Back in June, Barron’s advised [what conservative talk show host Bill O’Reilly creepily calls] “the folks” that GM shares could triple in value. Oh how we laughed! Well, surprise surprise surprise! Barron’s [sub] is now eating their words. “STAGGERING. THAT’S A FIT DESCRIPTION of the calamitous decline of auto markets in developed nations this year. U.S. October sales numbers released last week were ugly, down 32% from the year-earlier level and slamming all car makers hard. The month’s annualized selling rate was a paltry 10.5 million vehicles, the worst in more than a quarter-century. The weak financial positions of Detroit’s Big Three — General Motors, Ford and Chrysler — means their survival is at stake, and that Barron’s was wrong in describing GM as a buy late last spring.” Hey, wait a second; that sounds familiar. Market sucks. Who could have predicted this? Not our fault for missing it… GM! Anyway, how ’bout them bonds? “Our enthusiasm for GM was clearly wrong, as was a suggestion that its bonds, like the senior note maturing July 15, 2041, would be more valuable,” Barron’s writes. “They now trade at 20 cents on the dollar, versus 60 cents when the story was published.” Man the lifeboats! What? They’ve already gone? Look for GM’s stock to die a death tomorrow [Monday morning]. Trading suspended? De-listing from the Dow Jones industrial Average? Anything’s possible, and all of it’s inevitable.

We’ve already put Detroit Free Press writer Mark Phelan through the Cassandra-o-meter— and found his logic more than slightly wanting. Today’s column reveals that Phelan’s cluelessness runs deep. Contemplating the collapse of the GM – Chrysler merger, Phelan says “Finding a foreign buyer to provide advanced engineering for sophisticated small vehicles in exchange for access to Chrysler’s U.S. dealer network and expertise in trucks, minivans and big cars is the best option.” Of course, Phelan’s theory assumes that an automaker would want to buy Chrysler. While everyone and their proverbial mother believes that Jeep is some kind of brand babe, other than that, what would be the point? How do we prod thee with a ten-foot pole? Let me count the ways. First, the U.S. automotive market is dead in the water. Second, any automaker stupid enough to assume tens of billions of dollars of ChryCo debt and obligations to a union (whose primary expertise is in wresting said benefits from overpaid execs), not to mention a roster of uncompetitive products and nothing in the propduct pipeline (although I just did), is also hurting in the worldwide auto industry meltdown. Third, if said automaker wants a piece of Chrysler, they’ll wait for the now-inevitable Chapter 11 or 7 and buy the best bits for pennies on the dollar. Phelan’s take? A ChryCo sale (as such) could happen. But that would suck. “Even in that best of all possible worlds, however, Chrysler will be a smaller company than it is today. It will have fewer plants and employees, but it can remain a major contributor to the U.S. economy and an important center of engineering and design expertise for a healthy global company. We can hope Chrysler’s next owners will value it more than the last two did.”

Slipped that one in, eh? The official statement, via The Detroit News: “GM has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM’s financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term. While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside.” To which Chrysler CEO Boot ’em Bob Nardelli responded, “”Chrysler LLC neither confirms nor discloses the nature of its private business meetings, as many times they do not come to fruition. Returning Chrysler to profitability continues to be the key focus of the management team. We are significantly challenged by today’s economic environment and by the automotive industry’s unprecedented downturn. As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability.” Good luck with that, then.

The Wall Street Journal reports GM’s statement on its dismal Q3 results. The General’s general admits that “estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.” So, essentially, unless GM gets a federal bailout by 12/31/08, the artist formerly known as the world’s largest automaker will be forced to file Chapter 11. And no wonder, given GM’s cash burn reported [with all the numbers] by Yahoo! Finance. “Cash, marketable securities, and readily-available assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust totaled $16.2 billion on September 30, 2008, down from $21.0 billion on June 30, 2008… The change in liquidity reflects negative adjusted operating cash flow of $6.9 billion in the third quarter 2008.” The entire “money shot” quote after the jump.

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Smaller loss, bigger burn. Relative to last year, The Blue Oval Boyz narrowed their Q3 losses from $380m to $129m. But the cash burn is, as expected, intense. The Detroit Free Press tells the tale. “The automaker’s cash reserves dropped from $26.6 billion at the end of the second quarter to $18.9 billion at the end of September. That means Ford burned through $7.7 billion in cash in three months, or $2.6 billion a month — a much faster burn rate than over the prior 6 months, when Ford burned through about $1 billion a month.” But wait! There’s less! “Ford recorded a positive accounting charge of $2 billion for retiree health care costs during the quarter that helped the company’s overall result. Excluding special items, Ford posted a pre-tax loss of $2.7 billion for the quarter, which is worse than the $2.1 billion in losses that Wall Street analysts had been forecasting.” So… “As part of Ford’s latest plan to preserve cash, Ford said it would also cut its 24,100 remaining salaried workers by another 10%, further reduce capital spending in a variety of areas, such as advertising. Ford also said it would continue to explore selling non-core assets, in addition to other actions.” Meanwhile, if my math is right (which it seldom is), assuming Ford needs a $10b pad to keep the lights on and nothing much changes ($675m per month cash burn), they’ll conflagrate their cash in just over a year. [Raw numbers here.]

The Detroit Free Press claims to have access to the results of Ford’s most recent buyout program, designed to downsize the ailing automaker, and they ain’t good. “Despite an aggressive [and expensive] campaign by Ford Motor Co. to get more autoworkers to leave the company through a voluntary job buyout program, fewer than 3,000 of Ford’s 60,100 autoworkers in North America have decided to go.” In case you missed the meaning of that failure to entice a posse of Blue Oval Boyz to blow town, the Freep sums-up the situation succinctly. “Ford already has lost $8.6 billion through the first half of the year, and it needs to shed workers as quickly as possible to reduce its costs, as global demand for its cars and trucks continues to shrink in the suffering economy.” Even though Ford’s fighting for its survival, the workers’ reluctance to cut bait and fish is understandable; where the Hell are they going to get a job these days? “They can stay and risk their job being eliminated,” analyst Aaron Bragman opined. “Or, they can try to find a new job in one of the worst job markets in years.” In other words, like the orchestra on the Titanic, they’re staying.

TTAC has intercepted a memo from GM PR Spinmeister-in-Chief Steve Harris to the troops. [Full text of missive after the jump.] In the message, Harris advises GM employees to tune-in to the internal TV channel for an announcement from GM CEO Rick Wagoner and COO Fritz Henderson (former CFO and Harvard MBAs both) that will “share third quarter results and tell employees about important changes to our business to address the challenges brought on by the volatile global economic situation.” At this point, we have no idea what’s going down (other than GM’s cash reserves, stock price, credit-worthiness, etc.). Our best guess is the one we made for Monday (which didn’t materialize as predicted): a few GM brands are about about to go away. But it could be the GM Chrysler merger. Or… I dunno. Anyone with a lead can email me at robert.farago@thetruthaboutcars.com or place their idle speculation below.

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Initially, GM CEO Rick Wagoner’s sale of 51 percent of The General’s captive finance unit to Cerberus Financial (Chrysler’s new owners) seemed like a well-timed stroke of luck. Anyone paying close attention (i.e. reading this site) would have realized that Red Ink Rick was simply throwing GM’s furniture into the cash conflagration consuming the company; GMAC was just about all that was left worth burning. But GM had used GMAC as the engine for its car sales. When GMAC’s ResCap’s (Residential Capital) sub-division found itself (to be polite) deeply mired in the subprime mess, the lender couldn’t– can’t– lend squat, either on the house OR the automotive front. Not too put too fine a point on it, GM’s getting screwed from both ends. Bloomberg reports that GMAC’s taken a $2.52b hit in Q3, which brings us to $4.6b for the year. “Total net revenue declined 43 percent to $1.72 billion. The Residential Capital home-loan unit lost $1.9 billion during the quarter, while GMAC’s auto finance unit lost $294 million.” Even GMAC admits– in that “give us a bailout” kinda way– that it’s towel-throwing-in time. “Substantial doubt exists regarding ResCap’s ability to continue as a going concern,” GMAC said in today’s statement.If ResCap dies, GMAC dies. If GMAC dies, well, we’re almost there already. GM’s 45 percent sales drop in October reflects the loss of low credit score in-house financing. Hear that sound? It’s Uncle Sam’s wallet creaking open…

You might say that this plan– getting Uncle Sam to subsidize new car payments– is a warm-up for the main event: the big ass bailout. And you’d be both wrong and right. Right, because Detroit is using all the political leverage it can muster to extract whatever drops of sustenance it can secure from the federal teat. In that effort, Motown’s running all sorts of ideas up the proverbial flagpole, including perverting manipulating the federal tax code. And lo and behold, Toyota saluted it! “Toyota would be supportive of moves such as tax deductibility of auto loans,” ToMoCo’s U.S. Veep for corporate affairs said on his post- October-bloodbath conference call. Needless to say, GM was non-committally committed to the idea, in a general sort of way. “It’s really critical for the governments and the banks to aggressively help us to revive the credit market and facilitate consumer lending activities,” Mike DiGiovanni, a GM sales analyst, said on his conference call reported by Bloomberg. As for the “wrong” part, this measure, and the “cash for clunkers” initiative making the rounds, wouldn’t provide NEARLY enough relief for Motown’s mauled motoring mavens. But hey, you gotta start somewhere… Oh wait! They already got those $25b worth of D.O.E. low-interest retooling loans. Only not, ’cause they’re hung-up on “technicalities.” Sorry. Carry on.

“GMAC Financial Services has scheduled the release of its 2008 third quarter financial results for Wednesday, Nov. 5, 2008. The press release, including financial highlights, will be issued at 8 a.m. EST via PR Newswire and the GMAC Financial Services media Web site (media.gmacfs.com) and the Residential Capital, LLC (ResCap) news site (https://www.rescapholdings.com/news).

GMAC Chief Financial Officer Robert Hull will host a conference call at 9 a.m. EST to review the company’s performance. The call is expected to last approximately 30 minutes.”

General Motors Corp. (NYSE: GM) plans to release its third quarter 2008 financial results on Friday, November 7, 2008 at 10:30 a.m. ET via PR Newswire and GM Media Online (http://media.gm.com).

In addition, GM Executive Vice President and Chief Financial Officer Ray G. Young will host a conference call at 12:15 p.m. ET. The call will include a review of the company’s third quarter financial results, an updated liquidity analysis and review of its liquidity improvement initiatives, and a question-and-answer session with financial analysts and media. The call is expected to last approximately 90 minutes.

Chrysler’s CEO Bob Nardelli wants his troops to know that he made ChyrCo’s cutbacks to batten down the hatches for the current downturn. As opposed to, say, a pre-flip strip. “The difficult actions we have taken in the past, and those that we have just announced, are for one purpose and one purpose only: helping Chrysler survive this economic trough.” Nardelli said in a message to employees [via Reuters]. So… now what? More “down-sizing.” And anyone who suggests that Boot ’em Bob’s hankering for a bailout, buyout, merger or liquidation is a disloyal son of a bitch. “Nardelli said business conditions required a resizing of Chrysler again. ‘Rumors and speculation that these actions are being taken for any other purpose are simply not true.'” Meanwhile… “We don’t think a merger is in the interests of our members,” [Canadian Auto Workers union Ken] Lewenza said on the sidelines of an event at Chrysler’s minivan plant in Windsor. “I don’t see how you can take two sick patients and turn them into a healthy one.” Neither does anyone with a modicum of common sense. And yet, there it is.

It’s the same story for Chrysler: another month, another sad sales chart. Saying that, this month was a little different. Unlike many other carmakers, percentagewise, car sales were down (37 percent) more than truck sales (34 percent).  Bright spots: a few extra Vipers (87) and discontinued Crossfires (253) bumped sales numbers up to 142 percent and 128 percent respectively.  Challenger sales went up over last month despite the general doom and gloom to 3,104.  Ram sales, a mix of 2008 and spanking new 2009’s, were down 21 percent, and another few thousand Journeys launched. Everything else was down, mostly well into the double digit percentages. Confirming suspicions of a stillborn launch, there was absolutely no mention of Durango/Aspen Hybrid sales. Zip. Nada. Total year-to-date sales are down to 26 percent. There are a few recent articles here and there about product tweaks, but the cupboard is bare, and the guillotine is looming.

With the proposed GM-Chrysler merger effectively off the table, automotive colmunists are slowly returning to the task of facing reality. Needless to say, they don’t like what they see. Though Mark Phelan may smell the smoke on the breeze as well as the next Detroit cheerleader, he obviously still figures a pom-pom in the hand is worth two in the bankruptcy court. Stuck with three sickly children who won’t all make it through this dark night of the industry, Phelan verbally douses Chrysler in 57 sauce and calls out the wolves. “If I were the U.S. Treasury Department, I’d offer GM executives $10 billion, on the condition that they walk away from Chrysler and never look back,” goes the first sentence of his latest opus. “Or $15 billion, $20 billion,” begins the second. His point? That a merger between GM and ChryCo would be disastrous. And though he acknowledges the real reasons for this (overlap, baby), he doesn’t stop there. “Cerberus’ ownership of Chrysler is a strip-and-flip operation,” raves Phelan, adding “Chrysler’s leaders spent much of the nine years they were part of DaimlerChrysler approving vehicles that didn’t stand a chance in the market.” Sure, there’s no use in arguing that the Sebring and Compass aren’t evidence of a company that practically wants to fail, Phelan isn’t feeding his beloved Chrysler to the wild beasties for the sheer fun of it (that’s our job). It’s all about saving Ford and GM.

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Our guys on the front line tell us that GM has just launched a nationwide coupon program called “Garage Mate.” The General has mailed an unspecified number of consumers a $2k-off coupon good for every 2008 AND 2009 vehicle The General sells (including the Pontiac G8). The two grand is on top of any and every other available discount. More info as it becomes available.