Well, Ion Mihai Pacepa was. “When the Romanian dictator Nicolae Ceausescu decided in the mid-1960s that he wanted to have a car industry, he chose me to start the project rolling. In the land of the blind, the one-eyed man is king. I knew nothing about manufacturing cars, but neither did anyone else among Ceausescu’s top men. However, my father had spent most of his life running the service department of the General Motors affiliate in Bucharest.” Plus he was in charge of industrial espionage, which is also a good place to start. Pacepa wrote his recollections for the WSJ, because “the current takeover of General Motors by the U.S. government and United Auto Workers makes me think back to Romania’s catastrophic mismanagement [of its auto industry].” Though the differences between the US and Romania are legion, and not to be forgotten, the story makes for an interesting perspective.
Plug-in diesel hybrids? Anyone? Only 50 grams of carbon dioxide per kilometer! Of course, Volvo’s plans are plagued with the usual “big plans, little company” problems. Like the fact that Volvo has no money. Ford’s Swedish division will build diesel-hybrids with about 30 miles of plug-in capacity for this latest project, while utility company Vattenfall will develop infrastructure and charging systems. In other words, like Mama Ford’s planned plug-in this puppy is only in play because of outside help. Speaking of which, there’s just one more piece to the partnership. “We do of course expect that the purchasing price will be higher,” Volvo’s Stephen Odell tells Reuters. “In this area we are keen to see further subsidies and incentives from the political arena to promote green choice among customers.” Of course.
This from Fiat spokesfolks speaking with Automotive News [sub]. “The Fiat 500 — we see that, like the Mini[sic], as a sort of boutique car that we think we can sell in good numbers on the East and West coasts in the same way that Mini has been successful in the U.S.,” he tells AN. Interestingly though, the 500 will also be the only Fiat-badged vehicle in the new generation of Fiatsler products. But, says the Fiat source, “there is a misconception out there that Chrysler is going to build the Fiat Bravo, just stick a different badge on it. They will be Chrysler products. They will be specific to Chrysler. The vehicle architectures will be based on our stuff, and there will be some powertrains. The vehicles will be U.S. vehicles, designed for U.S. customers by a U.S. company.”
Our man on the ground has passed along a few documents from GM’s first day filings in bankruptcy court. And it seems that Fritz Henderson’s “Faster, Pussycat Kill! Kill! Kill!” strategy is for real. This looks to be one mother of a fast bankruptcy. As the sale agreement states, “Consumers must have confidence in GM’s products, i.e., that a new GM will exist in the future so that it can stand behind its products. It is in this context that the timing of the transformation of the assets, in connection with the approval of the sale, becomes critical.” The fact that GM is filing a sale agreement on its first day shows that speed is the critical factor. Even Chrysler’s relatively rapid sojourn in Chapter 11 didn’t start with a sale proposal on the first day. Debtor-In-Possession financing has been lined up as well (big hand for your US taxpayers), including an expected $950 million “wind-down” loan. The lawyer carve-out is also limited to $20 million. Hit the jump to find out how it all could go wrong (but probably won’t).
Motor Trend has picked up on news that GM plans on building a B-segment replacement for its Aveo at a US-based, UAW plant. True to form, the new Fiesta competitor will not build on the rich legacy of goodwill accumulated by the Aveo. Probably because the Aveo was a repeat TTAC Ten Worst offender that built no such legacy of goodwill. And thus a new name is born: meet the Chevrolet Viva. MT figures Lake Orion, Michigan; Wilmington, Delaware; or Shreveport, Louisiana, could get the nod. “Building a Chevy Viva in a UAW plant will cost more than building the Aveo in South Korea,” figures MT. “It should be much more stylish and upmarket compared with the current Aveo. Chevy would have the advantage over Ford of a more ready supply of its competitor if the b-segment, fueled also by the coming Fiat 500 and a small Dodge, takes off in the next few years.” Count the assumptions there, folks. Meanwhile, with a Fiesta-Viva battle brewing, it seems that the automakers may be paying attention to the increases in Hispanic population in the US.
Advertising Age asked the same question of a brace of marketing experts, with predictably hilarious results. Early on, one Mad Man suggests revamping GM by introducing “a promotion that would transform General Motors into America’s first truly owner-owned company: The government issues anyone who purchases a new GM vehicle in the next 12 months 1,000 shares in General Motors stock. Then GM shareholders become people who are motivated to make both better products and a better company.” Seriously. As if the cure for GM’s woes were for marketing to wag the entire bankrupt dog. Anyway, check out the whole thing for a wild assortment of interesting ideas and pure, unadulterated crazy. Then riddle me this: how does GM take advantage of its new structure and piles of tax money while minimizing bailout backlash? Or does it? Can a government-owned firm be popular with the public under any circumstances?
TheDetroit Free Press is reporting that GM supplier Delphi will emerge from its three-year bankruptcy by selling itself to L.A.-based private equity firm Platinum Equity, for $3.6 billion. The bad news? Delphi will terminate its salaried pension plan, which covers 20,000 workers and retirees.The Pension Benefit Guaranty Corp will take over Delphi’s pensions, a move which will “cap the annual payments to $54,000 a year for salaried retirees age 65 years or older.” Delphi’s hourly retirement fund “will be addressed by GM.” Or not. Whichever.
President Obama has made his case for his government’s purchase of a restructured GM. We’re still working to get a full embed of the speech. Meanwhile, if you can forgo the rhetorical flourishes for a moment, check out Obama’s fact sheet on GM’s restructuring. The first subheading is “General Motors Restructuring: Shared Sacrifice.” Hit the jump for more details.
Judge Arthur Gonzalez has approved Chrysler’s asset sale to Fiat, reports CNN Money, moving Chrysler closer to emerging from bankruptcy. Is it a coincidence that we are learning that the ChryCo bankruptcy is going swimmingly on the very day that General Motors files for bankruptcy protection? Probably not. It’s highly likely that everyone involved wants there to be only one automaker in Chapter 11 by the time a fresh batch of congressional hearings on the bailout (that was incidentally inspired by the fear of multiple, cascading auto-sector bankruptcies) roll around on Wednesday. Because nobody likes to look that foolish.
“Today,” writes GM CEO Fritz Henderson at his firm’s Fastlane Blog, “marks a defining moment in the history of General Motors.” And it’s true. GM has literally been skidding towards this day for decades. And though June 1, 2009 should have come years ago, it seems that there’s one possible benefit to its long, expensive delay. In this blog-driven year, GM knows that it can’t expect public largess without giving up some corporate privacy. That, or as a publicly-owned institution, GM is now subject to the Freedom Of Information Act. Either way, our tens of billions of tax dollars have bought American taxpayers an opportunity. An opportunity to webchat. Again.
P. J. O’Rourke takes the decline of the American car personally. And not just because his family has sold Buicks for three generations. In his latest book Driving Like Crazy, O’Rourke sees the very story of our nation written in the crazy, chrome-clad arc of American automobilia. From “the sheer genius that transformed the 1908 Model T into the 1965 Shelby Cobra GT500 in a single human lifetime of speeding tickets” to the industry’s decades-long “sayonara,” O’Rourke reflects on where we’ve been and what we drove to get there. But he also knows that cars are about more important things than mere cultural and political commentary. They’re about fun. Fast fun. Busting axles in Baja fun. Pointing a big, noisy car at the horizon and burying the gas pedal fun. And what’s more American than that?
And going, it seems. As many as 450 dealerships with franchise agreements coming due in the next 17 months will be dropped by GM, according to Automotive News [sub]. GM’s Mark LaNeve insists that “less than half” of the 450 number is more accurate, but admits that cuts will be announced when GM files for bankruptcy on Monday. “These are dealers who have very specific issues,” LaNeve tells AN. GM will be using “very similar” criteria for these cuts as the last round, when 1,124 dealers went to the big closeout sale in the sky.
Holy global overcapacity, Batman! Trading Markets reports that the world’s largest automaker is cutting Japanese production in half and overseas production by 43 percent, as it struggles to touch bottom. Toyota and its Hino and Daihatsu subsidiaries will produce 433,979 units gobally in April, down 46 percent from April 2008. Exports from Japan have been hit especially hard, dropping 70 percent (year-on-year) in April. According to the WSJ, all of the Japanese majors are dramatically decreasing domestic production on falling sales. Even without bankruptcy filings, it seems everyone in the gobal car game is facing some form of reorganization. Like Renault/Nissan’s new attempt to find another $2 billion in “synergy” savings. Try looking under the couch cushions, guys.
Apparently no good deed goes unpunished in Auburn Hills, as Reuters reports that Lee Iacocca will lose his retirement benefits under Chrysler’s bankruptcy reorganization. The man credited with saving Chrysler from bankruptcy in 1979 will lose all of his supplemental executive retirement plan (SERP) benefits and his lifetime use of a company car, according to CEO Bob Nardelli’s testimony before Chrysler’s bankruptcy court. Although Chrysler’s employee FAQ states that “SERP contributions are placed in a trust fund and are not subject to creditors in the event of bankruptcy,” it seems that applies only to tax-qualified contributions. “We are required by law to stop the payments of non-tax qualified SERP benefits,” the FAQ reveals. Clearly Iacocca’s benefits fall into this category. Time to make another ad with Snoop Dogg?
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