The Detroit News reports that Michigan’s congressional delegation has secured an agreement with House Democrats that could send three percent of the revenue from carbon emissions permits to American automakers starting in 2012. That would amount to billions of dollars every year, says DetN, and that’s not all. The new compromise also includes changes to carbon-cap proposals that “could ease the impact on states such as Michigan that rely heavily on coal for electricity generation.”
The Wall Street Journal reports that (suprise!) transaction prices on new vehicles have fallen over the last six months. The average transaction price for a new vehicle is now $27,941. Why so slumptastic? With American consumers perceived to be in value shopping mode and the automobile industry in disarray, incentives are starting to pile up on new cars. And it’s not just OEMs offering factory cash. Dealer incentives are up as well. The WSJ cites TrueCar data showing that a full quarter of all 2009-model vehicles are being sold below dealer cost. And those aren’t all coming from troubled Chrysler dealers.
The latest statistics from the Energy Information Administration show that diesel is actually .03 cents per gallon cheaper than gasoline on a national average. Whereas gas prices have risen considerably since their December low, the drop in diesel prices was slower, making the bounceback less extreme. According to CNN, the price parity can be traced to inventory levels. Gasoline inventory has been dropping bringing prices up more sharply. Meanwhile, diesel-making distillate supplies are increasing. Longer term, the Department of Energy expects diesel and gasoline prices to rise but not by as much as had been previously anticipated.
Auto industry supporters claim the EPA’s new dominion over CO2 regulations could be disastrous for the troubled industry. The Office of Management and Budget (OMB) agrees. Well, they did. A freshly leaked Bush-era memo reveals the agency had a major beef or two with the EPA’s recent ruling that carbon dioxide is—and should be regulated as—a pollutant. According to John Broder of the NYT, the document concludes that the EPA’s CO2 ruling “was not based on a systematic analysis of costs and benefits and fell short of scientific rigor on a number of issues.” Complaints with the ruling range from insufficient proof of C02’s harmful environmental effects to the negative economic impacts of C02 regulation (there’s your auto angle again).
The Daily Mail reports that the Gloucestershire police force has rolled out a new campaign urging citizens to turn in people they suspect of “living a lavish lifestyle from the proceeds of crime.” Chief Constable Timothy Brain explains, “in the current time of financial uncertainty, those who live a lavish lifestyle with no discernable, legitimate income become even more apparent. By flaunting their ill-gotten gains criminals signal contempt for everyone who works hard, and act as very poor role models for the younger members of society.” Based on this accompanying poster, it seems that Gloucesteshire MINI drivers should be prepared to prove that they can afford their gangsta whips at a moment’s notice.
Pop quiz: how many XL7s has Suzuki built at its CAMI plant this year? Answer: four. Seriously. Compare that with the 5,687 built in Q1 2008, and it’s pretty clear that there’s something rotten in the province of Ontario. Especially when you consider that GM is still using its CAMI capacity to pump out 2009-model Chevy Equinox and Pontiac Torrent CUVs. According to the Financial Post, Suzuki will not be be building any more vehicles in North America in 2009. Which means ’09-built XL7s are set to become one of the rarest vehicles in the world. But the firm is committed to its CAMI plant, with CEO Osamu Suzuki telling the FP that “the possibility that CAMI would be forced into closure or a production stop is 120% impossible. It is a central pillar in the reconstruction plan, so I am not worried about it.” Which means CAMI should survive any GM bankruptcy. Suzuki may be sitting out the NA market in 2009 (while nursing its Indian market profits) but when it brings its CAMI capacity back online, it will likely be in support of its ambitious Kizashi mid-sized effort. Too bad, then, that the fanboys are already calling BS on Suzuki’s pledge to bring the Concept 3’s bold styling to the streets with the Kizashi.
“You don’t need banks and bondholders to make cars.”
—Anonymous White House official to the Wall Street Journal‘s Neil King Jr. and Jeffrey McCracken. Check out their detailed breakdown of the White House/Chrysler Bondholder negotiations at the WSJ.
Ladies and Gentlemen, children of all ages: we give you the first Chevy Volt jingle, courtesy of Sarah Spiegel (shown here interviewing former CEO Rick Wagoner) and gm-volt.com! Listen to the ditty at the link and for lyrics hit the jump.
Of course not. It’s going to take a whole fistfull to make this spaghetti western happen. The Freep reports that when he replaces Bob Nardelli as Chrysler CEO, Marchionne will remain an employee of Fiat to avoid Treasury limits on executive compensation at firms receiving “extraordinary assistance.” Under these rules, compensation of Chrysler’s top executive is limited to $500,000 excluding restricted shares of stock. Marchionne earned around $4 million last year. Citing bankruptcy documents, the Freep explains that “under the deal, any of Chrysler’s top officers can be deemed a Fiat employee who’s “seconded” to Chrysler, and therefore take pay from Fiat beyond the Treasury cap.” Since Chrysler does just about everything “in consultation” with the Treasury these days, it’s hard to understand why Geithner’s own rules are being so blatantly flaunted. Oh well.
The AP (via Yahoo!) reports that Chrysler will ask Judge Gonzalez to cancel “at least” 800 dealer franchise agreements on Thursday. The news comes from lawyers of Cincinati firm Squire, Sanders & Dempsey, who are organizing opposition to the move. Automotive News [sub] has more on the effort, reporting that the National Automobile Dealers Association is soliciting $4,000 contributions from members to create a legal defense fund. Also, just because a dealer doesn’t get the axe on Thursday doesn’t mean they’re out of the woods yet. Mother Fiat is sees dealer cuts as business item number one for its new Chrysler division, and Thursday’s cuts are being called “preliminary.” Dealer cuts “won’t be a huge catastrophic number,” Jim “It’s Always Sunny In Auburn Hills” Press tells Bloomberg. After all, about 50 percent of Chrysler’s 3,188 dealers generate 90 percent of its retail sales.
The Ford-as-Survivor meme has properly taken hold in the mainstream media. But how much of the cheerleading is wishful thinking? Matt Debord of thebigmoney.com figures there’s no reason to get to excited about Ford’s $300 million stock offering, and indeed Ford’s stock is down considerably today. But Ford’s troubled supplier Visteon turned a $2 million Q1 profit, insists the Freep. The first quarterly profit since 2006! What you have to read in the whole piece to find out is that the profit comes courtesy of Visteon’s spun-off and bankrupted UK facilities. Meanwhile, Automotive News [sub] reports that Visteon financial filings admit the firm’s “ability to continue operating as a going concern is, among other things, dependent on the success of discussions with the lenders.”
It’s not news per se. After all, we knew that Wilmington was on GM’s “endangered plant” list. But the idea that GM will somehow attract a buyer for a factory that builds a dead-in-the-water sportscar is laughable. After all, Chrysler still hasn’t found a home for its Viper nameplate, a brand that carries far more heritage and prestige than the Skystice. So what to do with Wilmington?
Challenger? I just met her! In bankruptcy court.
You’d better be, because the White House told Wall Street Journal that it will hold onto its GM stake for “at least two years.” Out of “necessity,” no less. And burning $10bn in cash per quarter all the way. According to the WSJ report, the White House still doesn’t want to involve itself in day-to-day operations. Is that offer only good outside of bankruptcy? If Chrysler is the canary in the coal mine, the answer seems to be yes.
Time did the math, and reports that the total cost of the recent wave of automotive industry “assistance” has reached $83 billion. With Chrysler’s bankruptcy not going well (286,687 2009 models and 36,370 2008 models languishing on lots, according to Fortune) and GM about to join it in court, that number will top $100 million by the end of the summer. GM bondholders are also requesting something more than ten percent of New GM’s equity to give up their debt. And guess who’ll pay for that? Meanwhile, a lousy $4 million in federal emergency grants are going to assist Michigan’s autoworkers who have been laid off by the industry.
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