Detroit Free Press columnist Mark Phelan proves that even those in the mainstream media can handle a little bit of automotive truth-telling. His recent column hammers Chryslers decision to shut down factories for two weeks this summer. Actually, Phelan's beef is not with the plan itself, but its implementation. His main point? People spend all year planning their vacations; forcing employees to change all of their plans is not good for a company as fragile as Chrysler. "Forgetting that other folks have family obligations and less vacation time than you is what Type A executives do," argues Phalen. "The problem is that it has to be somebody's job to tell the boss when he's about to step in something that will stick to his shoe and smell bad." Apparently, skimping on consideration bears bitter fruit down the road. "The company should do everything it can to minimize confusion and communicate its message clearly. Sending a mass e-mail telling everybody to go home for a couple of weeks only fuels doubt and speculation," says Phalen. He definitely has a point there, re: TTAC's rumor report that Chrysler will file when everyone's on hols.

The situation has gotten so bad for parts suppliers, that even USA Today has an areticle describing the industry's abysmal conditions. After chronicling the travails of supplier bankruptcy poster child Plastech, the story notes that times will be tough for everyone in the biz. "I can't in my 21-year history in the auto industry think of a time when it's been more difficult than this," wails Laurie Harbour-Felax of consulting firm Stout Risius Ross. "More Chapter 11 filings are imminent in the next three to six months." The wide load of industry pressures: weak demand, rising commodity prices, increased overseas competition, tightened credit and cost-cutting pressure. Craig Fitzgerald, a partner at Plante & Moran, predicts that 50 percent of small and midsize suppliers will go out of business in the next five years, either selling out or shutting down. This is gonna get rough. I mean, rougher.

Nestle CEO Peter Brabeck has come out against biofuels, warning that trying to fill up to 20 percent of energy demand with plant-sourced fuel could result in a food shortage. As a food company executive, Mr Brabeck's opinion is neither surprising nor entirely altruistic. However, his warnings echo remarks from UN Special Rapporteur On The Right To Food Jean Ziegler last year. In October, Ziegler cautioned that every 13 gallons of corn-based biofuel could feed a child for a year, and called for a five-year ban in the EU on converting croplands to biofuel production. Just something to keep in mind the next time you put 30 gallons of E85 in your Suburban.

CAW President Buzz Hargrove has been in a feisty mood lately. After telling all of Detroit where it can stick two-tier wages, Hargrove got personal with Cerberus Capital Management, owners of Chrysler LLC. Bloomberg reports that Hargrove is irate at the three-headed hedge fund over promises its president made while seeking support for its purchase of Chrysler. Cerberus President Steve Feinberg had "promised that they weren't going to slice and dice and sell,'' Hargrove said in an interview. But with Chrysler cutting tens of thousands of jobs and slashing its model line, the CAW leader smells betrayal. "We were misled," says Hargrove, "(Feinberg's) trying to cut his way to profitability, as opposed to grow(ing) the business… (he) has never met with us since then to explain the shift in thinking." Of course, most people don't expect private equity groups like Cerberus to operate accountably, and strip-and-flip rumors have been plentiful since the Cerberus takeover. So what finally made Hargrove think that Cerberus wouldn't make good on its promises? The axing of Chryslers Pacifica CUV. Thats right, Hargrove calls the cancellation is "very concerning" because the crossover segment is hot at the moment and "they discontinued it without having a replacement." Anyone think Buzz ever looks at the sales numbers?

With the Olympics set to thrust The People's Republic of China into the world spotlight, the dictatorship's rulers have been attacking "environmental issues." Green Biz News reports the latest step in what the Chinese Communist Party terms "the scientific model of development:" a massive auto-parts recycling program. Three manufacturers and 11 parts suppliers have "agreed" to recycle engines, transmissions and electrical generators. The China Association of Automobile Manufacturers estimates that four million old cars will be junked each year by 2010. They maintain that refurbished parts from dead cars cost only 60 percent of new components. Meanwhile, in the U.S., parts recycling companies like LKQ are making big money (even without government intervention). As automotive profits become harder to find in a sagging economy, reuse and recycling is getting a major shot in the proverbial arm. See how that works?

The Age reports that the last of the great V8 Interceptors… Hold on, that's not it. Right. The last Australian-built Mitsubishi will roll off the line at Tonsley Park this Thursday, ending 28 years of production Down Under. Since it took over a Chrysler plant in 1980, Mitsu has built over a million cars in Australia. Production peaked back in 1997, when the Japanese automaker built 58,391 Magna sedans for domestic and export markets. Mitsubishi imports have seen strong demand, but the domestically-built 380 sedan will soon be sleeping with the fishes. Although Mitsu's laying off a thousand workers, it's not a post-apocalyptic scenario. They're receiving what's being called "the best-ever redundancy package in the automotive industry:" up to two years of severance pay. 

The AP reports that Toyota is tackling slow Japanese sales with a new, 200-store and restaurant, auto-themed mall. The Tressa mall in Yokohama features car-shaped shopping carts, a model car store and musical robots. The mall's "anchors:" massive Toyota showrooms. A Toyota subsidiary has been operating an automall in Gifu prefecture since 1999. Despite the marketing razzmatazz, the root problems for Toyota– and Japanese car sales in general– remain. An analyst with Mizuho Investors Securities says that Japanese OEMs have ignored the competitive domestic market for too long in favor in favor of higher profits abroad. Atsushi Kawai says the neglect has created a cultural resistance to the enormous hassles of Japanese car ownership. "Domestic sales are a total disaster now," says Kawai. "A car used to symbolize a dream. People used to work hard to buy a car. These days, nobody is saying that. No one thinks a car is cool anymore."

Ford invited journalists over to check out its "virtual assembly" technology. (Our invitation was lost in cyber-space.) The Detroit Free Press came, saw and geeked out, leading off their breathless coverage with "If you want to know why Ford Motor Co.'s quality is improving so much…" But what exactly is this strange and mystical technology which makes otherwise credible journalists into so many ad copy writers? Combining motion-capture and computer modeling technologies, Ford "builds" model factories and inhabits them with avatar workers who virtually assemble vehicles. By analyzing how production operates virtually, Ford engineers can streamline and simplify the process. The result: better ergonomics and fewer injuries for production workers, improved production efficiency and quality improvements. AND the computer modeling allows Ford to develop production processes faster, so it can bring new products to market in less time. (Where? What?) Ford is so proud of their sim factory it boasts that productivity master Toyota is curious about the technology. Then again, ToMoCo knows that the map is not the territory. 

Fiat has been talking-up a stateside launch for Alfa Romeo, and even suggested manufacturing in the US or Mexico. Now Fiat CEO Sergio Marchionne tells the Financial Times that his company is seeking suitable partners for North American production. "Nobody making anything in Europe is going to make profits in the US," says Marchionne, indicating that the losses on imported cars would be acceptable as long as a production partner could be found. Although the Financial Times makes much of Detroit's recent downsizing of North American operations, and stresses that The Big 2.8 have "overcapacity," other reports indicate that BMW is also a likely candidate for a FIAT partnership. For now, Marchionne is staying mum on the partner search, but makes it clear that BMW is on their radar… as competition. "We need to replicate the [BMW-owned] Mini phenomenon in the US," says the Fiat CEO. And yes, he does mean by bringing the popular Fiat 500 to the states. Toppolino!

We reported earlier that the smart money is getting out of OEMs and into parts and used sales.  Business Week confirms that while new car sales are tanking, used car sales are on the rise. A Wachovia survey of 40 vehicle retailers shows an increase in used car sales; 28 percent of dealerships indicated that their used car sales were above expectations. Dealers are also reporting greater inventory pressure for used cars, along with greater than expected demand for pre-owned vehicles. Online research companies are also showing significant increases in searches for information about used cars. "Although there was some seasonality, we believe many dealers have lowered their expectations and new car intenders maybe switching to used cars," says Wachovia's Richard M. Kwas in a letter which accompanied the report. "In general, dealers conveyed that prospects are more interested in used vehicles over new." Good news for some, bad news for others.

"Sources close to the Tata/Ford deal" have been busy little bees lately, shooting out sad little insights into the clunky sale of Jaguar and Land Rover. If we can believe these anonymous tipsters (and Reuters clearly does), the deal is done, and Ford will be announcing the sale tomorrow. One of these nameless, faceless dealmakers slapped down the suggestion that Ford would get $2.65b for the two brands, telling Indian TV "You have to come south from that (number) by quite a bit." But as with most leaks surrounding this deal, Tata reps refuse to play ball. "We have nothing to tell you now," they tell us. So is the deal happening tomorrow, or later, or not at all? With all of this conflicting information going around the media grapevine, we're not committing until the officially announcement, and maybe not even then (show me the money). Yea or nay, the fine print on this deal or no deal should make some very interesting reading.

Car fatality rates are at historical lows, thanks in large part to steady increases in vehicle frame strength and rigidity. But as Newsweek reports, tougher vehicle frames make it harder for rescue teams to reach trapped passengers after a crash. Highway rescuers must purchase ever-more-expensive extraction tools to keep up with increases in frame strength, and are forced to work deeper and deeper into the "golden hour" between the accident and emergency-room treatment. Rescuers also have to be careful not to puncture hidden pressurized-gas cannisters (which fire side-impact airbags) or hidden electrical lines, requiring extra time to peel away interior plastics before extraction can begin. With rescue times climbing past the ten-minute mark and rescue equipment costing even the smallest towns upwards of $50k, there's a case to be made that stronger is not always better. Add this to our own reporting on the downsides of strengthened roof crush standards, and the automobile safety picture becomes increasingly… complex.

The MinnPost reports that the local E85 lobby is joining the Minnesota Auto Dealers Association's opposition to California-style emissions standards. Although ethanol had been [tortuously] justified as an eco-friendly fuel, Minnesota corn growers say the standards would "make it difficult to certify E-85 vehicles." (This despite the fact that California has already certified 300k flex-fuel vehicles.) James Erkel of the Minnesota Center for Environmental Advocacy argues that the corn growers have stopped making sense. "These bills would not curtail ethanol markets and in some respects actually help it." Erkel added that the new regs wouldn't affect Minnesota's attempt to "upgrade" its E10 fuel to 20 percent ethanol. But the Minnesota Auto Dealers Association have convinced their agricultural pals that stricter-than-the-feds tailpipe standards would kill the market for new pickups and SUVs, including flex-fuel versions of same. 

Diesel Forcast is reporting that Indian firm Mahindra & Mahindra will be showing a diesel-hybrid powertrain on its Appalachian pickup at the Society of Automotive Engineers World Congress in Detroit. Not much is known about the system, other than that it's likely based on the company's 50-state-legal 2.2-liter inline four engine. [Note: Mahindra VP for Engineering and R&D Arun Jaura worked on the Ford Escape Hybrid program before moving to his current position.] Mahindra already has a U.S. distributor, but has not yet provided details about the U.S. release of its pickup or Scorpio SUV in either diesel or hybrid diesel forms. This widens the race to release a U.S. diesel hybrid to three companies: Mercedes, Ssangyong and Mahindra & Mahindra, with hybrid giant Toyota vowing to sit out the diesel-hybrid competition.

Les Alexander is a money man (bond trader) who owns the Houston Rockets. Billy Joe "Red" McCombs co-founded Clear Channel Communications and owns a huge network of Texan dealerships and aftermarket auto parts businesses. The Houston Business Journal [via Mlive.com] reports that the two men have bought a ten to fifteen percent share in the Chinese automaker Brilliance, for a cool $100m. McCombs wants Brilliance to use the money to develop Chinese dealership networks, auto financing, used car operations and Internet auto sales. "There's huge opportunities in China for companies to set up aftermarket services like leasing, vehicle loans and extended warranties," says Charles Child, International Editor of Automotive News. "All the kinds of things that U.S. car shoppers are offered every day." If the venture is successful and market share grows, Brilliance hopes to import cars to the United States "at prices under those for the Korean Hyundai and Kia brands." Yeehaw! Or should I say Ni Hao!