In a previous Wild Ass Rumor of the Day, we asked "GM wouldn't be stupid enough to try to pay all [Delphi's bankruptcy] debt, would they?" It was meant to be a rhetorical question. Dow Jones reports [via CNNMoney ] that The General is "exploring alternatives" that include "providing an additional significant portion of Delphi's exit financing" in their annual report filed yesterday. The filing also said they're willing to reduce their share of the cash distribution they could receive in the bankruptcy settlement and "and accept an equivalent amount of debt in the form of a first-lien note." The amount of this particular portion of GM's cash conflagration is not known. But it doesn't matter whether The General shells out more cash or goes deeper in debt– neither alternative bodes well for the GMs financial health or stability.

Here's the official statement, contradicting part of our story on Chrysler's post-Daimler accounts: "Several media outlets have erroneously reported a loss of approximately $2.7 billion by Chrysler between August 4 and September 30, 2007. In fact, from an operating earnings standpoint, Chrysler was profitable during this time period. Also, Chrysler lost significantly less than what was reported during the course of the full-year. We believe any differences are attributable due to U.S. Generally Accepted Accounting Principles (US GAAP) versus International Financial Reporting Standards (IFRS) accounting rules. These differences include pension accounting for the UAW settlement and restructuring and purchases accounting." So, can we have a look at those books then, Mr. Private Equity Firms Don't Need to File Public Accounts? Thought not. 

Some 175 member of the Canadian Auto Workers (CAW) union employed by the TRW auto supply plant in east Windsor (Ontario) downed tools at three am last night and walked off the job, protesting wages and benefits. The Detroit News reports that Chrysler's Windsor minivan plant– which depends on TRW for its minivans' suspension frames– shut down three hours later. "Talks have broken off," announced CAW Local 444 President Ken Lewenza. "We're digging in our heels for a long one." CAW bargaining rep Mike Renaud told The Windsor Star he's got no regrets. ""It's a major blow to our community, and we're fully cognizant of that. And we remain willing to bargain at any given moment. But we have to have fair wages and benefits here for people," he said. Renaud described the average TRW $11.25 per hour salary as a "poverty level wage." CAW member Ryan Kelly, who works in shipping, said amen to that. "I made more working at Tim Horton's — it's a joke." Surprisingly (or not), this is the first time the TRW workers have attempted to reach a collective agreement with management. But not the first– nor the last– time Chrysler has been whacked by supplier disruptions. 

UPDATE: Chrysler currently maintains an inventory of 45,700 minivan: a 57-day supply of Chrysler Town & Countrys and a 77-day supply of Dodge Caravans. 

After Bloomberg sounded the alarm re: The General's lousy prospects, phenomenal cash burn and potential slide into Chapter 11 (or foreign ownership or both), the Detroit News adds fuel to pyre. Of course, Sharon Terlep does does so in her own special way (i.e. it wazzunt me). "General Motors Corp.'s already fragile turnaround could be derailed by any number of threats looming in 2008, from more strikes at parts suppliers to a further meltdown of the housing market, according to the automaker's annual report filed Thursday." Without nailing GM for guarding the terms and conditions of its payment into the $34b union health care VEBA, the scribe hints at the implications. "GM's ability to spend in other areas of the business will be affected if it can't secure financing under favorable terms." After citing another possible downgrade in GM's ratings "if GM continues to burn cash in its home market or if operations outside the United States become less profitable," Terlep can't resist throwing GM a bone. The penultimate danger cited: "Competition from rivals introducing key new models this year. GM's product cadence will slow down this year after a number of successful, high-profile new vehicles in 2006 and 2007." Successful? Successful how? 

This one's a bit screwy. According to Reuters, Ford's compensation committee wants to pay Billy Ford– even though the former CEO and current Board Chairman pledged not to draw a penny in salary until FoMoCo had returned to profitability (currently scheduled for 2009). In a note filed with the SEC, Ford (the company) said it's decided to change the terms of of Bill Ford's 2005 compensation arrangement "in light of the company's progress in restructuring its troubled North American operations." The committee insisted that it was "not reasonable" to expect Bill Ford to continue to work for free "particularly after he has received no compensation for three years." Ford spokesman Oscar Suris said Bill Ford had turned his back on compensation worth roughly $25m to $33m. OK, now, The Detroit Free Press reports that Billy has reaffirmed his promise not to bank the bucks until Ford's in the black. TTAC is investigating.

So now we know why former Chrysler CEO Tom LaSorda was willing to punt BOTH of his turnaround plans, step aside for new CEO Bob Nardelli and share a co-presidency with ex-Toyota Prez Jim Press. According to The Wall Street Journal, Daimler's European accounts reveal that the Germans made the above payment (€10.4m) to Mr. LaSorda as a bonus for LaSorda's help liberating them from majority ownership of the American automaker. Yes, folks, that's on top of LaSorda's $3,223,116 (€2.13m) annual (which is to say ongoing) compensation package. Not to mention LaSorda's pension. Or health care. Or perks. And just in case you thought LaSorda's bonus and salary were performance related in the traditional sense of the term, Daimler's papers also show that Chrysler lost €1.94b ($2.9b) in an eight-week period last year. That's $51,785,714.29 a day. Hands-up anyone who thinks LaSorda gives a shit. [thanks to John for the link]

You know things are pretty bad for GM when Bloomberg starts sounding like TTAC. Doron Levin's column "GM Turnaround Collides With Dismal U.S. Car Demand" begins by turning around GM's "poor poor pitiful me" PR spin, which would have us believe they're unlucky rather than stupid. "Don't be fooled. That interpretation of GM's latest woes ignores years and years of dallying and denial. The No. 1 U.S. automaker delayed drastic action, hoping that growing automotive revenue might be enough to outstrip ballooning costs. GM has known at least since the early 1990s that its business model in the U.S. was defunct." Levin dismisses the foreign profits as life preserver argument, tosses aside GM's new products and predicts a cash crunch. And here's the twist: Sovereign Wealth Funds to the rescue! "The lenders include the governments of Kuwait, Singapore and Saudi billionaire Prince Alwaleed bin Talal. Perhaps sovereign funds willing to take a flyer on the second biggest U.S. bank [Citigroup Inc.] might be inclined to invest in its biggest automaker." Where did they get that $8.9b for the union health care VEBA from anyway? Meanwhile, Levin says "Without a financial cushion, GM no longer has the luxury of putting off until tomorrow what it should have done yesterday." We say: it's too late. 

As we chronicled in GM Death Watch 165, details of the new $33b – $36.5b GM – United Auto Workers (UAW) health care VEBA (Voluntary Employees Beneficiary Association) are beginning to emerge. That said, neither this site nor the 600k+ UAW workers whose health care depends on this trust know the timing or amounts of GM's contributions to the fund. While we await that info, The Detroit Free Press reports that GM's raising money to pay into this Mother of All Health Care Trusts. Regulatory documents reveal that GM has taken on an additional… wait for it… $8.39 billion in debt. The Freep breaks it down to "4.37b in 6.75% bonds, due in December 2012 and convertible into GM shares, and a $4.02 billion, 9% short-term note." As a quick reminder, GM's interest payments on its current debt burden are $2.9b per year. Again, we don't know how much more cash GM will need to fund the VEBA, and when they'll need it.

“You’re adding an oil shock on top of a crunch on credit and a housing collapse. Even the U.S. economy cannot withstand all of that at the same time.” Nigel Gault, an economist at Global Insight, didn't mention falling new car sales or millions of endangered auto loans in his analysis of the impact of rising U.S. gas prices. But then, he didn't have to. It's been clear for years how this one will shake out, with truck-heavy domestics losing both sales and market share. The New York Times says that when it comes to American gas prices, the only way is up. "Energy specialists predict that, as demand picks up further this spring and summer, retail prices will surpass the high of $3.23 a gallon set last Memorial Day weekend." Surveying  the supply, demand (both international and seasonal) and production equation, AAA spokesman Geoff Sundstrom reckons we could see $4 a gallon gas this summer. “We’ve gone from a worrying situation for gasoline to one that is quite alarming." Meanwhile, automakers placing their bets on oil burners will not be happy to read that "on Tuesday, diesel prices rose to a record $3.60 a gallon, compared with $2.62 a gallon last year." 

It's a piercing glimpse into the obvious in a New York Times article without any major revelations, but it's still worth noting the human toll of Ford's shrinking market share and concomitant race to slice its labor costs. As former Detroit News writer Bill Vlasic correctly points out, "Ford’s big new push is not to sell cars. Instead, it is trying to sign up thousands of workers to take buyouts, partly by convincing them that their brightest future lies outside the company that long offered middle-class wages for blue-collar jobs." To that end, the Times embeds a happy-clappy video “Connecting With Your Future" that shows Ford's please-leave-now ex-employees that yes, Virginia, there is life after Ford. Ah, but is there life for Ford? In the middle of Vlasic's sugar coated pill run down, a quote from analyst John Casesa is like a shot to the solar plexus. "These companies are trying to do in the last 24 months what they should have done over the last 24 years,” the head of Casesa Shapiro Group says. “That’s why it’s such a shock to the system.” Just as sadly, it's come to this: "One thing Ford workers are proud of is that their buyout options are more extensive and, in some instances, better paying than those at G.M." 

The more we look into the Chrysler vs. Plastech debacle– wherein the automaker and the parts supplier are locked in deadly combat over mission critical tooling– the more it appears that the Plastech ship has been sinking for quite some time. Canplastics.com, reports that Plastech owes J&J Tool & Mold of Ontario more than $1m for injection molds. The Canadian company's vice president says Plastech stopped making payments last November. "We've had to scrounge the last several months to try and find additional customers to replace that work," Mike Altenhof reveals. "For a small company, it's been terrible… we're in a cash crunch right now." For Plastech, things aren't so hot either. When the supplier filed for bankruptcy, they declared that they owed creditors some $488m.

Automotive News [AN, sub] reports that Chrysler is still pursuing Plan B, after a federal judge ruled that bankrupt parts supplier Plastech could hold onto the tools that make the 500 plastic parts that Chrysler needs to make cars. In other words, it continues to dangle replacement contracts in front of potential suppliers. According to AN, "late last week, Chrysler senior procurement manager Scott Roland convened about 40 supplier executives and Chrysler purchasing executives at the automaker's suburban Detroit technical center. Two people at the meeting said Roland told them to hold on because Chrysler wasn't done trying to get its tools back." Fair enough. Chrysler can't afford to pay through the nose for its plastic pieces OR face another parts embargo. But it looks like Chrysler jumped the gun before the Plastech ruling. AN also says "The suppliers at the meeting are makers of plastic components that last month received a letter of intent stating they would get the Chrysler trim business now held by Plastech." While I'm sure the letter was full of caveats, it's no wonder Roland's embarked on a little post-facto hand holding. 

What starts out as the [now] usual report on the huge number of high-risk sub-prime car loans– "According to Power Information Network, 1.85 of the 9.6 million customers in 2006 who leased or financed a new car were subprime borrowers or consumers with weak credit"– suddenly swerves towards Uh-Oh Town. The CBS5.com report highlights BMW Financial lease holder Vivian Snyder. A salesman inflated Snyder's income ($2500) on her credit application by 150 percent. The reporter then secured the loan application and discovered that "Snyder's income had been changed once again – from $6,000 to $8,600, this time without her knowing. An "8" had been placed before the "6" and "0"s tacked at the end." When confronted, Freemont, CA AutoNation General Manager Larry Long claimed the change had been made in Snyder's presence, and then blamed BMW Financial for approving the lease. "We have investigated this matter internally," Bimmer spokesmouth Martha McKinley insisted. "And we are satisfied that BMW Financial Services acted appropriately at all times during the application and credit review process." Yes, well, AutoNation eventually ate the lease and "according to consumer advocate Rosemary Shahan with Consumers for Auto Reliability and Safety the practice is common. 'This is an epidemic of loan applications being falsified. In fact, the model for the meltdown we're seeing in real estate and home mortgage lending was auto lending.'" [thanks to buzzlightyear for the tip]

According to Automotive News [sub], Saturn's looking for a “slight” increase in ’08 sales. Speaking at its dealers party like it's 1999 confab in the City by the Bay, execs predicted the uptick will come from the Aura, Opel Astra and the Outlook. Just in case those cars don't fly off the lots, Saturn execs will put “conquest incentive cash” on the Astra’s hood (for non-Saturn trade-ins). Maybe. In certain markets. Later this year, Saturn will launch the Two Mode hybrid Vue. Beyond that… Saturn suits told dealers that GM expects its growth over the next five years to come from its Rethink division, helped along by a shift away from trucks. John Pitre, the GM of Motor City Auto Center in Bakersfield, CA is stoked. He says his average Saturn transaction prices have gone from $17k in ’06, to $21.5k in ’07. "Our Saturn store remodel will be done in July, so that's a sign that we're very bullish on the brand." Meanwhile, the bears are waking-up out of hibernation.

It's a bit early to declare February the beginning of the long-anticipated new car sales face plant, what with President's Day sales and a couple of weeks to go, but the Wall Street Journal reports that the industry took a 16 percent dive so far this month. Zoom in on the main players and folks, these decade-low numbers [via J.D. Power] are downright scary. "General Motors Corp., riding momentum created by updated products and hefty incentives, recorded the only sales gain among major manufacturers last month. The latest numbers indicate GM ran into a roadblock during the first 17 days of the month, with dealers selling 31% fewer vehicles than in the first 18 days of February 2007… Chrysler LLC experienced a 27.5% decline despite a recent move to offer more free features on its cars and trucks." CNNMoney reports that "shares of automaker General Motors Corp. fell nearly 6%, making it one of the biggest losers on the Dow 30 Thursday afternoon, as investors were dismayed by weak economic data released earlier in the session." And that was BEFORE this information was released…