The Detroit automakers are trimming or eliminating their leasing programs due to plunging resale values and inflated residuals. In fact, in July leases accounted for only 19.7 percent of retail volume for the U.S. auto industry. However, leasing remains the way a lot of automakers use to put someone into an expensive car they really can't afford. And four of the most-commonly leased vehicles in the U.S. are BMWs (7 Series, Z4, 6 Series and X3). Bucking the current trend, sales and marketing VP at BMW Group Financial Services, Daniel DeChristopher, told BusinessWeek "we are still very committed to the leasing business." That's even though 70 percent of off-lease vehicles are returned to BMW Financial to be resold, usually as certified pre-owned cars. BMW is hedging its bet on leasing, though. They're also offering 0.9 percent APR loans during their "gotta unload these '08s before the '09s show up" sale. The top ten most commonly leased vehicles, and the percentage of them leased between January 1 and August 10 this year are:

BMW 7 Series – 85.3 percent
Saab 9-7x – 82.2 percent
Audi A6 – 74.1 percent
BMW Z4 – 70.7 percent
Mercedes E-class – 70 percent
Range Rover – 69.6 percent
BMW 6 Series – 68.6 percent
Audi A4/S4 – 68 percent
BMW X3 – 67.3 percent
Jaguar XJ – 65.8 percent

Why doesn't GM just go ahead and admit they're selling HUMMER? In spite of accusations of media "speculation" and assertions they "have not negotiated with any parties" by HUMMER GM Martin Walsh, GM just keeps moving steadily towards the auction block. In a phone interview, General Motors Middle East Managing Director Terry Johnson told Reuters:  "There has been interest from various parties within the Gulf … there is a precedent in the cases of Aston Martin, Ferrari or Daimler and those kinds of solutions could be very realistic solutions." GM is getting their paperwork ducks in a row and "has initial expressions of interest from [two] potential buyers that it hopes to develop into formal sale talks." However, in keeping with the corporate party line, Johnson also stated that keeping HUMMER humming is still "a realistic option" and selling was not a "forgone conclusion."  The sun rising tomorrow isn't a "foregone conclusion" either, but the smart money is still on it happening.

In Farago's editorial about the domestic automakers' attempts to get $25b in federal loans, he stated, "it's a prelude to a kiss: the REAL bailout (in for $25b, in for another $25b)." Well, it didn't take long for both sides to pucker up. The International Herald Tribune reports this morning the total has grown to $50b– it turns out the $25b was just for the first year. That would be followed by additional $15b in the second year and $10b more in the third year. Why? The UAW's legislative director, Alan Reuther explains "the amount of concern and urgency from the Detroit companies has increased in the last month and significantly ratcheted up what they're communicating what their funding needs are." But he makes it clear you don't dare call it a bailout: "We don't see it as a bailout. We see it as government assistance to help retooling tied to the production of these advanced technology vehicles." Whatever. It still amounts to billions of the taxpayer's dollars going to fund companies which have been driven to the brink of bankruptcy by inept management who collected obscene salaries for doing so. If they do get these handouts, it should include an oversight committee from outside the industry and from outside congress to make sure the money goes for vehicle design and retooling. Not a cent should be allowed to go to executive salaries or perks, bonuses, lobbyists or any of the other thousands of ways the automakers seem to find to fritter away money. And once that's gone, that's it. No third chances! And furthermore… Huh? … Oh… OK. Here comes the attendant with my Thorazine. I'll go sit quietly in the corner now.

As you might expect, with Toyota nipping on GM's heels sales-wise, the two companies' financial arms have also been neck-and-neck. Automotive News [sub] reports for the first half of 2008, though, Toyota Financial Services pulled ahead of GMAC as the biggest U.S. auto lender. Research done by AutoCount estimates TFS had a 6.35 percent share the lending market, while GMAC held 6.2 percent. With GMAC's cuts in leasing, they expect TFS to stay ahead for the rest of the year. In the first six months of this year, 58 percent of Toyota, Lexus and Scion vehicles sold in the U.S. were financed in-house. About 46 percent of GM vehicles in North America were financed by GMAC. Other captive finance companies in the top ten were: American Honda Finance at fourth overall with 4.95 percent of market share; Ford Credit at fifth with 4.77 percent; Chrysler Financial holds seventh place with 3.15 percent and Nissan Infiniti Financial is eighth with 1.87 percent market share. The other four spaces are held by various banks. Perhaps a more interest and relevant stat would be the total lost in over-estimated residuals and bad credit risks.  Anyone want to guess who'd be most likely to top that list?

And so it begins. The Wall Street Journal' s lead editorial makes it perfectly clear that Motown's plans to tap your taxes is well advanced. And guess what? It's a god damn conspiracy! "Earlier this month… the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits. We've since heard that lobbyists for the car makers are taking their pitch for direct federal loans around Washington, with a goal of unveiling the plan after Labor Day — conveniently in the frenzy of the fall election campaign. They've briefed Congressman John Dingell, the dean of Michigan Democrats, as well as officials in the Bush White House… The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years." TTAC will have an editorial on this shortly. 

It's always good to know the boss has your six. Yesterday we reported HUMMER's general manager said all the talk about GM selling eco-unfriendly-brand was "just speculation." According to the Wall Street Journal, Rick Wagoner announced that his employer is "preparing data and other materials to open formal talks" with "potential buyers." So much for "speculation." The usual "people familiar with the matter" told WSJ that GM is no longer "seriously considering" revamping HUMMER. Basically, GM can't afford to do it because of "a potential liquidity crunch" (to put it mildly). Of course as WSJ points out, selling HUMMER would be only "a minor part of GM's plan to raise the $15 billion in additional liquidity by the end of 2009 that it needs to remain viable." The only real hurdle they'll have in shutting down HUMMER and shuffling it off to India, China or Russia will be dealing with approximately 170 HUMMER dealers who have state franchise laws on their side. No doubt the vultures lawyers are already circling.

The Wall Street Journal reports that "Chrysler LLC will aggressively pursue partnerships with other auto makers to expand its global reach–" Hang on; "expand its global reach?" Don't you mean get something into Chrysler's American showrooms that customers will actually buy so we (Cerberus) can finally sell someone this turkey? No? OK. Carry on. "and its president dismissed the idea that joint ventures may damage the value of Chrysler's own brand." Well exactly! How could rebadging/reengineering someone else's product possibly hurt Chrysler's brand? (What brand, you say?) Especially when ChryCo Co-Prez Tom LaSorda promises "every joint venture will either produce an entirely new vehicle not already in Chrysler's lineup or it will be limited to a slightly modified car or truck made or designed by the partner but that doesn't compete with an existing Chrysler model in the same market." What's more, LaSorda says everyone should be doing it! "Partner early and partner often, because more strategic alliances and joint ventures are on the way. And the best time to partner with a company entering your market is before they enter." So let's see… Chrysler's cutting or trying to cut deals with VW, Nissan, Fiat, Great Wall, Chery, Mahindra and one Russian carmaker to be named (or not) later. Is there anyone "The New Chrysler" won't sleep with talk to?

We have it from an insider that the bankrupt parts supplier Delphi is about to "downsize" its domestic ops. Not that it'll do them much good. Now that Appaloosa Investments and Friends bailed-out of Delphi's bail-out plan, the former GM division is on its last life. Although Delphi's suing its jilters, what are the odds that a judge can/will force Appaloosa to fork over the billions the money men didn't leave on the table? At best, more money will be lost on lawyers, all 'round. All of which means a Delphi Chapter 7 is just over the event horizon. GM will have to buy up (back) the Delphi bits it needs to keep building vehicles. And as GM's August 8th SEC filing points out, "In addition the Benefit Guarantees may be triggered which would result in additional liabilities to us. We may also be subject to additional litigation regarding Delphi." The flames of GM's cash conflagration continue… [thanks to you-know-who-you-are for the tip]

"One advantage of private ownership is that we can sell nonearning assets to generate cash," Chrysler President and Vice Chairman Tom LaSorda told the Detroit Free Press. "To date, we've identified over $1 billion in non-earning assets and we're more than halfway to achieving that goal." Of course, another advantage of private ownership is that Chrysler doesn't have to reveal financial information, so why advertise the fire sale? "It has a lot to do with the media," LaSorda claimed. "They like to write about us and other auto makers who post $15.5 billion or an $8.7 billion loss just to get a few headlines." A more likely motivation: heading off further cuts to ChryCo's credit ratings. At the same time, LaSorda announced a forthcoming $1.8b spend to make the Jefferson North Assembly Plant more environmentally friendly, develop new cars and keep 400 jobs in Michigan. The green initiative– including energy management systems, efficient lighting and the use of solid waste and paint sludge for energy– will clear the way for Jefferson North to build a new, car-based (i.e. brand dilluting) Jeep Grand Cherokee, scheduled to debut in 2010.

The Daily Vedomosti (a combination of The Financial Times, The Wall Street Journal and Russia's Independent Media) says Russian "oligarch" Oleg Deripaska is making a play to purchase GM's HUMMER brand. ABC News repeats the report without providing any further details– save a few salacious facts about the Russian 28-billionaire's unsavory past. In context, of course. "The U.S. State Department revoked his visa in 2005 because they were reportedly concerned he had not been honest about his business dealings. U.S. law enforcement officials reportedly believe he is tied to organized crime. The allegations add a layer of irony to the possible purchase, as the Hummer has been popular with the would-be outlaw set in the United States. Gangsta rappers like now-deceased Tupac Shakur and 'Gangster's Paradise' artist Coolio owned Hummers, as did Christopher Moltosanti, the young ill-fated capo in HBO's The Sopranos." Less culturally aware commentators may remember Deripaska as Magna strongman Frank Stronach's partner in his ill-fated attempt to "liberate" Chrysler from Daimler. Anyway, GM will neither confirm or deny the report. "We haven't announced any of the discussions that have taken place with any outside parties that are interested in the brand," Hummer spokesman Nick Richards announced.

New York Times Op Editorialist Bob Herbert thinks motorcyclists in particular and American voters in general have been hood-winked by pols who proclaim that drilling for oil would offer relief from high gas prices. Make that "immediate relief." "Maximum capacity from these new leases wouldn’t be reached until 2030, when that 7- or 8-year-old is approaching 30, finished with college and graduate school, and very likely married with children. And even then — after more than two decades and who knows how many graduations, weddings, funerals and family cars — even then, the amount of oil expected to come from these leases would have little or no effect on the price of gasoline at the pump." So that's that then. Except for a slam at anyone stupid enough not to accept Herbert's argument. "I wonder if the electorate will ever wise up." Yeah, democracy sucks. You know, except for all the other systems [hat tip to Winston Churchill for the pithiness].

Like its LA equivalent, The New York Times is making gloat while the price of gas hurts. That said, The Gray Lady's Op Editorialist begins with an [ironic?] back pat for the great American SUV buyer's eco-political awakening. I mean, former SUV buyer. "We have heartily applauded Americans’ collective decision to recognize the finite nature of the world’s supply of fossil fuels and to start driving sensible vehicles. But we must also acknowledge that this abrupt change of heart is creating a new national challenge: what to do with the suddenly redundant S.U.V.?" After a quick acknowledgment of the financial pain caused by SUV backwardedness and the trapping of buyers' bucks therein, the NYT offers a practical idea for ditching the tree-hugger's four-wheeled bogeyman: "We suggest exploring foreign countries. The Russian market for cars, for instance, is booming — thanks to a fast-growing economy and generous government subsidies that are keeping a lid on the price of gas. The best part is that Russians prefer secondhand imports over domestic Ladas and Volgas." Huh? How's that going to work? And I thought The Times was anti-SUV on global warming grounds. Alternatively… "Then there’s the scrap market." Or, finally, "The artist John Chamberlain made a name for himself making sculptures out of crushed automobile parts. Cadillac Ranch — an array of graffiti-covered Cadillacs protruding at an angle from a field near Amarillo, Tex. — has become one of the nation’s landmarks.With a few adaptations, a Lincoln Navigator might make a nice streetlamp." Who said the Times doesn't have a sense of humor?

Having escaped The Bored of Directors' Night of the Soft Pillows, GM CEO Rick Wagoner once again watches as his employer takes a hit to its [somewhat nebulous] bottom line. Reuters reports The General is shelling-out $277m to settle a shareholders' lawsuit "contending the automaker made false and misleading statements." (Presumably, in its accounts, rather than generally.) You may recall there was a while there when GM restated its earnings more often than a squealing bookie– which is a bit bizarre (or not) as Wagoner ascended the throne from the Chief Financial Officer slot. Anyway, "In the regulatory filing [which exposed the payoff], GM also disclosed the tentative settlement of a separate lawsuit brought by shareholders, agreeing to make unspecified changes to its corporate governance rules. GM also agreed not to oppose plaintiffs' attorney fees of up to $7.5 million in that case." Unspecified changes? Hang on; is this a publicly-held company or not? And if you think this is bad, wait 'til you see the legal bills when the artist once known as the world's largest automaker files for C11. 

When is enough, enough? GM has to be asking that about their former subsidiary Delphi. The AP [via Forbes] reports that The General has agreed to lend the parts maker another $350m "so Delphi can maintain a minimum level of liquidity." That brings GM's financial stake in the company they thought they'd dumped spun-off to $900m in loans. And that's on top of the $3.6b they paid out to cover Delphi's UAW pension liabilities. Delphi has been in Chapter 11 since October 2005. Their bankruptcy original plan included exiting Ch 11 this past spring with an equity deal and massive loans. When Appaloosa Management and other investors backed out of a $2.55b equity deal at the last minute, Delphi had to go back to square one. Last week, bankruptcy Judge Robert Drain ruled that Delphi can file a lawsuit against Appaloosa and the other investors. Until that's settled (and assuming the lawyers don't eat up whatever settlement they get), it looks like GM will continue bailing out their largest supplier. The question is, who will bail out GM?

Fears of takeover, foreign or otherwise, figure large in the minds of many European auto execs. These fears ostensibly caused the Porsche-VW shotgun marriage collegial partnership. Schaeffler's "sneak-up" takeover of Continental is fuelling a whole new round of paranoia. Daimler's market value has declined by 45 percent on the year; the weakness has placed the Stuttgart firm in the middle of the takeover mania. Reports emerged saying "a foreign hedge fund is buying a large number of shares in (Daimler)," followed swiftly by more rumors that Swedish hedge fund Cevian Capital was taking a position in the firm. Daimler now says that it has "no indication" that it is under assault. But that confidence is undermined by reports from Automotive News [sub] that Daimler has enlisted Deutsche Bank to watch its back. Deutsche Bank is reportedly helping Daimler find an "anchor investor" who could play white knight should a takeover materialize. Hedge funds, like most predatory creatures, tend to not give a lot of warning in advance of a takeover, so its hard to blame Daimler for freaking out over this one. Especially considering that the prime suspect, Cevian Capital, "does not see itself as a hedge fund but as an investor that pushes for changes in companies." Yikes!