We thought things were bad when General Motors announced it was delaying incentive payments to dealers by two weeks (ten more days, hang tight guys). As usual, it gets worse. We now hear from Automotive News [sub] that GM is using its November Re-Consensus Dealer Cash Program to dump more inventory on its hapless dealers. An undisclosed formula determines eligibility for GM’s dealer incentive program, the gist of which is the less inventory you have, the more you have to order to receive incentive cash. Seems fair, right? Don’t worry, it’s not. Forbes reports that Detroit dealers are actually carrying historically low inventories, but that “days on hand” is what’s killing them. And now those (relatively) low inventory numbers are what GM is using to foist their cars on the dealers. A Montana dealer with a 365-day supply was asked to take only one Malibu sedan and one Silverado to get $3,000 dealer cash on his 2008 and 2009 models of the Traverse crossover, Tahoe and Suburban SUVs, and Impala sedan and $2,000 on Cobalt compact cars. But if you have less than 365 days worth of inventory (and in this market, who knows how long it will take to actually work through that much) you are going to be ordering more cars to get the cash… or watch your sales go to another dealer who does.
Category: News Blog
In the run-up to this weeks bridging tournament, GM and Ford are indicating their [belated] willingness to axe ailing brands. Now you could look at their most recent sales stats and argue that this description applies to all 11 U.S. car brands under The Big Two’s umbrella, but we speak here of the Swedish contingent: Volvo and Saab. The former lost $458m in the last quarter alone. The latter, well, who knows? GM doesn’t break-out Saab’s red ink. (The brand hasn’t made a profit since The General bought it in 1989.) Anway, The Financial Times reports “Ford and GM will both tell the US Congress they have long-term plans to dispose of the brands this week when they present detailed business and financial plans to support their request for $25bn of emergency funding.” “Long-term” being the operative word; the automakers can no more cut the Swedish brands loose without C11 than you can eliminate credit card debt by scissoring your plastic. But don’t worry, the suits have a way to avoid the thorny issue of using U.S. bailout bucks to protect Swedish (German?) jobs: they’ll ask Sweden for money.
Tesla’s hubris knows no bounds. Not only has the Silicon Valley manufacturer of $109k lithium-ion-powered carbon fiber sports cars applied for a $400m federal grant to sustain its oft-delayed and hugely unprofitable quest to “reinvent the automobile,” but they’ve also publicly declared that Detroit’s bailout-seeking beancounters should keep their NSFWing hands off Uncle Sam’s $25b retooling loans. (I’d cut and paste the exact quote from their website, but ten seconds of their white-on-black text is enough to short-circuit my optic nerves). The New York Times fired back, pointing out that taxpayer funds should not subsidize expensive toys. Tesla owner Jason Calacanis retaliated in a fit of “just you wait” pique. “The fact is that Tesla could–right now–produce a car that is 1/3rd to half the price if they set it to go only 100 miles. In nine years, they will easily be able to produce a $40k car that does this. Is nine years too long to wait for this technology to reach the price point that 80% of the new-car-buying country could afford? I don’t think so.” Meanwhile, Toyota has seen the EV’s Li-ion Promised Land, and declared “I may not get there with you.”
This is the week that the CEOs of Chrysler, Ford and GM make their second attempt at securing enough bailout bucks to stave-off bankruptcy (Ford not-so-much, but since you’re offering…). As is the way of such things, the serious “negotiations” is already going down, as politicians and supplicants prepare to posture for public presentation. Automotive News [sub] reports that Republicans have decided to focus their hypocritical ire (imagine a politician chastising an automaker for not balancing their budget) on the United Auto Workers’ (UAW) Jobs Bank. “The Jobs Bank requires the Detroit 3 to pay nearly full wages to hourly workers who have been laid off. Although the number of workers in the Jobs Bank has dwindled, the concept has become a powerful symbol of auto industry excess. General Motors is likely to propose its elimination, says a source familiar with the company’s thinking. Last week Bond did not spell out precisely which concessions he expects from the UAW. But during the congressional debates, many GOP lawmakers singled out the Jobs Bank as a wasteful Detroit 3 practice.”
Ok, girls and boys, we are entering the last lap of the year. Prepare for one more month of bad news – then it will be over. The year. A lot of bad news already happened before you had your wheaties: While America Slept is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. Buckle up and be safe. (If you don’t like WAS, read the last entry. You’ll find yourself delighted!)
It’s official: Nipponese share US distaste of new cars: Japan Automobile Dealers’ Association published their November domestic sales of new cars, trucks and buses. They (the sales) are ugly: Down 27.3 percent on the year, down for the fourth straight month, and nearly twice as down as in October (-13.1 percent.) According to Nikkei (sub) “auto sales will likely fall this year to the lowest volume in decades on the economic slump that has seen Japan enter a recession.” Expect more bad news “from those wonderful folks who brought you Pearl Harbor.” (Not my bad taste, Della Femina did it!) For instance: The closely watched Japanese golf club index just sunk to 1.77 million yen, down 33 percent from its 2.64 million yen peak in May 2007.
Nissan ready, set, fire! Maybe: In the flak trade, it’s called “softening the blow.” Nissan’s COO Toshiyuki Shiga said today to the Nikkei (sub) “that future sales will determine whether Nissan will need to cut more jobs.” Although Shiga-Sama said it’s too early to predict the company’s personnel strategy, we all know the likely outcome. See above. And there is more …
The Texas Department of Transportation (TxDOT) spends more than $10m a year on public affairs. Using documents obtained under the Freedom of Information Act, the San Antonio Express News found TxDOT assigned 63 employees to the Government and Public Affairs division, at an annual cost of $6.5m. Another 67 employees perform “media relations” duties, at a cost of $4m per year. The employee count does not include private contractors hired as lobbyists paid to wine and dine lawmakers in the hopes of landing earmarks, a controversial tactic that spawned at least one lawsuit. These efforts– indeed, the majority of TxDOT’s PR activities– have been primarily aimed at promoting toll roads. Last year, the agency delivered a report to the Texas legislature entitled “Forward Momentum,” designed to convince federal officials to give TxDOT the authority to toll existing freeways. Massive public protests, most prominently against the Trans-Texas Corridor, forced TxDOT to change tactics. Since May, they’ve backed off from promoting tolling as the solution to Texas’ transportation problems.
GM’s Board of Bystanders spent a good part of their Sunday reviewing their Chairman (and CEO’s) DC-bound turnaround plan. According to Bloomberg, Rick Wagoner’s new new new new new new new turnaround plan takes two forms: a 10- to 12-page public document and a “private, more detailed plan of about 80 pages with background material.” If the existence of a “private plan” to spend an estimated $12b of your tax money isn’t enough of an outrage– and I’m thinking it is– then ask yourself this: why is this plan different from all other plans? “The largest U.S. automaker also may ask to delay a $7 billion payment to a union retiree health fund, drop more brands and rework an accord with GMAC LLC to prove it can survive and repay the government, said the people, who asked not to be named because details haven’t been presented to Congress.” Don’t you just love fictional anonymous sources who always seem to state what common sense and pundits have already proclaimed? Neither do we. Anyway, as we’ve discussed umpteen times, the UAW’s Mother of All Health Care Plans was a non-starter before it started. GM can’t close brands willy-nilly; the lawsuits would make Oldsmobile’s termination look like a bris. And reworking an Accord is something GM should have done in 1976, not an escape clause fashioned by a terminally ill GMAC. Other than that, they’re good to go. C11. But shhh. Don’t tell that to GM’s Board. They’re thinking they’d better think it out again tomorrow.
There is a whole lotta bailout going on. More and more people are bailing on lending the Detroit dunces a helping hand. Last to bail: CNN founder Ted Turner. He went on NBC’s Meet The Press and said to Brokaw: “I saw it coming years ago that Detroit was headed for a crash, and it’s amazing to me that they didn’t see it either.” Ted’s recommendation: “Let them go bankrupt and get Toyota to buy them out.” As if they would. The one who stands firm by the side of the bail bondsmen is United Auto Workers (UAW) boss Ron Gettelfinger. The AP (via MSNBC) reports that Big Ron says the UAW would be “willing to consider more concessions on wages and benefits” to secure a federal bailout. But then again, not so much. “Based on the changes we’ve made to our contracts, we are competitive already.” By the same token (or a different one, I’m not exactly sure), Gettelfinger told CNN that $70-an-hour UAW wages were a “myth.” And Chrysler, Ford and GM should tell Congress they’ll limit corporate pay, bonuses and severance packages in return for bailout bucks. In other words, some pigs are more equal than others.
This is so, so 2007. Remember the bad old days when a real man wanted a Hummer? Definitely not correct anymore. But in the strictly scientific interest of preserving history – good or bad – here it is. Last year’s ode to the Hummer. A focus group, discussing the merits of the H1 and H2. Warning: Feelings may be offended by pressing PLAY. PG17. STW (Serious Time Waster.) NSFW. But hey, it’s Sunday. And who still has a job anyway?
Nissan has unleashed a promotional video of its all new Z car – via YouTube. To the soundtrack of Nipponese techno we see inside and outside shots of the 370Z. Exposed to it, the hearts of true Z car zealots may beat a bit faster. “The video itself appears to be for Japanese markets,” says Luxvelocity. Is this a praise, or a cut? We are not sure. But if this is viral marketing, then the spread will remain relatively contained.
Sunday. Even while God rests, the devils at TTAC perniciously prowl the news. While America Slept is a daily round-up of the news that happened in other continents and time-zones. TTAC provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off. Don’t let it ruin your well-deserved week-end.
Deutschland’s dealers found guilty of low car sales: J.D.Power, who’s fighting an uphill battle for the attention of Germany’s auto makers, may just have found the elusive key to their hearts and budgets: “Lack of attention from the salesperson is the most frequently cited non-price-related reason for customer rejection of European premium and volume automotive brands,” Power’s 2008 Germany Automotive Shopper Study says. We see all of Germany’s auto makers write the big checks for the study, and invite J.D.Power to conduct proprietary studies to further prove what auto makers deep in their dark hearts had suspected all along: The downturn is all the dealers’ fault. All dealers need to get fired.
Buick or bust: From the U.K., the Financial Times weighs in on the Detroit debate about D.C. dollar donations: “Congressmen mulling this request might want to visit their local Buick dealership. They should have no trouble finding one, with 2,751 nationwide the last time the National Automobile Dealers Association counted, more than double those selling Toyotas. As a result, only 88 Buicks a year are sold per dealer versus 1,821 for Toyota. Barring Chapter 11, multiple brands and excess dealerships can only be remedied with billions in dealer buy-outs due to state protection, as seen with Oldsmobile.”
Recession? Never heard of it: Honda announced that their production in Japan did set an all-time record for the month of October, The Autochannel reports. Even better, October worldwide production at Honda did set an all-time record for any month. What will they do with all those cars?
Last week, in south Essex, UK, speed camera protesters set a “scamera” alight with a gasoline-soaked tire. The fire destroyed the £40k ($60k) device on Long Road– despite the camera’s proximity to the Canvey Fire Station (whose inhabitants eventually managed to put out the blaze). According to the Echo newspaper, the incendiary incident follows a prior arson attack on a speed camera on the A127 in Southend. In the past year-and-a-half, eight south Essex speed cameras have been targeted by vandals. Meanwhile, in Queensland, Australia, on November 5, persons or persons unknown spray painted a new laser camera’s lense during testing on the Maroondah Highway in Croydon. Ten days later, three citizens tied a chain to the replacement camera and tore it from the ground.
Over at The Huffington Post, ad man Adam Hanft argues that “Lousy Marketing – Not Lousy Cars – Killed Detroit.” Like most experts (and Buickman), Hanft suffers from blaming the bit he knows best (if you’re a hammer…). But he makes some good points. If Wal-Mart catches flack for paying so little, then why didn’t Detroit seek positive PR for paying too much? More broadly, Detroit’s ads have long been forgettably mediocre (at best) thanks to a stifling creative process. Many ads have targeted an America that no longer exists, if it ever did. Ditto Detroit’s un-fun dealerships. Sure, those for imports have often been at least as bad, but this gave Detroit an opening. Which it failed to take advantage of. Add numerous PR blunders to the mix, along with improving reliability scores, and it’s easy to see why Hanft blames marketing. Except that there’s more to cars than not breaking, and the cars have also had shortcomings. The problem hasn’t been the cars or the marketing. It has been both.
When USA Today carmudgeon James R. Healey pours hate on a vehicle, you just know it sucks. Healey’s evisceration of the oil-burning Bubba Benz ML320 BlueTec begins with a slam at the powerplant’s herky jerky acceleration, then mentions Merc’s obfuscation: “M-B, in fact, disputes about every gripe. The gripes are serious, so it’s appropriate to give them a word.” And that word is? California compliant. OK, so it’s two words, but at least it wasn’t the two I was expecting (fans of German management culture will know what I mean). Anyway, Healey lets rip in his own not-so-special way, chastising the diesel ML for mediocre mileage (19mpg), terrible ride (“surmounting a branch felt like a major dynamic event”), lagging brakes (“Push, push, push the brake pedal and just when you think something’s amiss, the brakes start to haul it down”), hard seats (“Not firm. Not stiff. Not you’ll-get-used-to-it Teutonic. Hard. Like a board, or slab of concrete”) and sub-par details (“climate control was too hot at 70 degrees, too chilly at 68”). Healey being Healey, the litany is followed by amorous amelioration. But not much. And not for long. “Fifty thousand bucks for an uncomfortable, not-so-classy machine that’s unpleasant and unsatisfying to drive. Wonder who signed off on that business plan?” Jimmy, are you saying that diesel dog won’t hunt? Uh-huh. “Overall: Nope.”
In a report to appear Monday, the German magazine Der Spiegel will write that “several law firms are compiling material for lawsuits to hold Porsche liable. They are working for hedge funds which had lost billions of Euros.” That’s news to Porsche CFO Holger Härter. He says he hasn’t heard of anybody who wants revenge or restitution. “I don’t even know who might have been hurt.” On Sunday, FAZ will publish an interview with Härter. First question: “When will the hedge fund called Porsche close its sheet metal factory?” Härter’s answer: “Our core business is and remains the automobile.” Everybody knows: not true. Porsche made more profits than sales in the last fiscal year. Of €8.6b in profits, only €1b were generated in that sheet metal factory. €7.6b were generated with derivatives. That was in the last fiscal year, which ended July 31. God, Härter and Wiedeking only know how much the Porsche hedge fund generated in the months thereafter, when the VW stock went wilder than girls at Mardi Gras. Härter now says they didn’t really mean it. Here is Härter’s version:
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