Compared to GM going double down on Michigan real estate, this one seems like business as usual. The Wall Street Journal [sub] reports that while Iraq is a contentious focus of US Presidential politics, the Germans are stepping-in to figure out how to sell more trucks thereabout. Hopefully, they will also figure out how to get someone other that the US taxpayers to buy them. Also of note: "the Kuwaiti government is Daimler's biggest shareholder." Now I understand the gas guzzling Mercedes Benz V-12s. Ya gotta keep the big shareholder happy.

It should come as a shock to no one that the AP is reporting (via Yahoo! News) that GM has agreed to kick-in up to $200m to end the strike at American Axle. In "a government filing" today, GM said the money would go for bribes payments to make up for wage reductions for the employees, buyouts and early retirement packages. AA spokeswoman Renee Rogers said there's been no agreement between the UAW and AA. But the supplier is "hopeful that GM's financial assistance to help fund the buyouts, retirement incentives and buy downs… will facilitate an expedited resolution to the international UAW strike." In a separate filing, AA said GM's aid depends on how quickly the strike is resolved. Meanwhile, GM indicated they have enough money to "meet its needs," even though the strike has cut its liquidity by $2.1b. They didn't indicate from which bodily orifice they plan to pull the $200m.

Fitch Ratings released a report yesterday warning that GM and Ford are facing a severe cash drain in '08. Fitch rated both GM and Ford at "B" levels, a non-investment grade. They blame the usual suspects for the poor outlook: sagging US sales, high fuel costs and rising manufacturing costs– all while Ford and GM seek to restructure. Fitch says the negative outlook on the two companies will persist until either the US economy improves or the firms prove to investors that their cash flow position has improved significantly (Fitch would not comment on a scenario involving Hell freezing over). Of the two, Fitch is more bullish on Ford. "In light of Ford's progress on its restructuring program and its product profile, it may achieve (positive cash flow) before the end of this year." But "liquidity drains at GM this year may result in its rating being downgraded further." Folks, we're talking an $8b '08 cash burn. That is one serious ouchie.

Has BusinessWeek been reading TTAC? Writer Michael Frank's assessment of Saab and Volvo sounds extremely familiar… Frank places Saab's problems right where they belong, stating GM "hasn't let Saab do anything creative, let alone steer itself in any direction other than toward total irrelevancy, for a good decade." But what's wrong with Volvo? "[L]ike famously angst-ridden compatriot filmmaker Ingmar Bergman, Volvo fears sexy… its slammed and ultra-turboed R-edition cars… are, for all intents and purposes, neutered and dead [because] Volvo is worried about fuel economy." The biggest problem for both, though: they've lost their brand distinction. As we've pointed out, Volvo no longer holds the upper hand in safety. Turbocharging is no long a Saab distinction. He wants something new from both automakers but concludes, "Oh, right, neither Volvo nor Saab has a new story to tell. And until they do, neither carmaker will have much of a future." To which all we can add is "Amen."

Autoblog reports that some gas pumps refuse to display the latest price per gallon because their manufacturers never thought the price would get so high. In the gas-price equivalent of a Y2K problem, Washington state has at least 12 pumps which cannot display more than $3.99 per gallon. These pumps have gear-driven, mechanical processors and readouts. The mechanical marvels require a factory retrofit to handle gas prices over $4/gal, whereas modern, computerized pumps are more than happy to charge you whatever keeps the tax revenues rolling in the market demands. The retrofit can cost station owners up to $8500. In many cases, the parts are unavailable at any price. The state's weight and measures authority is allowing station owners facing this problem to simply multiply gallons pumped by the price of gas, provided that price is clearly posted. TTAC's resident "people who were alive in the 70's" inform us that this was also a problem in the bad old days, when gas prices also rose higher than pumps could count (whaddaya mean it's $1.09 a gallon??). Their old-timey-yet-effective solution? Set the machines to half-price and then just multiply by two. Brilliant!

Automotive News (sub) reports that ToMoCo is increasing prices on 11 Toyota and Lexus models by the end of the month. The hot-selling Yaris will see a $200 jump in base price, The sedan ascends to $13,085 while the hatchback's sticker rises to $12,210. The Prius' price will reverse its downward trend, adding $400 to the Moroni, for a new base MSRP of $22,160. The FJ Cruiser will see the biggest increase, adding $500, for a new base price of $23,730. All Toyota-branded vehicles will increase by comparable amounts– with a few notable exceptions (Sequoia, Tacoma, 2009 Corolla and Matrix). Lexus models will increase even more (expect to pay an extra $900 for an LS460) except for the new IS-F, which will remain unchanged. Why the price bumps during a period of weak sales? "Price changes were made to keep up with current economic conditions and the rising cost of major components," A ToMoCo spokesman demurred. "Materials in global markets have gone up. We have made an effort to absorb some to the cost while still protecting our price position." Hmm, weak sales and rising costs? Get the band back together, 'cause it's looking like good ol' stagflation all over again. 

The Department of Energy's predicts that soaring U.S. gas prices will reach their zenith in June. After adjusting for increased ethanol use [gag], the DOE expects oil prices to decline to $110 a barrel this year, with a resulting drop in pump prices. That's $9 more than the agency's previous prediction– and down $11.84 from yesterday's price. As The New York Times points out, this supposed peak will occur just before the summer driving season begins. The aluminum foil hat-wearers amongst you might wonder how the price of anything can peak immediately prior to a large increase in demand (not to mention soaring foreign use), and play connect-the-dots with the American tourist industry/carmakers/presidential election, but I couldn't possibly comment. In any case, the Lehman Brothers reckon this is gonna hurt. “In the past, high prices could be offset by borrowing or making more money,” said analyst Adam Robinson. “It’s really when you have the triple bite — a weaker economy, less access to credit, and higher prices — that you see the consumer recoil.” Recoil? Maybe. Drive less? For sure. See lower gas prices? Not likely. The Old Gray Lady leaves us with "analysts’ forecasts for the price of gasoline over the next few years run as high as $7 a gallon."

eBay Motors is a great site. Although our resident sharp end guy Steven Lang has, uh, moved on, he still reckons there's no better gauge of a car's worth than the completed items section. And these guys are serious about providing a safe place to buy and sell an automobile over the internet– an inherently dicey proposition. As Automotive News [sub] reports, eBay has 2k– count 'em two thousand– staffers who "handle complaints and investigate sham auctions and dishonest sellers." OK, now, in February, eBay announced they were going to list GM's Certified Pre-Owned Vehicles (CPO) on the site. All sorts of alarm bells went off. Knowing GM as we do, it seemed obvious that eBay would make it difficult (if not impossible) for consumers to cross-shop the price of these CPO-mobiles against the same cars sold independently. To its discredit, eBay still refuses to provide details of the agreement. In fact, eBay now says they're talking to "other automakers" about replicating the deal. We call on eBay to disclose enough information about this arrangement to reassure its base– the hundreds of thousands of people who buy cars via the service– that eBay's not going to sell the end users down the proverbial river by firewalling CPO and non-CPO vehicle sales.  

Automotive News [sub] interviewed Jerry York, former Chrysler CFO, GM board member and, most importantly of all, Kirk Kerkorian's man about Motown. Now that Captain Kirk owns five percent of FoMoCo, 'Jer's handing-out advice on how to fix The Blue Oval Boyz. York says he's "very confident that (Mulally's turnaround plan) is the answer." But then the Lion's cub demonstrates how much he really knows about the business: he says Ford should sell Volvo and Mercury. OK, we're with you on Volvo, although I'm not sure how you'd separate all the Volvo/Ford products (Ford Taurus/Sable, Lincoln MKS, Ford Taurus X, Ford Flex, Ford Galaxy, Ford S-MAX, Euro Ford Focus just to name a few). But York's suggestion for "selling" Mercury has to be some kind of joke. Selling Mercury would be like GM selling the Chevy LTZ models and keeping the LT/WT/1LT/2LT models. One can only hope York meant Ford should sell the name. But who in the world would buy it? Perhaps Mr. York should stick to selling Ford, er, I mean, selling Fords. You know; the actual cars. To real customers.

Why did Daimler AG– already involved in aerospace, a French limousine company, synthetic fuel and (God help them) Chrysler– purchase 22 percent of Tognum AG? The German carmaker claims its €585 million investment in the  fabricator of engines for agricultural threshers, military tanks and ships– makes good business sense 'cause Tognum is a major supply-chain partner. Hey, it's new tech! New markets! But wait, there's more! Under the prosaic project name "Business Innovation," CEO Dieter "no corporate diet" Zetsche has charged several high-ranking managers with finding new targets for synergy (a.k.a. whatever). Automobilwoche agrees with analysts and investors who find this acquisition strategy deeply worrisome. "There can only be one reason for Zetsche to be interested in unrelated businesses: apparently Daimler does not see enough growth prospects in its core business of making cars." The news that Daimler is getting back into its old conglomerate habit "should be alarming to any investor," says the German magazine. Looks like Daimler's ability to keep to the old adage "stick to the knitting" is coming undone.

According to Automobilwoche, FIAT signed an agreement to purchase 70 percent of Yugoslavia's Zastava in Belgrade Wednesday. This is a marriage made in Heaven — if you're a comedian. Picture Jay Leno combining Yugo jokes with "Fix It Again, Tony" witticisms. Or Stephen Colbert commenting on a car the grandchildren of Mussolini would build in joyful cooperation with the children of Milosevic. FIAT is investing 700 million Euros in a new modernized plant which will build 200,000 subcompact cars in (you guessed it) 2010 with a new mid-class car to follow. And the punchline of the biggest joke? The Yugo car Americans loved to hate was derived from a FIAT: the 127 model.

Wondering why politicians are considering bailing out the D2.8 to the tune of billions in subsidies and tax breaks? Wonder no more. The Center for Responsive Politics [via The Detroit News] reports that the auto industry spent a record $70m bribing lobbying congress last year. The General lavished $14.3m on its legislative campaigns, with Ford’s Capitol (capital?) efforts racking-up $7.2m. Toyota dedicated $5.9m to its lobbying team. Much of the money was spent [unsuccessfully] fighting recently-increased CAFE standards. A GM spokesman justified this a noble battle as “proportional to the potential competitive and economic impact that proposed legislation could have on our business.” It’s not like their $14m could have been better spent heading off other competitive challenges or paying an executive’s salary and bonuses. Anyway, don’t expect CAFE hikes to diminish GM’s enthusiasm for politics. They’ve already spent $4.1m on lobbying this year, not including $25k spent on The Governator’s re-election campaign (in unfulfilled hopes that he’d “hasta la vista, baby” to California’s new emission standards). Ain’t democracy grand?

While GM bleeds cash at home, its overseas business continues to fare pretty well. Auto Motor und Sport reports that GM's European Opel division posted a record 572k sales in the first quarter of this year, earning a pre-tax profit of $198m. Although profit is its own reward (and apparently an actual priority for GM), GM is rewarding its German branch with a $9b investment over the next five years. $2.5b of the cash will go towards renovating Opel factories in Rüsselsheim, Kaiserslautern, Bochum und Eisenach. The remaining $6.5b will help Opel bring 17 new passenger cars (and three new commercial vehicles) to market by 2012. And now the bad news: Opel's European market share declined from 9.7 to 9.6 percent. Opel GM-Europe boss Carl-Peter Forster says never mind, pointing to hbis employer's 11.6 percent Russian market, where car sales jumped by 78 percent in the first quarter. "Russia will be Europe's largest car market by next year at the latest," says Forster. With Opel providing several of GM's most popular U.S. products (Saturn Astra and Vue), GM's investment could well keep the sinking ship afloat for an extra quarter or so. Just kidding. On both counts.

It's been a while since we reported on Plastech's bankruptcy. But things are starting to get interesting once again. The Chrysler interior supplier and its creditors recently agreed on three options for bringing the troubled (as in that's MY tooling) partsmaker out of bankruptcy. Plan A: sell the whole kit and caboodle to one of its biggest customers, Johnson Controls (JCI).  Plan B: liquidation. Plan C: restructure and emerge as an independent company (never gonna happen). Meanwhile, Plastech's bankruptcy judge is set to rule on an $87m short-term finance plan (bankrolled by JCI and the Detroit automakers) to keep the lights on. Even though Plastech lawyers say the firm "won't make it past today" without the cash, there are (as ever) issues. For one thing, it doesn't cover up to $10m in administrative costs. For another, the UAW (them again!) says the plan doesn't include "funding for severance payments and other labor expenses related to the closing of any plants." Which reminds us that Plastech is, in fact, closing its Shreveport, LA plant and "one or two others." Bad juju. 

In the quarterly conference call to offer excuses discuss the latest financial report– the one where GM lost $3.5b in Q1— CFO Ray Young reassured someone that GM has no plans to kill any of their eight North American brands in North America. Advertising Age [sub] reports he's standing behind the recent reorganization that divvied-up the brands amongst four marketing chiefs. Young called it it "the right way to go." However, the CFO termed their North American operation's losses last quarter as "unacceptable." (Yeah! Someone should be fired! Oh wait…) GM's North American market share is now down to 21.7 percent, compared to 22.5 percent a year ago. In the global market, The General's share dropped 0.5 percent to 12.5 percent. Without North America's numbers, their share went up 0.1 percent to 9.6 percent. So, instead of addressing the problems at GMNA, the General will "beef up" its overseas activities and put "our foot on the accelerator… and jam it through to the floor" in emerging markets like Russia and India. They'll probably succeed, too. After all, it's a lot easier to peddle utility grade beef to someone who's starving than to discerning diners in the restaurant district.