Ronald Reagan once said that the scariest words in the English language are “we’re from the government and we’re here to help.” For troubled auto suppliers though, there are scarier things than government assistance. Specifically, government assistance administered by GM and Chrysler. Automotive News [sub] reports that the the newest automaking branches of the federal government will be in charge of allocating the $5 billion in supplier aid, and that they’ll be using the money to settle old scores. According to AN‘s breezy prose, GM and Chrysler may “pass over” suppliers that have sought to protect themselves from OEM bankruptcies by demanding payment in fewer than 45 days or arguing that insolvency worries allow them to break contracts with the automakers. After all, the government didn’t think the supplier rescue money would go to the most in-need firms, did it?

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President Obama concludes his remarks on the auto industry:

“But there is something I want everyone to remember. Remember that it is precisely in times like these—in moments of trial and moments of hardship—that Americans rediscover the ingenuity and resilience that makes us who we are. That made the auto industry what it once was. That sent those first mass-produced cars rolling off assembly lines. That built an arsenal of democracy that propelled America to victory in the Second World War. And that powered our economic prowess in the first American century.

Because I know that if we can tap into that same ingenuity and resilience right now; if we can carry one another through this difficult time and do what must be done; then we will look back and say that this was the moment when America’s auto industry shed its old ways, marched into the future, and remade itself, once more, into an engine of opportunity and prosperity, not only in Detroit, and not only in our Midwest, but all across America.”

Ironic counterpoint courtesy of CBS News and several recently laid-off employees of a Western Michigan GM dealership.

Shortly before Tesla officially debuted its Model S Sedan, three photos were leaked via (sigh) Twitter. This was one of them. Ouch. Tesla asked the leaker (Digg founder Kevin Rose) to remove the photos, prompting him to comment that he is “not sure if the company knows how the ’ol web works.” Anyway, the Model S (formerly WhiteStar) is supposedly being built on a chassis of Tesla’s own design (insert mirthless laugh here), will go up to 300 miles on a charge and hit 60 mph in 5.5 seconds. And all those “facts” sound reasonable compared to Tesla’s assertions that it will go on sale in 2011, ramp up to 20,000 units in the first year, and seat seven. Did the Jetson kids sit in the trunk too? Prices start at about $60K, depending on the battery choice, tax break and how gullible you are. Oh, and the looks? They got nothing on Fisker’s Karma.

If an automaker shuts down one of its New Hampshire dealerships, it is currently required by law to buy back inventory and parts. Fair enough, right? Well, the AP (via Forbes) reports that New Hampshire’s senate is considering a “dealer bill of rights” that would force OEMs to buy back stock and parts even if the local dealership goes under voluntarily. Local lobbyists say 14 dealers failed in 2008, and many weren’t provided fair compensation by their respective manufacturers. The Alliance of Auto Manufacturers claims to support buybacks for voluntary closures in principle, but says the bill’s language leaves it open to abuse. The AAM also charges that the bill would require manufacturers to pay for renovations done 15 years prior to closing, a protection that exceeds those of any other state. The bill also prohibits franchise agreements which limit the dealer’s legal recourse, gives the manufacturer the option to buy the dealership, inequally distribute or price vehicles between the state’s co-franchisees, or coerce the dealer to buy a certain vehicle model in order to gain access to another model. Numerous other protections for dealers fill out the comprehensive bill, which dealers and legislators say is necessary in the curent auto market.

Bloomberg reports that Citigroup (bailout bill to date: $45 billion) could team up with GM and Chrysler ($17.4 billion so far not including aid to finance units) to distribute the $5 billion recently allocated to the dead-alive auto supplier sector. This irony-free revalation comes courtesy of an Original Equipment Supplier Association document leaked to Bloomberg. Citi would act as the “third-party servicer” for the program, which guarantees suppliers’ accounts receivable “no matter what happens” to the automaker that promised to pay for the parts. Suppliers will have to pony up two percent of the receivable to qualify, three percent for expedited delivery. A number of zombie suppliers are expected to miss even this low bar. Meanwhile, we’re wondering how AIG didn’t manage to get a piece of this action.

Autobloggreen recently got its paws on a presentation (PDF, read the whole thing) from the California Air Resource Board’s public “cool cars workshop.” And let’s just say the thing exudes the kind of bureaucratic overreach heretofore only imagined by folks sporting the latest in tinfoil chapeau. Here’s the logic: cars that get hot when they sit require greater air conditioning, which increases fuel consumption and (tada!) air pollution. And since architectural surface coatings are 25-35 percent reflective, there’s no reason not to require similar levels from auto paint, right? Skyscrapers, cars; potato, potahto. CARB will require vehicle surfaces to reflect at least 20 percent of solar energy by 2012, a figure that no black auto paint can currently achieve. One third of OEM palettes must meet the 20 percent mark by then, and all OEM paints must meet the goal by 2016. Oh, yes, and by 2016 even collision repair shops have to use the special paint. The only mitigation for these rules are if you sufficiently increase the Rd factor of your cars windshield glazing. And just to keep a song in your heart, “other compliance options are under investigation.”

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You know how the endless parade of talking heads constantly bemoans the “freezing up” of global credit markets? They’re full of it. Credit markets are just fine. Just as long as you happen to be one of the world’s most profitable automakers. According to Bloomberg, Porsche Holdings has secured a €10B (with options to expand to €12B) refinance of a credit facility from a consortium of 15 banks including Barclays, Deutsche Bank, UBS and Credit Suisse. The refinancing was for cash borrowed by Porsche to buy its majority position in Volkswagen. Porsche is seeking another €2.5B in order to up its VW stake to the 75 percent level it needs to bring VW cashflow onto its books. And though lending to Europe’s largest automaker seems like a relatively safe investment for panicky banks, Porsche has been living by the sword from a financial standpoint. “The renewal of the credit line is a relief for short- term funding concerns,” says one Credit Suisse analyst who recommends that Porsche merely maintain its current investment in VW.

VW is killing the Rabbit, reports C&D. Well, the name anyway. And not a moment too soon. Sure, there’s some history there: the Rabbit was one of the first foreign cars to be mass produced in the US, helping kick off one of the most significant trends in US automotive history. But the Rabbit name also embodies so many of the compromises that have become stock-in-trade for North America-only models. Ugly, “Americanized” interiors and shoddy quality (not to mention the square headlights) marred early US production of VW’s rodent Golf-alike. When the name was revived in 2006 in a blaze of nostalgia marketing, it was saddled with a thirsty, primitive 2.5-liter engine while Euro-spec Golfs boasted a wide range of more advanced, efficient engines. Ultimately, the Rabbit name has come to signify unnecessary compromise and VW’s arrogance towards an American market it sees (and helps define) as crude and unsophisticated. With the Polo headed stateside and the Golf name returning, VW is not only re-rationalizing its nomenclature (games!), it’s taking a chance that America is ready for smaller, lighter, more “European” products. Well, sort of.

Honda planned its new Insight hybrid to cost less than Toyota’s ubiquitous Prius in hopes of snagging economy-minded hybrid shoppers. Unfortunately for Honda, the Insight wasn’t quite the bargain they’d hoped for. Despite rumors of an $18,500 base MSRP during planning, the Insight ended up just a few grand away from the Prius at $20,470 base (including delivery charge). And now Toyota is returning the favor, telling Automotive News [sub] that it’s planning a Yaris-based “economy hybrid” to undercut the Insight. “We are going to compete by expanding our hybrid-vehicle lineup to smaller hybrids, in the class of the Vitz and Yaris,” says Prisu chief designer Akihiko Otsuka, using both the Japanese domestic and overseas market names for Toyota’s supermini. The implication is that this baby hybrid will hit all of Toyota’s major markets possibly beginning as early as 2011. But Honda isn’t taking the news sitting down reminding AN that a Fit Hybrid is also being planned which could bring Honda’s hybrid entry cost down even further. All of which is good news for hybrids, which seem ready to finally leave behind their eco-accessory reputation and get stuck into some good, old-fashioned value competition.

Rumors have simmering for some time now that say Porsche is considering extending its once-focused brand downmarket. Again. And though the Roxster rumors prompted a repudiation of volume-chasing from Zuffenhausen, word is filtering in from the German auto press that Porsche might be considering a neo-914 project with VW. Or, as the starry-eyed fools at Motor Authority put it, “work on the next-generation Boxster and what has been thought of as a 914 revival may be a sort of cover for the even more secret work on the 356’s modern spiritual successor.” What they mean (I think) is that the new baby Porsche could be a rebadged VW, true to tradition. The Bluesport Concept, in this case. Of course that means cannibal trouble for the proposed Audi version, but that was coming anyway (VW “needs” to share the platform with “at least” three brands). Meanwhile, CAFE doesn’t just loom for Porsche, they’ve been fined every year since 1991. Oh yeah, and the lovable Boxster has loaded over $6K onto its base MSRP since its 1997 debut. So I’ll break with site tradition and say Porsche should keep stretching that brand. Let’s face it: the Bluesport ain’t coming stateside as a VW, so we can’t expect a true “performance bargain” out of the Bluesport platform. A sub-$40K Porsche? That might be worth dreaming of.

Results from the IIHS’ latest small SUV roof crush test are making the rounds of the autoblogosphere, and as usual the spoonfed information is being dutifully regurgitated in the name of consumer safety. What goes largely unreported is the fact that the IIHS is gleefully moving the roof crush goalposts, a unilateral decision with little benefit to consumers and a host of unanticipated consequences. Current roof crush standards mandate that vehicle roofs must support 1.5 times the weight of the vehicle, and have been in effect since 1973. The IIHS has been campaigning for years to increase government roof strength standards, and an uprated standard of 2.5 strength-to-weight ratio is currently being considered by the NHTSA. So where does the 2.5 standard rate with the IIHS? “Marginal” is the score that the IIHS gives to vehicles meeting this not-yet approved standard. Huh?

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President Obama wasn’t indulging in hyperbole last Sunday when he told 60 Minutes that “the only thing less popular than putting money into banks is putting money into the auto industry.” The Freep reports that a new Polk survey shows that 61 percent of Americans now oppose giving GM and Chrysler more money. More tellingly, support for a continued bailout of the auto industry peaks at only 16 percent in the manufacturing-heavy Great Lakes region and drops to as low as 4 percent in favor in New England. And there’s little room to argue that lack of support is based on ignorance or misperception. About the same percentage of people who opposed more loans also recognized that denying them would have dire economic consequences. One Polk analyst describes the emerging consensus on Detroit’s predicament as “it’s a problem, but it’s not a problem for taxpayers.” Cold.

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