A member of our Best and Brightest is smarting from a recent ownership experience:
I am a Detroit born, car loving, long time fan of your site, so when I had this experience, I thought I would share it with you. A year ago I was the proud recipient of the second Smart car delivered by Smartcenter of Beverly Hills. The car performed flawlessly—until last Tuesday. I was on my way to the airport and stopped for gas. When I shifted the selector into gear, the car did not really care. It just sat there and the engine revved. I tried to push it, and the transmission was locked. I called my dealer because I knew there was roadside service, but I did not know the number. The receptionist picked up the phone and I asked for roadside assistance and she patched me through to a number. From the way they picked up on the other end, I did not think it was the right number.
Bloomberg reports that General Motors drew $2 billion more than previously announced, feeding the cash burn raging amongst the company’s embers (or something like that). May’s federal payout brings The General’s monthly total to $4 billion. Not including the new $7.5 billion payment heading to its former captive still current lender GMAC. Which is on top of the $5 billion already propping-up the eleventh hour bank. And the $1 billion given to GM earmarked GMAC. Anyway, re: today’s $2 billion overdraft, GM is characteristically contrite. “Today’s loan draw is higher than the amount forecasted in the April 27, 2009 S-4 Filing for the Bond Exchange Offer and reflects updated timing of when certain expenses would be incurred. Total U.S. Treasury funding received by GM to date is $19.4 billion.”
GM’s troubles are hitting home. ALL its homes. Reuters reports that GM’s Korean division Daewoo—provider of the execrable vehicle known in the US as the Chevrolet Aveo—is getting the snot kicked out of it in its home market. “GM Daewoo is struggling. It is asking for additional loans from banks, including state-run Korea Development Bank, after using up $2 billion in credit lines.” Oops. Hey, did you know that Daewoo now accounts for a quarter of ALL of GM’s [soon to be formerly] worldwide automotive production? That’s a salient fact because we now learn that the Aveo’s replacement, codenamed T300 and scheduled for April 2010, has been back burnered. To January 2011. In theory. In practice, any such delay is most definitely not a good thing, as its fellow Korean, Hyundai, is planning to cap Daewoo’s ass [paraphrasing]. And anyone else at the bottom of the ladder, anywhere in the world, including China and the US. So can the Chevy Cruze fill The General’s small car gap? Place your bets here. Oh wait, you already have [via Uncle Sam].
According to the Detroit Free Press, opposition to the Presidential-Task-Force-on-Automobiles-administered Motown meltdown mishegos is “growing.” Who’d a thunk it? But wait! “They” are not voters fed up with dozens of bailout billions shoveled down a Chrysler and GM-shaped rathole. Nor are “they” free marketeers objecting to a sitting president telling a CEO to take a hike. Nope, the Freep is referring to Congress critters representing the Chrysler and GM dealers terminated with extreme prejudice. “Dealers were the focal point of a hearing by the House Judiciary Committee on Thursday under Chairman John Conyers, D-Mich., where industry critic Ralph Nader said the rescue plans were ‘a conclusive death star to tens of thousands of jobs.'” When asked by Rep. Lamar Smith, R-Texas, whether Obama’s auto task force was “unsafe at any speed,” Nader, author of a 1960s exposé by the same moniker on the dangers of the Chevy Corvair, replied: “Can we please stick with my metaphor?” No, seriously, he said, “Yes—worse than that.” Which is almost as nonsensical. [NB: Is there such a thing as a non-conclusive Death Star?] Anyway, here’s what makes this particular special interest group so special . . .
In honor of the global meltdown’s effect on used car prices, we’re initiating a new feature: YSE (Your Shitty Economy) Car of the Week. We begin with the Jaguar XJR. I mean, who would pay upwards of $80 grand for a luxo sedan that has brought up the rear of every comparo test it has ever been in? The main reason: it lacks key technological features. But now, when Mercedes S-class and BMW 7-Series owners’ credit cards are smoking from repairs to radar cruise control and cooled seats, the Jag XJR is sitting pretty. I know: Jag’s are hardly what you’d call exempt from repair and maintenance “issues.” Still, at $25,000, with low miles and driven lightly, you can afford to put aside a chunk of change to cover those running costs. Or, come to think of it, not.
My friend from Europe is visiting the USA next summer. We’re planning a three week road trip around the American Southwest. He’s a car fan (Alfa Romeo variety), and wants to tour around in something typically American with a V-8 and a drop top. I normally drive a Miata, but that’s too small for all our stuff, plus no V-8 (at least not yet).
I figure I can buy a previous generation (2004 and older) Mustang GT convertible, drive it for the summer, and then sell it for about the cost of a rental. My question: what suspension modifications do I need to make beyond new tires and shocks to make the Mustang handle reasonably well (not Miata-like but close) without resulting in a ride that beats us up on long trips? I’m thinking Panhard Rod, but am open to any ideas that cost less than around $1,000 in parts (I can do the install myself for anything short of major surgery).
Please note: this has to be an American V-8 convertible – don’t bother suggesting alternative cars that don’t fit that criteria.
End of Days folks, when the president of the United States puts taxpayer billions behind a “merger of equals” between Chrysler and Fiat. The latest weirdness: The Detroit News reports that “Japanese automaker Mitsubishi Motors Corp. is in talks to supply vehicles to Saturn dealers if the brand and dealer network is sold this year.” Would that be the same Mitsubishi who’s ass has been repeatedly kicked by the U.S. market, to the point where most industry analysts figured it would give up and go home? The same company that built a thousand cars in the USA so far this year? The one that sold 55 percent fewer cars last month than the same month last year (3919 vs. 8878)? The same. Or not. “A Mitsubishi spokesman said he was unaware of the company’s interest in providing vehicles to Saturn’s dealer network.” Yes, well, never mind all that. There’s another player sniffing around, and that’s where the real action is . . .
It was just another day at the “Tail Of The Dragon” for the group of experienced sportbikers clustering around the Robbinsville, NC gas station. Fresh from multiple high-speed runs down the famed road, they were reliving their victories when a long-haired old man in some girly convertible asked them to “show him the fast way through.”
Have a polluting vehicle? Then give Beijing a wide berth. You are no longer welcome here. Starting in June, any vehicles driving into China’s capital must carry an “Environmentally Friendly” label issued by their local authorities, Gasgoo reports. Environmental oinkers will be banned from driving inside the 5th Ring Road of the capital. From October 1, vehicles not meeting the standard can’t enter the capital’s areas inside the 6th Ring Road—a monster more than 100 miles long surrounding Beijing well outside the city proper. Part of a far-reaching plan to clear the air in China’s capital. (Read More…)
Anyone out there keeping track of how much money the federal government has plowed into GM, as the automaker downsizes to death? The Washington Post reckons that the next post-bankruptcy tranche—the debtor-in-possession financing needed to cleave GM into “good” and “bad” bits and keep both balls in the air—will be $30 billion. The paper also claims that this will bring taxpayer’s contributions to $45 billion. The $15 billion difference, originally sold as a “bridge loan”? Forgiven. Gone. In exchange for their largesse, “the government plans to take at least 50 percent of the restructured company . . . and the right to name members to its board of directors, as it has at Chrysler, where the government will control four of nine seats.” Although this bailout madness began last year, if we use IHS Global Insight’s recently recalculated GM production figures (GM will build 1.7 million vehicles this year), $45 billion represents a federal contribution of $26,470 per car. That’s provided you don’t add-in Uncle Sam’s $13.5 billion “investment” in automotive lender GMAC. And all the other stuff.
Top German government officials, including Chancellor Angela Merkel and Hesse leader Roland Koch, are due to meet later on Friday in Berlin to discuss the bids placed for Opel on Wednesday. A decision is not expected before the end of the month. “Running Mouth” Koch couldn’t wait and is already giving odds.
“There is a ranking in which the offer from Magna is closest to the hopes and wishes of many in the German political arena but also the workers,” Koch told the Deutschlandfunk radio station. And the other bidders?
More than a few TTAC commentators pooh-poohed the risk to the capital markets by Obama giving the UAW cuts ahead of senior creditors. Now the chickens are coming home to roost. There was that thing I sent you yesterday about Indiana, burned in the Chrysler bankruptcy, announcing the state won’t invest in bailout companies. Legislators giving tax incentives and other state aid to business is one thing, the state treasurer managing pension funds and state investments has a higher level of fiduciary (and legal) responsibility, and he’s not going to risk getting sued or worse. Today, Bloomberg reports that a bunch of hedge fund managers say they won’t invest in unionized businesses. Also, Jack Welch described the governments actions as “The creditors’ rights were trashed and the unions got 55 percent of the company.” People may not always be rational actors, but when you have everyone from economics professors to mom & pop investors asking “who will buy bonds if the terms are rewritten by the gov’t?”, it shouldn’t be any surprise that institutional investors act accordingly.
The taxpayers will be paying for the GM and Chrysler bankruptcies. The living. The dead. The unborn. Hell, even my dog. All of us here who give our money to a Congress and President that can’t say no get the honors. Shouldn’t we get something for it? I’m not talking about a bouncy little check in the mail from Uncle Sam. We already have enough of those. How about a car? Seriously. This is a bankruptcy the public will be paying for after all. We’re going to be paying in interminable interest payments and political pontifications if nothing else. Since that’s the case, why not offer all these wonderful unloved surplus vehicles to the public?
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