Former Ford CEO Jac Nasser’s abrasive public persona during the Firestone tire debacle makes him the most memorable chapter in the Ford Explorer story. Like many famous Blue Oval products, the bean-counted SUV that rode on “traction B, temperature C”-rated donuts suffered a never-ending assault from the Big Chief himself. And now that the Explorer is gasping for breath, waiting for a Flex-based CUV to snatch its storied past, its nice to know the original never forgot its mission.
Not literally. But close enough. At this point, GM would gladly transfer ownership of its German division to Daimler for about the same price Cerberus paid Daimler for Chrysler (without withholding a 19.99 percent share). Yesterday, GM’s European workers took the streets in Austria, Belgium, France, Poland, Russia, Spain, Sweden and Britain. They were protesting fact that their employers may stop paying them to build cars no one will buy. The International Herald Tribune ties cause to effect (not terribly difficult but needs must): “Targets outlined in the [congressional viability] report included the elimination of 47,000 jobs worldwide, including 26,000 outside the United States, $6 billion in grants from governments abroad by 2010 and labor-cost savings in Europe of $1.2 billion.” GM will no doubt use the industrial actions as a gun to the head of foreign governments, extorting bailout bucks in the great American tradition. (Collusion anyone?) Students of the Roman Empire know the deal: the foreign outposts revolt as the center no longer holds. Or, as Chinua Achebe pointed out, things fall apart.
An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Note: This week-end, BS will change his location to Berlin for a few weeks. WAS will be filed as time allows—or not, as RF fancies to say.
Daimler may buy Opel plant: Opel has contacted Daimler over plans to sell its Corsa-building Eisenach plant. The Financial Times Deutschland [via Reuters] bases its story on “government sources,” who also claim that Opel’s Astra and Zafira-producing Bochum plant is on the chopping block. Daimler management board member, Thomas Weber, said a takeover of Opel is not on the cards. “That also goes for Volvo or Saab,” Weber told Reuters. Meanwhile, Opel’s management is about to present their supervisory board with a restructuring plan. It’s expected to call for thousands of job cost and closure of one or more plants. Opel dealers have signaled a willingness to help secure their livelihoods by taking some form of equity stake in an independent company—an automaker without the excess workers and capacity, presumably.
And here comes the trade war: France’s President Nicolas Sarkozy wants the World Trade Organization to consider the legality of American aid to its domestic automakers. “We need to see if the U.S. aid is compatible with the WTO,” Sarkozy said in eastern France at a roundtable discussion on the car industry on Thursday, reported by Automotive News [sub]. [NB: This is the same Nicolas Sarkozy who recently announced protectionist aid for French automakers and called for a coordinated European plan to help the E.U.’s car industry.] EU competition authorities are scrutinizing car industry support from governments in France, Spain, Britain, Italy, Germany and Sweden. Separately, European Transport Commissioner, Antonio Tajani, said Europe’s lawmakers would consider appealing to the WTO if US aid made conditions unfair for European manufacturers.
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“Your camera can create clean cars.” That was the subject head on a mass mailing I received from the Sierra Club’s Greg Haegele. This was merely a gimmick—a “photo” petition to the Environmental Protection Agency. The EPA is considering rescinding the Bush Administration’s decision to block California and other states from implementing CO2 emissions standards for cars, and the Sierra Club is leading the cheering section. While I am all in favor of reducing CO2 emissions and fast, while rescinding the Bush legislation might well be a good idea, I’m dismayed by the way so many advocates of reducing greenhouse gases focus on micromanaging automotive reductions rather than on the big picture. To be sure, Ann Mesnikoff of the Sierra Club says the group is also working on cap and trade, a big picture approach to greenhouse gas mitigation. But what is it with anti-anthropogenic global warming (AGW) crusaders and cars?
Somewhere in the background, a White House spinmeister is busy telling the cross-dressing Fox News anchor (if he doesn’t, he should) that his viewers should chill about the $3.6 trillion deficit generated by her boss’ budget. “The average taxpayer knows that this is an investment in America that will reinvigorate the economy and, thus, generate new tax revenues and hey, presto! It will make itself disappear!” Or some such crap. The average person knows his or her government is out of control. They are also increasingly aware that GM is doomed. As I stated in last General Motors Death Watch, as the enormity of this collapse reveals itself (-$3,529,166.67 per hour) the American taxpayer will draw a line in the metaphorical sand. In fact, the coming tussle over the Detroit bailout could be the beginning of the end of Bailout Nation. We shall see. Meanwhile, lightly used Ford GTs are selling for $130K, a 2000 Ferrari 360 is going for $90K and today’s Maserati GranTurismo (or a Quattroporte) can be had for less than $100K. At the low end, prices are also slip sliding away. And yet, it’s still not time to buy. How scary is that?
What do you do when you’re out of time? Get rid of all your clocks! GM has already taken the humiliating measure of cutting clock maintenance from the RenCen budget, and Chrysler is now following suit. William Wolf of Chrysler Paint, Pilot and Facility Operations notes over at Chrysler Blog that “every little bit helps.” But Wolf wasn’t satisfied with the mere $10K in savings that cutting clocks yielded. Eliminating rooftop parking to save plowing costs will save over $300K, while halving the number of fluorescent bulbs at the Auburn Hills Chrysler Technical Center will yield $400K. And despite the bitter Michigan winter, Chrysler has dropped the temperature at the CTC by four degrees, saving $70K annually. And yet, somehow, not everyone’s happy.
Shortly after Transportation Secretary Ray LaHood expressed his enthusiasm for a nationwide pay-per-mile tax scheme, the White House reacted by denying any plans for the car-monitoring fee system. “[Pay-per-mile] is not and will not be the policy of the Obama administration,” White House press secretary Robert Gibbs told the WaPo at a press conference, kicking off a merry little game of gotcha. “So was Secretary LaHood speaking out of turn here?” an AP reporter asked at the briefing. “I would direct you to Secretary LaHood on that,” Gibbs said. “Well, we actually interviewed him,” the reporter noted. “Well, call him back,” Gibbs said. Transportation Department officials later “clarified” that LaHood’s comments “were part of a long interview about a range of transportation issues and that he never specifically advocated taxing drivers by the mile.” Well that clears everything up now, doesn’t it?
Gawker reports that Tesla spinmeister Daryl Siry left the Silicon Valley startup because CEO Elon Musk (above) was pushing to accept deposits on the Model S sedan. The Model S (a.k.a. WhiteStar) exists only as a prototype. Tesla has no factory or financing with which to build it. When Musk announced that the DOE would approve Tesla’s loan application (they haven’t and likely won’t) and decided to accept $40K Model S deposits (next month), Siry smelled fraud and bailed. Valleywag calls Musk “The New Preston Tucker,” revealing that Musk told a recent Tesla “town hall” meeting that Tesla deposits were not guaranteed. This despite earlier assurances that Musk would personally guarantee deposits. With reports of Tesla asking for up to $75K in unescrowed “reservation payments,” and difficulty reclaiming deposits as small as $5K, Siry’s fears were probably well-founded. Meanwhile, anecdotal evidence from Tesla forums indicates that the real winner here: the Fisker Karma.
I admit, I have a strange fascination with watching cars crash. And though large, heavy cars can cause some of the most dangerous accidents, there’s something particularly satisfying about watching a small car hit the wall (or get hit by a large, heavy car). As an American I feel hard-wired to expect smaller cars to explode into a million pieces of tin foil and socialized medicine every time I see one making a slow-mo impact in a crash test. But the glory days of “hoo boy!” moments in compact crash tests seem to be coming to a close. Toyota’s tiny iQ just logged a five-star rating from Europe’s NCAP crash testers, and as this video shows, the drama just never shows up. A cocoon of airbags, some brilliant crumpling and surprising side-impact resilience take a lot of the “sucks to be that dummy” entertainment value from the iQ test video. Oh well. I guess it’s time to move on to watching Chinese car crash tests. Schadenfreude doesn’t feed itself.
General Motors has finally announced their fourth quarter results and its terminal. The ailing American automaker’s cash burn was a staggering $6.2 billion. That might have a little something to do with the fact that GM’s revenues shrank by 34.2 percent, from $46.8 billion to $30.8 billion. Q4 operating loss: $5.9B. Net loss: $9.6B (compared to a not inconsequential $1.5B a year previous). For those of you keeping score, today’s results mark GM’s fourth year without booking a profit and the second largest loss in GM’s entire history. Reacting to the carnage, the man at the helm recycled a press release from somewhere in the middle of this slide into bankruptcy. “2008 was an extremely difficult year for the U.S. and global auto markets,” CEO Rick Wagoner said in a statement. “We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions.” At GM, restructuring actions accelerate you. Nose first. Pro forma mea minimus culpa filed, Red Ink Rick is headed to DC with his well-worn begging bowl . . .
An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.
And finally, the Nano: Tata’s Nano, slated to be the world’s cheapest car at under $2,000, will finally go on sale in April after months of delay caused by problems at its main production plant, Reuters reports. Tata said it would formally launch the Nano on March 23, and buyers could start ordering the model by the second week of April. “We expect only limited quantities to be produced now—maybe about 3,000 a month—so the waiting period could be long,” said Surjit Arora, auto analyst at Prabhudas Lilladher. Tata Motors’ new Nano plant in Gujarat, in western India, is not expected to be ready until the year-end. The company has said it would make the first Nanos at one of its two existing plants in Pune, about 170 km north of Mumbai, and at Pantnagar in northern India.
Aftermath: Japan’s eight passenger car manufacturers curbed their domestic output by 40 percent compared with a year earlier to 560,471 units in January as they stepped up efforts to correct inventory levels amid a sharp downturn in global demand, the Nikkei [sub] sums up yesterday’s reports. Toyota, Nissan, Mitsubishi Motors, and Mazda had embarked on their biggest cutbacks since they began releasing production data. Daihatsu was the only one to keep its domestic output reductions in the single digits, at 2.7 percent. Production cutbacks overseas also gained momentum, with carmakers lowering output by 41 percent to 602,502 units. Honda curtailed US output 50.1 percent in January. Exports sank more than 50 percent.
GM’s Saab Automobile has shut down production in Sweden until issues with a supplier and customs are solved, Reuters reports. “We had a problem with a supplier, but that has been solved now,” Saab spokesman Eric Geers said. “Now only the customs remains, and we will solve that.” A Swedish customs official said that after filing for protection from creditors last week, Saab lost a 30-day credit facility with Swedish customs. Saab owes duties for inventories and spare parts located in two customs warehouses, said Hans Ohlsson at Swedish customs. Saab has until March 4 to pay an undisclosed but “considerable” sum of money for the contents of the warehouses, Ohlsson said. In the meantime Geers denied that unpaid customs fees indicated Saab had acute problems in its payments. “No, that is not it at all,” he said. Automobilwoche [sub] says that Swedish customs has prevented deliveries of parts and assembled cars to Trollhättan, because Saab hasn’t paid its duties.
Update: According to Automobilwoche [sub,] the difficulties have been resolved, and production is running again. Also, Jan-Åke Jonsson said that there are “seven to eight serious buyers” who are interested in taking over Saab.
The Detroit News reports that House Minority Leader John Boehner isn’t happy about the way their hometown heroes have been running things for the last, oh, three decades.
When it comes to the auto companies, they’ve avoided making the tough decisions for 30 years—and that’s why they’ve ended up where they are. Until I’m convinced they’re willing to make the tough decisions that stakeholders, their bondholders, their employees—everyone is willing to step up and do what they have to do, I’m not willing to commit taxpayer funds.
Boehner’s right. But this statement has enough wiggle room to hide Jeff for all time—“willing to make” instead of “make.” And speaking of weasel words . . . where does a federal politician get off lecturing Detroit on its refusal to make “tough decisions”? In fact, what does John Boehner know about business?
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