Build cars people want to buy and sell them at a profit. There. Now you know. Didn’t quite catch that? “We’re only going to be in business if we create products that people really do want and value,” [Ford CEO Alan] Mulally told The Detroit News in an exclusive interview Tuesday. “This is the essence of creating a viable Ford.” Quite why scribe Bryce G. Hoffman thinks this is some kind of revelation escapes me entirely (so to speak). No wait! It’s not a revelation; it’s an EXCLUSIVE! My guess: Ford PR gave Bryce exclusive access to Big Al where he couldn’t reveal anything of a commercially vital nature; which is a bit like making out with Adriana Lima without being able to go to second base (or so I imagine). In any case, we learn sweet F.A., other than Bryce loves him some FoMoCo and there’s a Thunderbird Room on the eleventh floor of the Blue Oval HQ (which several of our Best and Brightest knew anyway). Oh hang on; “Benefits, including the bonuses paid to Mulally and other senior executives, are being cut.” A story! An honest-to-God this is news news story! So, spill Bryce. Who? How much? Bryce? Hello? Sigh. OK, I’ll make the call. Do I have to do everything around here myself?

Walt Disney’s deathbed request to his brother Roy: don’t change my plans for the Experimental Prototype Community of Tomorrow (EPCOT). Walt spent his final cancer-fighting years planning EPCOT’s every detail, from housing to commuting to garbage collection. When Walt was cold in his grave, Roy did the sensible thing. He tore-up Walt’s work and built a cod-World’s Fair. The idea of EPCOT as a company-run city rather than an amusement park was fundamentally flawed, doomed to controversy and failure (Celebration anyone?). Detroit reminds me of Walt’s unrealized Disney world (small “w”): a place where corporate culture dominates the community’s mindset. Brock Yates chronicled this “Grosse Pointe myopia. As does Autoextremist Peter DeLorenzo, in his own way. Or, more precisely, in a David Koresh kinda way…

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Here’s the money shot from GM’s quarterly filing with the SEC:

“In connection with their year-end audit of our annual financial statements, our independent auditors assess whether a statement should be included in their audit report related to the existence of substantial doubt related to our ability to continue as a going concern. If the report on our audited financial statements included such a statement, we would not be in compliance with the covenants in certain significant credit agreements, including our $4.5 billion secured revolving credit facility and $1.5 billion U.S. term loan, both of which would be callable by the lenders. Additionally, we have other significant obligations that include cross-default provisions that could be triggered by a failure to comply with those credit agreements. We would need to seek a waiver from the lenders for any covenant breaches or cross defaults, or arrange for substitute financing. There is no assurance that we could cure a default, secure a waiver or arrange substitute financing in such circumstances or that we would not incur significant costs in doing so.”

This is the big fear at GM: auditors issue a statement regarding GM’s ability to continue as a ‘going concern.’ It would start a customer-killing PR firestorm, launch a possible “run on the bank” scenario by suppliers and trigger immediate default ratings by the credit rating agencies.

Think you got it rough?  Well, what if you built a sleek, energy efficient 181,000 square foot corporate headquarters for $68m and seven years later you had to lease it to Taco Bell for ten years? More specifically FoMoCo leased their former Premier Automotive Group (PAG) headquarters to Yum Brands, Inc., of Louisville, Ky. Yum was spun off from PepsiCo in 1997 and currently operates over 35,000 Taco Bell, KFC, Pizza Hut, A&W and Long John Silver “restaurants.” Annual revenues are more than $10 billion and their stock is trading at $25.87 per share. Meanwhile, Ford sold Aston Martin to some Kuwaiti investors, Jaguar and Land Rover went to Tata (in India) and is moving Volvo to… New Jersey! Meanwhile a share of Ford stock is worth $1.80 — still somehow cheaper than a gallon of gas. Ford still has about 125 employees in Irvine, California (including the guy that gives us Mustangs) and they’re being relocated next door to Ford’s 90,000 square-foot product development center. The sad news for car guys is that ever since Crystal Cove moved away from Newport Beach, it has taken place every Saturday morning in PAG’s parking lot. No word on whether or not Taco Bell will allow the tradition to continue. Man, the car biz is rough.

Autocar slips this little nugget in an alarming alarmist story that Ford will run out of cash by May: “Ford has already pulled all of its UK advertising across all mediums until the end of the year.” I’m Googling like mad, but can’t find any corroboration. If true, this is some SERIOUS SHIT. Meanwhile, TTAC’s Ken Elias debunks Autocar’s assertion that FoMoCo will be out of dough by the spring. “AutoCar’s analysis on Ford’s cash flow is incorrect. For the year to date, Ford has used $15.7 billion in cash, although only $2.9 billion relates to pre-tax losses. The bulk of the cash used to date reflects mostly restructuring efforts due to constriction in working capital ($6.7 billion) and funding the required VEBA to the amount of $4.6 billion. Since these are mostly one-time items, the cash burn situation at Ford does not appear as dire as that of GM. Any stabilization of Ford’s North American business will stem its cash outflows.” Thanks for the heads-up Ken.

You know how it is. You’re talking with someone in the autoblogosphere on Ye Olde iPhone and he says “You know, GM’s pulled out of the LA Auto Show.” So you click over to the GM media website to see if it’s true, and there it is in black and white: “Public Invited to Put Pedal to the Metal Behind the Wheel of GM Vehicles at the Alabama International Auto Show November 14 -16.” No really. “Consumers attending the Alabama International Auto Show… will have a unique opportunity to truly ‘experience’ the GM display by getting behind the wheel and test driving many of General Motors’ new, fuel-efficient vehicles.” Such as the HUMMER H3T ALpha. Meanwhile, The Detroit Free Press‘ Katie Merx minx reports that GM’s “scaling back” its participation in the LA Auto show. “General Motors Corp. has canceled plans to unveil any new vehicles or host any news conferences at the Los Angeles Auto Show this month… The automaker will still have a presence at the LA show next week. The production version of the Chevrolet Volt extended-range electric vehicle will make its first auto show appearance and GM’s two-mode hybrids will be driving there.” By themselves, presumably.

DATE:                  November 10, 2008
TO:                     All GM Dealers
FROM:                 Mark LaNeve [GM’s Marketing Maven]
SUBJECT:             November GM Business Update – IDL Broadcast

On Wednesday, November 12, 2008, we will air a special IDL broadcast for all GM dealers.  This broadcast will provide additional insights regarding last week’s GM Business Update.

Autobloggreen‘s Sam Abuelsamid’s been talking to GM PR about his story re: the delayed debut of Saturn’s plug-in hybrid gas – electric Vue. (I could blog my blog of his blog, but why bother?) More accurately, GM PR’s been talking to Autobloggreen’s Sam Abuelsamid re: the delayed debut of Saturn’s plug-in hybrid gas – electric Vue. “Our original statement said that production would begin ‘as soon as 2010’ because we did not want to create artificial deadlines,” GM spokesman Brian Corbett lied to AB’s man in green. “We have dedicated significant resources to the program and it is progressing rapidly. Now that we are further along in the development process, we can now give a more up-to-date projection.” And that is? “From what we’re hearing from sources at GM,” Sam reports, “the PHEV is still moving ahead and will go into production and it will likely debut sometime in 2011.” Sources? Does Sammy mean Senior Corbett? Dunno. But the scribe’s coda sounds suspiciously pre-spun. “Given the importance of the Volt to GM and the limited resources it has at the moment, it makes sense for them to focus on the ER-EV first. Work is proceeding on the VUE and knowledge learned about lithium batteries and controls is being applied to the PHEV.”

The news that GMAC’s mortgage unit Residential Capital (a.k.a. ResCap) might go belly-up (AP via Yahoo) is shocking only because General Motors is the one saying it. What exactly was the captive finance arm of an auto maker doing so heavily into the mortgage business in the first place? Oh well, if Porsche can make a fortune gambling in the markets, why not everyone? The modern mortgage origination, funding and servicing business is so complicated as to be almost inscrutable. To wit: “ResCap said it posted an additional $200 million in collateral with Fannie Mae and sold off the rights to collect payments on $12.7 billion in loans, or 9 percent of the total amount it collects for Fannie Mae. Had ResCap not acted, Fannie Mae could have severely curtained its loan purchases from ResCap.” I really miss the days when home loans were made by banks using their capital plus deposits and were held, service and managed by said same banks. We may yet go back to the future on that one. Meanwhile, GM dropped a second bombshell in the same SEC filing by saying “that Delphi Corp., its former parts-making operation that was spun off in 1999, is unlikely to emerge from bankruptcy protection in the short term and may not be able to emerge at all.”  TTAC called it.

Well, well, GM CEO Rick Wagoner had a little chin wag with the boys over at Automotive News [AN, sub]. “General Motors CEO Rick Wagoner says GM’s financial distress is so dire that it must line up financial assistance from Washington before President-elect Barack Obama takes office in January. ‘This is an issue that needs to be addressed urgently,’ Wagoner said.” And that’s just for starters. “Now is the time to ‘overshoot, not undershoot; when it comes to assistance for the auto industry,” Wagoner pronounced, revealing that he’d rather be safe than sorry with your money. Makes sense to me, in a “TTAC earns a rep writing Gneneral Motors Death Watches” sort of way. In exchange for the money, Rick’s “willing to offer the government preferred stock, set limits on executive compensation and speed the introduction of fuel-efficient vehicles.” How… beneficent. And last but not least, Wagoner reckons the man who’s steered GM straight into the iceberg is the best guy to, uh, keeping ramming the ice. “Wagoner said he is not prepared to resign in return for government aid. ‘I don’t think it’d be a very smart move,’ he said.'”I think our job is to make sure we have the best management team to run GM. It’s not clear to me what purpose would be served…'” Love the ellipsis guys! Did Rick’s voice really trail off into silence? Nice touch.

Edward Lapham, executive editor of Automotive News, is so not a cheerleader anymore. In fact, the TTAC convert now reckons it’s going to be Lord of the Flies in Detroit. Lapham gathered this insight from an ex-GM exec who “has moved on to bigger and better things. Well, OK, at least better things. The exec has done enough since leaving GM that he has a broader view of the world.” [ED: is that code for some kind of deviant sexual practice?] The exec predicts that automakers, suppliers, and dealers were not likely to react to the current crisis by forming an alliance and working together to save their collective rear ends. Instead, each player will look out only for itself. For dealers, this means “wanton, willful, premeditated starvation.” GM won’t have to buy out weak dealers. It will simply feed them fewer and fewer models, and all but the strongest will die. My take: this should come as a surprise to no one who has studied the industry. Even in the best of times, Detroit’s senior executives have failed to build mutually-beneficial relationships with the unions, suppliers, dealers, car buyers, or even corporate middle management. And bad marriages rarely get better when debt piles up and bankruptcy looms.

“Shares of GM fell 23% to $3.34 in late-morning trading,” The Wall Street Journal reports. “After earlier hitting a 62-year low of $3.02, as analysts at both Barclays Capital and Deutsche Bank cut their target prices and investment ratings on the stock. Barclays now targets GM shares at $1, while Deutsche Bank slashed its target price to zero… Deutsche Bank analysts, who cut their rating on the stock to ‘sell’ from ‘hold,’ gave GM a shorter liquidity timeline, saying the company might not be able to fund its operations beyond December. Even with government intervention, the analysts said GM’s future is ‘bankruptcy-like,’ and shareholders are unlikely to get anything.”

TTAC has highlighted the inherent obscenity of GM CEO Rick Wagoner’s compensation for flying the artist formerly known as the world’s largest automaker straight into the ground. While Wagoner inherited enormous structural problems from his predecessors, he has done nothing to correct them. Throughout his administration he’s shown a startling lack of courage and foresight, no product savvy whatsoever and an abject inability to face-up to the reality of GM’s peril.  And yet he has drawn down over $100m in direct compensation since his installation at the top of the GM pyramid. This reporter (that’s me) was widely and loudly ridiculed when he cried foul at Wagoner’s bankruptcy-proof pension (and for asking if GM Car Czar Bob Lutz enjoyed same). Lest we forget, Wagoner’s compensation was INCREASED (a.k.a. “restored”) in April to $14.4m per year (and the rest). That’s more than all top ten of Toyota executives combined. Make of that what you will, but how can The New York Times report GM’s cutbacks in white collar retirees’ health care without putting their sacrifice (small as it may be) into its proper context? Surely, it’s time someone asked the question: why is Wagoner still getting paid?

Autobloggreen reports that the Saturn Vue plug-in hybrid vehicle (PHEV) is probably on ice. The wired Vue was due to become GM’s first– and pre-Chevy Volt– PHEV. Now, who knows? “During the General Motors third quarter earnings (or lack thereof) conference call on Friday, company executives discussed the vehicle introduction schedule for 2009 and 2010. Several cars that had been expected to debut during 2009 have been pushed back to the following year, including the Saab 9-4X and Cadillac CTS Coupe. GM declined to discuss any vehicles beyond the 2010 calendar year. One vehicle that notable by its absence in the list of vehicle launches is the Saturn Vue plug-in hybrid.” While we’re at it (or not), the hold-back on the Saab 9-4X also casts doubt on the Cadillac cute ute replacement for the SRX and the new Chevy Equinox; vehicles that were supposed to sit on the same platform. Equally important: each day that these and other GM vehicle programs are delayed, the more expensive it becomes to restart development, and the harder it becomes to catch-up with the competition. The delays also impact suppliers, who may go under in the meanwhile. But that’s another story, which we’ll get to a bit later…