For a long time, European and Japanese auto execs looked longingly at their American colleagues who command princely salaries (along with a royal air force.) The times and sums, they are a-changing. Chump change we’re talking not. Porsche’s Wendelin Wiedeking and his CFO Holger Härter already come close to benchmark-setting Wagoner. But Porsche is different; after all; they’re a bank with attached sheetmetal-fabrication. Now, it’s raining money on the leaders of Porsche’s takeover target, Volkswagen. The Financial Times learned that “Volkswagen’s five executive board members made $31.7m selling shares in the middle of a controversial share spike at Europe’s largest car maker.” They were not alone.
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Posts By: Bertel Schmitt
Too much happening around the globe to let a business trip stop me from reporting it. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Who can sleep with news like that anyway?
Lutz loose cannon, shoots foot, “too good to die:” The folks at RecCen were so busy charging up the batteries for their trip to DC that they forgot to put a muzzle on Czarevitch Bob Lutz. GM selling brands? Fohgeddaboutit, said Bobbie in an interview to the Swiss business magazine Bilanz. It’s all over today’s press in Europe. GM off-loading brands like Saturn, Saab, and Opel? LOL-Lutz had never heard of it. “It’s as trying to remove single eggs from an omelet and put them on sale,” Lutz told the Swiss who choked on their Roesti. Shutting down some brands would be thinkable, but “it would cost one or two billion per brand.” Opel? Opel is too tightly integrated into GM, and besides, Opel “doesn’t have the critical mass to survive. The idea to separate Opel from GM is a pipe dream.” Comes from someone who said that global warming is a crock of excrement, and that the moon is made of green cheese. OK, made the last one up. The charitable assumption is that the magazine was in print while other announcements were made. On the other hand … Lutzie’s last words: “We are too good to die.”
Uh-oh. Japan to repatriate foreign investments, tax free: The Liberal Democratic Party’s tax panel decided Friday that dividends received by Japanese companies from overseas subsidiaries should be exempt from corporate taxes, “in a bid to encourage Japanese firms to repatriate more capital,” says the Nikkei (sub) this morning. It’s one of those things we usually won’t notice, but we do now.
Chrysler clueless in China. Chrysler has put most, if not all of its Chinese joint venture plans on hold, says Gasgoo. A deal with Chery has been put on ice. Which surprises nobody.
Chinese makers short on cash: Chinese auto makers Haima, Brilliance, and Changfeng said that they need cash urgently. “The listed automakers now have dropped the unrealistic hope of raising capital through the stock market; instead, they are turning to their parent companies or issuing corporate bonds to collect money,” says Gasgoo.
There is more …
Neither rain,nor sleet,nor gloom of night, our daily round-up of the news that happened in other continents and time-zones must go through. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Note: I’m in Germany on business and will post as time allows. Last night’s news kept me sleepless, so you get WAS on time.
GM and Chrysler ready for ultimate sacrifice. GM and Chrysler executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, says Bloomberg. “Staff for three members of Congress have asked restructuring experts if a pre- arranged bankruptcy – negotiated with workers, creditors and lenders – could be used to reorganize the industry without liquidation.” Bloomberg quotes Lynn LoPucki, who teaches bankruptcy law at Harvard: “The Democrats’ goal of preserving a U.S. auto industry is not doable without a bankruptcy.”
China mulls GM’s default consequences: The Chinese government is also beginning to think aloud about the consequences of a possible GM default. Gasgoo quotes Xu Changming, Director of Information Resources Department under China’s State Information Center. He feels, not surprisingly, that “if a global company failed in management in its headquarters, impact will be felt by its Chinese business.” According to the Chinese, Chapter 11 would “have limited effects on Shanghai GM. The technical center built by GM and its partner SAIC will be running as usual.” However, if GM would go C7 “then Shanghai GM couldn’t produce Cadillac, Buick and Chevrolet and GM is likely to sell their 50% share in its Chinese JV.”
Volvo China unfazed, hopes for Chinese buyer: Gasgoo quotes a source at Volvo China that said that production of Volvo cars at the Chongqing plant will not be affected by the possible sale of the brand by its US parent. “Volvo Car’s Chinese partner, Changan Ford Mazda Automobile (CFMA) will start production of Volvo S80 next year, and this plan is unlikely to be affected by the change,” says Gasgoo. They also felt compelled reiterating that Bloomberg had said that an industry insider had said that Chinese automakers are among possible bidders for Volvo. Gotta read between the lines in China. And if that’s not enough …
This week while your eyes are wide shut: Our daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Note: For all of this week, WAS will either be late, or non-existent. I’m in Germany on business and will post as time allows. They woke me up for the Chinese story, so you get WAS on time today.
It’s official: Saab for sale. Long predicted by TTAC, now confirmed by GM’s Frederick Henderson: Saab will be sold. If no buyer is found, they will be shuttered. Automobilwoche (sub) has the story.
Sweden to bail Saab and Volvo from hell: According to AFP, “Sweden will come to the rescue of its US-owned carmakers crippled by the financial crisis, Saab and Volvo, to secure the future of an automobile industry which accounts for 15 percent of exports.” Details are yet murky. There isn’t much more than a “we want to keep that here and to protect it,” announced by Frank Nilsson, a spokesman for Sweden’s enterprise and energy ministry. Anything akin of a bank rescue package is definitely being ruled out by Nilsson. But he “can guarantee that we will have car manufacturing in Sweden.” Interesting undertones: Volvo is officially up for sale, Saab is, see above, on the block also. According to the report, “no matter who ends up as the owner, the [Swedish] government is committed to supporting the industry.” How? When? For whom? Stay tuned.
Volvo doesn’t want to buy Volvo: Ford bought the Volvo brand from Swedish Volvo Group. Their chairman Finn Johnsson doesn’t want them back. He told Swedish financial daily Dagens Industri via AFP that they are not interested, and that the Swedish government shouldn’t buy Volvo either. Johnsson: “The state knows nothing about the car industry and Volvo needs an owner that can increase sales and cooperate with suppliers on components and development.” He thinks, Renault would be a fine partner. It’s Swedish for “Up urs.”
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As reported by TTAC weeks ago, Chinese auto makers are seriously looking into buying all or some of General Motors. The story was never officially denied in China. Now, there are fresh and more concrete indications about a possible Chinese move on GM. Hu Xindong, Secretary to the Chairman of China’s third largest auto maker Dongfeng, said they have been contacted by financial groups which have close relationships with GM. Topic of the discussions: A possible takeover. This according to China’s National Business Daily via Gasgoo. His company “has not started formal discussions yet,” said Dongfeng’s Hu. He also said that “for the moment,” Dongfeng Motor has no intent to take over GM as a whole. They are interested in buying “overseas assets.” In China, “overseas” usually means outside of China. Hu: “Our managing board has not officially considered the option yet.” In China, where one never gets a clear yes or no, these statements are tantamount to a “Hell yes! We are crunching numbers day and night!” When Dongfeng was floated weeks ago, eyebrows went up. Wouldn’t SAIC, GM’s longtime Chinese partner, be a better fit? So, where did SAIC go?
If you go to Germany, as I did today, you won’t see or feel much of a recession. If you read the GMSM (German Main Stream Media – and I had 9 hours of reading the latest editions today while flying in from Beijing) you’ll learn that the jobless rate is contained, that people are buying, that Frau Merkel sees no need for s stimulus package, and that retail is looking for 150,000 temps to help them with the Christmas boom. All divvy in Deutschland?
When you go to a bit less than main stream, you are in for a shock: “German new cars sales down by 18 percent” says Automobilwoche (sub.) Aua! After slowly decreasing over the month, November sales suddenly cratered in Deutschland. It looks more and more like 2008 will be the worst year since 1989. Who was the worst performer in the volume segments? You guessed it: Opel. Down 36 percent. BMW lost 20.8 percent, VW shed 18.6 percent. Horrors! Mini cars went out of style, bigtime: The Smart lost nearly 46 percent. Best performer: Audi with a loss of only 1.1 percent. If you want the official government data in full gory detail, here they are.
Halt! Nothing goes there. Toyota will suspend production in Japan on Dec. 24 and 25. This sounds normal to you? Mind you: They don’t believe in Rudolph in Japan. Toyota will partially halt output of Lexus luxury cars at its Tahara plant in Aichi Prefecture and suspend all production at subsidiary Toyota Motor Kyushu Inc. “It is rare for Toyota to stop all production at a factory,” says an astounded Nikkei (sub.)
Honda submerges emerging market plans: Honda froze a project to raise capacity in Turkey and postponed the launch of its second Indian plant by at least a year, says The Nikkei (sub.) With raised eyebrows, the Nikkei notes that the “cutbacks are now spreading to emerging markets, which are seen as key battlefields for growth.”
European CO2 compromise: The EU member states agreed on a big CO2 compromise for cars, Das Autohaus reports. There will be limits. But not so fast and not so strict. Like in 2012, only 65 percent of new cars should produce less than 120g/100km of the climate-killer. In 2014 it will be 80 percent. 100 percent in 2015. This is a big walk-back from original plans, and the greens are up in arms. The ruling still needs a formal approval.
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If you think the U.S. auto market is bad, here’s something to cheer you up: it’s not as bad as Spain. November car sales are one half of their former self. Si, muchachos. According to Forbes, Iberian new car sales dipped by 49.6 percent. Explanation? In 2007, Spanish real estate cratered. Then, the country’s industry went anorexic. Spain now has the highest unemployment rate in Europe– 12.8 percent– and it’s expected to rise to 15 percent in 2009. That doesn’t bode well for Spain’s extremely shaky car industry, where another 50k citizens may go on the dole, pronto. Last week, the Spanish government announced a $1b package to resuscitate the nation’s car industry. With buyers on a general strike, it’s too little, too late. As far as brands go, in November VW was first, SEAT second, Ford third. For the year, Ford is leading before Peugeot and Citroen. Still, a perro flaco se le suben las pulgas.
Ok, girls and boys, we are entering the last lap of the year. Prepare for one more month of bad news – then it will be over. The year. A lot of bad news already happened before you had your wheaties: While America Slept is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. Buckle up and be safe. (If you don’t like WAS, read the last entry. You’ll find yourself delighted!)
It’s official: Nipponese share US distaste of new cars: Japan Automobile Dealers’ Association published their November domestic sales of new cars, trucks and buses. They (the sales) are ugly: Down 27.3 percent on the year, down for the fourth straight month, and nearly twice as down as in October (-13.1 percent.) According to Nikkei (sub) “auto sales will likely fall this year to the lowest volume in decades on the economic slump that has seen Japan enter a recession.” Expect more bad news “from those wonderful folks who brought you Pearl Harbor.” (Not my bad taste, Della Femina did it!) For instance: The closely watched Japanese golf club index just sunk to 1.77 million yen, down 33 percent from its 2.64 million yen peak in May 2007.
Nissan ready, set, fire! Maybe: In the flak trade, it’s called “softening the blow.” Nissan’s COO Toshiyuki Shiga said today to the Nikkei (sub) “that future sales will determine whether Nissan will need to cut more jobs.” Although Shiga-Sama said it’s too early to predict the company’s personnel strategy, we all know the likely outcome. See above. And there is more …
There is a whole lotta bailout going on. More and more people are bailing on lending the Detroit dunces a helping hand. Last to bail: CNN founder Ted Turner. He went on NBC’s Meet The Press and said to Brokaw: “I saw it coming years ago that Detroit was headed for a crash, and it’s amazing to me that they didn’t see it either.” Ted’s recommendation: “Let them go bankrupt and get Toyota to buy them out.” As if they would. The one who stands firm by the side of the bail bondsmen is United Auto Workers (UAW) boss Ron Gettelfinger. The AP (via MSNBC) reports that Big Ron says the UAW would be “willing to consider more concessions on wages and benefits” to secure a federal bailout. But then again, not so much. “Based on the changes we’ve made to our contracts, we are competitive already.” By the same token (or a different one, I’m not exactly sure), Gettelfinger told CNN that $70-an-hour UAW wages were a “myth.” And Chrysler, Ford and GM should tell Congress they’ll limit corporate pay, bonuses and severance packages in return for bailout bucks. In other words, some pigs are more equal than others.
This is so, so 2007. Remember the bad old days when a real man wanted a Hummer? Definitely not correct anymore. But in the strictly scientific interest of preserving history – good or bad – here it is. Last year’s ode to the Hummer. A focus group, discussing the merits of the H1 and H2. Warning: Feelings may be offended by pressing PLAY. PG17. STW (Serious Time Waster.) NSFW. But hey, it’s Sunday. And who still has a job anyway?
Nissan has unleashed a promotional video of its all new Z car – via YouTube. To the soundtrack of Nipponese techno we see inside and outside shots of the 370Z. Exposed to it, the hearts of true Z car zealots may beat a bit faster. “The video itself appears to be for Japanese markets,” says Luxvelocity. Is this a praise, or a cut? We are not sure. But if this is viral marketing, then the spread will remain relatively contained.
Sunday. Even while God rests, the devils at TTAC perniciously prowl the news. While America Slept is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. Don’t let it ruin your well-deserved week-end.
Deutschland’s dealers found guilty of low car sales: J.D.Power, who’s fighting an uphill battle for the attention of Germany’s auto makers, may just have found the elusive key to their hearts and budgets: “Lack of attention from the salesperson is the most frequently cited non-price-related reason for customer rejection of European premium and volume automotive brands,” Power’s 2008 Germany Automotive Shopper Study says. We see all of Germany’s auto makers write the big checks for the study, and invite J.D.Power to conduct proprietary studies to further prove what auto makers deep in their dark hearts had suspected all along: The downturn is all the dealers’ fault. All dealers need to get fired.
Buick or bust: From the U.K., the Financial Times weighs in on the Detroit debate about D.C. dollar donations: “Congressmen mulling this request might want to visit their local Buick dealership. They should have no trouble finding one, with 2,751 nationwide the last time the National Automobile Dealers Association counted, more than double those selling Toyotas. As a result, only 88 Buicks a year are sold per dealer versus 1,821 for Toyota. Barring Chapter 11, multiple brands and excess dealerships can only be remedied with billions in dealer buy-outs due to state protection, as seen with Oldsmobile.”
Recession? Never heard of it: Honda announced that their production in Japan did set an all-time record for the month of October, The Autochannel reports. Even better, October worldwide production at Honda did set an all-time record for any month. What will they do with all those cars?
In a report to appear Monday, the German magazine Der Spiegel will write that “several law firms are compiling material for lawsuits to hold Porsche liable. They are working for hedge funds which had lost billions of Euros.” That’s news to Porsche CFO Holger Härter. He says he hasn’t heard of anybody who wants revenge or restitution. “I don’t even know who might have been hurt.” On Sunday, FAZ will publish an interview with Härter. First question: “When will the hedge fund called Porsche close its sheet metal factory?” Härter’s answer: “Our core business is and remains the automobile.” Everybody knows: not true. Porsche made more profits than sales in the last fiscal year. Of €8.6b in profits, only €1b were generated in that sheet metal factory. €7.6b were generated with derivatives. That was in the last fiscal year, which ended July 31. God, Härter and Wiedeking only know how much the Porsche hedge fund generated in the months thereafter, when the VW stock went wilder than girls at Mardi Gras. Härter now says they didn’t really mean it. Here is Härter’s version:
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Beijing’s sizable German community congregated today at the annual Weihnachtsmarkt. At the German Embassy inside the People’s Republic of China, party-goers loaded-up on Bratwurst, Christstollen and got seasonably drunk. Volkswagen China, headquartered ’round the corner, sponsored a stand at the festival. Not to sell cars. No, they were hawking their fabled “VW-Currywurst,” a culinary delight served every Thursday to the working classes at Wolfsburg’s cafeterias. At the sidelines of the event, and under the influence of truth serums such as Radeberger Pilsner or Glühwein, leading Volkswagen of China execs reiterated what had been the talk around Sanlitun for months: VeeDub is defying gravity in China. In fact, they’ll probably sell more cars in China this year than their parent sells in Germany. According to Gasgoo, Jörg Müller, CFO of VGC (Volkswagen Group China) made the prediction in August. In October, VGC pronounced themselves over target.
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