If anyone has a spare $6.1b or so laying around, former GM division Delphi would like you to give them a call. According to the Detroit News, that's how much dinero the struggling parts maker needs to exit bankruptcy. However, because of the poor credit market, they're having trouble raising the money. If they don't get it, they'll have to rework their plan and head back to bankruptcy court– and continue paying professional and legal fees totaling around $10m per month. Delphi has few options; they're probably asking GM to foot the bill or using pension funds in return for a stake in the company. Despite GM's insistence that they're sitting on a healthy cash pile, the beleaguered automaker's hardly in a position to shell-out that kind of "investment." As far as using pension funds in concerned, Ron Gettelfinger is opposed. Even though the United Auto Workers (UAW) boss has had no discussions with GM or Delphi on the matter, Automotive News [AN, sub] reports that Gettelfinger asserted "we're not going to let Delphi rape a pension fund." You might wonder if Big Ron should have added "That's OUR job," but I couldn't possibly comment.

GM's record losses last year is Canada's fault– at least part of it anyway. GM CFO Fritz Henderson told Financial Post "three-tenths of a billion" of the $38.7b loss was due to foreign exchange losses. In other words, "This is largely driven by the strengthening C-dollar versus the U.S. dollar and the impact on our balance sheet through the 2007 calendar year." And in spite of CAW president Buzz Hargrove's insistence he will give no concessions in the upcoming contract negotiations, the handwriting is on the wall; Canada is now the most expensive place in North America to build cars. David Healy, an analyst at Burnham Securities: "[GM]'s strategy would likely be to do some hedging and hope that everything settles down. But Mexico and the U.S. are looking more attractive than they were to build future product." Looks like Buzz may be reconsidering his stance, if he wants to keep his union's members employed and paying their dues.

GM is expected to announce greater-than-predicted fourth-quarter losses for their North American unit later today. While the exact figures aren't available yet, experts predict GM will report a loss of 64 cents a share, compared with earning 32 cents a share in the same quarter of 2006. Bloomberg cites "two people familiar with the [fourth quarter] results" who say the losses were due in large part to an upsurge in incentives in the fourth quarter as they tried to keep up with Toyota. Credit Suisse analyst Chris Ceraso concurs. "Higher incentive spending outweighed better than expected volume and mix" in GM's North American operation. They seemed to forget that Toyota had plenty cash on hand to fund the average $6.4k rebates on Tundras while they could ill-afford the average $6k they slapped on the hoods of their pickups to keep them moving. The exact damage to GM's bottom line will be announced later today. Watch this space.

UPDATE: Well, folks, it was far worse than anyone expected. MSNBC reports GM had the largest annual loss ever reported by an auto company: $38.7 billion; GM's previous record was $23.2b in 1992. In the fourth quarter alone, they lost $772m. Part of the loss was from their share of GMAC, which cost them $1.1b. GM also announced today they're following Ford's lead and offering buyouts to all 74k of their hourly UAW workers so they can replace them with lower-paid workers under the new contract.  

The AP reports [via the Dallas Morning News] that Hugo Chavez has threatened to launch an “economic war” and cut off oil sales to the United States. “Take note, Mr. Bush, Mr. Danger,” the Venezuelan President intoned. Chavez is responding to Exxon Mobil’s attempts to seize billions of dollars in Venezuelan assets, to compensate for the South American country’s nationalization of the multi-billion dollar Orinoco oil project. "The outlaws of Exxon Mobil will never again rob us," Chavez promised. Meanwhile a British court has issued an injunction "freezing" as much as $12b of the assets of Petroleos de Venezuela SA, Venezuela’s state-run oil company. The U.S. imports some 12 percent (1.23m barrels per day) of its oil from the Bolivarian Republic of Venezuela. Oil prices are expected to spike on the news.

It's no secret that The Big 2.8 have been beating-up on their suppliers for decades, banking profits on the backs of their parts making "partners" by squeezing them for every possible penny (often at the cost of quality). Not to put too fine a point on it, relations between parts providers and American automakers are positively poisonous. So why is Reuters taking the automakers' side in their analysis of supplier – manufacturer relations post-Chrysler – Plastech blow-up? "And the stand-off between the companies will not be the last either, as U.S. automakers — looking to close plants, slash jobs and streamline operations to return to profits — lose patience with financially stressed suppliers." So how does scribe Ben Klayman reckon the suppliers became "stressed" in the first place? Anyway, "that hard line certainly caught suppliers' attention." Yes, but not in the way Klayman suggests. Suppliers are fed-up with Auburn Hill's late payments and now, bully-boy tactics. If they think Chrysler's pulling-out or going under, why wouldn't they get tough? Chrysler could soon learn that Hell hath no fury like a supplier scorned. 

The Wall Street Journal reports that Toyota's captive finance company is increasing the number of 84-month auto loans on its books. "These loans, which carry slightly higher rates than 72-month deals, have risen to represent 4% of all cars Toyota Financial Services lends money on." (This they call writing?) The Journal puts some numbers to that "slightly higher" aside (from 6.9% to 7.59% for 84-month loans, compared with 5.85% to 6.84% for 72-month financing) and ascribes the move to a general desire by automakers to avoid piling incentives on their new metal during the current sales slowdown. Although GM may face blowback for its "anyone with a pulse" zero percent financing deals, Toyota Financial Services is also on the hook for billions. An unnamed ToMoCo spokesmouth told the WSJ that her employer writes loans for about three-quarters of the cars financed at U.S. Toyota dealers, accounting for about 50 percent of total sales. She claimed the seven-year loans are given only to customers with top credit. Yes, well, is this the start of a trend? GMAC Financial Services says 84-month loans constitute a tiny portion of their car biz, and Ford Motor Co.'s credit arm says it "isn't aggressively offering them." "We don't like these loans," Ford Motor Credit Chief Executive Michael Bannister told the Journal. We shall see…

BMW's upper management tends to be more tight-lipped than treasure hunters. As a result, Wall Street sees the automaker's executive culture as closed-minded, overly proud and parochial. The Financial Times Deutschland (FTD) and the Financial Times  report that Bimmer's boss has broken his vow of silence, trying to soothe the markets regarding the automaker's poor share performance. At a conference in London yesterday, Reithofer outlined BMW's plan to increase its return on capital to 26 percent and its return on sales to eight to ten percent by 2012. The propeller people promise to reduce R&D expenditures from 6.1 percent of sales to five percent, save millions on purchasing and cut 8k jobs. No one was buying it. One analyst said, "the market in its current state is not in any mood to buy cheques dated to 2012". Morgan Stanley said in a research note: "The company provided incremental detail on its cost- cutting efforts, but it offered precious little in terms of specific figures or intermediate milestones." And while Reithofer was speaking, BMW's share price slid five percent, on a market-friendly day. Reithofer left the conference after one hour, saying he felt sick, and canceled further appearances in New York and Boston. By day's end, BMW's share price had lost 2.8 percent, equivalent to €609 million.

BusinessWeek's Dee-Ann Durban had the pleasure of attending the Chicago auto show to get a feel for how the suits are feeling about the future. And the answer is… great! "We're beginning to see, after six quarters of declines, the beginnings of some pent-up demand," opined GMNA Prez Troy Clarke. "You could make a case that the second half of the year could be significantly better." Marketing Mark LaNeve agrees with his co-worker's "Annie" analysis. "We really believe the industry's going to be OK this year," LaNeve said. "We've had a fairly weak car market for the better part of two years. Economic weakness is being experienced in other places right now. We've already been in it." Ford's President de las Americas, Mark "Tool Time" Fields, was also optimistic, in a plausible deniability sort of way: "We do see opportunity in the second half." While you can easily file all this spinnery under "What else are they going to say?" one could make a case that when the going gets tough, Pollyanna should go away. Sense of urgency. That sort of thing. 

The days of "anyone with a pulse" financing are long gone. Or they could just be getting started. As more and more people with "indirect" loans (loans not made through a "captive" firm owned by an automaker) default, banks and credit unions are tightening the reins on auto loan applications. According to The Detroit News, in the third quarter of '07, the delinquency rate for indirect loans hit a 16-year high of 2.86 percent. With '08 not looking so great, beleaguered automakers may not wish to turn away customers simply because the banks won't loan them the money to buy a car they can't afford. So, do the carmakers assume the credit risk to move the metal? The question is especially vexing now that Cerberus now owns 80 percent of Chrysler, 100 percent of Chrysler financial and majority control of GM's GMAC finance unit. If GM tanks, Chrysler wins; but would Cerberus manipulate Chrysler Financial and GMAC to save Chrysler? And Ford's finance company is still a cash cow. Would FoMoCo maintain fiscal discipline at the expense of the corporate mothership? As the perfect storm continues to gather, the stakes– and the finance rates– have never been higher.

Reuters reports that a former Daimler finance manager was sentenced to serve five and a half years in jail for embezzling more than 22 million euros ($32.5m) from the German automaker over a five-year period. A Stuttgart court ruled the 42-year-old man had submitted fake invoices for computer services and forged supervisors' signatures to obtain up to 2 million euros ($2.95m) at a time. Across the border in France, a court has fined Volvo 200k euros (nearly $300k) after the driver of a Volvo 850 TDI lost control of her car, killing two children and injuring another. The driver claims the brake became very rigid and she could not stop in time. Volvo is expected to appeal the decision. Meanwhile in Israel, a venture group known as C.En, says it’s developed a safe, lightweight hydrogen tank for automobiles. "The tanks will be like a battery that can be replaced and you can carry a reserve in the car," says Moshe Stern, who leads the project’s investor group. Unlike other systems, this one uses hydrogen gas rather than liquid. “We are looking now for one of the giants to adopt our technology and support it," Stern says. Uh sorry, the Giants have more pressing plans at the moment.

"If everything goes well in the rest of the world, we can take a couple hits in the U.S. and still be okay." Bob Lutz, GM Vice Chairman of Global Product Development. [via TTAC]. "Those emerging markets can't carry GM. We've got to get the job done in all markets." Fritz Henderson, GM Chief Financial Officer [via Automotive News, sub]. Given GM Car Czar maximum Bob Lutz' reputation for "shooting from the hip" (a.k.a. making shit up as he goes along), I'm going with Fritz' analysis. Oh wait, "Henderson also said the U.S. economy in general is faring better than the financial markets. He said he doesn't think the nation is in a recession, thanks to strength in certain sectors of the economy, such as exports." Holy Cruising Down Denial Batman! If anyone is in a recession– you know, other than the housing market– it's the U.S. automobile industry. On the other hand, Fritz also told the assembled car hacks "In terms of what we have to do — profits, cash flow, market cap — we're not the world's largest automaker." So he's down with that. But– "That's what I'm spending 100 percent of my time trying to figure out." Hmmm. Maybe it has something to do with, I dunno, product, or, I'm guessing here, branding. Anyway, if it's not a recession, what is it? Downturn? Market correction? Help Fritz out here guys; what euphemism should he use? 

TTAC's flagged this issue before: as The Big 2.8 shutter factories, they're on the hook for cleaning-up decades of extremely toxic pollution. In fact, the costs of said clean-up could well run into the billions. StarTribune.com reports that the controversy surrounding the pollution left behind in Ford's soon-to-be-defunct factory in the Highland Park part of St. Paul, Minnesota continues. At a neighborhood meeting, Ford told approximately 50 local residents that the extent of the problem requires more testing and analysis. Ford plans to close the 138-acre truck assembly site in 2009, a year later than originally planned. Even so, "City planner Merritt Clapp-Smith said that the 2009 closure has pushed back everything [in terms of local redevelopment] and that the city won't be comfortable recommending a redevelopment option until after testing has been done, which could be in 2010." 

Fiat's CEO once called his employer "so worthless it could not be sold." As recently as 2003, Fiat lost $2.7b for the year. In the middle of its travails, Fiat CEO Sergio Marchionne jumped in bed with GM CEO Rick Wagoner. The Harvard MBA swapped six percent of GM's shares for 20 percent of Fiat's. And get this: Wagoner signed a "put option" obliging The General to buy the remaining 80 percent of the Italian car maker between January 2004 and July 2009. In 2005, GM paid Fiat $2b– not including lawyer's fees– NOT to consummate the transaction. GM's epic stupidity funded winning new models like the Fiat 500, Panda, and Grande Punto. Five years later, a resurgent Fiat has paid off ALL of it debts, turned a profit and kept a few hundred million in reserve. And now… Moody's and S&P have looked at Fiat's balance sheet and returned Fiat SpA to "junk" bond level status (again). Sergio Marchionne's response: "that's obscene." If so, the fact that the man who funded Fiat's turnaround is still the head of GM is pure pornography.

CSM Worldwide [via Automotive News, sub] is the bearer of bad tidings: the slowing new car market will force The Big 2.8 to cut even more production in the second quarter than the first. The auto forecasting firm says Chrysler will slash second-quarter production by 19.1 percent (compared to the same period last year). Ford will trim production by 16.3 percent. And GM production will drop 8.1 percent. Joe Langley, CSM senior market analyst for North American forecasts, sees an end to the pain for Ford and GM in the fourth quarter, with production edging ahead of year-ago levels. He doesn't see a Chrysler turnaround until 2009. Saying that, Langley attributes Ford's potential upturn to the debut of the MKS (Lincoln somethingorother) and Flex (xB on steroids) and ongoing sales of a TTAC Ten Worst finalist, the Ford Focus. And just in case you were thinking this is "a falling tide sinking all boats" deal, "the three biggest Japanese automakers expect to ride out a recession without serious pain. Toyota is expected to boost North American production 3.1 percent, Honda 1.9 percent and Nissan a whopping 11.0 percent."

The revival of Ford's defunct Windsor, Ontario engine plant may hinge on Prime Minister Stephen Harper's electoral ambitions. Here's the deal.. Each time the Canadian dollar rises, the divide grows between Canada's two most prosperous provinces. On one side we have Conservative Alberta, Harper's home turf, whose petro-success has strengthened the Canadian loonie. On the other side we have Liberal Ontario, the former industrial powerhouse, whose fortunes and competitive advantage have diminished in direct proportion to the loonie's ascent. In the past, Harper has rejected the call for manufacturing subsidies, pissing off Ontario no end. However, this time, an election looms; Harper needs votes in Ontario. Signaling a possible shift in government policy, Harper's industry minister Jim Prentice has hinted that Ford's Windsor plant may be eligible for a chunk of the $350m hardship fund earmarked for Ontario. The Globe and Mail reports that Prentice has pinned the chances of Ford receiving the money on just how much Ontario's provincial government, led by Liberal Dalton McGuinty, cooperates. And if neither Ford nor Dalton play by Harper's rules, well, GM is also lined-up to receive some that loot to build a six-speed transmission plant in St. Catharines, Ontario. Realpolitik, eh?