“It’s not a good situation, no matter what.” These bleak words come from Christopher Whalen, managing director of Institutional Risk Analytics [via compareshares.com.au]. Whalen is wailin’ on the impact of the Fed granting GMAC bank status, should the lender complete its debt-for-equity swap. And what’s up with that? The deal was supposed to be done by 11:59 last night. So far not a peep from GMAC, the Fed, Cerberus (who owns 51 percent of the troubled lender) or any of The Wall Street Journal’s people close to the people who need people are the luckiest people in the world. To paraphrase our own John Horner, uh-oh. Meanwhile, back to our notable quotable, who points out the blindingly obvious: “Christopher Whalen, managing director of Institutional Risk Analytics, said would-be customers are simply not buying cars. Noting that Toyota has just forecast its first operating loss in 70 years, Whalen sees no end to the slowdown… The difficulty many homeowners have had in paying mortgage bills has been spreading to credit cards and other forms of borrowing, including auto financing, Alpert said. ‘I don’t see that coming back anytime soon – people with impaired credit suddenly getting credit,’ Alpert said. ‘That, I think, is what has showed itself across the board with consumer spending.'”
Posts By: Robert Farago
While occasional NYT carmudgeon Ezra Dyer’s busy celebrating high horsepower motor cars, his paymaster’s editorial board has announced their desire to have the incoming administration tax the bejesus out of the go-juice fueling Dyer’s cool whips (Bryan?). After bemoaning the lowered price of fuel’s dampening effect on Americans’ desire to buy the fuel-efficient vehicles that Uncle Sam, in his infinite wisdom, has mandated, The Times gets down to business. “There are several ways to tax gas. One would be to devise a variable consumption tax in such a way that a gallon of unleaded gasoline at the pump would never go below a floor of $4 or $5 (in 2008 dollars), fluctuating to accommodate changing oil prices and other costs. Robert Lawrence, an economist at Harvard, proposes a variable tariff on imported oil to achieve the same effect and also to stimulate the development of domestic energy sources.” BUT WHAT ABOUT THE POOR PEOPLE? “In both cases, the fuel taxes could be offset with tax credits to protect vulnerable segments of the population.” Uh, is a major recession really the best time to raise the price of a basic commodity? No but…
“Ezra, baby, we love your style! You’re the next P.J. Hunter Clarkson! But listen; we need something a little upbeat for the year’s end. A little sugar to sprinkle on top of all that rancid offal coming out of Motown. How about 2008 cars you love? Thanks… Uh, Ezra this is a list of muscle cars and sports cars. And they’re all powered by gas for Christ’s sake. This is the New York Times! Tell you what: write me a couple of hundred word intro on alt power stuff. What’s that battery-powered thing? Taser? Dazzler? Put that one in there. We’ll call it ‘Gas guzzling rocket ships are great but we can’t say that.” No, no. We’ll call it “Last Call for Horsepower.” You know, cake and eat it deal. Awesome. What’s that? Cars that suck? What do you think we are TTAC? Sigh. OK, list ’em at the end, be gentle and we’ll call it “not in my garage.” OK? And I’ll get back to you on the driving to Alaska in a Ferrari thing later. Love ya! [Ezra’s Reasons to be Cheerful Part One Through Eight after the jump]
In our coverage of lender GMAC’s struggle to become a bank (i.e. suckle on Uncle Sugar to avoid bankruptcy), we pretty much assumed it was a done deal. The Fed’s decision to grant GMAC bank status if/when they completed a mega-debt-for-equity swap seemed like the come-on reluctant investors needed to take their chances with the U.S. taxpayer, rather than a bankruptcy judge. The dealine for the d-for-e swap expired last night at 11:59. If GMAC made it, it’s just another step down the road to recovery, or nationalization, depending on your perspective. If they didn’t, all HELL will break loose. GM simply can’t survive without GMAC covering its dealers’ floorplan costs (loans for inventory). If GMAC goes down, thousands of GM dealers go belly-up. While that’s exactly what GM needs, they don’t need it all at once. The market would be flooded with hundreds of thousands of units of unsold inventory, supplier confidence would disappear, etc. So which way did it go, then? “We have not yet issued final results,” GM spinmeister Gina Proia told the AP. “But intend to in the near term. I have no further comment on the exchange until then.” Someone somewhere is holding their breath.
Reuters (and everyone else) reports that GM is suing bankrupt parts maker Cadence Innovation to recover the bits it needs to build/launch the new Chevrolet Camaro. Both more and less specifically, Cadence makes consoles, door panels and “other parts.” GM wants all of it, bad. So they’re suing, asking a Delaware Court for permission to access Cadence’s factory to recover the necessary tooling and parts to craft their Canadian retro-muscle car. “Even one day’s disruption in supply of certain Component Parts could cause a shutdown of GM assembly operations,” The General’s lawsuit proclaims, using German capitalization to emphasize the seriousness of their demands. A refusal to do so would end up “disrupting not only GM’s business, but the operations of countless suppliers, dealers, customers, and other stakeholders.” Countless? That’s a lot, right? And once they’re being both vague and alarmist, GM said the damages from Cadence’s refusal to surrender machines and parts “would be substantial, but difficult, if not impossible to calculate.” GM reckons it needs the parts-making machines by January 12th. Or a plague of locusts will descend upon the earth and boils will fester on muscle car collectors’ butts. But there’s more to this story than first meets the, uh, eye…
A recent TV ad extols the wonders of the Cadillac CTS. Suddenly, the image zooms backwards and flips around to become a sparkling GM logo. “The CTS is made by General Motors,” the narrator intones. “Surprised?” I sure was. I mean, I understand the intended subtext: See? We’re not a total basket case. But as my father would say, if you’re so smart how come you’re not rich? Students of this series know that GM has plenty of answers to that question. The only thing neophytes should clock: none of these answers involve the phrase “we fucked up.” That and the fact that GM wants you to believe that their turnaround depends on building more cars like the Cadillac CTS. Uh-oh.
“Hoover” as in the English expression for vacuum or suck-up– not the U.S. President at the helm when American slid into [what became known as] The Great Depression. Anyway, that brings Uncle Sugar’s contribution to the Detroit cause to $66.2b: $25b for retooling loans, $17.4b for direct-to-manufacturer bailout bucks and $23.8b for GMAC aid. OK, I’m exaggerating. Bloomberg reports that GMAC is “only” in line for $6.3b in cash money. The rest– $17.5b– will arrive in the form of federally guaranteed debt, under the Temporary Liquidity Guarantee Program. If you remove that choice morsel from the recipe for, what was it again? Oh right: turnaround. Recovery. That sort of thing. Then it’s a mere $48.7b. So far. GMAC still faces a midnight deadline to swap debt for equity to qualify as a bank, but it shouldn’t be much of a problem, given that the Fed has pre-approved the bank transformation process under its “emegency powers.” As far as GMAC’s future management is concerned, Bloomberg scribe David Mildenberg doesn’t “get it.” If Red Ink Rick Wagoner can hold onto the reins of power at GM, what’s the bet GMAC Chairman Ezra Merkin, “whose funds invested in Bernard Madoff’s alleged $50 billion Ponzi scheme,” will keep on keeping on?
Successful GM, Chrysler Dealership
Location: Mississippi > Confidential
Industry: Auto Related > Auto Dealers
Financials
Asking Price: $1,500,000
Cash Flow: $776,677
Cash Flow Comments: EBITDA
Real Estate: $2,000,000 (Not Included in Asking Price)
Seller Financing: Maybe
Business Summary
This is a very well established dealership that continues to have strong profits and sales. The area is growing and strong economically with job growth. Strong service department and parts sales departments are very profitable and enjoy a great reputation. One owner is willing to continue to operate as a minority partner. Only serious inquiries please.
About the Business
Year Established: 1955
Facilities: Great
Market Outlook and Competition: Strong
About the Sale
Management Training and Support: Yes
Reason For Selling: Retirement of majority owner
I mean, milestone. I mean, it would be petty and vindictive of me to suggest that Chevrolet’s Project Driveway program was/is an enormous waste of GM’s precious development money. If we are to have a hydrogen economy– and why wouldn’t we (other than the cost of rebuilding a trillion dollar-plus infrastructure from the ground up)– we’re going to need fuel cell vehicles to, uh, get around. So you can’t help but applaud the fact GM now has more than 100 hydrogen fuel cell Chevy Equinox on the road, which have logged a combined total of 500k miles. “The vehicles are performing very well and we are learning a great deal about fuel cell robustness and how to make this program work for real customers,” Marybeth Stanek, GM’s director of fuel cell commercialization, opines [via press release]. “The amount of data we’ve collected over the past year is very valuable to us, and gives us insight into this important automotive technology.” Yes, yes. What exactly have we learned? *crickets chirping* Hey! Jay Leno has one! Been driving it since April. Or, you know, parking it in one of his aircraft hangers.
* Finalist 2009 North American Truck of the Year (with 2009 Ford Flex for Car of the Year)
* Detroit News Truck of the Year
* Motor Trend 2009 Truck of the Year Award™
* 2009 Best Redesigned Vehicle from Kelley Blue Book’s kbb.com
* Top honors as “Truck of Texas” as well as “Best Luxury Pickup” for the 2009 F-150 King Ranch from Texas Auto Writers Association
* “Best Overall Half-Ton Pickup” from PickupTrucks.com
* “Automotive Excellence” award in the Workhorse Category from Popular Mechanics
* “Top Safety Pick” from the Insurance Institute for Highway Safety for its standard safety technology: Safety Canopy side curtain air bags and AdvanceTrac with Roll Stability Control
* “Residual Value” award from Automotive Leasing Guide (ALG) for retaining the highest percentage of its original price among 2009 full-size light duty pickups at the end of a conventional three-year lease, based on ALG projections
* Motor Trend’s Truck Trend Top 5 Trucks from Specialty Equipment Market Association (SEMA) for 2009 Ford F-150 Heavy Duty DeWalt Contractor Concept
* “Accessory-Friendly Truck” Design Award from SEMA
It’s ALWAYS Christmas in D.C.! Indiana democrat Senator Evan Bayh would like to say hello to the New Year with $1.63b worth of grants to American automotive battery makers. “For a fraction of what the federal government has spent to bail out Wall Street, we can create the next generation of high-mileage vehicles,” Bayh pronounced, neglecting to mention the $38.4b the feds have allocated to the domestic auto industry as of late– which doesn’t include the tens of billions headed to the newly-created GMAC bank. Local angle? You betcha! “Indiana can lead the way with cutting-edge technology being made right here within our borders,” Senator Bayh’s statement said. “Our state can help America move past Band-Aid solutions and help ensure the long-term viability of the domestic automobile industry.” That’s kind of low-key– given the level of PC bluster surrounding the incoming adminstration’s push for “green jobs.” Take two…
UK carmudgeon Jeremy Clarkson remains under fire for misrepresenting the Tesla Roadster in his Top Gear test. Initially, when Jezza and his boys were caught pretending that the Roadster had run out of juice by pushing the Roadster into their off-track facility, they claimed dramatic license. If you don’t work for Tesla and live by the words “That’s Entertainment!”, it’s no biggie. But as Teslagate spreads into the MSM, Clarkson’s prevarications grow increasingly… tedious. First, the Torygraph presents Tesla’s side of the story, via spokesperson Rachel “Heart of Darkness” Konrad [sic]: “Never at any time did Clarkson or any of the Top Gear drivers run out of charge. In fact, they never got below 20 per cent charge … they never had to push a car off the track because of lack of charge or a fault. It’s unclear why they were filmed pushing one into a garage in the video.” Unclear my ass. Sigh. Even when they’re right, Tesla can’t help but weasel. But Clarkson’s cantankerous reply was worse.
Over the next three years, the Iowa Department of Economics Renewable Fuel Infrastructure Board (RIFB) will grant gasoline retailers and their pump-oriented pals $13m. The Tall Corn State is allocating taxpayer money to encourage these commercial enterprises to offer E85 to the customers. More specifically, Ethanol Producer Magazine reveals that “the maximum award can’t exceed 50 percent of the total cost of making the [E85 oriented ] improvements, or $50,000, whichever is less. Projects must be completed within eight months of the award date unless an extension is approved.” Seems fair enough, right? Problem: with gas prices hovering at $1.50 a gallon, E85 is a drug on the market. In other words, why convert to corn juice if no one’s buying? Yes, well, never underestimate the power of the boondoggle: “At its quarterly meeting Dec. 16, the Iowa Department of Economics Renewable Fuel Infrastructure Board approved more than $1.52 million in grants for 43 biodiesel and E85 retailers and terminal operators across the state to expand their renewable fuel infrastructure.” Now, shall we talk about the federal program?
Recent Comments