The United Auto Workers (UAW) just lost their bargaining power in their strike against American Axle. When the strike shut down the plants supplying GM's truck and SUV plants, the union thought GM would put pressure on AA to settle quickly– so the automaker could get the lines running again. Not so. GM used the shutdown as an opportunity to purge its supply pipeline of a glut of slow-selling trucks. Then they "found" axles elsewhere to continue production of their better-selling models. Even after two months, GM still isn't feeling much pain from the strike. Instead, they've announced they're going to cut truck production drastically, meaning American Axle's Mexican operation can produce enough axles to [almost] meet their need while other suppliers take up the slack. To use an old military saying, the UAW has shit in their own mess kit. Even if they accepted all of AA's demands for salary and benefit cuts, there won't be a job for many of them to go back to. Looks like Ron Gettelfinger will have a lot of 'splaining to do, especially as they make a push to organize Toyota's operations.

While the chattering classes clamor for a fully-realized Nissan/Renault hookup with Chrysler, Nissault CEO Carlos Ghosn is in no rush to commit further to the U.S. market. In an interview with Business Week, the Brazilian/Lebanese wunderkind say the the American new car market isn't climbing out of the crapper anytime soon. "This year in the U.S. is going to be down, between 15 million and 15.5 million units for total vehicles [including light commercial vehicles]. Next year I think will be down as well.. I don't think auto sales will really stabilize until 2010. The U.S. auto market is not going to be great again. It has all the characteristics of a mature market." Ghosn also predicts (among other things) the increased prominence of small cars in the U.S., the rise of electric cars (including a Renault/Nissan for sale stateside by 2010), the resurgence of the U.S. as an exporter of commercial vehicles, and the unlikeliness of Chinese and Indian vehicles for sale in stateside. Lottery numbers upon request.

Marketwatch reports that Daimler's profits dropped 32 percent in the first quarter of this year, tumbling to $1.3b. Revenue actually jumped about four percent in the same period, although pre-tax earnings dropped by an even more precipitous 40 percent. Daimler blames the red ink on its remaining 20 percent stake in struggling Chrysler, which created a 340m Euro drag on operating profits. [Chrysler's reply coming.] Another hit: Daimler's sale of its minority stake in EADS, parent of Airbus, in the first quarter of last year. Daimler's core business is operating on a fairly solid financial basis; Mercedes sales increased by 17 percent, operating profit by 45 percent. Only Daimler's truck business remains shaky, due to the "tense economic situation in the United States," a European oversupply of commercial trucks and new emissions standards. Still, Daimler is sticking by its forecasts that profit will continue to rise throughout the year. What a difference a brand makes. 

Jim Croce wouldn't like TTAC; we have no compunctions about tugging on Superman's cape. In fact, it's no big deal. But it is for Automotive News [sub]: "Still, Toyota's vaunted inventory controls have come up against market forces even it cannot tame." Whoa! And there I was thinking ToMoCo had moved past inventory control to weather control. Nope. "The number of units in dealership stock and en route have swelled to about 376,000. That's about 100,000 units more than were on the ground last summer, and up from about 348,000 a year ago." While ToMoCo's "turndown pool" (vehicles rejected by dealers) has swelled to 9700 vehicles, these stats are, frankly, small beer compared to the situation over at GM. GM's cash flow and profit-critical truck inventory may be in great shape, but that's because the American Axle strike means they ain't building them. And they've just announced their decision to make 138k fewer trucks this year. That's in addition (?) to all the trucks they're currently not making. "With rising fuel prices, a softening economy, and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities," said Troy Clarke, GM NA Prez. This, folks, is the reckoning. 

Because outsourcing axle-making has turned out so well for GM, Chryler will be selling two Michigan-based axle factories. The Wall Street Journal reports that Chrysler has approached Dana Holding Corp and American Axle (as well as other private equity firms) with an offer to sell the two plants for $400m. Shockingly, "the offer has sparked little interest," according to "people familiar with the discussions." The two factories on the sale block are Detroit Axle and Chrysler's Marysville axle plant, the latter of which is still being built. The usual Michigan labor bugbears appear to be the main culprit for the lack of interest, as any buyer would have to also buy out Detroit Axle's UAW contract. Still, Chrysler has got to slim down, meaning the price might just drop until someone can be saddled with find value in the axle plants. We'll be right here holding our breath.

This morning, octogenarian investor Kirk Kerkorian bid $8.50 per share for 20m shares of Ford. His offering was 13 percent above FoMoCo's closing share price on Friday. While the total is only a fraction of Ford's $16b market cap, it does create a lot of speculation about his intentions. Tracinda stated they "believe that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward." Just a few minutes ago, we received this statement from Ford: 

The following statement is attributable to Ford Executive Chairman Bill Ford and Ford President and CEO Alan Mulally:

Dearborn, Mich., April 28 -"We welcome confidence in Ford and the progress we are making on our transformation plan. Any investor can purchase Ford shares, which are sold on the open market. The Ford team remains focused on executing our plan to transform Ford into a lean global enterprise delivering profitable growth for all."

After Kerkorian's attempt to take over GM and his bid to buy Chrysler both failed, is The Lion of Las Vegas trying once again to buy a car company? Or is he just making a shrewd investment? With GM struggling to keep its plants open, with Chrysler on the ropes (rumors of bill-paying problems), perhaps Captain Kirk is anticipating the TTAC-foretold dead cat bounce. As always, watch this space.

American Axle (AA) posted a $27m first quarter loss today. AA CEO Dick Dauch told the Detroit Free Press "AAM's first-quarter 2008 results were severely impacted by the strike called by the International UAW at AA's original U.S. locations." The loss is quite the comedown from last year's first quarter profit of $15.7m. Robert W. Baird & Co equity analysts David Leiker said the impact of the strike was about 40 percent larger than he was expecting., "We continue to recommend investors avoid the stock due to questions regarding the company's long-term growth opportunities." As if to illustrate Leiker's point, hundreds of strikers picketed AA headquarters in Detroit, after negotiations broke down late last week. AA had offered a wage and benefit package, claiming it's "substantially higher than $30 an hour and is higher than what its competitors pay UAW members." The UAW (perhaps waiting for AA to post its losses) rejected the offer. The strike will officially enter its third month tomorrow with 3,650 AA employees on strike and some 30 GM plants shut down or in limited production. 

A spreadsheet of analysts hanging with The Detroit News all agree with TTAC's Best and Brightest: Michigan is the least likely place on Earth of the three states VW's considering for its new U.S. plant. Hello? Bis morgan? Didn't anybody notice the fact that Volkswagen NA ALREADY LEFT DETROIT? Anyway, for some strange reason– something to do with labor costs and work rule flexibility– unionization seems to be hamstringing MI's chances of landing the gig. "That's the big risk of coming to Michigan or anywhere in the north," says Aaron Bragman, an analyst with Global Insight. "A lot of companies have wanted to avoid" the UAW. (For this he gets paid?) IRN's VP of auto forecasting says Alabama is the likely front-runner, followed by Tennessee. Erich Merkle fancies 'Bama's chances, citing the success of Mercedes-Benz production and the "German supply base that's already pretty well-established." Ultimately, the decision between the two right to work states will come down to the bribes incentive packages each state offers VW. 

Chrysler flackmeister Stuart Schorr didn't take kindly to Ford analyst George Pipa's comments about the decline and fall of the U.S. minivan market. On Chrysler's Firehouse.biz media blog, Schorr took on "the myth that shoppers are moving away from minivans." The numbers show last year's overall minivan sales (800k units industry-wide) were 18 percent lower than the previous year's. Yet Schorr still boasts that Chrysler's "retail [emphasis added] minivan sales are flat through the first quarter this year." Wait a minute. Isn't the goal supposed to be increased retail sales? Anyway, Schorr explains that the flatlined sales are part of "the overall 9 percent drop in industry sales" and "the reduction of our lineup to two models." Besides, "we cut our minivan fleet sales by 46 percent" (which has nothing to do with retail sales). The fact remains: minivan sales are down. Way down. And, if current trends continue, staying down. In fact, they're falling, both in absolute terms and as a percentage of vehicles sold. In case you were wondering.

Detroit News reports that VW has narrowed its list of prospective sites for a new American plant to Michigan, Tennessee and Alabama. The planned factory, which is said to eventually produce vehicles based on VAG's MQB (Golf) platform, is an important measure for VW to fight profit losses due to the weak dollar. The factory should produce up to a quarter million Audis and Vee-Dubs annually, and will employ between 1k and 2k employees. VW will need to sell all of its increased production in order to meet its stated goal of tripling its US sales by 2018, and sell a million vehicles per year. The decision to base the new factory in the Midwest or South comes shortly after VW USA moved its headquarters from Michigan to Virginia, citing the fact that "its customers were concentrated on the East and West coasts." Will a Michigan plant make up for the slight? More importantly, will American production hurt or help VW's spotty reliability record? Expect more details when a final decision is announced sometime this summer.

Ford's CEO Alan Mulally might disagree with whoever said "you can't cut your way to profitability." After cutting jobs, cutting salaries, cutting supply complexity and cutting entire divisions, Ford reported a first quarter net profit of $100m. That's a lot better than first quarter last year, when they turned in a deficit of $282m. But wait… The Wall Street Journal reports that FoMoCo earned (pretax) $257m in South America, $739m in Europe and $1m in Asia and Africa. Ford Credit added another $36m to the company's coffers. However, North America — the one region where they made the most cuts– showed a pretax loss of $45m. Just like their RenCen friends, the Blue Oval's North American operation is being kept afloat by their overseas operations. Maybe instead of cutting so much, Ford needs to look at what the other regions are doing right (hint: it begins with "p", ends with "t" and rhymes with "brod muckt"). Meanwhile, expect a glowing second quarter report in July when the cash from the sale of Land Rover and Jaguar hits the books. 

In years past, Ford resolutely refused to report earnings for the individual brands in its Premium Auto Group (PAG) (Jaguar, Land Rover, Aston, Volvo and, for ten minutes, Lincoln). And for good reason. The brainchild of former BMW suit and bon vivant Wolfgang Reitzle, PAG has been a financial sinkhole since day one. Now that Jag and Landie's gone to Tata Motors and Aston's been flogged to an unholy alliance of a Texan and the Kuwaitis, PAG consists of… Volvo. And today, for the first time ever, FoMoCo's broken out earnings in the Volvo unit. And the news ain't good. Yahoo!Finance reports that a year ago, Volvo posted a $94m profit in the first quarter. This year, they had a first quarter pretax loss of $151m. So why, when Volvo was making money, didn't they brag about it? And why, now that it's losing money, do they disclose the fact? It's just one more indication that Ford is building a case to justify putting Volvo on the auction block a la Jag and Land Rover. Adjö Volvo.

Poetically enough, The Wall Street Journal's Holman Jenkins wants to know if "GM is a genius or a dolt for developing the Volt." Why would a company that's lost $4.3b in North America the last three years throw billions into developing a car they know will lose money? Jenkins notes that when gas prices dropped after the original federal Corporate Average Fuel Economy (CAFE) regs, the standards devolved into "an elaborate scheme engineered by Washington and the UAW to keep auto workers busy manufacturing small cars in the U.S. at a loss, subsidized by the profits of big pickups and SUVs." Jenkins reckons GM– "America's biggest near-dead car company"– plans a similar tactic with the new standards. "[I]t's hard to see why a reformed GM would bother building such a car now unless it's planning to throw its lobbying clout behind a final set of CAFE rules designed to disadvantage its rivals." Then they'll "bribe consumers to drive Volts off the lot" because it'll let them "build and sell other cars bigger and more powerful than the cars its rivals can afford to build under the CAFE rules." And it's all because "GM intends to beat Toyota at its own game of selling bogus green symbolism to Washington and Hollywood." Let's hear it for the home team! 

Ford PR is blooming all over! On the same day that The Detroit News declares that "Ford's recovery gaining traction," page one of The Wall Street Journal claims "Ford Eyes More Cuts As Recovery Advances." Readers of both pieces will find plenty of reasons to be cheerful: cultural change! lower labor cost (eventually)! common components! reduced development time! positive operating cash flow! less brands! more filling! So… who wants to talk about Ford's U.S. market share? Mr. Hoffman? Mr. Spector? Do we have to do EVERYTHING around here? FoMoCo's market share dropped from 15.1 percent at the end of 2006, to 14.2 percent at the end of 2007, to 13 percent this April. Big deal. "I don't care what market-share level you are," Mr. Mulally told the Journal. The goal is to "get back to profitability." Oh, and the New York paper says "According to people close to Mr. Mulally, he is looking at selling Volvo despite Ford's repeated statements that it intends to hang on to the brand. Similarly, he hopes to shutter the ailing Mercury brand." Hopes and dreams. Drive one!

GM will resume production of Lucernes and DTS' at its Detroit-Hamtramck assembly plant on April 28, ending a four-week shutdown. They had closed the plant because of a parts shortage caused by the American Axle strike. GM won't say where the axles are coming from; the Detroit News quotes "sources familiar with production" as saying only they're buying parts "from another supplier." At the time of the closure, GM had a 111-day supply of Lucernes and a 57-day supply of DTS. Now that they've gone a month without any new product entering the pipeline, their inventory should be a bit more in line with sales. Let's see how long it takes "other suppliers" to come up with the parts to restart other plants affected by the AA strike as their  inventory levels come down into a reasonable range.