You didn’t hear it here first. Autoblog reports that the 2010 Ford Mustang will start as low as $21,845 for a V6, with GT V8 power starting at $27,995. As AB points out, that makes the forthcoming Mustang less expensive than Chevy’s Camaro ($22,995 for the V6, $30,995 for the V8) and Dodge’s Challenger( $22,545, $30,545). If you put much stock in the whole MSRP thing that is. Besides, who doesn’t think these pony revivalists won’t have tons of cash on the hood within months of showing up on lots? Then again, these have been trying times for the folks who’s interest in cars begins and ends with styling and horsepower ratings. Long days of photoshopping album covers are clearly taking their toll, and nothing cleanses the Autoblog palate like a good Mustang post. In fact, a quick Google search shows that AB posted 1,480 articles with “mustang” in the title in the last year, and 35 in the last month. For comparison, TTAC logged 31 in the last year. Moral of the story? If you’re curious about whether Ford will survive long enough to offer the inevitable incentives on the 2010 ‘stang of your dreams, you’ve come to the right place.
Category: News Blog
• GM’s liquidity situation is dire. According to the company’s restructuring plan that was submitted to Congress on Tuesday, it looks like GM burned another $7 billion in October and November, and should be about cash flow neutral in December; making Q4 another $7b burn quarter.
• As such, GM requires $4 billion of government loans immediately, with another $4 billion in January and an additional $2 billion by the end of 1Q09.
• At the end of 1Q09, GM will have drawn $10 billion under its base case assumption, and possibly as much as $15 billion under its downside demand assumption.
• The $18b in requested funding ($12b in loans and a $6b credit line) is in addition to the estimated $8.3 billion that GM is anticipating in Government loans under the ($25b) DOE program for fuel efficient powertrain technology investments.
• One of our primary concerns here is that the downside scenario is not much worse than the current run rate of sales (about 10 million units) and would still leave GM in the liquidity danger zone (with about $13 billion at the end of March) despite having drawn $15 billion in Federal funds.
• And what happens after that? If US sales remain in the 10-12m range and GM burns another $7 billion in 2Q09 it could see its liquidity drop to only $9 billion, even after drawing the final $3 billion in Government money (maxing out at the requested $18 billion). In this case, the Government may have to write another check before the end of 2Q09.
“There is very little in the way of new initiatives/efforts/changes to improve the cost structure or profitability of the company, in our view. Most of the document submitted to the Congress is an outline of the company’s existing ‘Plan’ and actions that either have already been taken or are slated to play out over the next couple of years (especially as it relates to new product development). Ford is now calling for its existing plan to deliver profitability of at or above breakeven by 2011 at both the corporate level and in North America. On a cash flow basis, the plan is to be breakeven or above on a Corporate basis by 2011 (no mention of North American cash flow). Ford’s base case US sales assumption for 2011 is 15.5 million total vehicle sales. Following are some things that we think are lacking in the plan:
Over in what we affectionately call the “Old World,” C-segment hatchbacks like the Golf, Focus, Megane, Civic, and Corolla/Auris also come in higher roofed variations affectionately called MPVs (multi purpose vehicles). One of VW’s entries into the market is the Golf Plus; and since the Golf was just redesigned somewhat, the Golf Plus has been updated accordingly. Except for VW’s little trick – the Golf Plus is still riding on the outgoing Golf platform, and has only gotten cosmetic updates to match the new one. It still shares the Golf’s mix of turbocharged and common-rail diesel engines and available DSG transmissions. And you might recognize the interior from the Tiguan – many components are shared.
The lead outside director at GM, George M.C. Fisher, informs the NYTimes that “Rick is the right guy to lead this management team through this crisis.” Acting on the assumption that GM has any reputation left to lose, all thirteen outside directors are in agreement with the Master Accountant that “bankruptcy would ruin the company’s reputation.” Fisher and his co-directors are “pretty convinced as to the serious damage to the brand from bankruptcy.” He’s right on that score, but doesn’t touch upon whether the fact that GM has been insolvent for close to a decade has given him any pause during that period. Fisher blames the company’s troubles on the dire financial conditions that have blindsided this fine collection of managers extraordinaire – noting that the sales rate in November was the lowest since 1982.
This is the first official shot of Honda’s upcoming Prius-fighter. And if anyone can take on the Prius (which despite being down 50% in November compared to November 2007, still sold 8600 units), it’s Honda with this car. I say that because (1) Honda has genuine hybrid building experience with the Insight, and (2) unlike previous hybrid efforts from many manufacturers, it’s not merely a hybridized version of an existing car. It looks unique, and that carries the image that’s so critical in the hybrid market. Previously, we reported that the Insight was targeted to go on sale this Spring for less than $20,000. With continuing reports that Toyota may be taking a loss on every Prius, I’m not sure how Honda plans to pull this off. Still, if you’er into this sort of car (and I’m really not at all), you probably won’t care what Honda’s bottom line is.
Facing a budget deficit that could reach $800m, Tennessee Governor Phil Bredesen (D) is looking at all options to bring the books back into balance. Bredesen’s former legal counsel, Robert E. Cooper, Jr. was appointed state attorney general two years ago. Last week, Cooper did his part by issuing a ruling designed to promote the use of photo ticketing by taking on constitutional arguments commonly leveled against such programs. “It is an accepted principle that enactments of the General Assembly are presumed constitutional,” Cooper wrote. “Whenever the constitutionality of a statute is attacked, courts are required to indulge every presumption in favor of its validity and resolve any doubt in favor of, rather than against, the constitutionality of the act.”
United Auto Workers Boss Ron Gettelfinger held an emergency meeting with union local officials in Detroit today to discuss possible concessions aimed at bolstering the case for an automaker bailout. The result of that meeting was an agreement to suspend the union’s controversial Job Bank program, and to allow the D3 to delay making payments to the VEBA retiree health care trust in 2010. The VEBA fund has long been posited as a potential solution to Detroit’s liquidity issues. Reuters reports that the UAW would consider other changes to the 2007 labor contract with the American automakers, but that all changes must still be approved by union members. Gettelfinger called the decision “the responsible thing to do,” noting that discussions with the automakers are ongoing.
In all this talk about GM’s financial health, the most important element of any potential turnaround has been woefully neglected: the company’s corporate culture. GM’s is so utterly dysfunctional that it makes John Wayne Gacey’s home life seem like Peter Brady’s. There is no way– no way whatsoever— that GM can recover with its current management. Be that as it is, I’ve been contacting recently “liberated” GM employees to get a glimpse of life inside the belly of the beast. And pretty it’s not. “I remember walking my dogs and literally dropping to my knees and praying to God I would get out of GM,” one ex-exec told me. “I’ve seen people throwing-up in the bathrooms because of the overwhelming atmosphere of fear, terror and panic… It’s the most warped and bizarre thing I’ve ever seen in my life.” This from an employee with over 20-years of industry experience in several large companies.
As the battle over bailout bucks rages, it’s easy to get the impression that Fortress Detroit is unanimous in its support for the home team. As usual though, there’s more to the story than just the loudest voices. The New York Times conducted interviews across the state over the last two weeks, and found that opposition to the bailout, if only in private. “There are plenty of people who are rolling their eyes,” said Bill Ballenger, editor of Inside Michigan Politics newsletter. “You keep your head down if you’re one of them, but they’re out there.” And much of the opposition seems to come from Michigan residents who lost their jobs before the automakers even came begging for a bailout. “How many other, small companies would like a bailout?” asks Heather Davison, an unemployed graphic designer who lost her job at a real estate publication a year ago. “It seems to me that the car companies saw the banks getting a bailout and said, ‘Oh, let’s go!’”
When TTAC’s Bertel Schmitt first blogged the story that China had designs on Chrysler and GM, the resulting traffic melted our server. So we added another one. That one melted too. Our stalwart TTAC technical team tells me they’re now load balancing– and doing something about handling our traffic spikes. The view counter’s disappearance serves as a stark non-reminder of that terrible, wonderful day. And, of course, Bertel wasn’t just whistling Dixie (or whatever Germans living in China whistle). Bertel’s given us more inside dope today, as Bloomberg breaks the story into America’s MSM: “Dongfeng Motor Group Co., China’s third-largest automaker, said it had received proposals from investment banks to buy assets from General Motors Corp. as the U.S. carmaker tries to avoid running out of cash,” Bloomies reports with a hint, hint, nudge, nudge, knowwhatImean? “’We’ve gotten e-mails and investment materials asking us whether we would be interested in buying some of GM’s assets,’ Hu Xindong, head of investor relations, said by phone today. ‘So far, our management has not yet reviewed the issues and we have not yet responded.'” GM says it isn’t in talks with Dongfeng, but that’s not what the story says, is it?
Audi has released photos and details of the convertible versions of its A5 and S5 coupes, and they’re classy little ragtops in the proud Audi tradition. North American pricing and availability are not yet available, but with Euro-only 1.8 TFSI versions starting at $47,300, they won’t be cheap. The S5 version will rock Audi’s new supercharged TFSI 3.0 V6, good for 333hp, 324 lb/ft of torque and a 5.6 second hustle to 60 mph.
One of our Best and Brightest forwarded this letter from GM North American Vice President Vehicle Sales, Service and Marketing to the company’s 124,756 dealers. Mark’s missive attached GM’s increasingly discredited rescue plan and exhorted store owners to keep the faith. More interestingly, the third ‘graph reveals LaNeve as a knee jerk (get well soon Mark) apologist, as he once again trots-out the 6W (woo-woo-woo-woo-woo-woo or Curley) defense. “As you read through these plans, please keep in mind we are in unprecedented times and the economic downturn has impacted industries and people across the nation, causing a devastating rippling affect. GM and other domestic and foreign automakers have been hit hard as consumers are unable to get credit for the purchase of new cars as well as other goods and services. This has resulted in a severe drop in auto sales and potential for revenue generation, which has made it necessary for GM to formulate even deeper cuts than originally anticipated prior to the credit crisis.” Of course, there’s more. Or less. More or less.
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