Reuters says the deal is done: GM has sold their medium-duty truck business to Navistar International Corp. The deal gives Navistar "intellectual property rights to manufacture GMC and Chevrolet brand vehicles in the class four to eight gross vehicle weight range and distribution rights for GM's medium-duty truck unit." Under the new ownership, production will move from GM's plant in Flint, Michigan to an unnamed Navistar facility. The terms of the deal were not disclosed, but its biggest benefit is supposedly allowing GM "to focus more on its core business of making cars and sport utility vehicles." That and pay off some of GM's debt. Or make the bottom line look good for the quarter. Or both.

Now that they've palmed-off their Chrysler fiasco on Cerberus, Daimler is cash rich and company hungry. Reuters translates: "'Acquisitions are an option for growth,' the German news agency dpa-AFX quoted Zetsche as saying in an interview, adding the German carmaker — also the world's biggest truckmaker — had practically no financial limits for deals." Apparently, Dr. Z has ruled out scarfing-up another automaker, preferring to sniff around for companies who make technology that Daimler needs to meet new European Union fuel economy regulations, and such. Oh and to prevent a takeover– the original impetus for the Chrysler fiasco– Daimler looks set to announce another round of share buybacks. It currently owns just 4.7 percent of its shares, but plans to use the cash swilling around in its corporate coffers to repurchase up to 10 percent of Daimler stock by the end of August 2008. Why they didn't do this instead of buying Chrysler the first place, or how Zetsche remains in power after NOT doing this in the first place, remains a mystery. 

More than a few industry pundits have taken to calling Hyundai "the next Toyota." The spin: Hyundai is a formidable low-cost automaker whose high quality products are stealing side dishes from Toyota's table, eying the Japanese automaker's main course. As our Steven Lang has pointed out, the Sonata's lackluster U.S. sales help partially put paid to that theory. And now Chosun explodes the myth entirely. The South Korean newspaper reports that the Federation of Korean Industries has discovered that Korea's largest carmaker produced 29.6 cars per worker last year, 57 percent fewer than Toyota's 68.9 cars per worker. "Hyundai Motor’s sales and operating profit per worker were also no more than 40.8 and 22.2 percent of those of Toyota. The Korean company's productivity was worse than that of six other international automakers. Compared to the assembly productivity of 21.1 to 23.2 hours per vehicle by Ford, Honda, General Motors and Toyota, Hyundai and Kia recorded 31.1 and 37.5 hours, respectively." And here's the kicker: "Hyundai paid its workers more than Toyota, with an annual average salary per worker of W57m (US$1=W934) compared to Toyota's W55 million." 

UPDATE This just in from Deep Throat: "Methinks the Korean reporting on Hyundai is wrong. There is no way the production per worker is half that of Toyota and they get paid more. They’d be bankrupt. Also, IIRC, the Nummi plant in NorCal produces something like 400,000 units per year on 4,500 workers… but if you add sales/admin/corp staff to that, I can believe somewhere around 70 units/worker/year. And Toyota/Ford/GM take about 30+ manhours per unit of production, not in the low 20 hour range."

Automobilwoche reports that November was an automotive watershed. For the first time in history, European car sales eclipsed American. From January to November of this year, the European Union (EU), Switzerland, Norway and Iceland racked-up 14,827,000 cars. That compares to 14,763,000 new vehicles (cars and light trucks) sold in the U.S. during the same time period. Automotive analyst Peter Schmidt of AID (Auto Industry Data) thinks it's more than a quirk. "Our forecast says that in the coming years, Europe will be ahead. We see 15.6m light vehicles being sold in the U.S. in 2008, as opposed to around 16.1 million in Europe… The established markets are satiated." The strong-growth regions of eastern Europe are the EU's car sales engine. Russia will account for some 2.3 million new cars per annum. "All this explains why German car makers are so healthy. There is no growth at home, but plenty to be exploited in other countries," says Schmidt. No surprise, then, that German carmakers have built up a spectacular war chest. Spiegel Online reports that BMW, Mercedes, VW and BMW have some €34b (about $49b) in their collective piggy banks. In 2007 and 2008, they may welcome an additional €26.5b. Unicredit Analyst Georg Stürzer thinks this means that German car makers will pay out generous dividends, invest in green technology AND finance large acquisitions. Uh-oh.

Or it could be a heady combination of desperation and lust. Now that common wisdom holds that the Russian carmarket is The Next Big Thing, all the major playas are scrambling for a piece of the action. As we reported, GM was looking to buy into the Russian automaker AvtoVaz. As we didn't report (until now), The General got pipped at the post by the French. Blogging Stocks considers GM's failure to hook-up with AvtoVaz a major bummer and reveals that Renault stumped-up $1.6b for the honor of owning 25% of the Russian automaker. Undaunted (or perhaps foolhardy), GM now wants to fill-up with Gaz. msnbc reports that The General has already signed a letter of intent to develop an "affordable car" (as opposed to?). Despite the lack of said vehicle, GM wants to deepen its ties with billionaire Oleg Deripaska's company and expand their theoretical mutual efforts. Yes, well, meanwhile, the Gaz Volga already uses a Chrysler engine and underpinnings (ye olde Dodge Stratus), and Auburn Hills wants in as well. "Leonid Dolgov, chief executive of Gaz's car division, told the Financial Times it was 'no secret' his company was involved in talks with Chrysler." Well if it was before, it ain't now. [thanks to starlightmica for the links]

The majority of this morning's New York Times article on the auto-oriented provisions of the new energy bill profiles the industry's posturing, infighting and kvetching over higher Corporate Average Fuel Economy (CAFE) standards. To wit, “'We’re not whiners,' Dominique Thormann, a senior vice president at Nissan North America, said in Washington during a lunch with reporters on Wednesday, in a thinly veiled jab at competitors that originally fought fuel economy increases." Breeze through this politically correct interpretation– transplants ready to rumble, domestics foot (not to say knuckle) draggers, Toyota playing both side down the middle– and Michelle Maynard finally reveals some of the more important "details." For example, we learn that the bill offers federal loan guarantees to "help auto companies that invest in factories that are at least 20 years old to build vehicles with advanced technology." Hey! Guess what? The General will [theoretically] build the new Chevrolet Volt plug-in electric hybrid at a Detroit factory that opened in the early '80s. No word on the new "footprint-based" CAFE calculations– which make a mockery of fleet-wide fuel economy averages– or ethanol credits– capable of transforming a gas-sucking SUV into a high mileage green machine (in regulatory terms).  

The Detroit News (DTN) reports that Chrysler CEO Boot 'em Bob Nardelli told his troops that the automaker will lose $1.6b this year. That's $.6b more than Steven Landry, executive vice president of North American sales, let slip to some students in Halifax last month. It's also a signal that Cerberus is about to start the "strip and flip around Christmas" program mentioned by Mr. Nardelli at another employee "pep talk." [Note to Bob from the Motivational Speakers Association: don't quit your day job.] While DTN spends most of its article soft-pedaling the red ink revelation– "A loss on the magnitude of $1.6 billion is not unexpected for Chrysler, said Joe Phillippi, principal of AutoTrends Consulting Inc. in Short Hills, N.J."– the problem isn't this year. It's next. And next year is looking to be a bitch. Whatever exit strategy led Chrysler's private equity taskmasters to buy the automaker in the first place– we're still thinking MAGNA is on Cerberus' speed-dial– is sure to be accelerated by the new numbers. 

We called it: Detroit's reliance on"zero percent for anyone with a pulse" financing to move moribund metal is coming back to haunt them. The Wall Street Journal (WSJ) cites a study by Lehman Brothers that reports that 4.5 percent of '06 auto loans were at least 30 days delinquent as of the end of September. That up from October's 2.9 percent, and represents the biggest one-month jump in at least eight years. And here's the really worrying bit: that's the stat for "top-rated borrowers." At the lower end of the food chain, 12 percent of subprime borrowers were delinquent on their 2006 auto loans as of September. That's up from 11.1 percent the previous month; it's the highest level since 2002. Seen from another perspective, "In the second quarter, borrowers were at least 30 days behind on 2.77% of all auto loans made by nonbank lenders, the main players in the market, according to the American Bankers Association. That was the highest delinquency rate since 1991." Although the WSJ has some soothing words for nervous auto execs, we reckon this one's gonna blow-up good. Tightened credit will remove one of Detroit's most effective sales devices (low-cost loans) and a flood of repo'ed cars– which are usually heavily abused– will further destroy residuals. Lest we forget, Mitsubishi barely made it back from the brink when its low-rate loans to credit-challenged buyers came back to bite them in the ass. Those who do not learn from history…

Fitch Ratings isn't overly interested in Detroit News columnist John McCormick's assertion that Motown's recent model introductions promise brighter days ahead for his paper's hometown heroes (Big 3 get it right with new vehicles). The hard-nosed financial analysts are more concerned with the cancer eating away at the Big 2.8: debt. The automakers' recent agreement with the United Auto Workers to establish a union-controlled VEBA health care superfund threatens to evoke that old saw about straw-carrying camels. While Fitch doesn't reveal the total financial burden weighing down The Big 2.8, they reveal that Ford's debt has grown by $21b since 2001, while GM added $31b worth of debt in the same time period. Uh-oh. "Increasing interest costs from higher net leverage will represent a more significant claim on operating cash flows," Fitch managing director predicted to Reuters. Mark Oline was quick to add that liquidity isn't [yet] an issue, but "with few assets left to divest, liquidity positions will likely drop through 2008." So, how low can you go?

Bloomberg reports that recreational vehicle manufacturer Winnebago is about to announce that shipments fell for the first time in six years. The downturn reflects an industry-wide slump, indicating that the U.S. economy (including the new car market) is, as predicted, headed for the doldrums. "For the past three decades, deliveries of motor homes and travel trailers have dropped before each decline in the U.S. economy, giving the $15 billion industry a reputation as a bellwether." This time 'round, Winnebago is going down fighting. The company is unveiling more fuel efficient models, including one that can get 22mpg (highway, tail-wind). Meanwhile, Thor brand's Chief Operating Officer isn't about to concede defeat. "The industry is definitely not immune to macroeconomic factors," Dicky Riegel admitted. But with 11k Americans turning fifty each day, Riegel reckons "we still have the demographic wind at our back." [thanks to starlightmica for the link]

Reuters seems to think so. "Seven years ago, Ford in Brazil looked a lot like it does today in the United States. It was losing so much money and market share that executives at headquarters in Michigan were seriously considering pulling out of South America altogether." And now? "Today, Brazil is Ford's biggest success story, helping to offset hefty losses in North America. Ford Brazil has doubled its market share to 12 percent, racked up 15 straight quarterly profits, and is now scrambling to keep up with red-hot demand for its cars and trucks." OK, you got our attention. So what's the recipe for success? A cheap SUV, that "rising tide lifts all boats" deal (Brazil's economy is go!), job cuts and a new, highly efficient, low-cost, supplier friendly manufacturing complex in Bahia. And there you have it. What's next for FoMoCo's turnaround poster child? Not much. Which is not good. "Some of Ford's rivals, however, are rolling out new models at a faster pace. That has some analysts wondering if Ford is playing it too safe in Brazil now that the turnaround is over." Hmm. I'm thinking that this situation reminds me of Ford's '90's-era Explorer-related success. Which would make Ford of North America Ford of Brazil's template for success. Uh-oh.

When it comes to creating reporting wild ass merger rumors, The Detroit News says game on! The latest chorus of "Daimler and blank, sitting in a tree" would have the artist formerly known as DaimlerChrysler selling 20 percent of itself to… BMW. Sussex scribe Neil Winton dutifully, perhaps even exhaustively lays out the rationale. "Audi is owned by German mass car maker Volkswagen, and Lexus by Japan's gigantic Toyota. This means that the cost of many basic components like engines, transmissions and components, which are used under the skin of ordinary as well as exotic machines, can be spread over huge numbers of vehicles allowing the interlopers what could be a killer long-term cost advantage." It's a simple if bogus premise: Mercedes and BMW could share parts and platforms to compete against Audi and Lexus. (Strangely for the home town paper, no mention of Cadillac.) It's also not Winton's idea. The entire story is based on a report written by Adam Jonas of Morgan Stanley. To be fair (why not?), Winton unearths a coherent naysayer in the form of Professor Ferdinand Dudenhoeffer, managing director of B&D Forecast. "The only thing that makes sense is that Morgan Stanley as investment bankers is going to make strong profits if they can sell someone a merger." Which makes the whole thing a bit of a non-story, don't you think? 

GM's new contract with the United Auto Workers (UAW) was sold to all and sundry as a necessary step to protect U.S. jobs. Meanwhile, GM continues to send jobs overseas. The Times of India reports that GM's set to triple parts production on the subcontinent, ramping-up to $1b worth over the next three years. The Indian-made bits and pieces will head-off for GM products worldwide. GM's President and Managing Director of GM India told reporters in Chennai that GM is currently exporting $300m of parts from India. Karl Slym also revealed that The General was planning to set up a powertrain production facility in country. It's not clear if the engines would find homes abroad. That could depend on the success of the Chevrolet Captiva SUV in the Indian market. In an echo of GM's Opel becomes Saturn Astra U.S. strategy, GM will begin by importing the Captiva from Korea. If it's a hit, they'll shift to local production.