We need not review the litany of bad news to remind you the Motown’s money’s too tight to mention. But amidst all of the plant closings, layoffs and rumors of bankruptcy, one song remains the same: management perks. The Detroit News reports that even as executives descend on DC begging for bailout billions, Ford, GM and Chrysler refuse to eliminate programs which subsidize car leases for management, often with insurance, maintenance and gasoline included. And this isn’t going over well with workers. “We’re taking concessions,” says UAW worker Jim Willington of Ford’s Woodhaven Stamping Plant. “They should level the playing field. They ought to be willing to buy the products. They can afford it.” A little perspective after the jump..

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A TTAC reader has emailed us a heads-up that the Michigan Economic Development Council (MDEC) has called an emergency meeting to prepare for the fallout from a GM – Chrysler merger. Warren, Michigan mayor James R. Fouts will chair the confab. Although Fouts is the only human on planet earth that’s more dour-looking than Alan Colmes, Hizzoner is apparently no stranger to hyperbole (even when it’s true). “I heard the Warren mayor interviewed on WJR a few minutes ago,” our informant informs. “He said the direct impact to the region is 145,000 jobs if the merger happens.” I guess you could say it’s that many jobs are on (or off) the line, all things considered. Which raises an interesting question: is this merger really going to receive federal backing given that the consolidation will create that kind of neutron-bomb style economic impact? Chances are, yes.

“We do not view the potential for any eventual transaction involving GM and Chrysler even in combination with government support, as a panacea for these companies’ credit concerns,” S&P analyst Robert Schulz said in a statement [via CNNMoney]. That’s a bottomless cup of not good. Hence Standard & Poor’s Ratings Service is keeping The General on credit watch for a possible downgrade, from “You Can’t Touch This” to “Toxic.” And the hits keep happening. “Our most fundamental and serious concerns regarding GM and Chrysler remain unchanged: the pressures on liquidity facing both automakers and their auto financing affiliates as a result of the rapid weakening of global auto markets and credit-market turmoil… Massive changes would be essential for any merger. That raises the possibility of a ‘strategic bankruptcy’ by one or more of the companies to carry out those changes.”

Reacting to happier talk around the world, every stock on Germany’s DAX closed higher today. All stock but one: Volkswagen. After blowing through the rafters yesterday, the VeeDub share price boomeranged. Result: This morning, the DAX was in the tank by more than 7 percent.  All other shares rose and did shine, but Volkswagen single-handedly brought the whole ship down. The Deutsche Börse, Germany’s stock exchange, is exasperated by Volkswagen’s wild gyrations. The Deutsche Börse is mad as hell and won’t take it anymore. As of this coming week, the VeeDub share will only make up 10 percent of the DAX, Germany’s equivalent of the Dow Jones, the Deutsche Börse decreed. Yesterday, VW represented 27 percent of Germany’s most watched index. The Euro Stoxx 50 will also reduce the weight of Wolfsburg’s shares. The German government loosed its dogs of watch to follow a trail of insider trading and market manipulation.

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Market crash? Say what? Volkswagen’s stock price continue to defy market malaise and Newtonian physics. After wild gyrations last week, the Volkswagen stock– better known as WKN: 766400 / ISIN: DE0007664005– went berserk today. It opened at €500, and then more than doubled its value to €1005. At the time of this typing, it stands at €670. At its high, VW had a market cap of €296b ($369,272,943,612.85). For a while, VW was the most expensive corporation on the planet. VW represented half of the DAX, the German version of the Dow Jones. Again, it was the shorts that were caught with their pants down and the stock up. According to Automobilwoche (sub), when Porsche announced they’d raised their share in Volkswagen, it dawned on the traders “that only 6 percent of the shares are still available on the open market.” What’s more, funds that get compared with the DAX are now forced to buy Das Auto, Newton be damned. If someone played their options right, buying Volkswagen didn’t need the measly profits from a few Cayennes. While the financial world is falling apart, there is a tulip craze, Wolfsburg style. Detroit, eat your heart out.

As Moody’s has downgraded GM and GMAC to Caa2, it only makes sense that the ratings agency has assigned potential “partner” Chrysler and Chrysler Financial the exact same rating. MarketWatch reports that the ChryCo Bros. are now at Caa2. Folks, Caa2 is the third circle of junk credit Hell, only a blink away from the last part of this category (Caa3). In other words, “Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk, and have extremely poor credit quality.” There are only two ratings lower: Ca and then C. And then… game over. Bottom line: Chrysler’s “plenty o’ cash contention” was the complete B.S. anyone with industry insight knew it to be. Or, as Moody’s puts it, “The downgrade of the Chrysler rating reflects the increased pressure on the company’s liquidity position due to the precipitous decline in US automotive demand and the likelihood that shipment levels will remain depressed through 2009.” Bottom line II: the only institution that will lend GM. GMAC, Chrysler and Chrysler Financial is you (a.k.a. the U.S. government). That said, Chrysler’s owners Cerberus have plenty deep pockets. According to their website: “Cerberus holds controlling or significant minority interests in companies around the world. In aggregate, these companies currently generate over $100 billion in annual revenues [emphasis added].” But Feinberg’s Boyz know better than to throw good money after bad.

The GM-Chrysler bailout article in today’s New York Times (written by Edmund Andrews and our friend Bill Vlasic) just recaps yesterday’s bailout news. But it raises an interesting point. The argument thus far has been that auto manufacturers (namely Chrysler and GM) would be entitled to the Treasury Department’s bad loan buy ups (TARP) because they have large credit arms. Except for one glitch: General Motors only owns 49% of GMAC (the NY Times article oddly reports the reverse “General Motors … spun off 49 percent of its financing unit, the General Motors Acceptance Corporation.”) As a result, even if GMAC qualifies as a financial institution, General Motors would not. This isn’t the same as Ford, which wholly owns Ford Credit. Fortunately for GM, as Vlasic notes, the government will find a way, one way or the other, to put cash in GM’s coffers. Until GM blows through that, too.

According to Karey Wutkowski at Reuters, the “The Treasury Department is considering aid of at least $5 billion, which could include direct capital injections and government purchases of auto loans.” The usual anonymous source claimed the decision could be made this week. Wutkowski reports that GM and presumably Chrysler have been lobbying the Bush administration for the money, no doubt made easier because Cerberus’s chairman, John Snow, is the former Bush-appointed Secretary of the Treasury. Purchase of bad auto loans is likely to anger many, but the “direct capital injection”– a suitcase full of freshly-minted money– is something else altogether. Will you, the new shareholders get any stock in GM-Chrysler? Of course not. Nor is there likely to be any accountability to the government beyond a nebulous promise by Rick Wagoner that “he’s working hard.” The kicker? The $5b is only the beginning. “People briefed on the merger discussions have previously said GM would need a minimum of $5 billion to start restructuring Chrysler’s operations. The total amount needed could reach $10 billion.”

I agree. Merge in haste, repent at leisure. Or, as Maximum Bob puts it to The Detroit News, “There is no timeframe at all for having anything definitive.” This said following Lutz’ speech at the “2008 Public Relations Society of America International Conference” at the Renaissance Center. The what? A PR conference? Oh, no spin there, then. I mean, is there some timeframe to have something not so definitive? Meanwhile, we so totally believe that the “sources close to the deal” quoted by Mowton’s hometown paper aren’t GM itself. The DetN reports that these SCTTD have previously told them that “GM and Chrysler want to get a deal done before the presidential election on Nov. 4, when politicians may be more receptive to requests for federal aid to complete a merger.” I make that “Who’s your Mama, Obama” by rapper 2 Big 2 Fail. “Lutz would not comment on reports GM has approached the U.S. Treasury for help financing a deal with Chrysler owner Cerberus Capital Management LP.” In other words, MB doesn’t know, doesn’t care (golden parachute at the ready), doesn’t remember or ain’t sayin’. We’re still hearing that the deal’s going down on Halloween. No, really.

Despite the five-week holiday Daimler said its German workers will get this winter, the firm is still going ahead with plans to build a €800 million factory in Hungary. The factory is, according to Reuters, meant for “compact cars,” though what they’d be I have no idea. Smart doesn’t need any more capacity (a previous attempt to expand the smart brand was a dismal failure). It’s not as though the expensive A- and B- Class Benzes are flying out of showrooms, either. The original plan: build four compact models at the Hungary plant, including an off-roader, cabrio, coupe, and small van. But that was in June, before everything went to hell. And Mercedes changes its product plans on a weekly basis, anyway. The bigger story is how much the Hungarian government is contributing to the deal, whether in the form of tax credit or just direct subsidies. Hungary’s economy has been in seriously deep trouble in the past six months, with the currency in freefall and interest rates at 11.5 percent in an attempt to help the currency. Just this weekend, the IMF scrambled to bail out the country (this was after the European Central Bank gave Hungary’s central bank an emergency €5 billion line of credit earlier this month). With all this in mind, Hungary’s officials are probably looking to the Mercedes factory as an economic blessing, and Mercedes is likely cautiously optimistic about the low value of Hungary’s currency.

April 10, 1945. American troops advance towards the Elbe. Russian troops prepare their encirclement of Berlin. WW II will last less than a month. On this day, a man packs up 10 million Reichsmark at the Volkswagenwerk GmbH and heads for Austria. This man is Anton Piech, Chief of Operations at Volkswagen, and Ferdinand Porsche’s son-in-law. Ferdinand Porsche had designed the Volkswagen for Hitler. The 10 million Reichsmark were Volkswagen’s war chest. Piech says he will keep the money from the enemy. Keep he did: The money was used to found Porsche KG. Nobody complained.

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Forget End of Days. I reckon this is The Beginning of Speculation. The Sunday Times [UK] is pulling rank on the ranks of the autoblogosphere’s recent anonymous attribution afffliction, quoting “senior car-industry sources” for their “story” that FoMoCo is busy selling Volvo to BMW. “Sources close to Ford and BMW said yesterday that there had been preliminary talks between the two automotive giants, although that was denied by the companies. ‘No talks have taken place,’ said a BMW spokesman.” As the non-news spread through the Sunday internet, Ford felt obliged to quash the rumors. Speaking to the Associated Press, Ford spokesman Tom Hoyt said the American automaker wasn’t commenting on speculation about Volvo’s future. Later in the day, he commented, issuing a denial that the Ford was selling their cash-sucking Swedish unit. “To my knowledge, we are not in negotiations with anyone about the future of Volvo,” Hoyt almost clarified.

No, the Germans don’t want to start retooling for Panzers and offer the world an opportunity to make it ‘3 out of 5’. But Yahoo! News reports that Daimler-Benz will suspend auto production on December 11th and resume on January 12th, due to flagging demand worldwide. This will be true for ALL Daimler owned plants. Although production may return afterwards… who knows? If the world economy continues it’s counter-clockwise spiral, we could see Daimler retool their plants in a similar way to what Toyota has been forced to do in Princeton, Indiana and San Antonio, Texas.

Barrons [sub] offers Inside Baseballers a lengthy interview with former Merrill Lynch auto industry analyst John Casesa,. GM’s bestest best friend thinks the GM – Chrysler merger “looks terrific on paper.” That said, JC (coincidence?) thinks the resulting mega-domestic would have too many brands and dealers. “So this is a deal that would be difficult to execute operationally, although it could happen because the motivations are so strong on both sides… Just because GM has 22% share and Chrysler has 11% doesn’t mean the combined entity will have anywhere near a 33% share.” OK then. So what does the walking quote factory make of Kirk Kerkorian’s Ford share sell-off? “He’s not one to give up easily. The sale is alarming.” Less alarmingly, Casesa likes Toyota and Honda because of their strong balance sheets and well-hedged technology bets. [ED: For that he gets paid?] Barrons offers an excellent graphic comparing the debt loads of Ford, GM and Honda per vehicle sold. Ford was sitting on almost $4k in debt for every vehicle sold LAST YEAR and GM’s number was just a few hundred dollars less. The equivalent figure for Honda: $119. Strong balance sheet: Priceless. For everyone else: Disaster.

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The Financial Times reports that Toyota’s suffered its first quarterly sales decline “since the months after the September 2001 terrorist attacks, underscoring that even Japan’s biggest carmaker will not escape the worldwide motor industry slump.” Uh, shouldn’t that be the world’s largest automaker? Anyway, ToMoCo global sales were yanked downwards by America’s carmageddon, falling by 4.3 per cent to 2.236m vehicles. As you might expect, the aforementioned worldwide collapse has hit Toyota’s share price hard. The AP reports that Japanese stockholders holding shares in export-heavy domestics are running for the exits, propelled by a soaring yen. “The U.S. dollar… plunged below 93 yen, a 13-year low, as traders reacted to dismal U.S. jobs data that spurred speculation the Federal Reserve might cut interest rates. The combination of the two — the yen’s surge and Sony’s revision — unnerved investors in Tokyo, who dumped shares of exporters like Toyota, Sony and Panasonic.” On the positive side, Toyota’s U.S. Prius production is sending jobs stateside. The Clarion Ledger reports that Mississippi is getting ready to welcome its sixth Prius-related supplier. “Toyota Tsusho America will open a joint venture steel processing facility on the Toyota site.”