and GM. While we await the official Chrysler court docs, the list of Auburn Hills’ other creditors is long and revealing. Number one: you, the taxypayer, dwarfing the second largest creditor by some $9.42 billion. So large, in fact, it’s not even on the list. Which leaves chassis maker Ohio Module Mfg. Co. as the largest non-governmental creditor. Ad agency BBDO Detroit Incorporated clocks in at number two most owed, at $58,055,133.44. As TDB observes, “Who would have thunk it! Well maybe it’s like American beer, the advertising and promotion cost more that the production of the stuff inside the can. Still, this is more money owed for advertising than steel, since U.S. Steel Corporation is owed only $16,182,772, as of April 30.” Looks like the spinmeisters got spun.
We now have two hybrids on our lot. It won’t last and, trust me, I know that. But I’ve always tried to buy low and sell high when it comes to cars, and non-Prius hybrids are actually reasonable these days. The car in question was a 2001 Honda Insight that was offered by a domestic dealership that had little experience with the product. The check engine light was on (recall related), the A/C was blaring ($35 of tint solved it), and the retail price was a bit prodigious ($6988 with 145k miles). They had a sealed bid sale and I got it for $4001.
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