And there you have it. The hit from Hell, sucking the life out of FoMoCo. Automotive News [sub] brings the noise. "In the financial report, Ford said that it took $8.0 billion in special charges to write off the value of troubled assets — including a $5.30 billion charge for Ford North America. The North American unit posted a $1.3 billion pre-tax loss in the quarter compared with a $270 million loss during the same period a year ago." If not for foreign ops… "Ford said it posted a pre-tax profit of $582 million in Europe during the quarter, up from $262 million. It also turned profits in Asia and South America." If not for Volvo… "The Volvo unit lost $120 million compared with a loss of $91 million a year ago." As promised, Ford announced the truck-related loss along with its plans to turn the not-so-supertanker- anymore around. [TTAC coverage continues.]. Meanwhile, according to Bloomberg, "Ford said it had $26.6 billion in automotive cash at the end of the quarter, down $10.8 billion from a year earlier." Chief Financial Officer Don LeClair is "confident'' Ford has enough liquidity. Sorry. "One time" expenses or no, there's no way Ford can sustain that kind of loss indefinitely. It's a race against the clock, and the clock is in the lead. 

Of The Big 2.8, there's no question that Ford has the best chance of emerging from America's Summer of Shiva, uh, intact. But that doesn't mean they will, or can– despite the Obama-like blessing bestowed upon the ailing American automaker by the mainstream automotive press. Tomorrow, The Blue Oval Boyz are taking a leaf out of GM's PR playbook. FoMoCo will announce its new new new turnaround plan on the same day that they reveal some shocking financial losses. To say the press is in the tank for Ford would be something of an understatement, as two of its heavy hitters have already praised Ford for its courage, perspicacity, common sense, speed and general good looks. Self-styled Autoextremist Peter DeLorenzo leads the charge. The big news here: Sweet Pete's finally using a typeface that doesn't make you want to do an Oedipus. But seriously, "Instead of doing a series of baby-step changes over the next three years, Ford will bring its 2012-2014 products forward to the 2010-2011 time frame in a blaze of models and configurations that will set the U.S. market – and its competitors – on its ear." Woo-hoo! While The Detroit News' Daniel Howes is a lot more cautious, his piece is generally supportive. "Ford is taking giant steps in the right direction," Howes pronounces, without waiting for a glimpse at the big picture. "At last."

Our contacts at Ford tell us there's big trouble brewing for The Blue Oval Boys. Two independent sources report that FoMoCo is ceasing production of the fresh-out-of-the-box Flex in their Oakville, Ontario plant. Apparently, the factory has built some 13k xB-shaped CUVs since production began on June 3– and sold [a lot] less than a thousand. Our correspondent tells us "the 500 additional employees that they were hiring for a third shift have been canceled… The CAW [Canadian Autoworkers Union] is not too pleased." If true, Ford's beancounters will share their dismay; the automaker spent over $1b converting Oakville to, wait for it, flexible manufacturing. While we seek further confirmation, a TTAC tipster working at a supplier for the Ford Edge (also made in Oakville) says dropping sales are leading to a severe cutback. "Our schedulers are trying to get some hard numbers so they can work out our shifts." You want hard numbers? Although Edge sales are up 16.8 percent year-to-date, they fell off a cliff in June, down 19.9 percent. The same fate befell the Lincoln MKX (the Edge's twin under the skin), up 4.2 percent year-to-date, down a whopping 34 percent in June. We will keep you up-to-date with new info as we receive it. One thing is for sure: when Ford reports its financials on Thursday, there will be Hell to pay. [thanks to our sources]

Nestled in a New York Times article about Ford's fight for survival– switching production to small cars, building world cars, reporting epic losses on Thursday, yada, yada, yada– comes news that FoMoCo is NOT killing their Mercury brand. The Gray Lady's head automotive cheerleader cites "people, who spoke on the condition that they not be quoted by name because of the timing of the official announcement on Thursday" as saying The Blue Oval Boys will make the brand "an integral part of its new small-car strategy." Well, my mind is boggling. But not Bill Vlasic's, a reporter who feels compelled to not add a damn thing to that revelation, other than "the company will keep the Mercury brand and use it as another distribution channel for small cars." Which is the same thing, only later. The rest of the article is padded with a potted history of FoMoCo's "troubles," with the usual Vlasic Motown-thrown bone. John Wolkonowicz, an auto industry analyst with the forecasting firm Global Insight, tells Bill "“It’s hard to blame Ford for building vehicles that consumers wanted to buy." 

In an email to the troops [obtained by The Detroit News], Chrysler CEO Bob Nardelli's denying The Wall Street Journal report that ChryCo's re-fi of $30b of short-term, car-loan-backed debt may not go down. If that happens– I mean, doesn't happen– Chrysler dealers will find themselves in that special place where they have no attractive deals to offer on their unattractive vehicles. Nardelli said pay no attention to that banker behind that curtain. "As is customary for many auto finance companies, this renewal process takes place every year. We will continue to offer competitive financing and lease options for our customers and dealers." A dealer worries. "We knew something was going on with Chrysler Financial, but we didn't know what," reveals Alan Helfman, owner of Rivers Oaks Chrysler Jeep in Houston. "It's a big-time concern, because there is a copious amount of deals that I can't get done today that last year I could make a phone call and they'd be willing to work with us." Perspective people! "If the demand for your products is there," says George Magliano, automotive analyst with Global Insight Inc. "You don't have to worry as much about offering a great deal." Which is exactly why Helfman and his fellow store owners are scared to death.

Three years. That's how long an eight-member GM hit squad's been working on defining The General's eight North American brands. Let's start at the end of The Detroit Free Press article on Liz Wetzel's team in GM's Global Brand Studio. Pom-pom-wielding autoscribe Mark Phelan concludes "…the automaker appears to have a solid product plan and design vision for its other brands for the first time in decades." OK, now, here it is: "Buick and Cadillac owners both have money, but they choose to spend it on radically different things. A Buick owner would be inclined for a quiet vacation on an isolated beach, while Cadillac is more about dressing up for a night out on a weekend in the city. A Pontiac will be designed for the nightlife, too, but for a fashion-forward agenda with pounding bass and flashing strobes. Chevrolets aim to look good as well, but with the effortless appeal of blue jeans and a good shirt, not Pontiac's club-hopping flash. Saab sells cars around the world, so it can speak to a smaller audience: people who consider themselves independent thinkers and want a car with Scandinavian style and environmentally responsible performance. Saturn attracts buyers who wouldn't touch a Chevy or Pontiac with a 10-foot-pole and its theme will build on Opel's European strengths: design, handling, fuel efficiency and interior room." Before you ask, in GM's world, that IS a plan.

Ever since GM CEO Rick Wagoner announced his first turnaround plan (turn around while I pocket $100m), Wall Street and the mainstream media have reacted positively to his cuts. And every single time TTAC's responded with Death Watch warnings that the cuts don't mean jack shit. GM's octo-branded, dealer-bloated, product-lame, legacy-intensive, union-stifled, fiefdom-protecting business model is broken. Last week, Rabid Rick did it again. And once again, the stock emerged, zombie-like from its grave. Only this time, those supposed to be in-the-know are, in fact, in-the-know. CNNMoney [finally] rolls with the changes, proclaiming "GM's Stock Surge May Be Short-Lived; Earnings, Sales Eyed." Hmmm. Could be. "In announcing the liquidity-boosting plan, the company also said that it expects to report significant losses when second-quarter financial results are announced in the next few weeks. GM hasn't announced a date for the release of its quarterly financial report. July sales results, set to be released Aug. 1, could bring more bad news for GM and its Detroit-based counterparts, which continue to lose market share to foreign-based rivals." As sure as eggs are eggs, GM faces yet another credit downgrade. If GM hocks its foreign ops– it's only remaining asset of  value– then even Chapter 11 may not save The General. 

The Detroit News reports that 150 Chrysler white collar retirees attended the first meeting of the National Chrysler Retirement Organization. The meeting comes days after GM announced retiree health care cuts, and a month after Chrysler cut life insurance to its former workers. "Chrysler workers were promised these benefits and counted on them when they retired, especially if they took an early retirement," said Chuck Austin, the org's president pro tem. "For them now to change their minds anytime they'd like — it's not right." The organization has sent letters to Chairman and CEO Bob Nardelli and Nancy Rae, executive vice president for human resources and communications, asking for benefit guarantees. Meanwhile, the group is looking into legal redress. "We need to make sure that the pension fund is 100 percent secured," says former Chrysler human resources staffer Nancy Furman. "If we are losing our benefits, seeing our 401(k)s drop and living longer, we need to make sure every penny counts." The group's also asking Chrysler to follow GM's lead and freeze executive salary raises and bonuses. Unfortunately, when (or if you prefer, if) Chrysler goes C11, these retirees will have little legal recourse. Yet another reason to bemoan, not celebrate, Chrysler's ignominious decline.

Automotive News reports that members of GM's national dealer council purchased more than 107k GM shares on July 14. The store owners claim the million dollar move was a symbolic gesture to "show support and confidence in GM's future." No really. "We firmly believe in GM and that we have the best products to sell," proclaimed Duane Paddock, co-chair of GM's national dealer council and owner of Paddock Chevrolet in Kenmore, N.Y. "Our fuel economy is the best story in the industry and the best way to do it [the show support thing] was to buy an investment stock." Paddock says he added $100k worth of GM shares to his $200k position. [Reporter Jamie Lareau neglected to ask if that 200 large represented his original investment or a recent valuation.] The dealers made the purchase the day before Rick Wagoner's cost-cutting announcement. The day after Wagoner's chin wag, GM stock rose 16.6 percent, closing at $11.48. Today, GM stock surged another 11.9 percent, closing at $12.85 a share. It has to be asked– if not by the SEC then by us– was this really an It's a Wonderful Life-style gesture or was it insider dealing dressed-up for the media?

In his most recent GM Deathwatch, RF raised the specter of "Bailout Fatigue." The Detroit News' Gordon Trowbridge agrees. Their man in Washington says to the government's preference for financial sector bailouts like Bear Stearns, Fannie Mae, Freddie Mac and Indy Mac will queer the pitch for Motown. Rep. John Dingell cries foul! "If Freddie Mac and Fannie Mae ask for a bailout and they get it, [automakers] should be able to ask and get it, too," says the Dearborn democrat. Former Michigan governor James Blanchard agrees: "government  seems to treat financial services with special care, and not care about manufacturing until the last minute." President Bush begs to differ: "If your question is, should the government bail out private enterprise, the answer is, no, it shouldn't." According to the Chief Excutive, the Fannie/Freddy "rescue" isn't a bailout because "the shareholders still own the company." And now a word from someone without a horse in the race. "Fannie Mae and Freddie Mac are fundamentally sound businesses," says University of Maryland economist Peter Morici, implying of course that the D3 aren't. Besides, Fanny and Freddy hold 91 percent of America's mortgage debt on houses under $470k, while Detroit only employs about as many workers as Chrysler did when it was bailed out in 1979. 

Fair and… mentally balanced? I'm not so sure. But one thing is certain: there's a new spinmeister in town. Speaking with Automotive News [sub], GM Chief Financial Officer Ray Young whirled a mean dervish. "There are reports that we were in crisis," Young said, confusing his tenses. "That's far from the truth. We run a dynamic planning process here, so we're constantly feeling the market. We have a certain view of the United States economy and a view of the oil prices. After the month of June, our assessment of the U.S economy made us realize there's a lot more risk in this economy than we thought initially." D'oh! And then scribe Jamie "I Ain't No Stinkin' Lap Dog" Lareau asks "Will this plan save the corporation?" Whoa, Dude! Or, as Young says, "It's going to allow us to handle a very conservative set of industry assumptions, a very conservative set of mixed assumptions and provide ample liquidity through 2009. We're still working through 2010 plans. To me that's still too far away." If only Toyota thought so short term. Anyway, Young says bankruptcy is "not in the cards" and Car Czar Bob Lutz is playing with a full deck [kidding]. Also, the Beancounter has not been asked to price-up the cost of a brand termination. "I keep on reminding our organization that cash is king. I'm not sure what it would cost to eliminate a channel, but when we closed Oldsmobile that cost $1 billion. That's a lot of money."

Does that include big-ass tax credits for Chevy's plug-in hybrid electric – gas Volt? Federal loan guarantees? I'm thinking… yes. But Barack ain't saying nothin'– other than it's all the republicans' fault, vote for me and I'll sort this shit out. As Reuters reports, "Democratic Presidential hopeful Sen. Barack Obama said today that the job cuts at General Motors Corp. were 'a sober reminder of the difficult economic times we're facing,' and said the U.S. auto industry was facing a 'perfect storm' of trouble." Yes, "when a mainstay of the American economy is forced to make a restructuring decision like the one General Motors is announcing today, it is a sober reminder of the difficult economic times we're facing and of why we need change and a new direction in Washington." Uh, did I miss something? What restructuring? Anyway, "My heart goes out to all the workers and families in Michigan and across the country who will be affected as well as those who have been impacted over the last few months and years of turbulence in the auto industry." FYI McCain has come out against a federal bailout for Detroit. Barack… isn't so sure. 

GM's given the media a heads-up that CEO Rick Wagoner is about to outline "actions to better align the business to the current market conditions" (i.e. reveal their new new new new new turnaround plan). It's a bit of a bitch, as I have a General Motors Death Watch queued-up for your dining and dancing pleasure. Rest assured I'll have TTAC's take on Wagoner's latest pre-apocalypse prevarications minutes after the other shoe hangs in the air. Meanwhile, it's worth noting that Automotive News [sub] scribe Jamie Lareau felt obliged to preview the forthcoming cut and shunt by stating "The message is not likely to be an announcement of management changes or that GM is filing for Chapter 11 bankruptcy protection, a source familiar with GM told Automotive News today. The news will be 'fairly upbeat,' the source said." That's a mind-boggling bit of writing on two levels. First, you know it's bad when a generally supportive member of the automotive press feels obliged to tell people you're not choosing the nuclear option. And second, what the Hell could Wagoner say that could possibly be "upbeat?" The only good news on any GM front is that sales overseas are up– foreign ops without which GM would have a negative market capitalization. 

To paraphrase an old expression, it stops being funny when it starts costing you billions. And make no mistake about it: Cerberus' investment in Chrysler has cost the private equity firm some serious scratch. Bloomberg reports that "The $7.5 billion Cerberus Institutional Partners Series Four [15-month-old fund] lost $32 million on $3.3 billion in investments through March 31… hurt by stakes in unprofitable companies including Chrysler LLC." That one percent drop might not seem like a lot of money in a shaky U.S. economy, but fans of Cerberus' top dog are used to returns in the neighborhood of 25 percent per year. Needless to say, Chrysler's been a bit of a drag for the three-headed dog, all things considered. "Founder Stephen Feinberg plowed as much $4 billion into automaker Chrysler and GMAC LLC, the former vehicle- and home- lending arm of General Motors Corp., before they were battered by the subprime-mortgage collapse and gas prices that rose 34 percent in the past year." Again, that's before the shit hit the fan. Bloomberg points out that Chrysler probably accounts for no more than five percent of Hell Dog's latest fund, and that the ailing American automaker is, supposedly, besting Cerberus' projections. Still, $375m here, $375m there…  

As a privately held company, Chrysler doesn't have to tell anyone anything. But in an enterprise as vast and well-charted as the American automobile industry, you can run, but you can't hide from market reality. Automotive News [AN sub] raises an interesting question: why is "fast moving" ChryCo asking its dealers to pre-order products five months in advance? In a July 3 memo to store owners, Chrysler claimed demand for its Belvidere-built products had 'skyrocketed.' Really? While Patriot sales were up 5.5 percent in June, Caliber sales tumbled by 43.6 percent, and the Compass crashed 38.8 percent. Apparently, "Chrysler is taking aggressive actions to realign our product volumes to coincide with market demand." Really? Chrysler killed Belvidere's third shift in March; it's currently running on two shifts with overtime. Would orders in hand inflate Chrysler's worth to a potential buyer? Anyway, buried in the article: an assertion [by AN] that "Chrysler is trying to stick to its guns on slashing unprofitable fleet sales." According to ChryCo, they've cut fleet sales by 20 percent. In truth, even the rental fleets don't want the cliff face depreciation cars, SUVs, minivans and pickups (despite a recently revealed, post spin-off, long term contract with Thrifty). And the automaker's retail/fleet mix is getting worse, not better. AN reckons fleet sales account for about 35 percent of Chrysler's total– not including dealer fleet sales.