I get it! Instead of putting the hate on owners of import-branded cars (as opposed to say imported Fords), supporters of the Big 2.8 could offer special membership benefits to those consumers who chose to support Chrysler, Ford and GM by buying their products (as opposed to say paying their taxes). We’ll have to see how this plays out in Farmington Hills, Michigan, where the owner of The Tribute restaurant is holding the antithesis of hot import nights. You can read the full offer to American-branded car owners (the cars, not the owners) after the jump. Meanwhile, rest assured this is no redneck truck stop. “Each night, executive Chef Rich Travis oversees the creation of eye-opening flavor combinations, pushing the boundaries of innovative cuisine to enthrall diners. His exquisitely detailed food, distinguished by diversity, inventiveness and spectacular presentation, are perfectly complimented by Tribute’s award-winning wine list.” Personally, I recommend the Grilled Honey Chamomile Glazed Duck Breast Duck Confit and Morel Wonton, Parsnip, Carrot, Wild Rice, Chamomile-Citron Gastrique. But then I’ve never eaten there. And I drive a Honda minivan, which, although it’s ranked number seven on cars.com’s American-made index, doesn’t qualify me for a 50 percent discount. Although… “In addition, during the week of Jan. 25-31, Tribute will recognize all American car-markers and offer a 50 percent discount on food purchases to anyone who drives an American made vehicle, including American automotive suppliers and dealers.”
Category: Chapter 11
Warren Brown is nothing if not ambitious in his defense of the indefensible (i.e. GM CEO Rick Wagoner). Rather than just raise a[nother] cheer for the man who’s spent the last decade-plus jamming the yoke forward on General Motors’ inexorable descent into bankruptcy, the Washington Post carmudgeon decided to rewrite the entire history of the Japanese “invasion” of the American automotive market. But before he does that, Warren upbraids those who’ve called for Toyota Prez Katsuaki Watanabe to resign, suggesting that Watanabe and Wagoner are birds of a feather, getting flocked together. “GM, as we all know, has lost substantially more than $1.7 billion. In fact, it has lost $72.3 billion since 2004 under Wagoner’s reign. By that measurement, applying Fire the Coach rules, Wagoner is 40 times more deserving of dismissal than Watanabe. But here’s arguing that all of that is sloppy logic and in many ways inherently unfair. Here’s also suggesting that Fire the Coach management will solve nothing — or remedy very little — in an arena where game policy is athwart common sense, as it is and has been in a United States absent effective industrial and energy policies.” Same old you-know-what, different wrapper. Brown is once again, blaming everyone BUT Wagoner for GM’s chronic, shameful self-destruction.
The New York Times entered the irony-free zone this morning, with an op ed entitled “GM’s Secret Success.” WTF? Is one of the Gray Lady’s ambassadors about to call GM’s descent into bankruptcy and subsequent raid on the public purse a “success”? Nah. The author of the forthcoming tome “Why G.M. Matters: Inside the Race to Transform an American Icon” wants you to know that GM CEO Rick Wagoner is a genius interruptus. “In reality, Mr. Wagoner has presided over the most sweeping transformation of G.M. since the 1920s,” William J. Holstein opines. “He has reversed management’s long practice of meekly going along with the demands of the United Auto Workers, notably with a deal to transfer health care costs to a union-controlled trust over the next two years.” Ah, a tour of an alternate reality. Cool. But why stop there? Why indeed.
Print is so dead. How anyone could expect a magazine with a two-month lead time to compete with the internet on the news front? It’s like pitting a semaphore line against G3 cell service. In case they don’t know it, the buff book’s business model is as dead as the carmakers’ they support. And while we await the car mag medium’s reinvention and rebirth (U.S. Evo please), we get to admire their attempts to remain au courant. I mean, poor todd lassa. Not only is the Motor Trend scribe’s name chronically under capitalized, but he also had to decide whether or not Red Ink Rick Wagoner would still be at the helm of GM in January 2009. What are the odds, eh? Unfortunately, todd erred on the side of common sense.
You just know they’re going to get it wrong. And so they do. Number One: Full-Size Pickup Trucks. Huh? If any market segment is likely NOT to restore The Big 2.8 to glowing good health, it’s the PU segment. But no. I mean yes! “The Dodge Ram is new for 2009, as is the top-selling Ford F-150, while the Chevy Silverado and GMC Sierra twins combine to sell more than any of them. With the Toyota Tundra in retreat and Nissan ready to surrender the segment (they’ll be getting their next generation of Titans from Dodge), cheap gas should keep buyers putting their money into these profit centers.” And if the housing market stays in the toilet, the market remains saturated with trucks or the price of gas goes up? * crickets chirping * No wait! Number Two: American Muscle. Huh? Talk about carving-up smaller pieces a decreasing pie. Nope. Fox is saying halo to the new Camaro, Challenger and Mustang. “Forget for a moment all of the goody two-shoes environmentally conscious cars Washington wants the Detroit 3 to build: These are the ones that look best in the commercials and get shoppers into showrooms. They may not sell in huge numbers, but you can’t pay for the kind of pride they bring to a brand’s image.” Apparently, you– I mean “we” can. Number Three…
Clearly, The Big 2.8’s head honchos did themselves no favors by swanning into DC for a federal teat suckle on big ass private jets. And Ford CEO Alan Mulally’s family outings on the company Gulfstream G500 were a bit OTT for a company on the ropes. But used judiciously, there’s nothing wrong with private jets per se; they can greatly increase an executive’s ability to get information from front line troops. By not sticking-up for private aviation, by slinking back into town via hybrid, the Big 2.8’s CEOs threw a valuable industry into disrepute. No, I mean the private aviation industry. AIN Online reports that “H.R. 7321, the auto bailout bill, which would have prohibited the financially strapped automobile manufacturers from owning outright, leasing or owning any interest in private passenger aircraft, as long as the government debt was outstanding; and required the manufacturers to sell or divest any aircraft or interest that was owned before the bailout. Even though the bailout bill failed, the damage was done. “Jeff Beck, a Gulfstream contract pilot, had one word to describe the state of the economy and the fallout following the GM and Ford announcements: bad. ‘As soon as [people] started talking about the auto executives and their private jets, it just killed the contract pilot business and the aviation business,’ Beck said. A number of other flight departments followed suit, Beck said, and now there simply aren’t enough jobs to go around.” Needless to say, there’s yet more perfidy here in GM and Ford’s craven capitulation to the congressional class worriers.
Shortly after receiving its second bailout of the month (first Chrysler, then GMAC), Cerberus Capital Management announced that it is limiting investor redemptions. Finalternatives reports that Cerberus recently notified investors that gate provisions on its Cerberus Partners hedge fund were triggered after clients sought to withdraw more than 16.5% of the fund’s assets. Investors will be allowed to withdraw one-fifth of their year-end redemptions, and Cerberus is magnanimously waiving 60 percent of its incentive fee for one year after it recoups losses. Cerberus lost over 18 percent in October and November alone, and its Chrysler investment is likely a total loss. “This is a very hard decision for us, and the realization that taking these steps is now necessary is deeply disappointing,” says Cerberus top dog Stephen Feinberg.
Poor Gina Proia. Not only does she have a last name that she can never leave for the order takers at Panera, but she also has to defend GM. AND look herself in the mirror in the morning. But plucky lass that she is, Gina (may I call you Gina?) is doing her best to fend off media enquiries about the debt-for-equity swap at troubled (as in death rattling) lender GMAC. The company needed to convert 75 percent of its $38b of issued debt into preferred stock to raise $30 billion in capital to become a bank. The deadline for the swap– upon which GMAC’s transformation into a bailout-rescued bank depends (no matter what Gina says)– expired Friday at 11:59pm. Since then, not a peep from the participants. Especially Gina. On Sunday, she played the inscrutability card: she’d let us know in the “near term.” Today, she told Bloomberg “Once the results are finalized, we will disclose that information.” Is she asking us to believe GMAC doesn’t know if it lives or dies or gets Uncle Sugar to change the rules? This could be much ado about nothing. Or it might be time for GM CEO Rick Wagoner to bone-up on his King Lear. So to speak.
According to Denmark’s Børsen.dk, “General Motors is now giving Saab Automobile 3-Months To Find Buyer, in discussing this with Eric Geers, Global Communications for Saab Automobile AB in Sweden.” Hüsker Dü? That’s the same three month deadline when GM returns, pre-pubescent Mark Lester-style, to Congress– or just the President of the United States, as is the way of things these days. The Danish report is semi-confirmed by a previous CNNMoney report on GM’s Marketing Maven’s pep talk to dealers. “LaNeve said the auto maker expects to announce significant developments in efforts to sell its Saab and Hummer brands by the end of March 2009.” So, who would buy Saab in this sales climate? And what if they don’t sell the brand? What then? Well, I suppose they could always slip the closing cost into the receipts submitted to Uncle Sugar on the day…
GMAC. Bank or bust? We still don’t know. As we’ve reported at least twice previously, if the troubled lender failed to make the leap to hyper-suckle by Friday at 11:59 pm (i.e. get investors to swap out enough debt for equity to morph into a bank and scarf $6.3b or so from the Trouble Asset Relief Program, and a bunch more as federally secured debt), then the whole house of cards known as the domestic auto industry will come crashing down. Automotive News [sub] reports that GM spinmeister Gina Proia said the company expects to put out the results of the debt-for-equity swap in “the near term.” Let’s call that option C. Option A? GMAC did the deed but remained tight-lipped for the last two days because majority owners Cerberus never met a cloak of invisibility they didn’t wrap around their operation like Christo covering the Arc de Triomphe. After all, this is the same privately-held company that owns Chrysler, which expects Uncle Sugar to “lend” it $4b, despite the fact that we don’t know how Cerberus paid for it in the first place and/or who owns the paper on what now, after the sale and (presumably) deep borrowing against assets. And now, option B…
“It’s not a good situation, no matter what.” These bleak words come from Christopher Whalen, managing director of Institutional Risk Analytics [via compareshares.com.au]. Whalen is wailin’ on the impact of the Fed granting GMAC bank status, should the lender complete its debt-for-equity swap. And what’s up with that? The deal was supposed to be done by 11:59 last night. So far not a peep from GMAC, the Fed, Cerberus (who owns 51 percent of the troubled lender) or any of The Wall Street Journal’s people close to the people who need people are the luckiest people in the world. To paraphrase our own John Horner, uh-oh. Meanwhile, back to our notable quotable, who points out the blindingly obvious: “Christopher Whalen, managing director of Institutional Risk Analytics, said would-be customers are simply not buying cars. Noting that Toyota has just forecast its first operating loss in 70 years, Whalen sees no end to the slowdown… The difficulty many homeowners have had in paying mortgage bills has been spreading to credit cards and other forms of borrowing, including auto financing, Alpert said. ‘I don’t see that coming back anytime soon – people with impaired credit suddenly getting credit,’ Alpert said. ‘That, I think, is what has showed itself across the board with consumer spending.'”
In our coverage of lender GMAC’s struggle to become a bank (i.e. suckle on Uncle Sugar to avoid bankruptcy), we pretty much assumed it was a done deal. The Fed’s decision to grant GMAC bank status if/when they completed a mega-debt-for-equity swap seemed like the come-on reluctant investors needed to take their chances with the U.S. taxpayer, rather than a bankruptcy judge. The dealine for the d-for-e swap expired last night at 11:59. If GMAC made it, it’s just another step down the road to recovery, or nationalization, depending on your perspective. If they didn’t, all HELL will break loose. GM simply can’t survive without GMAC covering its dealers’ floorplan costs (loans for inventory). If GMAC goes down, thousands of GM dealers go belly-up. While that’s exactly what GM needs, they don’t need it all at once. The market would be flooded with hundreds of thousands of units of unsold inventory, supplier confidence would disappear, etc. So which way did it go, then? “We have not yet issued final results,” GM spinmeister Gina Proia told the AP. “But intend to in the near term. I have no further comment on the exchange until then.” Someone somewhere is holding their breath.
Reuters (and everyone else) reports that GM is suing bankrupt parts maker Cadence Innovation to recover the bits it needs to build/launch the new Chevrolet Camaro. Both more and less specifically, Cadence makes consoles, door panels and “other parts.” GM wants all of it, bad. So they’re suing, asking a Delaware Court for permission to access Cadence’s factory to recover the necessary tooling and parts to craft their Canadian retro-muscle car. “Even one day’s disruption in supply of certain Component Parts could cause a shutdown of GM assembly operations,” The General’s lawsuit proclaims, using German capitalization to emphasize the seriousness of their demands. A refusal to do so would end up “disrupting not only GM’s business, but the operations of countless suppliers, dealers, customers, and other stakeholders.” Countless? That’s a lot, right? And once they’re being both vague and alarmist, GM said the damages from Cadence’s refusal to surrender machines and parts “would be substantial, but difficult, if not impossible to calculate.” GM reckons it needs the parts-making machines by January 12th. Or a plague of locusts will descend upon the earth and boils will fester on muscle car collectors’ butts. But there’s more to this story than first meets the, uh, eye…
Successful GM, Chrysler Dealership
Location: Mississippi > Confidential
Industry: Auto Related > Auto Dealers
Financials
Asking Price: $1,500,000
Cash Flow: $776,677
Cash Flow Comments: EBITDA
Real Estate: $2,000,000 (Not Included in Asking Price)
Seller Financing: Maybe
Business Summary
This is a very well established dealership that continues to have strong profits and sales. The area is growing and strong economically with job growth. Strong service department and parts sales departments are very profitable and enjoy a great reputation. One owner is willing to continue to operate as a minority partner. Only serious inquiries please.
About the Business
Year Established: 1955
Facilities: Great
Market Outlook and Competition: Strong
About the Sale
Management Training and Support: Yes
Reason For Selling: Retirement of majority owner
I mean, milestone. I mean, it would be petty and vindictive of me to suggest that Chevrolet’s Project Driveway program was/is an enormous waste of GM’s precious development money. If we are to have a hydrogen economy– and why wouldn’t we (other than the cost of rebuilding a trillion dollar-plus infrastructure from the ground up)– we’re going to need fuel cell vehicles to, uh, get around. So you can’t help but applaud the fact GM now has more than 100 hydrogen fuel cell Chevy Equinox on the road, which have logged a combined total of 500k miles. “The vehicles are performing very well and we are learning a great deal about fuel cell robustness and how to make this program work for real customers,” Marybeth Stanek, GM’s director of fuel cell commercialization, opines [via press release]. “The amount of data we’ve collected over the past year is very valuable to us, and gives us insight into this important automotive technology.” Yes, yes. What exactly have we learned? *crickets chirping* Hey! Jay Leno has one! Been driving it since April. Or, you know, parking it in one of his aircraft hangers.
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