If you're one of those people who believes GM has a coherent turnaround plan, or in fact believe in this unspecified, entirely elastic strategy for a return to profitability, you might want to take note of the fact that General Motors is locked in the PR version of Groundhog Day. As we've pointed-out many times, GM PR always saves its bad news for a Friday and/or makes major announcement on the same day it gets hit with disastrous numbers. This coming Tuesday (June 3) will be no exception. Automotive News [AN, sub] reports that GM CEO Rick Wagoner will reveal his new new turnaround plan (cut!) on the same day the company's May sales figures hit the wires. Amidst a predicted 10 percent overal U.S. new car sales drop, "analysts expect sales to drop 22 to 25 percent at GM and as much as 22 percent at Ford. Sales at Chrysler are also expected to be down by more than a fifth, according to analyst forecasts." As bad as those numbers will be, they won't be so bad for the transplants. Honda will post a gain, and "Toyota Motor Corp. is expected to reach a record market share… expected to reach 18.1 percent, up from 17.3 percent in the same month last year and 17.5 percent from last month." In other words, GM– and the rest of The Big 2.8– are losing sales and share. Gas prices, market shift, down economy, great sales in Russia; yada yada yada. As some point, the spin will stop. 

Even though Ford Motor Credit avoided the mortgage madness haunting GMAC, the credit crisis is taking its toll. Today's Wall Street Journal reports that FMC's delinquencies are up. Upside-down car and truck owners are giving up and giving back. With resale values falling through the floor, the bankers are stuck with monster truck-sized losses on repossessed vehicles. Even clean lease returns are a problem. Contemplating their ailing credit ops and DOA truck market, The Blue Oval Boyz have pushed out it's profitability date from 2009 to… someday. "Ford started the year expecting its credit arm to match the $1.2 billion in pretax profit it earned last year, but now has a much dimmer outlook. In the first quarter, Ford Credit earned just $36 million, $257 million less than in the year-earlier period." Unlike GM's sell-off of GMAC, Ford continues to say it "has reviewed the option of selling the unit many times over the years but has always come to the conclusion that Ford Credit is a strategic asset for the auto maker." Which is lucky; who'd buy it? Never one to miss the obvious, Ford share stalker Kirk Kerkorian's go-to guy Jerome York fingers Ford Credit as "an area of weakness." Ya think?

American Axle CEO Dick Dauch hung tough against the United Auto Workers (UAW) for 87 days. As the smoke clears, it's clear Dick Dastardly came out on top. The new union contract cuts the company's average hourly labor costs from $73 to about $40. The Detroit News reports that DD also sliced some 2k workers from AA's 3,650-member North American workforce. All in all, the parts maker will realize some $300m in annual savings. To help show these workers the door, AA secured some $215m worth of OPM from GM. That's roughly half the $450 to $500m tab. Meanwhile, AA shed some $370m in lost sales. Put those numbers against each other, and it looks like AA recovers its strike expenses in less than a year (excluding lost sales), and powers on from there. Meanwhile, Automotive News (sub) reports that AA has a $1.4b in backlogged orders to be filled between now and 2013. Mr Dauch celebrated the good news today by promoting his son, David Dauch, to the position of President.

Even before Tata Motors bought Jaguar and Land Rover from Ford, the Indian automaker's investors were not well pleased at the prospect. A dropping share price reflected their central worry: $3b or so in debt. These worries are proving well founded. Tata has announced a $1.86b equity share offering. The stock offering amounts to a 30 to 35 percent increase in equity capital; investors are heading for the hills rather than watch their shares take the hit. "The magnitude of this offering is unexpected and could adversely affect short to medium-term stock performance," Citi analyst Jamshid Dadabhoy tells the Detroit News. Amit Agarwal of Kotak Securities tells Market Watch that servicing all the extra debt could cost Tata 19 to 22 percent of its earnings per share. Meanwhile, Jaguar and Land Rover need considerable investment to develop the products needed for profitability, and Tata has yet to build its much-vaunted Nano. Tough times.

On Friday, after GM detailed the financial damage caused by the American Axle strike and union shutdowns at two of its plants, the American automaker's stock price slid to $17.38– it's lowest level since February 1982. Once again, GM saved bad news for the end of the week; the stock market couldn't fully react to the revelation. As the markets are closed for Memorial Day, it'll be Tuesday before investors [literally] take stock of the situation. They'll also take into account GM's busted accounts— a deficiency that caused numerous financial restatements, triggered an SEC investigation in October 2005, caused the ouster of CFO John Devine in December 2005, and forced the "resignation" of controller Paul W. Schmidt and chief accounting officer Peter R. Bible in May 2006. Meanwhile, in the here and now, the U.S. new car market is moribund (to say the least) and there's little prospect of immediate recovery. GM's high-profit trucks and SUVs are dead in the water. Suppliers are up against the wall, with a "run on the bank" scenario (cash on the nail, please) looming large, The stock market is waking-up to the perfect storm we've been predicting for months if not years.

UPDATE:  GM stock hovering at $17; down three to four percent. 

GM's annual report's out (just in time for the weekend!) and it's a shocker. The General's CEO, the company's former CFO, has admitted that the automaker's accounts are, how do we put this gently… unreliable. Here's the text: "Material weaknesses previously identified as of December 31, 2006 that continue to exist as of December 31, 2007: 1. Controls over the period-end financial reporting process were not effective. This has resulted in a significant number and magnitude of out-of-period adjustments to our consolidated financial statements and in previously reported restatements. Specifically, controls were not effective to ensure that significant non-routine transactions, accounting estimates, and other adjustments were appropriately reviewed, analyzed, and monitored by competent accounting staff on a timely basis. Additionally, some of the adjustments that have been recorded relate to account reconciliations not being performed effectively… 2. Controls to ensure our consolidated financial statements comply with IRS No, 109, Accounting for Income Taxes were not effective… 3. Controls over the accounting for employee benefit arrangements were not effective. We lacked sufficient control procedures as well as adequate involvement of technical accounting resources to ensure that employee benefit arrangements were accounted for properly." It's hard to grasp the full implications of this revelation. If GM severely over-reported its liquidity, the situation could be dire. Full Death Watch on Monday. [thanks to Buickman for the heads-up]

You'd think that Exxon shareholders would be pretty damn happy about rising gas prices (in terms of the company's alt. fuel investments) and the fact that the energy giant booked $11.7b worth of profits in the first financial quarter of the year. That should go double for the Rockefeller family, whose unimaginable lifestyle is supported by their Exxon stock. But nooooooooo. The New York Times reports that the Rockefeller family have thrown their weight behind a "shareholder rebellion" aimed at pushing Exxon further and faster towards an alt fuel future. "The resolutions ask Exxon to take the threat of global warming more seriously and look for alternatives to spewing [sic] greenhouse gases into the air. One resolution would urge the company to study the impact of global warming on poor countries, another would encourage Exxon to reduce its emissions and a third would encourage it to do more research on renewable energy sources like solar panels and wind turbines." Yes, “Exxon Mobil needs to reconnect with the forward-looking and entrepreneurial vision of my great-grandfather,” Neva Rockefeller Goodwin announced in a statement. “The truth is that Exxon Mobil is profiting in the short term from investments and decisions made many years ago, and by focusing on a narrow path that ignores the rapidly shifting energy landscape around the world." 

According to the (appropriately-named) SubPrime Auto Finance News, you can blame the cratering housing market for collapsing new-car sales. "Lower equity translates into an inability to borrow against the house to buy a car," opines Art Spinella of CNW Research. This is especially true in California and Florida, where new car buyers lead the league table for tapping into their home equity to finance a new whip. As of six months ago, California's supply of unsold new houses was running in excess of 80 months. Spinella reckons the Golden State's (and thus America's) auto sales recovery depends on reducing the staggering inventory of unsold new homes. So, Art, when? "Probably not until the final quarter of this year or the first quarter of next, but in either case a California turnaround will benefit all auto sales in 2009." Meanwhile, the number of homeowners who are "upside down" on their home loans is adding more fuel to the pyre. In fact, some  68 percent of those who bought homes in 2005 owe more than the house is worth. Ouch.

Tesla Motors chairman Elon Musk plans to take the company public before the end of the year. Before you call your broker to get in on the ground floor, think twice. Blogging Stocks' Zac Bissonette advises prospective investors to "stay away!" He doesn't base this advice on any of Tesla's financials. In fact he says he hasn't seen a registration statement or prospectus. Instead, he's looking at the money that initial investors lost in the airline industry, the hundreds of startup automakers over the years, the internet bubble that went bust and the struggling satellite radio companies. He reminds us that "world-changing technologies often fail to lead to profits for the investors." And then he offers this last bit of advice: "If the Tesla IPO is a hot one and investors start dumping boring profitable companies to pile in, I say take the hint and run the other way." You have been warned.

It turns out that Chrysler does have assets worth selling. Automotive News (sub) reports that Mercedes has agreed to purchase Chrysler's recently-shuttered Pacifica design center in Carlsbad, California. The 35k square foot building was listed at $7.3m, but with neither side commenting on the terms of the sale, one has to assume that Mercedes (once again) took advantage of its erstwhile partner. Mercedes already has a design studio some 51 miles away, in Irvine CA. At less than half the size of Pacifica, the Irvine design studio will likely merge into the newly acquired building, although Stuttgart is staying mum on the topic for now. Pacifica was responsible for some of Chrysler's most successful designs, from the 300 to the Challenger, from the Plymouth Prowler to the eponymous Pacifica. Of course they also designed the Dodge Intrepid and the Jeep Compass, so… maybe it's not a huge loss after all.

Edmunds' Inside Line quotes Lexus's corporate product planning manager as saying the price of the new Lexus LS-F price will "begin with a 2." We're guessing the V10 supercar won't be $29,995. In honor of this news, I've hit up the thesaurus: brainsick, off, daft, absurd and whack. See also: dismal failure, stillborn. Newsflash to Lexus. You're not Ferrari. This won't be a performance halo car (reference Acura's NSX and the amazing effects it had on making people think the RL was sporty). Also, people buying summer Sunday cars for $200k aren't motivated by factors like "reliability," especially when this hand built carbon fiber monster will likely not maintain the brand's hallmark reputation for non-breakage and low maintenance. And, because I especially don't care for this LF-A supercar, here's a list of cars that cost half as much with better looks (extrapolating), heritage or fun: Porsche 911 Turbo ($135k), Nissan GT-R ($70k +  ?), Corvette Z06 ($77k), Corvette ZR1 (estimated $100k), Ford GT (slightly used, $150k), Ferrari F430 ($175k), Aston Martin DB9 ($175k), and BMW M6 ($100k).

United Auto Workers (UAW) at American Axle are set to ratify vote on their new contract. You know– the one that cuts their wages from about $28/hour to $14.35-18.50 per hour after an 11-week strike. The one where UAW Prez Big Ron Gettelfinger said he didn't want GM's involvement. Yeah… that one. The Detroit Free Press reports a lot of the workers are unhappy with the proposed settlement. However, most feel they don't have a choice (as if). For its part AA management is hoping most UAW members will opt for buyouts or early retirement; it would be a shame to waste the extra $18m GM kicked in at the last minute to sweeten the pot (bringing their "involvement" ito $218m). Where GM wll get the money is anyone's guess. Perhaps those money trees at RenCen are producing a bumper crop this year. And well they should– they're being fertilized with the highest-quality corporate bullshit in the world. Just sayin'.

The Wall Street Journal [sub] reports Volvo's saying farväl to a third of the production workers at their last remaining Swedish factory. (The Belgian factory which makes Volvo's smaller vehicles is so far exempt from the cutbacks.) And no wonder. "Despite expansion in Russia and China, Volvo reported selling 22,000 fewer vehicles during the first quarter of this year compared with the same period a year ago." And there there's a sales mix shift to smaller, cheaper, less profitable vehicles and the weak U.S. dollar. It all adds up to a loss of "$151 million in the first quarter of this year, compared with a $94 million profit during the same quarter in 2007." Both are mouse nuts numbers in the Ford scheme of things, but Investor Kirk "The Lion of Las Vegas" Kerkorian's minion Jerome York recently opined that FoMoCo will probably jettison Volvo within 18 months. Ford says Volvo isn't for sale, forgetting to add "we constantly review the situation." Translation: yet.

Canada (like most other developed countries) has a hard time attracting/keeping auto manufacturing jobs due to high labor and tax costs. To counteract these competitive disadvantages, provincial governments often offer car companies tax holidays and other incentives. The problem with these handouts is that they do not guarantee a long-term presence by the bought-off manufacturers. Exhibit A: GM got handouts worth nearly $250m in provincial tax money (and about $200m in federal funds) for its Beacon project aimed at revitalizing its Canadian production facilities. Now, a few short years later, they're cutting some 1400 jobs at their Windsor transmission factory, with another 900 lost due to production cuts at the Oshawa truck plant. Having spent some $7b on various automaker subsidies without receiving a single job guarantee, Ontario Premier Dalton McGuinty is coming under fire. "The more money this government invests in a company, it seems the more jobs are lost," says Progressive Conservative MPP Bob Runciman. But McGuinty ays he "doesn't regret" giving the money to GM (at least until the next election). Report on Business tells us that GM is set to ask the Ontario government for another $140m to build transmissions at its St Catharines plant. Oh, and don't expect GM to offer any job guarantees, either.

In my imagination, GM execs start every major meeting cranking-up the Talking Heads' "Burning down the House" and dancing in that awkward style peculiar to drunk 50-somethings at the latter part of their daughter's wedding. In real life, they probably exchange worried glances over highly polished tables every now and then and continue their "work" with grim, monotone determination. Well here's an arched eyebrow for you guys: The Wall Street Journal reports that GM CFO Ray Young is "open to raising additional financing to weather the auto industry's current downturn and other challenges facing the company" at the same time that he "remains confident in its liquidity for 2008." I love a mixed message in morning. Smells like… bankruptcy. "If the current adverse economic conditions persist or deteriorate further we would consider a wide range of actions," Mr. Young said. On Ray's To-Do list: "opportunistically" tapping credit markets, including funding sources in the U.S., selling "noncore" assets and/or "reprioritizing" its capital spending. Question: what credit markets? GM credit ratings sucks. Cerberus' struggles with Chrysler have polluted the private equity pond and GM's already spending $2b on interest payments. What non-core assets? GM's already sold off everything it's got of any real value. And what do you mean by "reprioritizing" cap ex? Cutting back on product development? And I wonder why this article neglected to mention the newly released information that GM's cash burn for the year is estimated at $8b– and counting.  $24b (claimed liquidity) – $10b (float) – $8b (current cash burn) – ? = C11. [thanks to jthorner for the tip]