Even Detroit’s fiercest defenders allow that The Big 2.8 should have thought a little further ahead than a single financial quarter– although they’re sure that Wall Street’s responsible for the shorter-termism. Hey! Anyone remember when Cerberus said they’d be better owners for Chrysler than anyone ’cause they didn’t have to report to Wall Street? You know: we’re quick! Less bureaucracy! More selling! Turn on a dime! Well, a dime’s about all they have left and former ToMoCo Prez Jim Press has dibs on that bad boy. Anyway… even though Toyota isn’t $30b in debt, the Japanese automaker is in full crisis mode. Yesterday, the Prius plant plotzed and they shit-canned executive bonuses. Today, we hear that the diesel engine project with Isuzu is DOA– minus the “OA.” You know that $1m ho’ down the Toyota used to throw for its dealers in Sin City? Gone. Seriously, talk all you want about misplaced Tundras, but these guys don’t dance this mess around. Just-auto {sub] reports that Toyota’s UK Managing Director reckons it could be as long as five years before the automaker’s biz recovers to last year’s level. “We have our forecasts for the next 24 months,” Miguel Fonseca revealed. “But it is very difficult to forecast further. After two years I think there will be a slow recovery, but my own belief is that it will be five years before we are back where we were.” And here’s something The Big 2.8 might have said, I dunno, ten years ago…
Posts By: Robert Farago
I discovered Michael Furman’s photography whilst covering the Ralph Lauren car exhibit at The Boston Museum of Fine Arts. The two men were made for each other. Furman’s photographs portray automobiles as perfect objects: gleaming, seamless sculptures that exist outside the confines of entropic reality. Lauren’s collection IS perfect, restored to a level of flawlessness that makes an airbrushed cover shot of Britney Spears look like a photo booth snapshot. And then painted to a gloss to shame Adriana Lima’s luscious lips. When I talked to Furman about Lauren’s collection (Furman shot the catalogue), the artist showed an encyclopedic knowledge of GM’s design heyday. And now, here it is. The publisher was kind enough to send me a couple of copies [full description of the book after the jump]. One goes to Eddy for his birthday (today!). One goes to the commentator who can best tell me, in ten words or less, how GM can turn around its business. Thank you, in advance, for your submissions. [NB: to see the horizontal images properly, please click on them a second time]
It seems scarcely credible that GM and Chrysler’s fate– or lack thereof– now rests entirely in the hands of The President of the United States. Or, more precisely, his staff. Who, according to The Wall Street Journal, “spent the weekend poring over the auto makers’ books to assess their financial needs.” Which, to my mind, is a bit like saying they’re pawing over the automakers’ entrails. Of course, I would never stoop that low, busy as I am wetting my metaphorical finger and sticking it into the rarified air of the autoblogosphere, trying to divine which way the Divine Wind is blowing. Ominously, The Journal reports “The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more.” Sneaking in $14b or so from the remaindeer [sic] of the much-vilified $700b Troubled Asset Relief Program by executive fiat to shove this mess on Messr. Obama’s plate is one thing. Finding 40 billion dollars or more for the failed automakers is quite another. In other words, there are only two ways this thing can go. Either a short term “bridge loan to nowhere” or…
I have no idea why, but Kia’s PR say they’re ready to bless TTAC with exclusive pics and video of their new Soul. So you have that to look forward to today, along with the predictable punfest. Has TTAC Souled out? Are we Souldiers of fortune? Have we Souled our Soul to the Devil? Or is this car better than the Pontiac Soulstice? As the dealers’ parts department would say, stay tuned.
“In Woodhaven on Friday,” The Detroit News reports, “someone punctured the tires of five foreign cars — a Honda, Hyundai, Mazda, Toyota and Volkswagen — and used a marker to scrawl ‘Buy USA’ on the sides of the vehicles, in the lots of Lowe’s and Kohl’s stores near a Ford plant.” As TTAC’s publisher, I decided not to blog the story. There was no proof that the a Ford worker had carried-out the attack. As an isolated incident, I felt the vandalism didn’t deserve what Margaret Thatcher called “the oxygen of publicity.” We can debate the ethics or wisdom of that decision all day long. But today’s DetN story is flat-out incendiary. “Backlash brews in wake of Big 3 bashing” is strong beer. With that kind of headline, the onus is on scribe George Hunter to prove that Detroit is about to erupt into violence– the clearly implied and then directly stated premise of the piece. “After a month of Detroit-bashing in Washington and nationally,” Hunter writes. “some say a backlash is forming among Metro Detroiters, annoyed by the attacks on their lifestyle and angry at their neighbors’ choices of vehicles. Some fear that simmering resentment could turn to outright hostility.” Some? You mean like some people you specifically rounded-up to prove your inflammatory central thesis? Yeah, like that.
Chrysler’s co-Prez Jim Press has forced Automotive News [AN sub] to back away from an earlier story. Ish. This morning’s article claimed that Press’ recent appeal to Chrysler dealers– to order pre-built cars from a pool of 12k vehicles– constituted a return of the dreaded “sales bank.” But a funny thing happened on the way to the retraction: AN discovered further depths to Chrysler’s misery. According to Press, canceled orders account for the “fence units” in dispute (not driveways). The cancellations came from store owners who couldn’t obtain floorplanning loans (to cover inventory costs), dealers who went bust, fleet buyers who got cold feet and “vehicles left unsold from dealership sales promotions.” So what’s the difference between “overstock” and a sales bank? Jim Arrigo and Hayden Elder, co-chairmen of the Chrysler Dodge Jeep national dealer council, set us straight. “When we were doing sales bank, there was a lot of pressure,” said Arrigo, owner of Arrigo Dodge-Chrysler-Jeep in West Palm Beach, Fla. “It’s totally different this time. There isn’t somebody calling up.” Who’d listen? And what’s the bet that those 12k units are the tip of the iceberg?
According to Yahoo! Finance, “General Motors Corp. said in a regulatory filing Monday [full text after the jump] that it and GMAC LLC agreed to temporarily adjust the financing company’s terms for making advance payments to the automaker for the wholesale financing of vehicles sold to GM dealers.” Zooming in… “GMAC typically pays GM the invoice amount for each vehicle shipped by the automaker to a GMAC-financed dealer on the first business day following the vehicle’s shipment.” Closer… “Under the deal, GMAC won’t be required to pay the invoice amount until that amount is due from the dealer, which will allow GMAC to defer payment of up to $1.5 billion in cash due to GM until Dec. 30. GM will have a security interest in the financed vehicles during the shipping period.” Holy brink of bankruptcy Batman! Clearly, GM intends to use federal bailout bucks– should there be any– to prop-up GMAC. Never mind that, this move virtually eliminates GM’s cash flow (such as it is). I mean, GM won’t get paid for these vehicles in months. If ever. And if GMAC is down to its last $1.5b of liquidity, this little paper shuffling exercise ain’t gonna save nothin’. Bye-bye GMAC, arrivederci GM. Drink up lads. Last orders.
Another email from a GM insider: “Meet Rick, unassuming book worm with a penchant of fixing all things mechanical. Rick was a 12 year veteran of GM, spending 7 years as a journeyman Machine repairman. Due to a constantly shrinking work force, Rick soon had to relocate. Luckily, Rick’s first transfer kept him in his skilled trade and fortunately keep another well rounded expert in mechanical issues with the Corporation. Rick was content with the move but according to him ‘I wouldn’t wish that shit on anyone.’ Little did Rick know that the plant he just re-located to was soon announced that within 8 months it would cease production. Left with the option of hoping like hell another plant needed manpower or immerse himself in the job market, OL’ Rick again rented a U-Haul. It was in October 2003 that I had meet Rick. It still leaves me missing his daily ‘Hey dude, if its done this way, shit would be better’ remarks.
“Jet Gate” was a bit of an embarassment all ’round. Even Detroit’s fiercest critics (oh me! pick me!) understand that a business jet is an acceptable expense when you’re running a multi-national corporation. Provided, of course, you use the jet to get an efficient, realistic, first-hand look at conditions “on the ground” within your far-flung Empire; from factories to suppliers to dealers. Rather than, I dunno, ferrying the wife and kids back and forth to Seattle. Or flying to one location that’s well-served by commercial traffic. Anyway, Detroit’s chastened uber-suits made a big show of selling the jets (how’s that going guys?) and wheeling into DC (for round two) in their companies’ most fuel efficient products. Well, not the most efficient. That would have hurt. And now, thanks to The Detroit News’ Charlie LeDuff, TTAC can reveal that Mr. Mulally and Mr. Wagoner’s drivers– yes, drivers– “split the job.” What’s more, “Those who drove the executives to Washington flew home to Detroit, while those charged with driving the executives back flew one way to Washington to pick them up.” LeDuff says “In the end, it would have been cheaper to fly the jets.” But we couldn’t possibly comment.
John L. Perry’s column on Newsmax.com is way out there. But his comparison ‘twixt the Motown bailout and Charles Ponzi’s infamous con game (whereby the first in bilk the last out) isn’t entirely forced hot air (i.e. all heat and no light). “Under a Ponzi scheme, the sheep get fleeced because they want to play the game. They convince themselves they’ll get rich quickly. Otherwise why part with a single dollar? In fact, the crook running the Ponzi scheme has a hard time beating off the gullible, who can’t wait to be gulled. Under the Detroit scheme, every opinion poll taken — for whatever that’s worth — shows American taxpayers overwhelmingly do not want their tax dollars spent this way. Apparently, they don’t know what’s good for them.” In other words, no, the bailout is not a Ponzi scheme. It’s worse. “In a collapsed Ponzi scheme, the crook in the private sector can go to jail. In a collapsed Detroit scheme, no one in government goes to jail.”
Excerpt from an email sent by Soldiers of Solidarity’s I. S. Bill Hanline: “Lastly, the money for these programs came from somewhere. The automakers did not out of the kindness of their hearts offer job income security to us workers. There had to be a trade off. In other words we gave up something for those benefits and if I remember right it was the Annual Improvement Factor (AIF) that we gave up in exchange for lump sum payments during each contract period from 1984 to present time that paid for those benefit programs. We were told in each contract how much money would be put in the trust for our SUB and JOBS programs. Problem with that is there never was as much money placed in those trust as the union announced during the ratification of all those agreements. Instead during the life of those agreements the Union agreed to allow the automakers to pay as they went, instead of fully funding the trust, this is what caused any shortfall of which in turn placed a bigger burden on the automakers cash flow during times when they had to pay members their contractual benefits. That is the main reason for the automakers dilemma today. Senator Corker and Shelby need to be reminded of this fact and they should also inquire with the foreign automakers in their state they might find out that those automakers have income security programs vary much like the programs they want UAW members to give up.”
Yes, a WAR so absurd it gets its very own question mark. And yet there it is, lingering on the spanish language pages of peru.com. Stingray has kindly offered a computerized translation (with all the humor that implies) of this astonishing, you might even say scarcely credible revelation. “As a result of the global economic crisis, the major U.S. automotive companies: General Motors, Ford and Cryssler also entered into financial trouble. Ford and General Motors are several years owners of the Swedish ías Comp + “Volvo” and “Sabb” respectively. In the package of lifeguards big American companies such as settlement is the sale of the Swedish automotive factories in question. This decision by the two American giants had total chaos in these two automobile companies in Sweden. Such companies are already on sale and what’s curious is that nobody is presented as a possible buyer, no producers, investors in the industrialized world want to invest in cars because they too are in crisis.
Once upon a time, GM’s captive finance unit GMAC was the engine of its success, pouring billions and billions and billions of dollars into the General’s corporate coffers. At some point, the tail wagged the dog: cheap credit and lax lending practices fueled an unsustainable growth in new car sales. A bubble that recently burst (in case you hadn’t noticed). Meanwhile, GMAC’s mortgage unit ResCap pursued the same no-loans-barred policy, only worse. Then, in his endless (seemingly, at the time) pursuit of propping-up GM’s bottom line with asset sales, CEO Rick Wagoner sold 51 percent of the soon-to-be-troubled finance unit to, of all people, Cerberus (owners of Chrysler and Chrysler financial). Which brings us to today’s GMAC, which is about to go tango uniform, hoisted by its own retard. The only way out: change itself into a bank and scarf some major bailout bucks. Only there are rules for that sort of thing…
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