Ford, Lincoln and Mercury dealers reported total sales of 118,818 units this November, down 30 percent compared to a year ago. Ford’s spin on the news is that “estimated industry-wide sales” were down 35 percent, meaning Ford actually gained market share. But let’s look at the reality. The Ford nameplate is down 18.5 percent, with only the Fusion and Focus (+.9 percent, and +15.7 percent respectively) increasing sales compared to a year ago. Even the all-new F150 is down 25.4 percent. Lincoln is down 19.1 percent, and Mercury is down 28.5 percent, as neither brand has a single model that sold better than November of last year. Volvo is down 29.7 percent, with only the C70 enjoying a bump in sales compared to a year ago (+27 percent). Looking at the raw numbers, it’s hard to get too down on Ford’s PR flacks for trying to find something positive in this mess.
Posts By: Edward Niedermeyer
Bloomberg reports that Toyota will cut winter bonuses by about ten percent for some 8,700 managers. This is the first time Toyota has reduced bonuses since 1998, as economic headwinds batter even the strongest automakers. Toyota’s profit forecast was cut by 56 percent last month, spurring president Katsuaki Watanabe to create the cost-saving task force. Said hit squad recommended the bonus cuts as well as halving Toyota’s contract workforce by March 31. Watanabe has often warned his firm to beware the symptoms of what he calls “big company syndrome,” in reference to the problems with culture and execution that have reduced GM from its once-dominant position. Compared to Detroit’s production-slashing, brand-reviewing, bailout-mongering approach to hard times, Toyota is looking relatively nimble. Oh, and its projected to earn $5.7b in actual profit this year. It’s not the $18b of a year ago, but at least Watanabe isn’t staring at the possibility of a $1/year salary.
Ford has released its nonclassified report to the Senate Banking Committee today, as CEO Alan Mullaly escapes from Detroit in his Escape hybrid. The Detroit Free Press has posted the entire report in PDF format, and it’s 33 pages of good stuff. The big news: despite insisting that federal funds are a “backstop,” Ford is asking for more money than it did last time Mr. Mullaly went to Washington. Specifically, Ford offers three scenarios, ranging from a short-term recovery (14.5m total US market in 2010 = $5b in support), to normal (12.5m in 2010 = $9b) to short-term worsening (11m units in 2010 = $13b). Ford’s “recommended terms of the loan would be: (i) at government borrowing rates; (ii) a revolving credit line with a ten year duration; and (iii) with additional conditions consistent with the TARP legislation.” When was the last time you “proposed” your own loan terms?
Fisker seems to be getting a handle on the whole car-company routine, joining the now-proud tradition of leaking images to the web to build hype leading up to a launch. Of course that’s a little bit harder when your production model is nearly unchanged from the concept, but these considerations don’t bother anyone else in the industry. Anyway, the $88k Karma is said to get 50 miles of all-electric range before its GM Ecotec engine kicks in to generate more juice. Top speed is listed as 125mph, and 0-60 should take 5.8 seconds. Production at Valmet’s facilities in Finland will eventually reach 15k units per year, and the first deliveries will take place in fall 2009. We will bring you complete photos when the Karma debuts in Detroit this January.
When Jonathan Swift’s “A Modest Proposal” was first published, its sustained and unyielding irony lead more than a few to believe that the Irish scribe was actually advocating for cannibalism and infanticide. With the benefit of nearly 300 years, we can now recognize Swift’s detailed plan to serve the children of Ireland’s poor to their landlords as biting satire. Reading the LA Times‘ Dan Neil’s own “modest proposal,” one can’t help but go back and check for signs of self-aware irony (a far less scarce resource than it was in 1729). Sadly, there’s no much to go on, leading me to believe that Dan Neil actually wants the United States federal government to purchase General Motors. Or is there? After the usual litany of Big 3 woes, Neil “modestly proposes” as US takeover of GM. He then correctly anticipates the “gall of free-market ideology rising” in his readers, and he breaks down the case. And it’s off to irony no-mans land. (Read More…)
Porsche CEO Wendelin Wiedeking knows a thing or two about dealing with hedge funds. In fact his company’s relationship with the hedgies of the world has inspired more NSFW-bombs per TTAC headline than nearly any other topic. Anyway, The Guardian reports that Wiedeking tore into American automakers, singling out GM in particular for “openly threatening” the US government with bankruptcy for bailout bucks. Oh yeah, and “driving the industry to the brink of ruin.” Wiedeking went on to state that it could be only a matter of time before hedge funds took majority control of one of the US car manufacturers that had “inflicted damage on themselves with ruinous discounts and hugely subsidised leasing rates.” If that sounds familiar, it’s because Wiedeking was echoing a theory recently outlined by our own Ken Elias. We’ll be watching.
Recently, firms like Tesla have launched themselves into the public eye by trumpeting the meme that Silicone Valley’s innovation-driven culture will show the way for Detroit which remains mired in old-economy faults. And it’s a storyline that has yielded millions in venture capital and free media attention. The New York Times’ Thomas Friedman unintentionally brought this line of thinking to its point of absurdum by calling on Steve Jobs to “do national service and run a car company for a year.” But as our ongoing Tesla Death Watch consistently demonstrates, Silicon Valley automakers could still stand to learn a thing or two about, you know, actually producing cars from even Detroit’s most dismal. And then there’s this story from The San Jose Mercury detailling the extent to which Silicon Valley is dependent on business from Detroit. “As soon as the automotive industry coughs, a lot of other companies get a cold,” Gartner analyst Thilo Koslowski tells the Merc. “That includes companies in the semiconductor industry and that includes a lot in the Bay Area… It’s a relatively big market for them in Silicon Valley.”
Alfa Romeo has made the first North American delivery of its stunning 8C Competizione to uno dei più grandi collezionisti di automobili al mondo, Jimmy Glickenhaus. Because paying Fiat $3m to upgrade a million-dollar Enzo to 612 P4/5 spec buys you those little perks.
We gave Bond actor Daniel Craig a pass when he turned down the free Aston Martin of his choice as a perk for his silver screen Aston pimping. After all, London is one of the least driver-friendly city in the developed world, and as Craig put it “I live in London and it doesn’t make sense to drive an Aston Martin there. I’ve nowhere to park it.” And we bought his line, citing our own Adrian Imonti’s maxim that “driving in London just for fun is as sensible as rollerblading on the autobahn.” But, while we were defending Craig from the editorial assault of no less an authority than Pistonheads, 007 apparently went off the reservation and placed an order for a new Lotus Evora (while Aston burns). According to eGMCartech, Daniel Craig has joined half the celebrities on earth who are getting in line for the mid-engined 2+2. Other takers? London Mayor (and congestion charge slayer) Boris Johnson, Top Gear UK presenters Richard Hammond and James May, Craig;s Bond predecessor Pierce Brosnan, Jay Leno, Jamiroquai’s Jay Kay, supermodel Jodie Kidd, Beyoncé Knowles, Dave Grőhl, Kelly Rowland, George Clooney, Kevin Spacey, Patrick Dempsey and J-Lo. So this is clearly the “it” car of 2009, and apparently parking in London isn’t as big a deal as we thought. But wouldn’t you rather have an Aston for free?
Ever quick on the media-scene-defining draw, The New York Times is dubbing the auto industry bailout battle the cure for “campaign withdrawal.” Also known as the bitter, divisive battle, du jour. Or, to use the Grey Lady’s honeyed verbiage, “The crisis in the auto industry is helping to fill a void left by the end of the long presidential race. It has also rekindled debate over many of the big issues of the campaign. Arguments have touched on the environment, national security, American identity, small-town values, the role of government and, of course, the need for change.” Hell, SNL even did a skit about it. Anyway, the Times figures that the Battle Of Detroit is easier for middle America to understand than the acronym-laced cognitive hell of the Wall Street bailout, while offering the PR gaffes, emotionally-charged arguments and outright lies that make big media business out of political campaigns. So, how does this campaign break down? According to Alex Castellano, a media consultant for Mitt Romney, “The auto industry, of course, is the new McCain. The auto industry is old America. It’s stuck. It’s one thing we haven’t been able to move into the future.” Does that make Warren Brown the new Sarah Palin? And where the hell does that leave TTAC, who’s been banging the Detroit doom drum for nearly a decade? On second thought, we don’t want to know. We’re actually glad the election is over.
Since the first mutterings of an auto industry bailout, the idea has wrapped itself in unabashedly patriotic rhetoric. Now that the battle for the billions has been joined, this nationalist veneer is reaching near-self-parody levels of earnestness. All the while we’ve been arguing that saving American jobs and saving the Detroit Three in their current forms are mutually exclusive goals. As reality slowly becomes too real to ignore, directors, representatives and pundits are beginning to acknowledge this trade-off, although you might be surprised by how they’re playing. Or, if you’re as cynical as we are, not. The gameplan comes from Mark Phelan of the Detroit Free Press, who argues that to survive, Ford and GM must “must show a business plan that’s profitable at much lower sales volume and has upside flexibility to build more vehicles and for workers to make more money with overtime. This will require plant closures and layoffs.” At home, of course. Meanwhile, Phelan argues that “GM and Ford’s greatest assets are their worldwide facilities and capabilities…
We thought things were bad when General Motors announced it was delaying incentive payments to dealers by two weeks (ten more days, hang tight guys). As usual, it gets worse. We now hear from Automotive News [sub] that GM is using its November Re-Consensus Dealer Cash Program to dump more inventory on its hapless dealers. An undisclosed formula determines eligibility for GM’s dealer incentive program, the gist of which is the less inventory you have, the more you have to order to receive incentive cash. Seems fair, right? Don’t worry, it’s not. Forbes reports that Detroit dealers are actually carrying historically low inventories, but that “days on hand” is what’s killing them. And now those (relatively) low inventory numbers are what GM is using to foist their cars on the dealers. A Montana dealer with a 365-day supply was asked to take only one Malibu sedan and one Silverado to get $3,000 dealer cash on his 2008 and 2009 models of the Traverse crossover, Tahoe and Suburban SUVs, and Impala sedan and $2,000 on Cobalt compact cars. But if you have less than 365 days worth of inventory (and in this market, who knows how long it will take to actually work through that much) you are going to be ordering more cars to get the cash… or watch your sales go to another dealer who does.
This is what I get for taking a moment to check in at GM-Volt.com. The angry young Volt-lovers are freaking out about the possibility of GM not surviving until the Volt’s launch date, and the prospect of losing their beloved fetish object has folks in a “pay any price, bear any burden, meet any hardship” kind of mood. The emotional fervor that these people feel towards this nonexistant vehicle is such that their suggestions make handing a blank check to Detroit look like a good idea. The “GM-Volt.com Viability Plan Suggestion,” was put forward by semi-retired NASA engineer Phil Toney, and man is it a doozy. The plan boils down to congress legislating that the entire government fleet (600k+ vehicles) be replaced with, you guessed it, Chevy Volts. But that’s not all…
There’s a small rash of stories spreading through the media with a single common thread: everyone’s going to pull together to get GM through until the government picks up the tab. So, is it feel-good holiday rumormongering, or something more? Let’s take a look. The first story comes from Automotive News [sub], and it quotes GM purchasing boss Bo Anderson as saying suppliers aren’t demanding cash. And why would they? It’s not like things are tight right now. “Our suppliers are behind us,”Anderson tells AN, “We keep our terms of payments. They are contractual, something we negotiate with suppliers, and we think it is important to be a prompt payer. We are doing our best to hold the current terms.” Doth the gentelman protest too much? “It is very important to be very transparent and be open about the changes we see in the workplace with production schedules, product delay and any product changeovers,” says Anderson, while acknowledging that supplier CEOs face difficult conversations with their nervous directors, who worry about GM’s ability to pay as it suffers a liquidity squeeze and delays in getting financial aid from Congress. But anyone who has watched supplier after supplier go bankrupt over the past several years knows that suppliers have little choice in these matters. The UAW though? (Read More…)
This is what passes for good news these days, so pass the turkey and keep smiling. Edmunds (via Dow Jones Newswires) estimates that the American new car market is down 28 percent in November, but up 1.9 percent from October. “Sales improved slightly over October thanks to near record high incentives and perhaps a sense of relief that the presidential election is over,” said Edmunds’ executive director of industry analysis, Jesse Toprak. Many analysts had forseen a bloodbath in November, after a disastrous October. In November’s 25 selling days, Chrysler LLC’s sales are seen dropping 42%, with Ford posting a 33% slide and GM reporting a 28% skid. And it’s not just Detroit firms losing ground. Toyota sales are expected to drop 24%, with Honda sales down 21% and Nissan sliding 29% on the month. Detroit’s market share is estimated to be 47% in November, down from 51% a year earlier and flat from October. These numbers could easily have been much, much worse given the record low consumer confidence. But is cheap gas helping, and if so, how long will it last? Stay tuned, as we get official numbers out at the end of the month.
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