Want to see something else than always the same tired parking lot at Long Beach? Go to Russia, tovaritch! There, car haulers are lining up for miles and miles and miles at the border. As reported yesterday, the Russians raised their car import duty to a prohibitive 30 percent, and whoever wanted to ship a car to Russia did it, before the new rate went into effect. Some at the end of the line didn’t quite make it.
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Meanwhile in China, cars are waiting to be loaded at the port of Guangzhou. The LA Times had sent a photographer to China, hoping to find something worse than Long Beach. He aimed carefully, narrowed the field of view, and still came up with empty lots. The Chinese car trade isn’t hit hard by the export slump, because it’s so small, that it’s hard to hit. Other exports are way down, the LA Times reports while they are there. China’s exports to the U.S. dropped 6.1 percent in November as Americans avoided even Wal-Mart.
A short 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.
Volvo soap opera update: Indian farm tractor builder Mahindra & Mahindra denied media reports that they are considering to go for Volvo. Earlier, the Hindustan Times reported that the company was in discussions with private-equity players including Cerberus Capital and Texas Pacific Group to place a joint bid. TTAC didn’t believe the story. According to AFP, Mahindra & Mahindra said they “have to assess how to finance our mergers and acquisitions in times like these.” So the ball is back in China. Or outfield.
Changan expands Volvo range. Unfazed by the discussion about a possible sale of the Volvo mark, China’s Changan announced they want to widen their range of Volvo cars. They refused to comment on a newspaper report that Changan might acquire the Swedish brand. They want to build higher end cars, without naming specific cars, Gasgoo reports.
Automotive News [AN} reports that the U.S. House of Representatives has passed H.R. 7321 by a margin of 237-170. Thirty-two Republicans and 205 Democrats approved the measure. The bailout bill authorizes the Department of Energy to loan General Motors and Chrysler $14b (in total) at a rate of five percent for the first five years and nine percent thereafter (until?). The car czar is a go! Under the terms of the legislation, the de facto bankruptcy judge can “compel automakers, their creditors, workers, suppliers and dealers to agree on restructuring for long-term viability– or emergency loans would have to be returned.” Collateral? An equity stake for taxpayers and “go to the head of the line” debtor repayment positioning. Prohibition against payment of stock dividends, no corporate jets, limits on executive compensation, yada yada yada. If they are to return to the Hill to say the magic words (please sir, can I have some more?), General Motors and ChryCo must bend to the will of the car czar by March 31. Or April 30, depending on… the car czar. So where does this leave the bailout bill?
In the cosmology of the ancient Greeks, the universe would not tolerate a gross breach of justice. When a hero was killed with dishonor or without completing his destiny, supernatural forces would emerge from the cthonic realm to haunt the guilty party. These karmic enforcers were called the Erinyes, or Furies, and they are coming for Chrysler. The Detroit News has gone past mere Cassandra status, no longer satisfied with merely prophesying doom for the Pentastar brand. No, since its DCX gutting, private ownership, pathetic products and tiny scale reflect poorly on the other Detroit automakers and their bailout beggary, the DetN is actively calling the wrath of the Furies upon the house of Mopar. Interestingly, the Furies appear to have changed their name to CSM global forecasting. “It would be best for everyone involved if Chrysler were allowed to gracefully wind down and go away in a controlled, staged process, leaving a Detroit Two,” intones Michael Robinet, CSM vice president of global vehicle forecasts. There’s “not a whole lot of vehicle development going on at Chrysler,” Robinet said. “It has slowed down substantially and (is) just focused on core vehicles,” he said. “How long can it continue as a caretaker company?” asks Robinet, calling for the just vengance of the gorgon-headed Furies. CSM CEO Craig Cather argues that much of Chrysler’s weakness can be blamed on Daimler, which he says “handicapped Chrysler and its ability to expand internationally.” Whatever the sin against the natural order, when the Detroit News begins listing the crimes of a hometown automaker, you know their fate is nearing its end.
I’m not a constitutional law expert. But I’m a fan (of the document, not the lawyers). And I’m extremely uneasy at the prospect of the United States government assuming control of Chrysler, GM and (maybe) Ford ahead of the company’s legal owners AND its creditors. Of course, I’m not the only one. And, once again, we turn to the just plain folks at The Heritage Foundation for a heads-up on a bailout-related issue. “A key provision of proposed legislation to bailout the General Motors and Chrysler, which say they are on the brink of insolvency, may be an unconstitutional taking of private property… General Motors and Chrysler already carry significant loads of ‘senior’ debt with priority over other claims, and it is a standard feature of such debt agreements that borrows cannot subordinate this senior debt—that is, as a condition of the loan, the borrower agrees not take on additional debt that has a higher priority and would therefore imperil the senior debt. But that’s precisely what the bailout bill purports to do.” In other words, “Without providing any compensation to senior creditors, the bailout legislation would convert their loans to junior debt, increasing the likelihood that they will not be paid, which amounts to a partial or total taking. There is also a real question as to whether this taking would be for a ‘public use,’ as also required by the Constitution.”
I’m a fan of Saturn. The dealers, not the products (or the planet). Oh, the product are OK, I guess. But the dealers rock. I mean, despite the fact that the “different kind of car company” was assimilated by the GM Borg years ago, as a group, Saturn dealers are friendly, informed and straight-shooting. Yes, the word “relatively” probably belongs in there somewhere. In fact, considering the justifiably low esteem with which the average car dealer is held, praising Saturn dealers for their business ethics is a bit like saying the average ten-year-old lemonade stand proprietor is a financial genius compared to GM CEO Rick Wagoner. But you have to remember that, in terms of respectful and courteous customer care, Saturn was Lexus for working folks. Cook-outs and all. And as with Lexus, the quality of the cars really isn’t important. You know important, but not that important. Is that worth “saving?” Sure. But GM ain’t savin’ nothin’. That ship has sailed. Still, you can’t blame the Saturnalians at saturnfans.com for wanting to keep the brand alive. And an online petition makes perfect sense. But where’s the justification? And why connect that defense with support for the D2.8 bailout when the feeling is a long, long, long, long way from mutual? Love truly is blind.
Marketwatch reports that the federal appointment of a “Car Czar” could trigger a “credit event” for Ford and GM’s credit-default swaps, according to Bank of America Securities analyst Glen Taksler. Taksler points out that the International Swaps and Derivatives Association, the trade association that acts as a standard-setter for credit derivatives trading, says one trigger for a bankruptcy credit event is the appointment of an administrator, trustee or similar official to oversee all or most of an entity’s assets. But it’s unclear whether the potential car czar’s powers would correspond with the ISDA definition. The authority to review and prohibit certain transactions, or what’s been discussed in one piece of draft legislation, is different from having control over assets, Taksler noted. “The result may depend on the exact wording of a potential bailout package,” he wrote in a report made public late Tuesday. “We find arguments both for and against an autos czar triggering CDS,” he said, adding: “The actual process is likely to be determined through ISDA.” MW concludes that if the auto maker bailout does amount to a credit event, it would create another shock in the $50 trillion market for credit default swaps. Talk about unintended consequences! Stay tuned…
…and Honda tops the list for the first time. Nearly 65 percent of new Honda purchases replace an older Honda, edging Toyota’s retention rate by 1.5 percent. Lexus comes in third with 60.4 percent retention, followed by Mercedes and BMW. Ford scored the highest of all domestic brands, capturing 6th place with 52.5 percent retention and barely edging Chevrolet which boasts an even 52 percent retention. Cadillac was the only other domestic brand coming in above the industry average of 48 percent. Jaguar scored the lowest in the survey, with only 26.2 percent retention. Pontiac was second to last with 27.2 percent, with only Mitsubishi and MINI joining it under 30 percent. Check out the full results in PDF form at JD Power’s site.
Jalopnik has the latest in the ongoing “Ford sues everybody over use of its logo” story. Having already sued the Black Mustang Club (in a move that PR Squared called a reminder that “customers are in control of the brand”) and the Calgary Stampeders (whose stampeding horse was trademarked twenty years before the Mustang) Ford’s lawyer are continuing their reign of pathos. Therangerstation.com and nearly every website with “mustang” in the url have been targeted by Ford’s lawyers, demanding “the relinquishment of all Ford trademarks including domain names, banners, signs and merchandise as well as a restitution payment of $5000 by December 19th, 2008.” The huge irony in this is, of course, that Ford doesn’t really even own its logo, having mortgaged the blue oval during its $23b borrowing spree. Meanwhile, Mustang Evolution appears to have contacted Ford’s Scott Monty who reveals that some sites may have been selling “unauthorized Ford decals.” Still no word on whether or not it’s illegal to have a ford product name in your domain name.
From Politico, we have a counter-proposal on auto industry assistance by House Republicans, led by Rep John Boehner. In essence, it advocates for a pre-packaged bankruptcy with major concessions from all sides. More importantly, it suggests that instead of $15b in interim financing and a Czar to keep things in line, the government should “provide insurance, funded by the participants with a modest FDIC-like fee, which would cover up to 50% of the losses of new investment in the case of default, helping to unlock immediate private investment (not unlike debtor in possession financing). Such insurance would expire on March 31, 2009.” Hit the jump for a complete statement from Boehner and more details.
The quest for more oil and natural gas is turning the oceans into a cacophony, from the perspective of whales and dolphins. These are among the smartest creatures on the planet; a dolphin can recognize itself in the mirror, a hallmark of intelligence. (There are certain difficulties performing the experiment with whales.) Airguns used in seismic surveys for oil and gas, peak at up to 259 decibels and can be repeated every 10 seconds for months. The noise interferes with the animals’ feeding, communication, mating, and navigation, and may be involved in beachings. Furthermore, these sounds travel more than 2,000 miles from the source, according to an alliance of wildlife groups attending the United Nations Environment Programme’s Convention on Migratory Species conference in Rome. There are 90 seismic survey ships in the world, and one quarter are in use in any one day, according to a report released at the conference, “Ocean Noise: Turn it Down.”
Toyota spokesman responds in the Detroit News, asking “How do you tell a worker in Kentucky who’s producing a Toyota that his job is worth less than another American autoworker’s?” How indeed. And we thought the bailout was about fighting racism.
End of Days’ Sale, I guess. Seriously, there is some strange shit going down in the autoblogosphere today. Automotive News [sub] pegs my WTF meter with “Midwest credit unions pledge $10 billion in auto loans to help GM.” According to AN, here’s the deal. “A group of credit unions from Michigan, Ohio, Indiana and Illinois is pledging $10 billion in low-cost auto financing to its more than 12 million members for the purchase of General Motors vehicles.” Hmm. Low cost? Like HOW low-cost? Zero percent? Once again, AN fails to provide the money shot (so to speak). So I click onto the relevant website: ilovemycreditunion.org. Rates? Nada. But there is a GM discount, revealed in the article as… wait for it… $250. OK, click on the credit union discount button. Whoa! $250 bucks PLUS “supplier pricing.” Click on Contact Us, call the toll free number and voila! I’m through to GM. The rep wants to give me an authorization number. Yes, but what about the finance rates? Hang on, I’ll transfer you to GMAC. So, it’s like that is it? Yes, it is. Oh and the two-mode Saturn Vue hybrid is excluded. Go figure.
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