True story: New Chrysler’s Italian boss has promised America’s taxpayer/owners that the former bankrupt will release its “five-year plan” on November fourth. Setting aside the laughable idea that Chrysler has enough money to survive ’til 2011 (never mind 2014), one wonders whether the CEO of a multi-billion dollar automotive conglomerate could be that ignorant of history, or that good at post-modern irony. Lest we (or he) forget, the Soviet Union’s Gosudarstvennyi Komitet po Planirovaniyu (GOSPLAN) pretty much coined the phrase “five-year plan” when they tried to force the state-controlled Russian economy to do . . . whatever they told it to do. And how did that turn out? “Altogether, there were 13 five-year plans,” the Wikipedia hive mind reports. “The first one was accepted in 1928, for the five year period from 1929 to 1933, and completed one year early. The last, thirteenth Five-Year Plan was for the period from 1991 to 1995 and was not completed, as the Soviet Union was dissolved in 1991.” Not to put too fine a point on it, the USSR’s five-year plans were a monumental failure; an effort at social control that resulted in misery (e.g. starvation, forced migrations) for millions of people. Marchionne’s use of the term is about as bad as it gets without evoking Godwin’s Law. Still, can’t wait!

Today’s This morning’s GM WTF moment comes to us from CNN’s Assignment Detroit. It’s a damning report on GM’s post-bankruptcy travails, penned by veteran auto industry scribe Chris Isodore. You may remember Chris as the reporter to whom I recently gave shit about not giving a shit about GM’s refusal to release a secret list of closed dealers. Which TTAC’s number cruncher eventually created. Which all but the Orlando Sentinel ignored. Anyway, props to Isodore for doing a little barrel fish shooting, unearthing yet more disquieting factoids about your friendly neighborhood nationalized automaker. For example, “GM will now have to pay Saturn dealers between $100,000 and $1 million each to wind down, which will cost the company more than $100 million . . . GM spokesman John McDonald said that the company never counted on avoiding payments to dealers through a Saturn sale. So the collapse of the Saturn deal is not a setback.” Wait; what about the GM mothership’s lost volume/market share? Hope and change baby!

Read More >

GM’s Daewoo division is on the verge of being taken over by its largest creditor, the Korea Development Bank, reports the Korea Times. KDB CEOO Min Euoo-sung warns GM:

If General Motors does not play the role of the largest shareholder of GM Daewoo in an appropriate manner, we will start to retrieve loans that will mature this month. General Motors should accept both the financial and non-financial requirements of the creditors. If not, we will collect loans and will not participate in a paid-in capital increase

GM Daewoo lost about $2.6b in forward exchange transactions (a form of currency hedge) last year, exhausting its $2b line of credit with KDB. GM had asked KDB to roll these obligations forward and throw another billion dollars on the fire, a request it then reduced to $835m. The problem is that GM hasn’t raised enough money, or offered a larger equity stake in GM Daewoo. As a result, KDB is forcing GM to raise new equity, share licenses for jointly-developed vehicles and introduce a co-financial officer to look after KDB’s interests. Otherwise, the collections begin, with $100m due this month alone. And interestingly, money isn’t the only issue at play.

Read More >

When President Obama championed the federal stimulus bill, transportation and infrastructure projects accounted for a relatively small chunk of the total tab ($787 billion). BUT the Powers That Be hyped it hard; the Department of Transportation’s (DOT) piece of the pie was going to generate more than half of the 3.5 million jobs the Obama administration promised to create or save (don’t get picky). ProPublica’s crack investigative squad now reports that the DOT is having a little trouble shoveling the spade-ready jobs out the proverbial door. “Of the $48 billion in transportation stimulus funds, so far DOT has paid out only $3.4 billion, or 7 percent of the total,” according to Sunshine State Rep. John Mica, the top ranking Republican on the House transportation committee. DOT spokeswoman Jill Zuckman had an answer for that one. “The amount of money spent on highways isn’t as important as the amount of money that’s been approved, which has reached $19.4 billion.” Do people really think like that? Holy shit. It gets worse . . .

Read More >

A little birdie tell us GMC is raising its prices. Yes, raising.

GMC will announce revised 2009 model year prices effective for all Sierra and Yukon models produced on or after October 1, 2009. All model dealer discounts will be reduced. Dealer invoice amounts will increase accordingly.

Dealer price schedules will be available in GM Dealerworld under Sales &/Or F&I Tabs effective October 1, 2009. Reference administrative message #VSF20040006 (dated February 26,2004) for more information regarding this web site.

Sold order price protection eligibility dates are dictated by the customer and dealer order dates as follows:

-Customer order date must be prior to the date of the price increase.

-GM systems order date (date dealer enters in GM system) must be no more than one work day after date of the price increase.

These units will be invoiced at prices in effect at the date of production; however, the dealer open account will automatically be credited for the price increase once the unit has been delivered.

Read More >

How about a backers for an independent British sportscar marque? Kuwait’s national Investment Dar, which paid $925m for a 51 percent stake in Aston Martin two and a half years ago, has secured a claims freeze from creditors, reports The Guardian. This, nearly seven months after the fund got into trouble and offered its Aston stake up for biding, and our Aston-buyer-rumor-meter is still registering a fat goose egg. $393m of Dar’s stake was financed with a Shariah-compliant loan, and the Dar has been forced to publicly ask its creditors to chill. The finance guys will come to some kind of musawamah, but it’s Aston I’m worried about. McLaren is making a less indulgently heritage-dependent bid to be come the British sportscar firm, while Aston is… languishing on the market, firing workers, being turned down by celebs, rebadging Toyotas and generally cheapening the brand.  Where do you go from there?

OK, so GM launches a money-back guarantee for its cars and trucks. A kind of riff on the old “Try it! You’ll like it!” campaign. Except of course, those of us who actually remember the old Alka Seltzer ad (before Kathy Griffin murderized it) will recall that the exhortation to experimentation was ironic. The line—repeated by tens of millions of people ad nauseam—came from the waiter. The waiter, the bad guy of the piece, led the protagonist to try food which later made him want to hug the porcelain god. And that’s the key difference. The Alka ad was selling relief from remorse. The GM ad is selling the customer on the idea that they won’t need relief from buyer’s remorse. The GM ad highlights the possibility of buyer’s remorse, on the second biggest purchase of their customers’ financial lives (after their house). Which makes the nationalized automaker’s buyback campaign as dumb as rocks on toast. The man behind the plan, Maximum Bob Lutz, is completely oblivious to this analysis. In fact . . .

Read More >

Lithium-ion battery maker A123 Systems launched its IPO yesterday, and by end of trading its shares had soared over 50 percent making it the second biggest IPO of 2009. Founded on nanoscale electrode technology that emerged from MIT, the Watertown, MA-based firm counts BMW, Chrysler, SAIC and Delphi among its automotive customers (not to mention DeWalt power tools and other non-automotive clients). Despite its impressive customer list, Automotive News [sub] notes that A123’s heady IPO is “reminiscent of the frothy IPO market of a decade ago, given the company has never made a profit.” And a lack of profit isn’t the only issue facing A123. Bloomberg reports that in the midst of its IPO, A123 is trying to resolve a patent suit by the University of Texas and Hydro-Quebec alleging A123 designed its batteries around technology developed by the U of T’s John Goodenough. Which could mean post-launch Challenger, er, challenges.

Read More >

What started out a couple months ago as a “Slow Boat to China,” today feels more like the Voyage of the Damned.  Yesterday I filed this “Opening Brief” (plus the Sale Opinion at Appendix A and the Sale Order and MPA at Appendix B) on behalf of my five clients in our appeal of the GM Sale Order:  Callan Campbell, et al., v. Motors Liquidation Company, Case No. 09-6818 (NRB) (S.D.N.Y.). This appeal is the only one pending that challenges the abhorrent treatment of preexisting products liability claims in either the GM or Chrysler bankruptcy cases. When I first got involved in the case three months ago, I summarized here the injuries and the myriad adversities faced by my clients on a daily basis. I wrote: “The sad, and all too tragic, stories of my clients, taken from the filed objection, are set forth below.  The only thing my clients did wrong here was buy a GM car.  For this act of brand loyalty, they have paid dearly. It’s not enough that people lose their lives and get severely injured from design defects and product flaws, now they and their loved ones get thrown under the bus!”

Read More >

Back in February, a tipster told us that pre-C11 GM was cutting white collar pay. And so it did. Thousands of non-union GM workers—both here and abroad—took a three to seven percent hit for the team. Executives salaries received a 10 percent haircut. The move saved the on-the-cusp of nationalization automaker a reported $50 million. That’s not much compared to, say, the $100 billion in taxpayer funding and subsidies and whatnot that GM’s received since. But at least the move signaled the beginning of a new era of  accountability at GM. Just kidding. In any case, we now read that GM workers’ in-boxes received a notification from HR that New GM is restoring previous pay levels.

Read More >

One of our sources e-mailed me a copy of GM’s pre-bankruptcy dealer strategy, including the formula deciding which dealers lived and which ones died. [Download PDF here] According to the doc, the proto-nationalized automaker pegged its ‘ideal’ dealer total at 3,380. Only, Fritz Henderson’s mob overshot their target by 220: “objective performance criteria yielded approximately 4,100 dealers vs. 3,380.” Flash forward to today, and Automotive News [sub] reports, “The House’s No. 2 Democrat said lawmakers may try to revive stalled legislation to reverse dealer terminations if General Motors Co., Chrysler Group and dealer groups don’t sit down soon to begin negotiating a settlement.” Hang on; where’s the Presidential Task Force on Automobiles in all this? Meanwhile, Senator Grassley said “it’s important for Congress to get an explanation from the manufacturers as to how they determined which dealers would be terminated and which would be retained.” Well, now you know.

In case you hadn’t noticed, Ford is in a [familiar] race against the clock. Pre-economic meltdown, it mortgaged everything up to and including their logo. Under ex-Boeing exec Alan Mulally, the Blue Oval Boys have cut costs, improved efficiency, launched new products and gained relative market share. But Ford’s still a gi-normous company that takes in less money than it spends. The Department of Energy’s $10 billion twenty-five year, no-to-low interest loan didn’t hurt The Glass House Gang’s bottom line, but there’s only one way for Ford’s going to become profitable, to begin to pay off their debt and stave off bankruptcy: volume. Specifically, they need the U.S. auto market to recover, in a big way, for them, and quickly. So it’s no surprise that that’s exactly what CEO Alan Mulally says is gonna happen . . .

Read More >

If there’s one thing that can be counted on in the world of investment, it’s that someone is bound to copy Warren Buffett’s latest move. The Oracle of Omaha has reportedly made a billion bucks in less than a year on his $230 mil investment in BYD, and that firm’s soaring stock price has other investors taking notice. Bloomberg reports that Goldman Sachs is looking at buying $250 mil worth of convertible bonds and warrants in Geely, in hopes of repeating Buffett’s success. With major global automakers (specifically GM, VW and Toyota) solidifying their dominance of the Chinese domestic market, Chinese automakers see the low-cost segments in other markets as their opportunity for growth, and Geely is no exception. The firm hopes to boost overseas sales to 66 percent of its annual sales by 2015, a goal that justifies its current pursuit of the Volvo brand (update from Thor Johnsen coming soon). Though a name-brand backer like Goldman could help Geely break into foreign markets, there are challenges aplenty for the planned investment.

Read More >

Attending the IAA in Frankfurt are all (most of) the involved parties in the Saab/GM/Koenigsegg/BAIC-and whoever deal. For fans without a scorecard, that’s Saab Automobiles’ CEO Jan Åke Jonsson, Christian von Koenigsegg and Bård Eker of Koenigsegg Group, CEO of GM Europe Carl-Peter Forster and BAIC’s CEO, Mr. Wang Dazong. While the details behind the S/G/K/B/W deal are still being held under wraps, there are some interesting views and thoughts drifting through the autoblogosphere. Mr. Wang tells ttelia.se that Saab will be part of BAIC’s global vision, which is part of BAIC’s 10-year plan. Wang assures that BAIC has no other intentions than being a minority owner, and describes the Saab/BAIC deal to be a win-win, yin-yang thang. After all, we learn, Wang learned to drive in a Saab. Meanwhile, the Wall Street Journal reveals Wang’s plans to base the Saab deal on the “strategic alliance” between Renault and Nissan. And now the real news . . .

Read More >