Chevy’s Volt “will likely be too expensive to be commercially successful in the short-term,” reveals the PTFOA in what amounted to stunning news for Volt boosters and no one else. Wasn’t the Volt supposed to justify the whole bailout in the first place? The DetN‘s Scott Burgess takes the “yeah, but” tack, spinning expensive impracticality into farsighted vision. With a little help from his friends, of course. “In hybrid technology, it’s hard to argue that we’re not behind,” GM’s Rob Peterson tells Burgess. “But we believe we have a better solution.” And what of that $40K price tag that the government says will require “substantial reductions in manufacturing cost in order to become commercially viable?” “It’s a transformational technology,” says Peterson. “That’s part of the reason the cost is so expensive. But we believe if you start in the right direction, as the supply base matures, the volumes of the vehicle increases and the costs will go down.” If. As. Will. As in “we hope.” Meanwhile, someone has to pick up the bill and worry about the viability of a firm that is staking everything on an unprofitable-at-$40K moon shot. Needless to say that someone ain’t Bob Lutz . . . .
If it wasn’t clear before, it is now: GM will use the next 60 days to prepare itself for a Chapter 11 filing. Freshly-minted CEO Fritz Henderson told a suited and booted press Detroit press corps that he wouldn’t have taken the job from Rick Wagoner if he wasn’t prepared to do “whatever it takes” to return GM to profitability. Henderson spoke of his distaste for “messy” bankruptcies, but indicated his willingness to be the new broom. (Dream on, Fritz.) Meanwhile, despite repeated requests by the friendly press flacks, Henderson refused to be drawn out on how much GM will draw out of the taxpayer’s purse while it gets ready to file Chapter 11. He skated over the point faster than a duck landing on a frozen pond, saying that GM might scarf the $2 billion that it didn’t take this month, or the $2.6 billion it requested for April, or both. At the beginning of the conference, Fritz touted GM’s new “Total Confidence” program. TC is designed to protect GM buyers from losing their wheels after they lose their job, and insulate them from [some] negative equity at trade-in time. It doesn’t, however, protect TTAC’s Best and Brightests’ finely honed sensibilities by the unintentionally humorous irony implicit in the program’s name. If you know what I mean.
Big Brother could actually be her indoors, to use the British term for a female spouse. The Sun [UK] reports that a snooping wife was doing the electronic version of twitching curtains (Googling her friend’s house) when she spotted her hubby’s motor parked outside. “The love cheat is not the only husband trapped by Google’s controversial new 360-degree photo search which covers 25 cities and towns throughout the country. Top media lawyer Mark Stephens said: ‘I was talking about the Range Rover case when another divorce lawyer came up to say his firm was dealing with the same sort of thing. People are getting caught out on Google.'”
Mega dittos from our neighbors to the north. The Globe and Mail reports that the Canadian government is also playing hard man re: GM and Chrysler’s call on federal bailout bucks. Yada, yada, yada, restructure, union concessions, new plans, bankruptcy. And then, this:
Chrysler was unable to meet its Canadian payroll today without a $250-million advance on a $1-billion bridge loan from Canadian taxpayers. To qualify for up to $4-billion in long-term aid, Chrysler has to conclude now-stalled negotiations with the CAW on a cost-savings contract and complete the Fiat deal.
To stave off an immediate crisis, the federal and Ontario governments offered the bridge loans—including up to $3-billion for GM—to allow them to continue operating while they work to satisfy U.S. and Canadian government demands.
The Blue Oval Boyz are launching the curiously named, Hyundai-trumping Ford Advantage Program. The deal—which runs from today to June 1—offers new car buyers 12 months of “payment protection” (leg breakers need not apply) up to $700 per month, zero percent financing and, of all things, a donation to a local charity. Strange times when it’s considered an “advantage” to know you won’t lose your car for a year if you lose your job. Hang on; I’m looking for the fine print now . . . nope, can’t find it. Will update ASAP.
Yesterday, GM’s new boss (president Barack Obama) announced he was firing The General’s CEO and six members of GM’s Board of Bystanders. The new chief executive in chief also elevated BOD member Kent Kresa to the top slot. Kresa, who came to GM from the world’s least consumer-focused industry (unless you count killing them), replaces Rick Wagoner as GM’s new Chairman of the Board. You may remember Kent from from last May, when Kresa told the Wall Street Journal that Red Ink Rick was good to go. I mean, stay. “Management has a handle on the situation.” At the time, I wrote that the former Northrop CEO’s faith in Wagoner’s unspecified turnaround plan reflected “Kresa’s seat-of-the-pants, high stakes poker management style, and faith in political influence peddling.” But really, who IS this guy? Why is Kresa sitting pretty after sitting schtum? A little help from TTAC’s Best and Brightest in the Google department, and some thoughtful analysis, would be most appreciated.
I always tell people that their footwear will have a greater impact on their life than the car they drive . . . and they laugh. Then they start to think about it. All that money that goes into purchasing, financing, repairing, and insuring a car can be used for so many better purposes (for a non-enthusiast). College. Vacations. Cheap wine. You name it. The list is endless and the knowledge to achieve those ends is definitely out there. But how can it “really” be done? How can the laymen amongst us overcome the stacked deck of MBAs and conspicuous consumption that is seemingly “the American way” when it comes to cars and so many other things?
GM CEO Rick Wagoner promised to reveal the fate of the HUMMER brand today. Old Sparky was warmed-up and everything. Of course, that was before the President of the United States fired Wagoner’s ass. And so the maker of pseudo-military SUVs will spend its eleventh month on death row—sorry, “under strategic review.” Automotive News [sub] reports that GM will now postpone a decision “for a few weeks as it works to complete a sale.” No, they don’t mean “a” sale; they mean the sale of the entire brand. Wait! Does that mean . . . ?
“Our efforts to sell Hummer are proceeding, and there are several parties interested — and I would say really interested — in the brand,” Troy Clarke, GM’s president of North America, said during a call to dealers today. “We’re still very much in the process, although that process is maturing.”
WTH is a “maturing sales process”? Does GM have a buyer for the world’s most politically incorrect automotive brand or not?
Porsche presented the numbers for the first half of their fiscal 2008/2009. There is bad news and there is pornographic news, says Automobilwoche [sub]. The bad news is that Porsche is not immune against carmageddon: Their unit sales dropped 27 percent to 34K slot cars. In Euros, their sales dropped 12.8 percent to €3B.
Now for the pornographic part. On sales of €3B, Porsche reports a pre-tax profit of—hold on to whatever you can hold on to—€7.34B. In the same period last year, it was only €1.66B. How did they pull this off? You guessed it: The hedge fund with a sheet metal bending subsidiary earned €6.84B at the stock exchange, wheeling and dealing with stocks and derivatives. Why were Euro sales much better than unit sales? Read More >
So, where does DC vs. Detroit leave Opel, Vauxhall et al.? The “private intelligence agency” Stratfor [very expensive sub] summed it up most succinctly: “Add to this the complexity of Opel, a German car maker owned by GM, which Germany wants the United States to bail out but which the United States wants nothing to do with, and the fundamental problem is clear: While both Germany and the United States have a common interest in moving past the crisis, Germany and the United States have very different approaches to the problem.”
Ford apparently isn’t the only firm that “speaks car.” The ChiTrib reports that a Pennsylvania parts dealer is suing Ford for using the line “we speak car” in recent ads, claiming it has used the phrase for six years. Frank’s Auto Supply of Uniontown, PA uses wespeakcar.com as its website, and has used the trite neologism in advertising since June of 2003. The parts dealer is suing Ford in federal court, seeking unspecified damages and a ban on Ford’s use of the phrase. The upside to ripping off another marketing tagline? No one really misses the unoriginal ad when it gets pulled.
ABC News reports that outgoing GM CEO Rick Wagoner will walk away with a $20.2 million retirement package, not including the usual perks bestowed upon The General’s generals (e.g., free air travel, secretarial services, cars for life, etc.). Also standard: Wagoner’s pension is insured. In other words, if/when GM eventually files for Chapter 11 protections, even if the company ends up in liquidation, Wagoner’s pension is safe. And as the money is not a “bonus,” it can’t be stopped by the federales. In an email to ABC, GM spokeswoman Julie M. Gibson pointed out that it’s actually only $5M or so paid out over five years. (It’s my money and I want it now!) In a subsequent “clarification,” Gibson said the terms of Wagoner’s final compensation were not yet hammered out. “Specifics on any compensation entitled to, or actually paid to Mr. Wagoner are still being reviewed.” Could that mean he actually INCREASED his pay-out to piss off? Anyway, if Rick decides to take GM to court, guess who pays for the lawyer? Not that he can’t afford one: Wagoner’s already banked over $60,000,000 in salary. As for the value of Wagoner’s stock options, well, I guess there is some justice in the world.
Automakers are cutting second quarter production plans by double digit percentages, as the US auto market continues to contract. Automotive News [sub] cites CSM Global’s estimate that North American auto production will not top 2.07 million units, the lowest level since “at least” 1981. And though GM, Ford, Toyota, Nissan and Honda are expected to cut production in the 30-40 percent range, the worst news comes from Chrysler. The Cerburian dog is “selling the majority of their vehicles out of inventory,” says CSM’s Michael Robinet. “They are trying to get much more realistic about production levels.” How realistic? Expect a 60 percent cut in production for the second quarter, and under one million units of total North American production on the year, reckons CSM. That’s well below Chrysler’s 1.6m annual production plan from its original viability plan.
A Georgia state lawmaker wants to know the best way to force local jurisdictions to obey a new law governing photo enforcement systems. House Resolution 774, sponsored by state Representative Barry Loudermilk (R-Cassville), would create the “House Study Committee on Compliance by Local Governments with the Red Light Camera Law” in response to evidence that cities are operating automated ticketing programs without complying with Georgia Code 40-14-22. This legal provision, which took effect January 1, mandates a one-second extension of the duration of the yellow warning phase at red light camera intersections. As TheNewspaper first reported earlier this month, several jurisdictions are openly flouting the law.
Ronald Reagan once said that the scariest words in the English language are “we’re from the government and we’re here to help.” For troubled auto suppliers though, there are scarier things than government assistance. Specifically, government assistance administered by GM and Chrysler. Automotive News [sub] reports that the the newest automaking branches of the federal government will be in charge of allocating the $5 billion in supplier aid, and that they’ll be using the money to settle old scores. According to AN‘s breezy prose, GM and Chrysler may “pass over” suppliers that have sought to protect themselves from OEM bankruptcies by demanding payment in fewer than 45 days or arguing that insolvency worries allow them to break contracts with the automakers. After all, the government didn’t think the supplier rescue money would go to the most in-need firms, did it?
Recent Comments