Can that be right? The last time we checked it was $16b. If Ford's tearing through $20b though to the end of '09, what do you think GM's conflagration looks like? The $1b per month stat may be an underestimate… Anyway, this terrifying tidbit re: Ford's bank balance was buried at the bottom of a Fortune article [via CNNMoney] by Alex Taylor III. The once and future former Detroit cheerleader's speculating about whether there's a Ford Motor Company in investor Kirk Kerkorian's future– after Captain Kirk and FoMoCo CEO Big Al Mulally's sit down in Sin City. And then Taylor drops the bomb. "On their flight back home, Mulally must have wondered whether he simply dodged the first bullet. Kerkorian never remains on the sidelines after buying in and the only question about his greater involvement in Ford seems to be when he will choose to make his move. He has offered to invest more capital in the automaker, a potentially welcome move, since Ford is expected to burn through nearly $20 billion in cash by the end of 2009. But like any investor, Kerkorian would not be expected to hand over his money without some strings attached." Ya think? On the other hand, maybe Kirk's just waiting for a Chrysler/GM C11 dead cat bounce before cashing-in his chips. 

Fresh from their closed door meeting– which included Ford CEO Alan Mulally– presidential hopeful Barack Obama and GM CEO Rick Wagoner took the stage at Carnegie Mellon University to discuss federal handouts. As reported by The Detroit News, Barack set 'em up. "How do we shape our energy future in a way that allows GM to remain competitive, keeps some of the best workers in the world on their jobs [some?] and generates profits for the company and shareholders?" GM's jeffe knocked 'em down. "Wagoner sounded a note of optimism," the DeN notes. "Noting GM's plan to introduce the plug-in hybrid Chevrolet Volt by 2010 and more advanced research on hydrogen fuel-cells. But he said the researchers developing batteries for hybrids and taking hydrogen power from the lab to the highway need federal research money. And he asked for government help to offset the high costs of newer technologies for consumers — aid that traditionally has come in the form of tax credits." "We need to provide some support to make sure these new technologies are affordable to consumers," Wagoner said. Anything else? "Wagoner suggested that the carmakers' 'relatively weak balance sheets' make it difficult for them to make the large capital investments needed to shift production lines to new vehicles." So that "we" is "we the people." As in you. And your tax dollars. To GM. To pay for them to make better cars. In case you hadn't figured that out.

From unsinkable to unthinkable. But there it is; stock picking guru Jim Cramer says GM is headed for Chapter 11. Yes, The General "joins the list of unthinkables, the ones that may not be able to make it with its current structure. The ones that basically need to be Chapter 11'd to save the business from dying." In his own inimitable style, Cramer reduces the arguments against GM's survival down to its essentials. "GM does not have enough cars in demand that it can make a profit on, and it has way too many cars and trucks that aren't in demand to do anything but lose billions of dollars, despite the decline in headcount and costs per car. It feels like the Citigroup of the autos. Without the deposit base." But seriously folks, Cramer's rant also fingers Ford for extinction. Of course, this is the same Jim Cramer who said the following in his 10-25-06 TV show: "GM – We recommended it at $18; it goes to $36. We say take a little schnitzel. It's now pulled back to $34. It's going to get to $40, but it's going to meander. I like F. I like GM." And this in February of this year: "I know there's risk to GM. But if you want to tell me that I am being reckless recommending this small-cap stock with the biggest share in the world, then I might as well just recommend that there's no real way to make money in the market." Never mind. When telegenic mainstream media mavens tell the average Joe to sell his stock and run for the hills, you can bet the big investors are already sunning themselves in the Hamptons. 

Forbes' columnist Jerry Flint is at it again. This time 'round he's saying what he said last time 'round: the feds need to give Detroit a holiday from fuel economy and safety regs. While I approve of recycling in general, recycling the General's spin strikes me as a particularly inadvisable endeavor. By the same token, defending GM's management seems, well, indefensible. At first, at last, Flint seems to come to terms with GM suits' epic incompetence: "The record is not good. Since 1992, GM's U.S. market share has fallen steadily–from 34% that year to 19% in May. Many of GM's leading executives are from the finance side of the business, but the financial failures are numerous… What is more amazing is that GM management has survived relatively little criticism, as far as I can tell, from its board of directors or the press." The press being… Jerry Flint? Roger [and me] that. "I know many terrific GM executives, starting with Vice Chairman Robert Lutz, who are doing an outstanding job. The problem is that GM is running out of money and time. The decisions it makes over the next few quarters could be crucial to its survival. I worry whether GM has enough of the right leaders to steer the company through this crisis." File this one under too little, too late, too disconnected from reality to be believed.  

Several of TTAC's Best and Brightest sent us links to today's Wall Street Journal article "GM Slates Sweeping Rebates As Toyota Closes In on No. 1." That's bad news, but it's not new news– in these parts anyway. The real reason so many of our readers sent the tip is buried in the body copy of the story. "The cost of insuring against a default in GM's bonds has soared to a high in recent weeks as fears of a bankruptcy-court filing have grown. An investor who wants to buy credit protection on $10 million in GM's bonds for five years currently has to pay $2.8 million upfront and $500,000 annually for that insurance, through what are called credit-default swaps. A year ago, that protection cost only $400,000 annually, with no upfront cost, according to Credit Derivatives Research LLC. Based on market prices, debt investors currently see more than a 70% chance that GM will default on its obligations sometime in the next five years, said Boaz Weinstein, co-head of credit trading at Deutsche Bank AG." The really worrying part? "A spokesman for GM said it has sufficient liquidity for 2008. He declined to comment on 2009." Saepe ne utile quidem est scire quid futurum sit.  

In the latest GM Death Watch, RF points out that GM is dancing on the point of a spear. The LA Times puts it into a different perspective. After the stock market closed yesterday with GM down 6.4 percent from Friday's closing, the company that was once the largest and most profitable in the world is "now is a less-significant business than Starbucks Corp., Gap Inc. or computer game retailer GameStop Corp." GM's total market capitalization is currently $7.3b, down from $14.1b on January 1. Starbucks, on the other hand, "still has two digits before the decimal point: Starbucks' shares are worth $11.9 billion in all." And as if to rub salt into wounds, they point out "you could fit nearly 17 GM's in Coca-Cola's $124-billion market cap." How the GM board can sit idly by and watch this unfold is anyone's guess, and why they keep the current impotent leadership around defies logic. GM's workers, suppliers, dealers, stockholders and customers deserve better than this.

Washington Post columnist Warren Brown shares his thoughts on last week's Escalade Hybrid (EH) press conference. Not suprisingly, Warren's aware that now my not be THE best time to be launching a $79k SUV– even if is less thirsty than its less expensive gas-only variant. Still, in the end, Warren joins GM in their luxury barge as it drifts down denial. "Big tricked-out SUVs… retain considerable market pull, even in a market where monthly fuel bills are beginning to rival monthly amounts due on vehicle finance notes. There appears to be a cadre of hard-core fans, influenced by needs real and imagined and guided by a passion for motorized might and luxury, who are keeping the big rides on the road and in the showrooms." Warren is happy to parrot GM's sales projections for the EH (say it like you mean it). "With 60,000 Escalade sales last year, Cadillac was the undisputed leader of the luxury SUV market. But even with its new Platinum and hybrid models, Cadillac will be lucky to sell 40,000 this year, GM officials conceded. But 40,000 is still good business." This from the same company that overestimated '08 U.S. new vehicle sales by some two million units– so far. And just in case you'd think that Warren would call GM on this turkey, no. "The 'hybrid' tag comes with a hefty price premium — $5,000 to $8,000 more, depending on the model. Will hard-core SUV buyers go for that? Maybe they will." For sure, they won't. 

Retail issues aside? Like, um, the fact that GM's pulled the plug on the brand, assuring depreciation that would give a Maserati buyer the Willies? While I have no doubt that Autoblog's Dan Roth would tell us if he had someone in the HUMMER business, I also have no doubt that if he did, that person would be well pleased with Dan's blog on the doomed maker of militaristic SUVs. "Moving product is a tremendous challenge when the bobbleheads on the nightly news continue shrilly about the price of fuel and you've got a lot full of low-mpg, high weight trucks that happen to be a favorite target of vandals euphemistically masquerading as 'activists.' Customers that do make it through the door are looking for deals, and HUMMER will spot you five thousand bucks to take an H3, PLEASE." In other words, it's a great time to buy! "If you've got a boat to pull, and want to look like the Governator, an H2 could still be just the thing, and now you'll be able to find one for a song; most likely the blues." As Dave Edmunds sang, "Everything's wrong but nothing is right."

Now that Chrysler's HR honcho Nancy Rae has sent us a primer for pessimists, it's time for The Detroit Free Press to find some light at the end of the tunnel that doesn't look the headlight of an oncoming train. First the bad news, albeit with a light dusting of sugar coating. "Detroit's automakers are bleeding cash, despite massive cost-cutting and job reductions in recent years," Justin Hyde "reports." "And while each has socked away funds, the money will last only until 2010 at the latest unless the companies borrow to buy more time, analysts say." And then, hints of hope(tm)! "If you're looking for some sign of light in the gloom, there are glimmers. Unlike previous slumps, the vehicles built by Detroit's automakers are broadly on par with much of their competition. The landmark deal that will lead the UAW to take on health care for workers will free up cash in 2010, especially at General Motors Corp. All three companies are pushing new fuel efficient models, with side bets on more exotic technology such as plug-in hybrids." But even Hyde can't. "But a permanent cure — generating enough cash to pay their debts as they roll out new vehicles — appears unlikely before 2011, and another unexpected jolt could tear one or more of them asunder, analysts say." What corporate arrogance has created, let no market rent asunder? Good luck with that.

Marketwatch gives us our usual dose of pre-weekend gloom. It reports that Moody's "lowered Chrysler LLC's outlook to negative from stable and affirmed its B3 corporate family rating and probability of default rating… This erosion in market fundamentals could stress Chrysler's liquidity profile by late 2009 or early 2010." More bad news [via] The Australian: Ford Motor Credit is headed for the buffers: "Now the auto lender, faced with falling asset quality and burgeoning provisions for credit losses, may have to tap its parent for help at a time when Ford Motor is reeling from a sales slump and deeper production cuts." At the same time, CNNMoney reports that Standard & Poor's "put Ford Motor Co. on a negative credit watch list because of worries about the health of the U.S. auto industry… S&P also placed General Motors and Chrysler on CreditWatch with negative implications. "We have renewed concerns about all three automakers' future cash outflows in light of the prospects for U.S. sales for the rest of 2008 and into 2009," announced S&P credit analyst Robert Schulz. "It's hard to imagine what else you can throw into the mix to make things worse," added fellow analyst Efraim Levy. Hard, but not impossible. For example, what happens to Ford and GM's supply chain when Chrysler files (on a Friday)?

After losing its "best-selling vehicle in America" badge, Ford's F-150 has hit another pothole. Automotive News [sub] reports that the beleaguered Blue Oval Boyz are postponing the release of the all-new 2009 model by two months. The coompany says the delay will Ford can burn through its massive overstock of the outgoing model. Both F-150 plants will lose a shift this year, and one of the two will idle for most of the third quarter. These cutbacks are just part of the Ford's production slowdown. The Wall Street Journal reports that Ford will cut overall production by 25 percent in the third quarter, and by as much as 14 percent in Q4. "Ford has taken decisive action to respond to this accelerating shift in customer demand away from large trucks and SUVs to smaller cars and crossovers, and we will continue to act swiftly moving forward," says FoMoCo CEO Allan Mullaly. Ford also says its pre-tax earning will be worse in 2008 than 2007, and that cash burn will be higher than previously expected (by them, maybe). With $40b in liquidity, $23b in debt and $16b as good as spent to keep the turnaround on track until 2009, these cash burn issues are troubling, to say the least. Ford's stock reflects these concerns, currently down nearly 7 percent on the day. Paging Captain Kirk!

Folks, when Alex Taylor III bails on GM, it's all over bar the shouting. In his most recent article for Fortune [via CNNMoney] , Three Sticks puts down the pom-poms and gives GM a mighty good shellacking. "The news coming out of Detroit is getting worse, and unlike in past years, there will be no full recovery. Analysts are betting that General Motors will be forced to take emergency financial measures this year that could hamper its competitiveness for a long time to come… This stunning sales decline means that GM is continuing to burn cash at a fearsome rate – perhaps $1 billion a month by some estimates. Rod Lache of Deutsche Bank figures that GM will consume as much as $19 billion in cash over the next two years. Since it began the second quarter with $23.9 billion on hand and needs $10 billion to $15 billion to keep the lights turned on, that leaves a big hole." Yes, Alex, a VERY big hole. A hole that's an extremely slimming shade of black. How black? "In GM history, 1992 is generally considered the worst year of modern times, with multiple plant closings, huge losses and the shunting aside of CEO Robert Stempel. Now it looks like 2008 will have that beat." And then some.

Yes, GM's light truck sales are in the toilet. Yes, it makes sense to plan their future carefully, given questions about [the loopholes in] new federal fuel economy regulations. But it's also true that GM's stop/start development process hurts its competitiveness. If GM wants to maintain its co-domination of this wounded though high-profit sector– and why wouldn't they?– the automaker would do well to remember that the new Toyota Tundra and Sequoia are still out there, somewhere. AND there's a new Ford F-150 and Dodge Ram coming down the pike. But no. GM has revealed that the next gen trucks– scheduled to go into production in 2013– have been postponed. Bottom line: GM's saving $300m. Bottom line: GM's cash position must dire. Even The Detroit News gets it, kinda. "GM has said it needs more and better passenger cars for the U.S. market. But money to develop new vehicles is tight. The automaker, which hasn't turned a full-year profit since 2004, is burning cash, losing $3.3 billion in this year's first quarter alone." Over at RenCen, the spin starts there. "GM's Wilkinson said the automaker is confident that the existing trucks can compete with other companies' new models. Even without a total makeover of the platform, GM can change anything from the trucks' powertrains to the interiors. 'Our intention is to remain a leader in the segment.' What was that about the road to Hell? 

Forbes' Jerry Flint has some strong words for Detroit. But first… "Yes, Asian car companies cheated. They kept us out of their countries and kept their currencies weak. Yes, our government changed the rules so foreign brands could sell in domestic dealer showrooms, making it cheap for them to attack this market. Yes, our unions helped by ignoring the destruction they were causing until it was almost too late. State governments helped by giving foreign carmakers huge tax breaks when they build plants. Then there was bad luck, or whatever it is that has pushed gasoline prices to $4 a gallon." BUT "the blame has to fall on Detroit's executives. They didn't know enough about their own business to build better cars than the foreigners did, and they were unprepared for a change that was sure to come, sooner or later." BUT "That's not the issue. If we want a home-owned industry, our government will have to help for a change instead of piling on, treating the automobile and the industry like devils." OK, so, how much is this boondoggle going to cost me? Nothing! All we have to do is "halt immediately all new regulations–safety regulations, emission regulations, bumper regulations, mileage regulations." Where do I sign?

In an epic feature presentation, Bloomberg reveals that former Home Depot CEO Bob Nardelli beat out Wolfgang Bernhard for Chrysler's top slot by dint of his pessimistic analysis of the biz. Well, he's got plenty to be pessimistic about now; most important of which is, as we've pointed-out numerous times, Chrysler's cash flow. "Nardelli, who spends most weeknights at the Townsend Hotel in nearby Birmingham, Michigan, and commutes home to Atlanta on weekends [ED; who says Detroit execs don't care about their carbon footprint?], gets constant reminders that he's racing the clock at Chrysler. Every day, he and his top executives receive an e-mail from the treasurer's office showing how much cash Chrysler has on hand." Just because he's paranoid… "The carmaker started 2008 with $9.5 billion, a person familiar with the situation says. After tapping a $2 billion credit line from Cerberus and Daimler AG and setting aside $1.6 billion to repay a loan from the United Auto Workers union for a retiree health fund, cash will drop to $7.7 billion at the end of 2009, the person says. Chrysler needs $2.5 billion-$3 billion to fund its day-to-day requirements." Wow, that's a lot of billions! But not, as we know, enough to keep the automaker afloat in these truck-aversive times. Tick tock.