The Detroit Free Press reports that GM retirees could face pension interruptions thanks to the General's dumping of obligations to bankrupt supplier Delphi. Salaried employees who never worked for Delphi had their pensions handed over to the troubled GM spinoff in 1999, and had wondered what was happening when checks began arriving with Delphi's name on them. But puzzlement is giving way to concern, as the federal Pension Benefit Guarantee Corp has warned that Delphi is some $3.5b in the hole on its pension obligations. And no wonder, considering GM saddled it with pension obligations from several closed and sold factories as a spin-off goodbye present in 1999, a move pension experts call "legal." As in there ought to be a law against it. Meanwhile, hundreds of the non-Delphi retirees have received letters from the supplier saying their pensions are at risk, thanks to Delphi's bankruptcy. Delphi is supposed to transfer $1.5b in (hourly retiree) obligations back to moneybags GM, but mysteriously that hasn't happened yet, prompting the PBGC's concern with the situation. Though Delphi's bosses swear up and down that they're committed to honoring pension obligations, if the transfer doesn't happen by September 30 when new PBGC rules go into effect, Delphi will likely find itself in pension default. Which means hundreds of workers who never even worked for Delphi would be at the mercy of the PBGC. And those same new rules mean the PBGC will likely not honor most planned payment step-ups and early retirement benefits. "I don't want a handout," says one retiree. "I want General Motors to pay my pensions like they told me they were going to do."

If you happen to be looking for a quick fix to GM's and Chrysler's myriad woes, the closest you'll come to a silver bullet is good old Chapter 11. But Rick Newman of US News And World Report's Flow Chart blog seems to think a quiet little housecleaning bankruptcy isn't even an option any more. Newman argues that unlike, say, airlines, the automakers can't declare bankruptcy and still expect consumers to buy their expensive, warrantied products. He cites a CNW Marketing Research study which shows that 80 percent of respondents would suddenly lose interest in a brand if it declared bankruptcy. Then there's the chance that Washington D.C. could just decide that Detroit had the bad times coming and not make with the bailout. And unlike the recently-rescued financial giants, GM or Chrysler wouldn't bring the whole economic party crashing down around them if they did fail. Finally, Newman reckons Detroit's complex issues can't be solved with a simple reorg. After all, GM and Chrysler are slashing costs and squeezing suppliers in the status quo. The real issues, argues Newman, are revenue and products, neither of which will be fixed by bankruptcy. Taken together, the arguments seem convincing, but there are a few details being left out. Like the epic cash burn, the need to slash dealer franchises, and Washington's apparent openness to a hefty bailout. I, for one, am not completely convinced that (at least for GM) a Chapter 11 filing isn't the way to go. Chrysler, on the other hand, should just be taken out back and shot (Chapter 7). What say you?

And so it begins. The Wall Street Journal' s lead editorial makes it perfectly clear that Motown's plans to tap your taxes is well advanced. And guess what? It's a god damn conspiracy! "Earlier this month… the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits. We've since heard that lobbyists for the car makers are taking their pitch for direct federal loans around Washington, with a goal of unveiling the plan after Labor Day — conveniently in the frenzy of the fall election campaign. They've briefed Congressman John Dingell, the dean of Michigan Democrats, as well as officials in the Bush White House… The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years." TTAC will have an editorial on this shortly. 

Not to belabor the point (much), but the Chevrolet Cruze is GM's next next big thing. As such, the future Chevy needs a steady stream of spin touting it as such. And so why-the-Hell-isn't-he-embattled GM CEO Rick Wagoner cruises over to Lordstown, Ohio to announce his company's intentions to someday rule the world. I mean, design, build and sell a competitive, profitable small car for the North American market. Automotive News [sub] reports that Rick promised Lordstown $500m to facilitate Cruze control. That ain't much in the new car development scheme of things. And once again, The General's spinmeisters are using every possible opportunity to amp-up the rhetoric re: GM's impact on the U.S. economy. "The investment in Lordstown is one of several that have been announced at U.S. plants in the past five years, adding up to over $2 billion total investment in Ohio and more than $20 billion in the United States." Federal loan guarantee much?

Why would Delphi's bondholders sue GM in Manhattan court to prevent a $300m cash infusion? Because Highland Capital Management and other bondholders fear GM's "undue" influence over the bankrupt parts supplier. [NB: the $300m is on top of an existing $650m loan.] In other words, GM's money could give it the leverage it needs to prevent its former division from selling off profitable bits of Delphi. Like, say, the parts of Delphi that supply the GM corporate mothership with parts. GM control would also mean that the artist formerly known as the world's largest automaker could forestall a Delphi Chapter 7, should the bondholders decided that the jig is up. "It is merely a band-aid (albeit an enormously expensive and porous band-aid),'' the bondholders told Bloomberg. "It is a truism that borrowing to fund losses is a loser's bet.'' You want to talk about cash burn? "Highland and other bondholders said in the objection to the additional financing that Delphi used more than $960 million in net cash to fund operating activities in just the first six months of 2008." Anyway, bankruptcy judge Robert Drain approved a $5m company payout for the legal costs of defending former Delphi officers and employees from lawsuits related to pension funds and the bankruptcy.

While GM PR is milking the plug-in electric – gas hybrid hybrid Chevrolet Volt for all its worth, the automaker is shifting emphasis towards it latest savior. The Camaro. Wait. No. That's not it. The Beat. Nope. Hybrid SUVs? Uh-uh. The Cruze! "Wider and longer than most of its competitors, Cruze has a purposeful stance…" Yada, yada yada. Engines? At its European launch, the Cruze control will feature a choice of a 1.6-liter (112 hp), 1.8-liter (140 hp) or a new 2.0-liter turbo diesel (150 hp) four banger; with a five-speed stick or all-new six-speed auto. U.S. spec? Mpgs? No se. But here's the real news: GM reckons they can make money on building and selling this sucker in the U.S. "Small cars are becoming a permanent feature of the U.S. market, and the odds of earning a decent return have gone up" for domestic auto makers, auto analyst John Casesa told CNNMoney. "The window of opportunity for GM is now." Only, as Dow Jones' anonymous writer points out, "GM is counting on one more critical – but still uncertain – element to turn small cars into money makers, which is that consumers will ante up thousands of dollars more for a new small Chevy." Now what are the odds?

According to Bloomberg, Lehman Brothers' top auto analyst reckons GM "may" need to raise an additional $7.3b just to stay afloat through the end of '09. And that's just the start of it. "GM may 'burn through'' $6.9 billion of cash in the second half of 2008 and another $4.4 billion next year, according to the 'base case' of Lehman analyst Brian Johnson. If a worldwide economic slowdown causes auto sales to stall in the U.S. and fall by 10 percent in the rest of the world, GM may use an additional $4.9 billion of cash through 2009, forcing the company to raise as much as $12.2 billion, Johnson wrote in a note today." With the American automaker already paying $250m per month in interest on existing loans, with all of GM's "non-core" assets either sold or unsaleable, with its credit rating at Caa1 (seven levels below investment grade), with a negative shareholders’ equity, with profits from NA ops notable by their absence (and a short-term impossibility), where the Hell is this money going to come from? Answer: federal loan guarantees. And then what? 

GM's Chief Operating Officer has fired off a missive to The Wall Street Journal, taking the paper to task for its Op Ed "Can America's Auto Makers Survive?" Fritz is feisty– and full of it. "Contrary to Mr. Ingrassia's notion that U.S. auto makers did not anticipate the risk of rising fuel prices, GM has been preparing for the shift for several years toward more fuel-efficient models and developing diverse alternative fuel solutions that will redefine the industry." Hang on; isn't this the same company that said "no one" could have anticipated the recent gas price surge? "In fact, 11 of our last 13 U.S. launches have been cars or crossovers, as will 18 of the next 19. We have 17 models that get 30 mpg or better, and offer six hybrid models" All of GM's eight brands are losing sales and share. The hybrids are a drug on the market. But Fritz' last 'graph is far, far more worrying. It is nothing more or less than a pitch for a federal bailout. "The future of the auto business is important to America, and we are dedicated to seeing that GM continues to be a significant part of the American landscape for decades to come." Taxpayers, grab you wallets and ready those emails! Your money is at hand! 

[Read Fritz' letter here] 

Quick question: is there anyone who believes Cerberus managing partner Timothy F. Price's assertion [to The New York Times] that the private equity firm views Chrysler as a long-term play? Even ChryCo CEO Robert Nardelli is not brazen enough to make that sort of statement, preferring to go with "Yeah. What he said." Or, more literally, "Our job here is to run this company. Cerberus down the road will decide what strategic alternatives they intend to pursue.” Reporter Bill Vlasic can't come right out and say Chrysler's full of it; he plays one of those NYT nudge-nudge, hint-hint, these guys may be well and truly fucked games. "With limited access to financial data, analysts are skeptical of its overall health." Nothing like digging for a story, eh? Or sipping the Kool-Aid: "Now, Chrysler’s new leaders are settling in for what appears to be the long haul." Or, as we say in these parts, not.

Ye Olde Wiktionary defines "gee-up" as an English/Australian expression meaning "to excite in order to try to achieve a desired result." Ken Elias has never knowingly geed-up anyone about anything. But it's still true that his Ford Death Watch identified one of FoMoCo CEO Alan Mulally's most important jobs: getting the [remaining] executives lathered-up about the company's forthcoming products and, thus, the automaker's chances of survival. Yahoo! Finance reports that The Blue Oval Boyz have arranged seat time for the suits. "Last week, Ford started pulling around 4,000 workers from their desks at sites near the Dearborn headquarters and onto a test track for a few hours of driving and learning about how Ford hopes to set its vehicles apart from other automakers." So, how did they like the European Fiesta and Focus? Uh, well… "Most of the vehicles the workers were able to drive were 2009 or 2010 models of cars and trucks currently on the market, a vehicle lineup that for the most part hasn't sold well this year." A turbo-MKS was as good as it got. 

I know I [once again] risk the wrath of those who view me as GM's bête noir (I prefer to think of myself as an enfant terrible, but I'm way too old for that action). Even so, the news [via Reuters] that The General is upping the warranty on its Certified Pre-Owned (CPO) vehicles– from 3 months/3k miles miles to 12 months/12k miles– should be seen in context. It comes on the same day that GM announced it's pulling back on Buick, Pontiac and GMC leasing. Pulling back as in no longer offering leasing on any of the brands' models save the Pontiac G6 (go figure, fleet fans). With more brands to follow (suffer the little Cadillacs). Folks, it's all about the residuals– and I don't mean the customer's residual values. I'm talking about the multi-billion dollar hammering GM's taking on lease returns. And so is GM spokesman John McDonald, to The Detroit Free Press. "Leases, for a long time, have been supported at below-market rates. We're not able to financially support leases at below-market rates when the residuals have eroded as much as they have." So the CPO deal and the leasing no deal are designed to put a tourniquet on GM's self-inflicted wounds of lousy products, weak brands, the wrong products, chronic over-production, fleet sales and, I think that's it. Who can remember any more?

I'm flabbergasted. Presidential hopeful John McCain (or someone on his staff) pens an opinion piece for The Detroit News and the paper doesn't make ANY mention of the Arizona senator's bespoke opus on their on-line home page OR the Autos section. In fact, I would have missed McCain's rant entirely if not for an article in… The Detroit Free Press. WTF is that all about? Anyway, John is holding fast to his "no federal bail out for losers" position. Per se. "With a transition to alternative-fuel vehicles, we can rejuvenate the auto industry, drive cheaply and cleanly and be more secure. I will bring customers to the showroom with up to $5,000 in tax credits to encourage the purchase of these cleaner cars." Did he say American cars? No? Shit! Chill Motown; McCain's left himself some mighty fine wiggle room. "I will continue to meet with the leaders and workers of the Big 3 automakers. If the industry should need federal assistance, I will consider any reasonable proposal they develop that moves the industry to a more stable and prosperous future." So I guess that means McCain still considers it unreasonable to suggest that a federal bailout is reasonable. Or the other way around. 

CNNMoney reports that Chrysler has filed suit against Johnson Controls for "systematic and deliberate overcharges." The ailing American automaker claims the world's leading battery supplier "provided fictitious weight data under the guise that it could charge Chrysler more for the amount of lead used in its battery products. Chrysler had agreed to pay more to cover increasing lead costs." ChryCo's seeking to claw back $15m from Johnson. Or it could be trying to ensure that none of its suppliers gets too "feisty," in terms of demanding cash-on-the-nail for their goods or services. Or both. Or maybe Chrysler's Cerberusian masters reckon there's gold in them thar lawsuits. The Times of India intimates that Mahindra and Mahindra are looking to pay-off settle with Chrysler re: the Jeepish front grill on the Indian automaker's Scorpio SUV. 

So, what? You buy an H3T and you get the whole company? I kid. A bit. I mean, I'm not sure how HUMMER GM Martin Walsh makes that analysis. I guess it all depends on how you define the words "valuable" and "us." For sure, the new HUMMER pickup gives all the brand's executives and dealers something to do whilst they wait for the end, my friend. But there's no disguising the fact that the 14/18 mpg $31,495 H3T is about to arrive with a splat. OK, there's some disguising it, 'cause that's what GM PR does for a living these days. Uncharacteristically, Automotive News Jamie Lareau handles The General's whirling dervishes with kid gloves. "General Motors insiders admit high gasoline prices and a decline in U.S. pickup sales make the H3T a tough sell. They hope the H3T will sell well overseas until the market here recovers." And the punchline is… missing. But the humor is there, if you know where to look. "Walsh characterized the [ad] spending as significant but 'proportionate to the volume and the impact it'll have on the market. It's a niche player. It's not something we'd overspend on.'" Martin sets 'em up and Jamie leaves 'em alone. "Despite the tough economy and decline in truck demand, Walsh said a market exists for the pickup. Hummer is targeting males in their 30s who earn $90,000 or more and are into outdoor activities." If I were them, I'd duck.