For whatever reason (to please Hannibal Lecter fans?), Ford's product planners have decided to produce an upmarket version of the new Flex. Ford spokesman Mark Schirmer told the Detroit News that Ford "is actively pursuing a luxury crossover for Lincoln." By offering a new vehicle based on the so-not-a-minivan Flex, plus discontinuing the Mark LT pickup, The Blue Oval Boyz hope to "refocus the Lincoln brand and make it a serious contender again in the luxury space." The MOU812 is based on the whale baleen-snouted Lincoln MKT concept unveiled at the Detroit Auto Show. It's now due to hit the streets in 2009, bolstering sales and destroying what little brand equity Lincoln may have left. Oh, and no word on a Mercury variant, despite FoMoCo's promises not to leave Jill Wagner high and dry.

The Financial Times reports that VW CEO Martin Winterkorn is dissing the darling of Dearborn and the apple of GM's eye: the "world car." "The days of a 'world car' are dead and buried," Herr Winterkorn pronounced. "Our customers in China or India expect us, as a global player, to offer entirely different solutions than we do in the US or western Europe." To that end, VW will be rolling out no fewer than 20 new models in the next three years– as it tries to oust Toyota from the top global sales spot. But Wolfsburg's ambitious sales goals may not have unequivocal support from its new owners, Porsche SE. According to the FT, there's division on the Porsche board about Vee-Dub's global strategy. Wolfgang Porsche, recently voted onto the VW board, is said to head a faction which wants an emphasis on profits, rather than record sales. This might explain the recent unpleasantness between the two grandsons of Ferry Porsche.

The Oakland Business Review [via MLive.com] reports that intellectual property-related lawsuits are on the rise. Brinks Hofer Gilson & Lione in Ann Arbor says the car industry has abandoned their previous tendency to settle technology-based patent infringement disputes out of court. "Before the year 2000 there were sporadic [auto IP] cases, maybe one, at the most two every year and often zero," says managing partner Steve Oberholtzer. "In the period from 2000 to 2007 there were 46 cases." Oberholtzer says the increase is down to outsourcing. "Now that the suppliers have more of an investment in engineering, they're more likely to want to protect their investment." Talk about a sign of the times…

As we reported earlier, Hyundai Chairman and convicted embezzler Chung Mong-koo faced a challenge to his leadership at the annual shareholders meeting. Amazingly, Chung was able to retain his position despite having been convicted of "appropriating" $100m of company money and creating a bribery slush fund. Reuters reports that Chung survived opposition from Korea's National Pension Fund, the company's sixth-largest stakeholder as well as from other minority shareholders. Chung's popularity is said to be based on Hyundai's need for "strong and experienced leadership to cope with tough market conditions." Our guess is that shareholders want to hold onto Chung's battle-proven bribery rolodex in order to keep the Korean currency weak, as the cheap Won is Hyundai's major competitive advantage in light of rising commodity costs and increased competition. Stock value one, rule of law nil.

Yesterday, we reported that California roads suck, linking to KGTV. The station used The Road Information Project (TRIP) as their source. Bozzie wanted to know more about this "non-profit organization that promotes transportation policies that relieve traffic congestion, improve road and bridge conditions, improve air quality, make highway travel safer and enhance economic productivity." Yes, well, The Sierra Club's 1999 Sprawl-Watch.org newsletter described TRIP as “a non-profit highway research organization sponsored by equipment manufacturers and distributors, material suppliers and businesses involved in highway engineering, construction and financing.” True dat. Back in ‘04, TRIP named Keith Harlan, then president of the general contracting firm A.M. Cohron & Son in IA, to their board. They also elected Paul Diederich, then president of Industrial Builders Inc. in Fargo, N.D., to their executive committee. TRIP’s list of state-by-state “news releases” shows that the org. plays the “INSERT STATE NAME HERE roads suck” game around the country. And, as yankinwaoz pointed out, TRIP reckons the financial “cost” of bad roads includes fuel “wasted” by sitting in jams. California's roads still suck, but next time, we promise we'll be more cynical about media manipulation– if such a thing is possible.

Ford and GM shares were down sharply yesterday after a wide-load of bad financial news hit markets. The Detroit Free Press reports "Ford stock fell to its lowest level since 1985 and the price of GM stock fell to its lowest level since 2006, near the height of speculation that the automaker would need to declare bankruptcy if it didn't speed up its turnaround." Analysts believe Morgan Stanley triggered the plunge, when they cut sales and earnings estimates for the two firms euphemistically citing "near-term headwinds." Bottom line: analysts no longer expect GM to turn a profit next year, and Ford's loss expectations dipped further. Meanwhile, Lehman Brothers issued a client note stating that rising commodity prices would add about $350 to the manufacturing cost of the average car. As the Brits would say, the Big 2.8 are getting knocked from pillar to post.

Tata's prospective purchase of Jaguar and Land Rover from Ford is reportedly foundering on Tata's insistence on price guarantees for Ford engines. The Detroit News quotes sources "close to negotiations" (as opposed to?) as saying Ford is unlikely to agree to any such guarantees in light of price increases in key commodities. Garel Rhys, director of the Centre for Automotive Industry at Cardiff University, calls Tata's request "absurd, and they know it." BUT Rhys reckons it's in Tata's interest to drag-out the purchase process while it secures financing. And, perhaps, a better price. With no other offers tabled for the two FoMoCo "premier" brands, the Blue Oval Boyz have little choice but to duke-it-out with Tata. Ford's "Wish We'd Gone from Sir Anthony Bamford" deal has already been pushed past two informal deadlines. Ford now says an agreement with Tata Motors is expected "mid year." 

Bloomberg reports that Hyundai's been hit hard by rising steel prices. Apparently, China's Olympic building boom is causing localized shortages and driving up prices. Rising raw materials costs cut especially deep for the value-minded Hyundai brand, who can ill-afford the hike. "The higher prices come at a difficult time,'' says Mirae Asset Securities analyst Kim Jae Woo. "Hyundai won't be able to pass on the higher costs to customers as the slowing global economy is already damping auto demand.'' Steel prices are expected to continue rising for the considerable future; raising an interesting challenge to the strategy of manufacturing in east Asia. Although low labor costs have made the region popular among budget automakers (e.g. GM's Daewoo), China's economic boom is putting increased pressure on commodity prices. In the cutthroat global automotive industry, there's nowhere to hide.

Toyota President Katsuaki Watanabe has once again acknowledged ToMoCo's recent quality issues. The AP reports that Watanabe attributes the company's product-related failures to its rapid rise to global dominance. The growth has taken its toll in various areas, ranging from development and design to production, suppliers and maintenance. Watanabe says time pressures and the shortage of experts has exacerbated their quality control problems. What's more Watanabe admitted that Toyota is suffering from some of the symptoms of "big company disease:" arrogance born from success. Putting the pro in proactive, Toyota's CEO said some unspecified products are being delayed to ensure the "total quality" on which Toyota's reputation depends. The automaker is going over every problem, "tracking root causes, analyzing and coming up with ways to prevent a recurrence." 

American Axle (AA) and the United Auto Workers (UAW) are still talking– but only over the phone. Formal (as in FTF) negotiations ended on Monday. According to American Axle, that's when "the UAW sent its negotiators home." The UAW said they left the table because discussions were "still pretty much a one-way street [and] the company really hadn't changed their position at all." Talks are supposed to resume today, but a resolution is not expected. The Indianapolis Business Journal quotes labor law professor David Gregory, who reckons both the UAW and AA are in it for the long haul. "This has got the makings of a protracted strike. It's already a serious strike, but this could go into April." If that happens, GM will be in a world of hurt, as will a lot more of their other suppliers. It seems The General is using the strike to reduce bloated truck inventories, but the plan could backfire if either the UAW or AA refuse an eventual GM bailout. Watch this space.

Last week, we reported GM CEO Rick Wagoner's bonanza: a $2.2m salary re-raise, 165,563 shares, 500k stock options and 75k restricted stock units. We now learn that Wagoner's heir apparent, newly-appointed COO Fritz Henderson received a 36.6 percent raise. That takes the former Beancounter-in-Chief to $1.8m per year (plus bonuses, unspecified stock options, pensions, cars for life, etc.). The Wall Street Journal reports that GM Car Czar Bob "California rules" Lutz also got his chance to shake the GM money tree. Lutz gets a 17.6 percent re-raise, taking him to $1.55m plus bonuses and stock options worth over $1m. GM would't say what other top executives will be financially blessed, but spokesmouth Tony Cervone claimed GM suits are paid "based on their performance." If that rankles, just think what these guys would have made if they hadn't sold the family silver, lost billions of dollars and sacrificed once valuable U.S. market share.

When Plastech hit the skids and began its tussle with Chrysler for the tools that make the plastic parts for the cars ChryCo can't sell to the general public, Ford and GM made all kinds of soothing noises about their Plastech parts supply. Reuters reports that The General filed papers in U.S. Bankruptcy Court yesterday (Tuesday) to recover its tools from the embattled supplier. Ignoring/cognizant of the fact that 29 of its plants have been idled by a strike at American Axle, GM claimed "Any other course would constitute reckless endangerment of GM's production lines and those that rely on them." Given that the judge has denied Chrysler access to its tools, GM's petition doesn't stand a hope in Hell of satisfaction. No comment so far from either the Court or Plastech, which is busy trying to raise $14m to maintain operations through April Fool's Day (I kid you not). Under a court-approved bankruptcy agreement that expires tomorrow (Thursday), Plastech may borrow up to $35.1m. Yes, well, Plastech been "unable to complete long-term debtor-in-possession financing." Meanwhile, back in February, Ford told Reuters their supply of Plastech parts was cool. We shall see…

In an interview with Auto Motor und Sport, GM Car Czar Bob Lutz said proposed California tailpipe regulations are "an absolute mistake" that would be "impossible to meet." And yet, Maximum Bob predicted that The Golden State is likely to win the court battle over the stricter standards. "The judges aren't scientists," Lutz said. Maximum Bob warned that diesels would not be an easy route to clean air compliance. "We can currently meet 50-state Bin 5 standards, which is six times stricter than the Euro 5 norms, with our existing particulate-catalyzing systems. But these new California standards are not achievable in my opinion." GM's Veep of Global Product Development said that high diesel fuel prices and the $2k premium for oil burning engines made diesel-powered passenger cars unpalatable to American consumers. In other words, diesels and California regulations are a crock of shit. 

Define huge. And can we have a time frame please? According to CNNMoney, "JP Morgan analyst Eric Selle estimates GM will spend $1.8 billion if the strike lasts a month, based largely on hourly wage costs, according to a research report earlier this month." So that's besides the damage inflicted by the drying-up of dealer orders (GM books vehicles as sold when they leave the factory). Meanwhile, the United Workers (UAW) and American Axle (AA) are both toughening their positions. According to Automotive News [sub], the parts maker is threatening to further downsize its U.S. operations– two New York plants are due to close– if its UAW workers don't take a wage and benefit cut. UAW Prez Big Ron Gettelfinger went on radio to give AA a tongue lashing for dictating rather than negotiating terms. So far, the strike has idled 29 GM factories. For their part, GM spokeswoman Renee Rashid-Merem said the company "isn't commenting on the potential financial impact or on any analyst estimates." You know, other than Wagoner's assessment that it's no biggie.

With my parents flying to Florida for a few days, I started calling around to see if I could get them something better than the 1-cylinder Sebring they enjoyed (in the sense of hated) on their last vacation. Hertz was out of Shelby Mustangs but … Avis has Corvettes? That's right, they've added America's first sports car to the fleet in the usual "hot rental car" locations: Los Angeles, Arizona, Las Vegas and south Florida. Can you imagine the abuse these 430-horsepower rental cars are going to take? Even at $165/day, they're not going to preclude hoons from renting them– although I really think all levels of insurance should be mandatory for Avis' sake. From a business standpoint, this still isn't a terrible idea. With increasing numbers of people getting out of their fun cars and getting into fuel-sipping snorefests, why not take a vacation from their eco-responsibility too? Besides, Corvette sales were down 25 percent last month. Fleet sales ought to help staunch the wound.