Sergio Marchionne’s introductory epistle [via theDetroit Free Press] isn’t blessed with the same opportunities for self-congratulation as outgoing Chrysler CEO Bob Nardelli’s. Instead, optimism is name of the game. And as Marchionne puts it, this isn’t the first time he’s stepped into “[what many perceived as] a failing, lethargic automaker that produced low-quality cars and was stymied by endless bureaucracies.” But, “through hard work and tough choices, we have remade Fiat into a profitable company that produces some of the most popular, reliable and environmentally friendly cars in the world.” Sergio thinks the same thing can happen at Chrysler. Could it possibly get worse?
“I don’t know anything about cars. A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same.”
—Incoming GM Chairman Edward Whitacre Jr. admits his lack of auto experience to Bloomberg
Speaking of GM’s ambivalence towards energy efficient vehicles, Bob Lutz’s determination that 95 percent of America won’t pay a hybrid premium seems to be bearing more fruit. GM’s 26/34 mpg Malibu mild hybrid has been canceled, reports Left Lane News (blog). The news is hailed as “unsurprising,” considering the hybrid Malibu’s $2,000 premium only improved mileage by 4 mpg in the city and 1 mpg on the highway over a six-speed auto, four-pot ‘bu LT. Meanwhile, despite Penske’s rescue of Saturn, the planned Vue Two-Mode Hybrid has also been axed.
Bob Lutz needs to clear something up. Fun lovers, report to GM Fastlane stat! It seems that the Man of Maximum is steamed about a WaPo piece which he complains casts him as “ambivalent” towards his beloved Volt. In fact, the piece is a sweeping look at the Volt’s place in GM, and it contains more than a few anecdotes that reflect poorly on GM management (shocking, I know). And the facts of the matter clearly illustrate that the Volt’s importance arises from political considerations far more than the inherent passion of GM’s product planners to create reliable, fuel-efficient transportation. Hence the accusation of ambivalence. But political motivation has to be disguised with pure intention (no matter how implausible) in order to work. And so Lutz is off to man the crumbling Maximum rampart.
The sale of Chrysler’s assets to Fiat is complete, reports the New York Times. Paperwork (and the transfer of $6.6 billion in Treasury money) was completed at about 9 a.m. Eastern, after news came yesterday that the Supreme Court would not hear the Indiana pension fund challenge. News reports refer to the speed of the Chrysler bankruptcy as “an important victory” for the Obama auto industry restructuring effort. Perhaps to avoid talking about the substance of the bankruptcy. Either way, she’s a done deal. Chrysler is dead, long live Chrysler!
The House of Representatives has passed Rep Betty Sutton’s $4 billion scrappage scheme [download full text here], reports CNN Money. The bill now goes to the Senate. Under Sutton’s bill, clunkers with a combined 18 miles per gallon rating or worse would be eligible for a scrappage rebate. Purchasing new vehicle which exceeds its replacement’s rating by four miles per gallon would earn a $3,500 rebate. Improve the combined EPA average by 10 mpg and snag $4,500. Offer good for one year. Or until we tear through $4 billion in a wholesome, American display of redemptive consumption. I’m sorry, I mean “shore up millions of jobs and stimulate local economies . . . improve our environment and reduce our dependence on foreign oil. The [Consumer Assistance to Recycle and Save] act demonstrates that we can free ourselves from the false argument of either you are for the environment or you are for jobs. You can do both, you must do both.” As the bill’s author modestly puts it.
Roger Penske has got to be a busy guy these days. His purchase of Saturn is a characteristically audacious move that is simultaneously compelling and terrifying. Penske’s Saturn dealers will sell current GM products until they reach the end of their lifetimes. “Concurrent with that, we’ll go around the world to see what products could be brought into this country,” Penske tells Edmunds Inside Line. The “World Market” approach seems to do away with much of the industry’s basic understanding of branding, but Penske insists that aerodynamics, fuel efficiency, safety and styling will continue to be the defining characteristics for new Saturn products.
That’s the question motivating an alternative plan for the government’s “investment” in GM drafted by Sen. Lamar Alexander. Under Alexander’s plan, the Treasury secretary would be required to distribute the government’s GM and Chrysler stock to the 120m or so Americans who submitted tax returns for 2008. “This is the fastest way to get the stock out of the hands of Washington and back into the hands of the American people who paid for it,” said Alexander. The proposal, which Alexander plans on attaching to the current tobacco regulation bill would:
• Prohibit the Treasury from using any more TARP funds to bailout GM or Chrysler.
• So long as the government holds stock in these companies, require that the Secretary of the Treasury and his designee have a fiduciary responsibility to the American taxpayer to maximize the return on that investment.
• Not later than one year after each company emerges from bankruptcy, require that the Treasury distribute its common stock holdings in that company evenly to every American who paid taxes on April 15.
The Original Equipment Suppliers Association is requesting an additional $8-$10 billion in TARP money, reports Automotive News [sub]. Because the first round worked so well. But two factors nearly guarantee that the request will be approved: first, the recent announcement that ten banks will be able to pay back some $68 billion in TARP money and second, the forthcoming resumption of production at GM and Chrysler when they emerge from bankruptcy. Oh yeah, and the fact that practically no TARP requests have been denied so far.
Automotive News [sub] reports that the National Auto Dealers Association has given its (unofficial) stamp of approval to GM’s revised dealer agreement. The document, under which GM’s remaining dealers will operate, has not been made public, although we encourage dealers to share their information at our contact form. GM’s previous agreement had drawn heavy criticism at last week’s congressional hearing on GM and Chrysler’s dealer culling plans. “I especially commend GM for its flexibility and its willingness to make substantive clarifications and modifications to address dealer concerns,” NADA Chairman John McEleney said in the statement. “We believe GM has made a very good-faith effort, given the unprecedented circumstances facing GM and the industry.”
Sergio Marchionne’s statement that “we would never walk away” from the Chrysler deal may not be having quite the effect he wanted. After all, the entire justification for the Government cramdown of bondholders and “auction with one bidder” sale to Fiat is that Chrysler will unravel if the the sale isn’t implemented post-haste. In a new filing to Supreme Court (PDF via SCOTUSBLOG), the Indiana funds argue that:
The Debtors (and the United States) have advanced the position throughout this case, including in its papers filed with this Court, that the section 363 Sale at issue here had to close before June 15 or Fiat would exercise its right to withdraw and the entire transaction would collapse. The courts below relied on such arguments and testimony in moving this case forward at an unprecedented pace . . . Whether or not these arguments and testimony were ever true, the Indiana Pensioners respectfully submit that the risk of termination by Fiat if the transaction does not close by June 15 no longer provides a basis for driving the timing of these proceedings.
Automotive News [sub] is reporting that former chairman and CEO of AT&T, Edward Whitacre Jr., has been selected as the chairman of the “New GM.” Whitacre is an industrial engineer by training and previously served on the boards of ExxonMobil and Burlington Northern Santa Fe. Whitacre and interim chairman Kent Kresa will serve on GM’s board along with current members Philip Laskawy, Kathryn Marinello, Errol Davis Jr., E. Neville Isdell and CEO Fritz Henderson. Six other current GM board members will retire by the time GM’s asset sale is approved, four of whom will be replaced by a selection process now underway. Two more directors will be selected by the Canadian government and the UAW VEBA trust. The reconstituted GM board will seat 13 directors.
Auto Motor und Sport has driven VW’s “Blue Concept Sport” roadster (in concept form, limited to 100 km/h), and praise its agility, steering precision and weight distribution (48:52). Not to mention it’s near-production feel. Word is that the two-liter diesel (180 hp) convertible could go into production by 2013 at a €22k-25k price point. Building the better MR2 sounds like a good place to correct one of Toyota’s major errors: surrendering the fun.
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