That was quick. GM is saying nein, danke to SolarWorld’s offer to buy elements of its Opel subsidiary for one billion Euros. “This is pure speculation. Opel is not for sale,” GM Europe spokesman Nelson Silveira tells Automotive News [sub]. Meanwhile Opel is slashing production, and angling for its own federal bailout, courtesy of Berlin. Of course a German bailout of Opel will only happen if GM files for bankruptcy, but then, the same could be said for SolarWorld’s offer. AN notes that SolarWorld “benefited enormously from new energy laws set up by the Social Democrat-Greens government after it took power in 1998,” and it’s clearly aiming to not only acquire Opel up for a song, but to turn around and snag the government money as well. This is what the new economy calls “timing the market and the government,” a technique the firm is clearly riding to success with solar panels. Anyway, auto industry boffins say the offer is a joke, a charge SolarWorld founder and CEO Frank Asbeck firmly denies. Meanwhile, GM is clearly less adept at “timing the government,” or at the very least “charming the government.” With a US bailout looking increasingly less likely, GM may soon lose the luxury of saying no to offers like this one.
Category: News Blog
Mitt Romney reckons Detroit’s bailout brigade should get bupkis from Uncle Sam. Squat. Zero. Zilch. The big goose egg. Writing in The New York Times, the failed Republican presidential candidate and former Bay State gov leave no word unminced, claiming “Detroit needs a turnaround, not a check.” Quick digression. If that’s the quality of Mitt’s sound bites, it’s no wonder he got gunned down by Maverick. How about “Detroit needs root and branch revision, not more fertilizer?” No? OK, where was a I? Right… Romney exercises his CEO chops, giving readers of the Gray Lady a double dose of paternal hagiography and a lesson in economics they will soon forget. And then, the money shot. “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.” Take away the craven “may”– call it a political reflex– and it looks like Mitt’s been reading TTAC. “In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.” True dat.
After Carlos Ghosn spent an hour blowing a green smoke screen at his keynote address about the future of the auto industry, Nissan released the new 2009 370z, the most powerful Z car so far. With 332hp going to the rear wheels and a new seven-speed automatic transmission, Nissan one-upped themselves with a manual transmission that rev matches for you. With new sheetmetal that could have been penned by Porsche, and an interior that goes to “Infiniti” (but not beyond), the new Z is the poor man’s, uh, Porsche. The coupe starts at $30k. And what a sound it makes…
AFP is reporting (via Yahoo News) that German Solar Power firm SolarWorld has offered to buy Opel for 1b Euros, in hopes of creating Europe’s “first green automotive group.” The offer consists of 250 million euros in cash and 750 million euros in bank credit facilities for Opel’s four auto factories and a key research centre in Ruesselsheim, western Germany. I know, I know, you’re probably asking yourself if this is some kind of twisted joke. “I could not be more serious,” says SolarWorld boss Frank Asbeck. “We would not make this offer otherwise.” Of course there are still strings attached. For example, SolarWorld wants a liquidity guarantee for Opel from the German government. The deal also would require a complete split of Opel from GM, and compensation payments of 40,000 euros per Opel worker, which would approximately equal the one billion euro purchase price. But, as Global Insight analyst Christopher Stuermer points out, “Adam Opel Germany has total assets of around eight billion euros — SolarWorld’s offer is ridiculous.” The consensus appears to be that this will only happen if GM goes under, in which case the German state of Hesse has already pledged 500m Euros. After watching several hours of House Financial Services Committee hearings, this blogger is as convinced as ever that this is an outcome worth betting on.
Carlos Ghosn wants your help, and he isn’t shy about asking for it. In an interview yesterday with The Wall Street Journal, the Renault-Nissan chief announced his intentions to obtain a €40b ($50b) loan package from the French government, in addition to some undisclosed additional quantity of yen from their Japanese counterparts. Today, before a packed house during his keynote address at the LA Auto Show, Ghosn continued along this path, turning his attention to obtaining tax credits and other government assistance here Stateside. Citing October 2008 as the worst month for US car sales in the last 25 years, Ghosn claimed that the severity of current economic conditions were “putting the usual rules of business up in the air” and that “nobody knows” how long these conditions would continue. As he tore a page from Detroit’s eco-efficiency bailout pitch book, Ghosn stressed retooling for the development of Earth-friendly technology as a key driver for receiving state support.
Chris Kelly at the Huffington Post brings up a good point this morning. Chrysler is just one of more than fifty companies in the corporate Hades that is Cerberus Capital Management, L.P. They don’t have to bark publicly about their holdings, but have admitted to $25 billion under management in funds and accounts, with investments generating more than $60 billion in annual revenues worldwide. So why can’t one head of the beast help out another? Why can’t the dog ditch their Japanese bank, Aozora; their German bank, Handel und Kredit Bankhaus; a reinsurance company, Scottish Re, some of their seven TV stations or slice of their 65,000 apartments in Berlin? If their 250 Burger Kings were going under would Congress be rushing to save them? Why is Cerberus begging the Feds for scraps like some underweight cocker spaniel, when they’ve got so many bones buried out back?
On second thought, that’s a silly question. Why are we allowing it? Now that’s a question.
We’ve been ringing this bell for a while now, so it’s nice to see some of the big guns in the media world back us up. The New York Times has a scathing piece on the oft-cited Center for Automotive Research study on auto industry employment today, stripping the statistics of much of their bailout-justifying clout. The Times points to two significant shortcomings in the study, the first of which is that the statistics presented by CAR account for the entire industry, including those firms which build cars here but aren’t going under. As we have argued before, these statistics prove only how vital the entire auto industry is. For Detroit to claim that these numbers are somehow indicative of the amount of jobs which will be lost if the American automakers go under is beyond misleading. In fact, if the Detroit Three fessed up to the fact that the “foreign” transplants employ more Americans than they do, you would have a good sense of how “viable and relevant” they really are.
Chairman of the House Financial Services Committee Barney Frank (D-MA) spoke with NPR earlier today, and within a single question the bailout’s biggest backer was already undercutting his $25b pet project. “We don’t think it would be enough,” admits Frank, “If, on March 31, the president does not believe that this is going to get them the viability with energy efficiency cars, they have to repay the loan; they get no more money. If they can show by March 31 a plausible way to go forward, then we would consider giving more money, again, under equally stringent conditions.” NPR’s Steve Inskeep spends the rest of the interview trying to get Frank to make some sense… in vain. The best Frank ever offers is the cold comfort that his bailout plan is not as bad as the AIG bailout or the Iraq War. So, the bar’s clearly set pretty high.
As our regular readers know, TTAC’s labored on the Motown meltdown story for the last eight years, in relative obscurity. As the situation has moved towards its disastrous denouement, our traffic has exploded. It’s gratifying to see our focus rewarded by mainstream interest. Of course, it’s always the bus you don’t see that melts your servers. In this case, our Chinese correspondent Bertel Schmitt’s post on the possibility of The Middle Kingdom buying-up GM and Chrysler struck a nerve– on both sides of the Pacific. Stateside, we’ve been instapundited and digged and linked to from here, there and everywhere (a.k.a. Edmunds). The influx– over 1.25m page views today (as compared to 2.5m per month) lead to a big ass site crash. I apologize for the interruption of service. Suffice to say, we’re back and we’re bad (as always). TTAC may be a bit cranky for a while, as the boffins move shit around (the technical term) to try and cope with the traffic. Thanks for your patience. Especially those of you who’ve provided the foundation for our growth: TTAC’s Best and Brightest.
Sweet Pete DeLorenzo has made no bones about where he stands on the bailout, and having lashed out at the nattering nabobs of negativity (us), he’s turning attention to the old MSM and its coverage of the great bailout begathon of ’08. As a rash of common sense thinking about Detroit metastasizes into the mainstream, DeLorenzo is doubling down on his affection for Motown, and conducting interviews with whomever will listen to his rah-rah routine. In today’s Autoextremist Rant, he takes on the perception gap, that mythical construct which prevents the benighted masses from appreciating the truly great products Detroit offers. “The Perception Gap that exists out there for the Detroit automakers isn’t narrowing,” argues DeLorenzo, “it’s actually growing wider. Because when Americans get what minimal news they’re willing to digest – and only because it’s pre-packaged in carefully doled-out sound bites – then the Old Detroit will perennially overshadow the New Detroit, hands down.” Read More >
The West Virginia Legislative Auditor announced yesterday that a performance review of the West Virginia State Police found significant evidence that the agency imposes traffic ticket quotas to boost the number of citations issued. Nearly a third of all troopers involved in patrol duties statewide told the auditors that troopers are punished if they failed to generate a specified number of citations each month. In Troop 4, one of the six surveyed, 55 percent of the law enforcement officers admitted that they were under a ticket quota. The auditor confirmed this admission with documents, including a September 12, 2005 memo from Troop 4 commanders that ordered supervisors to impose a quota.
Bob Lutz rode to Motown greatness on a wave of bombast, charisma and general maximum-ness. And his ability to act like Patton in full advance, even in the face of dismal business results, has been crucial to GM’s several year long “product revolution” denial offensive. But when the war is over, and the other general’s are already discussing the terms of surrender, men like Bob Lutz are suddenly seen less as inspirational figures and more as, well, liabilities. Buried in an otherwise unremarkable piece on the LA Auto Show in MSNBC, we get a little taste of just how minimum things are at GM right now. Global Insight analyst Rebecca Lindland reveals that GM won’t be sending the man of maximum to LA to launch the new CTS Coupe. “The perception of Cadillac is of excess; it’s a high-profile, low volume vehicle and not the type of vehicle you want to be seen flaunting right now,” she said. “And you can’t take a chance that the media will catch Bob Lutz swilling Champagne or puffing on a cigar — it’s a PR nightmare waiting to happen.” Just wait till you see the post-bailout spa bills.
GM Fastlane blog was launched with the usual blather about two-way communications between the suits and the “little people” (a.k.a customers), complete with assurances that executives really will (we swear to God) read your comments and respond. Aside from one remark by Rick Wagoner about one commentator’s girlfriend’s car (as I remember it), this has most decidedly not been the case. Now, GM PR Supremo Steve Harris has decided to use the blog to rant against the New York Times’ columnist Thomas “Don’t Call Me Kinky” Friedman. Yeah, that’s the spirit!
An Open Letter to Thomas L. Friedman
Dear Mr. Friedman:
On Meet the Press you said, “So, show me a plan…” on why GM should receive government aid to bridge the current global financial crisis. We’ve invited you repeatedly to visit General Motors and see firsthand all we are doing to transform our business and develop new, energy-saving technologies.
We’re disappointed you still haven’t taken us up on our offer. You would be surprised at what you’re missing:
A quick reminder: the Toyota Prius OWNS America’s hybrid market. Year-to-date, the Japanese automaker’s sold 142,365 Priora. Even during October’s carpocalypse, at a time when gas prices have fallen back to pre-Katrina levels, ToMoCo shifted 11,804 of the gas – electric hybrids (down “just” 13.6 percent). All other hybrids– including Toyota’s Camry gas – electric variant– must live off of crumbs from the Prius’ table. So when Ford announces it’s about to sell a hybrid Fusion with better mileage than the Camry hybrid– a six (according to the press release) or five (according to Automotive News) mpg improvement around town and an indeterminate number on the highway, the words “big whoop” spring to mind. Or even, perhaps, why bother? Certainly the Gods of Corporate Average Fuel Economy must be satiated. But doesn’t Ford have to sell the vehicles for them to count against F-150 mpgs? As for the badge-engineered Milan hybrid, well you gotta put Mercury’s babe on your website! In your garage? Not so much. (The car. Not Jill.) More interesting: SmartGauge™ with EcoGuide. The doo-hickey “coaches” hybrid drivers to maximize fuel efficiency. John Madden voice prompts optional, presumably. Oh, and props to The Blue Oval Boyz for improving the 2.5-liter I4 Fusion for better torque, and offering a six-speed manual.
Watching the pressed suits in front of Dodd’s Committee made me sad last night. (Yes, we can watch CSPAN in China. On-line. Amazing. Probably a ploy to dissuade the Chinese populace from wanting democracy.) Sad I was, because I had expected an “are you or have you ever been tearing out the very heart of America’s industrial base?” I missed that a lot. Gettelfinger made me sad. How could he throw GM under the bus by giving the employer of his $73/hr union sisters and brothers last rank on the viability scale? Saddest made me Rick Wagoner. If he would have done the Iacocca, if he would have said, “Yes, I work for $1, I’m not worthy of more,” the bailout package would already be in the can. He blew it. Now there I sat, tears in my face, and German as I am, I thought: Rick Wagoner? As in Richard Wagoner? As in Richard Wagner with a typo? Last night was Richard Wagoner’s Götterdämmerung. You watched the funeral march of General Motors. Someone got a napkin? Danke.
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