I think it's safe to say to place this theory somewhere between Big Oil/Detroit's alleged conspiracy against the electric car and Erich von Daniken's Chariots of the Gods, ascribing human technological advances to alien visitations. Robert Horvath is the former Coral Gables Oldsmobile dealer who somehow decided that Oldsmobile's road to oblivion wasn't paved with good intentions and/or the inevitable result of a confederacy of dunces. While I haven't read Horvath's tome Project 2000, I read the press release, which, sensibly enough, makes no mention of the Toyota angle. By the end of our chat, I was feeling sorry for Mr. Horvath. No matter what you think of the wisdom of killing Olds, it behooves us to remember the executive actions have very real human consequences.

Chrysler is about to follow Ford and GM's lead and perform an asset-selling cash grab. According to The Wall Street Journal, Chrysler would "like" to sell its Mopar unit, which makes high-performance and specialty parts, and Chrysler Transport, which manages supply deliveries to their plants. To that end, Chrysler's brought up the possibility in its current contract talks with the United Auto Workers (UAW). Needless to say, the UAW opposes the move, as it would involve the loss of some 1300 dues paying members jobs. The union can bitch all they want but "Boot'em Bob" Nardellli has already stated his new employer's firm intention to "monetize some assets." That's equity fund speak for "strip and flip." Is anyone– including the UAW– really that surprised?

According to The Sunday Telegraph, FoMoCo is making it easier for bidders intent on relieving the automaker of the remaining British pieces of their PAG (Premium Automotive Group). In an "unprecedented move," Ford has decided that potential buyers do not have to submit fully-financed bids for the second round. The change reflects the tightening of the international credit market; a trend that raised the cost of Cerberus' Chrysler takeover and delayed the recent sale of GM's Allison Transmissions unit. The lowered bar is a big boost to bids by two (count 'em two) ex-Jag CEOs (Sir Nick Scheele and Bob Dover), former Ford CEO Jac Nasser and Chrysler-owning Cerberus; all of whom are playing this game with OPM (Other People's Money). Indian automakers Tata Motors and Mahindra & Mahindra, however, are bound to be pissed at FoMoCo's newly leveled playing field. 

CSM Worldwide have some bad news for auto execs waking up to their skinny lattes. The automotive forecasters reckon the collapse of the housing market and soaring consumer debt will send U.S. auto sales plummeting by nine percent. CSM's Senior Economist connected the dots. "With many consumers having a harder time getting mortgages or coping with higher payments from their adjustable rate mortgages, there will be a considerable impact on light vehicle sales," Charles Chesbrough predicted. "Weak sales of existing homes and declining home values also are dampening consumer spending, leaving less money available for vehicle purchases." It gets worse. CSM's NA soothsayer says American automobiles sales will recover "no sooner than" the fourth quarter of 2008. In fact, Joe Barker says "market fundamentals have deteriorated and will need at least a year to rebuild." He also noted that the domestics' production is heading south, while the transplants' are ramping-up. As David Halberstram might have said, a reckoning is on its way.

On August ninth, GM Car Czar Maximum Bob Lutz announced that his employer had increased incentives in response to its competitors' spending– not to shore-up sliding market share. On Elvis' Death Day (August 16), Bob pronounced himself "reasonably pleased" with the month's progress– despite our spies' reports that GM's sales were continuing their disastrous slide. Yesterday, GM ended the charade (at least for anyone other than Bob Lutz) by announcing production cutbacks on their cash cows: pickup trucks and SUVs. Reuters reports that the automaker has eliminated previously scheduled overtime through the rest of the year at truck-making plants in Arlington, Texas; Janesville, Wisconsin; Silao, Mexico; Fort Wayne, Indiana; Flint, Michigan; and Oshawa, Ontario. Spokesman Tom Wickham explained that "reducing overtime production enables us to reduce pressure for excessive incentive spending." True, but it also reduces the amount of cash GM's North American operations will generate. If August pans out the way we've heard, look for more production cuts AND increased incentives.

It's been a long time since Canadians harbored thoughts of crossing the border to buy a new car. Since the beginning of the year, the “loonie” is up more then 10 percent against the dollar. Now that the Canadian dollar is nearly equal in value with the American greenback (for the first time in 30 years), our neighbors to the north are doing some major cross-border shopping. The Chronicle Herald (of Halifax, Nova Scotia) reports that more than 64K American vehicles have found their way north so far this year; that's up 26 percent over year ago. One Toronto resident hankering after a new Mercedes S63 AMG found one selling for C$171K in Canada. When he threatened to cross into the U.S. and buy the car for US$127K, the price suddenly dropped to C$149.5K. Canadian car dealers claim sales are down by 25 percent across the board; they're “begging carmakers to cut their list prices.” NAFTA that.

In Portfolio Magazine's feature "The Most Dangerous Deal in America," author Daniel Roth combines high finance with a "what makes Stephen run" profile of Cerberus' enigmatic leader. We get to savor Stephen Feinberg's austere monomania, and enjoy the comedy of Cerberusians chanting "fix and hold, fix and hold." Overall, it seems we have the makings of a genuine tragi-comedy. To wit: temporary dupe Cerberus employee Wolfgang Berhard's three reasons why buying Chrysler was an excellent idea: "One, Daimler­Chrysler just finished spending a 'mountain' redesigning its front-wheel-drive system (meaning Cerberus won’t have to). Two, Chrysler is about to launch a new line of minivans and pickups, vehicle types that have boosted the company’s market share when new models have debuted in the past. 'Three,' he says, 'Daimler was desperate.' The crowd roars with laughter." Wow, If Cerberus believes that, it's only a matter of time before the three-headed dog gets smacked with the world's biggest newspaper. But good. 

CNNMoney reports that Volkswagen is considering moving their North American headquarters from Auburn Hills (MI) to an as-yet-undetermined location on the east coast. A "high-level manager in U.S. operations" says the company's considering the move because VeeDub's suits have trouble getting direct flights in and out of Detroit, and potential recruits are not exactly clamoring to move to Motown. Also in the mix: VW's thinking about building a second North American plant. Taking a lead out of Nissan's Nashville songbook, the German automaker might be looking to get management, marketing and manufacturing within eyesight of each other. Fearing another exodus like Comerica or Pfizer, Michigan Governor Jennifer Granholm's office said Tuesday the state is "in touch" with Volkswagen, but declined to "comment on rumors." If that changes, we'd welcome Jenny's shout out below. 

TTAC's Deep Throat tells us what common sense has suggested right from the start of Cerberus' involvement in Chrysler: the private equity firm has no intention of hanging onto Chrysler ten minutes longer than it takes to arrange a profitable transfer of ownership. "It’s going to take a mountain of cash to turnaround Chrysler– with no guarantees of success," DT emails. "The last thing Cerberus wants to do is pour money into the car business. Think about all the pieces in the deal… Why is Bernhard gone? Why hire Nardelli, unless Cerberus wants to marshal cash by having a strict numbers guy run the place? And don’t forget that the banks control Chrysler, not Cerberus – they’re holding $10 billion in loans." So? "Cerberus will sell Chrysler to GM in exchange for the rest of GMAC, or they’ll sell it to the Chinese who are much better capitalized than GM and can afford a 50 year view." Remember: you heard it here first.

CNN Money reports that Ford, GM and Toyota have all downgraded their forecasts for '07 U.S. automotive sales. Ford estimates total sales at 16.1m, GM pegs the number at 16.5m and Toyota reckons it's 16.3. In any case, the stats compare with last year's 17.1m sales. The downturn puts GM between a rock and a hard place; the company's inventories are high and they're set to crank out more vehicles in this year's third quarter than they did in '06. As reported here, GM faces a stark choice: up incentives (killing margins), cut production or… both. While GM's spinmeister Paul Ballew danced around the looming nightmare, Ford's $25m man made no bones about the need for realism. "The most important thing is to get to the real demand. We don't want to drive demand with big incentives. All you are doing is pulling it ahead, so we need to get to the real fundamental demand, and have the vehicles priced for the demand." Meanwhile, Toyota's sitting pretty. Declining market be damned; they reckon they'll increase '07 U.S. sales by five to six percent.

As predicted, car rental companies' balance sheets have taken a ding, thanks to Detroit's determination to trim the fleets. Dollar Thrifty reports today that second quarter net income was $15.3 million, compared to $26.7m in '06. Prez and CEO Gary L. Paxton was quick to finger The Big 2.8's cutbacks, and reveal the inevitable result: "Vehicle manufacturers have been reducing the number of vehicles sold to the rental car industry and increasing our fleet costs. We are also absorbing higher vehicle financing costs as a result of lower credit ratings in the auto industry… raising rental rates is the key to offset these vehicle related increases." Meanwhile, the Avis Budget Group is on its way to recovery– reporting a $24m profit compared to a loss of $1.1b in '06. Still, their per-unit car fleet costs increased six percent year-over-year, "reflecting industry-wide increases for model-year 2007 vehicles." Both companies are responding to rising car costs by aggressively cutting their own.

First, The Wall Street Journal reports that forthcoming European CO2 regs are casting a pall over Ford's sale of Jaguar and Land Rover. The European Union has announced its intention to reduce the new car CO2 levels by roughly 20% by 2012. As the British brands don't have more-fuel-efficient cars to offset their less-efficient models (i.e. all of them), potential suitors are worried that the new regs will price the automakers out of existence. Using that logic, Just-auto [sub] reports Management consultants Arthur D Little fancy Jag more than Landie. "While we do not foresee near- or mid-term legislation that would actually ban high footprint SUVs (chiefly due to the European job losses that would result) legislation will inevitably toughen. We consider this to threaten over half Land Rover's volume – only Range Rover and Defender are relatively secure… There is no alchemy involved in a Jaguar turnaround; good financial performance can be achieved through realigning the strategy with the brand values, leading to a lower volume (50-60,000 units a year), high gross margin business producing premium sporting saloons and grand tourers." Sounds like a plan to us.

Ford has consistently denied that it wants to sell Volvo– ever before it started to sell Volvo. Citing some wild ass speculation a variety of unnamed sources, CNN Money reports that FoMoCo is considering off-loading 85 to 90 percent of Volvo to Swedish investors (the flying Wallenbergs?). The second part of that story certainly makes sense. As the cryptic report says 'Volvo Cars today is strongly integrated with Ford technically, for components, and sourcing." And just in case you thought the sale would directly lift Ford's bottom line, let's not forget this little factoid, courtesy of The New York Times: "Volvo was among the wide array of assets that Ford pledged as collateral last year when it borrowed $23 billion to finance its overhaul program. If Volvo is sold, Ford will have to repay the value of the loans backed by Volvo assets, adding pressure on Ford to get as much for Volvo as possible."

While GM is showing an overall profit on its worldwide operations, Saab continues to be a huge money pit. The Local reports that last year Saab Automobile lost 2.9b kronor ($428m) while GM poured 3.8b kronor ($560m) into the company. "We didn't make a profit in 2006 and won't make one in 2007 either," said Saab CEO Jan-Åke Jonsson, adding he believed the company would turn a profit by 2010. While that kind of honesty is unheard of refreshing coming from someone within GM, you have to wonder how much longer GM will pour money into the operation before they finally admit they have a Swedish Jaguar on their hands and hold a Ford-style fire sale, or merge it with Opel.  

Who would have guessed the spoils of war had a nasty aftertaste? While Lord Dalhouise had the honor (honour?) of claiming India's legendary Kohinoor Diamond for the Queen in 1851, the Era of Globalization threatens to take UK's automotive crown jewel as reparations. India's Tata Motors currently has "absolutely no comments to make" about the prospect of bidding for Jaguar, but the estimated bid of 1.5 billion dollars for both the mighty Jaguar/Land Rover has the Times of India thinking otherwise.  Its just a matter of time before this becomes a Bollywood love story.