You want unintended consequences? You’ve got unintended consequences: The German Abwrackprämie is turning into an eruption of Mt. St. Helens proportions. When the German government launched their cash4clunkers boondoggle two months ago, the lawmakers earmarked €1.5 bn to pay for the program. At a rate of €2.5K for each German jalopy put out of its misery (exchanged for a brand new one), the money should have lasted for 600K cars. Mind you, the German new car market stands now at around 3 million annually, so 20 percent on top of that was seen as a goal to which nobody dreamed of aspiring. Now, Germany finds itself in the grips of the Abwrackprämien virus that’s spreading faster than the winter flu.

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Unintended consequences are the meme du jour in blogoville. Here comes a juicy one: Grapefruits. Carmageddon is severely upsetting the international grapefruit trade, the Nikkei [sub] reports. Here’s why:

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In the pigs-will-fly department, newly installed GM CEO Fritz Henderson told the Financial Times that “private investors are interested acquiring a stake in Opel.” Wow. Really? We know that there are a number of people who’ve expressed interest, amongst them such unlikely prospects as some Opel dealers and the workers council. But do they have the wherewithal, the money, and the blessing of the German government, which would have to guarantee a large chunk of the loans needed, and seems to be more reluctant to do so as the days go by?

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Yesterday, Germany went ga-ga (in a subdued German way) about a 40 percent bounce in new car sales in March. Today, the cold shower: German exports dropped 26 percent year on year in March, and plunged by nearly a third in the first quarter, Reuters writes. “Three out of four cars assembled in Germany are exported,” VDA President Matthias Wissmann reminds us. So despite the huge jump in domestic sales, overall car production fell by a fifth a March and was down by a third in the first three months of the year.
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Our Ed Niedermeyer wrote that China may have a design deficit. Daimler thinks otherwise. Daimler’s Mercedes cars are already produced in China under a joint venture agreement with Beijing Auto. Now, the car with the star will be designed in China as well. Or at least some of it. Daimler is planning to open their Mercedes-Benz Advanced Design Center in China’s capital Beijing, Gasgoo writes.

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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.”

Delphi is the former GM parts division. It had been spun off, only to go into bankruptcy not much later. Delphi also was amongst the first to embark on an aggressive “source in China” policy. Large chunks of Delphi’s production were moved to China. Large chunks of Made-in-America cars were actually Made-in-China. Now, China buys large chunks of Delphi. Possibly all of it.

According to the Freep, two Chinese companies and the Beijing government banded together to buy Delphi Corp.’s brakes and suspension business. The Chinese auto supplier Tempo Group will acquire a 24 percent stake, China’s Capital Iron & Steel Co. will purchase a 51 percent stake, and the Beijing government will own the remaining 25 percent. They will form a new Chinese company called Beijing West Industries Co. Ltd., based in Beijing. Delphi needs the money:
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Porsche presented the numbers for the first half of their fiscal 2008/2009. There is bad news and there is pornographic news, says Automobilwoche [sub]. The bad news is that Porsche is not immune against carmageddon: Their unit sales dropped 27 percent to 34K slot cars. In Euros, their sales dropped 12.8 percent to €3B.

Now for the pornographic part. On sales of €3B, Porsche reports a pre-tax profit of—hold on to whatever you can hold on to—€7.34B. In the same period last year, it was only €1.66B. How did they pull this off? You guessed it: The hedge fund with a sheet metal bending subsidiary earned €6.84B at the stock exchange, wheeling and dealing with stocks and derivatives. Why were Euro sales much better than unit sales?
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So, where does DC vs. Detroit leave Opel, Vauxhall et al.? The “private intelligence agency” Stratfor [very expensive sub] summed it up most succinctly: “Add to this the complexity of Opel, a German car maker owned by GM, which Germany wants the United States to bail out but which the United States wants nothing to do with, and the fundamental problem is clear: While both Germany and the United States have a common interest in moving past the crisis, Germany and the United States have very different approaches to the problem.”

Germany’s approach: Do nothing.
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On hearing that Rick Wagoner is outta here, Asia-Pacific shares nosedived on Monday, which wiped out most of the gains they had made last week. It’s not that anyone is missing Red Ink Rick. Traders at the Asian exchanges see the departure as a sign that “the US government might allow one of the world’s biggest car makers, General Motors, to go bust,” writes the Financial Times [sub].

As Wagoner’s defenestration hit the wires, the Nikkei in Japan dropped 4.5 percent to record its worst day for two and a half months. Hong Kong’s Hang Seng lost 4.7 percent—its biggest fall in three weeks. Taiwan shares were down 3.4 percent and in South Korea the market dropped 3.2 percent.

A person close to General Motors told the Financial Times said that the resignation of Rick Wagoner at the weekend made it likely the company would file for bankruptcy protection sometime in the next few weeks.

It’s been the weekend of the long knives for auto execs the world around. Rick Wagoner “did the right thing” and “resigned.” Meanwhile, across the frog pond, the board of French carmaker PSA had to unceremoniously fire Chief Executive, Christian Streiff, on Sunday. They replaced him with Philippe Varin, who will take up the position on June 1, Reuters writes.

The French board definitely has less of a stomach for losses than their American colleagues. Streiff was let go “after Peugeot last month posted a €343m ($460m) net loss and said it expected to stay in the red until 2010,” says Reuters. A measly three digit million number would barely register on a Detroit Richter scale. Not so in France. They want rolling heads:

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Another bucket of cold water on bailout plans for Opel. This time from Germany’s economics minister, Karl-Theodor zu Guttenberg. He used to be one of the biggest pro bailout flag-wavers; he even trekked to DC for a largely uneventful event. Now he signals to potential suitors of Opel that Berlin’s dowry will be less generous than hoped. “The wish of some interested parties, that the German government will assume the full investment risk over years is unrealistic,” Guttenberg said to the German paper Die Welt am Sonntag. He also warned other politicians not to raise false hopes amongst the Opel workforce. And he punts the ball back to Rüsselsheim and Detroit: whether Opel will get support from Berlin, “depends on the concept submitted by Opel and mother GM.”

Chancellor Angela Merkel will visit Opel in Rüsselsheim on Tuesday. She will come with empty hands or at least with empty promises.

In January and February 2009, China sold more cars than the US. From all indications, the same will happen in March: The US is preparing for a REALLY bad month, whereas China reports brisk sales. If this continues, China will be the world’s biggest auto market in 2009—with nearly unlimited growth potential.

If the stars align just right, China may even end up as the world’s biggest auto producer in 2009. China surpassed the United States in 2008 as the world’s second-largest auto maker and could overtake Japan as the top global car manufacturer in 2009.

The reason is not China’s phenomenal growth; it’s the dismal performance of Japan and the US.
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A few years ago, Hans-Ulrich Sachs, a former Volkswagen board member, had a brilliant idea: He wanted to import Chinese Brilliance cars. Brilliance is BMW’s joint venture partner in China. Brilliance also makes their homegrown cars—which kind of look like a Bimmer, if you don’t look closely enough. The plan: Import them to Germany, and sell them for half of what a real Bimmer costs. A plan that couldn’t fail except that it failed miserably: A few months before the launch of the car at the Frankfurt Motor Show, the ADAC (the German equivalent of the AAA) crash tested the car supposedly under EURO-NCAP conditions. The car received one measly star. The video landed on YouTube, and Brilliance was done. Thousands of Brilliance cars already were in Bremerhaven, ready for sale. A marketing consultant, asked what to do, recommended: “Load them back on the boat and head for the biggest hurricane you can find.” A few days ago, ADAC tested a new Brilliance car. Now, all Brilliance can hope for is an earthquake. Or a sympathetic judge. This test could go to the courts.
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GM about to contract German Commerzbank to be the matchmaker and to help find an investor in Opel and Vauxhall.