Several readers sent us a link to "Honda: Extreme Meets Mainstream" (a.k.a. "Sipping Gas and Taking Names; How Honda is Going to Own Toyota"). It's a love letter straight from the ad department heart. To wit: "When times are tough and gasoline prices rise, people come home to Honda," Paul Lienert gushes. "There's something unique about this company that seems to speak to Americans." In his campaign for Honda's deification, Lienert mentions a couple of flops (Ridgeline, Accord Hybrid) and mentions styling and performance-oriented probs. But they are but speed bumps on the road to immortality. "It all comes from a willingness to think outside the box. Sometimes it wins and sometimes it loses, yet Honda is always willing to embrace things that are new and different… The payoff has been unswerving customer loyalty… If Honda seems suddenly clairvoyant, the foundation for its most recent triumphs has been carefully and consistently laid over four decades." While no one begrudges Honda their success, Edmunds gets enough press releases without having to pay for one. 

Folks, when Alex Taylor III bails on GM, it's all over bar the shouting. In his most recent article for Fortune [via CNNMoney] , Three Sticks puts down the pom-poms and gives GM a mighty good shellacking. "The news coming out of Detroit is getting worse, and unlike in past years, there will be no full recovery. Analysts are betting that General Motors will be forced to take emergency financial measures this year that could hamper its competitiveness for a long time to come… This stunning sales decline means that GM is continuing to burn cash at a fearsome rate – perhaps $1 billion a month by some estimates. Rod Lache of Deutsche Bank figures that GM will consume as much as $19 billion in cash over the next two years. Since it began the second quarter with $23.9 billion on hand and needs $10 billion to $15 billion to keep the lights turned on, that leaves a big hole." Yes, Alex, a VERY big hole. A hole that's an extremely slimming shade of black. How black? "In GM history, 1992 is generally considered the worst year of modern times, with multiple plant closings, huge losses and the shunting aside of CEO Robert Stempel. Now it looks like 2008 will have that beat." And then some.

Industriainfo.com reports on the largest-ever ethanol industry hoe-down in Nashville. Reading between the lines, the corn-fuel folks are feeling the heat from their critics. Lucky for us, the Renewable Fuels Association blamed Big Oil for the anti-ethanol backlash. "The oil companies are behind it all, Prez Bob Dinnean pronounced. "With the passing of the 36 billion-gallon renewable fuels standard, the oil barons saw one-third of their market share slipping away and concocted an enormous campaign against renewables. They sit on editorial boards of every major newspaper." What's more Big Oil "bought themselves some studies" and conspired with major food companies to create a giant smokescreen. "They need to stop us now," battling Bob told the assembled throngs. "But they won't." To that end, the 2008 Fuel Ethanol Workshop & Expo will discuss plant development, new enzyme technology, water utilization and conservation, and the utilization of non-fossil fuel to power ethanol plants. Hmmm, what that all about?

Yes, GM's light truck sales are in the toilet. Yes, it makes sense to plan their future carefully, given questions about [the loopholes in] new federal fuel economy regulations. But it's also true that GM's stop/start development process hurts its competitiveness. If GM wants to maintain its co-domination of this wounded though high-profit sector– and why wouldn't they?– the automaker would do well to remember that the new Toyota Tundra and Sequoia are still out there, somewhere. AND there's a new Ford F-150 and Dodge Ram coming down the pike. But no. GM has revealed that the next gen trucks– scheduled to go into production in 2013– have been postponed. Bottom line: GM's saving $300m. Bottom line: GM's cash position must dire. Even The Detroit News gets it, kinda. "GM has said it needs more and better passenger cars for the U.S. market. But money to develop new vehicles is tight. The automaker, which hasn't turned a full-year profit since 2004, is burning cash, losing $3.3 billion in this year's first quarter alone." Over at RenCen, the spin starts there. "GM's Wilkinson said the automaker is confident that the existing trucks can compete with other companies' new models. Even without a total makeover of the platform, GM can change anything from the trucks' powertrains to the interiors. 'Our intention is to remain a leader in the segment.' What was that about the road to Hell? 

So GM's share price closes the day at $14.75, down 6.7 percent. The new historic low came in response to the news [reported here] that GM is going to borrow $10b to stay afloat. And yet tomorrow morning, GM CEO Rick Wagoner will report to work at RenCen and continue to do whatever it is he does to collect his $15.7m annual pay package. Obviously, I'm not surprised by this turn of events. Nor will I be surprised when Chrysler files for Chapter 11, or GM scores tens of billions of dollars in federal loan guarantees, tax incentives and good old-fashioned hand-outs. Or when Ford cries foul and makes sure it gets a piece of your tax money. But the thing that really amazes me: how long it's taken for the American media to wake up to the fact that our very own automakers have been going belly-up. This even as the carmakers have pulled the rug from under our feet, exporting our manufacturing base to Mexico, Canada, South Korea, etc. Or have they? What of all the transplants building cars in the U.S., presumably at a profit? More to the point, why should we reward companies that can make U.S. manufacturing work at the expense of those that can't? Ultimately, we can't.  

Forbes' Jerry Flint has some strong words for Detroit. But first… "Yes, Asian car companies cheated. They kept us out of their countries and kept their currencies weak. Yes, our government changed the rules so foreign brands could sell in domestic dealer showrooms, making it cheap for them to attack this market. Yes, our unions helped by ignoring the destruction they were causing until it was almost too late. State governments helped by giving foreign carmakers huge tax breaks when they build plants. Then there was bad luck, or whatever it is that has pushed gasoline prices to $4 a gallon." BUT "the blame has to fall on Detroit's executives. They didn't know enough about their own business to build better cars than the foreigners did, and they were unprepared for a change that was sure to come, sooner or later." BUT "That's not the issue. If we want a home-owned industry, our government will have to help for a change instead of piling on, treating the automobile and the industry like devils." OK, so, how much is this boondoggle going to cost me? Nothing! All we have to do is "halt immediately all new regulations–safety regulations, emission regulations, bumper regulations, mileage regulations." Where do I sign?

In an epic feature presentation, Bloomberg reveals that former Home Depot CEO Bob Nardelli beat out Wolfgang Bernhard for Chrysler's top slot by dint of his pessimistic analysis of the biz. Well, he's got plenty to be pessimistic about now; most important of which is, as we've pointed-out numerous times, Chrysler's cash flow. "Nardelli, who spends most weeknights at the Townsend Hotel in nearby Birmingham, Michigan, and commutes home to Atlanta on weekends [ED; who says Detroit execs don't care about their carbon footprint?], gets constant reminders that he's racing the clock at Chrysler. Every day, he and his top executives receive an e-mail from the treasurer's office showing how much cash Chrysler has on hand." Just because he's paranoid… "The carmaker started 2008 with $9.5 billion, a person familiar with the situation says. After tapping a $2 billion credit line from Cerberus and Daimler AG and setting aside $1.6 billion to repay a loan from the United Auto Workers union for a retiree health fund, cash will drop to $7.7 billion at the end of 2009, the person says. Chrysler needs $2.5 billion-$3 billion to fund its day-to-day requirements." Wow, that's a lot of billions! But not, as we know, enough to keep the automaker afloat in these truck-aversive times. Tick tock. 

High gas prices are a bit like the weather: everyone’s complaining but no one’s doing anything about it. Actually, that’s not true. At the sharp end, consumers are buying more fuel efficient vehicles. They’re driving less. We’ve even heard talk of gas-conscious automobilists driving more slowly. Now THAT’S serious, and, to mind, reprehensible. So, while the mainstream media is full of helpful advice on how to use less gas (e.g. take those gold bars out of your trunk), I hereby present TTAC’s unconventional guide to saving fuel this summer.

Long time readers will know I've been advising them to watch GM's cash flow. The fact that the automaker has been selling everything that wasn't nailed down– propping-up their bottom line with tens of billions of dollars worth of  "income" from former assets– was/is a sure sign GM was/is hurting for life-sustaining liquidity. Last week, I posted that "Our spies tell us GM's set to top-up its cash hoard by $10b– which would raises its debt to $50b." Confirmation came today via Bloomberg. "General Motors may borrow $10 billion as early as next quarter because rising commodity costs and falling U.S. sales are crimping cash flow, an analyst at JPMorgan Chase & Co. said. The largest U.S. automaker may secure a bank loan by borrowing against foreign operations, inventory, trademarks or its stake in lender GMAC." GMAC? I don't think so. CNNMoney reports that Moody's has just downgraded GMAC deeper into "junk status" (to B3 from B2). Lest we forget, GMAC recently obtained a new $11.4b credit line, partly to lend Residential Capital (resCap) $3.5b to keep their mortgage subsidiary solvent. GMAC's exposure to ResCap has increased from $750m to $4.6b. If ResCap fails… Meanwhile, even worse, "The downgrade also reflects growing pressure on the profitability of GMAC's auto finance operations, arising from higher average borrowing costs and weakening asset quality." Fan. Excrement. Collision. 

In today's most excellent editorial, Michael Karesh highlighted Toyota and GM's relative approaches re: creating and selling new automotive technology. Karesh didn't delve into the cultural differences between the two automakers. For insight into ToMoCo's slow and steady vs. GM's ADD, I offer this quote from Jeffrey Kluger's Simplexity: "Exploitative organisms are creatures with fixed niches and well-established survival strategies. An exploitative organism is unlikely to try something evolutionarily new, preferring instead to stick with what it knows and exploit its environment for familiar resources. This is good for the individual or the next few generations, since playing it safe prevents you from making adaptive mistakes. But it can be bad for the species, which may be slow to adjust to a rapid change in circumstances…. Explorative organisms tend to seek new niches, mutate fast, explore new survival strategies when the opportunities present themselves. This can be costly in the short run, since any evolutionary innovation has a chance of failing, but over the long run it keeps the species flexible." As mainstream manufacturers, both Toyota and GM are intrinsically exploitative organisms. But GM acts like an explorative. And therein lies its weakness. In case you were wondering. In any case, today's news…

The New York Times' editorial board is calling it. The SUV's Time of Death is… Black Tuesday. And while their headline says "RIP," what they actually mean is "may you rot in Hell you gas-sucking, planet-warming bastard." "It’s hard to convince most Americans that there is a silver lining to $4-a-gallon gasoline. But General Motors provided a nugget of good news when it announced that it would shutter much of its production of pickups and sport utility vehicles — and might even get rid of the Hummer, the relative of the Abrams tank unleashed on the streets in the cheap-gas days of the 1990s. It’s hardly the solution to global warming, or the country’s dependence on imported oil, but it’s a start." No ambiguity there, then. Nope. Nor is there any doubt– well, just a little– that high gas prices are just what the planet ordered. And can I get that with a side order of MORE taxes? "Expensive gasoline is not good news for most American families… Still, Americans’ response to rising gasoline prices makes an excellent case for a gas tax. It proves that drivers will change their behavior in response to high fuel prices. And even if Detroit doesn’t buy global warming, drivers can help persuade it to embrace fuel efficiency. They don’t even have to know that the Honda Civic emits less than half the 13 tons of greenhouse gases spewed by the Ford F-150."

WardsAutomotive reports from the floor of [their very own] Automotive Interiors Show that electronics supplier Continental AG is in love with Vegas, baby. "What happens outside the car should also happen inside the car,” company rep Brian Droessler told the throngs. Huh? "The Internet in cars is coming," Droessler explains. "People want it.” So what about safety? "Continental’s new dual-mode display screen situated in a vehicle’s center stack. Based on the angle of the viewers, the screen shows one image to the driver and another to the front-seat passenger, without either person seeing what the other is viewing." In other words, the driver can look at maps and arrows while the passenger watches a Savannah Sampson movie. (Needless to say, the display system will be available in the U.S. in 2010.) No seriously. Safety is serious. Hence another Ward's article on in-car info overload. "Twenty-two percent of car accidents or near-accidents are due to non-driving related distractions, says Steve Polakowski, executive director-advanced interiors and electrical/electronics systems for Magna International Inc.’s Decoma International subsidiary." But really, we heart toys! Hence another article on a new sat nav system that predicts traffic jams, and routes (BMW?) drivers accordingly. Mixed messages? Nah. Just caring and sharing. [NB: equal time was given to fans of Eric Stromer.] 

Democratic presidential hopeful Barack Obama's love – hate relationship with Detroit automakers– they're evil, foot-dragging SUV-builders who need federal green initiatives (i.e. taxpayer money) to protect votes jobs– continues apace. Yesterday, Obama visited The Wolverine State to promise he'd meet with American automakers– unlike George Bush, who didn't have a sit-down with The Big 2.8's well-compensated execs until the sixth year of his presidency. Actually, it was his third year. But, as The Detroit News reports, "Late Monday, Obama's campaign acknowledged the misstatement as an 'unintentional oversight.' But they said it didn't take away from Obama's broader point. 'When the auto industry needed help the most, President Bush delayed for months meeting with them and now American workers are feeling the devastating effects of record layoffs and job losses,' said Obama spokeswoman Amy Brundage. Yes, well, one can only imagine how that meeting would go. "You are bad, bad people. Now take these billion dollar handouts and go!" Make no mistake, the former Chrysler 300C driver (yes it's got a Hemi) is ready to ask "what's in YOUR wallet?" when it comes to helping Detroit: "Obama today reiterated in his speech his pledge to spend $150 billion over 10 years to help create 5 million jobs in the 'green' sector, including helping automakers retool older plants to make plug-in electric vehicles."

Back in August of last year, consumer advocate Ralph Nader sent an open letter to the FCC questioning GM's relationship to conservative radio and TV talk show hosts. At the time, GM said it didn't pay cash money to these pundits for favorable mentions; it simply provided free test cars and facility tours (all expenses-paid, presumably). Oh, and advertising. Lots and lots of advertising. Nader correctly pointed-out that "Section 47 U.S.C. § 317, requires broadcasters to disclose to their listeners or viewers if matter has been aired in exchange for money, services or other valuable consideration. Section 47 U.S.C. § 508, requires that, when anyone provides or promises to provide money, services or other consideration to someone to include program matter in a broadcast, that fact must be disclosed in advance of the broadcast, ultimately to the station over which the matter is to be aired." Yesterday, Rush Limbaugh talked-up his forthcoming free ride, the Saturn Astra. Apparently, it's "the most popular executive car in Europe." Rush gushed "We love GM." Last night, one of Sean Hannity's liberal guests (Fox's Hannity & Colmes) was touting the value of green technology (as opposed to drilling for oil) in America's quest for energy independence. "I know about new technology. I'm driving a Chevrolet Tahoe Hybrid" Hannity said. It's high time the FCC put an end to this craven commercialization. Or, to call it by its real name, payola.

On the same day that USA Today reports that average U.S. gas prices have hit a new high, the paper has some bad news for plug-in hybrid electric vehicle (PHEV) fans who think they'll be able to tune in, turn on and drive off for pennies on the gallon: electricity prices are also heading skywards. "Utilities across the USA are raising power prices up to 29%, mostly to pay for soaring fuel costs, but also to build new plants and refurbish an aging power grid." New, schmew; those raw materials costs are soaring. "The price of coal, which fires half of U.S. power plants, has doubled since last year, largely because of surging energy use in countries such as China and India. Natural gas prices are up nearly 50% on high U.S. demand. In California, drought has forced Pacific Gas & Electric to replace cheap hydroelectric power with natural gas, helping to prompt it to seek 13% rate increases." And you know that "let's build nukes for our plug-ins" idea? "South Carolina Electric & Gas wants to boost rates 37% by 2019 to cover its share of two nuclear reactors costing $10 billion." And Americans who believe that global warming is a threat are going to have to put their money where their mouth is. "Expect bigger rate shocks if federal legislation, anticipated by 2010, passes and forces coal-fired generators to pay fees to emit global-warming gases. American Electric Power, the largest coal-fired generator, will have to raise rates 115% to pay higher fuel costs, build new plants and recover global-warming fees." Bottom line: ICE, PHEV, EV– there is no such thing as a free ride.