Yes, car dealers. Well, why not? If you think about it, the car dealers have a LOT of political pull. (Remember GM CEO RIck Wagoner’s letter to the dealers asking for their support for HIS $25b Department of Energy federal teat suckle?) So, now, “Auto dealers are calling on President Bush and Congress to take emergency measures to help revive vehicle retailing and contribute to the nation’s economic recovery,” Automotive News [sub] dutifully (not to say respectfully, although you could say that too) reports. The request came this week in a hand-delivered letter [from the National Automobile Dealers Association] to an economic adviser to the president at the White House.” And what goodies, you ask, were requested in this mammary-seeking missive? “Refundable tax credits for car and truck buyers and restoring the tax deductibility of vehicle loans.” Is that it? You must be joking mate. “Federal funds for state programs to take air-polluting clunkers off the roads and giving businesses additional tax breaks for vehicle purchases.” Air-polluting clunkers? Someone remind me again what decade we’re in. All done? Ha! NADA also wants the feds to “provide emergency loan guarantees to dealers through the Small Business Administration so that they have working capital.” OK, NOW are we done? Who knows? Automotive News forgot to include the text of the actual letter. Doh!
Posts By: Robert Farago
One of our informants within GM tells us that Renault/Nissan (R/N) has entered the negotiations for Chrysler owner Cerberus’ final dispensation of Chrysler. Apparently, “Nobody wants to swallow Chrysler whole.” Although this one comes at us from deep left field, we have heard rumblings that GM wanted to merge Jeep with HUMMER– which we completely discounted at the time. We’re now told that GM and R/N are casting lots for production capacity. Allegedly, only one brand (as a brand) will survive the evisceration. You guessed it: Jeep. So the split would look like this: Jeep/minivans – GM. Trucks/SUV capacity – R/N. Cars? Neither one wants anything to do with them. The unnamed source close to the story familiar with people close to deal says that’s been the hang-up for Cerberus. Interesing…
A TTAC reader has emailed us a heads-up that the Michigan Economic Development Council (MDEC) has called an emergency meeting to prepare for the fallout from a GM – Chrysler merger. Warren, Michigan mayor James R. Fouts will chair the confab. Although Fouts is the only human on planet earth that’s more dour-looking than Alan Colmes, Hizzoner is apparently no stranger to hyperbole (even when it’s true). “I heard the Warren mayor interviewed on WJR a few minutes ago,” our informant informs. “He said the direct impact to the region is 145,000 jobs if the merger happens.” I guess you could say it’s that many jobs are on (or off) the line, all things considered. Which raises an interesting question: is this merger really going to receive federal backing given that the consolidation will create that kind of neutron-bomb style economic impact? Chances are, yes.
Not our man Warren Brown, obviously; although the Washington Post’s automotive critic (and I mean that in the nicest possible way) recently tore Ford a new you-know-what for replacing the Escape’s rear discs with drums. No, I speak here of Steven Pearlstein, who’s ready to put the meat on the bones of DetN Auto Editor Manny Lopez’ contention that’s there’s a bi-coastal conspiracy of nattering nabobs of negativism ready to let Detroit die (by its own hand, but who’s counting?). “You can just imagine [ED: hear] the pitch from the populists of the Michigan congressional delegation: If the government is willing to invest $250 billion to bail out pinstriped bankers, then the least it could do is throw an extra $10 billion to rescue the domestic auto industry and the millions of workers and retirees who depend on it. There’s only one difference: The government will make money on its bank investment, while the GM-Chrysler deal is a lemon.” Regular TTAC readers will know Pearlstein’s rationale without having to read it. But if Hayden Christensen can make jumping look cool, well, why not?
When I heard Sean Hannity blather on about “the death of journalism” re: the mainstream media’s coverage of the current presidential election, I paid the conservative talkmeister scant attention. Even if the press is in the tank for Obama, it’s not like the situation is analogous to living in Mother Russia during Pravda’s Stalinist heyday, when the KGB had about as much tolerance for dissent as Saddam Hussein’s thugs. Check it: Hannity’s got his airwaves. The “liberal press” have theirs. And everybody and their mother has the internet. But now that I’ve been following the GM – Chrysler merger story, I beginning to wonder if Mr. U.R. A Great American may have a point. I, for one, am not fooled for an instant by the automotive press’ unrelenting reliance on “unnamed sources” for their reporting on the creation of American Leyland. GM PR is spoon-feeding the press, no one’s admitting it and that’s that. But Jesus, did Reuters stop to think for ONE SECOND that GM might NOT have contacted Toyota for help? If we can see that a source isn’t reputable from friggin’ Rhode Island, WTH is wrong with Reuters’ Asian reporters? And what kind of bullshit is it when a supposedly reputable news agency retracts its story by repeating it? Media pros bemoan the ethics and standards of internet-based “citizen journalists.” Puh-lease.
Ford tells us that J.D. Power tells them that “30 percent of new vehicle shoppers who walk away from a dealership do so because the dealer did not have the exact vehicle with the colors and options they wanted.” Yeah, right. That what they say… Never mind. As suspicious as this factoid may be, Ford has decided it should use one of them there computer-type things to “determine the vehicle configurations customers in different regions of the country most want.” And once they do that, why not “significantly reduce the number of orderable combinations across its vehicle lineup”? You know; like, I’m thinking… Honda! “For example, the new 2010 Ford Fusion will be available in 104 popular orderable combinations, compared with 2,602 configurations for the 2008 model year. For the entire Ford brand, the company has reduced orderable configurations by 90 percent from the 2008 model year.” No seriously. This makes sense. It’s a good sign the lights are [still] on in Dearborn. Long overdue.
You gotta sit up and take notice when a new technology claims a 40 to 50 percent increase in fuel economy. Either that or hide your checkbook. Personally, professionally, I’ve never heard of a hydraulic hybrid vehicle (HHV), never mind a diesel hydraulic hybrid vehicle (DHHV?). But IndustryWeek has, as well as the United Parcel Service, which plans to deploy a fleet of two (count ’em two) HHVs in Minneapolis early next year. The only explanation for the taxpayer-funded technology involved is, to say the least, literally, marginal. “The technology, originally developed in a federal laboratory of the Environmental Protection Agency, stores energy by compressing hydraulic fluid under pressure in a large chamber.” Does one of our Best and Brightest care to elaborate? Meanwhile, it’s kinda weird to hear our government officials talk about the hybrid premium: “The EPA estimates that when manufactured in high volume, the added costs of the hybrid components can be recouped in less than three years through lower fuel and brake maintenance costs.” [thanks to nutbags for the link]
While the mainstream media focuses on the effects of Detroit’s downsizing (a.k.a. spectacular tumble into the abyss) on blue collar jobs, let it not be forgotten that tens of thousands of non-union white collar workers are already looking at a bleak Christmas season, with tens of thousands more realizing that this will be their last holiday period in their current employment. To wit: a TTAC reader tells us that GM R*Works is busy escorting workers to the door, after already shrinking from two dozen employees to ten. And no wonder… R*Works is a promotions company with one client: “Our vision: Use the power of promotion to provide General Motors with dynamic, unparalleled marketing initiatives that set the world’s number one automaker apart from its competitors. Secure GM R*Works position as our Client’s most valuable agency partner with ideas that enable GM to maintain its leadership role and grow market share.” Our reader reports that GM’s ’09 promotions budget have been slashed to levels insufficient to stage any major events. “Rumor now is that the entire company goes bye-bye by end of the month (which is not far off, obviously).” [thanks to you-know-who-you-are]
“We do not view the potential for any eventual transaction involving GM and Chrysler even in combination with government support, as a panacea for these companies’ credit concerns,” S&P analyst Robert Schulz said in a statement [via CNNMoney]. That’s a bottomless cup of not good. Hence Standard & Poor’s Ratings Service is keeping The General on credit watch for a possible downgrade, from “You Can’t Touch This” to “Toxic.” And the hits keep happening. “Our most fundamental and serious concerns regarding GM and Chrysler remain unchanged: the pressures on liquidity facing both automakers and their auto financing affiliates as a result of the rapid weakening of global auto markets and credit-market turmoil… Massive changes would be essential for any merger. That raises the possibility of a ‘strategic bankruptcy’ by one or more of the companies to carry out those changes.”
If you didn’t know better, you’d read Huffington Post writer (and HUMMER apologist) Matthew DeBord’s essay on Tesla’s travails as a post mortem. “But even though the downfall of Tesla seems like a disaster for boosters of all-electric vehicles, it should be a welcome development for the green-transportation movement. Tesla symbolized a science-fiction view of our future: it seemed like an instant cure for the problems of oil consumption and greenhouse emissions. In reality, it was a well-marketed distraction from a strategy that would yield more immediate results.” In other words, TTAC called it. But it looks like it’s gonna take a while before Tesla’s unsubstantiated claims for its Roadster/ WhiteElephant will R.I.P. “The big knock on electrics was always that they lacked the range of IC-powered cars. Then Tesla came along and not only unveiled a vehicle that could travel hundreds of miles on a single charge, but that could do 0-60 in four seconds. The gorgeous two-seater design, provided by Lotus and crafted in exotic carbon fiber, also didn’t hurt.” But DeBord has a more frightening message– at least for Tesla.
Detroit News auto jeffe Manny Lopez seems to think there’s orchestrated opposition to a Motown bailout. In this he could not be more wrong. Not a single elected representative has come out against federal mammary provision to Motowns’ mavens. Lest we forget, Senator John McCain reversed his anti-Detroit-bailout rhetoric in time for the election. Besides, the $25b Department of Energy is a done deal, and TARP provisions for Detroit’s captive lenders are on their way. Still, paranoia rules! “I’m not buying the ‘Let Detroit die’ line that’s being promoted by people across the country. It’s tired. It’s simplistic. And it’s misguided… Most notably the jobs that would be lost, though the ‘thought leaders’ on the coasts and politicos in Washington, D.C., don’t seem to be giving that much consideration. Carly Fiorina is among them. The former chief executive of Hewlett-Packard Corp. said in Detroit this week that the government can’t rescue the auto industry. ‘The auto industry cannot be saved from its own bad bets,’ she told the Detroit Economic Club.” Now THAT took some balls. Not that Manny’s ready to cede the point (as if). But it does inspire some classic “this is not my beautiful welfare” rhetoric.
In a break with TTAC tradition, today’s WAR comes from an “authoritative” source: Reuters. OK, it’s Kyodo news via Reuters. (Free marketeer that I am, I’m not so sure I trust a “nonprofit cooperative news agency.”) “The Kyodo news report said Toyota was expected to consider quick fixes for the cash-strapped GM, including buying up its assets and helping it secure sufficient business funds. The executives of the world’s two biggest automakers may also discuss an expanded business partnership, including Toyota making fuel-efficient compact cars for GM and providing hybrid-car technologies to the U.S. carmaker, Kyodo said, citing sources.” Obviously, this is complete and utter nonsense. Except that maybe it isn’t. If you recall, the last time GM was staring down the barrel of C11, back in May 2005, Rick Wagoner DID hop a Gulfstream for Tokyo and met with then-Toyota President Fujio Cho. The nature of those discussions was never revealed. (Until now: Pachinko!) Students of these turbulent times may also remember that Toyota offered to raise its prices to help GM (I shit you not). As TTAC has pointed out many times, GM’s survival is in Toyota’s best interest; the American automaker sets a profitable “floor” for all U.S. new car prices. This is definitely a rumor worth watching.
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