“Shares of GM fell 23% to $3.34 in late-morning trading,” The Wall Street Journal reports. “After earlier hitting a 62-year low of $3.02, as analysts at both Barclays Capital and Deutsche Bank cut their target prices and investment ratings on the stock. Barclays now targets GM shares at $1, while Deutsche Bank slashed its target price to zero… Deutsche Bank analysts, who cut their rating on the stock to ‘sell’ from ‘hold,’ gave GM a shorter liquidity timeline, saying the company might not be able to fund its operations beyond December. Even with government intervention, the analysts said GM’s future is ‘bankruptcy-like,’ and shareholders are unlikely to get anything.”

TTAC has highlighted the inherent obscenity of GM CEO Rick Wagoner’s compensation for flying the artist formerly known as the world’s largest automaker straight into the ground. While Wagoner inherited enormous structural problems from his predecessors, he has done nothing to correct them. Throughout his administration he’s shown a startling lack of courage and foresight, no product savvy whatsoever and an abject inability to face-up to the reality of GM’s peril.  And yet he has drawn down over $100m in direct compensation since his installation at the top of the GM pyramid. This reporter (that’s me) was widely and loudly ridiculed when he cried foul at Wagoner’s bankruptcy-proof pension (and for asking if GM Car Czar Bob Lutz enjoyed same). Lest we forget, Wagoner’s compensation was INCREASED (a.k.a. “restored”) in April to $14.4m per year (and the rest). That’s more than all top ten of Toyota executives combined. Make of that what you will, but how can The New York Times report GM’s cutbacks in white collar retirees’ health care without putting their sacrifice (small as it may be) into its proper context? Surely, it’s time someone asked the question: why is Wagoner still getting paid?

Dig through the dire news about GM floating around this morning’s autoblogosphere, and you just might notice a story that doesn’t quite jive with all the doom and gloom. Bloomberg reports that GM is “in talks with a local partners” to increase its 34 percent stake in GM-SAIC-Wuling, a Chinese light-truck and van maker. As our man in Beijing reports, China is aggressively stimulating its car market (which has bottomed out, by Chinese standards, at 11 percent growth) and GM wants in on the action. Of course there are just a few issues with the move– beyond the fact that GM has no cash with which to make such a deal. SAIC currently owns 50.1 percent of the consortium, and its Chairman Hu Maoyuan tells Bloomberg that it won’t be giving up its majority. “GM and our partner in Guangxi (Wuling) are still discussing how to settle the share transfer,” says Hu. So GM wants to spend cash it doesn’t have to increase a non-majority stake in an overseas joint venture. Non-starter, right? Not according to Ricon Xia, an analyst with Daiwa Associate Holdings…

Read More >

Sometimes it’s the stingiest person who pays too much. Case in point. A 2007 Chevy Aveo with no a/c, ugly gray color, and wheel covers made out of recycled Chinese plastic. Yours truly was the high bidder on this 25k mile car for only $4000. It was a reasonable offer given the lightning quick depreciation of any stripper in Atlanta. In Georgia, no a/c in a car means no customers. Nada! In fact, the neighborhood Kia dealer used to give them away if the customer in question would finance a regular Rio. Some people never learn.

China’s closely-watched auto sales stats are in. During the first month after the start of the worldwide auto industry meltdown, the first month after China awoke from the self-inflicted paralysis (a.k.a. the Olympics), sales are growing, but slowing. Compared to last year, China’s vehicle output and sales both grew 11 percent from January through October. October sales accounted for 715,700 units, up 3.37 percent year-on-year. Other countries would party after having received these numbers. In China, they come as a shock. According to China Associations of Automobile Manufacturers (CAAM) [via Gasgoo], China produced 8.02 million motor vehicles– and sold 7.94 million from January to October. Oops.

Read More >

The graduate of an insurance industry “boot camp” is behind efforts to legalize the use of red light cameras in Florida. State Representative Ron Reagan (R-Bradenton) twice attended the Insurance Campaign Institute, a special program designed to place insurance agents in positions of political power bankrolled by twenty insurance companies. “Essentially a political boot camp, the comprehensive political training program covers all facets of the campaign trail, from organization to grassroots strategies, fundraising, direct mail, advertising, media relations, public speaking, debate preparation, campaign research, and use of insurance community strength,” the Independent Insurance Agents of America explained in a 2001 press release. Reagan credits his 2002 Florida House victory to the Insurance Campaign Institute. To repay his industry backers, Reagan introduced the Mark Wandall Traffic Safety Act, a measure giving cities the green light to install red light cameras. Although the bill is portrayed as a response to the tragic death of a constituent in 2003, Reagan’s legislation is designed to create millions in new revenue for the insurance industry. And here’s how…

Read More >

Automotive News [sub] reports that Toyota is set to re-start Tundra production in their $2b San Antonio plant– although consumer demand for the full-size pickup is only obvious by its absence. “At the end of July, Toyota had about 60,000 Tundras in inventory, of which 45,801 units were in dealer stock. At the end of October, dealer stock had fallen to 29,784, according to Toyota. But Tundra sales have fallen sharply. Initially, the company had hoped to sell about 20,000 a month. When the economy began to slow late last year, the forecast was revised to about 15,000. In recent months Toyota has fallen well short of hitting its goal. Combined September and October sales were 14,121 units, off 62.3 percent from last year.” Even $10k on the hood of a brand new Tundra ain’t movin’ the metal– although it is disappearing any hope of obscene profits. “I have no doubt that there is a pent-up demand,” said John Matthews, managing partner of Pat Lobb Toyota of McKinney, Texas. “If I don’t see another Tundra until January, I’ll be happy,” said Jeff Daniels, general manager of Toyota of Muncie in Indiana. Imagine how Chevy dealers feel. Anyway, as commentator JT rightly points out, ToMoCo is ramping-up production to ship these bad boys to the Middle East. Hey, given fixed costs, they might as well do something with them.

First, Volkswagen, bucking a worldwide trend of global bad, refused to change their bullish guidance for the rest of the year. Now, VeeDub’s  luxury segment sibling Audi likewise sticks to its guns. According to Bloomberg, VW’s folks from Ingolstadt are dead-set at selling a million A-lettered cars this year. Grounds for their optimism? Audi sold 82,400 units worldwide in October, up a whopping 7.2 percent. Ten-month sales rose 3.3 percent to 844,700 vehicles so far for 2008. Results which makes Audi an endangered species, worthy of being protected better than the spotted owl. Recession? I ze nozzink! Official reasons cited for Audi’s meteoric ascend are as follows: the usual growth in China, of course. But also, trememediosissme sales in-– would you believe it-– bella Italia.

Unbelievable, The Wall Street Journal has an editorial that positions the paper four-square against a federal bailout for Detroit’s beleaguered automakers– and then wimps out. First, the “not with our money you don’t” bit. “A bailout might avoid any near-term bankruptcy filing, but it won’t address Detroit’s fundamental problems of making cars that Americans won’t buy and labor contracts that are too rich and inflexible to make them competitive… In fact, the main point of any taxpayer rescue seems to be to postpone a day of reckoning on those contracts. That includes even the notorious UAW Jobs Bank that continues to pay workers not to work. A Detroit bailout would also be unfair to other companies that make cars in the U.S. Yes, those are “foreign” companies in the narrow sense that they are headquartered overseas. But then so was Chrysler before Daimler sold most of the car maker to Cerberus, the private equity fund. Honda, Toyota and the rest employ about 113,000 American auto workers who make nearly four million cars a year in states like Alabama and Tennessee. Unlike Michigan, these states didn’t vote for Mr. Obama.” Hey! Place nice! Anyway, you get the picture– if only because we’ve been painting it for the last three years. But there’s a sting in the tail…

Read More >

Autobloggreen reports that the Saturn Vue plug-in hybrid vehicle (PHEV) is probably on ice. The wired Vue was due to become GM’s first– and pre-Chevy Volt– PHEV. Now, who knows? “During the General Motors third quarter earnings (or lack thereof) conference call on Friday, company executives discussed the vehicle introduction schedule for 2009 and 2010. Several cars that had been expected to debut during 2009 have been pushed back to the following year, including the Saab 9-4X and Cadillac CTS Coupe. GM declined to discuss any vehicles beyond the 2010 calendar year. One vehicle that notable by its absence in the list of vehicle launches is the Saturn Vue plug-in hybrid.” While we’re at it (or not), the hold-back on the Saab 9-4X also casts doubt on the Cadillac cute ute replacement for the SRX and the new Chevy Equinox; vehicles that were supposed to sit on the same platform. Equally important: each day that these and other GM vehicle programs are delayed, the more expensive it becomes to restart development, and the harder it becomes to catch-up with the competition. The delays also impact suppliers, who may go under in the meanwhile. But that’s another story, which we’ll get to a bit later…

First, again, my public thanks to our former Managing Editor Justin Berkowitz. In the interests of keeping the business afloat, TTAC has cut the ME position from our roster. Although Justin will continue to contribute to the site, we can no longer afford his full-time services. As and when we can, I’d be delighted to renew our more intensive association. Secondly, a TTAC commentator has complained that we’re heavy on the politics/business, light on the actual car coverage. And it’s true. As I survey the autoblogosphere this morning, there’s nothing but TTAC-worthy headlines everywhere (except for AB, obviously). While I will charge our freelancers with amping-up the [strictly-defined] auto news, I’ve decided to pursue the bailout story/U.S. auto market collapse full-throttle. It’s a story in which we’ve developed considerable expertise, and one that needs an independent voice. As someone with a lot more insight that I said, this too shall pass. But until it does, TTAC’s going to cover developments as best we can, on your behalf. Thanks again for your patronage and support.

[UPDATE:: OK OK. Forget the subscription model. Jeez!]

According to the officious, English-language China Daily, “Chinese automakers are facing their toughest challenge in three years as demand is falling and profitability is plunging amid rising costs.” And that’s because “China’s car sales rose 11 percent in the first nine months, compared with a 22 percent increase for the whole of last year.” So, even before the U.S. of A. can open the federal bra on behalf of Detroit’s automakers, the Chinese government has swung into action. “China’s government is discussing policies to help automakers boost sales and fend off the global financial crisis.” Policies being considered in Beijing include… “Consumption-tax breaks” –  The PRC plans to  give the little guy a break and money in his hand, instead of giving billions to  three (or maybe just two) big guys. “Subsidies to automakers that develop vehicles powered by alternative energies” – that has a familiar ring to it. Because alternative energies are still mostly a gleam in the eye of a few believers, the real plan consists a hefty tax break with a green top coat finish. Chinese consumption tax (nothing to do with TB) can be as low as one percent for a (non-)car with a displacement of less than a liter, and as high as 40 percent for a bigger-bore vehicle of more than four liters. China Daily’s source is Chen Jianguo, himself “deputy head of the industrial coordination department of the National Development and Reform Commission.” If China Daily quotes a guy with a title that long, you can consider the plan as good as done.

Back in June, Barron’s advised [what conservative talk show host Bill O’Reilly creepily calls] “the folks” that GM shares could triple in value. Oh how we laughed! Well, surprise surprise surprise! Barron’s [sub] is now eating their words. “STAGGERING. THAT’S A FIT DESCRIPTION of the calamitous decline of auto markets in developed nations this year. U.S. October sales numbers released last week were ugly, down 32% from the year-earlier level and slamming all car makers hard. The month’s annualized selling rate was a paltry 10.5 million vehicles, the worst in more than a quarter-century. The weak financial positions of Detroit’s Big Three — General Motors, Ford and Chrysler — means their survival is at stake, and that Barron’s was wrong in describing GM as a buy late last spring.” Hey, wait a second; that sounds familiar. Market sucks. Who could have predicted this? Not our fault for missing it… GM! Anyway, how ’bout them bonds? “Our enthusiasm for GM was clearly wrong, as was a suggestion that its bonds, like the senior note maturing July 15, 2041, would be more valuable,” Barron’s writes. “They now trade at 20 cents on the dollar, versus 60 cents when the story was published.” Man the lifeboats! What? They’ve already gone? Look for GM’s stock to die a death tomorrow [Monday morning]. Trading suspended? De-listing from the Dow Jones industrial Average? Anything’s possible, and all of it’s inevitable.

As we’ve just reported, Senate majority Leader Harry Reid has pretty much written-off the possibility of passing another bailout economic stimulus package before President-elect Barack Obama moves into the White House. Which leaves Motown SOL, in terms of their planned mega-suckle. And now that GM has publicly admitted that they can’t make it past December without some kind of public funds, Senator Reid and House Majority Leader Nancy Pelosi have changed tack. Automotive News [sub] reports that the dynamic duo have sent a letter to Treasury Secretary Henry Paulson asking for $25b worth of “emergency loans” for GM, Ford and Chrysler. “We must safeguard the interests of American taxpayers [!], protect the hundreds of thousands of automobile workers and retirees, stop the erosion of our manufacturing base, and bolster our economy,” the letter, uh, suggested. As TTAC  predicted, “The letter… recommended ‘strong conditions’ [for the loan] possibly equity stakes and limits on executive compensation, in return for any help. The government is requiring similar steps in its rescue of banks.” Equity stake? Nationalization by any other name would still smell like an old cadaver.