When Chrysler's employees got back from their forced "downtime," they found an email from El Jefe himself. In it, CEO Bob Nardelli welcomed them back and brought them up-to-date on what's been going on (like they hadn't been watching the news or reading TTAC). Boot "em Bob brags on things they've done, from donating to a NASCAR charity to receiving "the top ranking in the automotive industry in the NAACP's annual report card on corporate America's financial relationship with the African-American community." What's interersting: what he didn't say. While he mentions "reports on Chrysler Financial's annual process of renewing its credit conduit ," he doesn't comment on reports that say ChrysCo's in such bad straits they'll be facing much higher rates. He talks about "attractive offers" on Dodge Ram pickups– without mentioning the glut they're trying to clear. And then there's this bit about "creating partnerships and alliances to extend our portfolio, geographic reach and technology capabilities." Could Nardelli be setting-up the troops for another announcement about cutbacks, leading to a sale to Nissan or another automaker? We'll let you know as soon as we hear anything more. [thanks to you-know-who-you-are for the tip]

Click here for pdf of email 

The mayor of Warren, MI has the answer to The Big 2.8's woes. The MacComb Daily reports that in a letter to the Michigan Congressional delegation, Mayor James Fouts called for the reinstatement of the federal income tax deduction for interest on auto loans. "More new vehicle sales means more jobs, less unemployment and lower government costs to assist the unemployed," Hizzoner reasoned. Representative Candice Miller thinks "the mayor's idea is very creative." What neither of them seem to realize is that all of the Detroit manufacturers have offered 0% interest rates– and these promotions haven't exactly set sales records. Deducting the interest wouldn't have any effect on payments, and that's what floats buyers' boats. Also, Mayor Fouts better be careful what he asks for. The resulting legislation would be  industry-wide. It would likely hurt the American manufacturers more than it would help them.

With Hail Mary PHEVs and two-mode V8s leading the American automakers' charge towards fuel-efficiency, its easy to call Detroit's executives out of touch. But it turns out that the idea of applying simple fuel-saving technologies across product lines is finally taking hold in the corporate offices of our domestic auto firms. The Detroit Free Press reports that executives at Ford, Chrysler and GM predict that stop-start technology will find its way into every domestically-produced vehicle within the next five to ten years. Speaking at NextCruise, the eco-friendly sister event to the Woodward Dream Cruise, Detroit's finest fell over themselves trying to prove their companies' commitment to adding this (relatively) low-tech, fuel-saving technology. GM's Micky Bly went one further, saying future GM vehicles will incorporate weight-saving materials currently found in hybrids. Careful on that limb, boys.

The LA Times reports that a federal appeals court has ruled that the government may not withhold Early Warning data from the public. The info is collected in accordance with federal law requiring vehicle and component manufacturers to report information on their products (related to defects, injuries, deaths) to The National Highway Transportation Administration (NHTSA). The law was passed in 2000 in response to the Explorer/Firestone rollover scare. Until now, the information has been shielded from Freedom Of Information Act (FOIA) requests. Public Citizen forced the fork-over. To which The Rubber Manufacturers Association said phooey [paraphrasing]. "With this decision, unverified information released by the government can be misinterpreted and thereby unnecessarily alarm motorists about products that are safe." The Alliance of Automobile Manufacturers reckons "data that could cause a company commercial harm" should be withheld, including warranty and service information. The courts must still rule whether all Early Warning data should be made available, or just the information pertaining to cases involving injury and death.

Bloomberg passed on an unsubstantiated report in Nikkei English News that claims Honda, Nissan and Toray Industries are teaming-up to develop new carbon fiber materials for mass-produced automobiles. Toray is the world's largest producer of carbon fiber. They're hoping to make it economically feasible to use the material in large enough quantities to reduce vehicle weights by up to 40 percent. Japan's Ministry of Economy, Trade and Industry is kicking in ¥2b over a five-year period to help fund the research. It didn't say if this project would be an extension of existing carbon fiber nanotube research, or if it will explore new materials. Either way, with new tailpipe and fuel economy regs in the offing, the race to add lightness has begun, plug-in hybrid or no.

Ford's PR folks are busy weaving their tangled web. Case in point: in the press release announcing the dismal Q2 results for Ford Motor Credit, The Blue Oval Boyz state the net loss is "$1,427 million." I guess that doesn't sound as  as bad as saying they lost $1.427 billion in one quarter. Compare that to last year's second quarter earnings of $62m and that's quite a deep hole they've dug. Anyway, let's blame the economy! Yes, U.S. consumer preferences shifted "from full-size trucks and traditional sport utility vehicles to smaller, more fuel-efficient vehicles… [which] caused a significant reduction in auction values for used full-size trucks and traditional sport utility vehicles." In other words, their parent company put all their eggs in the truck/SUV basket, gave credit where credit wasn't due, offered lease deals based on unrealistic residuals, and had nothing to offer in the subcompact market when the market shifted. But it sounds so much better to tell the stockholders "it's the economy, stupid" than to admit "we screwed up."

Reuters reports that Toyota sold 4.8m vehicles in the first half of 2008, while GM managed to move 4.54m. It's official: GM is no longer the world's largest automobile manufacturer. GM's spinmeisters promptly bragged that it reached record numbers in three of its four regions in the second quarter of 2008. Unfortunately, GM's 116k-unit growth outside of the U.S. was swamped by a 236k-unit decline in the home market. Also, GM continues to take full unit credit for sales in China– even though the Chinese business is majority-owned by Chinese partner SAIC. (For example, GM owns only 34 percent of the unit which builds the high-volume Chevrolet Spark.) GM's decision back in 2000 to ramp-up trucks and SUVs whilst eviscerating their US car efforts in order to boost profit margins has come home to roost. 

At the risk of sounding like FBI BAU Supervisory Special Agent Jason Gideon, Christian Nevell Bovee observed "No man is happy without a delusion of some kind. Delusions are as necessary to our happiness as realities." If so, GM Car Czar Bob Lutz must be the happiest guy on earth. Maximum Bob was in London for the auto show. He reacted to questions about GM's layoffs, production cuts and the usual laundry list of woes with the statement above [via Just-Auto]. MB's clinging to his claim that his employer's problems are caused by the "unprecedented" rise in gas prices. What more, "we're quickly adjusting to meet the challenges of a changing market… Of course, we will adjust our product portfolio to meet the market where it's headed… We will continue to develop… our brands accordingly." And that's why they'll be keeping the Cobalt around (and unchanged) forever. And why Pontiac is being "nourished" with a lineup of rebadged cars from other GM divisions. And why GM still has no competitive subcompact car to offer the North American market. If all this indicates GM's doing "the right things," well, God help them if they're got it wrong.

I don't know how we missed this, but we're not alone; Autoblog didn't find this story until this morning. Anyway, Michigan's Democrats are pushing for a $4b handout stimulus package for their floundering automakers. The Detroit Free Press quotes Presidential candidate Barak Obama pledging support for such aid, stating "America cannot truly prosper unless Michigan prospers" while speaking in Warren, Michigan last week. (Governors of about 49 other states might disagree with that statement.) In a letter pandering to the UAW, Obama promised he "will provide real solutions necessary to help this industry compete and win in the global economy." Of course, his "solutions" boil down to the only "solution" politicians have for any problem: taxpayer money. Barack and other Democrats are pushing for a $50b "stimulus plan" for the auto industry, including loans at "below-market interest rates." Republican candidate John McCain is opposed to the loan idea, but he does support a $300m prize for battery development, tax credits for fuel-efficient vehicles and strict goals for flex-fuel vehicles. Either way, it's going to costs a bundle to correct what fifty years of over-priced, under-performing executives and their yes-men have produced. Or, dare I say it, not.

So begins the Detroit News' recent editorial on John McCain's recent flippity-flop on California emissions regulations. And though industry gentlemen prefer McCain, the DetNews' critique is centered not so much on McCain's flip as his flop. After all, McCain originally supported California's right to set its own standards before coming around to support the industry-backed opposition to CARB– before flopping back to the federalist camp at a recent appearance at GM's Warren Technical Center. That has the Detroit News going after McCain on a host of industry-related issues. Calling his proposal for a $5k consumer tax credit for zero-emissions cars a "giveaway scheme" sounds good, and is certainly founded on strong economic principles.  McCain's proposed $300m prize for an advanced EV battery is similarly lambasted. Which is all well and good, except that the Detroit News would rather find itself dead in a ditch than hold its industry backers up to the same standard. Haven't  Ford's Mark Fields and Chrysler's Jim Press been pressuring the government for production incentives for EVs? Hell, didn't Slick Rick even ask Obama for the very consumer incentives that the Detroit News derides? But as hard as it tries to portray Detroit as just wanting to be left alone by the government, DetN fails to apply its free-market logic to the industry it pimps. With this flip-floping attack, the industry's paid rhetoricians have inadvertently exposed their critique of John McCain as the intellectually bankrupt hypocrisy it really is. You stay classy guys.

It sucks to be a Chrysler brand franchisee right now. Trucks and SUVs are piling up on lots as dealers try to come up with ways to clear the inventory before the '09 models start rolling in. They have their work cut out for them. At the start of July, Chrysler/Dodge/Jeep dealers had a 160-day supply of Rams gathering dust. If that weren't bad enough, the stores have enough Nitros to last 143 days and enough Aspens to last a lifetime. I mean, 218 days. The Jeep Wranglers they couldn't keep on the lot just a year ago are now piled up 129 days deep. With an average of only 16 truck sales per Dodge franchise, 10 per Jeep franchise and four per Chrysler franchise in June, it may take them a while to dig their way out. But, as they say, misery loves company. Honda dealers are sitting on a 160-day supply of Ridgelines and Mitsubishi dealers are dealing with a 222-day supply of Endeavors. Nissan blows them all out of the water, though. If a 215-day supply of Xterras, a 229-day supply of Armadas and a 247-day supply of Pathfinders aren't enough, the "Lot Queen" crown goes to Titan: there's a four hundred eighty-nine (yes, 489) day supply of the Mississippi-made haulers sitting around. Blow-out clearance sales can't be far behind. 

With the "energy crisis" as the calamity of the moment, it's easy to forget that the credit crunch is still a long ways from resolution. Luckily, Chrysler is around to remind us. The Wall Street Journal reports ChryCo Financial has a $30b credit facility due for renewal next month, with its borrowing rates set to rise. The usual unnamed sources say the renewal deal is still being "worked out." And while the exact increases are not yet known, analysts are placing the spread at more than one point over LIBOR, currently 2.8 percent. JPMorganChase is said to be "pushing hard to persuade more than 20 banks to renew the facility — backed by car loans, leases and loans to dealers — that was issued by the auto-finance company last year when it was carved-out of the former DaimlerChrysler AG." Uh-oh. Investors have been running away from this exact sort of complex, structured debt since the credit crunch first hit. In contrast, Ford and GM typically use such "conduits" in one or two-month increments, keeping their borrowing costs below 0.5 percent above LIBOR. And the more expensive the borrowing, the less Chrysler can offer in financing terms to move its metal. Which is barely moving anyway. Not good.

Malcolm Bricklin is deeply regretting his plan to import Chinese Chery cars to the U.S. Automotive News (sub) reports that the man who brought Subaru to America is suing his erstwhile Chinese colleagues for corrupt practices. This after losing $26m (of someone's money) trying to bring Cherys to the US. The suit alleges Chery has "systematically broken contractual obligations, stolen plans for vehicles, made cars designed by Western companies without paying for their rights, and made deals without the slightest intention of carrying them out." In other words, business as usual. Bricklin once described his partnership with Chery in glowing terms: "I have never met a more cooperative, more intelligent, more aggressive group to do business with. We're working together as if we've been working together for 100 years." And now… "We're going to get them for everything they've done." Bricklin reckons Chery is legally vulnerable in the states; an American designer has successfully sued his overseas imitators. No matter how this shakes out, it's good news Chrysler's plan to import Cherys into the US.

Presidential Candidate John McCain raised a few metaphorical eyebrows last week when he reversed an earlier, federalist policy position. The Senator from Arizona stepped-up to an MI microphone and declared he'd [now] support California's quest to supercede federal automotive C02 regs (i.e. set higher corporate average fleet mpg averages than the feds). According to The Detroit News, the Senator from Arizona has, uh, reconciled his position on the matter. "Later Friday, a senior campaign aide sought to clarify McCain's position. The aide, who spoke on condition of anonymity, said McCain supports the ability of states to impose regulations until a national 'cap and trade' program to limit carbon emissions, something McCain has proposed, is in place. Once carbon caps are established, the aide said, McCain would oppose state regulations." So McCain will oppose California's tailpipe regs… later. Which means the statement "It's hard for me to tell the states they can't set their own standards… At the end of the day, I think states should make their own decisions" was premature recapitulation. 

In his most recent GM Deathwatch, RF raised the specter of "Bailout Fatigue." The Detroit News' Gordon Trowbridge agrees. Their man in Washington says to the government's preference for financial sector bailouts like Bear Stearns, Fannie Mae, Freddie Mac and Indy Mac will queer the pitch for Motown. Rep. John Dingell cries foul! "If Freddie Mac and Fannie Mae ask for a bailout and they get it, [automakers] should be able to ask and get it, too," says the Dearborn democrat. Former Michigan governor James Blanchard agrees: "government  seems to treat financial services with special care, and not care about manufacturing until the last minute." President Bush begs to differ: "If your question is, should the government bail out private enterprise, the answer is, no, it shouldn't." According to the Chief Excutive, the Fannie/Freddy "rescue" isn't a bailout because "the shareholders still own the company." And now a word from someone without a horse in the race. "Fannie Mae and Freddie Mac are fundamentally sound businesses," says University of Maryland economist Peter Morici, implying of course that the D3 aren't. Besides, Fanny and Freddy hold 91 percent of America's mortgage debt on houses under $470k, while Detroit only employs about as many workers as Chrysler did when it was bailed out in 1979.