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Posts By: Robert Farago
I don’t know about you, but if I’d earned $14m in ONE YEAR, and I’d worked for the same company for thirty-two years, at least eight of which delivered unto me similarly (if not equally) spectacular amounts of pay and benefits, I wouldn’t really be all that worried about what happened next. OK, yes, reputation and all that. But we’re talking about Rick Wagoner, the man that’s flown the GM jumbo jet straight into the dirt without once recognizing that funny looking thing called the yoke. Any reputation that remains is purely in Rick’s head, and the heads of the sycophants who wear their “Pay No Attention To That Man Behind the Curtain” T-shirts with pride, without irony. So don’t expect me to be surprised that USA Today reports “GM, [Wagoner] says, is crouched and ready to pounce if the auto market begins to rebound. ‘We just need to get the storm over, and we’re about ready to go.'”
“We’re placing a high priority on biofuels right now.” Yeah, right. “Hey guys, how’s that congressional viability plan coming? Shhh. We’re working on biofuels.” The man shilling for last year’s green queen is GM’s vice president of research and development. Lest we forget, Laurence Fishburne—sorry, Larry Burns—was The General’s main eco-warrior a little over a year ago. That’s when GM decided to squander some its precious pre-bailout bucks on buying a big piece of a cellulosic ethanol start-up named Coskata. Hyperbole is a dish best served cold. Looking back . . . USA Today: “General Motors says it is investing in a fledgling company that claims its secret process could be able to make ethanol from waste in large quantity as soon as 2010 for $1 a gallon or less, half the cost of making gasoline.” Just out of curiosity, anyone want to guess how much GM plowed into this turkey?
So, Best and Brightest, what’s the best car an enthusiast can buy—NEW—for under $30k? All in (discounts count). I’m asking because I just hooked-up (in the non-sexual sense) with a new[ish] website called Bestcovery.com. They’ve offering major linkage in exchange for Automotive “best” lists. So I wrote a “Best Porsche” list slamming the Cayenne to see if they were made of the write stuff. Yup. So, after that, I offered your services. Here’s my evil plan: I ask you, The Best and Brightest, to name the best fill-in-the-blank. At some point, I put up a poll of your most convincing nominations (chosen by me). You vote for the best whatever, I write it up and submit it to Bestcovery. What’s in for you? C’mon you love this stuff. And I’m looking into providing contributors with goods and services to test. So, let’s get stuck in, again, shall we? If you had 30Gs to spend on a new car, and you wanted to enjoy driving that car, what would it be? [NB: TTAC has no personal or commercial interest in any of the products or services presented for your consideration. And, yes, I deleted all the comments to the previous versions of this post.]
As GM gets out its begging bowl and approaches the federal bailout buffet for seconds, it’s got to tell Congress something positive about its bloated brand portfolio. The scuttlebutt: GM will declare its intention to kill Saturn—despite the enormous expense and legal hassles (i.e., more expense). Oh, and let the taxpayer pick up the tab (gee, thanks). BUT, one day in the not too distant future, the artist once known as the world’s largest automaker will file for Chapter 11. And on that fateful day, it will be free to kill brands. So I asked branding guru Al Reis about the maybe decision to deep six Saturn, what GM brands should survive the automaker’s impending C11 and what dangers lie ahead in that regard. The answers may surprise you. Or they may not. But you’re going to have to make the jump to find out.
The rest of the automotive industry might be watching in horror As the World Downturns, but Ferrari had a bit of a giggle all the way to the bank last year. The FIAT division ended 2008 some $437.7m ahead, on sales of 6587 vehicles (up two percent). While sales in Ferrari’s biggest market (that’s US) remained flat, they swelled in Eastern European (+23 percent), China (+20 percent), the Middle East and South Africa (+12 percent). With the feds capping salaries, and austerity chic sweeping Spago’s (“I’ll just have the lettuce leaf”), it’s entirely possible that that Ferrari’s ’08 sales surge represents a dead cat bounce. And there’s a seguire il denaro story behind the story . . .
A word to the wise (or The Detroit News): if you’re a cheerleader, stay away from irony. Irony is the discrepancy between expectation and reality. It’s a rapier specifically forged for cynical nasty bastards like . . . us. If you’re pro anything, it’s a blunderbuss for blundering buffoons. For example, The DetN’s automotive editor has penned a tongue-in-cheek essay on why he should be car czar. The result is earnest and scary, rather than droll and pointed. Our take: a federal car czar is a crazy cherry nesting in a gloppy pile of whipped insanity sitting atop a huge slice of death by delusion cake. Manny’s take:
I’m paraphrasing of course, in the grand TTAC style. But what are we to make of GM’s pre-bailout beg-a-thon announcement that Chevy’s electric/gas plug-in hybrid Volt will be easier to upgrade than a “conventional” car? Automotive News reckons Frank Weber’s assertion means “GM eyes fast gains with future Volt models.” But then we’re Garth to their Michael, and they still illustrate their Volt stories with the slammed concept car. Oh, hell, you be the judge. “This is almost like getting software updates into your car,” asserts the Volt’s global vehicle line executive. “This is not a mechanical world. So, even within a vehicle lifecycle you will see updates that are very significant.” How vague is that? Predictably so, given “GM expects to begin production of the Volt in 2010. The company has not said when it expects to roll out the second generation of the vehicle, but plans to focus on cutting the size and cost of the battery are a top priority. GM has not said how long it will take to produce an offshoot of the Volt.” Nor how much it will cost, if it really will go 40 miles on battery power alone, how long it will take to recharge, etc. But we do know one VERY important fact: GM will not make money on the Volt v1. AN programs the reminder . . .
Here’s my problem: the Taurus SHO’s 365hp EcoBoost (born TwinForce) V6 only offers ten more horses than a Lincoln MKT or MKS with the same unit. Quick! Which one of those is based on the Ford Flex? Doesn’t matter, ’cause the Flex is getting this engine too. Unlike the MKT (market?) and MKS (Mark Kay Sucks?), SHO actually stands for something: Super High Output. The Taurus SHO’s ten more ponies does not a legend make, IMHO. Thankfully, FoMoCo’s got some of the best chassis tuners in the world (most of whom spent the last twenty years or so tweaking cookin’ Euro Fords to greatness) to ply their dark arts on this big, bad boy. And when I say big, I also mean heavy. When you’re torquing that much power, the Taurus (born Taurus) needs all of its all wheel-drive to get the twist to where the rubber meets the road (hihowareya?). And now… the magic number is… $37,995. Plus the not quite so optional if you’re at all serious about this Performance Package (price unknown). Forty-grand for a fast Ford Taurus? This thing better SMOKE around corners. We shall see…
TTAC has been working with our Best and Brightest to uncover the hidden investors behind Chrysler. We’ve made some headway. First, the name of Cerberus’ Chrysler funds: Cerberus CG Investor I LLC, Cerberus CG Investor II LLC, Cerberus CG Investor III LLC. The information came from Daimler [click here then search for “CG Investor”; it’s under structure of the transaction]. Searching for hits on the CG funds, we’ve unearthed Franklin Templeton Investments’ Mutual Recovery Fund. Here’s the money shot: the fund’s 2008 Annual Report. Scroll down to page 5 (their numbering), second footnote. And there it is. And now we can drill down to some interesting info…
A TTAC Tipster writes:
According to one of my GM buddies, the May 1 pay cut is as follows: 10% for unclassified (executives); 7% for Levels 8 and 9 (managers, technical fellows, other senior folks); 3% for Level 7 and below. Levels 8 and 9 and unclassified enjoy the use of company vehicles. Last year, a lot of the Level 8s were forced to take demotions to Level 7: no pay cut, but they had to give up their company car, although they got some financial help in getting a new GM car.
All pay cuts are “temporary” and will be under reconsideration in December.
When it comes to “why can’t U.S. car companies kill their dead brands?” TTAC has always pointed the finger straight at America’s 50-state patchwork of franchise laws. If GM killed, I dunno, Saab, every Saab dealer in these here United States would drag The General’s ass down to the local courthouse demanding—and receiving—reparations. Lest we forget, Oldsmobile’s termination cost GM a billion dollars back when a billion dollars was a lot of money. If, however, Chrysler, GM or Ford filed for Chapter 11, they could kill brands and dealers at will—without paying ex-dealers anything more than the cost of their inventory. And maybe not even that. Franchised dealers can see the writing on the wall, and they’re not happy. So they’re proactively legislating a new post-C11 deal for themselves—inflating the claims against the automakers’ assets, increasing the likelihood that the D2.8’s bondholders will file for same.
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