Just as Costco and WalMart are doing relatively well in difficult times, the Wall Street Journal reports that while Hyundai USA’s sales are down, their market share is increasing.  Industry wide sales in September were reportedly down 27% while Hyundai was “only” down 25%.  Technically that does add up to a miniscule market share increase, but hardly anything to write home about.  Hyundai has also just released the Genesis Coupe in Korea, taking aim at the likes of the Infiniti G37.  Considering how much Sajeev liked the sedan, we are looking forward to the March 2009 US availability of the coupe. (Though Berkowitz not nearly as much).  In their heydey the Thunderbird, Toronado, Eldorado and Mark VII were cars everyone aspired to; lately, not so much. But, with everything old suddenly new again perhaps there will be a revival of the luxurious coupe.  With a starting price under $25,000 the Genesis Coupe might just be onto something. Or not.

While global stock markets are in full retreat, Volkswagen shares have soared to a 20-year high. Marketwatch has plenty of theories to explain the recent 60 percent surge: short covering, inclusion in market indices and the relatively small number of VW’s shares which trade on the open market. Even the collapse of Lehman Brothers gets an honorable mention. Whatever the reasons, “with a market capitalization of 95 billion euros, or $129b, VW is now worth more than Toyota.” Surely the big rise in VW shares has nothing to do with the company’s ongoing inability to get anything right in the U.S .market. VW’s US sales were down 9.4 percent in September and would have been even worse were it not for the introduction of the Jetta SportWagon and the Tiguan. The best explanation for the recent VW share price run-up: the tug of war between Porsche, the state of Lower Saxony and various factions within VW’s management and a related squeeze on short sellers who had bet that VW would crater along with the rest of the automotive stocks. Barron’s summed-up the situation up nicely today with this note: “Holding VW shares can be likened to musical chairs. Each time the music stops, some of the shorts cover and drop out. At some point, relatively soon, the shorts will be out effectively of the stock, and VW shares will start trading on fundamentals again. When that happens, the game will be over, and holders of VW shares will be left standing with shares that will plummet to where fundamentals dictate.” So, if you are a betting person, short some VW stock and wait for it to unfold. Me, I’ll be watching from the sidelines.

The scramble to raise cash over at Ford continues apace. Recent press rumors out of Japan [via The Associated Press] say The Blue Oval Boys are talking with the Zoom Zoom Zoom folks about selling all or part of the American automaker’s share of Mazda. Ford first invested in Mazda back in 1975. FoMoCo increased it’s stake to 33.4 percent in 1996. Mazda was on the ropes in 1975, thanks to having most of it’s chips on the Wankel-cycle rotary engine. The oil shocks of the 1970s killed the rotary engine and put Mazda on Death Watch. Ford rescued Mazda with cash and know-how. Since then, the Mazda-Ford partnership has been one of the most productive in the industry. Today the companies share platforms and drivetrain development on a global basis. For example, Ford’s four-cylinder engines are based on the Mazda MZR family and Mazda has standardized on Ford’s V-6 engines. The two companies also share factories in Thailand, China and the US. Considering these deep ties it isn’t surprising to hear that “Ford would maintain some of its stake in Mazda and management ties.” But, with Ford burning over $2b every quarter; there aren’t many good choices left. Ford has made it clear that they aren’t interested in handing Mazda over to a competing auto maker, but will they have any choice?

The financial conflagration which started in the US has spread around the world. Bloomberg tells us that in the UK “despite an easing in prices at the gas pump, sales of new cars in September tumbled, falling 21.2% from the same month a year ago. That was even worse than August, when sales were down 18.6%.” Porsches are apparently the SUV’s twin sister over there with a 33.3% sales plunge. But apparently the UK‘s art market is strong: “Stuart McCullough, board member for sales and marketing at Bentley said in an interview last week that some customers were putting off delivery because they didn’t want to make such a lavish and visible purchase when many consumers faced tougher times. ‘We are seeing buyers not taking delivery of our cars, but continuing to invest in the art market’, he said.” You do have to wonder how Sir Stuart knows this. Do his customers invite him into their homes for private showings of their art? Perhaps he will find a still hot selling Smart Car mounted on a pedestal as an object d’ art.

The Wall Street Journal is calling attention to the massive cash piles sitting around the offices of big oil re: falling stock prices. The solution to this problem? “Mr. Flannery argues that Big Oil will need to put cash into acquisitions to restore the battered share prices.” ExxonMobil alone is sitting on $39b despite buying back its own stock at a rate of $8b per quarter (it’s repurchased $218b of its shares over the past several years). General Motors’ total market capitalization of under $5b, and falling, makes it a target. OK, they have a few liability “issues.” But what’s good for GM is good for ExxonMobil. By deferring two months of its own stock buy backs ExxonMobil could gobble-up the world’s once and future king of cars. Think of the synergy! From exploration through production, marketing and finally right out the tailpipe; a truly global and integrated oil monster. Chevron, never one to be outdone by its sister company (both were once part of Standard Oil), is said to be eyeing Ford. With plunging demand dragging oil prices from $140 per barrel down to around $90, something must be done! Or not.

There was a time when $10m seemed like a lot of money.  It still does to me personally, but on the scales of corporate and government finance it is, well, almost nothing. Lest we forget, Ford’s lining-up for its share of $25b in low-interest loans provided by you [via The Department of Energy] to retool its way out of a sea of red ink (in theory). Meanwhile, the AP dutifully reports that Ford’s receipt of a $10m Department of Energy grant to cover half the cost of a planned 20 vehicle plug-in Escape test fleet. “Ford is working on a three-year project to demonstrate the vehicles and understand how they will interact with utilities around the country, a key step in commercializing cars that can be recharged by plugging into a standard wall outlet.”  At one million bucks per test vehicle, they’d better be good!

Ford’s popular European Ka car might be coming to America after all. The Associated Press reports (via Yahoo) that Ford decided to “give the Ka another look due to high fuel prices pushing up demand for small cars and the response to introduction of the Fiesta subcompact.” Perhaps the sudden availability of tens of billions of taxpayer-backed bucks to retool domestic factories for fuel-efficient vehicles had a little something to do with this change of heart. Ford has recently written off $8b worth of previous investments in truck and SUV production lines. It’s currently sitting on $25b of highly explosive long term debt. So yes, a little boost from Uncle Sam (that’s you) would be just the thing to get Ford to sing “Baby you can build my Ka.” Yes, but– can Ford get the kind of price premium for the Ka that Mercedes somehow cons people into paying for the Smart car? CAFE be damned; the idea of driving next to full-size SUVs from the driver’s seat of a Ka-sized car sets my teeth a chattering.

Assuming there’s still is an auto industry in the upcoming year of magical beings, 2010, Ford plans to roll out the Nanny Key. Ford’s press release sums it up thus: “Ford’s MyKey feature — which debuts next year as standard equipment on the 2010 Ford Focus and will quickly become standard on many other Ford, Lincoln and Mercury models — allows owners to program a key that can limit the vehicle’s top speed and audio volume. MyKey also encourages safety-belt usage, provides earlier low-fuel warnings and can be programmed to sound chimes at 45, 55 and 65 miles per hour.” Parents seem quite keen on the idea, but the kids are not exactly thrilled. “Teens surveyed by Harris said they are largely open to MyKey if it means they will have more freedom to drive. Initially, 67 percent of teens polled said they wouldn’t want MyKey features. However, if using MyKey would lead to greater driving privileges, only 36 percent would object to the technology.” In our home, we achieved pretty much the same end by buying an old Volvo 240. Hey! Isn’t that a Ford product?

Fiat and the European Auto Makers Association want an American-style multi-billion handout, STAT! Marketwatch reports that FIAT is leading the charge, demanding $55.22b in European Commission loans to “help Europe’s car makers make better environment-friendly vehicles.” Did I say demanding? Yes, I did. “All European car makers agree on the [€40 billion] demand,” a spokesman for Fiat said Saturday, confirming earlier remarks by Fiat CEO Sergio Marchionne. The final details of an agreement remain unclear, another person familiar with Fiat’s proposal said.The clock’s ticking on European Union’s 2012 mandate to reduce CO2 emissions; very little progress has been made… Which explains why the EU’s auto companies are also looking to move the new regs’ deadline forward to 2015. Meanwhile, E.U. member states have agreed to relax the rules governing the amount of money individual states can borrow, so they can address their own credit crisis (i.e. bad paper), hampering new car sales. Over to you, Japan.

The Wall Street Journal says FoMoCo burned through $2.1b dollars of cash in the second quarter, which ended way back in June of this year. Results for the July-August-September period haven’t been released yet. But given what we know about unit sales and sales mix, the cash burn almost certainly has gotten worse. Unlike mere mortals, a public corporation has the option to print-up more shares of stock and trade those for cash. Ford plans to sell $500m worth of freshly-minted common stock (not the special “Class B” shares which only family members get) to raise a bit of the needed cash. The crazy thing: half a billion dollars is a bucket of cold water to throw on the bonfires raging through the $26.6b (as of the 4th of July).  We’ll keep an eye out to see just how much of that went up in smoke over the summer. But wait, isn’t Ford going to be saved by it’s share of the $25b dollar government bailout? Not according to Standard and Poors, which said “that its negative rating on Ford would not be affected by the recent passage of a $25 billion low-interest loan package.” We shall see if the company’s finances are “Built Ford Tough” soon enough.

Back when there still was a real estate market, the San Francisco Bay area was one of the hottest. Los Gatos’ auto row included several venerable multi-generation family operations. Last year Swanson Ford gave up the ghost. Last week, Los Gatos Chevrolet hung up its spurs. Now lonely Moore Buick-Pontiac-GMC finds itself the sole survivor, stuck between the carcasses of Swanson on one side and Los Gatos Chevrolet on the other. According to the The San Jose Mercury News (SJMN), “Perhaps a dozen San Jose-area dealerships have closed in the past few years, including Silicon Valley Hummer, Stevens Creek Buick-Pontiac-GMC, Sunnyvale Dodge-Chrysler-Jeep and Sunnyvale Lincoln-Mercury this year. Smythe Volvo closed a location on Capitol Expressway Auto Mall, but remains open on Stevens Creek Boulevard.” Paul Melville of Grant Thornton LLP sums up the nationwide situation: “‘An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines… In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem because the economy is doing it for them.'” Even so, the dealer networks are not yet shrinking as fast as retail sales are falling. Carmageddon indeed.

The Associated Press report brings us the stunning news that GM’s employees have loaded up their 401K plans with so much company stock that the cupboards ran dry. Back in January, Financial Weekly published one of the many articles about the risk of loading-up on company stock. “After thousands of employees at now-defunct corporations such as Enron and WorldCom saw their retirement savings wiped out early in this decade, things were going to be different.” In case anyone has been under a rock for the past ten years, you don’t want your salary and your pension and your retirement investments all riding on the fortunes of one company. The big reason GM ran through its authorized number of shares for the 401K plan was the price plunge. GM stock is off 75 percent from its recent highs; it now takes four shares to stock to soak-up the cash which previously would have only bought one share. Between now and sometime in November when GM puts through the paperwork to print more shares, employee contributions will go into other investments. How long will it be before GM employees follow their Enron soul-mates into court over bombed-out 401K plans? Actually, it’s already happened. Workforce Management reported the January 18, 2008 settlement of a class action suit brought against GM in 2005 over the plunging value of employee 401K purchases of GM stock. Will they never learn?

Amidst all the noise about “troubled assets” and “toxic debts,” few commentators have noticed  that the bailout rescue package before Congress (again) includes provisions for the government to buy-up car loans gone bad. The Wall Street Journal, “In August, tight credit caused General Motors to lose sales of roughly 10,000 to 12,000 vehicles, the car maker said. When extrapolated across the entire U.S. industry, that was the equivalent of 40,000 lost sales, or about $1 billion in revenue.” Thus, the fed’s grand plan to pick-up big dollops of the bad paper so that car dealers can get back to the business of putting people into cars and trucks they can’t afford by writing more bad paper. Personally, I think people should only buy the vehicle they can pay cash for, but if the world agreed with me then the automotive market would probably crash and burn. Americans wouldn’t even accept a China-style system, where buyers have to put down 40 percent of a vehicle purchase price in cash. Regardless, if the bailout package passes this week, you can bet The Big 2.8 will be looking to push that money straight into its dealers’ hands.

The WTF factor out of GM simply knows no bounds. The AP reports Saab's decision to reduce warranties for 2009 and later model year vehicles. Saab already is in a sales tailspin and is losing GMAC lease support. It seems to me that if a vehicle is designed, built and maintained properly there should be very few powertrain failures between the four year, 50,000 mile "new" Saab warranty and the five year, 100,000 mile warranty in effect for 2008 model year vehicles. True enough, most of Saab's competitors offer warranties similar to the new Saab plan… but Saab is very much the underdog is this market and needs some kind of persuasive selling point. Why exactly does ANYONE buy a Saab instead of a Lexus, Infiniti, Acura, Audi, BMW, Mercedes or even Volvo? GM spokesperson Joanne Krell "said lower costs and a more competitive edge over other importers were factors in the decision." Apparently Saab expects a lot of powertrain failures between years four and five, otherwise there wouldn't be much cost savings to be had. As to the "competitive edge", WTF indeed.