Ford turned a profit in the second quarter of this year, thanks to a share offering and other debt-reduction actions which covered a $424M pre-tax operating loss. In the third quarter, however, Ford’s profit needs no such qualification. Pre-tax operating profits were $1.1B, including a $357M from North American operations. For the record, this marks the first Ford North America profit since Q1 2005. Perhaps more importantly, for an automaker that’s mortgaged up to (and including) its logo, Ford’s cash pile grew by $2.8B (on $1.3B positive cashflow), to $23.8B. On the strength of these surprisingly strong results, Ford has revised its 2010 guidance from being “break even or better” to “solidly profitable.” The future is looking far brighter for Ford than any of its cross-town rivals, but there are a few more considerations to keep in mind before we can pronounce Ford officially out of the woods. Even the Blue Oval is warning that its 2010 guidance will be revisited after full-year results are in.

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Images courtesy: Tommy Yoo Photography

After another week of digital dedication to automotive truth-telling, TTAC West is going undercover to explore the “hybrid lifestyle.” A hybrid and a yurt? Smug alert!

I’m not going to tell you incentives are going away. They’re part of the game, but they can be better managed than they have been in the past

GM Sales maven Susan Docherty in the WSJ.

Russian oligarch Oleg Deripaska meets with Fritz Henderson, German Gref of Russia’s Sberbank and Siegfried Wolf of Magna. The state department had previously denied Deripaska a US visa for undisclosed reasons, but according to the WSJ, the FBI arranged for Deripaska to visit the US because “they were getting interesting information from him.” Deripaska denies any cooperation with US authorities.

The recent revelation that congresspeople have been successful in coercing GM to rescind dealer closures in their districts, has the rest of our elected representatives (not to mention GM itself) sitting up and taking notice. In a conference call with Michigan’s congressional delegation, Fritz Henderson said GM was close to a deal which would restore a number of “mistakenly” closed dealerships. But GM hasn’t met with rejected dealers in weeks, and the Committee To Restore Dealer Rights is unaware of any such agreement. “[Henderson] was very vague, and the plan sounded inadequate to me,” Michigan Republican Hoekstra tells Automotive News [sub]. “He explained, for instance, that they might reopen some franchises if they found errors, but he didn’t say what those errors might be.” Henderson also rejected the dealer demand for compensation of $3,000 per vehicle sold in 2006, 2007 and 2008, further supporting suspicions that GM doesn’t have a deal at all. So what is happening?
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It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone. There can be no doubt that CARS drummed up more business for car dealers at a time when they needed help the most.

The Department of Transportation’s Bill Adams lays into recent Edmunds.com analysis showing Cash For Clunkers could have cost as much as $24,000 per vehicle sale [via CNN]. But one man’s negativity is another man’s constructive criticism. After all, Adams doesn’t touch the heart of the matter: the program’s cost per vehicle, and Edmund’s analysis (like all analysis) was educated guesswork. Luckily, CNN was able to shed a little more light on how Edmunds came up with their numbers.

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Frank Weber, the man in charge of GM’s electric vehicle line, will be leaving GM for a senior leadership at the soon-to-be-sold (or not?) Opel. Weber previously worked on Opel’s development of GM’s global mid-size (Epsilon II) vehicle line, before becoming the head of GM’s electric vehicle development program in March 2007. Weber is the second senior executive in GM’s global electric, hybrid and battery development organization to leave in a month, following Bob Kruse’s departure at the end of September. And as with Kruse’s exit, the sound bites coming out of GM seek to portray the loss as no big deal. “There is a huge difference in the Volt program from when I came here,” Weber tells Bloomberg. “The entire organization has inhaled what we do here.” In reality though, Weber’s defection makes the introduction of the Opel Ampera (as the Volt will be known in Europe) even more difficult than it was already shaping out to be.

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GM’s sale of Opel to Magna/Sberbank is being held up by the European Union, which is looking into whether the German government unfairly favored Magna’s bid. But while the interregnum plays out (the EU will decide by November 27th), GM has plenty of time to develop a case of seller’s remorse. After all, GM’s VP for Global Engineering Mark Reuss recently told Autoline After Hours that Opel is completely integrated into GM’s global product development, and that the relationship “won’t change.” Does that, as Business Week’s David Welch asked, mean GM will keep all of Opel’s development capacity while reducing loss exposure to 35 percent? Reuss had to change the subject, but it’s obviously not the case. With Daewoo under fire, GM would clearly prefer to keep Opel’s development capacity integrated, and keep its intellectual property out of the hands of Russian automakers. And with German newspapers reporting that GM’s board is considering a “plan B” to keep Opel within the GM fold, Opel’s workers are threatening to strike.

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It’s not that GM’s Korean Daewoo division doesn’t need more money. The problem is that the only bank willing to lend a dime, the Korean Development Bank, wants strings attached. Since GM came up with the cash to buy up Daewoo’s $413m rights offering, it says Daewoo is out of trouble for two more years. Or 18 months… depending on that troublesome global car market. Meanwhile, GM-Daewoo’s $5b worth of forward contracts will burn up $300m in cash every month, as the debt matures. Although KDB and GM-Daewoo’s other lenders refuse to roll any of that debt forward and have been firm about enacting safeguards before loaning the automaker more money, GM’s Nick Reilly says Daewoo can now negotiate from a position of relative strength. Emphasis on relative.

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There’s an excuse for everything, and if a UC Irvine study published in Cerebral Cortex [via CNN] is to be believed, genetics might just be the reason some people can’t drive for squat. A protein called brain-derived neurotrophic factor (BDNF) is typically secreted while performing a given task (in this case, driving), helping facilitate communication among brain cells and helps retain memory. But the study has identified a gene variant which causes individuals to secrete less BDNF, hindering learning and improvement at task performance. The UC Irvine team, led by Professor Steve Cramer, recruited 29 subjects to drive 15 laps of a twisty simulated driving course, measuring how well they learned to improve their performance. The seven subjects with the identified gene variant performed 30 percent worse. “These people make more errors from the get-go, and they forget more of what they learned after time away,” says Cramer, who estimates that 30 percent of Americans have the BDNF-inhibiting gene variant. “I’d be curious to know the genetics of people who get into car crashes.” There’s currently no commercially-available test, so bad drivers can’t definitively blame their genetics just yet. But they can still take lessons, hang up the cell phone, or chant the mantra “my car is a deadly weapon” whenever they get behind the wheel. Regardless of your genetic predilections, once you pass a driver’s test, the safety of other motorists is your responsibility.

Well, the “what makes an American car American” debate just got a little more interesting (and a lot more interesting than the “who ‘won’ the CTS-V Challenge” rigmarole). Automotive News [sub] reports that Ford’s Oakville, Ontario plant and GM’s Delta Township plant have ceased production of Flex, Edge, MKX, MKT, Acadia, Traverse and Enclave as supplier Rico Automotive is unable to supply key transmission components. The reason for the parts stoppage: labor violence… in India. Turmoil at Rico’s plant in Gurgaron (30 miles from New Delhi) came to a head on the 18th, when clashes between temporary workers and factory staff left an employee dead. Now GM stands to lose 7,200 units of production, while Ford admits “several thousand” units won’t be built over the next week. This striking illustration of how globalized the auto industry is, is causing some analysts to question the wisdom of using Indian suppliers. They argue that labor unrest like this is common in the subcontinent, compounding already-challenging logistical and shipping-cost issues. But GM and Ford aren’t exactly about to stop investing in Indian firms and production capacity either, since that market shows more growth potential than the US. One thing is for sure: there’s no such thing as an “American car,” let alone an “American car company” anymore. Government ownership notwithstanding.

I haven’t done this in 30 years. Young whipper-snappers showed me a thing or two. Let’s see them do this when they’re 77

Maximum Bob Lutz concedes defeat to TTAC’s Jack Baruth with dignity and a little feistyness. Cadillac is estimating Lutz will finish “in the top five or six.”

Via Cadillac’s Twitter Feed:

John Heinricy (Cadillac test driver)- Cadillac CTS-V: Top Lap: 2:46:560

Aaron Link (Cadillac development engineer)- Cadillac CTS-V: Top Lap: 2:48:902

Brian Redman- CTS-V: Top Lap: 2:49:596

Michael Cooper (Who is this guy?)- BMW M3: Top Lap: 2:50:424

Jack Baruth- Cadillac CTS-V (TTAC): Top Lap: 2:51:153

Lawrence Ulrich- CTS-V (New York Times): Top Lap: 2:53:157

Bob Lutz- Cadillac CTS-V (VP of Marketing, GM): Top Lap: 2:56:321

Michael Mainwald (carguydad.com)- BMW M5: Top Lap: 3:05:398

Wes Siler- Mitsubishi Evo X (Jalopnik): Top Lap: 3:08:126

Chris Fairman- CTS-V: Top Lap: 3:14:292

Archan Basu- Jaguar XF: Top Lap: 3:15:670

Tom Loder- Audi RS4: Top Lap:  3:15:702

It’s official: TTAC’s top driver has beaten Bob Lutz! Check back tomorrow for Jack’s on-the-ground take on the weirdness that was.

In the same week BMW revealed a one-off, 580 hp, 100+ lbs lighter “M5 CSL we never built” (in the words of the M division’s head of development, Albert Biermann), BMW USA’s VP had this to say about his firm’s absence from Cadillac’s CTS-V Challenge:

We have no fear of comparisons by objective bodies, but it’s different if the person doing the comparison has a dog in the hunt

Not that the point lacks validity, but would BMW’s tune be different if the M5 CSL were a production model? We’d like to think so.