GM's reported "done deal" to sell their medium-duty truck line to Navistar has fallen through. In a tersely worded press release – reprinted here in its entirety – GM stated:

Due to significant marketplace and economic changes, GM and Navistar have decided not to renew the memorandum of understanding to purchase GM's medium duty truck business, which has expired. GM will continue to run the medium duty business as it has in the past, including providing sales, service and marketing support to GM dealers for its medium duty trucks.

GM will continue to review strategic options for the business, including continued discussions with Navistar.

So what impact this will have on GM's finances, since you know they'd already counted this as part of the "as much as $17 billion" cash they were going to use to get them through the next year? Do they drop the price low enough to entice Navistar into buying? Or do they try to sell to someone like Mahindra and Mahindra? OR do they stay in the medium truck business and just lay off a bunch of workers like they have elsewhere and cut production to match sales? No matter what the final resolution, it won't be good for GM.

What be the ACSI, you ask? The American Consumer Satisfaction Index, conducted by the University of Michigan's Ross School of Business. As for methodology, the explanation is well above my pay grade. (I'd just ask "How satisfied are you with your car?" and call it good.) Unhelpfully enough, the automotive sector's results are listed alphabetically. But the bottom line is as above. And the answering spin, reported by The Detroit News, is mucho predictable. "We still say with a high level of confidence that the level of our customer satisfaction is improving for most of our brands, based on independent studies and internal data," GM spokeswoman Janine Fruehan said. "We have a renewed and intensified focus on satisfying our Chrysler, Jeep and Dodge customers that has been under way for about a year," Chrysler spokesman Ed Saenz said. "The new management is committed to satisfying our customers at every level. We are beginning to see, in internal numbers, improvements that indicate we are on the right path." And "This survey runs counter to the results of other recent surveys, in which we've made great progress," Ford spokesman Mark Schirmer said. Never mind, then. I guess. 

The decline of the US auto market is bad news for OEMs, but as usual shit flows downhill and auto suppliers could take the brunt of the impact. Sven Gustafson blogs an A.T. Kearney survey at MLive.com which says North American auto suppliers could lose up to $50b between 2008 and 2011. Caught between weakening demand for new vehicles and rising commodity costs, the survey estimates that the supplier sector will need $38b in incremental capital over the next five years. Another report by Grant Thornton LLC estimates that the hard times could put a full third of suppliers at risk of bankruptcy. Unsurprisingly, firms in the SUV supply chains face the highest risks thanks to their reliance on weak US sales. "The full impact of very low truck and SUV production in the second half of the year and any new production cutbacks this fall – something we believe is likely – will only make supplier cash flow problems more difficult to manage," saiys Grant Thornton principal Kimberly Rodriguez. And in the past these woes could have been turned around by acquisitions or mergers, but now the key to survival seems to be diversification beyond the auto industry. With credit tight, massive retoolings and turnaround plans also aren't in the cards for many suppliers who have little choice but to focus on successful core business to survive the rough patch. "I'd say things are being looked at very carefully," says Doug Grimm, CEO of supplier Citation Corp. "I think everybody's wondering if we've seen the bottom yet."

Auto Motor und Sport reports supercar sales jumped 45 percent between 2002 and 2007, to a record 165k units per year. The German buff book details a study by the Instituts für Automobilwirtschaft (IFA) at the Hochschule für Wirtschaft und Umwelt (HfWU) in Nürtingen-Geislingen. It estimates supercar sales will increase by another 20 percent to 200k units by 2015. The IFA says much of this growth will be driven by newly wealthy criminals and dictators status-seekers in emerging economies like Russia and China. It also credits (blames?) "the spiral of exclusivity." "Many premium manufacturers have lost exclusivity by widening their model ranges. The small-volume firms can offer the exclusivity that is so important for supercar buyers." So although the horsepower wars of the 1990s may have reached their zenith with the 1001 hp Veyron, we can expect a steady stream of four-wheeled unobtainium– with carbon tax surcharges greater than the GNP of Belize.

Struggling Malaysian automaker Proton has been hunting for a major OEM partnership for some time. Rumors have linked the company to PSA and VW. GM snuggled-up to Proton last year, meeting with management and shareholders. According to The Motor Authority, GM's recent financial "challenges" haven't discouraged the The General's Prez for S.E. Asian Ops from continuing to play footsie. "If Proton wants to talk," Stephen K. Carlisle announced. "We are ready as we are always interested about collaborating with them." GM may be hunting for [another] low-cost, entry-level car for emerging markets. As Proton also holds a majority share of Lotus, Hethelmania may also be taking hold. But c'mon. Another brand? And what about the money question? "GM would be able to make a financial commitment for a collaboration with Proton," Carlisle told The Star. "If it made business sense now."  Yeah, sure.

Automotive Fleet has published their mid-year report of fleet sales, and there are a few surprises to be found. The Crown Vic's place at the top of the list (94.2 percent of sales to fleets) is not one of them. Nor will anyone gasp at the Sebring's (69.9 percent of convertibles and 62.2 percent of sedans) and Avenger's (65.5 percent) rankings. However, the stats show that 56.6 percent of Dodge Calibers went to fleets, as did 49.9 percent of Chevy Impalas. The highest import nameplate: the Mazda6 (59.5 percent) followed by the Suzuki XL7 (53.2 percent) and, believe it or not, the Volvo S40 (48.9 percent). Brands you'd think were naturals for fleets like Hyundai and Kia placed below the 50 percent level. Overall, 21.8 percent of the cars and 20.8 percent of the trucks sold the first half of this year went to fleets. As overall sales drop and inventory builds up, that number will probably grow for the second half. We'll offer a more detailed analysis of fleet sales soon. [Thanks to NoSubstitute for the link]

Disney's Magic Kingdom has nothing on GM, the new Happiest Place on Earth. Why, things are so good there that CFO Ray Young told Bloomberg they may be able to reap a larger chunk of their projected $10b savings this year, instead of waiting for next year. Speaking at at the Traverse City auto management lovefest yesterday, Young said The General may have "as much as $17 billion" cash to get them through next year. And it's all because they're "accelerating all of [the] stuff" in Rick Wagoner's July 15 magical "Cut Your Way to Prosperity" plan. Of course, their model mix is still out of kilter for the market. And they have to look at "how strategic" GMAC will be as they enter "another stage" of their relationship with the floundering finance company (read: find some sucker to buy their share of that turkey). Oh, and they may have to "reconsider" their "contractual obligation… with the UAW" on retiree health care even before they make the first payment into the union-run superfund. And they'll do all this while "reinventing the automobile and GM," according to Young's slideshow. GM Deathwatch later today.

"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.

We've been helping to circulate rumors of possible Volvo sales recently, most of which have centered on Chinese firms as the potential buyer. All the while Ford has insisted that Volvo isn't for sale; statements which we've treated with the incredulity that all pre-sale denials deserve. But it seems Ford's sticking with the Swedes. In a post on his Autocar blog, Hilton Holloway describes Volvo's 20-year quest to emulate Audi's upmarket appeal, and its utter failure to escape its stodgy image. One Volvo exec tells Holloway that "he wished he had BMW's customers, who would tick all the options boxes and update their car every couple of years." Obviously that's not about to happen anytime soon. So FoMoCo is set to dial back Volvo's upmarket ambitions and reposition the Gothenberg brand as a VW-style "upmarket mainstream" marque. This means building cheaper cars that are "more closely related to Ford models" so that U.S. production can boost Volvo's profit margins. It also means Volvo wants to hoik sales from 420k to 600k vehicles per annum. The new Volvos could be green lighted as early as January. With such short development times, look for Volvo to descend into the bowels of brand engineering with its new generation of high-volume models. It could well be "one Ford" too many.

Toyota's Senior VP for NA engineering and manufacturing is rooting for the D3. "Competition is good for us," Steve St. Angelo told The Detroit News. 'The customers are the big winners, because it makes all of us better." But there's more to Toyota's largesse than simple concern for consumer choice. "We share many of the same suppliers, so if one of our suppliers has difficulty with either Chrysler, GM or Ford, there's a good chance they are going to have difficulty for us." And because of this interconnectedness, Toyota is helping its American rivals however it can without breaking U.S. antitrust laws. "When any of our competitors want to come to our plants, we let them," says St. Angelo. "We really don't want anybody to go bankrupt." The ToMoCo honcho professes faith in the D3's current leadership. "If you really look at the leaders of the Detroit Three, they're some of the finest leaders that this business has ever had. I hope and I think that they'll come out of this. It would help our company. It would help America. It would help our suppliers. It would help everyone." Not to mention the fact that rooting for Detroit helps Toyota in its quest to morph from evil, America-destroying transplant to leader of the United States of Toyota (as examined by Automotive News [sub] columnist Edward Lapham).

Although Ford only makes about $100 from each Focus it currently sells, The Blue Oval Boyz plan to bank big bucks from small cars. At a dinner with journalists last night [Ed: our invitation must have gotten lost in the mail], Ford Americas President Mark Fields said the small car segment is at "critical mass" and that Ford's "eager to tap it." The Detroit News reports that the formerly mulleted Mulally minion stated "we'll see a bigger smaller car segment," and wistfully added FoMoCo wants to start charging premium prices for small cars. And how will they accomplish this goal? With "exciting designs, best-in-class fuel-economy, excellent craftsmanship and innovative new infotainment technologies." And even though the Fiesta will be hecho en Mexico, the Mother of All Union Payoffs (a.k.a. the health care VEBA deal) will save Ford enough money that they can finally build small cars at a profit. Of course, the first thing they have to do is convince the average American small car buyer that a Ford small car is worth the same money as a comparable model from Honda or Toyota. [Ken Elias' Ford Death Watch later today.]

Bob Lutz better watch out; his boss is challenging him for the title of Most Delusional Person on Earth. After the Olympic Games' opening ceremonies, Rick Wagoner told Financial Times, "I would say, from an assembly perspective [the pain] is largely behind us." And even though GM has had to cut large chunks of their workforce, is losing market share on an almost daily basis and flushed $15.5b down the toilet last quarter, he feels they're in "a pretty good position." Since the interview was in China, the discussion turned to their Chinese operations. "This has been miracle story from our perspective. For me it's the replay of the US auto industry in the 50s, 60s, 70s, but the upside potential is dramatically greater." Correct me if I'm wrong, but aren't those the decades when GM began, advanced and perfected the brand dilution and model overlap that brought them to the point they are today? And when someone pointed out that analysts expect sales growth in China to slow drastically this year, he didn't care. "That's not something we are losing sleep over." Of course, with the golden parachute he has strapped to his back, he probably doesn't loose any sleep over very much of anything. His private little world must truly be a wonderful place to live in.

Chrysler ranks below the industry standard in J.D. Power and Consumer Report quality ratings. So when ChryCo VP for manufacturing Frank Ewasyshyn announced that warranty costs had fallen by 29 percent in the past year, he had a bit of trouble explaining why the improved reliability wasn't showing up on recent external surveys. When asked by MSNBC to explain this conundrum, Ewasyshyn replied, "If I could answer that question, you wouldn't be asking it. We certainly put enough energy and effort into it." He points to all the things Chrysler is doing right: sending teams to investigate recurring vehicle problems, establishing worker input boards, and standardizing production processes. But then Ewasyshyn takes a page from the GM's handbook: "In the meantime the rest of the organization is focused on improving the things that are customer dissatisfiers, or again, perceived quality." To be fair, Chrysler is digging its way out of a giant hole. Before Daimler offloaded Chrysler, it had the highest warranty costs in the nation; improvements haven't been dramatic enough to bring things up to industry standards. Meanwhile, Chrysler is essentially staying the Tom Lasorda-guided course. "We've got a plan. It works. We're gonna stick to it. And it's constantly being reinforced," Ewasyshyn said. "We know the right formula. Sticking to it and just constantly pushing it every day of the week, challenging people to do better, that's how we're going to get this thing done once and for all."

High material costs (particularly steel) are wreaking havoc on automotive suppliers, caught between soaring raw materials costs and cost-cutting customers. But the industry is getting a new tool which could help iron-out the most precipitous jumps in steel prices. Automotive News [sub] reports that the New York Mercantile Exchange will introduce a futures market for domestic hot-rolled coil steel this fall. The move could provide more price predictability for the crucial commodity. "The NYMEX proposal is one more option that we will review in determining the most appropriate overall strategy for us," GM spokesfolks didn't reveal. Steelmakers are not thrilled by the plan. They prefer the current method of direct price negotiation, and warn that speculators could drive prices up (it's hard to believe things could be much worse than the doubling of steel prices since December). Steel mill profits have been strong during the period of price increases, and the bankruptcies which once riddled steel production have migrated to steel customers, particularly auto parts suppliers. Though speculation is always a concern, a competitive futures market typically stabilizes market prices and makes downstream contract negotiations far easier.

Walk into a video rental store, and you're sure to encounter a large number of titles you've never seen gracing the marquee of your local cineplex. Similarly, rental companies hunting for the best deals buy-up huge numbers of the slowest-selling vehicles at cut-rate prices. And nobody makes more straight-to-rental releases than Chrysler. So it should come as no surprise that rental firms like Dollar Thrifty Auto Group have fleets that are up to 85 percent Chrysler. And that shouldn't be the end of the world, because most of the rental car market doesn't mind rocking a Sebring for a weekend if it saves them some cash. But, for Dollar Thrifty, the now-legendary Chrysler depreciation is munching a giant hole in their bottom line– at a time when rentals are slowing anyway. The LA Times reports that Dollar Thrifty (DT) has posted a 30 percent decline in Q2 earnings compared to last year, spurred by epic depreciation among the Chryslers that make up the bulk of DT's fleet. Costs associated with depreciation are up 28 percent. The only thing falling faster than the value of DT's fleet is their stock price, down 89 percent in the last year.