Plenty of industry watchers predicted that Chrysler wouldn’t restart production after the company extended its Christmas shutdown by two weeks, to January 19. As that date approaches, ChryCo’s CEO has let it be known that the ailing American automaker may not make autos again until… later. Bob Nardelli told reporters at the North American International Auto Show today that the company has a responsibility “to make sure we’re not jamming dealers” to buy cars. That’s not how Bill Rosado, owner of a Chrysler-Dodge-Jeep dealership in Milford, Pa., sees it. Bill told The Wall Street Journal that he’s actively resisting the company’s requests to add more stock to his already-crowded lot. “We’re not ordering any cars in spite of the pressure they give us. We are going to sit tight with what we have,” Mr. Rosado said. “We don’t see any peak coming up where all of a sudden Chryslers are going to be desired.” True dat.
Category: Chapter 11
Time to update “the future of car?” Yup. GM’s Car Czar has admitted that Pontiac has a new motto: “Pontiac is toast.” Automotive News [sub] reports that Bob Lutz has admitted that GM is trimming Pontiac’s line-up to five vehicles– if you count the Solstice hardtop as a separate model. Which we don’t. That leaves Pontiac with four vehicles: the doomed Australian-sourced G8, the G5, the Toyota co-production Vibe and the dead-in-the-water “we don’t need no stinkin’ trunk space” Solstice. Maximum Bob’s admission that Pontiac is being strategically reviewed to death comes hard on the heels of GM NA Prez Troy Clarke’s assertion that GM will “follow through with plans to shrink to four core brands.” That would be Buick, Chevrolet, Cadillac and GMC; ditching HUMMER, Saab, Pontiac and… Saturn. “‘We’ve entered into a very, very open and candid dialogue with our Saturn retailers,” Clarke said. Saturn, launched 19 years ago, has been successful in terms of brand attributes, he said. But ‘it just hasn’t been a good business for us… We need some breakthrough options here. We can’t continue brands that have no prospect of earning their way.'” It took them how long to figure this out? And, by the way, whose fault is that?
Bloomberg has had a look at the U.S. new car market and it seems that American consumers are busy joining their Japanese counterparts in a new trend: hanging onto their cars until they die. “Used vehicles being traded in at dealerships averaged 6.3 years of age after the Wall Street meltdown in late 2008, about 6 months older than before the crisis, according to forecaster J.D. Power & Associates in Troy, Michigan.” And you know which way this one’s going. TTAC’s Best and Brightest have been connecting those dots for some time. Still, it’s a bit startling to see the MSM do the same. “If the industry sells fewer than 12 million vehicles this year, the government will have to write more checks” media-friendly auto analyst John Casesa told Bloomies. “Otherwise GM, Ford and Chrysler will be gone, bankrupt.” TARP this. “’Even with a drop in the price of gasoline, families aren’t changing their decision to keep running the old car’ said the Conference Board’s Goldstein. Nor will steps such as an easing of credit standards at lender GMAC be enough on their own to revive showroom traffic, said Tom Libby, a J.D. Power analyst. ‘Just because GMAC has become a bit more lenient, it’s not like a light switch,’ Libby said. ‘It will take economic stability to reignite car buying, it will take some calm. That’s what a shopper needs for the confidence to spend $26,000.'”
The Detroit News and The Wall Street Journal are reporting that Motown automakers’ pensions funds are no longer fully-funded. “The outgoing director of the U.S. Pension Benefit Guaranty Corp. warned Friday that Detroit’s Big Three automakers face a $41 billion pension shortfall. “We’re not trying to tell people that the pension house is on fire,” quoth E.F. Millard in the DetN. “The point is that in many ways this has a similar look to other situations, such as a Bethlehem Steel.” Not surprisingly, the WSJ has an even more alarming sound bite. “An awful lot of people seem to think these plans are well funded or overfunded. Each of these plans is significantly underfunded [and] in three years I don’t want people coming back and saying, ‘How come the PBGC never told us that?'” Let’s drill down, then.
• December sales might have been even weaker if not for a hefty slug of fleet deliveries at GM. GM’s overall sales were down 31%, which topped our forecast decline of 34% to 36%. But within that total, GM’s retail sales were down a sharp 41%, while fleet deliveries were about flat year-to-year. If GM’s fleet sales were down roughly in line with the industry average (mid-30% range) the SAAR [Seasonally Adjusted Annual Rate] would have been closer to 10.0 million, or perhaps 9.9 million, we estimate.
• The outlook for sales in 1Q09 is no brighter than the 2008 exit rate. Both Ford and GM suggested that sales could run in the 10 to 11 million range in the first part of 2009, with somewhat of a (stimulus-driven) recovery in the back half of the year (has a familiar ring, doesn’t it?).
• GM slashed its production plans throughout the rest of the world, with Europe now set to fall 44%, Latin America 34%,and Asia pacific 27%, versus 1Q08.
When I read Autoblog’s post on the one-month delay to production of the new Camaro, I decided not to blog it. AB said a notice had been sent to Bow Tie dealers pinning the delay on their desire to assure quality control. I manually lowered my arched eyebrow and got on with the other business of the day. But now, scanning Automotive News [AN, sub], it seems that the delay isn’t quite as straight forward as I thought it wasn’t. “It’s due to a variety of factors that I’m not going to get into, but it’s nothing to be concerned about,” [GM spinmeister Terrance “I’m not a Dickens character”] Rhadigan said. “We’re still going to build every one we can, and we’re excited to get them out.” In a strange turn of events, AN fingers a previous flagged supplier “issue”– despite GM’s denial. “Automotive News reported in late December that GM is suing Cadence Innovation, a supplier of interior parts that is liquidating, to get machines and parts needed to make the Camaro. GM provided equipment to the supplier to make the Camaro parts, a standard industry practice. GM has said if it didn’t get the production equipment back by Jan. 12, the start of Camaro production would be delayed. Rhadigan said the postponement isn’t connected to the Cadence dispute.” So why mention it? Is AN beginning to lose patience with GM?
GM has placed HUMMER and Saab under “strategic review.” Which is a fancy way of saying if they could afford to kill them, they would. But thanks to 50 states’ worth of dealer-lovin’ franchise laws and a pile of cash that looks a lot like an asteroid impact crater, they can’t. So they’d like to sell them. But thanks to a global auto industry meltdown– worldwide production is well below 50 percent of capacity– they can’t. So… nothing. Well, your tax dollars hard at work. And soon, Sweden’s. Meanwhile, Automotive News [AN, sub] is confirming common sense, quoting sources familiar with people who know someone who may or may not be involved with the sale but since there isn’t going to be one do we really need to Deep Throat this thing oh what the Hell. To their credit, AN got the HUMMER-Saab-Cadillac channel’s spinmeister to reveal the corporation’s plans for their zombies, now that U.S. taxpayers have a direct stake in their fortunes. Just kidding. “Joanne Krell, a spokeswoman for GM’s Hummer-Saab-Cadillac sales channel, declined to discuss efforts to sell Saab. ‘We are not commenting on the details of the strategic review,’ she said. ‘As soon as we have some details to report, we will.'” As for Ford’s Volvo, everyone and their mother told The Blue Oval Boyz to sell the brand even before the crash of ’07. When Alan Mulally took the reins from Billy Ford, the ex-Boeing exec said no ‘friggin’ way. By the time he admitted to yes way, he couldn’t even get ten-foot poll marks on the brand [see: above]. It’s got to the point where Volvo’s grounded their press fleet. HUMMER, Saab, Volvo, Buick, Saturn, Pontiac, Mercury, Lincoln, GMC– can’t live with ’em, can’t live with ’em.
I’ve been watching the Hispanic-flavored “Operation Repo” series on truTV. All I can say is, man, obesity sucks. And if you need proof that carmakers have been selling too much car to too little brain, here it is. (Sweet G37 BTW.) For months, I’ve been telling my MSM contacts that repos are so bad that the collection agencies can’t keep up. In some cases, banks are not calling the repo man– to avoid the cost of recycling the cars and taking the hit to their bottom line. In other words, the headline figure above– representing a mere 12 percent rise of repos over 2007’s stat– could well be the tip of the iceberg. Tom Webb disagrees. Speaking with Automotive News [sub], the economist for auction giant Manheim says the worst is over. “[Repos] will certainly be up in first half of this year, and with the labor market deteriorating so substantially, it might be up quite a bit and might offset the decline I expect in the second half of the year. We won’t have a 12 percent increase, but I would expect something in terms of less than a 5 percent increase.” So “only” 1,753,500 repos for ’09, then. Even if that’s true, with new vehicles flooding the market, and used vehicles flooding the market, and repo vehicles flooding the market, prices are headed down. And if prices are headed down, residuals are in the crapper. And if everyone’s backwards on their existing loans, they’re not going to trade in for a new vehicle. You see where this is going? Nowhere.
To: [Delphi] Kokomo Site Employees
From: Mike Moran, Facility Manager, Kokomo Operations
Subject: Modification of Housekeeping Services to Improve Kokomo Site
Competitiveness
Modification of Housekeeping Services to Improve Kokomo Site Competitiveness
January 8, 2009
After detailed efforts to analyze and confront the housekeeping costs at the
Kokomo site, local management and the UAW have jointly established a plan to
significantly improve the site’s competitive position in the area of
custodial service costs. The resulting plan establishes a smaller group of
housekeeping personnel focused on core activities. Cost savings will be
immediate and will be achieved through productivity improvements and
reduction in the housekeeping work load.
The following elements are key components of the operating plan that will
affect all employees as soon as Monday, January 12:
* Consistent with the closure of Plant 9, Plant 10 and ITC, and in line with
the site population, several restrooms will be closed. Notices will be
placed on the doors of the restrooms that will be closed and the locations
for alternate options will be posted
GM CEO Rick Wagoner is out and about today, peddling his company’s ability to be all things to all people save, perhaps, enough customers to avoid bankruptcy, bailouts and brickbats. The AP reports that Red Ink Rick reckons retirees are golden. “General Motors Corp. Chief Executive Rick Wagoner said Thursday the Detroit automaker can survive long-term without cutting benefits to retired workers. Wagoner made the remarks on NBC’s Today Show, where he was joined by United Auto Workers President Ron Gettelfinger. The two made the appearance from Detroit ahead of their renewed labor negotiations scheduled to begin next week.” Nothing like a good long suckle on the taxpayer tit to bring out a little media-pleasing solidarity. I wonder how Ron’s base feels about that one. Prety good if they’re retired, and think Uncle Sugar will cotinue to fuel the gravy train for the next twenty years or so. Perish the thought. Now, about those congressionally mandated concessions…
There’s an eerie thread of optimism weaving through a number of post-bailout, post-December bloodbath stories lately. Sure, hope dies last and all that, but as Studs Terkel put it, “hope has never trickled down, it has always sprung up.” And most of this fresh-faced optimism seems to have trickled down directly from GM PR. Take the headline “‘Happy Days’ Return For Domestic Car Dealers” over at Dealersedge.com, for example. If the use of scare quotes in the headline isn’t enough to set your PR-friendly hackery alarm ringing, well, that’s why we’re here. The entire piece is based on quotes from employees and owners of three dealerships, two in New Hampshire, one in Michigan. These ecstatic, old-timey song-referencing folks spout anecdotal evidence of a new influx of floor traffic, offering no dissent from the opinion that “happy days” are indeed here again. And why wouldn’t they say that zero percent terms on Trailblazers and Saabs have Americans flooding the showrooms?
A TTAC commentator who wishes to remain anonymous raises a good point about Chrysler’s sales: “imagine Chrysler’s sales last month if ex-employees didn’t ‘buy’ their cars with Chrysler’s money. People who took the buyouts all got a free car as well. You know how people will ask… would you take a Chrysler car for free? (well, you still gotta pay the tax since Uncle Sam hates freebies). The answer is a resounding Yes! Because you can still flip the car for another brand and come out ahead after all the taxes. Anyway, approximately 5,000 of those Chrysler sales last month were paid for with Chrysler’s own money. Most were Wranglers, Grand Cherokees, and LX cars since those vehicles let you extract the most value out of your ‘free’ car.”
The post-apocalyptic analysis of December’s sales results continues, as pundits and producers attempt to make sense of the crater that’s replaced the U.S. new car market. Obviously, the situation will have the greatest impact on the Chrysler and GM. The domestic automakers have just finished their first suckle on Uncle Sugar’s taxpayer teat, with GM auguring-in for its second go mid-month. And both companies face a congressional grilling when they return for more money in March. So, what to do? What to do? For answers to that question, for the manufacturers’ spin, we turn to their unofficial mouthpiece, The Detroit News. “Auto sales skid: Recovery rests on stimulus” starts with good news! “After barely making it through the worst year for auto sales since 1992, Detroit’s Big Three expect consumer demand to remain very weak in the first half of 2009 but begin to recover in the second half.” I’d like to point out that a general “sales” recovery does not necessarily mean Chrysler or GM’s recovery. But that would kind of ruin the flow, if you know what I mean. To wit…
Crap. You know, I went to Coachmen Industries website to check for a list of RVs. The RV site didn’t some up. Just kept on a spinning, then timed out. And I saw that the main site was all about pre-fab housing. But I thought, oh well, the RV site’s down. But as bluecon points out in a comment below, Coachmen Industries is out of the RV business as of Boxing Day. Doh! But at least TTAC’s Best and Brightest spotted my lack of reportorial due diligence and properly revealed willingness to take Edmunds and Autoblog’s posts at face value. My bad. Lesson learned. And according to previously stated policy, I will not take this post down. Well, not the headline and the comments. The text is toast, ’cause there are limits to my prostration. And props to Warren, ’cause, as Kurt pointed out, this kind of housing is sure to find favor in the coming months and years ahead. Never a truer word was spoken in jest. Oh, and Buffett already owns an RV maker– that bought Coachmen’s assets.
Automotive News [sub]: “The magazine normally recommends cars in its April issue. But it singled out eight Detroit 3 vehicles early because consumers may be concerned about reliability while General Motors and Chrysler LLC seek federal assistance, said David Champion, the magazine’s chief car tester. ‘We’re only about halfway through our testing, so it’s not a complete list,’ he said. ‘But because of the public interest, we thought it would be useful.”” Huh? Since when is it Consumer Reports’ job to allay consumer fears about the reliability of the products produced by a small group of automakers, especially in response to an industry-wide event? In other words, why the special treatment? Even if it’s all about catering to a public need– remembering that Consumer Reports is a non-profit organization and there is no statistical data to support this position– CR’s special issue increases the psychological polarization between domestic and import-branded vehicles. And that’s not a good thing– for the domestics. If nothing else, the D2.8’s abject inability to identify the difference between quality relative to each other and quality compared to the wider car market has contributed to their failure. Anyway, the “winners” in the gallery below and/or after the jump.
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