“A leading Democrat, Senate Banking Chairman Christopher Dodd of Connecticut, said he knows of no Republicans who would vote for a $25 billion auto rescue package. He added he was ‘not inclined’ to move a bill without bipartisan support, pointing out that prominent Republicans have publicly opposed the measure.” And there you have it, via The Wall Street Journal. Then again, maybe not. We know from Dodd’s profession (politician) and his connections to the mortgage industry (which his committee oversees) that the Senator’s “inclinations” are not inviolate. So perhaps the fact that House Minority Leader John Boehner called the bailout ‘neither fair to taxpayers nor sound fiscal policy’ is more germane. That’s rep Boehner of Ohio folks. “And what assurances will Democrats give taxpayers about their chances of getting their auto bailout money back?” Boehner asks in a prepared statement. While I’d like to think that the republicans have had a sudden bout of common sense and rededicated themselves to fiscal responsibility, this sounds like nothing more than pre-horse-trading political posturing to me.
Posts By: Robert Farago
The Financial Times reports the run on the bank scenario mooted by TTAC– bankruptcy-wary suppliers demanding cash-on-the-nail for goods and services– may be going down across the pond. “Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers [Euler Hermes, Atradius and Coface], which have removed cover from their suppliers. The withdrawal of credit insurance – which covered suppliers against the risk of the car companies’ failing – has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.” The FT reports that the move leaves only three possibilities, all them swirling around a bathtub full of Not Good: “GM and Ford can start paying upfront for goods; they can hope their suppliers will trade uninsured; or they could be unable to buy the parts they need for car production.” [Thanks to Uncommon Sense for the link]
The question presumes that A) Detroit’s ailing automakers ARE America’s automobile industry and B) using our tax money to protect Ford, GM and Chrysler from their own incompetence would benefit the U.S. car industry. Not true, on both counts. And by ignoring the flawed assumptions underpinning the argument for raiding the average American’s wallet, bailout proponents are misleading what they condescendingly call “Main Street.” To which I say no, no, and Hell no.
I like Phil LeBeau. Sweetheart of a guy. He talks to TTAC’s Ken Elias on a regular basis. But I’m not so convinced about Mssr. LeBeau’s journalistic cojones. In the first post-GM quarterly statement TV interview with Rick Wagoner, LeBeau asked GM CEO’s the tough question: is there any point at which you say fuck that shit, we’re out of cash, I’m heading for Aruba, YOU file for C11? [paraphrasing]. But Phil forgot to go for the kill and/or (we hear) ask Wagoner to share some of his private stash. Now that the Detroit Bailout has become Germanicized (caps) and gets its own logo (the sure sign of sexual maturity for any story in the MSM), Phil is on the case– although not the case of the CEOs responsible for this Donnybrook…
Actually, it’s not a car. It’s a race car. OK, it’s VW’s “purpose-built” (as opposed to?) Race Touareg TDI Trophy Truck. Ja, it’s powered by a 12-cylinder clean diesel, which produces enough torque to mess with the Earth’s rotation. Clearly, this thing ain’t heading for the ‘Ring; VeeDub’s entering the RTTTT in the 41st Annual Tecate SCORE Baja 1000 desert race. The official press release goes for the techie hard-on, but then blows it (so to speak) by predicting that their hässliches Entenküken will breeze to the finish line. “With a double A-Arm front suspension that allows 25 inches of wheel travel, and a 4-link rear suspension that allows 30 inches of wheel travel, combined with Fox Racing Shocks, Eibach Coils and BFGoodrich Baja KRT 37×13.5×17 off-road tires the Race Touareg TDI Trophy Truck should have little difficulty maneuvering the highly difficult and technical 634 mile Baja 1000 course.” More importantly, at least for the aesthetic police, “The Race Touareg TDI Trophy Truck Body was designed by the Volkswagen Design Center located in Santa Monica, California.” Paging Shy La Boeuf. The German co-financed remake of Mad Max II awaits.
UPDATE: Oops.
Today’s New York Times’ story on GM’s travails begins by highlighting the bailout bullet train– and then switches track. “Momentum is building in Washington for a rescue package for the auto industry to head off a possible bankruptcy filing by General Motors, which is rapidly running low on cash. But not everyone agrees that a Chapter 11 filing by G.M. would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company.” Yes, it’s GM CEO Rick Wagoner’s worst nightmare: as TTAC predicted, momentum is growing for a GM C11. Obviously, any such suggestion depends on GM continuing to do business post-bankruptcy. And that’s a bridge [loan] too far for most MSM pundits.
The BMWblog offers us this picture of the Propeller People’s new hybrid BMW X6. I know what you’re thinking. Huh? First, no bonus points for you, Boyo, for missing the key visual ingredient separating the gas – electric X6 from the normal (and I use that word in the post-modern Chris Bangle is my owtowmobeel God sense of the word) gas-powered X6. “The body style is almost identical to the petrol versions,” the Bimmer boys report. “Except the slightly larger M3-style bonnet. The obvious changes appear under the hood, where a two mode hybrid system developed by a consortium formed of BMW, GM, Daimler and Chrysler, will power the X6 ActiveHybrid.” Dudes; if the changes are under the hood, they’re not obvious. (Obviously.) Anyway, who knew the X6 variant got a German-style mashed-up nospacebarneeded moniker all its own? But I did know about the consortium, which, by the way, did not include Daimler and Chrysler at the time. (It was, appropriately enough, DaimlerChrysler.) This corporate cluster-you-know-what was a multi-billion dollar joint effort that should have been used for joints, rather than hybrids, as nothing even remotely salable came from the collaboration. And while we await mpg figures (doh!), here’s some proper German humor… “Once again that great photos were brought to us by Palbay who also shared a funny story with us. Apparently the X6’s driver could have been a BMW executive from outside the U.S since he made several wrong turns getting to the test track and he was wearing a business suit, not a common thing for the BMW regular test engineers.”
Build cars people want to buy and sell them at a profit. There. Now you know. Didn’t quite catch that? “We’re only going to be in business if we create products that people really do want and value,” [Ford CEO Alan] Mulally told The Detroit News in an exclusive interview Tuesday. “This is the essence of creating a viable Ford.” Quite why scribe Bryce G. Hoffman thinks this is some kind of revelation escapes me entirely (so to speak). No wait! It’s not a revelation; it’s an EXCLUSIVE! My guess: Ford PR gave Bryce exclusive access to Big Al where he couldn’t reveal anything of a commercially vital nature; which is a bit like making out with Adriana Lima without being able to go to second base (or so I imagine). In any case, we learn sweet F.A., other than Bryce loves him some FoMoCo and there’s a Thunderbird Room on the eleventh floor of the Blue Oval HQ (which several of our Best and Brightest knew anyway). Oh hang on; “Benefits, including the bonuses paid to Mulally and other senior executives, are being cut.” A story! An honest-to-God this is news news story! So, spill Bryce. Who? How much? Bryce? Hello? Sigh. OK, I’ll make the call. Do I have to do everything around here myself?
Students of the automotive industry know that manufacturers are on a five-year timeline. You spend a few bil updating your gas-guzzling SUVs a couple of years before Hurricane Katrina and BAM! Rising gas prices send sales to the Mariana Trench. Such is life. Such is evolution. Of course, there is a bit of wiggle room: sales and marketing. You can “re-position” a product to suit the temper of the times. Then again, that’s a bad idea. One of the Immutable Laws of Branding: don’t change your core brand message. Ever. (Ultimate Drive that, Buick.) Conversely, it’s never a good sign when a car’s advertising doesn’t change to reflect current reality. It’s a sure indication of stifling bureaucratic sloth. Now that gas prices have tumbled, and then tumbled again, and then tumbled some more, any manufacturer selling a vehicle based on gas prices is so far behind the curve they make the Great Plains look like a roller coaster. Don’t get me wrong. I like Suzuki’s products. But this ad for the Grand Vitara was stillborn. Just let it go Suzi, let it go.
That’s the day that House Financial Services Committee Chairman Barney Frank, D-Mass, will introduce legislation that will change the rules on the previously approved $700b financial rescue package so that America’s ailing automakers can stick their snouts into the federal trough. Yes, that Barney Frank; the same congressman whose oversight of Fannie Mae and Freddie Mac lead to the relaxation of lending policies that pushed both quangos to the brink of extinction. (Not to mention Frank’s relationship with Fannie’s policy wonk Herbert Moss or campaign contributions from both organizations to the Congressman’s campaign.) Automotive News [sub] reports that it’s shootout at The OK Give ‘Em 25 Bil Corral.
After Peter DeLorenzo’s fusillade, Autoblog’s TTAC upbraiding comes as something of a relief. As we’ve been picking on Sam Abuelsamid for some time (in the most morally self-righteous sort of way), I suppose it’s only fair that he takes his shot at our generally, shall we say, “skeptical” attitude towards a Detroit bailout. Of course, he can’t mention us by name… “Those cheering for Detroit’s demise may want to reconsider,” the headline chides, ever-so-gently. Bless. “Many analysts and commentators have seemingly been cheering for the imminent demise of the Detroit-based automakers. Something that needs to be realized amidst all this talk of low-interest loans and bailout money is how interconnected the auto industry is and how it affects our economy as a whole.” Not to offend Sam’s delicate sensibilities, but I don’t recall many commentators– here or otherwise– saying “fuck ’em.” But hey, he did say “seemingly,” and we like that kind of humility. And it could be, yes, wait, it is, time for an Autoblog Cassandra Watch! “Yes, the Detroit 3 have made a lot of stupid product decisions over the years and wasted a lot of money, but allowing the free market to pull them under will create a ripple effect that reaches more than just the shores of the Detroit River.” Nasty free market! Don’t you just HATE IT? Well, some people do. They may want to reconsider. You know; take a look around and ask themselves, well, how did I get here?
Walt Disney’s deathbed request to his brother Roy: don’t change my plans for the Experimental Prototype Community of Tomorrow (EPCOT). Walt spent his final cancer-fighting years planning EPCOT’s every detail, from housing to commuting to garbage collection. When Walt was cold in his grave, Roy did the sensible thing. He tore-up Walt’s work and built a cod-World’s Fair. The idea of EPCOT as a company-run city rather than an amusement park was fundamentally flawed, doomed to controversy and failure (Celebration anyone?). Detroit reminds me of Walt’s unrealized Disney world (small “w”): a place where corporate culture dominates the community’s mindset. Brock Yates chronicled this “Grosse Pointe myopia. As does Autoextremist Peter DeLorenzo, in his own way. Or, more precisely, in a David Koresh kinda way…
• The U.S. auto industry has been hard hit by the credit crisis.
o Carmakers can’t get credit to complete their restructurings and put new advanced technology vehicles into production.
o Customers can’t get credit for new cars and other purchases, and consumer confidence has fallen to an all-time low.
o Suppliers are losing business and can’t get credit to keep them afloat until the industry recovers.
o Dealers can’t get credit to finance inventory and other routine business needs.
Dear GM Dealer:
Earlier today, during a GM Dealer IDL broadcast, I provided you with a GM Business update and significant information about the vital role the U.S. automotive industry plays in the health of the country in terms of employment, annual economic output, exports, R&D investment and retail business. As we’re in the midst of the deepest crisis our industry has ever faced, GM’s priority is on seeking support from various U.S. government agencies and congressional leaders. We need your help now to ask government officials to approve an additional loan package to help us deal with our current liquidity crisis.
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