Despite not having spent a dime on the US firm, Fiat is widely credited with “rescuing” Chrysler. Here’s another way of looking at it: the United States taxpayers bailed out Fiat, an Italian firm with no presence in the US market. For no money down, Fiat got a 20 percent stake in a Chrysler that, although troubled, had been rinsed clean in bankruptcy. Now, analysts looking at Fiat’s spin-off of its automotive unit are telling Automotive News [sub] that

The government of Sweden’s Västra Götaland County has referred Saab to the Swedish Enforcement Service (Kronofogdemyndigheten) over nonpayment of a $16.2m loan, reports thelocal.se. The bill is for repayment of a portion of a roughly $45m in aid extended by the county to Saab during its first weeks of bankruptcy. Because the $16.2m portion was used specifically to guarantee employee salaries, the County is arguing that it is not covered by Saab’s 75% writedown agreement with creditors. Saab insists that the salary guarantee portion is covered by the cramdown, and says it has paid its 25 percent of the total loan.

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Again, shameless China shows utter disregard for intellectual property. Nothing is sacred anymore. The American government fines Toyota? Great! Let’s copy that! The Nikkei [sub] reports that Toyota has been fined by local authorities in Zhejiang Province. Wait until you hear what for. Read More >

If you are one of the richest car executives of the world, if you have “about twelve children. You never can tell for sure”, if those children are from four different women (I did not say wives), and if you are 73, you slowly start doing some estate planning.  That’s exactly what Ferdinand Piech, Emperor of Volkswagen and Porsche, did. His heirs are livid. Read More >

Since I’ve been writing for TTAC, I predicted that Chinese interests will eventually go for GM, if and when price and time are right. GM already sells more cars in China than back home.  GM expects that huge business to grow by 10-15 percent next year. It stands to reason that China wants on (the) board. There has been talk about limiting the share of “foreign investors” in the GM IPO. “Foreign investors” of course are Chinese, and the true number of foreign investors interested in the GM IPO probably comes down to one: China’s SAIC, GM’s Chinese joint venture partner for 13 years now. And now it’s official. Read More >

While Japanese automakers are digging in for the big sales drop at home, caused by the evaporating government stimulus money, all eyes are across the China Sea. A large share of this year’s profits will come from China, says The Nikkei [sub]. Read More >

Digging through the finances of a company as large as GM is never an easy task, especially when the balance book in question was recently wiped clean in a bailout-bankruptcy. Luckily, Bloomberg columnist Jonathan Weil has the chops to do the task justice, and he’s come up with a fascinating insight: through the power of an accounting tool known as “Goodwill,” Weil claims that GM has juiced its assets and liabilities during its “fresh start.” He notes with TTACian zeal:

It’s as if a $30.2 billion asset suddenly materialized out of thin air. In the upside-down world that is GM’s balance sheet, that’s exactly what happened.

The short version: GM undervalued some assets and overvalued some liabilities during its “fresh start.” The scary result: improvement in GM’s performance and creditworthiness could actually lead to writedowns on its Goodwill… which is currently The General’s largest non-current asset. Oh yes, and without that $30.2b in Goodwill, GM would have about an equity value of -$6.3b. Welcome to the new General Motors…
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BYD hasn’t been doing so well for months. BYD’s August sales dropped 5.9 percent from previous month and 19 percent from a year earlier, Reuters says.  Just a few days ago, BYD blamed force majeure for its misfortunes: Seasonal factors, floods and mudslides had impacted sales, they said. Read More >

The ever rising yen makes Japanese manufacturers flirt with the idea of abandoning the land of the rising sun and to shift production abroad. Toyota President Akio Toyoda told Asahi Shimbun that Toyota wants to keep building cars in Japan — for domestic sales. Even that is up for discussion. Read More >

You know who is really freaked about the stronger and stronger Japanese yen? Mazda. Mazda is considered the Japanese manufacturer with the highest exposure to currency swings. Mazda builds 70 percent of its vehicles in Japan. In the first half of 2010, Mazda exported nearly 80 percent of its Japanese output. Ouch. A year ago, a dollar bought 110 yen. Today, it buys only 84. As the yen continues its march upwards against other currencies, Mazda is enacting emergency cost reduction measures to protect their profits from being gobbled up by a steadily advancing yen on its earnings. Here is the plan: Read More >

We can’t pretend to be overly enamored with former “car czar” Steve Rattner, who oversaw the auto bailout before being disgraced for his role in a New York pension fund pay-for-play scandal. Still, the guy was in the thick of things during last year’s negotiations over Detroit’s rescue, so he knows where the bodies are buried. And in his new book, Overhaul, which has been released to select outlets ahead of its October 14 publication, he tells a whole lot of stories about the months of bailout proceedings that led to the rescue of GM and Chrysler. Of course, Rattner has an agenda in all this, namely proving that

so he’s not necessarily an unbiased source. But with grains of salt at the ready, let’s dive into his spilled guts and see if what secrets lie beneath.

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Another day, another story detailing the political nightmare that is the GM IPO. The WSJ [sub] reports that

The U.S. Treasury is concerned about how many overseas investors it should allow to buy big stakes in General Motors Co. through the car maker’s initial public offering this fall, according to people familiar with the matter.

The caution—aimed at minimizing any political fallout from the massive stock sale—could involve limiting or being selective about which non-U.S. investors such as sovereign-wealth funds would be invited to be “cornerstone” investors in the IPO

Expect Treasury to publicize any limitations on foreign investment in GM’s IPO sometime “within the next couple of weeks.” And no matter how the bureaucrats rule, it won’t be great for taxholders. After all, foreign investors (particularly in China) have the motivation and means to invest heavily in GM, which would help boost the IPO price. The downside, of course, is that the taxpayers’ $50b investment wouldn’t have kept the company American-owned. If keeping ownership in the US is the priority, it’s fair to expect a considerably lower IPO valuation. Heads they win, tails we lose. Ain’t the intersection of politics and business grand?

Looking for proof that politics are an overriding concern for GM during its forthcoming IPO: look no further than a report by Reuters which claims that

GM’s roadshow is set to begin on Nov. 3 and will last two weeks, the sources said. The IPO is expected to price on Nov. 17 and debut on Nov. 18.

Now why would GM wait until the day after midterm elections to file? Well, it could be so GM has time to file 3rd Quarter financial data before offering shares to the public, but GM’s CFO has already warned that 3rd Quarter results will be worse than results from the first half of the year. In other words, waiting to file is likely to materially hurt the IPO (and taxpayers’ chance of payback). But if GM launches its roadshow the day after elections, it won’t turn the midterm election into a referendum on the auto bailout, a situation that would surely exacerbate the already-strong anti-incumbent trend in American politics. And clearly protecting craven pols is far more important than maximizing the return on “investment” for taxpayers, right?

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The Automotive World reports that Ford has agreed to a settlement with non-union employees and retirees who incurred stock losses. The plaintiffs brought the suit against FoMoCo because they lost billions of dollars investing their 401k’s into Ford during 2000-2006; a period when Ford’s stock price plummeted. The plaintiffs argue that Ford should not have allowed them to invest huge portions of their pension plans into the company. Now Ford’s defense (which some say invokes a level of personal responsibility) is that the claimants had plenty of time and opportunity to manage their pension plans and leave if they so desired. Who’s right and who’s wrong here? I’ll leave the Bill O’Reillies and Michael Moores of this world to debate that. Or TTAC’s Best and Brightest, whoever is available sooner… Read More >

Sometimes, strength is a weakness. Especially in currencies. The still surging Yen makes Japanese Exports expensive and unprofitable. Despite a lot of talk from their elected officials that the Yen is too high, manufacturers are thinking it will go higher. This could significantly alter the export-heavy Japanese industrial landscape. Case in point. Suzuki and a plot of land. Read More >