Even as Detroit races to turn-off the production spigot, dealer inventories are building to abandoned airfield levels. You want to talk trucks? In an industry where a 60-day inventory is ideal, every single GM truck has over a 100-day supply; some many more. While all three automakers swore they'd sworn off incentives (and blamed the move for reduced sales), that was then, this is now. Chrysler's Jim Press signals the fire sales to come. "It is inevitable from our standpoint because we have pricing pressure in terms of cost from steel and plastic," Press said during an interview with Dow Jones Newswires. "Incentives will be a key part but the focus will shift on those products that are facing the headwinds, such as trucks and SUVs, rather than those benefiting from the tailwind like cars." Chrysler? Cars? Tailwind? What tailwind? Anyway, the bottom line: "Chrysler's average incentive per vehicle sold in the U.S. in May was $3,714, the highest figure among the six top-selling auto makers for the month, according to Edmunds.com. Ford's average incentive totaled $3,326 followed by GM at $3,477. Nissan Motor Co.'s (NSANY) average U.S. incentive in May was $2,090, while Honda Motor Co. (HMC) was at $1,256 and Toyota was $1,045."

Motor Trend's Angus MacKenzie is pissed-off at the autoblogosphere for crapping on his advertisers' inability to predict the death of the great American gas guzzler. "Don't you love Monday morning quarterbacks? The blogosphere is in seven shades of schadenfreude this week as a shocked Detroit wipes away the blood in the aftermath of May's brutal sales slump: Why didn't Motown see this coming? We told them relying on big trucks and SUVs was a dumb idea. It was obvious gas prices were going to rise. Fire the idiots! Oh yeah? If you're reading this, I'll bet my 401k that like Rick Wagoner and company, four years ago you didn't figure you'd be paying over four bucks for a gallon of gas today. Because if you had, you would now be richer than Croesus, and lying on a tropical island somewhere, kicking back with a mojito or three, without a care in the world. Hey, we're all still writing blogs. We didn't see it coming this fast, either." Ah, this fast. And there's your Detroit excuse of the day, as laid out by GM CEO Rick Wagoner in this startling video. Oh, and this is all your fault. "Automakers grudgingly built the more fuel efficient cars the government ordered them to, but we bought gas-guzzling pickups and SUVs by the millions instead because, hey, gas was cheaper than water. Who needed to drive a girly gas-miser? So maybe we ought to ease up a little on the finger-pointing at Motown; the truth is we're all a little bit complicit here." Speak for yourself Angus. Oh wait…

What is it with Friday? Every time I think I've crossed the finish line, the bad news arrives like an uninvited guest. Of course, it's not all about me. It's about an entire industry facing cataclysmic change. Bloomberg reports: "Oil rose $11.33 to an all-time high $139.12 a barrel during trading. Crude oil surged more than $10 a barrel to a record as the dollar weakened after the U.S. unemployment rate grew the most in two decades and Morgan Stanley said prices may reach $150 within a month." As far as GM's concerned, causation don't 't make no never mind. The bottom line: the automaker's stock price ended the day at $16.22, a 33-year low. Automotive News [sub] attempts to put a brave face on it, spinning the loss as part of the larger stock market drop. No matter how you parse it, GM's still a high-cost, cash-burning, truck-heavy manufacturer leaking red ink from every pore of its North American ops, with no escape plan (although its CEO and top brass are well-protected). As this blog from the Wall Street Journal indicates, the Street is waking up to GM's death spiral, and it ain't that pretty at all. "By contrast, GM — which seemed to have covered itself well by selling assets before the buyout markets skidded to a halt last year — could end up with less than $1 billion by 2010, thanks to a combination of cash-draining losses and debt repayments, according to Lehman Brothers Holdings. Even if it tapped bank credit lines, it would by then have less on hand than the $10 billion or so analysts reckon it needs to support its everyday business."

Talk about your diminished expectations… Post-Black Tuesday, GM CEO Rick Wagoner's told the world [via The Financial Times] that his employer has enough cash to make it through '08. And while you're filing that under "methinks he doth protest too much," Wagoner defends GM's (and the rest of the 2.8's) reliance on big trucks and full sized SUVs by… pointing a finger at Toyota. By his way of thinking, you can't blame Detroit (i.e. him) for missing the SUV and pickup truck exodus because Toyota got caught building a new truck factory at the wrong time. Huh? Toyota added a full-sized truck to its product portfolio to compete vigorously in one of the few segments of the market where they were weak. (Lest we forget, they built the Prius in record numbers at the same time.) Sure it turns out that Toyota's Tundra timing was off, but they aren't at risk of closing up shop because of it. Bottom line: ToMoCo books more profit in one year than GM's entire net worth. Comparing GM's management decisions to Toyota's is patently absurd. Will no one rid us of this troublesome man? 

Or, more charitably (if equally egomaniacally), great minds think alike. Or, even less charitably (to both the Freep and TTAC), duh. First, let me get this off my chest. We've done the GM Attention Deficiency Disorder thing here, here, recently here and just about everywhere since ever I started this website. The fact that the Freep's Tom Walsh has only just reached this conclusion- after trying to reconcile J.D. Power's IQS rankings with domestic auto sales– is mind-boggling. As is the format of his treatise: "conversation with self." As are the simple-minded counter-arguments forwarded by his Detroit-loving half. "This [J.D.'s survey results] means that Detroit’s Big Two – General Motors and Ford Motor – are back in the game again. Right up there in quality with Toyota, Honda, Nissan, Hyundai, Audi and all those other foreign brands.” “Who cares?” “Whaddya mean, who cares? I care. We’ve got lots of trouble here in River City with plants closing, suppliers bankrupt, lots of people losing jobs. Better quality means our hometown companies will stop shrinking and start growing again.” Like Walsh's column, this realization is too little, too late. And too optimistic, too soon. 

As a burgeoning fuel crisis unseats the credit crunch as the downer du jour, the subprime woes of GMAC and ResCap are bubbling away under the surface. Reuters reports that GMAC has completed a $60b refinancing and funding package in hopes of returning its ResCap mortgage branch to reality liquidity. The bailout arrived just as ResCap revealed that it needed to raise $2b in cash by the end of June to meet its obligations, after losing $859m in the first quarter of this year. ResCap has refinanced its unsecured debt, renewed bank credit lines, and exchanged nearly $10m in bonds for higher-interest, longer-term debt. GMAC shareholders GM and Cerberus jointly provided $750m guarantee as part of a $3.75b line of credit extended from GMAC to ResCap, and have thereby exposed themselves to the first loss, should ResCap default. Interestingly, the bailout came in a week that saw rampant speculation (since denied) of a Cerberus sale of portions of GMAC and Chrysler. Far from punting, Cerberus is actually buying-up hundreds of millions of dollars worth of GMAC's resort funding division and ResCap's model home assets, since market conditions are slowing asset sales. "The fact that ResCap's owners – both GMAC and Cerberus – remain willing to pony-up cash in order to keep the mortgage subsidiary afloat, strongly suggests that they still see something there that's worth saving," KDP analyst Thomas Ferguson tells Reuters. Avoiding bankruptcy perhaps? Whatever it is, GM and Cerberus better hope it pays off, and soon.

Tata Consultantcy Services may regret their contract to take over Chrysler's information technology (IT) services. Automotive News [sub] reports that Chrysler "asked its non-production suppliers for a 5 percent across the board cost reduction" effective June 1 and effective for one year. "Non-production suppliers" are those providing IT, administrative, custodial and other support services not directly involved with producing automobiles. A statement from Chrysler explained their "recent decision to enact a 5 percent cost reduction on non-production materials and services is part of Chrysler's ongoing efforts to reduce its cost footprint in a highly competitive marketplace." From what we've seen, these "ongoing efforts" also include stiffing delaying payments to some suppliers and asking others to take a 25 percent cost cut. Some of these beleaguered suppliers can't take beatings like this much longer before they follow Plastech into Chapter 11. But maybe that's what Cerberus wants, because it would give them an excuse to take Chrysler in the same direction. 

In these and following presentations and in related comments by General Motors management, we will use words like "expect," "anticipate," "estimate," "forecast," "objective," "plan," "goal," "project," "outlook," "targets," and similar expressions to identify forward looking statements that represent our current judgments about possible future events. We believe these judgments are reasonable, but actual results may differ materially due to a variety of important factors.

Among other items, such factors include: our ability to realize production efficiencies, to reduce costs and implement capital expenditures at levels and times planned by management; market acceptance of our products; shortages of and price increases for fuel; significant changes in the competitive environment and the effect of competition on our markets, including on our pricing policies; our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; the final results of investigations and inquiries by the SEC; court approval of the settlement agreement with the UAW and UAW retirees related to the 2007 national agreement; negotiations and bankruptcy court actions with respect to obligations owed to us by Delphi Corporation, a key supplier; possible downgrades for GMAC or ResCap by rating agencies; developments in the residential mortgage market, especially the nonprime sector; and changes in general economic conditions such as price increases or shortages of fuel, steel, or other raw materials.

Speaking to analysts during a conference call, marketing maven Mark LaNeve said GM "will continue working with [HUMMER] dealers on the appropriate mix of ads, incentives and dealer programs to keep them going and build franchise value." According to an anonymous source (whose information has been independently confirmed), GM has killed the HUMMER brand. The ailing American automaker told its field teams that it's ceased all corporate investment in HUMMER. This includes updates for existing models, the scrapping of the upcoming H4, and a severe cut-back or elimination of marketing and advertising– as contracts allow and media buys can be diverted to other GM brands. The decision pulls the rug from under  171 HUMMER franchisees, including 71 standalone dealers. According to our tipster, GM field ops– who must make nice with the abandoned store owners– are "crapping themselves." Why wouldn't they? Many of these HUMMER dealers have just spent millions upgrading their dealerships to meet brand requirements set forth just two years ago. The first lawsuits have probably already been filed. The rest will follow. Still, closing HUMMER should cost GM less than the billion dollars it spent shuttering Oldsmobile– although that was back when a billion dollars was real money, not GM's monthly cash burn.

In a video interview with USA Today. Ford CEO Alan Mulally admits that American consumers' switch to smaller, more fuel-efficient vehicles is permanent. Despite talking-up the new F150's chances of success, Big Al reckons the move from light trucks is "not a temporary shunning of big SUVs while they wait for record fuel prices to drop." Which Mulally says ain't gonna happen, anyway. "It's not like we have a shortage of oil, but recovering what's left under the earth has become very expensive, ensuring continuing high prices." When asked for a new date for The Blue Oval's scheduled return to profitability– previously set at 2009– the former Boeing exec would only say it's delayed by a weak economy and the shift from "high value trucks" to smaller cars. The video clips are interesting to watch, and much less painful than anything from Lutz or Wagoneer. But the spin doesn't stop here. Asked about Volvo, Mulally claimed the ailing Swedish brand isn't for sale. Last April, Mulally told the world Jaguar wasn't for sale. That deal went down yesterday.

The Detroit News is reporting GM CEO Rick Wagoner's new new turnaround plan. As expected, The General is cutting back SUV and truck production in a BIG way: "phasing out" Oshawa, Ontario (2009); Moraine, Ohio (2010 or sooner); Janesville (end of 2009) and Toluca, Mexico (end of this year). At the same time, GM's ramping-up production– adding a third shift– at Lake Orion (Pontiac G6 and Malibu sedans) and Lordstown (Chevy Cobalt and Pontiac G5). And here's a surprise: Wagoner said GM is "exploring all options, including the possible sale of its Hummer brand." To whom? In other product news, GM said it was abandoning plans to build an entry-level Cadillac and will instead create an S-Class killer to replace it's ancient, arthritic STS. Just kidding. The company will build a new Chevy compact car at Lordstown (as reported yesterday). The DetN also reports that GM promises a "world car" replacement for the Chevy Aveo to go on sale in the U.S. in the second half of… 2010. Full Death Watch analysis to come, after the real news: GM's May sales results.

[GM press release here.] 

That's the difference between the cost of maintaining GM's $1 per share annual dividend ($567m) and the company's so-called "free cash flow" (.33 cents a share or $189m). As Bloomberg reminds us, GM cut its dividend in half– from $2 to $1 per share– in February '06. At the time, talk of bankruptcy was in the air and on CNN ("And yet the evidence points, with increasing certitude, to bankruptcy.") GM was well into it current market share decline, having lost some $8.6b in NA the year previous. But hey, given GM's recent $1b per month cash burn, what's $387m between friends? That said, if you want proof that the ailing American automaker is still in denial/maintaining a brave face regarding its cash conflagration and North American market share tumble (down from 26 percent in '06 to around 20 percent now), look to see if CEO Rick Wagoner eliminates the dividend at his turnaround hoe-down later today. And then duck, lest a flying pig hit you in the head. 

No, of course not. And the sentiment is doubly true– OK "applicable"– if you're the CEO of Ford just before launching a new full-size pickup. Especially when full-size pickups sales are down 23 percent over the last three years. And falling. Of course, what else could Alan Mulally say? The F150 is still the country's best-selling vehicle, Ford has to defend its turf and the launch was planned at least three years ago. "What we have to manage is bringing down the overall volume on the trucks and SUVs," Big Al told Automotive News [AN sub]. "As we make this awesome transition to the new one." Like, totally. Big Al's "there's no such thing as bad timing" remark also refers to ALL of FoMoCo's '08 releases. As AN reports, "Ford still aims to hit volume targets previously established for the 2009 Ford Flex crossover and 2009 Lincoln MKS sedan." There's nothing on predicted F150 volumes, but Ford plans to sell between 75k and 100k Flexes and 36k Lincoln MKS per year. Big Al's theory: "Higher gasoline prices shouldn't hurt volumes of the Flex and MKS because consumers who were driving big SUVs are turning to cars and crossovers. They want improved fuel efficiency, but still may need the space of a bigger car." May? Uh-oh. 

And so they did. GM's stock price rose today, after scribe Vito Racanelli penned an opus entitled "Buy GM." "On the long side, General Motors now seems suited mainly for one group — bold investors who hope to eventually double their money but can afford to lose it all if their wager goes awry. The good news for GM fans: Despite the misery that the car maker is experiencing and might endure for another 12 to 18 months, such a wager ultimately should pay off." Racanelli then presents a litany of GM's financial "challenges," combined with a regurgitation of GM's party line (i.e. things suck now, but won't later). Racanelli's not-quite-as-guarded-as-it-seems recantation of The General's Volt hype exemplifies the analysis. "But if the Volt succeeds — and, yes, Wagoner's stated delivery deadline won't be easy to meet — GM will steal a march on its big Japanese competitor. And, says Elizabeth Lowery, GM's vice president of environment, energy and safety policy: 'The Volt is just a piece of it.' She says that the company is launching eight hybrids this year — more than any other company — and 16 over the next four years." Sixteen? "'Enormous' is the word that Csaba Csere, editor-in-chief of Car and Driver magazine, uses to describe GM's progress. 'Their cars look good on the outside, have a luxurious sense inside and drive well,' says Csere, whose publication used to routinely blast the General's vehicles." Etc. Look for the "Racanelli" effect to disappear when GM's May sales are revealed tomorrow– with or without Rick Wagoner's new new turnaround plan. 

As readers of our General Motors Death Watch know, GM e-rotweiler and junket dispenser Christopher Barger thinks TTAC is WAY too negative. At least we're not double negative. Check out the Director of GM Global Communications Technology's response to a CNBC poll. Phil LeBeau asked readers to choose one of four culprits– management, unions, SUVaphilia or Toyondissan– for GM's sagging stock price and rapidly declining fortunes. Barger sent a "now hold on a god damn minute" email to LeBeau which tells us exactly how GM's spinning their [death] spiral: it's the economy, stupid. "In fact, these economic headwinds are taking their toll on virtually every American business and industry — and consumers from all walks of life too. Singling out one company for criticism when the entire economy is struggling seems a bit unfair, don't you think? It's kind of like blaming one person for being out of work when unemployment is on the rise." (Tell that to Honda.) There's a lot of B.S. to wade through, from GM strengthening its brands, to the fact that the automaker sells eight (count 'em eight) hybrids, to "our products can go toe-to-toe with anything on the market today." Barger's central message: fuck the past. "I think it's more constructive to look forward and to try to continue improving things, don't you?" As the old saying goes, those who don't learn from history have a bright future in corporate PR.