Bloomberg reports that GM’s scheduled its Chapter 11 filing for Monday, June 1, 2009. And we were wrong about GM’s bankruptcy becoming the world’s largest. Thanks to Ex-CEO’s Rick Wagoner’s decision to throw all of GM’s “non core” assets into the fiery pit of the company’s endless cash burn, the American automaker’s C11 will only rank as number three. “GM’s bankruptcy will be the third-biggest in U.S. history after Lehman Brothers Holdings Inc. and WorldCom Inc., based on GM’s reported global assets of $91 billion and total liabilities of $176.4 billion as of Dec. 31.” Meanwhile, the company has pulled ahead its US white collar workers’ payroll. Apparently (unconfirmed), they’ve already sent out the checks for the week of May 25, 2009. “Other than the date change, all other payroll processes will remain the same in terms of paying employees at work or if they are on layoff,” a leaked memo from Marketing Maven Mark LaNeve reveals. According to the document, “This action is not an indication that GM plans to file for bankruptcy on or about June 1 . . . GM has determined this simple action — moving up the payroll pay date for this month — is the least the company can do to reduce any potential for disruption regardless of what happens.”
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Don’t worry: despite the catchy headline, this isn’t going to become a regular TTAC feature. I think. Anyway, pistonheads reports that this tuned estate’s mill generates 585bhp and 509 lb·ft of torque. But wait! There’s more! “The brakes have been upgraded with six-piston callipers and 390mm drilled discs, and a new differential has been added. But the most obvious changes are to the body, on which Vath has spent considerable time and energy creating a new carbon fibre front lip returning 12kg of downforce, large carbon diffuser and carbon side vents. The whole Vath package is rounded off with 20-inch split rims and new Michelin tyres.” No word on price. But if even if you could afford it, would you?
Actor Mathew Modine votes aye over at HuffPo, calling our four-wheeled friends “the new pariahs.” After informing us that the world’s resources are finite, bicycles rule, and that there’s much to be learned from a baby’s first steps, Modine finally gets around to making his argument.
“We must look at the automobile as a cigarette–a cancer stick–a nail in our collective coffin. The sexy lifestyle that the tobacco industry sold to us contains the same advertising lies and poison which the automobile industry sold and continues to sell to the world. Look at the ads for automobiles and you’ll begin to recognize the lies. You’ll see open roads with happy smiling drivers. Ask yourself, When was the last time I was NOT stuck in traffic?”
Interestingly, the lasting impression from Modine’s rant is that actors’ opinions are like all forms of advertising: facile and misleading.
As GM augers-in for its Chapter 11 face plant, the Presidential Task Force on Autos (PTFOA) has been busy cutting back-room deals with bondholders. Reuters reports that the feds are getting their proverbial ducks in a row for a fast-track fustercluck—sorry, reenergized company. “Under the proposed deal, which is supported by major institutional creditors holding about a fifth of its debt, bondholders representing $27 billion in debt would be offered 10 percent of a reorganized GM — the same stake they had been offered previously. In a sweetener, bondholders would also receive warrants to acquire another 15 percent of the equity in the new company, provided they support a quick Treasury-backed sale process similar to one now being used for rival Chrysler.” GM has released a statement on the new plan, removing any last traces of doubt that it’s headed for the world’s largest bankruptcy proceeding . . .
You may remember Malcolm Bricklin as the man who unleashed the Yugo on an unsuspecting American public. Or as the car guy who brought automotive enthusiasts the mid-engined rust bucket known as the Fiat X1/9 (re-badged Bertone). Or, infinitely more forgivably, you might know Malcolm as the entrepreneur who gave Subaru its start stateside. Moving up the car nerd food chain and deep into the realm of delusion, Bricklin’s name is reasonably synonymous with his eponymous car company, Canadian manufacturer of the ill-fated SV-1. For those of you who have never heard of a Pet Rock (and couldn’t imagine why anyone would want one), Bricklin’s broken ass deal to import Chinese Cherys into The Land of the Free (Perkins, IL excepted) may be the freshest factoid. Moving on to today, Malcolm Bricklin has revealed his desire to end his career in ridicule. Which, of course, starts here . . .
So it’s the evaporation of easy credit that caused carmageddon? Don’t tell that to the Chinese. China became the world’s largest car market (as of the first quarter of 2009) with the bulk of its people paying cash for their cars. Until 2004, getting a loan for a car was more or less unheard of in the Middle Kingdom. Even after 2004, one could only finance a maximum of 80 percent of the price, and it was a straight loan for a maximum term of 5 years. To this day, “residual value” is not part of the Chinese language. Interest rates were high, twice that of a mortgage on a home. About 16 percent of cars sales were on credit after the rules were relaxed in 2004. Did that number improve while the world went on a credit binge? No way: In 2008, the number of cars financed had dwindled to 8 percent. There have been attempts to increase that number as part of the government stimulus package, but to no avail. Consumer credit “traditionally hasn’t been the Chinese way,” says the Wall Street Journal. Quite the opposite:
Vehicle owners could lose their car when passing through Pekin, Illinois, if a passenger happens to be carrying something on the city’s list of contraband. On Tuesday, the Pekin City Council agreed to tinker with its controversial automobile towing ordinance that has boosted the police department’s annual revenue by 29 percent. It has also generated opposition from local residents like Ed Emmons who is circulating a petition calling for reform. “The city saw a new way to make money and ran with the idea,” Emmons wrote in March. “The council should do what the majority of their constituents wish abolish the new vehicle impound ordinance.”
I was sitting around with the COO of one of Atlanta’s largest dealer networks. They now have nine different dealerships. Most of which have historically catered to the upscale and affluent. That is until now. For the first four months of this year, 60 percent of their retail sales profits came from vehicles that sold for $4500 or less. New car. Used car. CPO. Everything. That completely floored me. Then he asked the very same question I’ve heard at least fifty times this year, “How many new cars would it take for us to make as much as we get from these sleds?”
The Truth About Cars has come a long way since it had zero readers and zero page views. In the last however many years, we’ve gradually gathered a group of the autoblogosphere’s best and brightest. It is your patronage and engaged, informed and passionate commentary that has kept us honest, and made this site a success. As we prepare for a seminal moment in both the history of this url and the automotive industry, I’d like to offer you some stats on our current status. Not to toot our own horn; but as a thank you to all our “stakeholders.” The readers, writers, editors, investors and techies dedicated to telling the truth about cars. (Not to mention our advertisers.) Suffice it to say, those of us on this side of the WordPress platform will continue to do our level best to stay true to the TTAC brand: providing no-holds-barred automotive news, rants and reviews. [Tweeting all the way.] At the risk of sounding ghoulish, the best is yet to come.
TTAC commentator jpcavanaugh writes:
My mother is in her mid 70s. Of course, she drives a 2006 Buick LaCrosse with about 10k miles. It is the first GM car in our family since the 1970s. She planned to remain a loyal Ford customer for life after 20 happy years with a pair of Crown Vics, but she won the Buick in GM’s last Hot Button contest.
I recently learned of this stuff called DexCool that is the factory-fill radiator coolant. From what I have read, I do not much care for this stuff. If it were my car, I would drive quickly to my independent mechanic and flush the system with the old-fashioned green stuff. So what do I tell mom to do? The choices, as I see them, are (in order from my least to most favorite ideas):
Parts maker Visteon’s US operations have filed for bankruptcy. No surprise there. In the nine years since FoMoCo spun off its vehicle climate systems, interior parts, lighting and electronic systems maker, Visteon has never posted an annual profit. After losing $663 million last year, Visteon warned a few weeks ago that they may have to file if the creditors would not agree to concessions. Nobody conceded. Visteon filed along with some of its US subsidiaries in the US bankruptcy court in Delaware. None of its overseas subsidiaries or joint ventures outside the US are part of the filing. Not that they need any help with it: In March Visteon’s main UK subsidiary filed for reorganization.
In its C11 filing, Visteon listed assets of $4.58 billion against debts of $5.3 billion. This as April sales to Ford, Visteon’s biggest customer, fell 40 percent. Automotive News [sub] reports that the company’s creators will be there for their progeny. “Visteon said Ford has committed to ensure long-term continuity of supply and to support debtor-in-possession (DIP) financing for the restructuring efforts. Ford is still Visteon’s biggest customer and accounted for about 31 percent of its $1.35 billion of sales last quarter.” The question is, can Ford afford another mouth to feed? And with all those bailout billions flowing towards all the other local suppliers, can Ford resist dipping-in for Visteon? If Visteon suckles, does that taint Ford’s non-bailout (Ford family control related) political purity?
It was a long meeting that lasted into the wee hours of the Thursday morning. It ended with the German government throwing insults at the US government. Everybody went home or to their presidential suites with a headache and no deal. If there is no further movement, Opel will go down the drain with GM by Friday.
Before the meeting, there were rumblings that wrinkles had to be ironed out in a trustee plan that was supposed to be the basis for bridge financing provided by the German government. The money was supposed to keep the lights on in Rüsselsheim, while the proper groom for Opel is being groomed.
Mice and men impacted with US government greed. Or lack of their usual largess.
The Associated Press called it: GM is set to enter popular parlance as “Government Motors.” When the automaker files for Chapter 11, the nickname will stick, as the debate over GM’s future centers on whether or not the United States government should own a commercial enterprise. To which the only possible answer is no. It was no back when President Bush over-ruled Congress and authorized the first multi-billion dollar “loan.” It’s no now, as the feds prepare to stump-up another $20 billion dollars to keep GM in business. There are lots of reasons why “new” GM is a bad idea. But here’s the most important impediment: Government Motors doesn’t have the vehicles it needs to survive.
The Detroit Bureau reports today that in a bankruptcy court document, CEO Robert Nardelli stated that Chrysler LLC offered for sale the Detroit Viper factory (and presumably the tooling and intellectual property to go along with it) for a mere $10 million dollars. The factory has been up for sale since this past August, but sadly there was “no purchaser interest.” 2008 Dodge Viper sales were 1,172, up 169 percent over the prior year. According to another bankruptcy filing, the operation was previously been slightly profitable, with a net $16 million in 2008 before taxes, interest, depreciation, and amortization. With those kinds of numbers a buyer would need to spend several times the purchase price just to keep the assembly line humming. We all know how challenging it is these days for a sports car manufacturer to stay solvent, SUVs or not.
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