A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. For the next two weeks, WAS will be filed from Tokyo.

Canada paying their share for the bailout: Canada will follow the United States and give $3.3b in emergency loans to the Canadian arms of the D2.8, Prime Minister Stephen Harper said to Reuters. GM of Canada is eligible for loans of up to $C3b, Chrysler Canada Inc can get up to C$1 billion. The Canadian arm of Ford has not asked for assistance. Harper said the governments were attempting to attach some liens and secure some assets of the car companies “but I will not fool you — there is obviously some money at risk here.” Translation: Don’t ever expect to see the money again.

Toyota still has got the dough: One of the most important metrics in business is “free cashflow.” It’s the money you can spend: cash generated from operations plus capital available for investment. Despite the business downturn, Japanese companies added to their free cashflow. Toyota tops the list with an improvement of 500.7 billion yen on the year, The Nikkei (sub) reports.

And now, the Chinese bailout plan: China is thinking about its own bailout plan for the auto industry, says Gasgoo. The plan joins several that had been announced in the past. It could also be a retread of the bailout plan that was proposed Ministry of Industry and Information Technology in November 2008. What is interesting is that the plans get more focused. Or less diverse, however you may want to look at it. The first plan had nine recommendations. Further plans went to eight, then seven. The new plan now reportedly is down to six policy recommendations including jacking up domestic demand, expanding overseas markets, supporting homegrown brands, reforming fuel tax, boosting the second-hand vehicle market, and “preventing policies and regulations that may hurt auto sales.”  The last one sounds like a great idea.

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Apart from keeping an eye on the imploding world economy, North Korea’s nuclear ambitions, Iran’s nuclear ambitions, the war in Iraq, the war in Afghanistan, a Russia that is flexing its muscles, and other minor annoyances, “the incoming Obama administration is closely monitoring the innovative electric car project being developed by Israel’s Better Place company,” writes the Jerusalem Post. Idan Ofer, chairman of Better Place, says [hopes?] that Obama “may be adopting it.” Also according to Ofer “a leading US car manufacturer” is “putting together a team” to work on the project. Now who might that be? “Renault-Nissan agreed 18 months ago to build the first cars, and will be mass-producing hundreds of thousands of the electric-powered vehicles by 2010,” Ofer said to the paper. So why the need for a leading US car manufacturer? For all we know, the US car manufacturers are leading straight into C11.

Ofer doesn’t suffer from a lack of self-esteem. When “you hear announcements” from the incoming administration about reviving Detroit with electric cars, job creation in battery factories and modernizing the national electricity grid, the Better Place chairman reckons “you’ll know that it will have come from us.”

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A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Note: For the next two weeks, WAS will be filed from Tokyo.

Cerberus wants to unload Chrysler, keep GMAC: That’s what Automotive News says. I’m sure TTAC’s day shift will have more on this.

Honda uses the F-word: Honda President Takeo Fukui had already dropped hints about locating the Honda HQ outside the land of the rising yen. Now, even more sinister threats. Fukui said to the Nikkei (sub) that Honda “may have to abandon one of its key principles of protecting the jobs of its full-time workers next year, if the Japanese currency remains at current levels of around 90 yen to the dollar.” That means F as in fire, unless the effing Yen is getting cheaper against the greenback. Honda is bracing for a group operating loss of 190 billion yen in the second half of the current fiscal year. “I think the dollar will move back to above 100 yen because the level of below 90 yen is abnormal,” Fukui said. Hint, hint, hint.

Toyota and Fuji Heavy put joint sports car on back burner: Toyota decided to delay the compact sports car it has been developing with Fuji Heavy, the Nikkei (sub) writes. The two automakers had planned to begin manufacturing the car in late 2011 for the domestic market, but the start of production will now likely be postponed until 2012 or later.

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The Financial Times (sub) is pissed. Pissed at Peter Mandelson, Britain’s business secretary, and his planned bail-out of Jaguar Land Rover. Forgetting the old school of not mixing reporting with opinion, the FT pulls out the flame thrower and blasts away: “It is hard to imagine a less deserving candidate. The luxury carmaker fails the public interest test on two key grounds. First, its products are of questionable social utility. For the government to allocate scarce funds to prop up the production of the 4.2 Litre V8 Petrol Supercharged Jaguar is a nonsense. It has a top speed of more than 150mph, emits 299g of carbon dioxide per kilometre and costs about three times the average annual wage. True, the UK car industry employs 190,000 people directly and supports several hundred thousand more once components and retailing are taken into account. But if Mr Mandelson wants the government to underwrite this £50b industry, he should harness such public funds as are available to develop the green cars of the future, not pander to vested interests.”

Hmmm. Let us remind you: This is not a rabid blog. This is the venerable Financial Times. We kid you not. Would the pink Financial Times be so ferocious if Land Rover and Jaguar still be a company that’s firmly in British hands? We guess not. The FT seems to have issues with the current owners of Land Rover and Jaguar, who happen to sit in one of Britain’s old and long departed crown colonies. After refilling the flame thrower, the FT launches an incendiary attack in the easterly direction:
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A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off.

Bridge loan, possibly today: According to Reuters, “General Motors Corp and Chrysler are close to securing emergency loans as part of a U.S. government aid package that would demand sweeping restructuring at the troubled automakers, according to sources familiar with the talks.” Reuter’s sources say that bridge loans could be announced today, staving off – for the time being – the prospect of a  bankruptcy. The aid package being spearheaded by the White House demands that both automakers restructure by seeking new concessions from unions and creditors.

Japan aghast: The shocks of Toyota’s announcement of a loss were so great in Japan, that there are no auto related news out of the country today while they crawl out from under the financial rubble.

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Although genetically adverse to saying the L-word, the Japanese will have to famiriarize themselves with it: “Plunging sales worldwide and the yen’s sharp appreciation will likely push Toyota Motor Corp. into its first-ever operating loss” in their 2008 fiscal year, writes an aghast Nikkei (sub) today. In earthquake-prone Japan, this resembles a 9 on the financial Richter scale. Once, Toyota came close: In ancient 1949, when Japan was a chaotic mess after World War II and was ruled by a benevolent dictator called McArthur, Toyota had a pre-tax loss. But they never posted an operating loss since Toyota began releasing earnings figures with fiscal 1940. This announcement will leave Japan shell-shocked.  They have a different attitude towards losing money than in What-me-worry Land.

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Are you in automotive R&D? Experience and successful track record in automotive marketing? Worried about your job? Polish up your resume. Chinese automakers are hiring. “After considering the risk of buying US auto manufacturers’ assets, Chinese automakers realized that targeting their research and development (R&D) talent would be a more realistic and profitable option,” writes China Daily today.

China Daily called around. Zeng Qinghong, General Manager of Guangzhou Automobile Group, for instance said that his company is not interested at all in buying brands or whole companies in the U.S.A. However, he’s very interested in US auto professionals. The head of his research center had already been on a recruitment trip to the US, and he was surprised: “Interest shown by US auto talents in Guangzhou Auto exceeded expectations.” Xu Heyi, board chairman of Beijing Automotive Industry Corp said that they are also interested in talent from the US. Even the Chinese government is prodding their auto industrialists to buy themselves some foreign know-how.

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The glorious times when Japan could pride itself as the world’s second largest auto market are definitely over. Never mind that next year will be the year of the bull according to the Chinese/Japanese Zodiac. As cars go, 2009 will be a grizzly bear, the Nikkei (sub) reports. The Japan Automobile Manufacturers Association projects domestic new car sales for 2009 to come in at a paltry 4.86m 4.9 percent below 2008. For the first time in 31 years, Japanese new car sales will be below 5m. If the JAMA projection is correct (and it could be worse,) new car sales in Japan will have declined for five straight years, with the market shrinking by 40 percent from its peak of about 7.78 million units in 1990 to a not seen since the late 1970s. Even the burst of the Japanese bubble in 1990 didn’t have the implosive energy of what’s happening now: Sales dropped into the mid 6m, and recovered in 96. Since 97, sales remained in the high 5m, and started deteriorating in 2006.

JAMA sees large vehicles and luxury models as particularly endangered. The impact on mini vehicles will be less severe, with sales expected to total about 1.85m units in 2009, down only 1.6 percent from the figure forecast for 2008. The trade group sees this trend to continue. Overall domestic sales in Japan for 2008 are projected to reach 5.1m vehicles, down 4 percent from 2007. With an aging population and a protracted recession ahead, this will be the last 5m for quite a while.

A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off.

Nikkei: GM & Chrysler talking again: The biggest news in Japan today is that “General Motors Corp. and Chrysler LLC have reopened merger talks, as Chrysler owner Cerberus Capital Management LP has signaled its willingness to give away part of its ownership in the auto maker,” the Nikkei (sub) writes. The Tokyo paper assumes that “the renewal of the talks could be a way for Cerberus to show Washington — which is weighing a $14 billion rescue package for the auto industry — that it wants to cooperate in restructuring the industry.” Japan is very worried about any of the D2.8 going out of business, as it would decimate the supplier base of their transplants.

Japan on slim-fast: The Japanese are skinny already, pocha-pocha (chubby,) or even debu-debu (fat,) are a rare sight in the land of sushi. Prepare for even leaner figures, the Nikkei (sub) writes. “The situation is worsening day by day,” Honda President Takeo Fukui said yesterday, “no signs of a recovery are in sight.” In addition to the austerity measures already announced by Honda, there are more: One year delayed  are a new factory in Yorii, and a new R&D center in Sakura, originally scheduled to come on-stream in 2010. Honda group firm Yachiyo Industry likewise delayed their new factory in Yokkaichi by slightly more than a year. Nissan said yesterday that it will reduce domestic car output by and additional 78,000 units than previously planned. The Nikkei: “Freshly revised production figures from Honda and Nissan have increased the total planned worldwide output cut by Japanese automakers for fiscal 2008 to slightly more than 2.2 million.”

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There has been a lot of speculation why the Chinese have such a hard time exporting meaningful numbers of cars. The Chinese government even has a 7 point program to boost exports – under review.  Allow me to add an eighth point to the program – after all, 8 is a lucky number in China: Find someone who writes serviceable tag-lines, in English. “Unlimited Almightyness” (a tagline for the Great Wall  Hover CUV)  just won’t do, unless you are advertising the pope mobile. For a free review of your taglines, give me a call. New lines at a slight extra charge.

Two weeks ago, Chrysler terminated its joint venture talks with Chery. This doesn’t stop Chrysler from talking to the Chinese. The talks go in two directions: One, Chrysler needs low cost cars, and the Chinese have them. Two, Chrysler is looking for a buyer, and a Chinese company may just have mercy and cash and take Chrysler off the sweaty hands of Cerberus. Hell, you never know. Now, Chrysler has been spotted chatting up Great Wall Motors, Gasgoo reports. Great Wall is known for its large portfolio of SUVs and MPVs. They also got into hot legal waters with Fiat who claimed that Great Wall’s Peri (called Jing Ling in China) is a copy of Fiat’s Panda. A court in Turin said Fiat is right and Great Wall is wrong. A copyright claim in China is slowly grinding through the wheels of the Chinese courts.

According to Gasgoo, Philip Murtaugh, Chrysler Asia CEO, went to inspect Great Wall Motor’s facility last week to look into the code-named CH041 model and CH031 hatchback, which could be the A-class model Chrysler needs. Murtaugh was supposedly satisfied with the two models. Great Wall Motor said the two parties will launch “CH031” first if the projects fare well. The two automakers are still in talks and nothing is definite yet, said Great Wall Motor. If the models see the light of mass production, they will go on sale in overseas markets with the Chrysler label. A Chrysler China executive said Chrysler was in – duh – “a transitional period.” They might need Great Wall, one way or the other.

Volvo is Latin for “I turn” (as in “revolving credit” of lore, or as in “revolver” for people who can’t get one.) Nomen est omen: Never has the word been truer than now, as the formerly glorious Swedish brand is being offered-up for a gang-bang.

From day one, TTAC chronicled the trials and tribulations of the D2.8 to sell as many brands a possible to the highest bidder. The news cycle on that is predictable. We report it. They deny it. Pom-pom waving bloggers drop their cheer-leading acoutrements for a second, wave the denials, and call us idiots.  Shortly thereafter, The Truth About Cars offered to India and China comes out, usually by way of the Indians saying that they don’t have the money, or the Chinese saying that they looked and lost interest. All while Detroit denies that anything of that nature may be going on.

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China has a 60 percent local content law for cars. If local content falls below that mark, the car is treated as an import, even if it’s Made in China. That means a 25 percent duty. “Unfair!” said the US, EU and Canada, and filed a complaint with the WTO in March 2006. In July, the WTO ruled that China is wrong. China appealed. The WTO now rejected the appeal, and China has to come into compliance. “WTO’s final ruling marks the first time the country has lost a legal trade dispute since joining the global trade body in 2001,” China Daily regrets.  However, the Chinese parts industry’s fear of a flood of cheap imports from the EU and NA is unwarranted, China Daily says: “Analysts say that the effect on the domestic auto industry would be minimal since many multinationals would still prefer using local car parts to imported ones even if the Chinese government lowers the tariff over some auto parts.” According to a report by China Galaxy Securities, most multinational carmakers have already started making more car parts in China to cut costs. Honda and Volkswagen, for instance, make over 80 percent of their components in China. And China doesn’t have to change tomorrow: “China now has a reasonable period of time to bring its measures into compliance with WTO law,” the European Commission said in a statement. “This period of time will be negotiated or determined by arbitration.” Time is on China’s side.

A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off.

D2.8 may get unexpected break – strength from weakness: The money-losing automakers made at least some money in some foreign markets. However, the recent strength of the greenback wasn’t in their favor. In July, a profit of one Euro translated into a $1.6. But what counts is when the books are closed, and that usually happens at year end. The recent strength of the dollar made foreign profits look less juicy. In October, that one Euro profit was worth only $1.23 – ever since, the Euro bounced around in the $1.25 to $1.29 range, which worried CFOs with foreign profits to no end. In the last few days, a miracle happed: The dollar got weaker. In the last few days, the Euro shot up into the $1.40 range, and it may even climb some more. With a little luck, and some end of year central bank machinations, a profit of one Euro could translate into a $1.50 by year’s end. Which will look quite good in the books. The bad news: If you have foreign losses, it will have just the opposite effect.

Nissan cuts output: Nissan wanted to make 1.38m units worldwide in their 2008 fiscal year, which ends in March 2009. That plan is no more: Nissan will end the year with 230,000 units less, a reduction of approximately 17 percent, the Nikkei (sub) reports today. Nissan will also eliminate “all nonpermanent positions” by March, becoming the first major Japanese automaker to ever do so. Starting in January, assembly work will be suspended for several days a month at two factories in Japan. Production speeds will be slowed. By March, all temporary workers will be gone. Any further layoffs, and the (in Japan) sacrosanct permanent workforce will be affected.

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The ratings agency Moody’s Investors Service gets, well, a bit moody about the “bankruptcy is no option” outlook favored in certain Detroit circles. Moody’s says the odds are 4:1 against that happening, Automotive News (sub) reports.

Moody’s said there is about a 70 percent chance of a prepackaged bankruptcy coupled with government assistance. Moody’s graciously places these odds on all three Detroit automakers.

A government bailout without a bankruptcy, Detroit’s favorite, is given just a 25 percent chance.

Detroit will find solace in the fact that Moody’s sees just a 5 percent chance of a “freefall” bankruptcy without a prepackaged plan.

“We think it’s most likely that a prepackaged bankruptcy filing coupled with government financial assistance will be needed to restructure the Big Three,” Moody’s Senior Vice President Bruce Clark said in a statement.