You thought you’ve heard it all? Now hear this: “The private equity firm Cerberus plans an engagement in a possible new European Opel concern,” the Düsseldorf, Germany, newspaper Rheinische Post writes, citing unnamed German government sources. If true, doesn’t Cerberus know how to say “uncle?” If not true, isn’t crack illegal, even in laissez-smoke Germany? According to the newspaper’s deep throats, the hellhound is interested in a chow-down of 25 percent of an independent Opel. Fiat would be part of the party, last week’s denials notwithstanding. According to the Rheinische Post, the prospective gang bang has been organized by Roland Berger. Roland Berger, the German consulting company, is in the employ of GM Europe. Roland Berger, the owner, has been hired by the German government to advise them in sticky Opel matters. He’s also on the Board of Directors of Fiat, says Der Spiegel. Conflict of interest? Never heard of it.
Daimler’s Zetsche won’t have to worry explaining the T&E for his trip to the Shanghai Motor Show. He might come back with a big chunk of Chinese money. According to the German Handelsblatt, “Daimler is negotiating with the Chinese sovereign wealth fund about selling shares and doesn’t rule out a Chinese engagement in Stuttgart.” Zetsche put on his best poker face: “We have had talks in the past with possible investors in China, and the talks are still on-going.” Looks like there is more to it: On Tuesday, Zetsche will travel to Beijing to meet with representatives of the Chinese government. Asked whether he would also meet representatives of the Chinese government fund CIC, Zetsche gave a definitive “no comment.” If they buy, China will be in good company:
Got $652m in loose cash sitting around? Boy, does GM have a deal for you! If you are willing to invest that money into Opel/Vauxhall, then The General “is prepared to part with a controlling stake in Opel/Vauxhall for nothing,” Financial Timesreports. It gets better . . .
The United Kingdom always had been a reluctant—and sometimes recalcitrant—member of the EU. Some of Her Majesty’s subjects still refuse to fully accept the EU’s existence. This may explain why our colleagues at Autocar.uk found it worthy to note that “the unexpectedly high take-up of the German government’s scrappage scheme has led to an unexpected side effect—a boost to new car sales in Poland. The combination of the fact that the German scheme doesn’t require the new cars to be purchased within Germany, and the weakness of the Polish zloty—which has fallen by around a third against the euro in the past year—has resulted in more than 10 per cent of new cars sold in Poland being bought by Germans.” And what’s wrong with that? Read More >
“It was a mere footnote in the German government’s latest €50b fiscal stimulus;” writes the Financial Times about Germany’s Abwrackprämie (a.k.a. “cash for clunkers”). The footnote turned into an epic win. BUT—“a scrapping bonus aimed at encouraging new car purchases has become such a success that it has left Berlin facing up to three times the measure’s initial €1.5b price tag.” The FT was lowballing. Today, Germany’s government allocated €5b for Abwrackprämie, the sequel, reports Automobilwoche [sub]. That’s enough money for two million old cars crushed and two million new cars bought. If that’s the way the deal goes down, Germany will have the biggest car sales year in recorded history. Germany’s annual pre-Abwrackprämien sales stood at 3 million. Next year, it might be less, because Berlin made it clear that there will be no more new money after that. In the meantime, Berlin is being waterboarded by Abwrackprämien applications.
Ragtop lovers, get out your rags and cry. German maker Karmann, famous for its Karmann Ghia and later for many ragtop versions produced for makers such as Audi, Ford, Mercedes, Porsche, Renault and VW, has declared insolvency, Automobilwoche [sub] reports. The company still has 3470 employees.
Karmann’s last big job was the Audi A4 Cabrio. After that was insourced back to Ingolstadt, Karmann could not find another large account to keep them busy.
You want unintended consequences? You’ve got unintended consequences: The German Abwrackprämie is turning into an eruption of Mt. St. Helens proportions. When the German government launched their cash4clunkers boondoggle two months ago, the lawmakers earmarked €1.5 bn to pay for the program. At a rate of €2.5K for each German jalopy put out of its misery (exchanged for a brand new one), the money should have lasted for 600K cars. Mind you, the German new car market stands now at around 3 million annually, so 20 percent on top of that was seen as a goal to which nobody dreamed of aspiring. Now, Germany finds itself in the grips of the Abwrackprämien virus that’s spreading faster than the winter flu.
In the pigs-will-fly department, newly installed GM CEO Fritz Henderson told the Financial Times that “private investors are interested acquiring a stake in Opel.” Wow. Really? We know that there are a number of people who’ve expressed interest, amongst them such unlikely prospects as some Opel dealers and the workers council. But do they have the wherewithal, the money, and the blessing of the German government, which would have to guarantee a large chunk of the loans needed, and seems to be more reluctant to do so as the days go by?
Yesterday, Germany went ga-ga (in a subdued German way) about a 40 percent bounce in new car sales in March. Today, the cold shower: German exports dropped 26 percent year on year in March, and plunged by nearly a third in the first quarter, Reuters writes. “Three out of four cars assembled in Germany are exported,” VDA President Matthias Wissmann reminds us. So despite the huge jump in domestic sales, overall car production fell by a fifth a March and was down by a third in the first three months of the year. Read More >
If this is a dead cat bounce, then it is a dead cat on steroids: German new car registrations jumped an unbelievable 40 percent in March. This according to data released by the Verband der Internationalen Kraftfahrzeughersteller (VDIK). Taking the Easter holidays in to account, which were in March in 2008, the gain still is a very impressive 20 percent, Automobilwoche [sub] writes. In the same month, sales in the USA continued to crater. The German sales blitzkrieg comes on the heels of a 22 percent jump in February.
The main reason for the incredible increase is the cash-4-clunkers Abwrackprämie. Buyers of a new car receive €2.5K if they retire their old one. Sellers of small cars profited most. French and Italian cars dominate this segment. In Germany, volume manufacturers Volkswagen, Ford, and even Opel profited. Even makers of luxury wheels see some improvement: Porsche reports an increase of 15 percent. Even BMW sees “first signs of an improvement.”
Porsche presented the numbers for the first half of their fiscal 2008/2009. There is bad news and there is pornographic news, says Automobilwoche [sub]. The bad news is that Porsche is not immune against carmageddon: Their unit sales dropped 27 percent to 34K slot cars. In Euros, their sales dropped 12.8 percent to €3B.
Now for the pornographic part. On sales of €3B, Porsche reports a pre-tax profit of—hold on to whatever you can hold on to—€7.34B. In the same period last year, it was only €1.66B. How did they pull this off? You guessed it: The hedge fund with a sheet metal bending subsidiary earned €6.84B at the stock exchange, wheeling and dealing with stocks and derivatives. Why were Euro sales much better than unit sales? Read More >
So, where does DC vs. Detroit leave Opel, Vauxhall et al.? The “private intelligence agency” Stratfor [very expensive sub] summed it up most succinctly: “Add to this the complexity of Opel, a German car maker owned by GM, which Germany wants the United States to bail out but which the United States wants nothing to do with, and the fundamental problem is clear: While both Germany and the United States have a common interest in moving past the crisis, Germany and the United States have very different approaches to the problem.”
Another bucket of cold water on bailout plans for Opel. This time from Germany’s economics minister, Karl-Theodor zu Guttenberg. He used to be one of the biggest pro bailout flag-wavers; he even trekked to DC for a largely uneventful event. Now he signals to potential suitors of Opel that Berlin’s dowry will be less generous than hoped. “The wish of some interested parties, that the German government will assume the full investment risk over years is unrealistic,” Guttenberg said to the German paper Die Welt am Sonntag. He also warned other politicians not to raise false hopes amongst the Opel workforce. And he punts the ball back to Rüsselsheim and Detroit: whether Opel will get support from Berlin, “depends on the concept submitted by Opel and mother GM.”
Chancellor Angela Merkel will visit Opel in Rüsselsheim on Tuesday. She will come with empty hands or at least with empty promises.
A few years ago, Hans-Ulrich Sachs, a former Volkswagen board member, had a brilliant idea: He wanted to import Chinese Brilliance cars. Brilliance is BMW’s joint venture partner in China. Brilliance also makes their homegrown cars—which kind of look like a Bimmer, if you don’t look closely enough. The plan: Import them to Germany, and sell them for half of what a real Bimmer costs. A plan that couldn’t fail except that it failed miserably: A few months before the launch of the car at the Frankfurt Motor Show, the ADAC (the German equivalent of the AAA) crash tested the car supposedly under EURO-NCAP conditions. The car received one measly star. The video landed on YouTube, and Brilliance was done. Thousands of Brilliance cars already were in Bremerhaven, ready for sale. A marketing consultant, asked what to do, recommended: “Load them back on the boat and head for the biggest hurricane you can find.” A few days ago, ADAC tested a new Brilliance car. Now, all Brilliance can hope for is an earthquake. Or a sympathetic judge. This test could go to the courts. Read More >
So far, GM isn’t very successful in finding a suitor for Opel and Vauxhall. Now, they’ve hired professional help. Their choice is interesting. According to the Financial Times, GM is about to contract German Commerzbankto be the matchmaker and to help find an investor in Opel and Vauxhall. GM said it was willing to cede control of its European arm in exchange for €3.3bn ($4.4bn) in European government funds needed to keep it afloat. Government enthusiasm for such a cash injection seems to be waning.
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