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Thanks to strangely prescient asset mortgaging, Ford has not yet joined Bailout Nation. Providing, of course, you discount its forthcoming share of the Department of Energy’s $25b no- to low-cost “retooling” loans (remember them?). But don’t get to thinking that FoMoCo doesn’t have its eye on the prize (federal succor). The Detroit News reports this morning that Ford’s lobbyists are hard at work in the teat suckling department. “Ford Motor Co. is calling on Washington to do more to stimulate the economy and get consumers back into its showrooms, after posting a record loss of nearly $14.6 billion for 2008 on Thursday.” Ready? “Anything that can incentivize the consumer, especially with regard to automobiles, would be great, because it’s such an important part of the economy,” CEO Alan Mulally told The Detroit News. “I know that they know how important the automotive sector is.” Cue “I’d do anything” from Oliver, substituting the word “money” for “love.” Anything? But what, exactly?
My three-year anniversary with TTAC is rapidly approaching. After meeting many great people because of this website, it’s time to meet the Best and Brightest who hail from the Bayou City. This concrete jungle has plenty of automotive venues, so let’s make it happen with the finest iron on the road today. I suggest the “Cars and Coffee” event: a non-denominational, show-n-shine type of affair. There’ll be downhome hospitality, tasty cupcakes and Starbuck’s finest to take the chill out of the winter air. Or the winter heatwave off your face: everyone knows the weather in this town is more changeable than GM’s plans for Cadillac. See you there!
When: Saturday, February 7th, from 8:30 a.m. to whenever.
Where: The parking lot surrounding the Starbucks in 1151 Uptown Park. That’s at Post Oak Blvd at Highway 610. [Google map here.] The venue is family friendly.
Bonus! To indentify yourself from the riff-raff, the code word is “B&B.” Anyone wearing a lapel badge with those letters qualifies for one free Venti coffee, no drips, flavors, soy or other misegos.
Inflammatory much? Of course we do. Quick digression: Bain & Co is one of those international consultancies whose website doesn’t provide a client list, or any exact idea of what it does for them. Reading between the lines, like McKinsey & Company, they probably specialize in firing people (e.g., “Where appropriate, we work with clients to make it [increasing “value”] happen—which may mean fundamentally changing the company.”) The connection between Bain and a study of potential EV ownership is left unspoken. Looks like the usual client angling to me. OK, so, Business Week reports that Bain reports that EV intenders are rich bastards. “The survey of 4,000 people in eight countries, including the U.S., China, Japan and Germany, finds that high-income buyers are ready to buy all-electric vehicles as a second vehicle for short trips. ‘Consumers would be buying now if there were products,’ says Gregor Matthies, a Munich-based partner at Bain who specializes in the auto industry.” Did they only survey high income buyers? Not specified. So which theoretical EVs are we talking about?
What’s the opposite of reductio ad absurdum? Whatever it is, that’s what we’re looking at, as Bailout Nation (hat tip to Daniel Howes) continues to expand. The Wall Street Journal reports that the rental car giants are putting in their bid to dine at the multi-billion dollar bailout buffet. “Avis Budget Group Inc., Hertz Global Holdings Inc. and other rental-car companies are lobbying Congress to allow them to use Troubled Asset Relief Program funds to finance new auto purchases. The House of Representatives included a clause in a TARP reform bill that it passed last week to give the government authority to back loans to rental-car companies and other fleet purchasers. The bill has now moved on to the Senate.” So rental car companies AND fleet purchasers get low-interest federal loans (a.k.a. free money)? Hey, I own two cars! Is that a fleet? Trust me: they’re deeply troubled assets. Where’s my bailout? I know! Let’s ask Barney Frank!
For this section of the trip to make any sense, I must tell you a story, an important story allowing you a view into one of the Air Force’s most hallowed legends. The story of a bourbon whiskey called Jeremiah Weed, a fighter pilot, a young lieutenant, and how it all involves a Porsche Cayenne and a pursuit for hypermileage….
Once we learn the identity of the investors behind Cerberus’ Chrysler FIATsco, the “debate” will move on as if nothing happened. Even if Osama Bin Laden steps forward as the automaker’s real owner, the furore will only last long enough to confiscate his shares while the Congress restocks the multi-billion dollar bailout buffet. Remember: back when the bailout bridge to nowhere loans were going down, Senator Corker pronounced ChryCo DOA. History. Toast. Unsustainable. A blot on the landscape. A zombie. Nobody even blinked. Here’s your $3b. See you in a month. OK, ar the precise moment of Corker’s Chrysler Crucifixion, CEO Bob Nardelli’s eyelids went into Morse Code mode (translation: I paid for this abuse?). And then everyone pretended that no one had farted. Hang on; that’s not the most self-flattering of metaphors. OK, let me put it this way: the day that we learn the real story behind Cerberus’ investment is the not the day the company will face the music. Meanwhile, someone should tell the American public that Chyrsler’s CEO owns one of these.
This one is driving me nuts. I’ve heard this from three sources now. Good sources. Independent sources. Sources that will never talk to me again if I name them. Even discounting their tips, the story makes perfect sense. It’s common knowledge that ex-Home Depot Chairman Bob Nardelli actively campaigned for Chrysler’s top job. Up until the weekend of August 2, 2007, there wasn’t a single journalist who didn’t think Wolfgang Bernhard was going to get the job, with Chrysler veteran (and author of the Daimler-commissioned turnaround plan) Tom LaSorda as his underling. And then… Bob Nardelli. Who? Nardelli was a complete industry outsider (he owned a Plymouth Prowler for God’s sake). Why the sudden change of plan? Could it be that Nardelli put his own money on the line? Motive: resurrection of his tarnished rep. Means: the exec drifted out of Home Depot on a $210m golden parachute. Opportunity: Cerberus considered industry players inherently suspicious. And what do we make of Nardelli’s testimony to Congress that he doesn’t draw a penny in salary? OK, so I called Chrysler for confirmation. Within ten minutes Nardelli’s personal PR person returned my ping and categorically denied this report. So are you saying that Mr. Nardelli didn’t put ANY money into Chrysler when Cerberus bought it from Daimler? Correct. So now you know. Or don’t.
• We expect the annualized light vehicle selling rate (SAAR) to run in a range of 10.0 – 10.3 million units in January, the midpoint of which would be about 34% below the year-ago pace of 15.4 million, and a little softer than last month’s pace of 10.3 million.
• Unit volume (selling day adjusted) should be down in a range of 35% – 37% versus January 2008, compared to a decline of about 35% in 4Q08. The seasonal factors are favorable this month, which explains how unit volume could be down more than the annualized selling rate.
• The industry faces significant sequential and year-over-year sales headwinds from lower daily rental deliveries in January. Demand from rental car companies is weak; but the decline in deliveries will be exacerbated by severe production declines in January as daily rent vehicles typically turn quickly from production to delivery.
• By maker, we see GM sales down in a range of 40% – 42% year-to-year, with market share dipping to around 22% or less, compared to share of 24.4% in December, and versus 23.9% in the year-ago month. We see the sequential decline in share as partly driven by fewer daily rent deliveries.
I got an email yesterday from a mob called LandLine TV. They sent me a link to the above video asking if I wanted to post it for your amusement. Of course I said no. It’s so not funny. OK, the pitchmen have natural comedic talent, in that gormless, Pineapple Express kinda way. But the ad itself could’ve been made by a 12-year-old with his mom’s video camera. I suppose that’s the point, but, again, it’s just not funny. So I wrote back explaining why the faux ad didn’t work and offered my services as a script writer. That fish is wiggling on the hook. They sent me back an email saying that they were open to suggestion (the seminal work on hypnosis by the way). They’re thinking about spoofing this Caddy ad. Not only is the Caddy slingshot ad older than John McCain (in Internet time), but who cares? Why not spoof the Caddy Escalade Hybrid ad. Or the Dodge Boys’ “man step” dissing ad? Or… well, there are lots of possibilities. And so I throw it open to you, our Best and Brightest, to share some ideas for spoof car ads. And remember: these guys are hiring.
When Daniel Howes was a European correspondent, I had nothing but respect for his work. Since relocating to Detroit, my former main man has lost the fearless objectivity he displayed in his e-missive from across the pond. Lately, Howes’ column has blended piercing glimpses into the obvious, recaps of well-known events and a newfound ability to not say anything much. Today, like yesterday’s AutoExtremism, Danny finds his inner TTAC. Only one problem: “Jobs bank end won’t halt D.C. bias” channels Howes’ anger at Washington’s hypocritical bailout minders. Sigh. Moral relativism—those evil bankers got their money without a public humiliation and strings made of piano wire—may give hope to the hometown crowd, but it’s an old, moldy, shoddy shibboleth. Danny should know better. How many times does one have to say that two wrongs don’t make a right? I mean, he’s WAY off target. Again.
Peter M. De Lorenzo, the self-styled AutoExtremist, seems to have calmed down a notch or two in recent weeks. Sweet Pete is back to taking well-aimed rifle shots at the industry’s soft spots. This week, he takes on J.D. Power and Associates. As SP points out, few consumers realize that J.D. Power is a for-profit marketing/research/data mill firm dedicated to raking in the bucks by any means possible. “Their latest money-making brainstorm? Something called the ‘Vehicle Launch Index.'” Using a bunch of pseudo-scientific statistical mumbo-jumbo, J.D. Power says they will be able to measure the effectiveness of new model launch campaigns AND tell the auto makers how to do it better. Peter doesn’t miss a step when he says: “J.D. Power has honed its brazen formula of Unmitigated Gall + Unmitigated Bullshit = Huge Wads of Cash exceedingly well over the years, and too often the auto industry blindly catered to Power with little rhyme or reason other than the fact that they were afraid what would happen if theydidn’t bow down to them.
Tick tick tick. “Ford finished the year with cash reserves of $13.4 billion as it tries to avoid borrowing money from the U.S. government,” Automotive News [sub] reports. So, if the cash burn continues at the pace of the last three quarters—and why wouldn’t it?—Ford has fewer than six months (June ’09) before it’s running on fumes. Fewer, if you consider that the ailing American automaker needs a $10b pad to keep the lights on. More, after they tap their remaining credit reserve. Which they’re doing as I type. OK, let’s drill down.
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