Time steps up to the e-plate with some timely cross-border bailout comparative analysis. “Canada is paying a significant premium over the U.S. to save Chrysler jobs at home, with no guarantees that the billions it is laying at the automaker’s door will ever be repaid or do anything to help maintain the country’s 20% production share of the North-American auto industry.” Drum roll . . . “Ottawa and the Ontario government are contributing a total of $3.2 billion in loans to keep Chrysler Canada alive, including $850 billion extended to the ailing automaker at the beginning of the year.” No, no, it’s a misprint. But even so, “the Canadian rescue package works out to more than $340,420 for every employee at Chrysler Canada, which has 9,400 hourly and salaried workers on payroll. That’s 15% more than the $295,000 per employee that Washington is shelling out to save about 40,000 Chrysler jobs in the U.S.” Why do I get the feeling that these numbers are lowball estimates? Because they are?
Toxicroach: “Only thing today was the identities of the [nine] non-TARP bondholders, and I’m a few hours behind the curve on that (download pdf here). As far as I can tell, [non-TARPies attorney] Uzzi thus far hasn’t filed any exhibits to prove Chrysler is worth more than the $2 billion. Uzzi still has a chance to object, so it might be coming up soon. And not a moment too soon.”
Hey, he warned us. When the president announced Chrysler’s C11, he mentioned in passing that the feds would provide GMAC with “fresh funds” to take over ChryCo dealer and retail financing (from Chrysler Finance). Well, Uncle Sam’s gonna need to back-up a dump truck to git ‘er done. Bloomberg reports that the former lender (now bank) will require an $11 billion “top up” just to not go tits up. That’s after a last-minute, rule-changing $5 billion infusion (plus $1 billion bestowed upon GM to help them help GMAC). And before The Presidential Task Force on Autos figures out how much more money GMAC needs to finance customer purchases and keep Chrysler dealers solvent. Ah, but do they want to avoid dealer death? As we’ve reported previously, GMAC has been busy pulling financing from selected GM dealers—an end run around GM’s franchise agreements designed to avoid the threat of dealer lawsuits against the mothership for termination. Can we expect the same for Chrysler dealers? Already happening.
More Janus-like indecision from a member of our Best and Brightest who’s torn between two lovers, feeling like a fool. “Jack” wants to buy American (whatever love is). And like many of us, he suffers from some sort of right brain/left brain; head/heart deal. So, he made a list:
Pros for the CTS-V
1. Helping out Joe Six Packs up there in Lansing and at all the parts companies across the country. I’m not a jingoist, but I’ve asked that Detroit build a car that’s competitive—and they have. And in a tie, I’m cheering for my fellow Americans.
2. The absolute best new car value for money in the over $50,000 category with respect to performance.
3. New car smell and complete control over the hoonage that I’d inflict on my car.
One of our sources reports that Chase has just told Chrysler dealers that it will no longer loan them money to buy Chrysler products.
Just got the call. Chase has officially terminated the floorplanning of Chrysler vehicles. Given the freeze at CFC [Chrysler Finance], now nobody can buy cars. Supposedly the haulers won’t deliver units because of payment concerns. A suggestion: see if the sales projections match the dealer network. My take is they aren’t even close . . . meaning, the expected losses to the taxpayer are going to be through the roof.
Let’s face it? I’ve been covering GM’s slide into bankruptcy for well over four years now, and it never ceases to amaze me how the people inside the company persist in trying to paper over cracks in the company’s operations that make the Grand Canyon look like a paper cut. In this case, a personage no less than Vice Chairman Tom Stevens gets in the Fastlane to tell the world that GM doesn’t have a fucking clue what it’s doing with its products or brands. “Although Saturn’s future is likely not to be within GM now, I can assure you our commitment to hybrid, plug-in hybrid and advanced battery technology is a key element of GM’s reinvention. I’m pleased to let you know the plug-in hybrid technology will be applied to one of GM’s four core brands. Stay tuned for which one, and in the meantime, I’ll enjoy reading the speculation.”
The point of the original Gumball Rally: cross the country in the fastest possible time without getting caught. While, at the same time, not killing anyone. It was a non-PC salute to Richard Nixon’s double-nickel speed limit. A political statement, of sorts. How in the world can you “recreate” this event with sponsorship, blogs, YouTube posting, and people without any political consciousness driving “arrest me” supercars that are 50 or more miles per hour faster than the original participants’ wheels (which included a converted ambulance)? Answer: easily enough, given the large number of magic feather missiles owned and occasionally operated by the rich and famous. I know: we’re giving these idiots the oxygen of publicity by even mentioning their pursuit of attention. But it’s time for TTAC Best and Brightest to rag or rave over this clear and present danger to public safety and auto enthusiasts’ image. If supercar owners want to do this sort of thing, they should either take it on the track or enter “open road racing” events. Ironically, sensibly, open road competitions consist of time trials on closed-off public highways: a safe place for over-testosteroned drivers to compete for something that benefits us all: a Darwin award.
Volvo has released its “Focus on the future of Volvo Car Corporation in the 2008/09 Corporate Report” (download “pocket version” pdf here). The report is stuffed with useful information for any private equity firm or car company looking for a nice little Swedish number. For example, it’s nice to know that safety is still on top of the Volvo food pyramid. And don’t expect Volvo to tie one on; the carmaker has one employee in Thailand. And here’s news: the Swedish automaker’s second largest market (after the US) is . . . Sweden, accounting for 47,750 sales in ’08. NOW how much would you pay? Of course, it’s quite the buyer’s market for car brands these days, what with GM jettisoning Saturn, Saab, HUMMER, Pontiac and, perhaps, Opel and Vauxhall. Maybe Holden. What the hell: make an offer for the whole company. Meanwhile, motoring moguls fancying Volvo should address all enquiries to “Big Al” Mulally at Ford Motor Company. You also might want to cc the US Treasury Department, just to be on the safe side.
In its report on GM’s new new new new new new turnaround plan, Reuters reminds us that GM’s going to the well one more time—before it goes to the well again.
The automaker said it expected to draw another $2.6 billion from the U.S. Treasury before a June 1 deadline set by the Obama administration for it to reach agreements with all of its key stakeholders.
Federal bankruptcy judge Arthur Gonzalez has pulled the trigger on Chrysler’s reorganization. Late last night, Arty cleared the way for the bankrupt automaker to review and accept bids on the company’s assets. Gonzalez said there’s an “urgent need for the sale to be consummated.” What’s more, the bidding process offers the prospect of “a fair and orderly sale.” The ruling extends the bidding deadline by five days, to May 20. One week later, the judge will hold the hearing to approve the sale of assets. Not-so-coincidentally, that’s just three days before GM’s drop deadline for its [theoretical] pre-C11 reorganization.
General Motors has filed papers with the Securities and Exchange Commission detailing plans for financing the new, “good” GM. If/when realized, the scheme will wipe out GM’s current stock holders. The plan would:
* Increase the number of authorized shares to 62 billion
* Reduce the par value to one cent
* Effect a 100:1 reverse split for the existing shareholders (that’s one cent on a dollar)
The Honorable Neil M. Barofsky
Office of the Special Inspector General for the Troubled Assets Relief Program
1500 Pennsylvania Avenue, NW, Suite 1064
Washington, DC 20220
Dear Inspector General Barofsky:
Thank you for your work investigating the American International Group, Inc. (AIG) counterparty payments. I appreciate the update you provided me on this audit on April 28.
As we discussed, I am also concerned by the circumstances surrounding the current efforts to resuscitate the American automobile industry. The Department of the Treasury and the Federal Reserve have provided billions of dollars in working capital for General Motors (GM) and Chrysler LLC (Chrysler) while the two firms pursue financial restructuring solutions. While the assistance to Chrysler terminated at the end of April, GM has approximately three weeks left to complete its restructuring before the working capital ends.
Toxicroach clocks in with today’s ChryCo court action. And here’s one from left field: Chrysler FInancial attempts to short-circuit the plan—put forward by the President of the United States no less—to transfer all of the zombie automaker’s business to GMAC. Turns out they would do anything for love, but they won’t do that.
“Chrysler Financial got into the act today, objecting to GMAC providing financing going forward (download pdf here). First, they complained about the celerity of the proceedings. Then they pointed out that Chrysler Financial has liens on, oh, all of the Chrysler product on dealer lots, and that the agreement with the dealers prohibits them from financing through anyone else. Since the dealers are not debtors in bankruptcy, the court can’t really protect them. Chrysler Financial’s remedy: kick GMAC to the the curb, replace them with Chrysler Financial. Failing that, let ChryFi see the terms of the agreement between GMAC and Chrysler proper (which had previously been sealed by the court to protect competitive information). The Non-TARP bondholders also filed a motion to protect their identities because Obama is defaming their reputation! The judge shot that down fast. Looks like we will get to find out who all the non-TARP bondholders are by tomorrow at 10 a.m. (download opinion here).
You know what I mean: it’s so bad, it’s good. And make no mistake about it: Ford’s fiestamovement.com is really bad. Garishly, gloriously, car-crash-by-the-side-of-the-road bad. We’re talking 100 pre-release Fiesta “agents” assigned reality TV show style missions by someone who smokes a large quantity of top shelf cannabis on a regular basis. “Take someone to the ocean who’s never been” [LSD optional?]; “Go to your favorite fast food joint order one of everything and give it away” [heads-up Ford: the days when McDonalds sold three items are well and truly over]; and “Blindfold a friend and take them away” [lawyer on speed dial]. It’s friggin’ endless. And the best/worst bit? ALL the agents blog. Twitter. YouTube. There hasn’t been such a surreal yet completely earnest multimedia agglomeration of [tangentially] auto-related inanity since, well, ever. I’m telling you: Ford has a major hit on its hands here.
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