Back when I worked for CNN, I went to some damn auto show or another. I was trying to interview a gentleman about his cherry ’34 Chevy when something roughly approximating depth charges went off. I turned around to see Paul Revere and the Raiders performing. Well, Paul anyway. And a bunch of middle aged men dressed like, what? Minute Men? Pirates? Thanks to acoustics that would make the inside of Quaker oatmeal box sound like the studio at the top of Bose Mountain, I couldn’t hear a word they were singing, which was OK. No one was paying attention anyway. And both of those who were knew all the words. Now I don’t expect the Jonas Brothers to be afforded the same indifference when they do their thing at this year’s North American International Auto Show. And who knows? Maybe the Doobie Brothers will convince a new generation that Jesus is just alright. Oh yeah. But I was thinking, who would be the perfect artist to perform at this year’s auto show? The obvious answer is Maureen McGovern from the original Poseidon Adventure, singing There’s Got to Be a Morning After (pass the Alka Seltzer will ya?). But you guys didn’t get to be the B&B by going for the easy laughs. So put it out there. Who should take center stage at NAIAS?
Posts By: Robert Farago
Well why not? If the the Fed can justify “emergency” approval of GMAC’s switch to bank status as a necessary step to save GM, it’s not that much of a leap to suggest that bankrupt parts maker and GM spin-off Delphi’s next in line for some bailout bucks. As we’ve said here before, no Delphi, no GM. Bloomberg puts it this way: “GM has already spent more than $11 billion to help Delphi, the largest U.S. auto-parts maker, exit bankruptcy. Delphi has been unable to get further loans to help it leave court protection because of stricter credit requirements and declining revenue from slow auto sales.” And now… “We would not be surprised to see additional government funds to GM to support a Delphi solution,” JPMorgan Chase & Co. analyst Himanshu Patel said in a report today. As JP is up to its eyebillions in GM, Chrysler, Chrysler Financial and GMAC, it’s a good bet this is more of a trial balloon than mere conjecture. Bloomberg points out that the idea of throwing some cash at, I mean arranging some loans for Delphi is no longer beyond the remit of the increasingly vaguely remitted $700b Troubled Asset Relief Program.
The analysts at Credit Suisse (CS) get no points for predicting the continued cratering of the U.S. car market [full report after the jump]. But one has to wonder just what in the Hell GM was thinking when it predicted 12m unit sales in the U.S. as late as late summer. No matter how you cut it, or what incentives GM’s offering, the American automotive industry is looking at sustainably low numbers. And speaking of “sustainability,” CS is now starting to factor in consumer fears of bankruptcy. When the words “bailout backlash” start to appear, as they surely will, it’ll be all over bar another $50b or so in taxpayer subsidies. Sorry, loans. Meanwhile, there is some good news here: CS reckons The Big 2.8’s production cutbacks will clear their 35 percent overstock. And “all else equal, GMAC’s increased access to funding could increase GM’s sales by several hundred thousand units in 2009.” Good luck with that.
12/30/2008
To: All GM Dealers
Subject: GMAC APR RATES
Date: December 30, 2008
I wanted to update you on the recent actions that have taken place with regard to GMAC obtaining bank holding status.
We believe GMAC’s ability to extend financing will be greatly enhanced.
To that end, I am pleased to tell you that starting today, GMAC will be offering reduced rate financing as low as 0% APR for up to 60 months on select new cars and trucks. The reduced rate financing is available to qualified buyers (S, A, B and C tiers) through January 5, 2009.
In addition, we have stackable bonus cash and/or dealer cash of $500 to $4,250 on some models.
Following are examples of the supported rates being offered:
I know this is The Truth About Cars, not the inside baseball truth about the finance companies that prop-up the domestic automobile manufacturers. Dot com. But we’ve been following this story because, well, if GMAC had gone down, GM would have gone down and GM still makes cars. Well, after the holidays. And the shenanigans involving the federal government’s rescue of GMAC have been nothing less than shameful. First, Uncle Sugar signals GMAC in no uncertain terms that if the bankruptcy-bound lender doesn’t convert 75 percent of their debt into equity they can go ahead and fail. Then, on Christmas Eve, before we learn the results of that d-for-e swap, the Fed says, never mind, you can be a bank. We’ll just use our “emergency” (as opposed to superhero) powers to bend our own rules. And still GMAC doesn’t reveal the success or failure of the swap, claiming they needed time to tabulate the results. And now… we know. Surprise! Not. The Wall Street Journal reports “Struggling finance firm GMAC LLC said Wednesday that bondholders tendered $21.2 billion in notes in its bid to raise capital for its new status as a bank-holding company. The lender’s goal had been to raise $30 billion by converting 75% of its issued debt into preferred stock holdings. The offer expired Friday after having been extended four times.” So they received prior approval AND a $6b federal (that’s your taxes) investment and they STILL missed the legally mandated target by $8.8b. One rule for you, one for former U.S. Treasury Secretary and current Cerberus Chairman John Snow.
The Chevy Aveo has been on TTAC’s Ten Worst List since we inaugurated the public service. In 2008, it remains at the top of the steaming pile, garnering a gong at the number three spoty. To quote from this year’s encapsulation: “The Aveo continues to offer a snap-crackle-pop interior, mediocre gas mileage, roly-poly handling and gutless onramp terror.” So how in the world could Detroit News carmudgeon Scott Burgess find anything nice to say about Chevy’s Korean American revolution, never mind a whole column’s worth? Let’s s-s-s-s-sample. “It’s roomy, peppy and comes with more personality than similarly priced competition.” Oh really? Vera, Fit, Yaris? “The hatch helps the Aveo5 stand out. It’s a good look, and it plays multiple utilitarian roles, such as making it extremely easy to park as well as load big things in the back. Few other exterior features add to its looks. It’s not like the designers had a lot of sheet metal to work with.” So… it’s a hatchback. Gotcha. “Chevy upgraded the interior materials, though there is a certain economical feel to this vehicle. Every part of the cabin feels well built, though it’s difficult to know how it will hold up over the long haul.” “Economical feel.” Is that a synonym for horrifically cheap?
Never let it be said that TTAC doesn’t kick a bad idea when it’s down. (It’s the best way to make sure it stays down.) Obviously, it’s no secret that myself and several members of TTAC’s crack (smoking) freelance team consider E85 the biggest boondoggle outside of the Motown meltdown boondoggle. Corn juice for fuel is a fundamentally flawed concept on environmental, energy, practical and even a geo-political basis. But even as the U.S. ethanol customers line-up none deep for their chance to prove that “no one ever died defending a corn field,” even as the ethanol industry continues to block cheap E85 imports from Brazil, even as the major players suck-up to Uncle Sugar to secure a $1b bailout (no really) to stay alive in a business where they already enjoy a .50 a gallon “blender’s credit” and a federal requirement for someone somewhere to use the stuff (a.k.a. the 36b gallon by 2020 Renewable Fuels Standard), they’re shifted gears to open a second front in their war against common sense. AG Week reports that the push for a federal mandate to raise the ethanol content in regular gas from E10 to E15 (and beyond) continues apace.
It won’t be long now: a parody ad of Chrysler’s thank you for your “investment” ad, to join the bailout parody ad and the anti-anti-bailout (i.e. Toyota) viral email. Meanwhile, Chrysler’s still catching heat for spending big bucks on the post-bailout ads in USA Today, The Wall Street Journal, The Atlanta Journal Constitution, online (even TTAC!) and other media. TTAC flagged the obvious waste ogf taxpayer money and condescension on the 23rd, but the MSM have just caught on. Autoblog reports today on Fox News’ Monday report slamming the automaker for the campaign. Their boy Newt’s minion does the dirty. “‘It’s quite ridiculous to be spending that kind of money,’ said Princella Smith, national spokeswoman for American Solutions, an organization headed by former Republican House Speaker Newt Gingrich. ‘Those ads are just a precise example of the fact that they do not get it … and it’s just in our faces.'” So, now how much did they pay? “A full-page ad in The Wall Street Journal runs between $206,000 and $264,000, and a full-page ad in USA Today runs between $112,000 and $217,000.” Wow. Still, $4b buys you a lot of ad space, if not a single class-leading automobile. Oh, and why haven’t MSM picked-up on the fact that the ad’s picture is a fake?
When the news came across the e-transom last night that Cerberus’ chairman John Snow’s pals at the U.S. Treasury had decided to “invest” $5b in GMAC, my blog was filled with words like “bat shit crazy” and “disgusted.” After the shock wore off, I edited the post to remove my angry jibes and let the nonsensical nature of the move speak for itself. And respect the views of those who feel that pissing away $6b (an extra $1b for GM) is in the national interest, free market principles be damned. And anyway, I figured this is only the tip of the insanity iceberg. It didn’t take long to get a look below the waterline. Marketwatch (can someone lend their logo a sweater?) reports that the plucked-from-bankruptcy lender is lowering its lending criteria, from a FICO score of 700 to 621. “The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers,” said President Bill Muir in a statement. “We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis.” Need I say more? Oh, one thing: we still don’t know whether or not GMAC met its debt-for-equity target. I wonder why…
Why is Interactivity stressed? What did Toyota and Scion ever do to it?Personally, I’m stressed by Autoblog’s ability to jump on the latest manufacturer press release like a miniature Schnauzer on a peanut butter covered Kong. Still, I don’t think the 800-pound gorilla on the net will stoop low enough to sample– or indeed, republish– Toyota’s official description of its exhibition stands at the don’t call it the Detroit Auto Show. Even though ToMoCo PR-fest will be greener than insert metaphor here. But, as the genie intones in John Papadiuk’s Tales of the Arabian Nights, this amuses me. “These displays include: a ‘Safety and Technology’ kiosk that explains Toyota technology in everyday language; and a series of “Hybrid Synergy Drive® Regenerate Campaign Pods,” which educates consumers on Toyota’s hybrid technology, the benefits and drawbacks of various alternative fuels, and Toyota’s leadership in environmental sustainability.” Pod people unite! Your new Prius is at hand! Toyota hears your cries! “Back by popular demand is ‘Toyota Live,’ a stylized talk show, featuring hosts and guest seating. Introduced last year, ‘Toyota Live’ hosts lead audiences through the latest Toyota news stories as well as engage in a prize-laden Toyota trivia game show.” Of course, Sciontologists will not be neglected.
I know what you’re thinking. If Ford’s dedicating itself to building automobiles without A-pillars the size of redwood trees and blind spots that could hide a girl scout chapter, then huzzah! The Blue Oval Boyz get it! Uh, no. The only thing FoMoCo wants to “get” is more money for backup cameras. “Ford Motor Company is answering consumer requests for more visibility around their vehicles. Ford plans to continue its aggressive technology onslaught by doubling the number of Ford, Lincoln and Mercury models that offer its innovative and affordable Rear View Camera System by the end of 2009. Approximately 75 percent of Ford vehicles will offer the feature by the end of next year, including the new 2010 Ford Mustang – the only sports car to offer the feature when it arrives in spring 2009 – and the recently introduced 2010 Ford Fusion and Fusion Hybrid.” Don’t get me wrong: my minivan’s backup camera is much appreciated (by my neighbors if no one else). But if “our research shows that visibility is one of the biggest customer concerns today,” why not design for it? Oh right, the Ford Taurus. OK, carry on then.
Previously, on “We Can Confabulate the Managerial Incompetence Behind Motown’s Meltdown and Federal Cash Grab by Raising Issues About Race, Regionality, Class and (it’s coming) Religion,” Washington Post Carmudgeon Warren Brown argued for Motown bailout bucks as a “thank you” for the auto industry’s help to African Americans. The Detroit News said “amen” and added a little ditty about how black workers are more exposed to the Detroit “downturn” than their Caucasian union brothers. And now The New York Times is adding the official seal of approval of the “minorities need the bailout” meme, with “As Detroit Suffers, Black Workers Hurt.” Not surprisingly, Gray Lady scribe Mary M. Chapman follows DetN wordsmith Louis Aguilar’s template to the point of plagiarism– and beyond! Do these stats seem familiar? “By last month, nearly 20,000 African-American auto workers had lost jobs, a 13.9 percent decline in employment, since the recession began last December, according to government jobs data analyzed by the Economic Policy Institute, a liberal Washington research firm. That compares with a 4.4 percent decline for all workers in manufacturing.” First of all, define “lost jobs.” Does that include workers who took a buyout? Jobs bank? Second, let’s compare apples to apples; what’s the differential between black workers auto industry layoff rate and that of white workers with the same jobs? The Times offers more misleading stats and insinuations, but my work here is done.
CNNMoney is reporting that the U.S. Treasury will “invest” $5b in formerly bankruptcy-bound lender GMAC. In return, “GMAC will issue warrants to Treasury in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase that will pay a 9% dividend if exercised.” Presumably, the treasury provided your tax money after GMAC failed to convince enough of its bondholders to swap debt-for-equity to qualify for bank status (under the Fed’s “emergency powers”). Now that the Treasury has stepped in, GMAC can make the morph and hoover $6b plus from the Troubled Asset Relief Program and $17.5b in federally guaranteed debt. Folks, that little package right there comes to $28.8b. Oh wait; the Treasury has decided to “lend an additional $1 billion to GM so it could invest in GMAC as the financing company reorganizes.” So if you add GM’s $14.4b, Chrysler’s $4b, GMAC’s $28.8 and the Department of Energy’s $25b retooling loans, you end up with a $72.2b Detroit bailout “plan.” Way hey! GMAC press release after the jump.
Automotive News [sub] reports that Uncle Sam is set to transfer $4b worth of taxpayer funds to GM and Chrysler. Each. The e-checks were due to be signed by close of play today, but got hung-up on “technical issues.” So, tomorrow then. This is, of course, only the first installment. GM scarfs another $9.4b early next year, $4b of which will require congressional approval. “The automakers must file plans by Feb. 17 describing how they will restructure to become viable for the long term. Unless the agreement is changed by the Obama administration, a president’s designee, or car czar, is to decide by March 31 if an automaker’s restructuring plan is sufficient. If not, the first loans will be called in, possibly forcing the company into bankruptcy.” Possibly? Anyway, I am disgusted that this deal went down without public scrutiny of GM or Chrysler’s books– or a call for the MSM for same. While our duly elected representatives supposedly saw the “real” books– but couldn’t reveal the information for “commercial reasons”– last week’s Wall Street Journal story on Cerberus’ ownership of ChryCo’s HQ indicates that there’s ample reason to believe there’s something rotten in the fortress of Detroit. You know, other than President’s Bush bald-faced usurpation of Congressional power and federal funds to prop-up two dying commercial (non-banking) enterprises. The Bailout Watch continues.
Poor Gina Proia. Not only does she have a last name that she can never leave for the order takers at Panera, but she also has to defend GM. AND look herself in the mirror in the morning. But plucky lass that she is, Gina (may I call you Gina?) is doing her best to fend off media enquiries about the debt-for-equity swap at troubled (as in death rattling) lender GMAC. The company needed to convert 75 percent of its $38b of issued debt into preferred stock to raise $30 billion in capital to become a bank. The deadline for the swap– upon which GMAC’s transformation into a bailout-rescued bank depends (no matter what Gina says)– expired Friday at 11:59pm. Since then, not a peep from the participants. Especially Gina. On Sunday, she played the inscrutability card: she’d let us know in the “near term.” Today, she told Bloomberg “Once the results are finalized, we will disclose that information.” Is she asking us to believe GMAC doesn’t know if it lives or dies or gets Uncle Sugar to change the rules? This could be much ado about nothing. Or it might be time for GM CEO Rick Wagoner to bone-up on his King Lear. So to speak.
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