GM wants to dump Opel on Fiat, but Fiat has its eye on GM’s successful Latin American division. GM sees a chance to hop on Fiat’s runaway train and is considering giving the operations to Fiat for a stake in the Marchionne empire. Two anonymous sources tell The New York Times that Fiat’s CEO “has indicated a willingness to give up less than 10 percent of Fiat to General Motors.” GM is said to be asking for 30 percent. How awkward.
The Sebring/Avenger twins aren’t going out of production come the 2010 shutdown of the Sterling Heights plant where they are currently produced. Inside Line has it straight from the horses, er, mouth: Chrysler spokesman Rick Deneau.
Deneau: “We definitely have plans for these vehicles beyond December 2010. That’s about all I can tell you, but it’s pretty definitive.”
Inside Line: “They aren’t being killed?”
Deneau: “Nope, we have flexibility in our plants. We said [that] all along. You could build Sebrings and Avengers in Belvidere. I’m by no means trying to make a manufacturing statement. But we have plans for them beyond December 2010.”
The Kokomo Tribune reports that the funds are for several former executives facing securities fraud charges, including former CEO and president, J.T. Battenberg. The KT describes Delphi’s 15,000 retirees as being “riled” by the decision. Considering the The Delphi Salaried Retirees Association just negotiated $8.75 million for continued health insurance benefits, I’d imagine “riled” is some heavy-duty midwestern understatement. They’re definitely seeking a motion to block the request. According to court papers though, $6 million has been deposited in the defense fund since Delphi entered bankruptcy aproximately 4.5 billion years ago (based on carbon dating). “Where is the justice?” asks DSRA interim chairman, Dennis Black. “Where is the money coming from?” Nope, I got nothing.
Bloomberg reports that Renault/Nissan is looking at partnering with Penske Automotive Group to make a bid for the Saturn dealer net, according to “people familiar with the matter.” Nissan wants to use more of its North American capacity to build Saturn-branded vehicles based on either Nissan or Renault products. Penske would distribute the vehicles through existing Saturn dealers, using its “plug and play” model already in use with Smart dealerships. In this arrangement, Smart takes customer orders and deposits via a Web site, allowing dealers to keep fewer cars in inventory. Would this work with a larger model line? Does Nissan/Renault really want to compete with itself? Does GM really have another month to solicit offers (as it plans to) for Saturn? Will those offers improve over the next month? Er, maybe, apparently, no and definitely no. Still, if Penske and Nissan want to pull the trigger, it’s hard to see how GM could say no. And maybe, just maybe, Saturn could once again become America’s most innovative dealer network.
Consumer Reports drops a sly wink at the irony-free Daimler-Chrysler tagline while revealing that (surprise!) Fiat’s reliability is little better than Chrysler’s. Of course, pre-retreat American Fiat records speak for themselves. Usually in acronym form (Play It Again, Sam, as the old folks say). But even 21st-century Fiat ranked only three places higher than Chrysler in Britain’s 2008 Which? Car reliability survey. Did we mention Chrysler took last place? Honda and Toyota in first, etc. But CR plays it cool. Real cool. “By the limited indication we have, it looks like reliability may be a challenge,” is the money shot. Way to represent the data!
And, golly, is it a touching scene. The Richmond (Indiana) Palladium-Item reports that the small town of Connersville is tooling up its effort to become the future home of Carbon Motors, makers of the E7 purpose-built police car. “A crowd estimated at 1,000 people attended a community prayer service Sunday night at Spartan Bowl, praying the 1,350 jobs Carbon Motors could generate will come here,” reports the P-I. Paging Norman Rockwell!
Earlier today, Robert noted that “GM doesn’t have a fucking clue what it’s doing with its products or brands.” For more proof of this, consider this report from GMInsideNews which claims that a Buick-branded version of Opel’s Astra has been approved for the North American market. According to the GMI story, the 2012 Buick “Astra” will be built at either GM’s Lordstown, OH, assembly plant or at their new San Luis Potosi, Mexico, assembly plant starting in 2011. The crazy part? “At this point the car has NOT been approved for Buick in China, that decision will be up to Shanghai GM.”
Considerare l’aritmetica, asks Rob Cox at breakingviews.com. Sure, the Chrysler freebee deal has sent Fiat stock soaring, but if you strip away the non-auto components of the Fiat group and factor in the firm’s $8 billion in debt, and what’s left is worth only $5.5 billion, according to Cox’s math. Which means Fiat will face some major challenges in cobbling together its 5 million annual global sales empire, a fact we’ve already explored here. And based on Chrysler’s insatiable appetite for taxpayer dollars, Fiat’s going to have a tough time just feeding the cash-burn beast.
The Wall Street Journal reports that GM is in talks with Renault over the future of the Saturn dealer network. GM has already given up on the possibility of receiving any kind of cash consideration for Saturn; a deal with Renault would see Saturn essentially handed over to the French firm. According to the WSJ, Renault is considering Saturn as an American-market brand for its Renault and Samsung Motors products. Why Renault wants to compete with its sister-firm, Nissan, in that brand’s biggest market isn’t immediately apparent. Maybe Ghosn doesn’t like Marchionne hogging the spotlight. Meanwhile, Chinese automaker Geely has submitted a bid for GM’s Saab “division” (it’s more at brigade strength currently). Unfortunately, nobody is sure if this bid is for real or if it’s just a gambit to pressure Ford into accepting Geely’s Volvo bid. Or maybe Geely has just fallen for all things Swedish. We’re told to expect a Saab deal in “early summer,” and with bankruptcy looming, look for Saturn to be offloaded post-haste as well. (Thanks to rod panhard and Mr Sparky for the tip.)
Oh noes! The UAW did the math on GM and Chrysler’s newest restructuring plans and it’s not pleased at all. Well, with GM’s plan, anyway. Commence angry letter (PDF) to Senator: [blank]!
“Incredibly, between 2010-2014 GM’s restructuring plan also calls for a 98% increase in the number of vehicles it will be importing into the United States from Mexico, Korea, Japan and China, with the number of imports from these countries increasing from 371,547 to 736,743. As a result, the share of GM’s sales in the U.S. market that will be imported from these countries will increase from 15.5% to 23.5%. The overall number of vehicles GM will be importing in 2014 represents the production of four assembly plants, the same number that GM plans to close in the United States.”
How does Marchionne do it? Having paid precisely bupkis for a reorganized “allegedly good Chrysler,” the Fiat CEO is now set to earn his firm $35 million if the deal doesn’t go through. In court filings (via DetN), Chrysler has requested the break-up fee with the following mystifying justification. “Fiat appropriately is the recipient of the proposed breakup because it has pursued and funded all aspects of the Fiat transaction on behalf of purchaser and has itself agreed to substantial commitments for the use of its technology, platforms and distribution network in support of the Fiat transaction and the Fiat alliance.” While taxpayers take an $8B+ bath no matter what. Huh?
Who would have guessed it? As soon as we start reflecting on what exactly this little government foray into the auto sector will cost us, DC goes and prepares to bump up the sum. From ABC News comes a report that Democrat wranglings on the upcoming climate bill have yielded a compromise on forthcoming “cash-for-clunker” provisions. Details are still sketchy, but according to ABC, “under the new agreement, consumers will be able to trade in a “clunker”—a car that gets 18 miles per gallon or less—for a voucher for a new fuel-efficient car. The amount of the voucher will range from $3,500 to $4,500, depending upon the fuel efficiency of the new vehicle.” Want more details? Too bad. All you get for now are the assurances of one John Dingell (D-MI) that “it’s a good agreement. It means sales of autos, it means fuel efficiency and it means progress.” No word on cost to taxpayers, limits, “buy-American” clauses or other potential sources of trouble.
The Detroit News reports that the NHTSA’s upgrade of roof crush strength standards will add $1.4 billion to the cost of new cars industry-wide, but will save 135 lives per year. Based on the NHTSA’s numbers, the costs will come out to about $54 per vehicle in design costs and another $15 to $62 in added fuel costs. In other words, even the NHTSA admits that uprated roof strength tests do trade off with fuel economy.
Short answer: no. But that doesn’t stop The Detroit News from practically begging the man they say “has accomplished almost everything in the auto industry” to reach for the stars. Er, planets. “We have been offered an opportunity to look at Saturn,” say Penske Automotive Group spokesfolks. But “it’s very premature to assume anything will be done. I can confirm to you that we are looking at it.” And that’s enough to get Motown’s cheerleaders all hot and bothered. Motor Trend‘s pick for Car Czar negotiating with the UAW’s pick for Car Czar (now GM advisor on the Saturn “sale”) negotiating the fate of GM’s best dealer network? Sign me up for that smoke-filled room!
For all the “Inside Baseball” we play around here, we never forget that this is a car website. And the immediate reason Chrysler has gone under is because its products have been consistently sub-par for several cycles now. With that in mind, we can dissect the financial details of Chrysler’s alliance with Fiat all we like, but if it doesn’t produce products that sell, it goes nowhere. Car and Driver’s analysis of Chrysler’s plan (PDF) shows that Chrysler has nothing besides a tarted-up “new” 300C and EV vapor in its new-car pipeline. Which means Fiat’s going to have to step up, big style. But are Fiat’s products up to the challenge of overcoming Chrysler’s brand baggage? And will they translate into the US market success that Chrysler needs to pay off its taxpayer loans?
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