Autoblog: "You're going to be reading in the mainstream press about how horrible sales were in the U.S. during June, 2008. Yes, they were bad for many automakers, but consider that there were only 24 selling days last month versus 27 days in June, 2008. This makes comparing raw sales numbers misleading, since there were three fewer days to sell. Thus, as always, all the percentages below represent the change in Daily Sales Rate, i.e. the average number of vehicles sold per day, not the change in raw number of vehicles sold." TTAC joins Automotive News in rejecting this metric. We go by cars sold per month. Period. That said, TTAC got caught-out when Automotive News started with adjusted numbers, then revised to non-adjusted numbers. But no matter how you crunch these stats, they ARE horrible. "Not That Bad Edition"? The idea that any credible news organization would say otherwise is almost as astounding as the chaos afflicting the U.S. new vehicle market. How about this: there are industry players in Detroit who ascribe to Autoblog's Pollyanna philosophy. And while you're thinking about that (or something), Justin and I perform our usual reality check. 

To paraphrase John F. Kennedy (who probably stole the expression from someone else), a falling tide lowers all boats. Or, if you prefer, it looks like Toyota got keelhauled along with the rest of 'em this month. Automotive News [sub] also does nautical metaphorication, reporting that "Toyota Motor Corp. ran aground in June, with U.S. sales down 21.4 percent (unadjusted), the biggest drop of the year for the world's No. 2 automaker. For the first half, Toyota said it sold 1,240,086 vehicles, down 6.8 percent from the first half of 2007." ToMoCo doesn't break out their Scion sub-brand's sales, but Lexus is proving to be a luxury canary in a gold mine- or if we're unmixing metaphors, a bit of a boat anchor. Lexus' Junes sales slumped 21.1 percent vs. June '07. Truck sales? We're talking post-iceberg Titanic; down 31.1 percent. What's worse, Toyota can't build Prius-shaped lifeboats fast enough. "Sales of the Prius hybrid were down 25 percent during the month as Toyota struggled with supply problems. Dealers are reporting a two-month wait for the fuel efficient hatchback." Clearly, the U.S. market is undergoing a sea change. Toyota has the products it needs to change course, but it's hard to sell anything when people ain't buyin'.

UPDATE: Toyota just sent out a revised press release with June's sales breakout. The numbers in the press release are adjusted for selling days. The numbers used both by Automotive News and TTAC are unadjusted. 

Click here for Toyota Sales Press Release 

This website has railed against automobile manufacturers' insidious influence on editorial content: casual pro-GM remarks made by Rush Limbaugh and Sean Hannity, publications and websites that don't fully reveal sponsored junkets, buff book car reviews that pull their punches to appease advertisers and TV programs built around automotive product placement. [In the latter case, the new Knight Rider is the most egregious example– a program so laced with Ford product placement it was hard to tell where the show started and the commercials began.] Advertising Age reports that the Federal Communications Commission's chairman is sending a torpedo towards the entire product placement business. "There is growing concern that our sponsorship identification rules may fall short of their ultimate goal: to ensure that the public is able to identify both the commercial nature of programming as well as its source," FCC Chairman Kevin J. Martin said. Kev's contemplating new requirements for longer and bigger disclosure of product placement– up to four seconds. Does the ad industry like this? Uh, no. ""I really don't think product placement is sinister or fooling anybody. It's just part of life," insists Dan Jaffe, an exec VP at the Association of National Advertisers. "A crawl or bubble would be totally disruptive of what is going on in the program itself." So much for engaging content, then. 

Ah, to be the head of a "managed" economy! Let's say you want to clean-up Bejing's foul air for the Olympics, so athletes don't retch, collapse and die of asphyxiation in front of billions of international onlookers. Simple. First, ban 300k cars in a single stroke. Sorry, your car is illegal. Drive it between now and September 1 and we'll confiscate your car and throw your ass in jail. "The next stage," ABC News reports. "Will be for all private cars to be banned on alternate days using an 'odds and evens' number plate system. This will start on July 20 and is expected to take 45 per cent of cars off the streets." That's 45 percent of the 50 percent of Beijing traffic that remains after the first ban. Next? "Factory closures and a halt to major construction will also occur during the same period." Anything else? Raise gas prices. "State-owned oil companies, now subsidizing fuel prices, have been losing hundreds of million of dollars," The Detroit News reports. "Today, Chinese drivers pay $2.85 for a gallon of gas versus $4 in the U.S." Tomorrow, more. China's leaders will work on kicking-out foreign automakers eventually. But that's enough for today, yes?

We're getting reports from the front line that GM's 72-hour sale is a success– of sorts. One dealer reports that business was so brisk that both the Dealer World system (used to verify codes. locates, ordering, and more) and GMAC's computer comms crashed. "The F&I guys had to use the fax, then phone and stay on hold for an hour." Popular models are… gone. "Try and find a Cobelt or HHR at the ZERO for 72. Can't be done." Another dealer reported that he'd sold 15 additional units during the sale, a number he called "substantial." Which is, of course, a relative term. IF this plays out across the country, GM's Black Hole Tuesday numbers will be bad, but they won't be as bad as analysts' predictions. The downside: the prices– hence profits– are scary low. Loaded 1/2 ton pickups are walking out the door for $200 per month. And GMAC is ignoring the "when you're in a hole stop digging" maxim; offering low credit score buyers up to 150 percent loans (to get them out of their backwardsness). Worst of all, July and August. Despite the hit to the bottom line, and the long-term damage to GM's pricing, metal is being moved. Short-term thinking GM may extend the sale. The question is, can it afford to?

In 2001, GM named Progressive Progressive Molded Products supplier of the year. Boston investment firm Thomas H. Lee Partners bought Progressive in 2004. With '07 revenues cresting $1.4b in 2007, the company's been a major GM supplier (TTAC is still investigating which parts they make for which GM vehicles). Yes, well, like so many other suppliers, Progressive got stuck between rising raw material costs and declining prices. Progressive filed for Chapter 11 on June 20, listing $500m in debt vs. $50m worth of assets. And now, as the court prepares to liquidate the supplier, GM has asked for court approval to seize tools from Progressive. Reuters reports says GM's filing cites "potential supply disruptions" that could "force the carmaker to shut its assembly lines." "The tooling is essential to ensuring the production of the component parts GM's assembly lines depend on," GM said in court papers, describing the company as a "single-source" supplier. You may recall that a federal bankruptcy judge withheld supplier Plastech's tooling from Chrysler, which forced ChryCo to temporarily suspend production. That's all GM needs right now. Or, strangely, maybe it is. 

The perfect storm we predicted is rapidly approaching hurricane force. Whether or not you believe Motown's automakers could have predicted the soaring price of gas (hint: they could have at least hedged their bets a little), it's increasingly clear that the truck-heavy domestics are in deep, deep shit. The price of oil has jumped again today; this time on rumors that Israel is about to attack Iran over their nuclear weapons program, "disrupting" Iranian oil supplies. Bloomberg reports that OPEC President Chakib Khelil predicted that the military threat– and the falling value of the U.S. dollar– may drive oil prices from their current price ($143 a barrel) to $170 a barrel. Meanwhile, Goldman Sachs has declared that supply and demand, rather than speculators, are responsible for oil's rally. All of which has raised gas prices, killed the U.S. new car market, murdered light truck sales and torn a hole in Ford, GM and Chrysler's balance sheets. Tomorrow is Black Hole Tuesday for The Big 2.8, when the full horror of the sales stats are revealed. In anticipation of this bad news, The Detroit News reports that GM stock hit a 34-year low ($10.57). Ford's stock tumbled to $4.46 a share. Barron's reports that late last week, "some [funds] designed for individual investors are selling at about 50 cents on the dollar-almost as if GM were headed for bankruptcy." Almost?

Source Interlink Media owns Motor Trend magazine. Both conglomerate and car mag are heading south, quickly, in a big way. Ad revenues and circulation are in free fall. Motor Trend (MT) is fighting for it survival with glossy pimpatorials for equally doomed advertisers. The August issue features a glossy "special advertising section" for Buick ("Drive Beautiful") and a slick "advertisement" for the Dodge Challenger ("Motor Trend drives the new Dodge Challenger Through Europe"). Meanwhile, the chronically undercapitalized columnist arthur st. antoine takes a whack at a premium car brand: BMW. Huh? 

You may recall the Plastech debacle. Chrysler's interior supplier got bailouts from ChryCo, then filed for Chapter 11. ChryCo tried to swoop down and take the tooling. A federal judge said no. Since then, the supplier's been sold off. And much to somebody's chagrin, the owner of the mismanaged parts maker has pocketed, wait for it, $12m for running the company into the ground. And if that's not bad enough, and I say it is, Crain's Business Detroit reveals that the federal judge overseeing the break-up allowed Plastech to hide Julie Brown's compensation from public view. And no wonder. "Those documents show that Julie Brown's husband, three brothers, two sisters-in-law, a sister, a cousin and a nephew were on the payroll to the tune of about $6 million a year. Of that, $2.25 million was paid to Jim Brown, Julie Brown's husband. From other documents, it appears that Brown's personal driver, cook and two housekeepers were paid by the company." Strangely, Crain's sense of righteous indignation also files for bankruptcy. "Employing family members is no crime. Trying to keep how many relatives and what they were paid from the public suggests that Plastech's owner thought she had something to hide. If each family member performed his or her duties well, what's the problem? Surely the compensation is not the cause of the company's overall financial problems." No, of course not. Nor is it any indication that the company was poorly run. At all. 

Back in the 70's former TTAC columnist Brock Yates coined the term Grosse Point Myopia: the tendency of Detroit's execs to use each other for their frame of reference. [Our own Andrew Dederer revisited GPM in October 2006.] And now Ford's Presidente de las Americas, Mark Fields, evokes the concept with his insistence that doing better than before is as good as doing well. Or being prepared. But you'd expect these sort of revisionist weasel words in an article by The Detroit News on the D2.8's troubles the day before the June sales numbers drop (as in off a cliff). Did you know that after last May's numbers, Ford and GM "executives were alarmed?" Yes, "eventually [eventually?] they made almost desperate decisions that will cost thousands of jobs, change the vehicles people drive and determine whether their businesses survive." And check this: Mike DiGiovanni, GM's executive director of global market and industry analysis, told scribe Tom Krishner "oil prices in February began to rise, still not to an alarming level because they were consistent with previous seasonal spikes. Gasoline was still at a nationwide average of $3.03 per gallon. In March, though, pickups' share of the market dove to just 11.6 percent and gas rose to $3.24. 'That's when I said 'Red Alert,' Digiovanni remembered. 'We're worried.'" To which Krishner adds "Even critics say it would have been nearly impossible for the automakers to predict the 74-cent-per-gallon spike in regular gas prices between February and May." This is going to be one Hell of a wake-up call. Or, even more worryingly, not. 

We've been sounding the alarm on Detroit's liquidity "challenges" even before the automaker's began their most recent "turnaround" efforts. Before I relate Automotive News' [sub] tardy take on the situation, keep in mind that Ford has abandoned its promised "return to profitability" target (and not set a new one), GM never had a publicly pronounced plan to get back in the black (how great is that?). And Chrysler's gone into radio silence since its private equity owners bought themselves a multi-billion dollar passel of trouble. And don't forget Fitch's Ratings has better access to corporate info than Automotive News; they've downgraded all three automakers and put them on negative credit watch. Alright then… GM "will burn through about $1 billion a month this year and $6.3 billion next year, says Patrick Archambault, an analyst for the investment bank Goldman Sachs Group Inc. That would leave an anemic $8.7 billion in cash by the end of 2009 unless GM dumps assets or adds new debt, he said." Ford "is in better shape — about $29 billion in cash and $11 billion available through credit lines. Moody's Investor Service says Ford could exceed a two-year total cash burn of $14 billion by the end of 2009." Chrysler "started 2008 with slightly less than $10 billion in cash. On June 18, Bloomberg News reported that Chrysler will burn through $2.5 billion this year and would end the year with $7.7 billion in cash." We're thinking they're all low-balling. You? 

You want evidence that GM takes TTAC seriously? I got nothing. You want proof that GM should lend us an ear, or another indication that the American automaker's just too damn slow? No problem. Back in April, Edward Niedermeyer flagged the fact that Chevrolet was [all too quietly] selling a higher-mileage Cobalt XFE with re-jigged gearing and low-resistance tires. "These are exactly the kind of common-sense efficiency improvements Chevy (et al) should spread across their lineup," Edward opined. Yes, the Detroit Free Press reports that "thanks to quick action by GM's engineering and marketing teams," the Cobalt's twin-under-the-skin Pontiac G5 also gets the mods and the new badge. Quick? Yes! Quick! "We saw fuel prices rising early this year, and rather than sitting on the sidelines in a Motown hole-in-the-wall knocking-back boilermakers worrying, we did something," Chevrolet spokesman Terry Rhadigan boasts. Unfortunately, it doesn't look like GM's going promote these "new" cars; Lordstown's maxxed out as it is. And GM's hasn't quite committed to the XFE concept. "Chevrolet may apply the strategy — and the XFE badge — to other model lines. Other GM divisions may do the same, although they might not use the same XFE badge." Hey, what's the hurry?

If a gathering of crows is called a "murder," what do you call ten New York Times Op Ed pieces on high gas prices? A derrick of… no, I won't say it. Luckily, the Times only provides McNuggets for their "Is Your Tank Half Empty or Half Full?" editorial agglomeration. So… Pajama Life: Nicole Belson Goluboff, author of “The Law of Telecommuting,” says telecommuting rocks! Fuel for Inequality: Robert R. Reich says poor people are harder hit by rising gas prices than rich people. What the Green Bubble Will Leave Behind: Daniel Gross looks forward to driving a plug-in electric hybrid charged by a wind mill in his driveway. Ghosts of the Cul de Sac: Allison Arieff says high gas prices will kill the suburbs (so much for Gross' driveway). Goodbye to the Great American Road Trip: Michael Paterniti says fuck that shit. Tax Brakes: tax the Hell out of driving. I mean, the feds should give tax credits for NOT driving. Be the Prius: Tom Vanderbilt recommends hyper-miling. Or is that eco-driving? Psychoanalysis by the Gallon: Viennese scribe Annaliese Rohrer is, gasp!, on the subway "more often than I normally would choose to be." The Light Stuff: Jamie Lincoln Kitman (a car guy!) believes Detroit should be, sorry, build, smaller cars. Hair-Raiser: Karen Karbo loads us with this jewel: "Until [bicycle] helmet hair becomes universally chic, we will never be free of our dependency on mom chauffeuring us to the mall." (Her mom chauffeurs her to the mall?) So, what did we learn? 

After thirty-two years in the media, I know how this works. You take a popular, generally negative story like, say, rising gas prices. You think of a likely trend within the story: the effects of $4 a gallon gas on teenage cruising. Must be down, right? Makes sense, yes? So you find people who can validate the central thesis: teens, teens' parents, cops. You weave the tale with plenty of anecdotes and call it good. In fact, there's only one thing missing from this otherwise boilerplate New York Times feature: facts. "From coast to coast, American teenagers appear to be driving less this summer. Police officers who keep watch on weekend cruising zones say fewer youths are spending their time driving around in circles, with more of them hanging out in parking lots, malls or movie theaters." Note the word "appear." And the reliance on an unspecified number of police officers. To be fair– not always a NYT hallmark– The Grey Lady mentions the possibility that the dearth/death of cruising might have something to do with… something else. "To be sure, the number of teenage drivers nationwide was already on a downturn over the past decade, a trend fueled by tighter state laws governing the hours when teenagers can drive, higher insurance costs and a move away from school-sponsored driver’s education programs to more expensive private driving academies." To be sure, we expect better reporting from America's newspaper of record.

Ha! So close, yet so far. American Axle CEO Dick Dauch's '07 paycheck– $5.55m salary and a $8.5m bonus– doesn't quite eclipse GM CEO Rick Wagoner's $14.4m compensation. But hey, what's $350k between friends? And, it must be said, that's a lot of money– even if Dauch did break– sorry, "settle" a three-month strike by cutting half of AA's 3,650 member unionized workforce, instituting a two-tier wage system (lowering newbie wages by roughly 50 percent) and "convincing" GM to kick-in $215m to pay for bailouts. As AA's independent compensation committee put it, the bonus "took into account the company's strong financial performance in 2007, the structural transformation achieved under our new labor agreements with the UAW and… Dauch's leadership role in these negotiations." There, that sounds better. Neither the UAW nor American Axle's president (Dauch's son, appointed post-strike) were available for comment. Meanwhile, well done to The Detroit News for not totaling the CEO's compensation for their headline. There's only such much shock and awe Motown can take these days. (P.S. Isn't it amazing how all this big bucks salary stuff comes out during the weekend?)