Toyota sales (press release via earthtimes.org) declined a whopping 42 percent from last April, as the big T recorded only 126,540 unit sales last month. And the bleeding comes from all over the lineup. From bread-and-butter Camry and Corolla (down 36.7 and 42.9 percent, respectively) to the entire Lexus line (LS down 61.6 percent, GS down 70.2 and IS down 48 percent) and from trucks (Tundra down 54 percent) and SUVs (4Runner down 69.3 percent) to compacts (Scion xD sold only 880 units) it’s ugly all over. Toyota sold more Priora (8,385) than Yaris (8,118) while the RAV4 (11,126) sold better than Venza (3,793) and Highlander (5,595) put together. Other than RAV4, the only bright-ish point in an otherwise forgettable month was RX which sold 6,237 units (including hybrids) and was reportedly the top selling luxury vehicle in America last month. Total hybrid sales hit 12,223.
Newsday reports that New York City has purchased 40 Nissan Altima Hybrids for its police fleet. NYC Mayor Michael Bloomberg pointed out that the Smyrna, TN-built Altimas enjoy a patriotic advantage over the Canadian-produced Crown Victorias and Chevy Impalas that comprise most of the NYPD’s fleet of 2,400 patrol vehicles. “It is an added benefit that buying these cars helps create jobs in America,” says Bloomberg. According to the report, some traffic enforcement agents have been using Toyota Prius hybrids since 2002, and police duty captains, who respond to major incidents, have already been using GMC Yukon sport utility vehicle hybrids. “We’ve had no downside,” says Police Commissioner Ray Kelly of his force’s hybrid use.
Ford’s sold 129,898 vehicles last month (PDF) as overall sales declined by 31 percent compared to last April. Retail market share did increase, however, as Ford likely gouged its bailout-burdened Detroit colleagues. The big news though? Mercury outsold Lincoln! Which is more an indicator of Lincoln’s sorry situation (5,973 total sales) than Mercury’s success (7,662). But then even Volvo (4,503) makes Lincoln look good.
No, really. The Detroit News reports that prior to its Chapter 11 filing, Chrysler sought to sell off parts of the company to everyone. “Chrysler sent letters to parties, primarily in China, whom we thought would be potentially interested in purchasing our assets,” writes ChryCo’s Tom LaSorda in a bankruptcy filing affidavit. “Over the next two months, several companies, including Beijing Automotive Industry Holding Co., Tempo International Group, Hawtai Automobiles, and Chery Automotive Co., expressed interest in purchasing specific vehicles, powertrains, intellectual property rights, distribution channels and automotive brands.” But guess what? Not even these ambitious firms were tempted to spend a dime on Chrysler’s alleged assets. And the major OEMs in the global auto game? Chrysler’s efforts to form alliances with Nissan, GM, Volkswagen, Tata Motors, Magna, GAZ, Hyundai, Honda and Toyota “have been determined and undertaken in good faith but have met uniformly without success,” admits LaSorda.
And that’s just the prototype. The LA Times‘ Dan Neil (the automotive journalist’s automotive journalist) got an exclusive first up-close look at Tesla’s Model S and comes away with some healthy skepticism. What did he learn? “Tesla has already had to walk back a claim regarding the Model S’ recharge capacity. The car will not have the capacity to accept 440-volt current, which would allow it to be charged in 45 minutes,” for one thing. The prototype “is just barely ambulatory,” writes Neil. “More like a glorified golf cart than a harbinger of tomorrow tech.” Also, “the car’s signature design flourish—a 17-inch, touch-screen control panel with haptic feedback in the center console —may not even make it to production.” And Neil’s skepticism is contagious: The Business Insider concludes that “There’s No Way Tesla’s Model S Will Cost $57,400” even after hefty government incentives. Ouch.
NPR’s Steve Inskeep: “You have no intent, and, in fact, not even the ability to remain major shareholders of two major auto companies?”
UAW President Ron Gettelfinger: “That’s correct. We do not have the ability because of the need for the cash in the VEBA.”
Inskeep: “Are you optimistic that Chrysler is going to emerge from bankruptcy in a long-term viable form?
Gettelfinger: “First of all, we did everything we possibly could to keep Chrysler from filing for bankruptcy. We did our part, and we’re not responsible for them being in bankruptcy . . . ”
Welcome to the new Chrysler ownership. And unlike Cerberus they’re not even pretending they’re in it for the long haul. But to whom will they sell? Listen to the whole story here.
There were plenty of entertaining moments on last night’s Autoline After Hours. Fortress Detroit’s ugly bunker mentality proved at every turn what people (specifically, former GM consultants) mean when they accuse the American auto industry of problems of culture (with footnotes!). But TTAC is here to help. And our first suggestion to those feeling threatened by the collapse of their comfortable, familiar world is to read more. Seriously. “You don’t think Toyota makes any money on their hybrids do you?” asked one torpid apologist. Unless the Nikkei (via Green Car Congress) is part of the dreaded “we hate Detroit” conspiracy, it turns out that Toyota does make money on their hybrids.
Fiat’s explanation of its deal with Chrysler states, “Pending (the transactions) approval, the current Chrysler will continue its normal business operations and the US Treasury and the Canadian government will provide the company with financing in order to allow the performance of all its obligations towards the employees and to fund its on-going needs.” But according to The Detroit Bureau, this isn’t the case. “During the bankruptcy proceedings, which are expected to last from 30 to 60 days, most of its manufacturing facilities will be closed. It is only when the New Chrysler emerges from bankruptcy that production will gradually resume. Workers will be eligible for supplemental unemployment benefits, worth about 80% of pay. Some additional plant closings are anticipated.” Which means either The Detroit Bureau has its facts wrong, or Fiat does. And if Fiat is wrong and Chrysler will halt operations during bankruptcy, what does Auburn Hills need $3.5 billion in government DIP financing for?
Also from Fiat’s official announcement today (via Financial Post)
The transaction will be implemented through an expedited sale of substantially all the assets of Chrysler to a NewCo pursuant to certain provisions of the US Bankruptcy Code. After intense consultations with the US Treasury and all the other constituencies, including, the government of Canada, the United Auto Workers (UAW) and the Canadian Auto Workers (CAW), Chrysler elected such route as the most effective to restructure its debt. As a consequence, today Chrysler will request the bankruptcy court in New York to approve the sale of Chrysler’s business to a NewCo. Subject to the approval of the regulatory authorities, if the Court will approve the Transaction it will require the parties to complete the transaction as soon as possible.
“This transaction represents a constructive and important solution to the problems that have plagued not just Chrysler in recent years, but the global automotive industry as a whole. Bringing together Fiat’s world-class technology, platforms and power-trains for small and medium sized cars, and its extensive distribution network in Latin America and Europe with Chrysler’s rich heritage, strong North American presence and talented and dedicated workforce will create a powerful new automotive company, while helping preserve jobs and a manufacturing industry that is critically important to the U.S. and Canadian economies.”
“Chrysler’s bankruptcy,” according to President Obama’s statement today, “is not a sign of weakness.” The goal is not to radically restructure the business of a firm that has been failing for decades and currently makes some of the least desirable vehicles on the market. No, for Obama and his task force, this is about going after evil speculators. After lauding the noble sacrifices of the UAW (which will own 55 percent of New New Chrysler), JP Morgan (recipient of $25 billion in TARP funds) and Daimler (who raped Chrysler in the first place), Obama glowers at the mean, nasty speculators who are “forcing” Chrysler into bankruptcy. “In particular,” explains Obama, “a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them.” So who are these shadowy money men who just won’t let Chrysler run free of their oppressive debts?
Or, as President Obama puts it, “a new lease on life.” Chrysler (“a company with a particular claim on our American identity”) will file for Chapter 11 bankruptcy in Manhattan court today, as Obama has promised $3.5 billion in federal aid over the next 30 days in hopes of hitching the troubled automaker to Fiat. The case will be handled by judge Arthur Gonzalez, a veteran of the Enron and WorldCom bankruptcies. When the deal is concluded and Chrysler emerges from bankruptcy, the federal government will inject another $4.7 billion. That more than doubles the current taxpayer investment in Chrysler, which had reached $4 billion (not counting ChryFi). See President Obama’s full statement at C-SPAN.
GM’s major bondholders are asking for a 58 percent stake in a reconstituted General Motors, but there are a number of challenges facing any debt-swap to relieve GM’s crushing $28b debt load. First of all, the Freep reports that some $2.7 billion worth of GM debt is covered by credit-default swaps. Since this means that ten percent of GM’s bondholders stand to receive face value for their bonds, the odds that 90 percent of GM’s creditors will take up any haircut offer seem slim. Add a bunch of angry, populist small bondholders to the equation, and you have yet another obstacle to the restructuring goal.
Reuters reports that the UAW membership has “overwhelmingly approved” its deal with Chrysler, paving the way for unionownership of the firm. So it’s fair to say that Obama’s “what we’ve seen is the unions have made enormous sacrifices on top of sacrifices that they had previously made” line sent the right message?
Deb Price, Detroit News: Thank you, Mr. President. On the domestic auto industry, have you determined that bankruptcy is the only option to restructure Chrysler? And do you believe that the deep cuts in plant closings that were outlined this week by General Motors are sufficient?
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