Before you start wondering about the color of the sky in CNBC's Phil LeBeau's private little world, the writer understands "that for many people (soccer moms, the guy putzing around the suburbs, etc) driving a gas guzzling SUV makes no sense." Whew! Phil's talking to those motorists who need an SUV's cargo, passenger or towing capacity; or off-road capability, due to job or locale. While TTAC Best and Brightest prepare to discuss the Marxist implications of needs vs. want, one thing's for sure: it's an SUV buyer's market out there. Kelly Blue Book prices for used SUVs are down more than $2.5k. Even so, you might want to hold off; they're expected to go lower as leases from 2005 vehicles start expiring and pump-shocked SUV refugees trade their behemoths for economy cars (no really). In an online poll, CNBC asks readers if they'd buy an SUV now. Almost half (49 percent) said "no." Of the remaining 51 percent, 13 percent said they'd "think about it," while 39 percent stated yes, they would buy one now. I guess there are still either a lot of "contractors, people in specialty trades, those who live in rural areas where the roads can get dicey at times" or gas prices aren't high enough to prise the keys from SUV fans' cold, dead fingers.

It's been a bit over six months since you, our Best and Brightest, picked 2007's Ten Worst Automobiles. A lot's happened in the industry since then, not much of it good. SUVs are out and econoboxs are in, gas prices are insane and manufacturers are closing factories and realigning those left. To lighten the mood during these dark days, let's see how our biggest losers have fared amidst all this turmoil.

The Detroit Free Press confirms what we've been reporting: Chrysler is forcing a five percent price cut and change from Net 45 to Net 60 on their indirect suppliers. A "company document obtained by the Free Press" states Chrysler predicts they'll save $100m over the next 12 months by doing this. Chrysler wouldn't comment on the document, saying somewhat redundantly "The type of information described would be considered confidential. … We do not discuss confidential information on a public basis." The document acknowledges they'll piss off their suppliers: "It seems that this action is in direct conflict with Chrysler's desire to rebuild relations with suppliers… [but] Chrysler is committed to improving its relationships with suppliers through open, honest communication — no matter how difficult the subject." I don't know which school of management teaches this kind of logic, but common sense says the way to improve your relationship with someone you're buying stuff from is to pay them on time and at the agreed price, not name your own price and pay when you're jolly well ready. Just sayin'.

A couple of weeks ago, we reported that GM would be building a new small car at the Lordstown OH plant where they now build Cobalts and Pontiac G5s. Wards reveals the mystery car: the next-gen Chevy Optra, replacing the Cobalt/G5. The Optra (AKA Daewoo Lacetti, Suzuki Forenza and Buick Excelle) will be produced at GM-Daewoo's plant in Gunsan, Korea starting toward the end of this year. Production will transfer in Ohio in 2010 "pending conclusion of GM's negotiations to obtain state and local investment incentives from Ohio authorities." The U.S.-spec Optra will feature a 1.4-liter turbocharged four-cylinder engine with "considerably upscale" and "sporty" styling. It'll be joined by a redesigned Aveo (Daewoo Gentra) in an "entirely new portfolio of Chevrolet small and compact vehicles." In a move akin to the "Chevy Classic," "Malibu Classic" and "Silverado Classic" games GM's played in the past, the Gunsan plant will continue to produce the current Optra "for certain export markets" along with the "dramatically different" new model. That "dramatic difference" better include dramatic improvements in materials and build quality if Chevy expects to sell it in what's becoming a highly competitive small car market. 

May was a disaster for American new car sales. Practically every player in the U.S. market ended-up the month trailing last May's totals, many by a significant margin. Perhaps the most damning indicator of the industry's general direction: the F-150's sudden and precipitous drop from the top sales spot. Ford's full-size pickup wasn't just edged out; it was defenestrated by four different cars. The Civic, Camry, Accord and Corolla all mounted the Mother of All Palace Coups. With gas prices singing "the only way it up," clearly, May is only the start of a long, hot, bloody summer.

The automotive industry has long borrowed technology from the aerospace industry. Head-up displays, space frame construction, "drive by wire" controls and lightweight materials all first showed up on modern aircraft. Now BMW is turning back the clock a century or so. Just like a WWW I-era biplane, the BMW GINA Light Visionary concept car is fabric-skinned. The water-resistant material is stretched over a lightweight frame that can change its shape as you drive in a process that's visually akin to Bruce Banner's transformation into the Hulk. There are no visible gaps in the car's "body" except the door openings, the headlight covers open like cat's eyes, the taillights shine through the fabric and the engine is accessed through what looks like a surgical incision in the "hood."  In the video, designer Chris Bangle babbles on waxes eloquent about "a philosophy that says 'let's do things differently'" and "context over dogma" (whatever that means).  It's a cool concept, Chris, but enough is enough.  Why not just shut up for once and  (as you suggest) "let the material do the talking?"

Chrysler is no longer "asking" suppliers for a five percent cost cut across the board– they're just taking it. More ominously, they've changed their payment terms. We just received this information from a reader (independently confirmed) who wishes to keep his name and company confidential for obvious reasons:

On June 3 we received revised purchase orders (PO's) indicating Chrysler will now be taking five percent off all PO's and will take 60 days to pay instead of 45. The trouble is they are doing it to all existing orders, not just future orders. I was told by Chrysler purchasing they were trying to keep their cash flow together and there was nothing they could do about the PO changes. I think that might be all for Chrysler unfortunately. They also told me the new rules were going to include PO's shipped after June 1 even if they hadn't bothered to change the order.

If Chrysler's cash flow is so precarious that they have to shortchange suppliers and take longer to do it, it doesn't bode well for the company's short-term prospects. It looks like the only thing that will pull them out of this death spiral is a healthy infusion of cash from Cerberus' deep pockets; the private equity firm isn't known for throwing good money after bad. Look for Chrysler to file for C11 before the end of August, when the statute of limitations expires for suing Daimler for false conveyance.

Once it was big shiny convertibles that caught the ladies' eyes. Then it was Corvettes, Lambos or anything else low, fast and expensive. But the times they are a-changin'. Yahoo! Green reports that hybrids are this generation's automotive codpieces. A survey done by GM during this year's Challenge X competition reveals that 88 percent of women say "they'd rather chat up someone who owns the latest fuel-efficient car versus the latest sports car." On top of that, 80 percent of American car buyers would rather talk with someone at a party who has the "latest fuel-efficient car" than someone with a sports car. And for the fashionists out there, 45 percent of "18- to 43-year-olds say it's a fashion faux pas nowadays to have a car that's not green or environmentally friendly." But does that now mean that those who buy the highest mileage cars are overcompensating? And what does that say about all those who put down deposits on Teslas and Volts? The mind– or something– boggles. 

That RenCen money tree must be producing a bumper crop this spring. The custody battle over Cobasys between parents Chevron and Energy Conservation Devices (the loser gets custody) has reached the point where GM feels obliged to intercede (i.e. throw money at it). Cobasys makes the batteries for GM's mild hybrids. No other batteries will work in the vehicles, at least until they're redesigned in (all together now) 2010. Automotive News reports "three sources" told them GM is preparing to buy the floundering battery company. The irony: GM helped found Cobasys, then sold its share to Texaco (which later merged with Chevron). Just as spin-offs Delphi and American Axle continue to sap GM's waning resources, Cobasys now returns to haunt them. No one's saying what this acquisition will cost The General, but not to worry… they have plenty of money to get them to the end of the year.

Canadian Auto Workers (CAW) union officials are meeting with "top GM officials" about closing the Oshawa, Ontario truck plant. After CEO Rick Wagoner's announcement that The General's terminating Oshawa production– along with three other plants– workers blockaded GM headquarters. The Detroit News  reports CAW president Buzz Hargrove supports the blockade. Hell, he won't "rule out" the possibility of a strike. Buzz says the Wagoner's announcement was "an insult" as it's been just two weeks since the company promised workers the plant would be open at least until 2011 (what happened to 2010?). GM spokesman Stew Low says the protest is "understandable." I'm sure that really made the workers who are losing their jobs feel better. Maybe next, GM will offer them a spot of tea to go with that sympathy. But don't count on GM changing their plans to ship work from that plant to cheaper ones in the U.S. and Mexico.

I was wrong. In spite of indications to the contrary, the GMC salesman blogger defending your right to suck-up fuel and clog the roadways with oversized trucks didn't have a change of heart about hybrids. In his latest anonymous posting on the Commercial Auto Dealers web site, the same person who warned us about the dangers of hybrids (so quiet we'll all fall asleep behind the wheel) is "irked"  about environmentalists who "who think hybrids are God's gift to humankind" because of "Al Gore's half-truths and theories."  And he's specifically "annoyed" with those of you who've commented about his views on trucks vs. hybrids. Just to make sure you understand where he's coming from, he states "I'm sticking with my truck and I'm not going to feel guilty about it." Neither should anyone else "feel guilty about going to your local GMC truck dealer and getting the biggest, baddest truck you can find and driving it for no reason at all." Gas prices be damned. After all, "when [hybrid owners] need a tow, the guys with the big trucks are the ones they're going to call first."

Tata Consultantcy Services may regret their contract to take over Chrysler's information technology (IT) services. Automotive News [sub] reports that Chrysler "asked its non-production suppliers for a 5 percent across the board cost reduction" effective June 1 and effective for one year. "Non-production suppliers" are those providing IT, administrative, custodial and other support services not directly involved with producing automobiles. A statement from Chrysler explained their "recent decision to enact a 5 percent cost reduction on non-production materials and services is part of Chrysler's ongoing efforts to reduce its cost footprint in a highly competitive marketplace." From what we've seen, these "ongoing efforts" also include stiffing delaying payments to some suppliers and asking others to take a 25 percent cost cut. Some of these beleaguered suppliers can't take beatings like this much longer before they follow Plastech into Chapter 11. But maybe that's what Cerberus wants, because it would give them an excuse to take Chrysler in the same direction. 

AutoWeek's Dutch Mandel thinks GM has got it sussed. The mag's Editor & Associate Publisher is full of praise for The General's decision to shut down truck plants, kill Hummer and ramp-up car production. Mandel calls the plan "a brilliant tactical move." That's because it "telegraphs a message that this company understands life as we have known it has changed." (What was their first clue?) Dutch then pooh-poohs the notion that consumers should change/are changing their driving habits. It's better for a "big-time corporate CEO to be proactive and go with the flow of consumer sentiment." He's obviously confused about the difference between being proactive (which implies anticipating a problem and taking steps to avoid it) and a knee-jerk reaction in response to a sudden "oh shit!" realization that you'd better do something fast because you're going down the toilet. Nevertheless, Mandel "applaud[s] all who put collective heads together to make this tough decision– Rick Wagoner, Fritz Henderson, Bob Lutz, all the way down the line." How come GM doesn't list its advertising budget as a PR expense? 

GM's May sales numbers were down 30 percent from last May. A disastrous 39 percent dive in truck sales led to so much spin in this month's press release that reading it was like watching a washing machine in full boogie mode. GM blames the sales drop on a number of factors: a "strong May 2007," "a decline in fleet deliveries," the "impact of the American Axle strike" and Hillary Clinton's dismal showing in the polls. OK, I made that last one up. The bright points: the new for '08 Malibu's total sales rose 34 percent (103 percent increase in retail units) and the CTS' total sales climbing by 11 percent (retail sales up 18 percent). The Aveo was up 39 percent total and 22 percent retail, Cobalt was up 15 percent total (but only one percent retail) and Vibe was up 65 percent total with a 36 percent increase in retail sales (so much for declining fleet sales!). Rick Wagoner promises to shift focus from trucks to passenger cars, with cars accounting for 60 percent of their North American production in three years. Judging from May's figures he may want to step up the schedule on that.

The relationship between battery maker Cobasys and parent companies Chevron and Energy Conversion Devices (ECD) is entering the crisis stage. Previously, we reported that Cobasys had no budget or business plan for 2008. They still don't. Chevron cut off funding in September 2007. Oakland Business Review (via mlive.com) reports "the company has been operating on a loan and price increases from an undisclosed customer since February." In February, Cobasys' corporate parents "entered into an interim settlement agreement to negotiate a sale with an unnamed bidder;" they've extended the deadline for completing the sale seven times since then. GM's rumored to be their benefactor and mystery buyer, since Cobasys has the contract to develop and test lithium-ion battery systems for GM's plug-in hybrid electric vehicle program. Given GM's current financial situation, buying into a dysfunctional battery maker seems like a particularly dodgy deal. Which probably means it's exactly what they'll do. [Hat tip to Dan Segal for the link]