Always be suspicious of peace announcements coming from Munich. Oh, wait… make that Stuttgart. I mean Großaspach. Anyway, AMG’s boss has been wondering where all the hydrocarbons have gone (long time passing). Volker Mornhinweg tells Autocar that “the horsepower war is over.” Luckily, it turns out that there are more ways to massively inflate a Mercedes price tag than just dialing up the horsepower. The new emphasis for AMG’s tuning efforts: weight saving, engine optimisation and alternative technologies. For example the new E63 AMG ( with “only” 550hp) will offer an optional, efficiency-improving manual wet-clutch gearbox. That’s the unit first seen on the SL63. Woo. Hoo. AMG also hints that smaller diesel, hybrid and four-cylinder models could be in the cards. But don’t call it eco-appeasement; the move may be more about finding some branding lebensraum. Daimler’s anschluss with Aston Martin, the emergence of AMG’s Black series and the persistence of Maybach are simply pushing AMG’s mainstream offerings in a less power-crazed (and carbon-intensive) direction.
Category: Germany
When Porsche, led by Wendelin Wiedeking and his CFO Holger Härter engineered the classical short squeeze, when they drove the VW share into the stratosphere and hedge funds into deep losses, the men received applause. Hedge funds are supposed to know what they are doing. And no kittens were harmed.
Yesterday evening, a 74 year old man walked in front of an oncoming train near the German city of Ulm. He used to be a billionaire. He used to be on the 94th place of Forbes’ list of richest people. Adolf Merckle had placed his bets on the wrong side of the Volkswagen game.
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On Monday, the German magazine Der Spiegel will report that Daimler had looked at taking Volvo off Ford’s hands. But after trying Volvo on for size, the good folks in Stuttgart decided it’s not a good fit. “Daimler boss Dieter Spiegel has carried out a close examination of a possible purchase in the past few weeks and acknowledged a series of possible drawbacks,” the German weekly will say. According to Der Spiegel, Daimler scoffed at problems with harmonizing Volvo with its own Mercedes cars. The article is not even out yet, and it has already been shot down by a missive from Stuttgart. Two days before the report was to appear, Daimler said it’s a fabrication. “We were never interested in Volvo,” a Daimler spokesman said to Reuters. Not interested doesn’t mean they didn’t look.
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Wendelin Wiedeking, chief of a bank with attached sheet-metal fabrication named Porsche, used the quiet time between the holidays to sit down and pen a letter to all employees. He had to get it off his chest. Usually, this is the time for well wishes and brave forecasts. This time, it’s different. At least at Porsche. Even the most dopamine-saturated Porsche employee will be deeply depressed after reading Wiedekings new year letter. Sales of Valium and harder drugs, such as Schnapps, probably went through the roof in Zuffenhausen after the letter was opened. Automobilwoche (sub) obtained a copy of the inspirational message.
“Don’t let the high profitability of our company fool you. Dark clouds cover the skies. Due to the crisis in the financial markets, we are in a recession which we had not seen for many decades.” So far, so bad. Everybody who can read or watch TV knows that by now.
The missive continues with the usual yadda yadda of all auto makers being in a deep sales slump. Aber Achtung! Even Porsche, the company that could make more profits than sales, suddenly is not immune: “Despite being better prepared than most of the competition, we will not remain unscathed by the drops in demand.” Uh-oh. “Reduction in demand” usually is a precursor for “reduction in jobs.” As Wiedeking is looking ahead, the wisdom of building a Cayenne becomes as clear as it possibly can get:
The Mercedes-Benz SLR McLaren is – and soon was – an Anglo-German sports car jointly developed by Mercedes-Benz and McLaren Automotive. The standard version of the little critter would set you back just half a mil. If you want one, then better hurry: Production of the SLR will cease in June 2009.
Or, if you want an extra special SLR, and have a little more discretionary cash sitting around, wait until June 2009, because the SLR will go out with a bang. According to the London Telegraph, Mercedes and McLaren will celebrate the death of a legend with “an exclusive SLR inspired by British motor racing legend, Stirling Moss. Only 75 will be made, each costing €750,000 .” At today’s rate, that’s just a little bit over $1m. So for only twice the price you will get … not even a front window.
Important visitors today in Angela Merkel’s chancellery in Berlin: A delegation of German Opel dealers. They present a plan for a truly German future of Opel. The title of the plan: “We believe in the future of the Opel brand.” What the dealers and the German government don’t quite believe in is the future of the US bail-out package. Everybody is preparing for the worst, the defeat of the General, and (in their eyes) the best: Opel, German again.
The delegation is led by representatives of several well-heeled dealer groups. As early as November, plans had surfaced that a consortium of dealers is ready to take over Opel if the previously unsinkable should go down. The Opel works council has openly supported the plan. Opel management is giving tacit approval, without sticking their necks too far out. Recriminations from Zurich or Detroit can be swift. There is an update:
The news of Congress killing the bailout plan got Europe really worried about the survival of Opel and Saab. Work is afoot to keep them viable, even if GM should go under. Workers at Opel are willing to trade salary cuts for a stake in the company. One condition: Opel severs financial ties with GM. That according to Auto Motor und Sport via Reuters. AMS has access to internal documents from the IG Metall engineering sector union. Opel management is looking for $750m in costs savings. According to the paper, the unions are willing to give them the savings, in return for getting a part ownership of Opel. The union has told GM management that the plan “hinges on separating flows of finance between GM’s European business and struggling parent GM,” Reuters says. Otherwise, the danger of the money “disappearing in the big GM pot is too great,” the working paper says. Euphemisms aside, “separating financial ties” means separating ties, period. A month ago, the German metal workers union had already offered pay concessions, under the condition that Opel is being separated from GM. More money could be coming from governments. As reported in today’s WAS, the Swedish government already has offered financial support for Saab. The German government has been petitioned for $1.34b in loan guarantees. Now if Saturn goes to China, and if Opel gets liberated, what would be more logical than a Saturn-Opel-Saab pact, helped along by the Swedish, German, and Chinese governments? Meanwhile in the UK, Vauxhall offers workers 8 months off for 30 percent pay, the Times reports. Vauxhall made this offer to most of the 2200 workers at its Ellesmere Port in Merseyside.
For a long time, European and Japanese auto execs looked longingly at their American colleagues who command princely salaries (along with a royal air force.) The times and sums, they are a-changing. Chump change we’re talking not. Porsche’s Wendelin Wiedeking and his CFO Holger Härter already come close to benchmark-setting Wagoner. But Porsche is different; after all; they’re a bank with attached sheetmetal-fabrication. Now, it’s raining money on the leaders of Porsche’s takeover target, Volkswagen. The Financial Times learned that “Volkswagen’s five executive board members made $31.7m selling shares in the middle of a controversial share spike at Europe’s largest car maker.” They were not alone.
If you go to Germany, as I did today, you won’t see or feel much of a recession. If you read the GMSM (German Main Stream Media – and I had 9 hours of reading the latest editions today while flying in from Beijing) you’ll learn that the jobless rate is contained, that people are buying, that Frau Merkel sees no need for s stimulus package, and that retail is looking for 150,000 temps to help them with the Christmas boom. All divvy in Deutschland?
When you go to a bit less than main stream, you are in for a shock: “German new cars sales down by 18 percent” says Automobilwoche (sub.) Aua! After slowly decreasing over the month, November sales suddenly cratered in Deutschland. It looks more and more like 2008 will be the worst year since 1989. Who was the worst performer in the volume segments? You guessed it: Opel. Down 36 percent. BMW lost 20.8 percent, VW shed 18.6 percent. Horrors! Mini cars went out of style, bigtime: The Smart lost nearly 46 percent. Best performer: Audi with a loss of only 1.1 percent. If you want the official government data in full gory detail, here they are.
In a report to appear Monday, the German magazine Der Spiegel will write that “several law firms are compiling material for lawsuits to hold Porsche liable. They are working for hedge funds which had lost billions of Euros.” That’s news to Porsche CFO Holger Härter. He says he hasn’t heard of anybody who wants revenge or restitution. “I don’t even know who might have been hurt.” On Sunday, FAZ will publish an interview with Härter. First question: “When will the hedge fund called Porsche close its sheet metal factory?” Härter’s answer: “Our core business is and remains the automobile.” Everybody knows: not true. Porsche made more profits than sales in the last fiscal year. Of €8.6b in profits, only €1b were generated in that sheet metal factory. €7.6b were generated with derivatives. That was in the last fiscal year, which ended July 31. God, Härter and Wiedeking only know how much the Porsche hedge fund generated in the months thereafter, when the VW stock went wilder than girls at Mardi Gras. Härter now says they didn’t really mean it. Here is Härter’s version:
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Brussels just ratcheted up the thumbscrews they placed on Berlin: “Either drop that VW-Gesetz now, or we’ll see you in Europe’s High Court. You’ve go two months.” Automobilwoche (sub) has the story in German. In case you don’t know: The VW-Gesetz (VW-law) was written to give the state of Lower Saxony veto power. Lower Saxony holds 20.1 percent of Volkswagen. According to German law, a minority shareholder must have 25 percent to exercise veto power. Lower Saxony didn’t want to spend the extra money for the extra shares. A law was passed instead. For a long time, this law was seen as a weapon to ward off foreign raiders and other riff-raff: Who wants to take over a company they can’t boss around? Now, the law bothers two parties:
Will Daimler and BMW be Germany’s Ford and GM? Germany is worried about its two prides and joys: “Some senior executives already question whether Daimler and BMW will survive the crisis as independent companies,” writes Der Spiegel, translation via Business Week. “And close examination reveals that both companies have significant Achilles heels.”
“The biggest risk for BMW stems from its successes in recent years,” writes Der Spiegel. “BMW has almost doubled its car sales since 1999, and since 2007 the Bavarian carmaker has been the world’s top seller in the premium class.” Now, BMW sits on $25b of car loans and leases, backed by cars with increasingly dubious residual value.
Second risk for BMW: Customers, shame on them, buy the wrong cars. Instead of buying big bore 7 and 5-Series Beemers, as they should, customers suddenly insist on smaller models and lesser engines. BMW’s Munich-based engine factory is caught unprepared. “We are producing the wrong engines,” says Manfred Schoch, the chairman of BMW’s works council. Eight-bangers, even six-cylinder engines are piling up unsold. Daimler is even more distressed.
More news coming in from Porsche’s annual numbers press conference. Due to the worldwide recession, our TTAC correspondent in Stuttgart has to moonlight as a security guard at the event, but whatever works. We already announced this morning that Wendy Wiedeking said that “it is becoming increasingly unlikely” (translation: don’t even think it) that Porsche will go for 50 percent this year. Porsche holds 42.6 percent of the common stock of Volkswagen. They also own 31.5 percent of VW in options, but derivatives don’t count in the boardroom. “Wiedeking says their goal is still to build up to a majority of 75 percent in 2009,” our correspondent whispers into his lapel mike. But there are “too many uncertainties.” (Not to mention the VW-law, that makes owning 75 percent utterly wasteful.) Therefore, Wiedeking punts, much to the chagrin of our reporter-cum-rent-a-cop: “Wendy just said there is no telling how many moves will have to be made until the game is over.” He just said that. Wendy thinks, taking over the world’s third largest automaker, Volkswagen, he calls that a game? Where’s the outrage? “What game? Monopoly? Chess? Pick-up sticks?” Wendy won’t say. Maybe later, in the Q&A. Wait, there is more …
The “bank with a subsidiary that makes cars,” a.k.a. Porsche, had to stop production in their car subsidiary Zuffenhausen for a day. There is less demand for the 911s. The hedge funds strike back and go on buyer strike. Until end of January, 7 additional no-work days are planned, Das Autohaus learned.
2,500 workers are affected. 1,280 fewer 911s will be built. Tomorrow, at the press conference, Porsche will most likely announce that in their 2008/2009 fiscal, they will not reach the 98,652 cars built in the previous fiscal year.
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