Anyone out there keeping track of how much money the federal government has plowed into GM, as the automaker downsizes to death? The Washington Post reckons that the next post-bankruptcy tranche—the debtor-in-possession financing needed to cleave GM into “good” and “bad” bits and keep both balls in the air—will be $30 billion. The paper also claims that this will bring taxpayer’s contributions to $45 billion. The $15 billion difference, originally sold as a “bridge loan”? Forgiven. Gone. In exchange for their largesse, “the government plans to take at least 50 percent of the restructured company . . . and the right to name members to its board of directors, as it has at Chrysler, where the government will control four of nine seats.” Although this bailout madness began last year, if we use IHS Global Insight’s recently recalculated GM production figures (GM will build 1.7 million vehicles this year), $45 billion represents a federal contribution of $26,470 per car. That’s provided you don’t add-in Uncle Sam’s $13.5 billion “investment” in automotive lender GMAC. And all the other stuff.
Category: News Blog
Top German government officials, including Chancellor Angela Merkel and Hesse leader Roland Koch, are due to meet later on Friday in Berlin to discuss the bids placed for Opel on Wednesday. A decision is not expected before the end of the month. “Running Mouth” Koch couldn’t wait and is already giving odds.
“There is a ranking in which the offer from Magna is closest to the hopes and wishes of many in the German political arena but also the workers,” Koch told the Deutschlandfunk radio station. And the other bidders?
More than a few TTAC commentators pooh-poohed the risk to the capital markets by Obama giving the UAW cuts ahead of senior creditors. Now the chickens are coming home to roost. There was that thing I sent you yesterday about Indiana, burned in the Chrysler bankruptcy, announcing the state won’t invest in bailout companies. Legislators giving tax incentives and other state aid to business is one thing, the state treasurer managing pension funds and state investments has a higher level of fiduciary (and legal) responsibility, and he’s not going to risk getting sued or worse. Today, Bloomberg reports that a bunch of hedge fund managers say they won’t invest in unionized businesses. Also, Jack Welch described the governments actions as “The creditors’ rights were trashed and the unions got 55 percent of the company.” People may not always be rational actors, but when you have everyone from economics professors to mom & pop investors asking “who will buy bonds if the terms are rewritten by the gov’t?”, it shouldn’t be any surprise that institutional investors act accordingly.
The taxpayers will be paying for the GM and Chrysler bankruptcies. The living. The dead. The unborn. Hell, even my dog. All of us here who give our money to a Congress and President that can’t say no get the honors. Shouldn’t we get something for it? I’m not talking about a bouncy little check in the mail from Uncle Sam. We already have enough of those. How about a car? Seriously. This is a bankruptcy the public will be paying for after all. We’re going to be paying in interminable interest payments and political pontifications if nothing else. Since that’s the case, why not offer all these wonderful unloved surplus vehicles to the public?
TrueDelta has once again updated the results of its Car Reliability Survey. Based on over 10,000 responses for the first time, the new results cover owner experiences through March 31, 2009. Elsewhere, results continue to be based on an April 2008 survey. Thanks to these prompt quarterly updates, TrueDelta can provide reliability stats on new or redesigned models sooner, and then closely track cars as they age. Among the highlights: the 2009 Audi A4 has required 37 repair trips per 100 cars per year—similar to the benchmark Honda Accord. The implication: most of these cars will not require any repairs in their first year.
Start with this: Automotive News [sub] reports that FoMoCo is set to out-produce cross-town rivals General Motors this year. This according to auto industry analysts IHS Global Insight. “Ford will rank first with North American production of 1.9 million units, a 17.7 percent decrease from 2008, IHS said. GM, which is shutting most of its plants as it braces for a possible June 1 bankruptcy, will build 1.7 million vehicles, about half as many as it did last year.” A fifty percent production decline. Whoa. And what’s with the probable on the GM C11? AN should’ve saved the modifier for GM’s projected production; it’s entirely possible they won’t even build that many. Especially if/when Nissan/Renault buys-up the bits. As you might imagine, “new” Chrysler keeps on slipping, slipping; into the man-u-re . . .
Would you like to supersize your irony with that, sir? Having received one bailout, flunked a stress test, now in line for another $7.5b, GMAC knows the meaning of the word “unfit.” And their recent Insurance National Drivers Test shows that 20 percent of American drivers, some 41m people, are a danger to themselves and the financial system. I mean others. Idaho, Wisconsin, Montana and Kansas top the states in “basic road rules” test results. New York, New Jersey, Hawaii and California’s drivers averaged the worst scores. According to GMAC, 5,000 licensed Americans were asked 20 actual questions taken from state Department of Motor Vehicles exams. Anyone changing their mind about speeding?
Early reports on the new national emissions/CAFE standard seemed to imply that California would be barred from moving the goalposts again on emissions. Not so, it seems. Automotive News [sub] reports that California’s Air Resource Board (CARB) is preparing the next round of emissions standards, and (surprise!) they will become more strict rather than the other way around. Or, as CARB Chair Mary Nichols puts it, 2016 will see the emergence of “a much more stringent standard.”
Tense, Bob, tense. Repeat after me, “we have failed to survive . . . “
CTV.ca reports that GM emailed 245 of its 700 Canadian dealerships notifying them that they’re the biggest losers. According to CNNMoney, this time ’round, GM isn’t basing its dealer downsizing on simple volume. “The auto maker said that, due to the ‘unique aspects’ of the Canadian dealer network, its rationalization efforts will focus on key urban markets. ‘The end result in Canada will be a more competitive dealer network with higher volumes, while continuing to maintain the strongest and broadest dealer network in the country better equipped to serve GM customers.'” In theory. In practice, this is only the General’s opening salvo. The friendly fire is sure to get worse when GM files for C11 at the end of the month.
In March 2008, China’s Shuanghuan (SH) Auto presented the Noble to the Greek media. The two-door may look like Daimler’s Smart, but there are crucial differences. The three meter long Chinese vehicle can can carry up to four people; Daimler’s mini (not MINI) mobile seats two. The Noble is a front-engined, front wheel-drive car with a unibody structure; the Smart’s engine is underfloor with a rear-biased drivetrain, built around a “Tridion” safety cage. Yes, well, in April 2008, Daimler’s crack legal team moved quickly to prevent import and sales of the [alleged] Chinese Smart clone. This week, a judge struck down Daimler’s case.
The National Motorists Association (NMA) yesterday rated all fifty states based on their friendliness toward the motoring public. By analyzing laws and speed trap patterns, the group measured each state’s dependence on the motoring public as a source of state and local revenue. “It is not exactly a well kept secret that many traffic laws, enforcement practices and traffic courts are more about generating revenue and political posturing than they are about traffic safety,” NMA President Jim Baxter said in a statement. “During holidays, like the upcoming Memorial Day weekend, we’re bombarded with messages about intensified enforcement, ‘click it or ticket,’ and horrendous fines when in fact most vacation-related traffic accidents are caused my inattention, distraction and fatigue. However, these are accident causes that don’t generate much in the way of government revenue, so instead our highways are overrun with unmarked police cars and ticket cameras.” The following were the top-ten worst states from the motorist’s perspective:
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