The "bubble" is the point in a poker tournament where the next player out will not win any money– but the rest of the players will. A player "on the bubble" is on the verge of ignominious defeat. Automotive News [sub] reporter Amy Wilson deploys the term to flag Ford's plans to kill development of its large, rear-wheel drive (RWD) platform. Or not. "[Ford product chief Derrick] Kuzak told Automotive News last week that he is reconsidering the program. 'We need to understand the role of those vehicles, given the change in the market mix,' he said. In the meantime, Ford is developing those vehicles at full speed, he said." So it's all systems go! Right until it isn't. Lincoln dealers taking delivery of the new meh MKS await Ford's final decision with bated breath. Meanwhile, here are three more decision Kuzak hasn't made, but might. 1) sticking a turbocharged, four cylinder engine into the F-150 2) adding more European-sourced small cars to the lineup and 3) amping-up EcoBoost engine production past the 500k mark. Note: Lyndon Johnson said a bad decision is better than no decision. 

Even though I disagree with him more often than not, I like Terry Box's writing. If such a thing is rhetorically possible, The Dallas News car correspondent thinks outside-the-box. He's also a true champion of blue collar consumers. So when I caught a link to his coverage of GM CEO Rick Wagoner's appearance at a Dallas luncheon– where Rabid Rick's dropped his infamous and ineffective "inaccurate" bankruptcy rumor remarks— I knew we'd get some additional insight into Wagoner's thinking, or lack thereof. Box flags the fact that Wagoner reckons GM's Arlington will be GM's sole SUV supplier. "We think the segment will be big enough to support a plant," Mr. Wagoner assured his Lone Star State admirers. Think? But here's the real money shot: ""We used to do cars and everything else – with everything else being trucks. Now, we are moving toward three channels: cars, trucks and crossovers." Parsing that, it seems Wagoner still doesn't get it: America's future is predominantly car-shaped. Or does he? "Our job now is to get our cars more profitable," Wagoner announced. And how, pray tell, is he going to do that? Oh sorry. The answer would require a coherent turnaround plan with publicly stated goals. Why start now?

The S&P 100 is the most widely watched index of large-cap US stocks. It's a bellwether for the U.S. economy, a vital component of the Index of Leading Indicators. Reuters reports that the index's managers have punted GM, replacing it with Mastercard. "S&P did not in a statement explain why it dropped GM from the S&P 100." The fact that the automaker's share price has recently slid to 50-year lows, and the international automaker's market cap has fallen from $56b in 2000 to around $5.6b (which means GM NA has a negative net worth), might have had something to do with it. Informed speculation about an impending GM bankruptcy certainly came into play. And now all the index funds that buy the basket of S&P 100 stocks will have to sell their GM and buy Mastercard– no matter what the current price. The news should drag GM's stock price even lower. It's only a matter of time– and not much of it– before the DJIA (Dow Jones Industrial Average) will have to take a hard look at GM's inclusion. If/when, GM gets kicked off that listing, raising money to feed the automaker's cash conflagration will get a lot harder. Leaving federal loan guarantees as GM's only recourse to stave-off Chapter 11. All this before July's sales number and GM's first quarter results. Dark days ahead. 

If GM and Chrysler were healthy, they wouldn't have anything to deny, would they? But they do. And so they have. In so doing, GM CEO Rick Wagoner provided the perfect non sequitur. According to Bloomberg, "GM has no thoughts whatsoever'' of bankruptcy. Hang on; if you're not thinking about it how can you answer the question? And anyway, if Wagoner isn't thinking about bankruptcy, should he be? You know; the threat of bankruptcy? Or is this one of those quintessential GM fingers-in-the-ears "la-la-la-la-la" moments? Along the same lines, Wagoner declared "We don't have any plans to eliminate more brands." That's reassuring? Shouldn't GM have plans to eliminate brands? Especially if GM "has a lot of money for a company of its size" (i.e. one who's market cap is less than Mattel). Meanwhile, Automotive News [sub] has intercepted a letter from former ToMoCo Prez (and current Chrysler Prez) Jim Press and his best bud Steven Landry (executive vice president of North American sales) to ChryCo dealers. The missive assures store owners that the ailing American automaker isn't going Tango Uniform. "Speculation has surfaced recently in media coverage of analyst reports suggesting Chrysler might have liquidity issues down the road if the U.S. market does not pick up. Chrysler has communicated to the media that the suggestion of a possible bankruptcy situation is without merit." Without merit? As in untrue? False? Wrong? Parse-ably. 

You'd think we were back in second grade, what with all this "not" stuff. New York Times Op Editorialist Roger Lowenstein joins celebrity stock picker (and former GM booster) Jim Cramer and Merrill Lynch analyst John Murphy in accepting GM's not impossible nightmare. In his attempt to discover "WHO shot GM?" Lowenstein passes rising gas prices, a lack of hyrbids and bad design and goes straight to… the United Auto Workers' (UAW) legacy costs. "None of G.M.’s management miscues was so damaging to its long-term fate as the rich pensions and health care that robbed General Motors of its financial flexibility and, ultimately, of its cash." Huh? Apparently, without paying all that money to the UAW GM could have "designed new cars or researched alternative fuels. Or it could have acquired half of Toyota." Or bought Saab! Or HUMMER! Or started Saturn! Oh wait… sorry. It's all about universal health care and highly relevant shit like that. "The sorry decline of General Motors has proved Reuther right: the government is the better provider of social insurance. Let industry worry about selling products." Sure. That's the right approach. NOT! 

So now, without referring ONCE to GM's point blank denial of the Wall Street Journal article claiming the automaker was considering chopping brands and firing bureaucrats, The Detroit News reports that GM IS "undertaking an in-depth review of its product portfolio that could include eliminating or selling a brand." "A" brand or "some" brands? Who knows? But according to "a source familiar with the plans"– which could be you by now– this whole kerfuffle will end-up being nothing more than a damp squib. The "strategic review' will "most likely will result in the Detroit automaker purging overlapping models and shifting its emphasis to more fuel-efficient cars." Whew! And there we were thinking something radical might go down. Meanwhile, GM spinmeister Tom Wilkinson assured the DetN that there's gold in them thar' hills, when should GM need it. "Additional measures could include further reducing structural costs, selling noncore assets, and retiming or eliminating other capital spending. In addition, we will consider opportunistically executing financing transactions in the global capital markets, although we have nothing to announce." While we await that announcement, add "opportunistically executing" to "operationally bankrupt" and "aggressively conservative" to your lexicon of two-word bankruptcy-related expressions. 

GM wants to have a production version of its plug-in electric – gas hybrid Chevrolet Volt ready in time for its centennial this September. Automotive News [sub] cites "people familiar with the project" [Ed: my haven't they been busy today] who say the ailing American automaker is rushing to finish their four-wheeled Hail Mary by September 16, when RenCen celebrates the 100th anniversary of its founding by Billy Durant. In spite of the self-imposed deadline, "a GM spokesman declined to comment on the timeline for its next announcements on the Volt, which will include naming a supplier for the vehicle's lithium-ion battery pack." How can GM PR claim a "production version" of the Volt will be ready when they can't even say who'll supply the battery pack eight weeks before the debut? With ease, apparently. GM seems to be banking on the usual fawning media coverage to divert attention from the real issue: crashing sales, a raging cash conflagration and the threat of Chapter 11 just over the horizon. But hey! We'll have a hand-assembled "production" Volt to show off. What more could you want?

Huh. There can only be three explanations. One: The Wall Street Journal was seriously duped by a stock manipulator or a member of one of GM's warring factions. Two: The Wall Street Journal made shit up– there are no "these people" or "people familiar with the matter" or "people close to senior leadership." Or three: GM is lying; they are considering terminating/selling Buick, GMC, Pontiac, Saab and/or Saturn. Bloomberg ignores the implications and reports the refutation: "GM spokesman Tony Cervone… said no brands are under 'strategic review' beyond Hummer." Well, that's unequivocal. Then again, we know for a fact that GM's use of the term 'strategic review' is misleading; the automaker has shut off all HUMMER's dealer support and new product development. Anyway, the denial puts paid to my theory that GM PR planted the story to bolster the ailing automaker's sagging stock price and help it raise a little money (as in $15b). I mean, GM PR wouldn't purposely plant a story and then deny it, would they? Nah. It's probably one more example of the panic and confusion aboard the holed, listing ship that is General Motors. 

Last week, we remarked that the Motown media had finally put down the pom-poms. The Detroit Free Press' Mark Phelan seems determined to prove us wrong. First, the scribe offered us a rah-rah-siss-boom-bah on the plug-in electric gas hybrid Chevrolet Volt. To which Phelan adds a who-do-we-appreciate? look at The Big 2.8's "race to build fun, fuel-frugal cars." Yes, "They are honing new technologies, refining designs and scouring the Earth for fun, fuel-efficient cars they can build or sell in North America. From Chevrolet Corvettes and Ford F-150s to small cars engineered in Europe and Asia, every vehicle is being rethought as fuel prices skyrocket and new fuel-economy rules loom." That's all well and good if this was 2003ish. But it isn't. GM's market share is below 20 percent, Ford's racing against "last orders" and no matter how you measure it, Chrysler is in the toilet. Meanwhile, the transplants are eating Detroit's lunch. Never mind. Phelan reckons it's a "level playing field," now. "Unlike the 1980s, when small Japanese cars started the race a full lap ahead of the Detroit Three, the new technical challenges are equally daunting for everyone. 'They've all been dealt the same hand this time,' said Michelle Krebs, editor of AutoObserver.com. 'Now it's a matter of how they play it.'" Huh? "Vast and slow improvements in the cars the domestics build haven't been enough to change that perception. The massive, fast changes every automaker must make in the next few years could be their last chance to hit the reset button on how the American public sees them." Or not.

Doth Chrysler President and Vice Chairman Tom LaSorda protest a possible C11 filing too much? You be the judge. Meanwhile, step forward JPMorgan auto analyst Himanshu Patel. And man did that dude set the Wall Street cat amongst the Detroit pigeons this week, most notably flagging GM's "not impossible" bankruptcy. Now that the dust has settled (i.e. GM's stock found a level below the basement) the AP is highlighting Patel's assertion that Chrysler is in worse shape than GM, or Ford. "Patel estimated the automaker will burn through $4 billion this year and could be forced to file for bankruptcy protection or sell off parts of its business in the second half of 2009 if industry conditions don't improve. Patel said it's difficult to predict the most likely outcome for Chrysler, but he said South Korean or Chinese automakers covet Chrysler's U.S. distribution network. A bankruptcy filing could be a hit to Cerberus, which invested $6.1 billion in Chrysler as part of its acquisition and also backed a $500 million line of credit that Chrysler tapped last month." [FYI: The steelworkers union was no big fan's of Patel's.] 

Scanning the blogs as we do, Frank and I often sense the cold dead hand of automotive PR. Predictable patterns emerge. For example, GM saves bad news for Friday and launches "good" news (new products, restructuring, etc.) ahead of bad (sales figures, losses). This time, unusually, we've detected GM PR man Steve Harris' spinmeisterwerk post-trauma (Black Hole Tuesday). Unless… Anyway, not to diss disinformation, but Harris' handiwork arrives in the form of "here's one [high mileage car] we prepared earlier." Bloomberg doesn't even bother trotting-out the proverbial "unnamed sources" in its lead, preferring to stick with the "m" word. "General Motors Corp., which popularized the 7,800-pound Hummer, may [emphasis added] begin selling a mini-car more than a foot shorter than anything else it markets in the U.S. to win back buyers deterred by record fuel prices." Sure. We believe that. But here's the real story: "GM has reassigned engineers to many of the projects, according to the people familiar with the planning. The company is taking them from SUV and truck programs suspended while awaiting the return of customers. Now, these people said, GM sees no point in waiting." In other words, it's chaos as usual behind the scenes at GM– aside from the PR department.

I would have gone with Major Investor Liquidity Fuck-Up. But I suppose MILF's already taken. Anyway, The Detroit Free Press is waking-up and smelling the coffee, and JPMorgan (the investment bank, not the Gong Show judge) is brewing-up some sobering news. "Analysts at JPMorgan painted a bleak picture for Detroit’s automakers today, suggesting General Motors Corp. might need to raise $10 billion, Ford Motor Co. could be forced to sell Volvo and Chrysler LLC may have few if any options by late next year." Few options as in "The company could face a 'major liquidity event' by the second half of 2009 — and its options for raising capital are limited." Is a MLE the same as Chapter 11? While we await clarification from TTAC's Best and Brightest, I reckon JP's timeline is a bit optimistic. Their overall outlook, however, isn't. "The analysts note that a bankruptcy filing at any major U.S. automaker would be catastrophic for the broader industry, resulting in widely lower vehicle prices and dealing a severe setback to auto parts suppliers." (It's that middle bit that's got Toyota worried.) Oh wait! Maybe not "They sharply widened their loss estimates for both Ford and GM for the next two years, but still expect both companies to return to profitability by 2010." Gotta love that year!

"We continue to question whether GM will be able to sustain eight different brands and over 13,000 franchises with less than 20 percent market share." TTAC? Nope. Deutsche Bank analyst Rod Lache, as quoted by the Detroit News. GM's stock fell below $10 a share yesterday, and the prognosis isn't good for the company whose stock has fallen by more than 70 percent in the past year. Even Merrill Lynch analyst John Murphy, described by his peers as "last guy defending the [GM] bunker," said he expected GM's stock to fall to $7 and forecast "significant losses" for GM this year and next. When even the cheerleaders start predicting a losing season, the team doesn't stand much of a chance. It looks like GM could use a new coaching staff, and fast.

Ontario's struggling manufacturing sector took another blow yesterday. CNews reports that Oakville, Ont-based automotive supplier Polywheels has shut down indefinitely. Workers arrived for their 7am shift on July 2 only to find the plant closed and shut down notices posted at the entrances. The workers, represented by the Canadian Auto Workers (CAW), were surprised that the company shut its doors without warning. "I'm upset because this is a good factory, they had good, good benefits," emotes a local worker in a moment of unionist entitlement. The Toronto Sun reports that American Axle's own strike, which halted production of Polywheels' bread and butter models (e.g. Sierra/Silverado) was a body blow for Polywheels. The subsequent rise in gas prices was the coup de grace, according to another worker: "We figure out how to bring the price of oil down and we'll all be fine." Easier said than done, I suppose. [Thanks for Michael Kirouac for the tip]

Red Sox fans will recognize this "not impossible nightmare" as the inverse of their team's fabled 1967 season. The rest of us will see it as a fancy way for an influential Wall Street firm to say a GM bankruptcy is "increasingly likely." In fact, Yahoo! News reports that Merrill's analysts had a gander at June's sales stats and GM's cash burn and reckon the ailing American automaker will need to raise an additional $15b– preferably with Merrill's help– to stay afloat. Meanwhile, Merrill Lynch analyst John Murphy shanked The General, cutting GM from "buy" (har-har) to "underperform," and lowering his price target from $28 to… $7 per share. The move slammed GM's stock price and forced a subtle shift in GM's increasingly taciturn spin. "We continue to believe the company has sufficient liquidity for 2008 despite lower volumes," GM spokeswoman Renee Rashid-Merem told Reuters. "If conditions continue to deteriorate, we would consider other operating measures." In other words, more cost-cutting in addition to fund raising. But honestly, what good what that do?