So now we know why former Chrysler CEO Tom LaSorda was willing to punt BOTH of his turnaround plans, step aside for new CEO Bob Nardelli and share a co-presidency with ex-Toyota Prez Jim Press. According to The Wall Street Journal, Daimler's European accounts reveal that the Germans made the above payment (€10.4m) to Mr. LaSorda as a bonus for LaSorda's help liberating them from majority ownership of the American automaker. Yes, folks, that's on top of LaSorda's $3,223,116 (€2.13m) annual (which is to say ongoing) compensation package. Not to mention LaSorda's pension. Or health care. Or perks. And just in case you thought LaSorda's bonus and salary were performance related in the traditional sense of the term, Daimler's papers also show that Chrysler lost €1.94b ($2.9b) in an eight-week period last year. That's $51,785,714.29 a day. Hands-up anyone who thinks LaSorda gives a shit. [thanks to John for the link]

You know things are pretty bad for GM when Bloomberg starts sounding like TTAC. Doron Levin's column "GM Turnaround Collides With Dismal U.S. Car Demand" begins by turning around GM's "poor poor pitiful me" PR spin, which would have us believe they're unlucky rather than stupid. "Don't be fooled. That interpretation of GM's latest woes ignores years and years of dallying and denial. The No. 1 U.S. automaker delayed drastic action, hoping that growing automotive revenue might be enough to outstrip ballooning costs. GM has known at least since the early 1990s that its business model in the U.S. was defunct." Levin dismisses the foreign profits as life preserver argument, tosses aside GM's new products and predicts a cash crunch. And here's the twist: Sovereign Wealth Funds to the rescue! "The lenders include the governments of Kuwait, Singapore and Saudi billionaire Prince Alwaleed bin Talal. Perhaps sovereign funds willing to take a flyer on the second biggest U.S. bank [Citigroup Inc.] might be inclined to invest in its biggest automaker." Where did they get that $8.9b for the union health care VEBA from anyway? Meanwhile, Levin says "Without a financial cushion, GM no longer has the luxury of putting off until tomorrow what it should have done yesterday." We say: it's too late. 

With three selling days left in the year's shortest month, Ford Sales Analyst George Pipas is preparing the financial community (and the Ford family) for the worst: "The retail business is not that strong." You got that right. Pipas is predicting a ten percent drop in Ford sales relative to last Feb. That said, Pipas boasted that Ford will "hold our own" on retail sales relative to the rest of the industry. According to Automotive News [sub], Ford did so last month. FoMoCo sales "only" tumbled 3.9 percent, compared to the overall industry average of -4.1 percent. Excuse us for not believing Detroit's official retail sales numbers these days, what with reports filtering-in of increased fleet sales to government agencies and other commercial organizations. But we're good with Pipas' invitation to consensus: "I think we can all agree: '08 is getting off to a pretty low start."

As I pointed out in today's editorial about Detroit's branding fiasco, I was extremely disappointed by Mark Rechtin of Automotive News [sub]. When I called him for more info on the J.D. Power Customer Ratio index story, I never expected to hear that he'd cut a deal with J.D.'s mob to limit his coverage to excerpts. The index data was important information presented in a semi-public forum, using a projector no less. If a TTAC reporter made that kind of agreement with a news source, their services here would no longer be required. Anyway, the more we talked, the worse it got. Rechtin said reporters from all the big guns had attended the conference. A handful recognized the importance of the material. All of those who did agreed not to use the full chart. And only Automotive News carried the story. As long as the automotive press refuses to report the truth, the whole truth and nothing but the truth, TTAC will do its best to fill in the gaps. And even after that. 

The automotive press is obsessed with new cars, and the automakers know it. As The Big 2.8 flounder on the shoals of their broken branding, badge engineering and bloated dealer networks, they highlight the latest bright shiny object as proof of future salvation. Jerry Flint: “The best news from the domestic industry is that the product, particularly at GM but also at Ford, is getting better.” Meanwhile, car hacks are ignoring the fact that the domestics’ business is collapsing, as startling new data from J.D. Power illustrates.

As we chronicled in GM Death Watch 165, details of the new $33b – $36.5b GM – United Auto Workers (UAW) health care VEBA (Voluntary Employees Beneficiary Association) are beginning to emerge. That said, neither this site nor the 600k+ UAW workers whose health care depends on this trust know the timing or amounts of GM's contributions to the fund. While we await that info, The Detroit Free Press reports that GM's raising money to pay into this Mother of All Health Care Trusts. Regulatory documents reveal that GM has taken on an additional… wait for it… $8.39 billion in debt. The Freep breaks it down to "4.37b in 6.75% bonds, due in December 2012 and convertible into GM shares, and a $4.02 billion, 9% short-term note." As a quick reminder, GM's interest payments on its current debt burden are $2.9b per year. Again, we don't know how much more cash GM will need to fund the VEBA, and when they'll need it.

Holy emerging markets! According to Japan's Nikkei business daily [via Reuters], Toyota's luxury division is boosting production by 35 percent to cater to strong demand in Russia, China and other nascent automotive markets. No question: the brand's on a roll. Last year, ToMoCo sold 518,300 Lexi, a nine percent gain over 2006 totals. Lexus now accounts for roughly six percent of Toyota's total sales. As we reported previously, Toyota plans to expand production generally by 8.4 percent– despite the U.S. downturn and any ripple effect it may have on the global economy. According to Nikkei, that's just a start (continuation?). "Toyota has set an internal goal of producing 11.3 million vehicles globally in 2012, excluding its units Daihatsu Motor Co and Hino Motors Ltd. That would represent a rise of more than 30 percent from 2007." Toyota denied the report. 

Rising food prices, sinking water tables, deforestation leading to increased CO2 levels, billions in taxpayer subsidies; what else could you possibly have against ethanol? How about this [via Yahoo! News]: "Ethanol fires are harder to put out than gasoline ones and require a special type of firefighting foam. Many fire departments around the country don't have the foam, don't have enough of it, or are not well-trained in how to apply it, firefighting experts say. It is also more expensive than conventional foam." Unlike many of the effects of America's rush to ethanol, this is a danger you can see. Have seen. "In the last three months of 2007, three major fires pointed up the danger. In western Pennsylvania, nine ethanol tanker cars derailed and triggered a blaze that tied up a busy rail line. In Missouri, a tanker truck carrying several thousand gallons of ethanol and gasoline crashed near the state Capitol, killing the driver. The flames spurred the evacuation of two elementary schools and forced the state to rebuild a badly damaged bridge. And in Ohio, a train heading through the northeastern part of the state to Buffalo, N.Y., derailed and burned, forcing more than 1,000 people from their homes." Now how much would you pay? [thanks to David Holzman for the link]

“You’re adding an oil shock on top of a crunch on credit and a housing collapse. Even the U.S. economy cannot withstand all of that at the same time.” Nigel Gault, an economist at Global Insight, didn't mention falling new car sales or millions of endangered auto loans in his analysis of the impact of rising U.S. gas prices. But then, he didn't have to. It's been clear for years how this one will shake out, with truck-heavy domestics losing both sales and market share. The New York Times says that when it comes to American gas prices, the only way is up. "Energy specialists predict that, as demand picks up further this spring and summer, retail prices will surpass the high of $3.23 a gallon set last Memorial Day weekend." Surveying  the supply, demand (both international and seasonal) and production equation, AAA spokesman Geoff Sundstrom reckons we could see $4 a gallon gas this summer. “We’ve gone from a worrying situation for gasoline to one that is quite alarming." Meanwhile, automakers placing their bets on oil burners will not be happy to read that "on Tuesday, diesel prices rose to a record $3.60 a gallon, compared with $2.62 a gallon last year." 

I can't remember the last time I drove a press car. Since we added the News Blog, more than quadrupling our content at a single stroke (not literally), I've had precious little time to get my running machine fixed, never mind test drive a press car. Not that carmakers are falling all over themselves making them available. TTAC is still banned from Honda, BMW, all eight brands of GM and Subaru press cars. I'm sure there are a few more that have us on their shit list (my mother's expression). But again, I'm so damn busy tapping these keys on your behalf that I don't have the time to chase PR people for "free" cars. Of course, they're not free, even when they are. Journos who accept a press car are testing a carefully prepared, non-representational vehicle. We've mentioned this before, but it was brought home to me again when Chrysler PR called me– and Chrysler PR never calls me– to find out where Michael Karesh got the leaky Dodge Journey to review. Reading between the lines, someone high up at Chrysler was pissed that we got a hold of a duff press vehicle. Which is why TTAC will continue our [originally unintentional] policy of testing production vehicles rather than press cars. This further separates our reviews from every other media outlet save Consumer Reports. Just to let you know.

It's a piercing glimpse into the obvious in a New York Times article without any major revelations, but it's still worth noting the human toll of Ford's shrinking market share and concomitant race to slice its labor costs. As former Detroit News writer Bill Vlasic correctly points out, "Ford’s big new push is not to sell cars. Instead, it is trying to sign up thousands of workers to take buyouts, partly by convincing them that their brightest future lies outside the company that long offered middle-class wages for blue-collar jobs." To that end, the Times embeds a happy-clappy video “Connecting With Your Future" that shows Ford's please-leave-now ex-employees that yes, Virginia, there is life after Ford. Ah, but is there life for Ford? In the middle of Vlasic's sugar coated pill run down, a quote from analyst John Casesa is like a shot to the solar plexus. "These companies are trying to do in the last 24 months what they should have done over the last 24 years,” the head of Casesa Shapiro Group says. “That’s why it’s such a shock to the system.” Just as sadly, it's come to this: "One thing Ford workers are proud of is that their buyout options are more extensive and, in some instances, better paying than those at G.M." 

Backing-up the basic thoery behind Andrew Dederer's TTAC editorial on Chinese automotive exports, Toyota is countering a drop in domestic sales by aggressively expanding exports. The JCN Network reports that while ToMoCo's home market sales fell 4.4 pct (to 108,787 units), they ramped-up exports by 9.1 pct (to 208,156 units). Globally, the world's largest automaker increased production in January by 8.4 percent (compared to '07), cranking-out 719,646 units. If you add in sales of ToMoCo subsidies (NOT minority partnerships like some automakers we could name), January's total rises to 801,873 units.

The more we look into the Chrysler vs. Plastech debacle– wherein the automaker and the parts supplier are locked in deadly combat over mission critical tooling– the more it appears that the Plastech ship has been sinking for quite some time. Canplastics.com, reports that Plastech owes J&J Tool & Mold of Ontario more than $1m for injection molds. The Canadian company's vice president says Plastech stopped making payments last November. "We've had to scrounge the last several months to try and find additional customers to replace that work," Mike Altenhof reveals. "For a small company, it's been terrible… we're in a cash crunch right now." For Plastech, things aren't so hot either. When the supplier filed for bankruptcy, they declared that they owed creditors some $488m.

I'm old enough to remember when the Cadillac name was a synonym for quality. That said, the brand's glory days were already behind it; the expression "the Cadillac of…" was already becoming quaint. I came of age as GM's brand managers trampled any remaining brand equity underfoot. Even as I marveled at BMWs and Mercedes, I wanted Caddy to triumph. Why should the Germans build the world's best sedans? When Lexus launched the LS, I abandoned hope. If the Japanese– masters of the economy car– could build a better Cadillac than Cadillac, well, forget it. Even though Cadillac has enjoyed something of a renaissance with the Escalade (puh-lease) and the CTS, I refuse to get my hopes up. And for good reason. Cadillac's brand manager is still talking about an "entry level" baby Caddy sedan. "I was first kind of consistent that we didn't need one — it would need to be $25,000 to $30,000, which is a pretty cheap Cadillac," Jim Taylor told Automotive News [sub]. "But as the CTS moves up to be $30,000 to $40,000, you are creating space for a smaller Cadillac. So it is starting to be emerging on the list as more viable to me." Note to Jim: the more viable a $25k Cadillac, the less viable the brand. If that's even possible.

Automotive News [AN, sub] reports that Chrysler is still pursuing Plan B, after a federal judge ruled that bankrupt parts supplier Plastech could hold onto the tools that make the 500 plastic parts that Chrysler needs to make cars. In other words, it continues to dangle replacement contracts in front of potential suppliers. According to AN, "late last week, Chrysler senior procurement manager Scott Roland convened about 40 supplier executives and Chrysler purchasing executives at the automaker's suburban Detroit technical center. Two people at the meeting said Roland told them to hold on because Chrysler wasn't done trying to get its tools back." Fair enough. Chrysler can't afford to pay through the nose for its plastic pieces OR face another parts embargo. But it looks like Chrysler jumped the gun before the Plastech ruling. AN also says "The suppliers at the meeting are makers of plastic components that last month received a letter of intent stating they would get the Chrysler trim business now held by Plastech." While I'm sure the letter was full of caveats, it's no wonder Roland's embarked on a little post-facto hand holding.