As our airplane began its final approach into Atlanta’s Hartsfield airport, we flew over the muddy outlines of an enormous new housing development. Phase I was attached. There wasn’t a single construction worker, car or human to be seen. Later, driving through the city’s outskirts, we passed dozens of these brand new ghost ‘burbs. It looked as if someone had detonated a neutron bomb, or unleashed a killer virus. Of course, someone had. Easy credit. And anyone who thinks the new car market is headed for a recovery simply isn’t paying attention.

During our Jeep Cherokee-enabled whistle stop tour of 17 dealers on the way north, we found most GM stores as lonely and hungry as an abandoned wolf cub. The majority of the showrooms were the automotive equivalent of those “starting in the 100’s!” housing tracts– only not as new. No surprise there…

Back when GM was offering zero percent financing to anyone with a pulse (i.e. buyers with low FICO credit scores), we flagged the fact that there would be a reckoning. Clearly, GM’s enthusiasm for putting people into cars they couldn’t afford was bound to boomerang. And so it has. A fetid flotilla of whipped whips is back on GM’s books. This number grows larger with each passing day, with each economic shock. The repo men have never been so busy.

This super-abundance doesn’t include the existing “glut:” the millions of would-be GM customers who are so far backwards on their existing car loan that they won’t be buying another new car for a long, long time. (If ever.) What’s more, the hidden engine of GM’s sales– endless sheaves of bad paper– is kaput. “We’re not writing any GMAC loans,” a dealer told me. “None.” God knows what impact that’s having on GM’s captive finance unit, but it can’t be good. Meanwhile, dealers are turning to local banks for their loans.

And “financially challenged” customers are returning to scary-ass corner lots. We stopped at four of these Hell holes, and they’re doing land-office business. (They eyed our 127k-mile Laredo with obvious rapaciousness.) The lots cater to people who need wheels, any wheels, now. These dealers, who specialize in high interest loans, report that cash ‘n carry is king. It’s a ridiculously small sample upon which to base a conclusion, but the trend, should it exist, doesn’t bode well for GM, whose low-end products are not-so-cheap and certainly not cheerful.

More anecdotal evidence: plenty of GM’s [supposedly] new car dealerships have used cars– many of them non-GM)–lining the street at the front of store. (This is doubly true for Chrysler.) The principal of one of the Chevy dealers told me he now considers himself a used car dealer; new cars are a loss leader. Literally. “Have a look back chair,” he said, waving at a lot full of new pickups. “I’m not ordering any new vee-hicles. Nun.”

GM’s numbers don’t jive with the reality we discovered on the ground. The automaker reports that all of its mainstream models fall below a 100-days’ supply. The most recent sales per franchise numbers are in. While they suck, they’re up: Saturn (47), Chevy (46), GMC (19), HUMMER (13), Cadillac (11), Pontiac (nine) and Saab and Buick (six each). And somewhere in the middle of his campaign for bailout bucks (a.k.a. low-interest federal loans for retooling), GM CEO Rick Wagoner said September’s sales stats will be in-line with this summer’s suffering.

Fleet sales? Fire sale fallout (i.e. lots of sales, little profit)? Closing dealers dumping inventory? Channel stuffing? TTAC’s Frank Williams is on the case. Meanwhile, our southern sojourn left us with an overall impression that the worst is yet to come.

Why wouldn’t it? Like their customers, GM and their captive finance unit GMAC have literally mortgaged their future. Both companies may delude themselves with talk of a market recovery, gently pushing it further and further into the distance as events unfold, but the truth is they’ve only begun to experience the fallout of their own short-sightedness. As credit tightens, as the economy reels, as gas prices continue to push the market into more frugal machines (where the competition has a huge advantage), GM faces a bleak future.

There is but one silver lining to this: GM’s bloated dealer network is contracting. The automaker doesn’t discuss such unseemly events, but we’ve seen the husks. There will be more failures to follow. But here’s the really scary thing: GM is not prepared for, nor welcomes the change.

Bill Heard (a.k.a. “Mr. Volume” or “that bastard”) closed its Arizona Chevrolet franchise yesterday. “It’s in a good area, and the store has a lot of traffic,” GM spinmeister Susan Garontakos said. “GM intends to keep it open.” Volume over profit? Time for a trip out West.

Halleluiah! Oil prices are falling. Despite Nigerian revolutionaries attacking Royal Dutch Shell facilities. Despite hurricanes Gustav and Ike disrupting gulf production. And despite all of the hysteria of the last six months trumpeting the end of the era of cheap oil, oil prices have fallen as much as $55 per barrel after being pushed to a peak of $147.27 in July. Once the residual shock to gasoline refining by Ike dissipates over the next couple of weeks, consumers will begin to see a substantial difference at the pump. So is it safe for Americans to recommission their mothballed SUVs and muscle cars? A close look at financial events in recent days indicates otherwise.

First, let’s recap what we’ve seen.

Beginning in 2004 the price of Light Sweet Crude on NYMEX began an almost uninterrupted ascent that added more than $100 to the price of every barrel. A circus ensued. Consumers swooned (precipitously). Automakers faltered (dangerously). Speculators hyped (aggressively). News media sensationalized (despicably). Inflation grew (corrosively). Environmentalists cheered (quietly). Politicians protested (hypocritically). Oil company execs defended (piously). Saudi’s pumped (merrily). Oil peaked (allegedly). Demand evaporated (predictably). Prices fell.

A more revealing analysis shows that the surge in prices was the result of two seldom mentioned factors: a weakening dollar that required that Americans spend more of them to get their fix of black gold. And index fund managers discovered that the commodities market was a good place to shelter their money from falling real estate and stock markets. In May, BusinessWeek summed the market distortion this way:

“[Commodities] are experiencing demand shock from a new category of speculators: institutional investors like corporate and government pension funds, university endowments, and sovereign wealth funds,” said Michael Masters, managing member of Masters Capital Management, a Virgin Islands-based hedge fund.“Index speculators are the primary cause of the recent price spikes in commodities.

Speculative activity in commodity markets has grown dramatically over the last several years. In the past decade, the share of long interests – positions that benefit when prices rise – held by financial speculators has grown from one-quarter to two-thirds of the commodity market. In only five years, from 2003 to 2008, investment in index funds tied to commodities has grown twentyfold, from $13 billion to $260 billion.

Additionally, hedge fund director Masters points to data showing that over a five-year period, China’s demand for oil has increased by 920 million barrels, while over the same period, index speculators’ demand has increased by 848 million barrels.”

Whew! So it is safe to say that if you are invested in any of these index funds or if you are due a pension, you likely benefited from the higher commodity prices at the same time you are paying higher prices at the pump.

Since that time, we have seen the market peak followed by a rapid deflation in prices. While it can be argued that demand destruction accounts for some of the effect, it alone cannot approach the 37% fall in price. Rather, the dollar has strengthened (erratically) and investors have stampeded out of the notoriously risky commodities market.

This is good news, right? The bubble, which energy economist Edward Morse calls it the “Oil Dot-com,” has burst. Now consumer prices can be restored to normal supply and demand price points. Yes, but… (There’s always a big but and I cannot lie.)

Monday morning financial markets were ambushed by the announcement that troubled investment bank Lehman Brothers, a 158-year old fixture on Wall Street, has folded. The big B-K. Horrified, the Dow Jones industrials plummeted more than 500 points, the worst day of trading since terrorists slammed hijacked airliners into the World Trade Center.

What of oil futures? Based on recent history one would think that fleeing investors would seek refuge for their money back in the commodities market. Didn’t happen. Instead it followed the trend of the broader market. The inverse relationship between the markets appears to have broken. Which is a good thing – I would rather index fund managers look elsewhere when stocks falter so energy prices that directly impact my pocketbook don’t become unnaturally inflated.

But this is a dire indicator. Rather than the correction of an over-inflated price (I still believe that oil is overpriced and has room to fall further before it achieves an undistorted equilibrium price), this week’s decline shows that investors well and truly have lost faith in the economy. Rather than divert their funds to alternate investments they sold off for cash or stayed pat and suffered a loss in equity.

In other words, factories will idle, business will stop growing, and the transport of goods will slow because no one is buying. All of this points towards corporate downsizing and layoffs.

B&B, be advised: keep your gas guzzlers parked.  It’s going to get worse before things start to get better.

Driving well has nothing to do with how well we late-apex Oaktree Corner at VIR, how cleanly we rev-match a heel-and-toe downshift or how much we know about F-bodies and Kappa platforms. It’s all about simple movement and complex congestion, intuition versus intelligence, myth versus reality. Why We Drive the Way We Do by Tom Vanderbilt is a shot across the bow of the typically clueless, not very competent, generally thoughtless, surprisingly unsafe, unjustifiably over-confident average driver. In other words, you and me.

Take the common task of merging from three lanes into two. Polite drivers will segue into the next lane as soon as they can. Jerks will stay in the closing lane all the way to the end, then force their way in. As Vanderbilt correctly argues, these “jerks” actually help traffic move faster. If a larger number of motorists simply followed their lead, stayed in the “open” lane to the bitter end and THEN alternate-merged into the funnel, everyone would get where they’re going more quickly.

Or say you’re in a line of fast-moving cars following somebody in your lane who slows quickly— maybe he’s been cut off, or is about to miss an exit. You’re third in line and so skillful a wheelman in your Brembo’ed BMW that you can follow the car ahead pretty closely and still brake safely. Unfortunately, the six cars behind you each progressively uses up the rapidly closing gaps that you have single-handedly created, and the tenth car in line has a huge and unavoidable rear-ender that you caused.

Traffic driving is filled with visual illusions and sensory tricks. SUV and pickup truck drivers tend to go faster without knowing it, because they’re just that much farther above the road. They’re just like early 747 pilots who tended to taxi at speeds that could damage the landing gear, because they’d never sat that high above a taxiway.

Traffic has many facets. We communicate in traffic with bumper stickers announcing that we’re religious, liberal, ex-Marines, whale-savers, parents of teachers’ pets. Yet the little billboards are counter-communicative. Beep to try and say Semper Fi and you’ll get the finger. (I was leaving the gym in our Boxster awhile ago and found myself right behind a woman in a near-identical Boxster, waiting to enter the highway. I gave her a “Hi, Porschie fan” toot and got, yes, the deadly digit.)

Parking is an inevitable part of driving. Why do many people park substantially farther from the big-box store if they have a sightline to the front entrance, even if there are closer spaces off to either side? Some drivers are active parking searchers, endlessly cruising to look for a spot, like an orbiting hawk. Few can bear to be owls, perching in wait for a shopper to come out of the mall to follow them and take their spot. In one survey of a 15-block area near UCLA, a survey discovered that people looking for parking drove 3,600 miles a day.

Driving involves not just seeing but knowing what to do with the information you thus collect. A driver in Maine will brake immediately for a moose but less quickly for a zebra, since he has to process an unfamiliar situation. When the light turns yellow, you need to quickly make the correct decision: push through and run the slight risk of getting heavily T-boned by a green-light jumper, or stop quickly and run the more substantial risk of getting into a minor rear-ender.

Traffic is stuffed with seemingly random but always instructive factoids…

We constantly see other drivers making mistakes but are unable to see ourselves doing so.

We often drive at a distance behind the vehicle ahead that far exceeds our ability to avoid a crash, because we have blind faith that the driver in front of us will never, ever need to stop quickly.

Drivers prefer waiting in a single long line than in multiple shorter lanes, because they hate the stress of worrying that the other guy has chosen a faster lane.

Rubberneckers create the perfect self-generating traffic jam, and people slowing to look at an accident get into accidents themselves.

If you drive an average of 15,500 miles a year, there is one chance in 100 that you will die in a fatal car crash over a 50-year lifetime of driving.

The most dangerous vehicles on the road are… pickup trucks. More people die in pick-’em-ups per 100m miles driven than in any other vehicle.

Stirling Moss once said “There are two things no man will admit he cannot do well: drive and make love.” But then smarter Albert Einstein said, “Any man who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves.” Go figure.

Today is General Motors’ one hundredth anniversary. Ironically, GM reached the century mark in the same year that it ended its reign as the world’s largest automaker. More importantly, the American automaker’s status as the world’s most profitable private enterprise has long been consigned to the scrapheap of history. The former economic powerhouse is now worth less than it owes, as it slouches towards bankruptcy. While The General’s camp followers may wish to set aide this day to bask in past glories, it’s the perfect time for the ailing American automaker to draw a line under the past and face the future.

To begin, GM must abandon its dreams of world domination. The automaker’s well-traveled centurions must surrender their multi-maniacal global ambitions. “World platforms” or no, GM will never again achieve international supremacy, let alone dominance. Not in the UK, China, India, Russia, South America or the United States. Not as Chevrolet or Opel or Saturn or any other of the company’s many guises.

Today’s GM lacks the focus, drive, determination, savvy and resources it needs to mount an all-conquering assault on any of the world’s major territories. Toyota, on the other hand, doesn’t. Hyundai doesn’t. VW doesn’t. Suzuki doesn’t. Not that it matters. All of these car companies (and GM and more) face each other in their international fight for survival. In today’s global economy, everyone is a niche player– even if some “niches” are more equal than others.

Ostensibly, GM has already made this jump from hyperspace. When Toyota wrested the world’s largest crown from Motown’s mavens, CEO Rick Wagoner and his Car Czar Bob Lutz both hummed hakuna mutata. Profits were the new black. Wrong. GM must face a future without profits. I repeat: GM must realize that it can’t make money in its current, bloated, Byzantine form. And it’s not going to make money for a long, long time.

Once GM files for Chapter 11, the automaker will enter the proverbial wilderness. Customers will run for the hills. Dealers will die. Executives will flee. Unions will attack. Regulators will interfere. Opportunists (i.e. lawyers and rivals) will pick at the entrails. Even so, a plan for GM’s emergence from C11 protections will arise. Whatever it is, it won’t be quick. The General’s recovery will require at least two product cycles, maybe more. It may not succeed. But the plan’s backers will, by necessity, take a long term view.

To make that work, GM must sever its ties to its historical business model. Death to CEO Alfred P. Sloan’s formerly transcendent strategy: an ascending range of automotive brands offering a car for “every purse and purpose.” GM must embrace the new paradigm: a wide price range of vehicles within one coherent brand structure (BMW, Mercedes) or two (e.g. Nissan and Toyota, discounting the Scion debacle).

In fact, General Motors as such must disappear, so that Chevrolet and Cadillac may rise from the ashes. And even these brands must be liberated from the weight of the past to find new resonance in the popular imagination. What separates a Chevy or Caddy (made anywhere) from any other existing brand’s products? Reliability? Longevity? Beauty? Opulence? Power? Comfort? Choose one. By euthanizing dead brands and gaining focus, the non-general General can fully capitalize on its squandered and stifled world-class talents.

But most of all, GM NA has to distance itself from GM of old.

No matter how invalid its foundation, the “perception gap” afflicting Buick, Chevrolet, Cadillac, GMC, Pontiac, Saab, Saturn and HUMMER products is a Grand Canyon-class chasm. In other words, GM is already dead to at least two generations of buyers: those who experienced the brands’ horrific quality and indifferent (to say the least) service, and those who never owned a GM product because they’ve always considered the automakers’ octo-branded handiwork deeply and completely undesirable.

Again, this effort requires reinvention rather than re-dedication. GM must be able to speak to customers about the “new” Chevrolet and Cadillac with factual sincerity. They must explain why these brands are different, now. America loves a comeback kid. But it will not tolerate, for lack of a better phrase, the same old shit in a different wrapper.

Of course, the full realization of that task would require GM to come clean about the mistakes of the past– if only internally. And that would mandate at least a notion of the meaning of accountability.

It is this deficit that defines GM’s recent history. For the last fifty years or longer, GM’s been a company in the thrall of executive ignorance, greed, arrogance and hubris. In that sense, the only worthy celebration of GM’s past would be one where the automaker’s guardians could finally declare that its culture of entitlement and insularity has been sent off into the woods to die, alone and unloved. Gone, but not forgotten.

In Finnish, August is elokuu, the “month of life.” Automakers selling vehicles in the U.S. market missed the irony, as most A) don’t speak Finnish and B) finished one of their worst sales months ever. Even company-wide sales promotions didn’t do anything to put paddles to chest. Ford asked us to “Drive One” (wouldn’t it be more effective if they asked us to “Buy One”?), and GM shared employee pricing (maybe if they threw in the employee health program… ) while Chrysler invited us to “Shop until you drive” (again, where’s the “buy” part?). Toyota and Honda aren’t showing that kind of desperation. Yet. But they still felt some pain. Let’s take a closer look at the katastrofi.

Overall, light vehicle sales dropped 15.5 percent in August, compared to August of last year. Year to date, sales are off by 11.2 percent. Car sales were down 8.5 percent for the month and 2.4 percent for the year. Truck sales took a hard hit, dropping 22.0 percent from last August and are down 19.7 percent compared to last year.

Family Sedans

The star of every GM press release: the Chevy Malibu*. The model was up 8.4 percent compared to last August and up 32.4 percent for the first eight months of this year. Although Ford’s Fusion is still up seven percent year-to-date (YTD), the model dropped 27.5 percent on the month. Chrysler’s 300 continues to circle the drain, with a 59.1 percent plunge in August. YTD. Even with four out of every ten 300s sold went to fleets so far this year, sales are down 41.3 percent. The Toyota Camry* continues its slow crawl back up from June’s drastic crop, with a 3.3 percent increase over last August; it’s managing to stay ahead of last year by just 0.4 percent. After riding above the 2007 sales line since March, the Honda Accord dropped below the line in August, with a 7.9 percent dip. However, it still remains nine percent above last year overall.

Compacts

Busting the 30 mpg barrier with the XFE didn’t help the Chevy Cobalt. August sales fell 26.6 percent for the month (it remains up 9.6 percent YTD). Ford’s Focus soared 23.4 percent ahead of last August, and is up 25.8 percent on the year. Dodge’s unlikely fleet queen, the Caliber, sank 56.8 percent. With over half Caliber production sailing with the fleets YTD sales remained 8.2 percent above last year’s level. For the first time since gas prices went crazy, the Toyota Corolla** fell below last year’s line. The sales champ dropped 3.4 percent for the month, down 1.5 percent on the year. The Honda Civic* continues to ride above last year’s line, with sales up 5.3 percent for August, up 14.7 percent year to date. Nissan’s Sentra dropped sharply from July to August. But it’s still up 1.4 percent up on last August, 4.9 percent YTD.

Subcompacts

The hot market in gas-sipping subcompacts seems to be cooling down. The Chevy Aveo finished August down 21.3 percent from the previous year, down 1.8 percent YTD. Toyota may need to check into whether or not Yaris sales are cannibalizing the Corolla. While the staid compact fell in August, its subcompact sibling jumped 20.5 percent, with a 32.4 percent increase YTD. The Honda Fit was in short supply due to the model changeover, so it was down 25.1 percent for August. The Fit’s a healthy 55.7 percent ahead of last year overall. Nissan’s Versa fell below 2007 levels for the first time this year with a 5.2 percent drop. It remains up 15.7 percent year-to-date.

Prius

Even though it remains the darling of the green scene with demand to match, Prius sales were down 4.2 percent in August, down four percent on the year. Toyota better plug in that Mississippi plant and crank out Priora STAT.

Pickup Trucks

As you could guess, the big trucks continued to take it in the shorts. Chevy’s Silverado* extended its sub-2007 trend, with sales down 17.4 percent in August and 24.8 percent YTD. Ford delayed the launch of its ’09 F-150 so it could clear the ’08 inventory. With current model sales down 41.6 percent, 25.2 percent YTD, it’s not clear if there’s enough demand/space/credit on the ground for the new truck’s success. The Dodge Boys said “what the Hell” and launched their freshened  Ram— even though they aren’t moving many ‘08s. Ye Olde Ram was down 22.7 percent for the month, down 29.0 percent YTD. Toyota’s Tundra continues to fail to meet original expectations (200k annnual units) with an eight percent drop for August and a 14.1 percent slide YTD.

Truck-Based SUVs

Employee Pricing for Everyone– or fleet sales– seems to be helping the Chevy Tahoe*. It bounced back a bit from July’s drop, ending August “just” 10.2 percent below last August. However, for the year it’s down 25.7 percent. Ford’s Explorer joins the Durango in the toilet. Sales sank 53.9 percent in August, almost as bad as Durango’s 56.8 percent drop. Explorer’s still doing better YTD, though. It’s “only” 37.8 percent below last year, compared to Durango’s 51.8 percent loss. When you’re selling in small numbers, a 1500 unit increase can equal high percentages, as illustrated by Toyota Sequoia’s 86.1 percent jump above last August and its 38.4 percent rise over last year.

CUVs

After spending four months below 2007’s sales line, the GMC Acadia jumped 25 percent above the line for August; it’s up 8.9 percent year to date. The Ford Edge edged its way up from last month, but it’s still down two percent compared with last August. So far it’s 11.7 percent ahead of last year. The restyled Toyota Highlander* doesn’t seem to be making much of an impression on the buying public; it was down 15.2 percent for August, down 8.3 percent on the year. After staying below the ’07 line for three months, the Honda’s Pilot rallied and ended August 18.6 percent above last August. Meanwhile, Pilot sales are down 16.8 percent YTD.

By Manufacturer

Last year, all five manufacturers showed an uptick from July to August. This year all but Ford did the same, but at a much lower level than last year. Compared to August of last year, GM was down 20.3 percent, down 18.1 percent for the year. Ford dropped 28.6 percent from last August and shows a 16.5 percent drop year to date. While Chrysler showed a slight upturn from last month, it’s 34.5 percent below last August and 24.2 percent below last year. The Toyota juggernaut has reversed direction, losing 9.4 percent from August ’07 and dipping 7.8 percent year to date. Honda dipped below 2007 last year and stayed there for August with a 7.3 percent loss. However, they managed to keep their head above water year-to-date, with a 1.7 percent increase.

Down the Road

Automotive News predicted sales hit rock bottom in August and would rebound from there. Then they said “never mind.” That just shows it’s almost impossible to guess what’ll happen next. There are still a lot of 2008 models on the lots with the 2009’s showing up daily. Dealers are already offering full-sized trucks for half price and as the manufacturers ramp up incentives you may see even sweeter deals than that. The last five months of 2008 are shaping up to be one hurjasti ahdistaa.

* Includes hybrid models
** Includes Matrix
All numbers are unadjusted and reflect total sales

The unveiling of the production version of the Volt will go down in history as one of GM’s final coffin nails. Not only does it mark the death of the Volt cult, but it also signals the end of the whole “concept/dream car” era as invented by GM’s legendary Harley Earl in the fifties. Bob Lutz has thrown his “Hail Mary pass” right into the stands. The fans are furious, heading for the exits.

Strong words, considering GM has committed to actually building the Volt. But the promise of the Volt, as defined by the concept car, was something totally different from the perfectly ordinary-looking compact sedan revealed. The Volt concept was a blatant effort by Lutz to tap into the last vestiges of the Futurama psyche: a place where reality is suspended in the belief that a better (and greener) tomorrow really exists, thanks to GM’s infinite technical and styling prowess.

Never mind that the Volt concept was utterly impractical, and had zero chance of becoming the actual production car. In typically Lutzian fashion, the gut dominated the head. The car’s profile, the long, low hood, the chopped top, and those huge wheels, pushed out to the extremities, are nothing but a recapitulation of Lutz’s favorite concept, the Cadillac Sixteen. It’s a RWD concept intended to carry a sixteen cylinder engine under the hood, not a coffee-can electric motor driving the front wheels.

The Volt concept was a blatant lie, because nothing of its mini-Sixteen form spoke to its intended EV role. It was a bait-and-switch routine, consciously contrived to generate enthusiasm, such as the 30k names on the gm-volt.com “waiting list.” Lutz may imagine himself to be the modern day Harley Earl, driving his beloved (and utterly impractical) gas-turbine powered rocket-ship Firebirds. But no one took dream cars like the Firebirds seriously back then; they were part of the Futurama show of unlimited possibilities– which never actually came.

Lutz lied when he said the Volt just needed to be “aerodynamically optimized.” In reality, GM knew it couldn’t afford to develop the technology as well as a new platform and distinctive body too. The production Volt would, by economic necessity, be part of the Delta II platform and body family. It’s an electrified next-gen Cobalt/Cruze/Astra, plain and simple, with a stupid, fake blanked-out grill. It explains the Volt’s mediocre Cd of .28. The Prius may not be stunning, but Toyota shelled out for a unique platform and (more) aerodynamic body, sans fake grilles.

“Rolling turd-mobile” is just one (delicate) sampling of the profound sense of disappointment at Volt Nation. The “leaked” images of the production Volt unleashed a tsunami of negative comments (over 800 and still growing). Some asked to be taken of the (un-official) waiting list, and many are apoplectic. What gives? Weren’t they mainly interested in a car with a 40-mile electric-only range?

The Volt concept coupled the powerful emotional and visceral right-brain appeal of a snorting Cadillac Sixteen with the left-brain advantages of an EV. It was the royal flush, the four cherries, the completed Hail Mary pass that would resurrect GM from the ashes of its (self-induced) immolation. The Messiah/Volt would leap-frog the Prius (and the ascending Asia it represents) as well as shove a giant middle finger in OPEC’s face. America’s place in the world would be restored.

But the production Volt brings to light a grim and stark reality: it’s just an ordinary-looking car. Where’s the (Pontiac) excitement and fun in that? Yes, GM has made an important (and necessary) step in the long-term electrification of the automobile. But it’s hardly alone in that. And it may not be all that exciting, either. In fact, the electrification of the automobile represents the triumph of the left-brain/form follows function/Japanese approach to car building: rational, systematic, measured integration of technology, continuous improvement, and cost-effective (profitable) production. The very qualities that lead to the Asian dominance of the American car market, and cars like the Prius (there never was a Prius concept, it just appeared one day, production-ready).

The glorious fifties and sixties are long gone and dead, despite Detroit’s best efforts to evoke them with retro pony cars and Volt dream-car concepts. And the much-hated Prius represents the force that killed that era. No wonder so much of the scorn being dished out at gm-volt.com is laced with Japanese model names: “Ugh; it looks like a bastard child of a Prius and a Civic.” What the GM faithful were looking for, what Lutz got them excited about, was the equivalent of the 1963 Riviera coupe powered by a nuclear reactor. And they were willing to pony-up. But what they’re seeing now is a forty-grand Cobalt. And falling gas prices. And rising electric rates. Suddenly, the Prius and Insight look… not so ugly after all.

The great Detroit bailout of 2008 will not be debated in terms of economics. Free market considerations will take a back seat to the “consensus” on what’s good for our “national interest.” But Detroit is just one among many industries now nuzzling towards the warm embrace of a federal bailout. So what makes the American auto industry more equal than say, the mortgage sector or the airline industry? Not much, as it turns out.

In fact, mortgage giants Fannie Mae and Freddie Mac are already suckling upon the federal teat. Financial analysts say that taxpayers are facing a $300b bill for that already-underway bailout. Or more. For now. The staggering size and indeterminate endpoint of the terrible twins’ predicament creates the possibility of Motown-scuppering “bailout fatigue.” Meanwhile, the emerging details of the deal are sending Detroit a message: if you want public money, management must change, investors will take a bath and you’ll be placed under federal “conservatorship.”

This not what Detroit wants to hear, never mind experience. Hence the Big 2.8’s relentless “not a bailout” rhetoric. But even the most devout industry backers have to understand the populist appeal of “letting Detroit choke on its own SUVs” rhetoric. America does not love a loser, let alone a litter of them.

And push come to [unexpected fiscal conservativism revival] shove, D.C. will back the financial giants before Detroit. In fact, much of The D2.8’s recent financing came from the very structured investment vehicles that the Fed is propping-up by backing Fannie and Freddie. Every Detroit exec worth his country club membership would prefer $300b in bailout fatigue over a post-F&F credit market.

But yet another hungry mouth looms over the government trough, anxious to secure patriotic assistance in hard times. The airline industry is on course to lose $5.2b this year, and another $4.1b in 2009. Another flagship American enterprise, and the source of much national pride could just need our collective help… again.

And once again, the parallels to Detroit are eerie. A rapid rise in fuel costs that “nobody saw coming,” perennial legacy costs and crippling labor relations bind automakers and airlines in common misery. What’s more, both trumpet their necessity to the American economy while consistently having their lunch eaten by lean, mean competitors.

The airlines are not currently proposing bailout schemes with the “no bad publicity” shamelessness of Detroit. But when automakers come a-begging, the airline industry parallels will (or should) be brought up by los federales. Why? Because the major airlines are the living dead of corporate welfare necromancy past.

From the $15b “great patriotic bailout” post 9/11, to ongoing “reserve air fleet” payments, from protectionist ownership laws, to Reagan’s infamous strike-busting, the feds have done much to assist the airlines. And what do the taxpayers get for the trouble? Giant firms, dead on their feet, slouching towards bankruptcy court. Or, yet another bailout.

The travails of the airline industry and the F&F unraveling are not the only potential roadblocks to Detroit’s campaign on the Potomac. There’s even a chance that lawmakers might hold American automakers to account– not only for its poor business practices– but for its profligacy with pork long since digested.

The New Chrysler of today is hardly a ringing endorsement of the kind of “loans for retooling” bailout being shopped around. It’s hard to draw causal links between the bailout of ’79 and Auburn Hills’ current plight. Too much water has flowed under the bridge for such a sweeping claim. But, Chrysler’s precipitous downfall proved (if nothing else) how fleeting a bailout can be.

Detroit has also handily proven that government handouts given to the industry as a whole are even more wasteful. In 1993, the government created The Project For A New Generation Of Vehicles (PNGV) to help Detroit build 80 mpg sedans for everyone. Eight years and over a billion bucks later, Ford, GM and Chrysler had each built one “working prototype,” capable of 72 mpg or better.

This was the chance for Detroit to invest intelligently in R&D to prepare for a fuel price shock it “never saw coming.” Instead, $1b+ bought Americans three unobtainable diesel-electric hybrid cars. PNGV research helped clean-diesel and fuel-cell development, but where are these cars of the future?

The pressure is on politicians from all sides to protect their nation’s economy. Since Freddie and Fannie have been deemed too big to fail, the others must wait in line. But Detroit is no more deserving of federal loans than anyone else, but presents a poor track record and little hope for the future. When all is said and done, there’s still a chance that DC could just say no.

Selling eight brands’ worth of vehicles under the “Employee Pricing for Everyone” banner does nothing to reassure jaded “I won’t ever buy domestic” car shoppers that GM isn’t Wal-Mart. Even so, GM makes some great– well very good anyway– rolling stock. But a quick bailout from the Feds won’t fix the cash-burning automaker in time for consumers to discover this fact. It will simply prolong The General’s “we’ll muddle through” mess until the next crisis. What GM’s North American ops really need is a full, head-on crash into the wall of bankruptcy, followed by private DIP (debtor-in-possession) financing. Meanwhile, it’s a real Saab story.

News flash! During the last GM fire sale, I bought a 2007 Saab 9-3 2.0T. The 9-3 offers a great combination of comfort, handling, performance and decent fuel economy. Safety? Top pick of the IIHS. In an era of high gas prices, when every automaker scrambles to make small cars “cool,” GM’s got a darn good one.

Only no one knows about it. Instead, The General is busy trying to convince the public that the electric car of the future is on its way. Wake me up when the Volt arrives. Until then, why bother? What IS the point, especially when it comes to Saab?

GM began its Swedish odyssey in 1990 (with 50 percent ownership). The takeover reached fruition in 2000, with complete ownership. GM’s thinking at the time: Saab would provide the company with a Euro entry lux vehicle for the U.S. market. GM would gain sales by expanding the Saab offerings upwards, fending-off rising competition from both the new Japanese and stalwart Euro lux brands.

Wait. Wasn’t Cadillac supposed to be GM’s upmarket brand? Did GM really need Euro-badged vehicles? Perhaps Saab’s takeover was an admission of the damage already done to Cadillac. Or maybe it was reverse badge snobbery from the Powers that Be. No matter how you look at it, GM never figured out what to do with Saab.

Saab launched its volume leader, the 9-3, in 2003. It had a host of problems, mostly electronic. Vehicle testers/raters like Consumer Reports ranked the 9-3 as “problematic,” giving the brand a black eye. No one really expected a Saab to be as reliable as a Toyota; the car’s quirkiness, Swedish design elements and turbocharged engine offered a trade-off. But for a company (GM) as supposedly committed to vehicle quality to build and sell a modern era car that didn’t work well (to put it mildly), well, the damage was done.

In subsequent model years, the problems were mostly resolved. But Saab’s sales never recovered. They declined from 2003’s peak of 48k units to last year’s 30k last year. Sales in ’08 are set to be much, much worse. It’s been widely reported that GM’s lost money on Saab for all of the years it’s been involved.

During this decline, RenCen decided to expand the Saab lineup on the cheap. It looked to leverage its investment in Fuji Heavy by rebadging a Subaru WRX as a Saab 9-2x. No one was fooled; the small Saabaru never sold more than a few hundred units a month, and the experiment quickly ended. GM also decided Saab needed an SUV on the other end. The General repackaged it’s less-than-stellar Chevy Trailblazer as a Saab 9-7x. Same result. Like anyone really thought this vehicle-– built in Ohio– had any linkage to the brand? Where was the true Euro-flair, the ride, the design? Gone.

To make matters worse, GM launched a new tagline for the brand in the fall of 2005 with a massive (for the brand’s size) media campaign: “Born from Jets.” Ok, like anyone in the USA had any clue that Saab started life as an airplane company? Can anyone name a Swedish jet? Did anyone care? Suffice it to say, as mentioned above, the campaign failed miserably.

Strangely, the Saab 9-3 today could be the right car for times. But GM bungled the handling of the brand from the beginning, and then compounded mistakes. It’s too late to breathe fresh life into this dead brand.

Think of other GM brands where this exact pattern has been repeated. GM’s mistakes with the Saab brand reflect the problems GM faces with consumers across its entire vehicle line-up: poor build quality and mechanics (now mostly resolved), lagging technology, stale designs (much improved today), overlapping vehicles (still an ongoing problem) and weak brand equity (getting worse all the time).

I want GM to make it. I’m an American. But why should the Feds give money to a corporation that’s done such a piss-poor job handling its North American business, such as selling one of its only competitive cars? What makes anyone think GM will do better with a bailout? No, GM needs to crash in North America and then rise from the ashes. It’s the only way.

Detroit refuses to contemplate the only possible savior for their broken businesses: bankruptcy. Unless Chrysler, Ford and GM use Chapter 11 protections to kill products, spike brands, close factories, “renegotiate” labor agreements, terminate dealers and generally reinvent themselves, they will continue to die by a thousands cuts. The automakers’ pride– and their belief that “no one buys cars from a bankrupt automaker”– prevents this radical move. So, instead, they’re pursuing a federal bailout. Only they don’t call it that. And therein lays the seeds of their final destruction.

Motown’s federal bailout is set to arrive as $50b worth of low-interest federal loans. The money is a [now-inflated] part of a $25b provision in last year’s Energy Bill, disguised as an attempt to “help” Detroit retool 20-year-old factories for a fuel-efficient future. TTAC and other commentators immediately identified it as a bailout. Simply put, the 20-year caveat restricts the loans to Detroit.

Thanks to the very public Bear Stearns bailout debacle, and the even more prominent Fannie Mae and Freddie Mac “rescue,” and The Big 2.8’s increasingly obvious financial distress, the convenient falsehood of Detroit’s “green” federal assistance has lost currency. Hence Bill Ford, Alan Mulally, Mark Fields, Rick Wagoner, Bob Lutz, Jim Press and the rest of the Motown elite are busy denying that the money is a bailout. As Queen Gertrude remarked about her evil doppelganger in Hamlet’s play-within-a-play, “The lady doth protest too much, methinks.”

There are a couple of simple reasons why Detroit won’t come clean about their need for a taxpayer-sponsored financial infusion. First and foremost, personal power.

As Edward Niedermeyer observed in his Aporkalypse Now editorial, we’ve been here before. The last automaker “bailout” was bestowed up Chrysler. It was, in fact, a federal loan guarantee program (this time it’s actual loans). Uncle Sam demanded an executive shakeup and enough management-related strings to turn the Pentastar Pinocchio back into a marionette. If any of the current players admitted to the feds that the $50b was a bailout, they’d lose their autonomy (i.e. power) and, most probably, their jobs.

If you wanted to be more charitable about Detroit’s craven denial of their position at the head of shit creek sans paddle, you could say that Ford, GM and Chrysler don’t want to destroy their [remaining] customer loyalty. (Never mind potential conquest sales, we’re moving beyond that now.) They recognize that the word “bailout” and “bankruptcy” are virtually interchangeable in the public mind. And for good reason. It’s the truth.

While Motown’s moguls deem this prevarication necessary to shield the buying public from the heretofore under-the-radar realization that one, two or all three Detroit automakers are in real danger of going bye-bye (say sayonara to your vehicle’s resale value), the lie puts The Powers that Be in a ludicrous position. Even as they hustle over to Capitol Hill to secure their piece of the multi-billion dollar public pie they must pretend that everything’s hunky dory.

“Ford CEO says effort to regain profits going well” today’s Detroit News headline blares. Yes, OK, if everything’s going so well, why does Ford and friends need $50b of our money to fund their recovery? Bill Ford trotted-out the new party line: it’s all about the SPEED of bringing green machines into the supposedly free market. If the money is denied, “It would just make everything more difficult, and we may have to go slower, and that’s clearly not what society wants.”

Sure, I blame society. But it’s hardly likely that society will blame society. Despite the fact that bailout bucks are free-flowing at the moment, despite the fact that Michigan is a key state in the upcoming presidential election, despite Detroit’s cunning plan to avoid speaking the word “Voldemort” in public, The Big 2.8 are not going to have as an easy time of this as they think.

The “bailout by any other name would still be so green” ruse may fool willfully ignorant Big 2.8 dependents– execs, union workers, suppliers, dealers, etc.– but the “change Washington” election rhetoric circulating through the rest of the country indicates a growing Pink Floyd mentality: “keep your hands off of my stash.” During these times of pseudo-austerity, telling the people’s representative that $50b in federal funds is “nice, but not REALLY needed” is not going to be a particularly convincing strategy.

This whole boondoggle is just another in a long line of half-assed, boneheaded decisions that reflects Detroit’s ongoing inability to fully face their actual, honest-to-God brand, product and profitability problems and develop a viable strategy– now involving Chapter 11– to overcome them.

There is but one word that truly suits this $50b federal loan guarantee/bailout program: enable. Even with some pertinent strings, the money will simply enable Detroit to continue its addiction to stupidity, sloth, greed and arrogance. And that’s why I believe Detroit should not receive the funds.

Discovery Channel’s “Mythbusters” takes on urban myths that have been circulating through the culture. The show’s producers go to great extremes to prove or disprove the stories, and establish a coherent, no-nonsense scientific basis for their conclusions. Although copyright prevents them from using the term, GM has decided to play Mythbusters. Their new “GM Facts and Fiction” website claims to  rectify analysts and commentators (including this site) who have been trash talking The General and its wonderful products. Unfortunately, their “busting” consists of a lot of hyperbole. Their responses are short on facts, and constantly cherry-pick the stats they deploy in their defense. Let’s take a closer look, to separate fact from fiction.

Myth: GM didn’t anticipate the growing demand for fuel efficient cars

GM says: Early this decade, GM put a major focus on improving its cars and expanding the number of crossover vehicles that it offers. As a result, of the last 13 new GM products introduced in the U.S. 11 have been cars or crossovers. Of the next 19 launches, 18 will be cars or crossovers.

The Truth: “Crossover” vehicles are barely more fuel efficient than the SUVs they’re supposed to be replacing. Of the “last 13 new GM products introduced in the U.S.,” four are variations of the same vehicle (Lambda), two were based on an existing platform (Malibu, Aura), two were large pickups (Silverado/Sierra), and one is a re-bodied captive import with a gas-guzzling V8 (G8). As far as truly “fuel efficient” vehicles go, the only fuel-efficient car GM has on the horizon is the Cruze, which we won’t get here until two years after it debuts in the rest of the world.

Myth: GM quality is not competitive

GM says: GM quality is very competitive, and it continues to improve, according to both our internal measures and independent surveys. For example, in the most recent J.D. Power and Associates Initial Quality Study, Chevy Malibu and Silverado were the highest ranked midsize car and large pickup in the industry. GM’s 5 year/100,000 mile powertrain warranty reflects our confidence in the durability of our vehicles, as does our 12 month/12,000 mile bumper-to-bumper warranty on GM certified used vehicles.

The Truth: Yes, GM’s quality has improved, especially compared to what they produced in the 80s and 90s. However, so has everyone else’s. The General brags about having two cars as “highest ranked” in the Power IQS. That’s out of over eighty models they sell. Also, as we’ve discussed time and time again, the IQS survey only covers the first 90 days of ownership, when very few problems show up. If GM’s quality is so high, why don’t they offer a 10 year/100k warranty like some other manufacturers, instead of cutting off coverage at five years?

Myth: GM can’t make money selling cars

GM says: Well before the recent dive in truck sales, GM was moving to increase the profitability of its cars and crossovers. This starts with stronger products. Recent entries like the Cadillac CTS, Chevy Malibu and Buick Enclave have won praise from the press and public. Customers are willing to pay more for them, and they are selling strongly, even in a very weak market. Chevy’s next generation small car, the Cruze, should further strengthen GM’s presence in that important segment.

The Truth: This claim that “GM was moving to increase the profitability of its cars” should come as a surprise to the UAW. The fact that GM couldn’t make a profit on cars was the justification for union concessions. So was GM lying then, or are they lying now? And since they won’t be introducing the Cruze here for another two years (at least), how does GM know it’ll be profitable?

Myth: GM is looking for a government bailout

GM says: We are not asking for a bailout, or a handout. The program under discussion – part of major energy legislation signed in December 2007 — is intended to lower borrowing costs for carmakers and suppliers who are investing in energy-saving technologies. This would be done through direct loans, which must be repaid in full, with interest.

The Truth: The only “carmakers and suppliers” who will benefit from these loans are The Detroit Three. The legislation is written to specifically exclude the transplants. If this $50b loan isn’t a bailout, if it really is for carmakers to invest in “energy-saving technologies,” they should be available to everyone. The “loans” are at a much lower interest rate than anyone would give these companies. And if they “must be repaid in full,” what penalties are in place for late payment or nonpayment? And if “early this decade, GM put a major focus on improving its cars” because they anticipated “the growing demand for fuel efficient cars,” why do they need all this money at this late date? What happened to all the development they’ve been doing for the past ten years, and how did they pay for that?

Myth: The Volt is vaporware

GM says: While we can’t comment on the efforts of others, we can assure you, the Volt is for real. On June 3, GM announced that production funding for the Volt had been approved, and that GM’s Detroit Hamtramck plant has been selected as the assembly plant, pending government approvals. Meanwhile, development of both the car and its lithium-ion batteries continues apace. For the latest information, please see our Volt website.

The Truth: OK, they’ve announced the the plug-in electric – gas hybrid Chevy Volt is approved for production. They’ve named a plant that will produce it. They’re developing batteries. So when do we see a road-worthy version of the powerplant and the batteries? Oh, that’s right… they’ve just now decided who’ll produce those batteries for them so they don’t have any to install. And they’ve leaked photos of the headlights of what the “production” version. So where’s the rest of the car? And if they have one, why are they using the concept in all of their commercials? Define vaporware.

Myth: GM still doesn’t make cars that people want to buy

GM says: In 2007, the Saturn Aura and Chevy Silverado won North American Car and Truck of the year. In 2008, the Chevy Malibu was named North American Car of the Year, The Cadillac CTS was Motor Trend’s 2008 Car of the Year. Customers have responded just as enthusiastically as the critics. Despite a very tough market, GM cars and crossovers have enjoyed significant sales increases so far this year.

The Truth: COTY awards have no relevance to sales (e.g. Saturn Aura). GM’s “debunking” lists several cars, bragging about their sales increases this year. However no fewer than two of every ten Vibes and Auras built the first half of this year went to fleets. With the Cobalt and Malibu, it was more like three of every ten. And the G6? Almost half. The hard fact is that GM’s sales for the first seven months of this year were down 26.1 percent from last year and their market share dropped 3.6 percent over the same time, regardless of how well a few individual models sold.

Myth: GM has too many brands

GM says: GM has grouped its eight U.S. brands into four retail channels: Chevrolet, Buick/Pontiac/GMC, Saturn and Cadillac/Saab/Hummer. This allows GM to offer the broad range of choices that customers want, while streamlining product development and back-office operations. GM has announced a strategic review of the Hummer brand, which will study options ranging from revamping the product portfolio to selling the brand. GM is also using its global operations to develop distinctive new products for its U.S. brands. Fact is, to continue growth, many carmakers have entered new segments or added new brands as the market has grown and fragmented. The number of brands is not the key, but rather GM’s ability to provide strong products and efficient marketing support for them.

The Truth: GM has more brands in the U.S. than Toyota, Honda and Nissan combined. All they’ve done by creating these “retail channels” is enforce the point that they have about twice as many brands as they need. Their “streamlined” development and “efficient marketing” of their “strong products” seems to consist of degrading brands by giving everyone versions of the same car or bringing cars from overseas. Other carmakers may be adding brands, but none of them approach GM’s brand complexity, lack of coherent ideentity and model overlap.

Myth: GM opposes higher fuel economy standards

GM says: GM fully supports new national corporate average fuel economy (CAFE) standards of 35 mpg by 2020, a dramatic increase of 40% over previous standards. Along with other interested parties, we will work with the government throughout the rulemaking process on details of the new regulation. GM continues to believe that a single set of tough national fuel economy standards is the best way to focus the industry’s efforts and to reduce fuel consumption and CO2 emissions nationwide.

The Truth: When the new CAFE standards were coming up for vote, GM and the other automakers lobbied Capitol Hill not to pass the new standards. Once again, they protested that the new standards would mean the end of the auto industry as we know it. Now, suddenly, when they see a chance of getting a multi-billion dollar handout for “investing in energy-saving technologies,” they’re the perfect corporate citizen, standing behind the new standards. If they truly supported the standards, they wouldn’t be trying to influence the “rulemaking process on details of the new regulation.”

There are several “myths” that GM forgot to bust. The “myth” that they are the victims of an unforeseen rise in gas prices, and related shift in consumer tastes. The myth that their current business model is sustainable– but for a few hit products. The myth that the Volt could possibly compensate for lost pickup truck and SUV profits within the next five years. And the myth that federal money will not disappear down a rat hole. Then again, I guess that kind of mythbusting is best left to someone who’s willing to tell The Truth About Cars.

[click to gmfactsandfiction.com here]

Ten weeks before the Tet Offensive fatally undermined American support for the Vietnam War, General William Westmoreland embarked on a publicity tour to “sell” the ongoing military campaign. In a televised news conference, Westmoreland famously declared that he could see “the light at the end of the tunnel.” In the same sense, GM’s executives continue to express their faith in the automaker’s “turnaround.” This much is to be expected– especially when The General is lobbying for tens of billions of dollars in public funds. But the mainstream automotive media’s complicity is unconscionable.

For decades, the American automotive press has suckled on General Motors’ bounteous teats. Last year alone, before GM’s cash burn mandated some serious back-of the-sofa scrounging, the automaker spent over $2b on advertising. That kind of money buys you a lot of friends. In fact, The General’s formerly free-flowing ad bucks have supported a lifestyle to which automotive journalists became accustomed.

So it’s not surprising to see these jobbing journos share GM execs’ reluctance to face the grim fact that the artist formerly known as the world’s largest automaker is terminally ill. The scribes and suits adhere to the same delusional notion that all new cars are wonderful, but Detroit’s latest are the most wonderful of all. If not now, then soon. One day. Some day.

Of course, the 50 and 60-something white men who have watched The General’s descent from dominance to disaster share a cultural heritage with the men (and a few women) sailing this increasingly strange ship of fools onto the shoals of bankruptcy. This doesn’t excuse these journalists from their duty to serve the public trust. Clinging to the profound, unspoken belief that “what’s good for General Motors is good for America” is a disservice to the consumer and, ultimately, ironically, General Motors.

Mark my words: in these internet-savvy times, the mainstream automotive press’ failure to fully disclose the denial, hypocrisy and greed surrounding the planned GM et al. bailout– cravenly camouflaged as a green initiative– will be the final nail in both lovers’ coffins. To wit, this from Automotive News:

“General Motors’ employee pricing program helped the automaker sell more vehicles in August than in any month of 2008. But sales still were 20.3 percent below the level of August 2007. GM sold 307,285 cars and light trucks in August, up 31.3 percent from July. Trucks and SUVs delivered a big surprise for GM. Although still down from August 2007, GM’s pickups and big SUVs turned in their best sales performances of the year. In August, GM delivered more than 80,000 full-sized Chevy Silverado and GMC Sierra pickups.”

Silverado sales? Off 24.8 percent from last August. Sierra? Down 17.1 percent. Incentives? Automotive News mentions the profit-killers, but Edmunds estimates them, at $3965 per GM vehicle. And guess which vehicles have the most cash on the hood (‘cause GM ain’t sayin’ nothin’)?

As one of those 50-something white guys (well, 49, but who’s counting), Automotive News’ article is a frightening reminder of the “body count” battle reports from Vietnam, which invariably painted any and all conflicts as a [relative] U.S. rout. As we all know, the military operation may have been a success, but the South Vietnamese government (and many of our supporters in the region) died. And what’s that bit about history repeating itself?

“‘We’re not indicating or pretending in any way that the truck market is snapping back’ [vice president of GM North America sales, service and marketing Mark] LaNeve said, but the numbers indicate that pickup sales have perhaps bottomed out. LaNeve also said that he thinks overall industry sales may have hit bottom in June or July.

‘I think we saw the bottom and are going to start scratching our way up to numbers that are improving.'”

“Up to numbers that are improving?” On what? When? By how much? Is GM really a publicly-traded company? The automaker’s stunning lack of accountability continues apace. For now. One way or another, there will be a David Halberstram-predicted reckoning.

At the very least, our elected representatives will demand an explanation for the situation that has led GM to call on federal tax money for its survival. Given the prospect of publicly acknowledging their epic mismanagement and personal greed, I wouldn’t be surprised if Rick Wagoner and his mob drift away on the golden parachutes before the show starts. Nor would I be surprised if they don’t; their hubris seems to know no bounds.

Either way, like General Westmoreland, Wagoner, Lutz, Henderson and their obscenely compensated brethren will eventually claim that their stunning defeat was actually a victory in disguise: the unavoidable economic “catharsis” American industry needed. Even worse, many media members will affirm this absurd notion. Rest assured that I, and the new legions of uncorrupted commentators, will not be amongst them.

Discuss Detroit's bailout plans with one of its well-informed backers, and they will inevitably bring up the Chrysler bailout of 1979. Chrysler's near immediate return to profitability after receiving low-interest government loans is considered proof that U.S. government intervention in the American auto industry can work. After all, Chrysler paid back all its federal loans seven years early. But this comparison doesn't hold water. If anything, the bailout of '79 points out the many reasons for opposing the next big Detroit giveaway.

Bailout backers claim that low-interest federal loans helped Chrysler turn its business around. But there are loans and there are loans. Detroit's lobbyists [correctly] call this year's Department of Energy funding “an incentive to help the country meet its energy goals.” Back in 1979, Uncle Sam's money was universally and unashamedly acknowledged as a bailout.

Bottom line: the forthcoming $50b in low-interest government loans will arrive with far fewer and less powerful strings attached than the $1.5b lent to ChryCo back in the day.

When Chrysler came begging to congress in '79, it was in the midst of massive restructuring. The automaker had already sold or shuttered huge portions of its business, laid off workers and extracted then-historic concessions from the UAW. Even so, Congress was in no mood to give without asking. Our legislators placed significant conditions on the eventual bailout package.

To qualify for loans, Chrysler was forced to raise another $1.5b in private capital, present a convincing plan to return to profitability, and accept Treasury oversight of its implementation. This included the ability for the treasury to shuffle Chrysler's leadership in order to provide "a sound managerial base."

Needless to say, the “un-bailout” of 2008 is unlikely to include any such conditions.

The first $25b which has been authorized– but not yet appropriated– will be used to retool plants to build more fuel-efficient cars. But Detroit is transitioning to increased fuel-efficiency anyway, thanks to both market demand and beefed-up fuel economy regulations. And though final rules for the loan program have not yet been drafted, Washington doesn't appear to be asking for any more than business as usual from Detroit.

Considering the risk to taxpayers, Detroit needs to prove there is at least a chance it will be able to pay these loans back.

The key to Chrysler's post-bailout success was a well-grounded turnaround plan rooted in solid products. The K-Car and minivans were the right products at the right time. The government could invest in Chrysler with some confidence that it would return to profitability. Especially with Treasury officials closely monitoring the turnaround. Not to mention the salutary effects of a little job insecurity among Chrysler's execs.

Today, the federal government has no such grounds for optimism in Detroit's short-term future. Chrysler's new-product pipeline is a wasteland as far as the eye can see, with only the Hornet compact standing out from the Nissan re-badges and mild re-skins.

GM is banking on the Volt EREV to turn its fortunes around, but without inexpensive, fuel-efficient options in the meantime, the General won't survive to see the [initially] low-volume Volt turn a profit. Nothing minivan-like looms on GM's horizon to justify a huge, public money investment.

Ford alone shows signs of the kind of across-the-board revamping demanded by the dire times, bringing proven, paid-for and popular European models stateside over the next several years.

But congress won't be in a position to bail out specific automakers based on their turnaround plans; The Big 2.8 are approaching congress as a single block. What's more, they're framing the bailout in terms of environmentalism and nationalism (i.e. an entire industry in decline). This plan seems specifically designed to shield individual automakers from scrutiny and accountability whilst manufacturing a atmosphere of crisis.

Though rationales for the bailout are expressed in terms of decreasing America's dependence on foreign oil, this is a red herring. As Farago points out, consumer tax breaks make far more sense as a means of approaching this problem. And contrary to the all-for-one talking points, the American auto manufacturing segment is not in ruins. Transplant factories still build high-quality, profitable products across the land.

This bailout then is a political decision, motivated by political goals and wreathed in nationalist rhetoric. It seeks to collectively rescue several failing firms in a rapidly-changing industrial landscape.

As such, its closest comparison is to the British Leyland debacle of the 1970s. Then, an emotional attachment to failing British car brands cost UK taxpayers billions before the whole mess fell apart in a pile of rust and faulty electrics.

Without principled political resolve from Washington, Detroit faces a similar fate. Even with appropriate terms and conditions, Chrysler's return to the brink of bankruptcy– via a series of bone-headed product decisions and executive greed– demonstrates conclusively that, ultimately, no amount of money can save an automaker from its own incompetence.

Of all the failures that have led GM to the brink of bankruptcy, the automaker's failure of imagination is the most profound. Never mind the plug-in electric – gas hybrid Chevy Volt. How about conjuring a vision of a company with two or three tightly-focused brands that each produce a handful of distinctive, class-leading and profitable vehicles, that markets them with relentless focus, and stands behind them with a national network of honest, efficient and courteous salesmen and mechanics? Whatever else Car Czar Bob Lutz can say about GM's product strategy, that ain't it. Which begs the question: what does The General want to do with U.S. taxpayer’s money?

The proposed cure is symptomatic of the disease. Like General Motors’ endless, target-less turnaround, the automaker’s plans for low-interest federal loans are utterly vague. GM won’t disclose exactly how much federal money it wants, or what they want to do with it. “We know the legislature authorized up to $25 billion," GM spokesman Greg Martin told the St. Louis Post-Dispatch. "But the amount that could really make a difference likely is much higher.”

Of course, that all depends on who gets how much and what Martin means by the phrase “make a difference.”

If GM wants a share of the proposed $25b in federal loan guarantees to subsidize production of the company’s “game-changing” plug-in Volt, six to ten billion ought to do it. Free marketeers may wonder why American taxpayers should subsidize the producer (GM) rather than the consumer (a buyer of ANY vehicle that meets a certain mpg rating), but hey, Michigan is a "battleground state." American votes jobs are on the line. 

Did I say $25b? In the run-up to and (especially) including the Democratic and Republican national conventions, Detroit has been lobbying pols to increase the federal tax cash to $50b. Michigan Senator Debby Stabenow hinted that even more federal funds might be needed (a lot now, a lot later). This desperate doubling down stripped away any pretense that the supposedly eco-friendly federal loans will pay for Uncle Sam's green dreams. It’s bailout bucks, pure and simple.

Well, not so pure and not so simple.

The $25b loan program is part of last year’s Energy Bill. Your elected representatives mandated that the funds be used to develop and build fuel-efficient vehicles. To channel these loans to The Big 2.8, applicants (supplicants?) must use the low-interest (4.5 percent) loans to re-tool U.S.-based production facilities to manufacture gas-misers. The bill also stipulates that The Department of Energy– the agency charged with steering boatloads of Benjamins to Motown– must give “priority” to assembly plants that are at least 20 years old. (Toyota and Nissan have one qualifying plant each, and they don’t want/need the money).

Of course, federal programs are almost infinitely… mutable. Even though the Energy Bill’s wording seems clear enough, Detroit’s spinmeisters are already pointing out that the final rules are yet to be written. (The final definition of applicable vehicle types should be a fun read.) Taxpayer grumbles about federal favoritism aside, dumping more money into this part of Uncle Sam's trough will be easy enough.

Assuming (as we must) that significant federal funds will flow into GM’s new product development, it should be remembered that the tax money will replace GM cash already allocated for that purpose. GM can then use the [former] development money for housekeeping: union buyouts, unconscionable executive compensation, Delphi's pensions, etc.

So, what’s the bet that the $25b to $50b (to whatever) loans won’t do any damn good? And by “good” I don’t mean that GM will end-up with electric Volts or gas-miserly Cruzes. I mean what are the chances that our tax money will provide anything more than a temporary, ineffectual band aid for GM’s arterial spray of red ink? 

Even if you gave GM a blank check and said “Here, whatever it takes. Build something that will kick the imports (the other guys’ imports, not yours) ass,” they couldn’t do it. Or do it often enough, what with eight brands selling over 40 different(ish) products.

Heads up feds: tight money has not been– nor is it now– the bane of GM’s existence. The General’s goose was cooked by managerial and union greed, sloth, arrogance and, above all, bureaucratic bungling. As anyone who’s ever worked for a company with its head up its ass will tell you, giving copious amounts of fresh capital to execs in charge of a dysfunctional corporate culture to “fix” their business is like trying to extinguish a log fire with gasoline.

If we used our $25b to buy out every GM senior manager and union worker currently employed by the company, and then let the new guys get on with it (with performance-related pay), GM might dodge the bankruptcy bullet. Or, alternatively, embrace C11 as the best way to create a sustainable American automaking endeavor. In fact, the new team would do whatever they'd have to do to survive. And if they didn’t, they wouldn’t. Imagine that.

Today marks my final day as Managing Editor of The Truth About Cars. Never in my wildest dreams would I have imagined that when I forwarded a snarky letter I'd written to Car and Driver complaining about their lack of editorial direction to some guy at a web site I'd just discovered, it would lead to this. It's been a wild roller coaster of a ride, occasionally aggravating, usually entertaining and always educational –  but never boring. I'm going to miss it. A lot.

The decision to leave TTAC didn't come easily. In fact it took an offer of considerably more money and some pretty sweet benefits to pull me away. (OK, so I'm a sellout.) I won't be writing a lot or working in an automotive-related field, so I'll have some adjustments to make. By far, the biggest will be going through Farago withdrawal. 

I can't say enough good things about Robert Farago. Yeah, he can be stubborn, opinionated, hard to get along with and a real pain in the ass at times, but he's also one of the best persons I've ever had the honor of working with. You'll never find anyone as dedicated to anything as he is to this site. Nothing gets published that he hasn't read and approved (and usually tweaked at least a little). And yes, he really does read every single comment. Robert Farago is TTAC.

Robert liked the snotty letter I sent C/D and asked me to write something for the site. When I finally realized he was serious, I submitted my first article. I didn't think it was very good but he saw something in it, worked the Farago magic on it, published it, then asked for more. I was hooked and he knew it.

As the site grew, he approached me about being the part-time Managing Editor. I thought he'd lost his mind, but I agreed to give it a try. Then when the State of Georgia did me a favor freed me to pursue other opportunities by abolishing my position, he offered me the chance to do it on a full-time basis. My momma mighta raised an ugly child, but she didn't raise no stupid one. I jumped at the chance.

I think almost every pistonhead has a secret fantasy of being an automotive writer.  I've been lucky enough to live that fantasy. And because of Robert and TTAC, I've had the chance to rub elbows with journalistic giants like Stephan Wilkinson and Brock Yates. I've also worked with some of the best writers on the web.  Guys (and gal) I'm going to miss all of you. It's been a genuine pleasure. And thank you, Robert for believing in me and giving me the chance of a lifetime.

To our readers all around the world, a big word of thanks. This site wouldn't be what it is today without you. I can't count the number of times Robert and I have gotten emails expressing wonder at the quality of comments and the depth of discussion found here. And they were spot-on. You won't find another site in the blogosphere with the brilliant readers and civil discourse you'll find here.

I know TTAC will go on without me and do just fine. Justin will keep things flowing smoothly and the site will continue to grow. Hopefully some of the changes Robert's visualizing for the future will come to fruition. If so, the TTAC experience will only get better for everyone. 

Yes, I'm going to miss all of this. But don't think you're getting rid of me that easily! I'll still be lurking in the shadows, making pithy comments occasionally and calling bullshit when necessary. I'll also continue doing the "By the Numbers" and inventory/sales per dealer editorials every month and working with the Ten Worst and Ten Best Auto awards. Basically, if it's a job for a spreadsheet monkey or involves a poll, I'll most likely be involved somehow.  

You'll also see a review from me from time to time, so don't be surprised when you see my byline pop up.  I'll no longer be here on a daily basis but I'll still be around. TTAC's like a drug — easy to get hooked on and tough to walk away from, and I'll still have to have my regular fix. So until I see you again, take care, drive smart and keep on tellin' the truth!

The following Q&A was published on Chrysler's Firehouse media blog. TTAC republishes it here in its entirety, without editing, to provide insight into Chrysler's call on the public purse, and the ailing automaker's plans for the future. Such as they are… "The campaign season is in full swing, with the Democrats holding their convention in Denver this week, and the Republicans meeting in Minneapolis-St. Paul next week. John Bozzella, Vice President of External Affairs and Public Policy, will be at both conventions, hoping to win over Congressional support for funding the auto industry’s technology transformation to build a new fleet of fuel-efficient vehicles. We talked to Bozzella from Democratic Convention in Denver about the effort.

Q – Why are you in Denver this week and what are you hoping to accomplish?

Bozzella – We’re in Denver for a number of reasons, most importantly, to work on funding this important technology partnership between the auto industry and government. This partnership will drive forward advanced and alternative propulsion systems at a time when it’s particularly important to deliver improved fuel economy in our vehicles, while reducing greenhouse gases. We have an opportunity this week with the Democrats in Denver, and we’ll be going to Minneapolis next week to meet with Republicans and make our case. We hope to build some momentum to get this technology partnership funded before next year.

Q – Why would something like that be important to both the country and consumers?

Bozzella – The auto industry is an important contributor to the U.S. economy. Not just regionally, but nationally, through dealerships, parts suppliers, etcetera. Millions of jobs depend on a healthy U.S. auto industry.

At the end of the day, the ability to develop and produce this technology ourselves, and here in the U.S., will produce value across the economy. A home grown solution for batteries and other advanced technologies will impact far more than automotive manufacturers. It could also provide a much needed financial shot in the arm to the millions of others who are involved in the development and marketing of the technologies. That means jobs and a boost to our economy.

Also, let’s go back to last year. Chrysler supported a broad energy bill last year that included significant increases in fuel economy standards over the next 10 years. We were pleased to support that initiative. The bill also included a partnership to transform technology and to support the industry during its retooling to produce more fuel-efficient vehicles. We supported the whole bill which includes both of those provisions. If we go back to last year when that bill was signed, it was recognized by us and by the Administration that that was an important initiative and a critical partnership.

This partnership provides loan support to allow us to continue to make these multi-billion dollar investments, to continue to transform Chrysler and the industry at a time when the capital isn’t available to do so. That’s why it’s important to Chrysler because it gives us the access to capital to drive ENVI, to drive our hybrid strategy and to continue to make progress across the fleet on fuel economy. It’s important to the country because we can’t make progress on energy security and reducing greenhouse gases without a significant contribution from the auto industry.

I would add that there’s also a national security component to this. What would happen if the United States completely gives up its manufacturing sector? What would happen? We have as a nation, especially in the last century, called on the auto manufacturers to be the arsenal of democracy and to really provide huge military support during times of crises. That’s another element to this, to retain this manufacturing capacity, and we’re going to develop an advanced manufacturing capacity at the same time.

Q – Some call this a bailout. Is that right?

Bozzella – What we’re talking about is this is a partnership for technology transformation. By partnership, what the government is doing is providing loan support. This is not a blank check. This is not a Freddie Mac and Fannie Mae exercise. This is a partnership and providing loan support at a critical time to improve the country’s fuel economy. The notion that this would be considered anything other than a partnership seems beside the point to me. Last year, when Congress enacted this bill and the President signed it, nobody called it a bailout then. Back in December of 2007, I never once heard that word. Never once heard it. If it wasn’t bailout then, how is it a bailout now?

We have set a course to dramatically increase fuel economy in this country through increases in CAFE standards. What we have said in response to that is we are all in – we are going to deliver it, we are going to do it, and we are going to move forward. What Congress also said is let’s form a partnership to ensure that we in the United States have the capacity to have this technology leadership here. That’s what we talked about last year, and that is what we’re trying to finish this year. We’re finishing that business, and it is nothing more or nothing less than completing the lap on what was established last year.

Q – It sounds like you’re getting some political support this.

Bozzella – We’re seeing momentum to get this done. The support for this was bipartisan when it was enacted last year and remains bipartisan today. And also, we see support in both Houses. We are hopeful that we can complete the funding of the program this year.

Q – You’re also seeing some support in the press for this. One example is a blog by CNBC reporter Phil LeBeau. You can access LeBeau's blog "The Big 3 DO Need Federal Help" by clicking this link)

Bozzella – I think he framed it in a very appropriate way. What he’s essentially saying is, let’s not call this a bailout, let’s call this what it is, which is a significant and robust partnership to make sure we make progress as a nation. I can’t think of a more appropriate role for government – in contrast to bailing out the industry, provide support for the industry as it transforms itself. That’s the point we’re making. You can make a fairly strong contrast between a blank check-type bailout, which we’ve seen in recent months in some sectors of the economy, and a program that helps the industry transform itself."