Until now, owning an Oldsmobile dealership was kind of like Ford’s logo-and-all, pre-meltdown mortgage: at the time it seemed bad, but history proved that the alternative was worse. After all, the Olds wind-down paid dealers up to $4 million to go away. Only now, several Oldsmobile dealers are getting a little taste of what GM’s less fortunate, bankruptcy-culled dealers have been put through. The Detroit News reports that “a handful” of Olds dealers are still owed annuity payments from the brandicide, and GM is filing those claims as “unsecured” debts of old, bad GM. Nobody likes being shorted in the neighborhood of $20K, but at least Olds dealers got something, right? Shouldn’t they count themselves lucky to be free of GM with any compensation at all? Not according to their lawyer . . .
Just as GM is prepping a green themed “230” Volt hype campaign, comes word from Automotive News [sub] that green is so 2003. “For all the talk about green vehicles,” intones the industry rag, “blue is the new color of choice to embody clean driving.” Did you think that Mercedes BlueTec and VW/Audi’s “AdBlue” names came from the blue tint of their diesel-emissions-treating urea fluids? Nope. “The color blue is associated with freshness, dynamism and lightness,” say VW flacks. And according to Hans Tempel, president of Mercedes-Benz Japan, “Blue perfectly encapsulates the cool, clear sky of a world unsullied by greenhouse gases.” Gagging yet? The best eco-chromatic marketing analysis awaits post-jump.
Folks are a bit confused by these mysterious ads. The giveaway is the music, which reveals the spot to be part of the Volt campaign, but what is 230? It would seem that 230 could well be the Volt’s EPA MPG rating, a number which will be useful only to GM’s relentless hype campaign. After all, no single portion of the EPA test cycle is longer than 11 miles, meaning EREVs get their own testing method (summarized after the jump). But as Ad Age puts it, “why run a teaser campaign for a car that doesn’t go on sale until next year — and one that’s been known about for some time? After all, the marketer has been beating the drum for the car for more than a year.” Because that’s the Volt Way. Meanwhile, 230 MPG? Really?
It’s been a while since Ford had a halo car. The GT got the sighs of admiration but was more of a monument to Ford’s past than to its present. If nothing else, the F-150 Raptor gives Ford trucks a Baja 1000-competitive glow (3rd place in Class 8, “race prepped”). Besides, it actually attracts paying customers. Like . . . the government! “Multiple sources reveal” to pickuptrucks.com that the US Border Patrol is considering the purchase of “at least 10” of the $38K base trucks. The one catch is that Border Patrol wants “work truck” interiors instead of Ford’s standard “class leading” finery. Can’t you see Howie Long rolling his eyes about that one? But hey, Ram and Silverado are both built in Mexico (among other places), so at least the Raptor is the least irony-charged full-sized border guard truck. Still, is “the immigration issue” as easily solved as a factory offroad special?
“We were too optimistic on timing. Maybe what we should have done was not bought it.”
Cerberus Capital honcho Steve Feinberg in a New York Times takedown on his private equity bid to turn Chrysler around. Ya think? So where did The Old New Chrysler go wrong? Was it simply “one of the investments made at the very top of the credit bubble,” as a Harvard Business School professor puts it? Or was it that “Cerberus did not have a clue about the automotive industry,” as a former Chrysler employee claims? Or was Cerberus’s investment of $7.4 billion not enough in the first place? Probably all of the above, but whatever the correct diagnosis is, it’s lost on Feinberg. “I don’t know what we could have done differently,” he says. “From the day we bought it, we worked hard to improve it.”
The New York Times reports that GM will offer 2.5 billion shares of common stock in July 2010, just a year after emerging from government-backed bankruptcy. The news comes from regulatory filings in which GM says it will also begin sharing financial data after the third quarter. The Wall Street Journal voices serious doubts as to whether GM is ready for such an offering, pointing to its weak showing in the current cash-for-clunkers bonanza, falling sales, and product weakness. Meanwhile, PTFOA chair Ron Bloom tells the NYT that a Chrysler IPO is further off. “I don’t think Chrysler’s IPO is a 2010 event,” Mr. Bloom said at the Center For Automotive Research’s conference in Traverse City. “I think it’s a little further off. But again, that will be the board’s judgment.”
Automotive News [sub] reports that the Senate has passed a $2 billion extension to the Cash for Clunkers program, extending the deal through Labor Day. President Obama has already said he would sign the bill. But will it help the taxpayer-owned auto firms that desperately need a boost? Will sales levels continue at their current surging rates? Will fraud stories start popping up as they have in Germany? Who cares. America loves a deal.
The good news, despite the Automotive News [sub] “Cash For Clunker Chaos” subhead, is that none of the automakers are completely out of cars. Regardless, clunkermania clearly took almost all of the OEMs by surprise. In July, Chrysler’s inventory reportedly plummeted from 71 days supply to 30, a huge reversal from the not-so-long-ago days of sales banks and channel-stuffing. But perhaps the biggest surprise is that Toyota was caught napping as badly as GM. Last month Toyota and GM both saw their inventories reduced by 18 days’ supply. But because Toyota started the month at a near-ideal 47 days’ supply, it now finds itself scrambling for vehicles with only a 29-day supply. Thanks to months of weak sales (and despite a long summer shutdown), GM started July with 82 days of supply. That number now sits at 64. Is GM saddled with inventory that doesn’t qualify for the CARS rebate? Possibly, but the only GM model cracking the top ten clunker models is the Cobalt. At number 10. Mind the perception gap!
“If it were up to me, I would ban drivers from texting,” the Secretary of Transportation tells the LA Times. Happily, LaHood does not have the authority to unilaterally enact laws, so, “that’s why I have decided to convene a summit of senior transportation officials, safety advocates, law enforcement representatives, members of Congress and academics who study these matters.” The conference is expected to yield “concrete steps” to curb the threat of distracted drivers. Like an education and awareness campaign. Meanwhile, the Avoiding Life-Endangering and Reckless Texting by Drivers Act (ALERT Drivers, geddit?) has been introduced to the Senate. This bill would force states to pass texting-while-driving bans (with DOT-set minimum penalties) within two years of its passage, or risk losing 25 percent of their federal highway funding. Just like the good old double-nickel days. Meanwhile, has anyone thought about the difficulty in enforcing such a ban?
GM will receive some $241 million of the government’s $2.4 billion electric vehicle (EV) stimulus grants, most of it for the “on-time and under-budget” Chevy Volt program. Other grant recipients were Chrysler ($70m), Ford ($92.7m), JCI ($299m), A123 ($249m), Compact Power ($151.4m, on behalf of LG Chem, the South Korean supplier of Chevy Volt batteries), and the National Fire Protection Association ($4.4m). Full breakdown in PDF format here. But what makes this otherwise routine subsidizing of particular interest, it’s that GM is spending its non-Volt money on . . . get this . . .
The second tranche of cash-for-clunker money could be approved as early as today, reports Automotive News [sub]. Not that there’s any suspense about how the vote will turn out. Whether it passes today or tomorrow, pass it will. The NHTSA’s program feels enough like a success to guarantee a re-up. And as psychologically motivated as markets are, sometimes feeling like a success is enough. But congress can’t be motivated by a mere uptick in overall dealer traffic alone. After all, our government is no longer a passive proponent of American industry as a whole: we’ve picked sides. And the teams we picked, namely GM and Chrysler, aren’t seeing any real benefit out of the CARS program. And remember, if the $3 billion worth of clunker culling doesn’t help our inept wards of the state, we’ll be looking at pouring at least that much directly into them. Again.
Automotive News [sub] reports that Chrysler’s unsecured creditors have requested permission to sue Daimler for gutting Chrysler’s “most valuable assets” during its sale of the company. The request alleges that “unidentified assets” were lost in Daimler’s 2007 sale of Chrysler to Cerberus Capital Management, for which creditors are seeking $3 billion in compensation. If granted, the damages would eclipse the $2 billion granted to secured debtors during Chrysler’s bankruptcy sale. “This is completely without merit and we intend to defend ourselves vigorously,” say Daimler spokespeople, and we can’t help but feel that they have a point. What mythical assets were present for Daimler to squirrel away by the time they sold to Cerberus? Did Daimler mismanage Chrysler? Sure. Did they loot assets? For that to happen, there would have to have been valuable assets in place to begin with. Best of luck with that, Chrysler creditors.
Not selling power, mind you. In fact demand is so high for the new Prius that Toyota would like to increase production past its 500k/year projections. Too bad its battery supplier, Panasonic, can’t keep up. “Battery bottleneck,” howls Automotive News [sub], before admitting that Toyota has been building towards a million battery per year capacity. A year ago Toyota said they would reach that mark by 2011, now they are saying Summer 2010. Besides, what’s the hurry? “In terms of the Toyota lineup, I’d say [the Prius] is probably in the midlevel of profit,” reminds Toyota senior managing director Takahiko Ijichi. And all those batteries require more harmony between man, machine and nature. I mean nickel mines.
The Government should urgently re-evaluate the planned discontinuation of the Scrappage Scheme in order to avoid a sudden, pronounced and damaging fall in business.
So says Adrian Rushmore of Glass’s Automotive Business Intelligence in a company press release (via theautochannel.com). But . . .
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