GM’s overseas operations have long been touted as the only part of the General that is worth actual money. But might it make sense for GM to sell of profitable foreign operations? Though it’s doubtful that GM would ever voluntarily spin off, say, Buick and sell it to a Chinese firm, Charles Child has a column in Automotive News [sub] suggesting lawmakers should consider making such an asset sale a condition to further bailout cash. Child suggests that a sale of Buick to Shanghai Automotive Industry Corp (SAIC) makes lots of sense, cutting the number of US brands, and putting cash in the General’s pocket. How much? Based on Jag/Land Rover’s recent price tag of $2.3b, Child guesses Buick could be worth a billion to SAIC. Sure, The JagRover sale happened before credit markets took a dirt nap, but hell, GM could even use thre-quarters of that much cash right now. Plus the US market needs the Buick brand like it needs another run on the banks. Child’s analysis is thorough and compelling, and his thesis is well summarized in the final two sentences of his piece.”In today’s crisis, creative solutions are imperative. Nowadays, nothing is sacred in Detroit.” Truer words were never spoken.
Another day, another Cassandra-come-lately. Today we hear from Patrick Anderson, CEO of the Anderson Economic Group, who tells the Detroit News that the automotive market cannot support three Detroit car companies. “2008 marks the year when it became apparent to everyone that (providing products at a loss to maintain market share and keep plants at capacity) not possible. The days of zero-percent financing on a vehicle that was sold at a loss are over.” Anderson is unsurprisingly bearish on Chrysler, admitting that Auburn Hills is “not going to sit around and lose money for the next five years. They will consider auction and Chapter 11.” Of course, like so many of the grudging doomsayers recently emerging from the woodwork, Anderson somehow believes that an auction is preferable to a bankruptcy. “A merger of some type is likely to occur because the economics now are unsustainable for three Detroit automakers,” says Anderson, while admitting that “there is no scenario where GM and Chrysler avoid significant reductions in employment — none.” The real question is how close to the 70k expected losses will the final tally be. And whether a bail-and-merge would save any more of them than a bankruptcy. And how much that bail-and-merge might cost. And whether American Leyland will have any success. And on. And on.
We need not review the litany of bad news to remind you the Motown’s money’s too tight to mention. But amidst all of the plant closings, layoffs and rumors of bankruptcy, one song remains the same: management perks. The Detroit News reports that even as executives descend on DC begging for bailout billions, Ford, GM and Chrysler refuse to eliminate programs which subsidize car leases for management, often with insurance, maintenance and gasoline included. And this isn’t going over well with workers. “We’re taking concessions,” says UAW worker Jim Willington of Ford’s Woodhaven Stamping Plant. “They should level the playing field. They ought to be willing to buy the products. They can afford it.” A little perspective after the jump..
Automotive News [sub] tells us that GM’s big hope small car, the Cruze, has gone on sale in Korea as the Daewoo Lacetti. The replacement for Top Gear’s one-time “reasonably priced car” comes with a 1.6 liter four-banger, making 116 hp and costing only $7,948 in devalued Won. With production underway in Gunsan, Korea, GM needs only develop US-market trim and begin production of its 1.4 liter turbo-four engine to bring the Cruze stateside. Unfortunately, GM is on a zero-development budget for 2009, meaning production at Lordstown, OH is on hold. We won’t expect any news of US production of the Cruze until the Department of Energy writes up regulation controlling the $25b in retooling loans needed to get Lordstown rolling. Still, it’s nice to know that, unlike certain other GM vehicles in the pipeline (cough, Volt, cough) the Cruze is already on the road, if only in Korean spec. If GM can’t find the money to build and sell a small, already-developed economy car, well, it makes one wonder what they’re doing in business at all.
The latest feel-good offering from GM’s Fastlane Blog is this “cool video from the folks over at GM Europe showcasing the Saab 9-X Air concept.” And though the 9X Air has a certain appeal (sleek four-seat convertible), its relevance to GM’s current situation is as good as nil. Of course, calling the video a throwaway distraction would imply that GM has ever posted anything insightful at Fastlane. Posting a concept video is doubtless meant to convey the impression of business-as-usual at the RenCen. But to anyone who understands the quantity and quality of excrement hitting the fan in Detroit right now, the impression is of deep denial. Why on earth is GM burning much-needed cash on concepts with retracting side mirrors, a dash on loan from the Romulans and “a canopy top?” That Fastlane would note that this final feature has a patent pending shows how deep the denial goes. Just the kind of venture I want to sink my tax dollars into.
Curious about how things are progressing on the Volt front? Want to know all about how the Volt team “weighed each metric by importance and factored in what Volt vehicle-line executive Tony Posawatz diplomatically calls “qualitative factors,” such as, Are we going to hate working with these guys?” when choosing a battery supplier? Popular Science has a monster piece on the moon shot’s moon shot entitled Power Struggle that will answer all your questions about the Volt’s battery. Except for who’s going to make it and what the actual specs are. You will, however, learn that “It was a different proposition for the EV1,” according to Jon Bereisa, the chief of propulsion on the EV1 and an early instigator for the Chevy Volt. “The battery technology was not there and we knew it, but we believed that we could make up for it by designing a highly efficient car. You could say we nailed it. But we really did not achieve commercial viability.” And one analyst warns “the battery is too big, too expensive, and we are concerned about the life of the battery, the liability risk and the warranty’ — that’s what I hear at every car company I’ve gone to for the last nine years, and now I’m going to go to plug-in hybrids? The batteries are five times bigger, five times more expensive. The liability risk is five times more, or 10 times more.”
Acura made quite a little splash when they announced a diesel version of the TSX was America-bound at this year’s NAIAS. Now, with much less fanfare, Vtec.net reports that “the i-DTEC TSX has been delayed indefinitely (if not cancelled outright).” The unnamed source says that an automatic transmission version hasn’t been able to pass 50-state emissions tests, and that Honda won’t go to market with only a manual on offer. Not that the fact that diesel is almost a dollar more expensive per gallon than gas in most markets is helping either. Nor are the other indications that diesel is dying. To make up for dropping the diesel, Acura will fast-track a V6 version of the TSX. Because all Americans know is torque.
As bailout after bailout sucks the federal teat dry, the ethanol lobby is finally doing the patriotic thing by taking its insatiable greed for public money to China. Green Car Congress reports that General Motors and its cellulosic ethanol partner Coskata are making the pitch for US-style ethanol subsidies in the Happy Shiny Peoples Republic Of China. At the World Biofuel Symposium hosted by Beijing’s Tsinghua University, GM and Coskata announced that China could produce 45-49 billion gallons per year (BGPY) of cellulosic biofuels by 2030… with the proper subsidies. And though the 45-49 BGPY would be 60% derived from agricultural residue, 20% from grasses, 10% from forest residue and 10% from “other,” China’s capacity is estimated (by GM and Coskata) at only half that amount without government incentives. E10 mandates in several of China’s largest provinces have already increased grain-based ethanol production from 100 million gallons in 2004 to about 500 million in 2008, but the Chinese government is also trying to limit grain-based production for all of the obvious reasons. Hence GM and Coskata’s attempts to hype their cellulosic ethanol approach, despite not having plans to open a commercial demonstrator plant before 2011. Meanwhile, “GM will continue to advance its strategy of ‘in China, with China, for China‘ to help China develop diverse automotive energy solutions and commercialize such energy solutions, according to GM China VP David Chen. All we can say to China is, beware of Americans bearing biofuels and patriotism. Then again, better you than us. But don’t say we didn’t warn you.
From the land of speed cameras and license points comes news that a new generation of GPS satellite navigation systems could be the Next Big Nanny to take all the fun out of driving. The Times reports that TomTom and Navteq are developing Advanced Driver Assistance Systems (ADAS) which will take GPS far beyond its current navigation-only capabilities… with dismaying results. The new systems will reportedly tell motorists when to change gear, at what speed to take a corner and even how to drive more economically, while providing 3-D navigation and refined destination-seeking capabilities. Needless to say, the prospect of having a computer yell at you for taking corners too fast on a windy mountain road is hardly the stuff of gearhead daydreams, but as usual a higher power is at play here. Navigation system makers have been dealing with the legal reprecussions of uncritical reliance on GPS systems, such as the woman who got her SL500 stuck in mud when her sat/nav told her that a ford over the river Sence was navigable. By issuing constant feedback about driving style and possible damage to the car’s internals while improving the three-dimensional mapping, these firms hope to prevent future lawsuits. And annoy the hell out of anyone who happens to enjoy the occasional spirited drive.
We’ve counted ourselves among the many who laughed bitterly when Volkswagen first announced that it was campaigning to overtake Toyota as the top volume automaker in the world. Well, Automobilwoche Editor Guido Reinking has penned a column for Automotive News [sub] arguing that VW’s Mission: Improbable might just stand a chance. Surprisingly, the column is not a paean to German sachlichkeit in the nationalistic mold of most mainstream German auto journalism. Instead, Reinking makes a bold claim: Toyota, long the 800 pound gorilla of global automakers, may be losing its aura of invulnerability. First he points unconvincingly to Toyota’s 32 percent drop in US sales for the month of September, “worse even than the fall taken by sickly General Motors.” Sure Guido, but keep in mind that those are previous-year percentages, not apples-to-apples… (Read More…)
With a new VW plant under construction, Chattanooga’s local media is hunting down every last detail available on the new D-class, America-only model to be built there in 2011. WRCB TV even sent a reporter to a recent VW presentation in Berlin, at which a few more facts were released about the closely-guarded NMS (New Midsize Sedan) project. Those of us who consider VW’s current American-market engines a slap in the face (and I’m with you there, JB) will be happy to hear that the “NMS” will come with Fuel-Stratified Injection (FSI) gas and diesel options, mated to a dual-clutch transmission. Size, legroom, trunk volume and the number of cupholders are planned specifically for the US market, so expect proportions to be more Passat than Jetta. Oh, and it will have something called “dynamic powertrain acceleration” too. Whatever that is.
The British Government’s love for cameras of all kinds is well known, and its passion for speed cameras is a story we’ve followed at TTAC for some time. Until now, the news we’ve reported has been consistently bad, unless you happen to be a big fan of increasing government surveillance for revenue-building purposes. But the Times of London reports the speed camera onslaught may have reached its zenith, as the town of Swindon has become the first British municipality to ban the automatic speed traps. The Tory-led council of Swindon banned the devices, for a variety of reasons, although it seems that the “blatant tax on motorists” angle may have taken a back seat to the camera’s half-million-dollar annual maintenance costs in the decision. Hysterical opponents of the move wail that the council would have “blood on its hands” when the first person is killed by a speeding driver.
From the moment that GM’s Next Small Thing was announced, this blogger complained that the baby ‘Bu approach made for a particularly inflexible platform. And then we heard that the Orlando seven-seater Cruze variant wouldn’t be made in America, seemingly confirming that GM doesn’t take the roomy compact trend seriously. Perhaps GM was listening to our complaints, because Automotive News [sub] reports that GM is considering hatchback and wagon versions of its new compact in order to “accommodate the ‘individuality’ of markets around the globe.” “We will have tool sets in many locations,” says Hans Demant, managing director of Opel of the Cruze strategy. “And as soon as you have a tool set, you have variation which you can create basically at no cost. You have a customer advantage if you make a little modification while you’re doing that.” Demant also reveals that the Cruze will have different powertrains from market to market. Of course, highlighting the Cruze platform’s flexibility and GM’s ability to make tweaks based on individual markets’ needs doesn’t mean any of these variants will arrive in the U.S. at any point. In the very same article, GM COO Fritz Henderson says that the Cruze “won’t have high levels of variability. Huh? “We’ve developed the vehicle to meet broad, different levels of regulations: pedestrian protection, safety, emissions, all kinds of different requirements,” says Henderson.”But other than that, the Cruze will be the Cruze.” In other words, no news here. We think.
We’ve long held that Cadillac is one of two “core brands” for GM that should be preserved (along with Chevy) at all costs. To compete with the big boys of luxury (Hyundai, anyone?) Caddy needs new product, and unlike Pontiac it’s going to get it. But will Cadillac’s product pipeline be filled with unique, desirable products or cannibalistic also-rans? I know, let’s ask that font of balanced coverage and journalistic integrity, Motor Trend! In fairness, MT admits that “It’s been four or five decades since Cadillac built a car that came close to being ‘The Standard of the World.'” “But” comes the now-customary about face that emerges any time a mainstream journo discusses the failure of an American automaker, “with the new CTS, and especially the world-beating CTS-v sport sedan, (Cadillac’s) rehabilitation is well underway.” Oh really? Let’s take a look.
My, how things change. Just two short months ago, Automotive News [sub] publisher and editorial director Keith Crain was asking us to redefine our very notion of what an automaker is in order to justify Chrysler’s continued existence. “Who knows?” mused Crain. “Before too long, Chrysler might just do some engineering and perhaps a bit of design and let someone else build its vehicles. Chrysler would become a marketer rather than a manufacturer, sort of like Home Depot.” Fast forward through two months of bad news, and suddenly Crain has realized that just maybe it’s more likely that Chrysler will die rather than challenge paradigms. And though his latest missive “Just Put Up A ‘For Sale’ Sign” is doom-and-gloomy enough to get him membership in our rapidly-growing Cassandra club, he makes sure blame goes where it belongs: the fools who were dumb enough to buy the mess the last time it was for sale.
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