The mainstream media is beginning to wake up to GMAC’s seemingly endless call on the public purse. Thanks to chronic mismanagement—and an 11th hour, last-minute back room deal with The Fed and the US Treasury that turned the virtually bankrupt lender into a bank that couldn’t pass a stress test if it was doped-up to the eyeballs with Thorazine—GM’s former cash cow has become a cow-sized vampire bat, feasting on US taxpayers’ blood, sweat and tears. It’s sucked-up $6 billion in federal funding so far, heading for another . . . wait for it . . . $15.5 billion. The Wall Street Journal is shedding a little heat (not light) on this “hidden” auto bailout, which is heading for another one of those dumb-ass “your money for government equity in a born loser” jobs. Without the slightest hint of accountability.
“Today’s equity offering is another example of the fast, decisive action we are taking as we build momentum on our plan, including further progress on improving our balance sheet.” Well, he would say that, wouldn’t he? And now’s as good a time as any for Ford CEO Alan Mulally to cash-in some of his employer’s chips by selling 300 million shares of common stock. Ford’s stock price has tripled—from not very much to three times not a whole lot—since Chrysler filed for Chapter 11 and GM heads for same. And Ford needs a mountain of cash to honor their contract with the United Auto Workers. While the MSM is busy repeating Ford’s “we’re the only one not suckling on the federal teat” mantra, keep in mind that the sale should raise $1.8 billion or so, and we’re talking a $15 billion total obligation the union’s VEBA health care fund. The market knows: Ford’s stock sank nine percent today on the news of the offer. Still, as we’ve said all along, there’s something to be said for being the last man standing. The question is, what? Let’s hope it’s not “our turn.”
Timedid the math, and reports that the total cost of the recent wave of automotive industry “assistance” has reached $83 billion. With Chrysler’s bankruptcy not going well (286,687 2009 models and 36,370 2008 models languishing on lots, according to Fortune) and GM about to join it in court, that number will top $100 million by the end of the summer. GM bondholders are also requesting something more than ten percent of New GM’s equity to give up their debt. And guess who’ll pay for that? Meanwhile, a lousy $4 million in federal emergency grants are going to assist Michigan’s autoworkers who have been laid off by the industry.
Here’s a story that proves that incompetence and general apathy isn’t limited to the DMV where Patty & Selma Bouvier earn their living. Starting now, Quebec motorists can offer up $51.97 above the current cost of a driver’s license to obtain what the provincial government is calling “Smart” driver’s licenses. These licenses will come equipped with an RFID chip that can be scanned remotely by US border guards to identify approaching drivers. Introduced by Quebec’s version of a DMV, the SAAQ, these chipped IDs are meant to allow Quebecers to comply with new Department of Homeland Security regulations that require government-issued identification when entering the US by land. Here’s the problem: The (highly personal) information emitted by the RFID can also be read by anyone else who, with $250 and a working knowledge of eBay, can obtain the necessary equipment. To make matters worse, no encryption or security measures were implemented on these “Smart” licenses. Needless to say, it’s an identity thief’s wet dream.
Such as they are. Japanese sales are set to fall below 5 million in 2009 for the first time in nearly thirty years. But even with Japan’s sales slump particularly affecting standard-sized cars, Honda moved 10,481 units of its new hybrid on the Japanese market last month. That makes it the best selling car in Japan just as Toyota brings its third-generation Prius to market. A hybrid as the best selling car? Government subsidies sure help! And with consumers in Japan clearly value-shopping their hybrids (Honda’s Insight is several thousand dollars cheaper than Prius), is it any suprise that we’ve heard rumblings of a Yaris-based hybrid? Meanwhile, German cars top Japan’s import brand sales. VW, BMW and Mercedes took the top three spots but sold fewer cars combined than the Insight.
Remember the whole “we do not want to run the automakers” routine? Cue up the laugh track. President Obama’s PTFOA has intervened to halve Chrysler’s ad budget during its taxpayer-funded bankruptcy, reports Automotive News [sub]. Chrysler had requested $134 million for advertising during its alleged nine-week bankruptcy. That request was halved by the PTFOA because that body “believed that it was not feasible to not spend anything on marketing and advertising for fear of eroding the image of the brand,” says Chrysler Chapter 11 consultant, Robert Manzo, in court documents. We knew Chrysler’s DIP budget was being drawn up “in consultation with the Treasury,” but this is the first glimpse of a struggle between Chrysler management and its government paymasters.
GM’s CEO took a half hour out of his panic-packed schedule to chat with the GM Fastlane-reading public. He discussed CAFE, the Corvette, salaried benefits and more, via CoverItLive. There’s not exactly a wealth of new information, but it’s an interesting insight into the mind and typing skills of GM’s top dog. It also shows the lengths to which GM is going to communicate this week, even if it has nothing specific to announce. Speaking of which, The Detroit News is announcing the kickoff of the “Keep It Made In America” tour, which began at American Axle’s Hamtramack plant today. The Rev. Jesse Jackson, MI Senator Debbie Stabenow, and others reportedly exhorted crowds of UAW workers with chants of “Reinvest in our land” and “Keep hope alive.” Local mayors and union officials provided the requisite pro-union, pro-Detroit quotes, but the effort at feel-good flag-waving rings somewhat hollow, considering the antagonistic relationship that is developing between GM and the UAW as The General unwinds towards bankruptcy.
The $5 billion bailout of Detroit’s suppliers has “flopped” according to Automotive News [sub]. Even though the bailout funds were made available in mid-March, money has yet to be disbursed even to firms which have been blessed with OEM approval. Problems seem to be traceable back to the decision to use Citigroup to manage the funds. “All our paperwork has been in for weeks,” says one supplier CEO. “But Citibank does not return phone calls or e-mails.” With reports of Citi being “overwhelmed” by supplier applications (aka anyone owed money by GM or Chrysler) and rampant government red tape, what do Citi, GM, Chrysler and the Treasury say about the unfolding boondoggle? Nada. “A Treasury spokeswoman said the government has no information on how the car companies have disbursed the money or to whom. She referred all questions to GM and Chrysler.”
The magic and deadly mystery of the Porsche 911 is simply this: take a wooden baseball bat, preferably one of those thirty-five-ounce Louisville Sluggers like McGwire might have swung, hold your palm out, place the thin end of the bat there, and balance it vertically by moving your hand back and forth. See how you have to move your hand quite a bit, at unpredictable and rapid intervals, to keep the heavy end from falling? The heavy end of the bat is the 911’s engine. The thin end, where you are working, is the steering. Got it? Now run.
General Motors is is “open to considering moving its headquarters from Detroit, selling off U.S. plants and even renegotiating parts of its restructuring plan with its major union,” CEO Fritz Henderson told Reuters today in a conference call. The possible relocation and renegotiations are part of a last-ditch effort to restructure GM outside of bankruptcy, a move that Henderson admits is likely to fail. “It’s more probable that we would need to accomplish our goals in a bankruptcy,” says Henderson. “There’s still a chance for it to be done outside a court proceeding.”
President Bush’s imaginatively-named “Freedom Fuel Initiative” has been slashed by President Obama, cutting $100 million per year from hydrogen research funding according to DailyTech. Government spending on hydrogen fuel cell technology will drop from about $169 million per year to about $69 million, as a natural and healthy skepticism grows about hydrogen’s short-term potential. “The probability of deploying hydrogen fuel-cell vehicles in the next 10 to 20 years is low,” say Department of Energy spokesfolks, taking an early lead for understatement of the week.
Some vehicles are doomed from the start. Take the Acura RDX: a not-inexpensive CUV with aesthetically challenging looks nestling amongst Honda’s “Huh?” brand. The RDX seems carefully designed to appeal to the few, the proud, the pistonheads. You know: enthusiasts who absolutely must have a willing engine, a chassis that’s a suitable dance partner and the elevated driving position of SUV—all at a price that’s significantly higher than more sensible (if dull) alternatives made by brands whose street cred didn’t die with the Integra. You see how that doesn’t work?
Assuming GM does go Chapter 11 and kills off Saturn, what happens to part support? I doubt it matters for my case, as a ’95 is old enough and common enough that its pretty much junkyard/recycled/remanufactured for anything major at this point anyway, but what happens to those with newer models?
The Alabama state legislature this week sent a bill authorizing Montgomery’s use of red light cameras to Governor Bob Riley (R) for his signature. The city has been using automated ticketing machines since May 2008, but the local measure authored by state Senator Larry Dixon (R-Montgomery) and state Representative David Grimes (R-Montgomery) is designed to retroactively protect the city from any lawsuit challenging the legality of the first $1 million worth of tickets already issued without authorization. “The city, by Ordinance No. 10-2007, hereby validated ab initio, adopted the procedures authorized by this act,” Senate Bill 59 declares.
The Texas House of Representatives voted on Friday to bring an end to the use of red light cameras in the state. During consideration of a bill to reauthorize the Texas Department of Transportation (TxDOT), members debated over 180 amendments to the underlying legislation. Amendment Number 102 added a sunset clause to state approval for the use of automated ticketing machines. This provision passed by a vote of 107-36 and the underlying TxDOT reauthorization measure was adopted on a voice vote.
Recent Comments