Crazy Henry’s heirs and descendants own enough “special class B” stock to control 40 percent of the automaker’s shareholder votes. Translation: Ford owns Ford. While the Ford family isn’t down to its last $100m, the automaker’s plummeting fortunes must be more than slightly worrying. The last time Fortune checked-in with Ford family finances– April ’07– the Blue Oval Boyz and Girlz lost a cool (if paper) $581m. This after Ford suspended payments (September ’06). The last time TTAC checked-in with Bill Ford’s wallet, the FoMoCo Chairman had “modified” his pledge not to take a dime from his employer until it was back in black (a 2008 then 2009 prophecy that’s long since been abandoned). Ford (the failed CEO) agreed to defer (rather than forgo) the compensation until Ford (the failing company) returned to profitability. As the undisclosed bounty piles up, Billy may have something of a liquidity problem. Reuters reports that he’s unloaded one million shares of Ford common stock [not class B] to pay down debt that he took on to exercise options and acquire stock in the automaker in 2004 and 2005. “Ford sold the shares at an average weighted sale price of $5.05 on Thursday and continues to hold more than 5.3 million shares of common stock in the automaker, according to a filing on Friday with the U.S. Securities and Exchange Commission.” All credit to Bill for investing in his own optimism. But here’s a question: when Chrysler and GM file for C11, will Ford follow suit? If so, it will mean the end of Ford family control.

As TTAC has been predicting, The Big 2.8’s new car pipeline is becoming choked with product. The Dow Jones Newswire [via easybourse] reports that Chrysler is increasingly desperate to keep their factories humming. They’re now offering their stores a grand to move the metal. “Dealers can turn their $1,000 payment into an incentive that can be passed on to a customer and applied to any vehicle in the auto maker’s product portfolio, according to three dealers briefed on the offer. Some of the select vehicles include the Dodge Charger and Jeep Grand Cherokee.” This is on top of Thursday’s announcement, when Chrysler expanded its employee pricing to nearly all 2008 and 2009 Chrysler, Dodge and Jeep models sitting, unloved, on dealer lots. Oh, and Chrysler’s U.S. employees can give one additional discount to a friend or neighbor. Oh, and Automotive News [sub] reports that the fresh-out-of-the-box new Dodge Ram will arrive at Dodge dealers with $1k on the hood. “We’re committed to remaining competitive with our new truck pricing, and that includes offering modest incentive and lowered MSRP pricing,” Chrysler spokeswoman Eileen Wunderlich told AN. Look for Chrysler to lose that modesty in the near future, as ’07 Rams gather dust, even with 40 percent discounts.

Bloomberg reports that General Motors has tapped the remaining $3.5b of a $4.5b revolving credit line. (Needless to say, the bad news arrived on a Friday– the by-now usual pattern for the embattled automaker.) In an official statement, GM said the cash “will go to help cover restructuring costs.” Or, as Bloomie’s put it, “GM, the largest U.S. automaker, has said it needs to raise $4 billion to $7 billion by selling assets and adding debt to ensure it has enough liquidity to operate through the end of 2009. GM has lost $69.8 billion since the end of 2004, its last profitable year.” The reality is that Q3 will show another big loss; the loss might have put GM in violation of certain covenants/ratios in the loan agreement, which would give the bankers the right to deny funding and pull the line. Of course, we don’t know the details. But, as TTAC’s Deep Throat put it, this company is running close to the edge. Meanwhile, GM’s former captive lender GMAC (The General now owns 49 percent) renewed a credit facility with Citigroup yesterday. GMAC now has access to $13.8b, down from last year’s $21.4b.

Death Watcher that I am, even I’ve lost track of all the excuses Ford, GM and Chrysler have used to explain declining sales vis a vis the transplants and the market in general. Let’s see… currency manipulation, reduced fleet sales, unforseen rise in gas prices, Mars in retrograde, etc. Here’s the next one: consumer anxiety re: Wall Street. “All businesses are operating in a world of ambiguity,” Ford’s chief sales analyst George Pipas told Reuters. Tell that to the repo men. Anyway, FoMoCo is preparing the mainstream media/stock holders/camp followers for the worst. “Industrywide auto sales in September to date have extended the weakness seen in July and August,” Pipas said, adding that “financial market volatility makes it hard to forecast results for the remainder of the month.” I’ve got a prediction: down. And, IMHO, Wall Street’s not to blame. Much.

The Wall Street Journal reports that General Motors has canceled plans to build the seven-seat Orlando stateside, or bring a foreign-built version to The Land of the Free. “The canceled Chevrolet vehicle, code-named the ‘Delta MPV7,’ was originally intended to be built in Hamtramck, Mich., beginning next year, according to the auto maker’s recent agreements with the United Auto Workers union. The MPV, or multi-purpose vehicle, would have been based on GM’s compact-car architecture, but capable of seating seven people.” The program termination leaves the U.S. factory SOL, hoping to score Volt production (via federal low-interest loans, of course). The United Auto Workers (UAW) can’t be too pleased about recent developments, having acquiesced to GM’s “two-tier” wage system, increased health insurance co-pays, etc. in their last contract. “In recent months, the auto maker has suspended plans for several new models that GM told the UAW last September it would eventually build in North America. These suspended model programs include a new generation full-size trucks and sport-utility vehicles; large, rear-wheel drive luxury cars; and a redesigned flagship sedan, known as the Aura, for the Saturn division.” To be fair, that is one ugly-looking thing. And did GM really need another model? More interestingly, was the Orlando a head fake from the beginning?

GM has let slip to Automotive News [sub] that Corvette production will cease for the week of Oct. 6. After that, The General will slow the assembly line and lay off an unspecified number of employees (estimated at 75). “It is the first inventory-related closure of the Corvette assembly plant in Bowling Green, Ky., since at least 1995.” While GM spinmeisters were quick to blame the economy, there seems to be something else in play. As AN reports “Through the first eight months of 2008, Corvette sales fell 8.5 percent to 21,066. They rebounded 47.4 percent in August after 2008 models were included in GM’s employee pricing sale. The big-ticket discounts, rare on the Corvette, reduced the car’s inventory glut fast. The Corvette went from a 145-day supply on Aug. 1 — a 2008 high — to a 56-day supply on Sept. 1.” So why not keep on keeping on?  “You can’t count on (the incentives) holding inventories down through the balance of the year,” GM spokeswoman Sharon Basel explained. I know Vette sales are seasonal, but how much money will GM “save” by losing one week’s production, and then cutting output from 18.5 vehicles per hour to 15?

But HOW will it be remembered? TTAC has more than a few automotive historians in our midst. They’re ready, willing and able to identify and anlyze the key moments in the company’s history, leading from complete market and (arguably) world dominance to lost market share and the brink of bankruptcy. (Think how many Death Watches there’d be if we’d started with the dismissal of the federal anti-trust suit that would have liberated Chevrolet from GM.) As we head towards GM’s 100th (tomorrow), The General’s spinmeisters are doing their damndest to promote a corporate history that shows strength, innovation and, above all, continuity (i.e. non-bankruptcy). But not every media outlet is The Detroit News. Some are willing to chronicle the catastrophe, albeit without editorial comment. The AP plays it straight, letting the facts speak for themselves. If history is written by the winners, GM PR’s take will not be triumphant. But it will be interesting.

In keeping with tradition, GM announced it latest “wait ’til the weekend” share-price-rattling revelation: the automaker has agreed to provide an additional $4.6b support to former division and bankrupt parts maker Delphi, from $6b to $10.6b. Justifying the cash burn to Automotive News [AN, sub], GM said it’s doing the deal “to speed the auto parts maker’s emergence from bankruptcy.” Here’s the break down [via The Detroit News]  “Under the deal, reached after months of negotiations and outlined in a court filing late Friday, GM would assume responsibility for $3.4 billion of Delphi’s hourly pension obligations — up from $1.5 billion — and make payments totaling $1.2 billion through Dec. 31 to boost the supplier’s balance sheet.” In its press release, Delphi said the cash infusion will put it in a position to pursue exit financing, through an equity-based rights offering. “Pursue” and “secure.” Two different words. In other words, with Delphi’s U.S. business experiencing the same kind of turnaround that GM’s currently “enjoying,” the clock is still ticking on Delphi’s Chapter 7 liquidation.

Thanks to epic leasing losses, bad loans and Chrysler’s declining market share, Chrysler Financial has been taking a beating on the Street, with a capital B. A month ago, ChryCo Financial struggled to re-new its loans on Wall Street, only managing to raise $24b of the $30b it wanted to stay in business. It now appears that the conditions of the re-fi include the end of the leasing (done) and new terms for Chrysler dealers. Automotive News reports that the lender has told dealers it will jack-up their floorplan interest rates by an unspecified amount and force them to pay off older, unsold vehicles. More specifically, “Dealers will be required to pay monthly fees on new-car inventory 180 days old and older. The fees start at $10 per unit, go to $15 at 270 days and $25 at 360 days. 2008 and older units more than 360 days old must be paid off at 10 percent a month. All used cars more than 180 days old must be paid off.” This is bad news for Chryco dealers; they won’t be able to get alternative wholesale financing elsewhere on better terms. It also means they’re going to be very careful on inventory. And that’s bad news for Chrysler’s factories (i.e. Chrysler). Other captive floorplan lenders, like GMAC, may soon follow suit. All of which means its hardly likely sales have “bottomed out,” although it’s for sure that dealers will have to do something to get rid of old inventory. As in price cuts. 

Wall Street Journal scribe John. D Stoll gets it right: if HUMMER can’t make it in Las Vegas, it can’t make it anywhere. The fact that a Vegas-based HUMMER dealer is now as dead as a dodo indicates that the entire brand faces the same non-future. “This closing is notable because of where it is taking place and who is pulling the plug. It is, after all, one thing for enviro-friendly people in San Francisco–another city that recently lost a key Hummer dealership–to shun the brand. It is entirely different when Sin City decides the vehicles are too excessive. [Dealer owner Dan] Towbin said Las Vegas is a custom fit for Hummer. ‘It’s all about bling and it’s in the desert.'” It’s also about price (high), demand (low), resale (horrendous) and incentives (Olympian). In fact, how’s this for a parenthetical aside? “(Towbin says he was offering $6,000 in incentives, not including GM’s employee-pricing discount, hurting profit margins.)” Followed by “Hummer discounts represent 22.6% of the price of the vehicle–the highest in the industry, Edmunds.com says. And still Hummer sales are down 47% this year, the largest decline of any brand, according to Autodata Corp.” So, will anyone take this three-ton turkey off of GM’s hands? How’s that old joke go? For a nickel I will.

Frank’s preparing to tackle the new GM website, GMfactsandfiction.com. Meanwhile, I was amused to find a link in the right hand column sending me to an August 1 Wall Street Journal Marketwatch blog. Ostensibly, GM wanted me to read a remark by house spinmeister Tom Wilkinson’s defending The General’s honor. [Quoting yourself is like the joke about the falling American tourist trade in post-911 Paris: the waiters were reduced to insulting each other.] But I got caught up in the blog post itself, filled as it is with its own set of facts. Or perhaps we should call them inconvenient truths?

“Shares of General Motors are down 6.2% after the company reported a staggering $15 billion loss for the second quarter, as a result of declining sales, losses on leases, lots of debt, high energy prices, and just about anything else that could go wrong with a company.

Here’s a list of some numbers to put the earnings report in perspective:

• $15.471 billion: GM’s loss for the entire quarter.
• $11.68 billion: ExxonMobil’s profit for the quarter.
• $6.267 billion: The market capitalization of General Motors as of this morning, according to WSJ.com.
• $7.512 billion: The market capitalization of Clorox, which reported net income of $158 million for its most recent quarter.
• $3.6 billion. GM’s cash burn during the quarter, according to Citigroup, who said that “weak fundamentals, low visibility and inherently slow company turnarounds stress the importance of liquidity.”
• $19.356 billion. GM’s cash on hand as of the end of the quarter.
• $56.97 billion. The total stockholders’ deficit as of June 30. That’s up from $3.77 billion at the end of June 2007. And yet, people continue to try to rally the shares.
• $4.55 million. The cost of insuring $10 million in GM bonds against default for five years (not including a $500,000 annual additional cost). That’s up from $4.2 million Thursday, according to Phoenix Partners Group.
• $16.91. S&P 500 earnings per-share before including GM.
• $15.29. S&P 500 earnings per-share for the second quarter, including GM’s GAAP results. GM’s earnings reduce S&P per-share earnings by 9.5%, according to Howard Silverblatt, equity index analyst at Standard & Poor’s.
• 21.3%. GM’s U.S. auto sales market share, for the year-to-date.
• 28.8%. GM’s U.S. auto sales market share, as of the end of 1999.”

Even before GM spun off parts maker Delphi in 1999, critics questioned the new company’s viability. Delphi depended on GM’s business for its survival. While bean counters talked-up diversification, new markets, etc., the 800-pound General in the room wasn’t going away– especially with all the GM-obligatory Delphi-related job, pension and wage benefits secured by the United Auto Workers. And GM’s need for parts. Since then, Delphi done well abroad and lost money hand-over-fist in the U.S. And so Delphi failed, filing for bankruptcy protection in 2005. But here’s the thing: GM wants Delphi to survive as is. The money they’re proposing to pour in– $650m loan agreed, $300m more proposed– seems a good money after bad mistake. Until you realize that a semi-viable Delphi guarantees the ailing automaker a supply of mission critical parts at a price they like. That’s right: $950m (and the rest) is less expensive than paying full freight for Delphi’s parts, which cost GM $3.12b in the first half of 2008. If Delphi goes into Chapter 7 (liquidation), GM’s either going to have to buy out the factories that make their stuff (with what money?) or face a more “realistic” pricing structure from the factories’ new owners. What’s good for GM isn’t good for Delphi’s investors and creditors, and don’t they just know it. “A group led by Highland Capital Management LP said in a letter to Delphi’s board of directors that the new financing by GM would benefit only GM while stripping worth from creditors imperiled by Delphi’s continuing massive losses in North America,” Automotive News [sub] reports. And there you have it. Until you don’t. Delphi’s Chapter 7 is coming; it could well be the straw that breaks GM’s back.

Back when GM and Ford claimed that foreign sales would keep them afloat long enough to patch their hulls, turn their ships around and avoid reefs of their own making, TTAC called bullshit. First, we pointed out that the domestics’ American losses were simply too large to sustain with foreign profits. Second, we said overseas car markets were hardly immune to the forces sending the States into the doldrums. And so… The Daily Telegraph reports that rising petrol prices have lowered UK vehicle sales to their lowest level since England won the World Cup against Germany in 1966. “The latest sales figures from the Society of Motor Manufacturers and Traders (SMMT) showed that the number of new cars registered last month was down 18.6 per cent on the same period last year. Worst hit were luxury marques and 4x4s, with monthly sales of Aston Martin cars down by two thirds in a year, Land Rover suffering a 58 per cent drop and demand for Porsche models 58 per cent lower than August 2007.” Worse– much worse– is yet to come. “The car market is now in real pain, real free-fall,” Professor Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff University, told the Torygraph. “It is not just the private buyers who are not buying it is also the companies and the fleet side who have decided to pull their horns in, it is a sign of pretty awful times ahead.” Oh, and The Times of India says “Sluggish outlook in India has forced Japanese car major Toyota  to revise and extend further its market share target from the country by as much as 5 years.”

And York should piss off. I’m sorry, but court papers released yesterday— part of an SEC slap on the wrist– reveal that Jer’ told his boss Kirk Kerkorian that investing in GM was a “no-brainer.” Of course, this was back in ’05– when the shit was already hitting the fan. Immediately before The Lion of Las Vegas forced York’s elevation to GM’s Board of Directors, and then tried to broker a GM – Renault merger. OK, OK, Kirk eventually made his crust on the playing the dozens with GM (hence the SEC ruling). But I’m thinking that York isn’t the brainiest “auto industry gadfly” in the biz– although it seems like piercing glimpses into the obvious are all that’s needed to catch Automotive News‘ editorial eye. (Sorry guys, but you write this stuff.) “The winners will be those companies that can change their output from larger to smaller and more fuel-efficient vehicles,” York revealed in a presentation to auto dealers and investors. “And that can improve their efficiency to make substantial profits on a less-rich mix of products sold.” And if you doubt York’s sagacity, well, he doesn’t. “There’s no doubt in my mind Cerberus’ strategy was to fix Chrysler up as best they could and find a merger partner,” York said. “I don’t know this for a fact. Nevertheless, there is no doubt in my mind.”

As Farago pointed out in his latest General Motors Death Watch, Automotive News [AN, sub] has suddenly decided enough is enough. The currently moribund U.S. new car (truck?) market is about to rebound. Excellent! I was getting tired of berating Motown for its unsustainable optimism. So, what are the facts that underpin scribe Richard Trout’s faith in the immediate future? “Heavy incentives on pickups and SUVs, combined with gasoline prices that are down about 40 cents a gallon from the July peak, may help the Detroit 3 and Toyota Motor Corp. shore up sagging U.S. sales.” Yes, OK, they “may.” But where’s the evidence they will? In fact,  Trout relies entirely on GM’s spinmeistery. “But GM executives found some cause for encouragement in sales of the Chevrolet Silverado and GMC Sierra pickups and the giant Tahoe and Yukon SUVs. The big light trucks had their best months of the year, stoked no doubt by GM employee pricing incentives that whacked thousands off sticker prices.” Folks, not to belabor the point that RF made so eloquently, this is not what responsible adults call journalism.