According to Automotive News Europe, Porsche’s new holding company will increase its VW holdings after Sunday's state elections in Lower Saxony (whose government is VW's second-largest shareholder). Speaking at Porsche’s annual general meeting, the prospect had the automaker’s CEO all misty-eyed. "Barring the unexpected, we should once again achieve a result where it will be difficult to suppress tears of joy." Along the same line, Wendelin Wiedeking revealed that "The operating profit in our car business is developing according to plan and our hedging transactions in the context of our long-term VW strategy look good." What if the U.S. economy tanks? "Porsche is well prepared for a possible economic crisis in the USA, with inventories in the local market having been significantly reduced." Wiedeking also submitted his application for TTAC’s Bob Lutz Award (no really). "It would appear that the only way to escape the end of the world is to hop into those quaint little baby-cars from Italy and France." So much for a “unified” Europe, eh boys?

Yesterday, Ford CEO Alan Mulally told the world that he'd downsize the company if needs be. Well, needs be. After revealing that FoMoCo dropped $2.7b in the last financial quarter, the Detroit News reports that the American automaker is offering buyout to ALL of its [remaining] 54k United Auto Workers (UAW) employees. You heard right: Ford is asking every single UAW worker laboring for The Blue Oval Boyz if they'd like to abandon ship. To that end, Ford's sweetened the deal for union members with retirement packages in place. "Workers eligible for retirement will receive a lump-sum payment of $50,000 if they agree to leave the company, plus full retirement benefits. That is $15,000 more than Ford offered to retirement-eligible UAW workers in 2006. Moreover, skilled trades workers, who are among the highest paid, will receive a $70,000 buyout payment, or $35,000 more than the previous offer." Although Henry's Mob doesn't expect everyone to leave, the move paves the way for Ford to hire lower-cost replacements; you know, if they need them. The DetN ends on the usual upbeat note. "'Ford is becoming a smaller company and becoming a lower-cost company at the same time,' said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass. 'You can become profitable by becoming small.'" Ah, but will they? Watch this space. 

Credit where credit's due: the executive director of GM Powertrain's fuel cell activities realizes that this may not be the best time to clamor for a suck on the taxpayers' collective tit. As Automotive News [AN, sub] reports, J. Byron McCormick was careful to cloak his call for federal funding in vague and patriotic terms. "Without more investment, there is a real threat that alternative vehicle technologies and development of the hydrogen automobile will leave the United States… Other countries are investing heavily in this sector and could surpass the United States." Oh no! A hydrogen gap! Let's throw some tax money at it, 'cause if we don't "There is a real chance that [a hydrogen gap] could happen. If that happens, what happens to the jobs, to the learning and the skills that go with it?" Oh, hang on. "But for now, McCormick said the United States has technology momentum in the field. 'We have a wonderful opportunity to put the United States in a leadership position,' he added." Still, "There are a number of regions getting their act together. I would hate as a U.S. citizen and taxpayer to have the United States become complacent." And I would hate as a U.S. citizen and taxpayer to have to pay for any more of GM's R&D bill. 

Not to add to U.S. auto execs angst, but consider the Federal Reserve Board’s “emergency meeting” to cut interest rates by three-quarters of a percent. It’s the first cut between regularly scheduled meetings since the September 2001 terrorist attacks. While a recession may provide some short-term relief to gas prices, oil analyst Tom Kloza offers this advice (via CNNMoney): "I wouldn't go out and buy that Hummer; It's still prudent to behave as if record gas prices are just one event or one economic recovery away." Mark Zandi, chief economist at Moody's Economy.com tells the AP (via WTOP News): “When the economy stumbles, you have to begin living within your means, or you'll be forced to do so." Example given: Denise Dorman of Geneva, Illinois. To avoid making new-car payments, she’s not going to replace her 12-year-old Jeep Grand Cherokee (with 125k miles on it). If that’s the start of a trend, Chrysler and the rest of the industry are headed for big trouble.

You can bet that more than a couple of Detroit execs are monitoring today’s Fed rate cut and U.S. stock market slide, wondering if this is it. Meanwhile, BusinessWeek’s Autobeat reports that Japanese automakers' stock prices are suffering alongside The Big 2.8's. Compared to year-ago prices, Mazda’s stock is down 45 percent, Toyota’s is off by 32 percent and Honda’s stock price has dipped 35 percent. This despite the fact that all the automakers expect to post record earnings in March. The underlying logic: when the U.S. economy sniffles, the rest of the world feels a head cold coming on. Long term, bigger picture, Autbeat says Japanese automakers “strong sales in emerging markets” should offset the coming U.S. slowdown, and their range of fuel-efficient offerings put them in a good position to profit from higher U.S. gas prices. Not to mention the fact that if a full-on recession throws one (or more) of The Big 2.8 into Chapter 11, the last men standing will get one Hell of a dead cat bounce.  

Yesterday, we took a "Whose Fault Is It Anyway?" look at consumers who used carmaker's easy credit to buy (in the ironic sense of that word) vehicles they couldn't afford. Today, the San Antonio Business Journal reports that The Alamo City guv'mint has teamed-up with Ford "to make it easier for more working individuals and families to buy a new or used car." Here's the deal: low income buyers save up $1000. FoMoCo and San Antonio's Department of Community Initiatives match the buyer's grand with two more, creating a $3k down-payment towards a new or used vehicle from one of eight participating Ford or Mercury (!) dealers. To qualify for the "down payment assistance program" the buyer's income must not exceed 300 percent of the federal poverty level (that's $61,950 for a family of four). Applicants must also be a San Antonio resident, an insurable driver, not have declared bankruptcy within the last seven years and be "current" with all creditors. (Driver's license?) Oh, and they have to qualify for financing. Welcome to America! 

As TTAC previously reported, Getrag has pulled the plug on its $530m Chrysler transmission factory "indefinitely," for reasons that remain well outside public purview. Those of us in these parts who see the [non] development as a death rattle in Chrysler's corporate chest have yet more reason to wonder about the implications of the hard stop to a key part of Chrysler's powertrain program. Automotive News [sub] says Chrysler's new owners have gone radio silent on the automaker's suppliers. "Only 22 percent of the 90 suppliers surveyed said Chrysler executives had communicated with them since Cerberus took over in May, reports supplierbusiness.com, a research firm in Stamford, England. Of the vendors surveyed, most were direct suppliers to Chrysler. Forty percent had annual sales exceeding $500 million." The blackout could be the result of personnel changes; former Home Depot purchasing chief John Campi was named Chrysler's new supplier supremo on January 3. Or…?

Just-auto [sub] reports that Ford's Jaguar and Land Rover brands may have found their proverbial feet prior to sale. The eds say Landie will rack-up a $1.2bn profit in 2007, while Jag reduced its losses to around $100m "thanks to cost-cutting and concentrating on fewer, more profitable sales." Obviously, reducing losses isn't the same as making money, and Just-auto stays shtum on the number from which the $100m has been deducted. All we know is that the two brands combined lost FoMoCo $500m last year, apparently. Ford has refused to break-out the numbers for the various parts of its European misadventure since high-living former Bimmer exec Wolgang Rietzle formed the Premium Automotive Group at Dearborn's behest. So who's spinning the spin, leaking the info? Perhaps Tata Motors, who'd like the markets to think they're picking-up Landie and Jag for a $3b "bargain." Or Ford, to keep Tata on board. In any case, the clouds of European and American fuel economy standards hang heavy over both. Dead cat bounce?

It's a Hell of a good question. Strangely, few Western media outlets have tackled it. While TTAC's take is forthcoming, The Liverpool Daily Post's Alastair Houghton casts his beady eye on Tata's prospects with the damaged British brand. It may be painful for Jag fans to reconsider the fate of the ill-fated X-Type and re-scan the arterial spray or red ink dogging the cat, but they'll be heartened to read Houghton's historical analysis of the Indian conglomerate's success with other British concerns. The story surrounding Tata's entry into the steel market is especially resonant. “Do you mean to say Tata proposes to make steel rails to British specifications?" Frederick Upcott, Chief Commissioner for Indian Railways reportedly remarked at the turn of the last century. "Why, I’ll eat every pound of steel rail they succeed in making.” Last year, Tata ate Corus, the company that had eaten British Steel. Equally reassuring (to "traditionalists"), the chief executive of the UK India Business Council doesn't see any branding issues. “If you look at Tetley [tea], you don’t see the Tata brand on it at all," Sharon Bamford says. “They put the interests of the brand and the community they serve at the forefront. The process we’ve seen appears to be a typical Tata deal.”

GM's spinning the fact that they're not renewing their $4.1b standby credit because they don't need it. Speaking to CNNMoney, GM spokeswoman Melisa Tezanos claimed GM never borrowed under the agreement and "a review of its capital needs for the first half of the year showed the auto maker had enough liquidity and flexibility with the standby credit pact." Texanos also said that the fact that the credit line was collateralized by GMAC "was not a factor" in GM's decision to terminate the credit revolver. We call bullshit. Our spy reports that the banks won't lend on the line since the GMAC security interest is worth less than the line, thanks to the strong potential of bankruptcy at GMAC/Cerberus-owned mortage lender Residential Capital. "Obviously, it's not good to admit you can't renew your line. Better to tell the story you don't need it now." But, they do. Although the automaker hasn't drawn upon the line of credit, it still relies on it as a backstop for certain financial transactions. Oh, and if RESCAP goes belly-up, how do you think that will affect GM's auto loans? This could get really nasty really quickly…

CNNMoney.com reports that the price of oil has topped $100 a barrel, for the first time ever. (Happy New Year!) U.S. crude priced for delivery in February has gone up $4.02, to reach $100 a barrel on the New York Mercantile Exchange, Inc. (NYMEX). Ira Eckstein, president of Area International Trading Corporation, says you ain't seen nothin' yet: "This market is really gonna fly.” CNN lists several reasons for the rise, including civil unrest in Nigeria and rumors of a potential cessation of Mexican supply (no reason given). And then there's the ongoing decline of U.S. oil supplies. Oh, and a “surprise fall” in US manufacturing, which could lead to lower interest rates, which could further ding the value of the dollar, which could lead investors bail out of U.S. equities and into commodities, which would drive up the cost of imported crude. No mater how you slice it, gas prices are sure to arc upwards, putting yet more pressure on a beleaguered market for gas-hungry SUVs and pickups.

"And even those who keep paying their [car loan] bills may reach a point… where they simply can't afford another car. That could send vehicle sales down the drain, a nightmare scenario for an industry that has already taken a hit this year from slower consumer spending and higher gas prices." This little tidbit in the LA Times underscores a point TTAC made when GM first offered "Anyone with a Pulse" zero percent financing: easy credit creates short term gain leading to long-term pain. The Times identifies four warning signs that the easy credit chickens are coming home to roost. First, loan durations are growing. "Nearly 45 percent of loans are for longer than six years. Toyota Financial Services and Ford Credit are offering seven-year financing. And a few credit unions are tinkering with the eight-year note." Second, the loan amount is rising. "In October, the average amount financed hit $30,738, up $3,500 in just a year and nearly 40% in the last decade." Third, more and more customers are "backwards" on their loans, by a larger amount. "Today's average car owner owes $4,221 more than the vehicle is worth at the time it's sold." And fourth, an increasing number of these negative equity car owners are hanging fire on new cars– or simply defaulting. "S&P says delinquencies of more than 60 days on car loans issued this year to borrowers with the best credit are up 20 percent compared to those issued last year." Manufacturers and consumers alike are learning there's no such thing as a free car.

Now that we're in the post-Christmas pre-New Year interregnum, the media is, as usual, attempting to fill the void with retrospectives. The New York Times Dealbook looks back at the wheelers and dealers that filled their column inches in '07. And you just knew Cerberus' takeover of Chrysler Corp. was going to be in there somewhere. Somewhat surprisingly, scribe Andrew Ross Sorkin decided to upbraid the private equity firm for its lack of PR skills, rather than its decision to invest billions in a sinking ship. Perhaps that's because Cerberus is only slightly more media-friendly than Leonid Brezhnev's Kremlin. Well, not exactly. While we were expecting criticism of Cerberus' decision to dump combative Chrysler Spinmeister Jason Vines, and the resulting circling of Chrysler's PR wagons, Sorkin seems to think Cerberus' management style makes them unlikeable. "To lead Chrysler, Cerberus chose Robert Nardelli, the former chief of Home Depot, whose high-handed style helped get him ousted from his previous job. Layoffs grew, but so did losses. Then Cerberus dented its deal-making reputation by walking away from two previously agreed-to deals — for H&R Block’s mortgage arm and for United Rentals. So far, this charm offensive is light on the charm and heavy on the offensive." Don't look for Cerberus to answer Sorkin's emails anytime soon. 

Yeah, right. That makes perfect sense; for all the common sense reasons you're about to post below. And yet, Fortune's senior editor Alex Taylor Three Sticks offers the possibility within his '08 auto industry preview. "Speculation is building about Cerberus' exit strategy from Chrysler, as well as its timing. Will it try to merge Chrysler with Ford or sell it to another automaker, or go to the public with an IPO?" At least Taylor's on board with TTAC's Chrysler Suicide Watch theme: "Crosstown rivals are watching carefully because a Chrysler in distress could lead to suicidal industry-wide price-cutting." Wow, all three Motown automakers could be jumpers? Now that we didn't consider. While he's at it, Taylor allows himself some xenophobic posthumous projection regarding India's Tata motors assuming control of Jaguar. "Winston Churchill must be spinning in his grave." And speaking of theoretical quotes… "The other day, a GM executive was speculating that the auto industry was sorting itself into two categories: two super-companies, GM and Toyota, with annual production of nine million vehicles each, and all the rest." Alex torches his straw man and concludes "the world is becoming a fluid place." This is news?

USA Today's financial markets repoter Matt Krantz gives Ford a Boxing Day black eye, warning his readers not to touch FoMoCo's stock with a proverbial ten foot pole. Krantz proffers his prognostication of doom based on four criteria. In the area of risk versus reward, the McPaper's market maven figures "you're taking twice the risk to get a shot at a smaller return." Looking at discounted cash flow, Krantz says if "you're looking for a bargain, you're not getting it with Ford at these prices." Based on the stock's current value compared to historic range, Ford is in the "sell" range, and "that's not good, either." Finally, Krantz rates Ford's overall financial health on a scale from 1 (healthy) to 5 (mortally wounded). The Blue Oval Boyz clock-in at… 4.3. Krantz leaves no words minced. "You can do much better… there's no reason to think Ford stock is worth taking a chance on yet." Incidentally, he also warns "General Motors' stock hasn't been much better" this year, in case you were considering an American automotive alternative.