When trying to buy VW with the proceeds of derivatives instead of plain old money, Porsche bit off too much it can chew. And they are choking. Volkswagen performed a Heimlich maneuver to the tune of a €700 million loan to save Porsche from extinction by bankruptcy. That loan is not enough, and it’s short term, 6 months max. Porsche was then able to secure a €10 billion bank loan, but had to put the crown jewels of the Porsche family in hock. The €10 billion loan was used to pay off a previous €10 billion loan. The adroit derivatives player turns more and more into someone who uses a credit card to pay off credit card debt. Porsche needs more money. They went to “Germany’s dumbest bank.”

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You, TTAC’s Best and Brightest, knew it was going to happen: that unfortunate intersection of business and politics, where the taxpayer-supported GM would be forced by its new masters to place the latter ahead of the former. In other words, brain dead zombies are easily led. The Hill reports that Massachusetts Congressional Representative Barney Frank has “convinced” GM to keep a parts operation in his district open for business. “Frank’s staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass., plant open for at least 14 months.”

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Photoshop, obviously. That said, there’s this:

Those 789 Chrysler, Dodge and Jeep dealers that were cut loose by Chrysler as a part of its bankruptcy and restructuring plan have until June 9th (next Tuesday) to part with their remaining inventory.

Because of the dealership contract that they signed, dealers aren’t allowed to sell off the cars once the contract expires. And because Chrysler is in bankruptcy protection, it doesn’t have to buy the cars back either.

Chrysler has said that it will help the 789 dealers move their inventory to the remaining Chrysler dealerships, but it won’t give any guarantees on the amount of money those dealerships will have to pay for the remaining vehicles. And considering the circumstances, the terminated dealers don’t exactly have much faith in their parent company right now.

As a result, dealerships are slashing prices. CNN visited Pohanka Chrysler-Dodge in Leesburg, Virginia, where the dealership has slashed prices on some models by as much as 40 percent. A brand new Dodge Nitro, which lists for  $29,170 now has a sticker price of just $17,510.

[thanks to Cardeveloper for the link]

“It’s our obligation to be open and transparent in all we do to reinvent GM, particularly with the American taxpayer as our largest investor.” That was the second sentence out of GM CEO Fritz Henderson’s mouth in sworn testimony before the U.S. Senate re: GM’s dealer cull. When pressed by Senator Rockefeller, Henderson reluctantly promised to release the list of all the dealers sent their walking papers by the corporate mothership. And then . . . nothing. In fact, behind the scenes, GM is desperately trying to quarantine/suppress the information.

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As predicted, the feds have bailed out bankrupt parts maker and former GM division Delphi, through GM, to the tune of $2.5 billion. That doesn’t include the $250 million direct subsidy from American taxpayers. On other hand, GM no longer needs to buy those five Delphi factories GM as previously reported. The cash for the Delphi buyout arrives via one of those “follow the money” deals, as the Wall Street Journal reports. “GM will provide more than $2.5 billion of the $3.6 billion necessary for Beverly Hills-based buyout firm Platinum Equity to gain control of Delphi, according to a person familiar with the matter . . . Under the terms of the transaction, Platinum is expected to invest no more than $750 million, according to the person familiar with the deal. GM would provide the balance in financing. Those financing commitments may or may not be drawn upon in the future, depending on how Delphi performs. The terms of the GM loans couldn’t be learned.” So much for GM CEO’s promise of transparency at yesterday’s Senate hearing.

So says the bond market according to Bloomberg. And yes, we’re definitely talking about the “New GM.” Using a Deutsche Bank formula for analyzing the bond market, demand for GM debt shows the company to be worth about $33 billion post-bankruptcy. By comparison, the same formula estimates Ford’s value to be about $19.9 billion. Still, that valuation shows just how little the taxpayer intervention in GM bought for its $65 billion investment. The Deutsche Bank report, by analyst Rod Lache, indicates that GM’s post-bankruptcy value will be on-par with its 2002 value. But, “Much higher — and consistent — levels of profitability” will be needed to keep that market value, according to Credit Sights Inc analyst Glenn Reynolds (no relation to the famed blogger). “It takes more than government debt-to-equity swaps.” There’s always a catch, isn’t there?

“Drivers who own [defective, shoddy and/or downright dangerous] Chrysler, Dodge and Jeep vehicles will retain their Lemon Law rights to compensation for defects under a deal between U.S. states and Chrysler LLC’s new owners, [Florida] Attorney General Bill McCollum said Wednesday.” And so the AP reassures ChryCo’s remaining half dozen or so prospective retail customers that they can once again buy with confidence from the bankrupt, federally-sponsored zombie automaker. More specifically, Fiat Group SpA has agreed to stand behind ChryCo crap. Not that all Chrysler’s products are crap, obviously. Well, perhaps not that obviously . . .

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California’s zero-emissions vehicle law could cost Toyota, darling of the environmental crowd, up to a billion dollars reports Bloomberg. That’s more than any other automaker is looking at. Why? Because by 2012, California will require that 3 percent of unit sales over a three-year period be zero-emissions models. Since Toyota has over 24 percent of the California car market (nearly double Honda, which is number two at 12.9 percent), it’s facing far stiffer requirements. And unlike Honda it doesn’t have a hydrogen fallback (although Honda’s FCX Clarity is not yet on sale). According to Bloomberg, Toyota will have to sell 16,000 plug-in hybrids (PHEVs) and EVs come 2012. “If you’re only discussing the cost of batteries and other components, a $1 billion cost for Toyota may be a stretch,” says Brett Smith of the Center For Automotive Research. “Add in all the things needed to support these vehicles — service, dealer training, marketing, warranties, new manufacturing equipment to get them into production, and [$1b] sounds reasonable” Toyota is declining comment on the exact cost of CARB compliance, but has already questioned whether PHEV demand will live up to enthusiast expectations.

From Despair Inc (via Jalopnik), comes a T-shirt that is sure to outsell the Aveo. Is it time to declare the death of the ironic T-shirt?

We rip on the Volt a lot around here. And with good reason. But at least GM’s moonshot has a few things going for it, like a gas range-extender, a real (if devastated) dealer network, a metric ton of government money and over a year of relentless hype. Coda Automotive has none of those things, but apparently widespread ridicule of the Volt and other overly optimistic variations on the overpriced EV theme aren’t stopping the firm from letting it all hang out for the LA Times.

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The latest attempt to bring the hottest Euro-fad in the biz has failed in the Senate Appropriations Committee, reports the Detroit News. Was it because it was attached to a tobacco regulation bill of all things? Or because SenAppCom has bigger, better plans for Obama’s stimulus money? Or because of the nascent green opposition which kiboshed the measure mere weeks ago? Who cares? At least it’s dead. For now. Since the idea has the White House’s support, expect it to be exhumed at least a few more times.

It has been commented widely (and it doesn’t take a tall IQ to do so) that Magna might get problems with its parts customers (a.k.a. OEMs) when Magna starts competing with them through Opel. Didn’t take long: “Volkswagen AG said Wednesday Canadian auto parts supplier Magna International Inc. will face conflicts of interest following the planned takeover of General Motors Corp.’s (GM) Adam Opel GmbH unit,” Dow Jones Newswire reports from Germany. The threats are carefully worded:
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Far be it for me to extend TTAC’s reputation for putting a negative spin on news trumpeted as a sign that the auto industry’s dark days are coming to an end. But this story—“Toyota sees turnaround, boosts U.S. output”—is making the ’rounds, and it bears closer examination.

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