We've been saying for almost a year that U.S. and European automakers need to watch their backs when dealing with their government-owned Chinese joint venture partners. Now that GM is paying a quarter billion dollars to hand over all their hybrid research set up an environmental research center in the military dictatorship known as The People's Republic of China, the Gerson Lehrman Group is sounding the same alarm. Jack Lifton says GM's "business model based on a shortsighted belief in mainly short term solutions to long term problems" has "led them to their latest mistake with regard to the Chinese OEM automotive industry." After decades of building-up the Chinese auto industry, they now "have to bring to China as a gift the latest technology required for cars made to be sold in the American and European markets." If a Chinese company should offer to buy Ford or even Chrysler in the near future, "we should thank GM for so generously giving China a good part of the technology it will have needed to close the [market] gap." Ruh-roh.

The Detroit News reports that Delphi has asked the U.S. Bankruptcy Court for permission to pay its top executives more than $215.5m in bonuses and incentives for 2008. Now that the autoparts maker is almost out of Chapter 11, they're looking to shell-out bonuses to 560 executives: $78m in one-time bonuses, $11.5m "one-time supplemental grants" to "compensate for changes in the new executive retirement program," $46m from a "short-term incentive program," and $80m from a "long-term incentive program." Some of the payments will be in cash and some will be in stock. Proponents of the bonuses say hey, c'mon, cut us some slack. The payouts are on par with the goodies on offer at  Visteon, DuPont, Coca-Cola, Goodyear Tire, Best Buy and Pepsico– none of which, incidentally, are in bankruptcy. Shareholders and workers who had to bear the brunt of Delphi's losses are less than pleased, to say the least. Will the federal judge reward Delphi's execs for almost killing their company resurrecting the company's fortunes? Watch this space.

The American Family Association may think their boycott of Ford for "supporting homosexual groups which are pushing homosexual marriage" ended the automaker's efforts to attract DINKs (Double Income No Kids), but a new ad campaign from the Land Down Under says otherwise. Gaywired.com reports Ford Australia is running a commercial in their "Everyone's Journey is Different" campaign that includes two same-sex couples, including a a pregnant woman. Sinead McAlary, Ford Australia's PR wonk, said the ads aren't meant to "target any particular group." They're "designed to appeal to the wide variety of consumers who are now driving smaller cars in Australia." She describes the ads as "very successful with awareness and brand recognition quite high after only one month on air." While they don't use fairies zapping macho men into sweater-draped metrosexuals, they do show a white male couple in sweaters with matching Pugs on leashes. Ford has refused to comment on why they chose to depict the gay couple in such a stereotypical manner.

October was a tricky month with few treats for the auto industry. Overall, total U.S. sales just about broke even, ending-up with a 1.2 percent increase over October of last year. Year-to-date (YTD) sales sank 2.5 percent. Ford and Chrysler were the biggest losers; both domestic automaker suffered big decreases from the month last year and continuing to drop in the annual numbers. Here's how our bellwether models finished the month.

Back in May, presidential hopeful Hillary Clinton refused to endorse a specific change to federally-mandated Corporate Average Fuel Economy (CAFE) standards. In a speech in Cedar Rapids, Iowa, the former first lady jumped into the debate with both feet. The Detroit News reports that Ms Clinton gave her support to non-existent legislation that would raise U.S. automakers' CAFE averages to 55 miles per gallon by 2030. Hang on; the toughest standard currently under consideration would hoik the CAFE standard to 35mpg by 2020. How the Hell would Detroit up their fleets' fuel economy average by 2mpg per year for 10 years after that? Why, by using the $20b in low-interest government funds she's promising to help them retool factories. Plus $2b in R&D funding for battery research. And a $10k tax credit for consumers who purchase an as yet non-existent plug-in hybrid. Oh, and the aspiring president said she'd add 100k as yet non-existent plug-in hybrids to the federal government's vehicular fleet by 2015. It'll be worth it, too, because "these tough CAFE standards will save consumers more than $180b per year and reduce carbon dioxide emissions by more than 730 million metric tons." When asked to comment, one auto official replied "it's futile to comment when the candidates are engaged in one-upsmanship."

London's infamous congestion charge is having an unintended if not unpredictable consequence: a rise in the number of stolen or counterfeit license plates. The Wall Street Journal reports that unscrupulous motorists attach someone else's "number plate" to their car to avoid the $16 daily charge for driving in downtown London. When a scofflaw's car gets caught on camera with a plate that doesn't match those who have paid the fee, the genuine owner of the license plate gets a citation in the mail. (As you can imagine the paperwork involved in contesting the fine/rectifying the identity theft is listed in the OED under both "enervating" and "labyrinthine.") England's Automotive Association estimates that up to 300 cars with illegal plates amble about in the congestion charge zone every day. While some companies are selling anti-theft devices to cut the number of stolen plates, that doesn't stop the counterfeiting. All you have to do is order a set of "decorative plates" from several companies on the internet with whatever license number you desire. 

BusinessWeek's Ed Wallace thinks U.S. automakers– both indigenous and transplanted– better watch out for the UAW. While GM and Chrysler are dancing a jig over unloading retiree health care and cutting wages, he foresees aftershocks in a few years. Wallace points out that retired members of the United Auto Workers (UAW) don't get to vote on contracts. As active members (who voted for the two-tier wage structure) retire, as they're replaced with lower-tier workers, a "younger worker might well feel cheated and resentful, doing the same job for maybe half what someone else was paid to do it just five years earlier." Wallace thinks this seething resentment wage and benefit disparity will combine with a backlash from transplant workers facing lowered wages to stimulate a UAW "comeback." In other words, the deal Detroit's celebrating today could bite them in the ass tomorrow– in, say, four years. Should they be around to experience the backlash, The Big 2.8 will claim they never saw it coming.

After being bashed by the greenies for standing as one with Detroit on an easy-does-it hoik in Corporate Average Fuel Economy (CAFE) standards (while producing fuel-sucking pickup trucks), after taking a beating in the press over quality issues (for not being Rolex reliable), Toyota has decided to launch a PR counter-attack. The Japanese automaker has unveiled a new ad campaign to prove their "social responsibility, environmental commitment and economic impact." Speaking to Advertising Age [sub], Toyota spinmeister Steve Strum says the campaign will use print, online and "poignant" TV ads "to touch U.S. consumers and give them a better sense of the corporation's vision." One ad described by Ad Age shows a group of people in an outdoor setting assembling a vehicle using natural materials. The narrator asks, "Can a car company grow in harmony with the environment? Why not?" Incidentally, Strum says there's no link between the new ad campaign and Toyota's recent bad press. So there's one more thing Toyota has in common with Detroit.

U.S. auto sales showed their first overall increase since May, with a 1.2 percent gain over last October– if you don't adjust for selling days. If you do, (as does BusinessWeek) then sales were down about 3 percent.. The good news: sales growth by GM, Toyota, Honda, and Nissan. The bad news: Ford and Chrysler weren't so fortunate (as in very, very unfortunate). Bloomberg attributes their sales tumble to the popularity of small cars and car-based SUVs (aka CUVs), one or the other (or both) of which are poorly represented in Chrysler's and Ford's lineups. Here's how the top six fared overall:

Nissan – up 13%
Toyota – up 4.5%
Honda – up 3.8%
GM – Up 3.4%
Hyundai – down <1%
Chrysler – down 8.9%
Ford – down 9.5%

We'll have the detailed By The Numbers breakdown for our bellwether models next week.

I'm paraphrasing. In fact, Canadian Auto Workers (CAW) union president Buzz Hargrove told Autoweek [sub] he'll play hardball when it's his union's turn to talk contracts next summer. There'll be no concessions from the CAW. As in none. Hargrove's fuming over the speed with which GM and Chryslerberus announced shutdowns and layoffs after the UAW approved their contracts. "This just reinforces my thinking that you can't change a situation with two-tier wages, VEBAs and concessions." Then in the "DUH!" statement of the year, Hargrove observed if Chrysler's workers had known what was coming they wouldn't have approved the contract. "You'd have to be blind not to see that it was hidden," he added. So… uh… did he just say the UAW was stupid for ratifing the agreement?

With the help of our pals over at Edmunds.com, BusinessWeek has compiled a list of the 20 most heavily discounted 2007 vehicles still on the lots. They based the list on Edmund's average transaction price vs. sticker price. As you can imagine, the list is tilted heavily towards pickup trucks and SUVs; only two passenger cars are included. Imported vehicles are conspicuous by their absence (all the import-branded vehicles are rebadged versions of American-built vehicles). Oh, and someone forget to mention that depreciation is the single largest cost vehicle ownership. A two-year-old Mitsubishi Raider? You must be joking mate. [The percentage represents the discount, while the number in parentheses shows the supply on hand as of the first of October. The inventory numbers may include some 2008 models while the discounts only apply to '07s.]

Mitsubishi Raider – 29% (19 day supply)
Jeep Commander – 29% (84 day supply)
Dodge Ram 1500 – 28% (92 day supply)
Chevy Silverado Classic 1500 – 27% (102 day supply*)
GMC Sierra Classic 1500 – 26% (103 day supply*)
Isuzu Ascender – 26% (196 day supply)
Jeep Grand Cherokee – 25% (70 day supply)
Lincoln Town Car – 25% (78 day supply)
Dodge Durango – 25% (74 day supply)
Dodge Dakota – 24% (76 day supply)
Chrysler Aspen – 24% (32 day supply)
Mercury Grand Marquis – 23% (67 day supply)
Chevy Silverado Classic 2500HD – 22% (102 day supply*)
Chrysler Pacifica – 22% (63 day supply)
Saab 9-7x – 22% (113 day supply)
Dodge Grand Caravan – 22% (50 day supply)
Buick Rendezvous – 22% (12 day supply)
Isuzu i-Series – 22% (172 day supply)
GMC Sierra Classic 1500HD – 21% (103 day supply*)
Chevy Trailblazer – 21% (50 day supply)

(*The inventory for Silverado and Sierra are for all versions, not just the Classics. GM doesn't break the inventory numbers down by version or weight class.)

As part of its plan to "balance supply against demand," GM's laying off workers at their the Lansing, Michigan plant. That's where The General builds its new Lambda CUVs: the Buick Enclave, GMC Acadia and Saturn Outlook. The triplets are this year's "save the company" vehicles– at least until the Malibu hits the streets tomorrow. If you listen to GM's spin, demand for the crossovers is booming! But if they're selling them as fast as they can ship them, why are they cutting an entire shift at the only plant that's building them? Why to keep supplies low to keep residuals high! Alternatively… So far this year, GM's sold 91,412 of the large crossovers. Of those, the Acadia accounted for 52,857 units, the Enclave racked-up 12,726 sales, and Saturn shifted 25,793 Outlooks. GM likes to brag that at the first of October, they had only a 21-day supply of Enclaves and a 49-day supply of Acadias. But– and they don't talk too much about this– they had enough Outlooks to last 73 days. Uh oh. Buick actually has a smaller supply of dead-in-the-water Lucernes on hand than Saturn has Outlooks. Maybe things aren't quite as rosy in Lambda-land as The Wall Street Journal and others are painting them.  

Gas prices are rapidly going up in China and the people of the People's Republic aren't happy. China Car Times has a list of just a few of the [printable] comments made in various Chinese publications about the situation: "Socialism is great – prices rise, but our wages don't!" "I hope it goes up to 10rmb a liter, this way we'll all ride our bikes again and loose weight." And the aforementioned "Lets go to the Middle East and steal their oil!" In other news related to the Chinese fuel crisis, some areas are reporting short supplies resulting in fuel rationing with long lines, and at least one person has been killed in fighting over line jumping at a fuel station. The situation is bound to get worse as auto sales continue to outpace China's refining capacity.

Cars that recognize the driver via a pocket-dwelling key fob will soon be old hat. Gizmag brings news from the Tokyo Motor Show of Hitachi's biometric steering wheel. The helm's sensors reads the veins in the driver's fingers. The system can then be configured for security, so that only an authorized user can start the car. (Have fun at valet parking.) But wait, there's more! The biometric boffinology can also be set-up so that each finger triggers a different response from the on-board computer. Your index finger could activate the sat nav system. Your pinkie could control presets for the seat, mirrors and sound system. Future applications could even include authorizing automatic payments for drive-thrus or music downloads. Talk about high touch…

GM has announced that it will begin exporting its Chinese-made Cadillac SLS (a.k.a. STS stretch) to the Middle East in the first quarter of 2008. Huliq reports Shanghai General Motors Co. Ltd will debut the SLS in Dubai at the Middle East International Auto Show later this month. This will be the first export deal for the Chinese Caddy, which went on sale in the military dictatorship known as The People's Republic of China in March. Cadillac GM Jim Taylor believes the SLS "will be just as successful with luxury car consumers [in the Middle East] as it has been in China." There are no plans to bring the the big Caddy cruiser stateside. Meanwhile, GM's Chinese sales rose by 128 percent year-to-date. [Spin alert: the actual number of vehicles sold may be quite small.]