What if they held a North American International Auto Show (NAIAS) in the middle of Detroit in the middle of the winter and the Japanese manufacturers’ CEOs didn’t go? We’re going to find out what that means this year, as The Detroit News reports. “Toyota Motor Corp. confirmed earlier this week that CEO Katsuaki Watanabe had canceled plans to travel to Detroit… Previously Honda Motor Co. and Nissan Motor Co. said their chief executives would not attend. The companies did not give reasons, but officials say they expect the crush of reporters covering the Detroit show will focus almost exclusively on the industry downturn and the U.S. automakers’ difficulties.” So they’re running scared? Uh, I think that’s what you call “projection.” Another explanation comes from Joseph Serra, senior co-chairman of the NAIAS and president of Grand Blanc-based Serra Automotive Inc: “What’s possibly happening now is that, out of respect for the Big Three, they don’t want to upstage anything right now.” So they’re running scared? You know, from anti-transplant blowback. That sounds more likely, especially given the transplant’s low profile and quietly supportive demeanor during GM and Chrysler’s very public, shameful jostling at the billion dollar bailout buffet. Another another explanation: all those NAIAS unveils cost big bucks and sap a lot of time from execs’ scheds. Occam’s razor that.
Posts By: Robert Farago
Welcome! I don’t know how you managed to separate yourself from the merry makers in your midst, but we aim to provide you with a little late December diversion. Today’s car-related entertainment comes to you via Google Earth and a TTAC commentator, who suggested we have a gander at the abandoned airfield at Downsview Park, Ontario. Sure enough, there’s a line of new but definitely uinsold cars parked in rows on the runway, ready for… winter. We’ve been saying for some time that new cars are stacking-up like cordwood. So, where’s Waldo? Please add new manufacturer car lot locations below.
I know the following letter, first published in the Park Rapids [Minnesota] Enterprise, contains some highly contentious attacks on The Big 2.8 and slurs upon the United Auto Workers. It’s also a bit lacking in the factuality department. But I’m republishing it because I believe the miffed missive mailer represents more than one consumer’s antipathy towards the domestic automakers. If the broad strokes painted here are in any way reflective of a segment of the car-buying public, if that sentiment swells as longtime D2.8 critics become more vocal and visible, well, it’s an abandoned airfield full of not good. And if GM, Chrysler and then Ford belly-up to the bailout buffet for yet more billions, they could well be evoking the law of diminishing returns. (Or endless socialism.) After all, at some point, they have to sell cars to someone.
* Automobile Magazine – All Star Award
* Texas Auto Writers – Overall CUV of the Year
* Texas Auto Writers – Full Size CUV of the Year
* Canadian Auto Writers – CUV of the Year
* Society of Plastic Engineers – Team of the Year
* Popular Mechanics – Automotive Excellence Awards
* Autobytel – Best Family Car
* Autotropolis – 2009 Truck of the Year
* Autobytel – Utility Vehicle of the Year
* GQ Magazine – Best Stuff of the Year Awards
* SEMA Design Award from the Auto Writers – Most Accessory Friendly SUV
* Maxim Magazine – Hottest Cars of the Summer
* Kelley Blue Book – 10 Best Road Trip vehicle
* Maxim Magazine – Favorite new Color – Cinnamon
* Car and Driver – SEMA Show Surprisingly Good Canvas Award
* Maxim Magazine – Ultimate Road Trip Car
* Active Network – Active Lifestyle Vehicle of the Year
* Gay Men Magazine – Top Retro Flagship
There’s a reason why the Pulitzer Prize committee gave Dan Neil kudos, and it ain’t ’cause his hair stylist saw Eraserhead a few times too many. The LA Times carmudgeon’s eco-friendly posture can be a bit of a bore. And there are times when Neil geeks out but good. But there are columns where Neil drops it like he’s hot. His commentary on the symbolism of the 1972 Gran Turino in the movie Gran Torino is a prose poem that will, Samuel Johnson-like, stand the test of time (unlike the POS upon which the column and movie are based). “1972 was in many ways an inflection point for the U.S. automakers, the year that Detroit’s mighty cylinders began to seize. The Big Three would never again be as comfortable, and arrogant, and solipsistic, as they were then. The following year’s OPEC oil embargo sent them reeling. It was this generation of cars, which almost seemed to radiate contempt for their buyers, that drove Americans into the embrace of Japanese automakers when they came. It was this generation of carmakers, and indeed the one that came after, that failed to answer the challenges of an increasingly competitive global market. That failure took Detroit — a once-beautiful city of broad avenues and majestic public spaces — straight to hell.” Make the jump for Neil’s Talking Heads-style conclusion.
Cerberus is the highly secretive private equity company that owns Chrysler, the ailing American automaker that just scored $4b from the Troubled Asset Relief Program (TARP). Cerberus also owns 51 percent of lender GMAC (soon to be less) and all of Chrysler Financial Services. And a lot of Burger Kings. Anyway, The New York Daily News reports today that “Cerberus says it will invest the first $2 billion of Chrysler Financial profits back into the financing arm’s parent automaker.” WHAT PROFITS? This horseshit comes hard on the heels of Cerberus pledge not to take any profit on Uncle Sam’s forthcoming $4b “investment” in Chrysler. WHAT PROFIT? CEO “Boot ’em Bob” Bob Nardelli and his golden parachuted pals want us to believe that Chrysler is determined to become a profitable automaker. Is there anyone who actually believes that? FYI, make the jump for Cerberus’ reason why Uncle Sam must boldy go where the equity firm fears to tread.
Automotive News [sub] reports that the propeller people are pushing prices upwards, by an average of .7 percent. “The automaker said the move was driven by ongoing economical changes in the marketplace and ‘will ensure revenue generation for the company’s U.S. operations and help to protect the quality of business.'” Uh, how’s that again? (And what’s an “economical change” anyway?) “The rise comes despite the fact that the brand, like the rest of the industry, saw its U.S. new-vehicle sales slip by just over 12% to 231,053 units in the first 11 months of 2008 vs. a year ago.” So, in a declining market, BMW is raising its prices? In theory. In practice, not even the Germans can change the law of supply and demand to hoik prices on vehicles that aren’t selling.
Thanks to its enthusiastic participation in the sub-prime mortgage market and billions in low-interest, low-FICO score auto loans, GMAC was headed for bankruptcy. There was only one way out: convert to a bank and suckle on the federal teat labeled Trouble Asset Relief Program (TARP). Only… GMAC couldn’t convince enough of its investors to swap debt for equity to meet the Fed’s regs for the transformation. To forestall GMAC’s C11, and the domino destruction of General Motors, the Fed did what comes natural to our August federal institutions these days: they changed the rules. The Wall Street Journal reports that The Fed has granted GMAC bank status– despite its failure to meet the letter of the law. As the Fed’s statement clearly indicates, they’re making it up as they go along. “As part of the approval, the Fed is requiring GM and Cerberus Capital Management LP to reduce their ownership stakes in Detroit-based GMAC. GM must reduce its ownership interest in GMAC to less than 10% in voting shares and total equity. Cerberus, which owns Chrysler, must reduce its interest to a maximum of 14.9% in voting shares and 33% in total equity.” And that ain’t all…
I’ve finally convinced one of our Delphi insiders to let us go public with the bankrupt parts maker’s layoff plans. I know it’s not exactly what you’d call Christmas cheer, but imagine how the affected workers feel. This is the presentation that Delphi’s HR department is detailing Delphi’s “Temporary Layoff” (a.k.a. TLO) policy. The nasty bit: after Delphi temporarily lays off a worker, they can cut their pay and change their job when they return, at will. “If you don’t show up to work on the designated date after your TLO, they also consider it a ‘voluntary quit’ (as opposed to what?). It appears that they are already getting a campuswide TLO ready for possibly the end of January for two weeks (including execs), and that we will have a two-week TLO pretty much every quarter until some unspecified time.” Bottom line: Delphi is still going down.
Some 43 years after its Turin Show debut, Los Angeles based collectors have acquired the one-and-only 1965 Turin Salon Lamborghini Miura chassis, designed by chassis genius Gian Paolo Dallara, complete with Lambo’s first-ever transverse mid-mounted V12 engine (0293). It’s being “restored” now. Well, after Christmas.
In a broadcast to dealers, GM marketing maven Mark LaNeve has reassured Saturn store owners that The General has no plans to send the brand to the firing squad. In fact– no. That’s it. “General Motors’s US sales chief has played down speculation the automaker will axe Saturn,” just-auto [sub] reports, “hinting instead a new business model for the ‘no-haggle’ brand would be developed.” And that would be…? “We have a very successful consumer brand with Saturn,” LaNeve lied. “We need to find the right business model.” What’s the rush? After all, “GM is focused on clearing 2007 and 2008 model year vehicles from showrooms by the end of the year.” LaNeve reiterated that point several times, telling dealers GM would like to add more discounts on 2009 vehicles– but they’ve got to sell the remaining 2008 cars and trucks first. (Doh!) “We need to sell to generate cash. We will be aggressive [on incentives],” he added. “Please, sell like crazy.”
The U.S. new car market is officially dead in the water. Well, not officially officially. As the UK’s Guardian points out, December’s best selling days are its last. But the paper quotes Edmunds projection for the month’s sales, and it’s an unmitigated disaster. Edmunds expects December auto sales to crater to 9.8m units. “That would represent a further decline from 10.2 million units in November, which marked 26-year lows.” Sales analyst Jesse Toprak expects U.S. new vehicle sales to fall by more than 38 percent in December. More specifically, “Chrysler… is expected to lead the industry decline with a more than 45 percent plunge in December sales… while GM sales are seen down 39 percent and Ford sales down 34 percent. Toyota Motor Corp, Honda Motor Co and Nissan Motor Co are all expected to report declines of about 40 percent.” BarClays Capital analyst Brian Johnson predicts bad things for Detroit’s hometown hero. “We continue to see little equity value in the restructured GM. A greater decline in sales raises the possibility for additional funding needs.” Any guesses who pays that bill?
President Bush has pledged $4b of your taxes to Chrysler. Ultimately, the money will be under the control of the ailing American automaker’s owners, Cerberus Financial. Despite the enormous call on the public purse to fund a company whose prospects are dimmer than a 70’s porno theater, the secretive private equity group that pulls ChryCo’s strings has not opened the company’s books to full public scrutiny. Fortunately, we have a little something called the free press (and I don’t mean you Freep) ready to poke its nose into the dealings of the company about to poke its nose into the federal trough. The Wall Street Journal [sub] reports that “Public documents filed in Oakland County, Mich. show a Cerberus subsidiary called Auburn Hills Owner, LLC, bought the 458-acre complex on Aug. 3, 2007, for $325 million. That same day, Cerberus completed the deal to take over 80.1% of Chrysler from Daimler.” While the Journal seems obsessed with the fact that ChryCo employees didn’t know that Chrysler proper doesn’t own the Auburn Hills campus, the accounting behind the transaction is more interesting…
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