From the just-released GAO report (PDF) on the auto bailout:
Chrysler’s shareholders, including Treasury, have agreed that Fiat’s equity stake in Chrysler will increase if Chrysler meets certain benchmarks, such as producing a vehicle that achieves a fuel economy of 40 miles per gallon or producing a new engine in the United States. Treasury officials stated that they established such up-front conditions not solely to protect Treasury’s financial interests as a creditor and equity owner but also to reflect the Administration’s views on responsibly utilizing taxpayer resources for these companies. While Treasury has stated it does not plan to manage its stake in Chrysler or GM to achieve social policy goals, these requirements and covenants to which the companies are subject indicate the challenges Treasury has faced and likely will face in balancing its roles.
Well, it turns out that October sales won’t be released until tomorrow, but luckily we have a hot-and-sweaty-fresh report by the Government Accountability Office (PDF) to keep things interesting. And we’re learning all kinds of new things about the auto bailout. To wit:
Chrysler must either manufacture 40 percent of its U.S. sales volume in the United States or its U.S. production volume must be at least 90 percent of its 2008 U.S. production volume. GM agrees to use its commercially reasonable best efforts to ensure that the volume of manufacturing conducted in the United States is consistent with at least 90 percent of the level envisioned in GM’s business plan.
Who knew? Not us! And as surprising as it is to find that GM and Chrysler face federally-mandated production quotas, we’re almost more surprised that the most the UAW (or whomever) could negotiate was 40 percent of Chrysler’s US sales volume. Especially since the UAW owns a majority stake in Chrysler. But wait, there’s more!
As we wait for October sales to come rolling in, I’d like to take advantage of the calm before the storm to update our faithful readers on the wild week to come. Tomorrow I’ll be flying to Detroit to cover Chrysler’s five-year product and business plan. Luckily though, the trip will not be limited to a six hour presentation on “Fiat’s fuel-efficient engine technology” and sundry Pentastarred optimism. We’re also getting the opportunity to interview a certain Mr Ian Callum, chief designer for Jaguar. Do you have any burning questions about the new XJ, the XF or Jaguar’s new styling direction? Let us know and we’ll be sure to ask for you. We will also be covering the roast of Bob Lutz, so be sure to tune in for a report on the best jokes of the evening (although really, nobody expects them to improve on Farago’s effort). Though we’re thrilled to be able to offer a week of fresh reporting, interviews and jokes about GM’s Vice-Chairman, making it happen might require a slightly slower pace of content this week. Luckily Robert Farago, Bertel Schmitt, Paul Niedermeyer, Sajeev Mehta and other TTAC faves will be stepping up to keep the flow of news, commentary and analysis steady. So get ready for a big week, and take a moment to tell us what you most want to hear from Mr Callum, and the New New Chrysler. And thanks, as always, for your tips, comments and support.
Kudos to Steve-O, who was able to distinguish between fake vomit, grandma’s fridge, and naugahyde to identify the Dodge Aspen. And his was the first guess, of many. Regrettably, today’s clue is small, but don’t let that discourage you.
Who in their right minds thought that the United Auto Workers (UAW) rank and file would ratify a contract that included a no-strike clause? That would be like cutting off your balls to spite your penis. And so they haven’t (ratified the contract that is). Sure, Chrysler has one of them no-strike deals, but they’re dead in the water. Ford’s on its way back to profit! Ford’s CEO said so himself. Many times. As Alan Mulally and UAW Prez Ron Gettelfinger have learned, if you talk out of both sides of your mouth, you’re heading for a big old bitch slapping. On Friday, Big Ron told the Detroit Free Press that the UAW won’t return to the bargaining table if the measure was defeated. So Ford’s unionized work force will carry on as before, until the existing accord (so to speak) expires in 2011. The rejection will not play well with Ford’s investors, who were looking for the Blue Oval Boys to reduce their labor costs to match those of the transplants and cross-town welfare queens.
Ford turned a profit in the second quarter of this year, thanks to a share offering and other debt-reduction actions which covered a $424M pre-tax operating loss. In the third quarter, however, Ford’s profit needs no such qualification. Pre-tax operating profits were $1.1B, including a $357M from North American operations. For the record, this marks the first Ford North America profit since Q1 2005. Perhaps more importantly, for an automaker that’s mortgaged up to (and including) its logo, Ford’s cash pile grew by $2.8B (on $1.3B positive cashflow), to $23.8B. On the strength of these surprisingly strong results, Ford has revised its 2010 guidance from being “break even or better” to “solidly profitable.” The future is looking far brighter for Ford than any of its cross-town rivals, but there are a few more considerations to keep in mind before we can pronounce Ford officially out of the woods. Even the Blue Oval is warning that its 2010 guidance will be revisited after full-year results are in.
Automotive News [AN, sub] reckons it’s got the inside line on Toyota’s “new U.S. plan.” They’re so chuffed with the scoop that their article presents the bulleted battle plan in both the body text and a little gray box. And here it is: “Review and possibly trim the lineup of full-frame trucks; Skip midcycle vehicle enhancements to focus on bigger launches; Introduce more hybrids to North America; Give U.S. engineers a bigger voice in r&d.” AN reckons the headline is the potential truck trimming and hybrid adding bit. Which is certainly important news for a company with a “tattered image” (Toyota, apparently, not the American zombies clinging to profits via pickups, who’ve yet to produce a single large-volume hybrid vehicle). But what of ToMoCo leaving existing vehicles as is for longer?
Massachusetts Governor Deval Patrick (D) on Thursday outlined his plan to reduce the state’s $600 million deficit and help struggling municipalities by, among several other revenue raising measures, installing red light cameras. The governor’s proposed fiscal year 2010 budget amendments would eliminate an existing state law forcing police officers to issue traffic citations personally. Under the new legislation, any jurisdiction in the commonwealth could give private, for-profit companies the right to issue $100 traffic tickets.
I just got new wheels and tires on my 2008 Buick LaCrosse Super, 245/45R19s to replace the stock 18s. The tire dealer put in 40 lbs of air, and when I said “is that a little high?” they pointed to the sidewall and said “look, it can take up to 51 lbs.” I’ve never run more than 36 lbs in my tires, but I’ve never had a profile this low before. Am I just behind the times?
By last Friday, it was clear that the United Auto Workers rank and file found their new, no-strike contract rank, and filed their objections during voting. In other words, the union’s members rejected the deal. Which left Ford CEO Alan Mulally’s rep seriously dinged. After all, Big Al’s been talking-up Ford’s return to profitability ever since he banked that first $25 million paycheck. The union vote against the strike was a vote for Big Al’s plan. If he’d kept his mouth shut or, better yet, constantly warned against looming collapse, the UAW might have made the ultimate concession. But then investors wouldn’t have dumped more money into Ford and the Ford family members signing Mulally’s big ass paychecks would have been seriously spooked. Big Al can’t win from losing, as the Brits would say.
Nannification makes a great leap forward: OnStar services will be activated and fully operational in China in December 2009 on some Cadillac, Buick and Chevrolet vehicles, PRNewswire reports. The system will be operated by OnStar Telematics Company Limited, a joint venture between GM and SAIC. According to the blurb, “this is OnStar’s first venture outside of North America in its 11-year history.” Read More >
While other countries are weaning off their auto markets from the amphetamine injections, China is set to increase the dosage. Already the world’s largest auto market, the Middle Kingdom is hell-bent on turning its working masses into mega motorists. Read More >
BMW is talking to China’s 800 lb gorilla SAIC about producing BMW’s luxo-barge, the 7-series in China. This according to Bloomberg who has it from Dongfang Daily, who heard it from an unnamed source at SAIC.
BMW and SAIC had been talking about a joint venture three times in the past, says the Chinese paper, but noting came of it.
If this isn’t one of those Chinese rumors that are floated on one day, and denied the next, then this could be interesting in several respects.
Some of America’s most recognized corporations are growing increasingly involved in providing equipment and services to the automated ticketing industry. In many cases, these Fortune 500 firms play a behind-the-scenes role, without actively seeking publicity for their connections to controversial programs. Imaging giant Kodak did announce that it would be demonstrating a new CCD image sensor at a trade show in Germany on Tuesday. This sensor was specifically designed to work in red light camera and speed camera applications. The company claims the unit doubles light sensitivity, allowing a substantial increase in the number of tickets that can be issued in bad weather conditions.
Recent Comments