Senate Majority Leader Harry Reid has cast doubt on the lame duck Congress’ ability to ram through another multi-gajillion dollar bailout economic stimulus package– upon which GM’s hopes currently reside. Automotive News [AN, sub] reports that the Nevada Democrat reckons that the dems have no chance of passing “a very robust, bold stimulus package” before the new team hits the field. At least not without those pesky Republicans lining-up behind it. AN correctly concludes that this is a septic tank full of Not Good for Motown– especially as GM has just publicly declared that they’ll be out of cash by December (a fact curiously absent from AN’s coverage). “The Detroit 3 and the UAW last week asked congressional leaders to include in the legislation $25 billion in loans for retired autoworker health benefit trusts, called VEBAs. They also want the bill to prod the Treasury Department and the Federal Reserve into releasing other federal money as ‘bridge’ loans to get the automakers through the current economic crisis.” Reid’s run the numbers and… “Until the first of the year, I still have a one-vote majority in the United States Senate,” Reid told CNN. “I’m senior enough and experienced enough to know that you can’t do something with nothing. I need votes.” And here’s the kicker: “The leader specifically mentioned only increased unemployment compensation benefits as a priority in a stimulus bill, not aid to automakers.”
Category: News Blog
Following this week’s successful voter referendum banning photo enforcement in Cincinnati, residents in two more Ohio cities are looking to oust red light cameras and speed cameras. The sponsors of the Cincinnati initiative are now exploring the possibility of putting ticket cameras on the ballot in Toledo. In Chillicothe, more than 17 percent of the city’s 13,000 registered voters has already signed a growing online petition demanding camera removal. “The undersigned will take action to elect new city council members therefore removing all those responsible for this unconstitutional act unless the said members make motion to remove and terminate this contract the city signed with Redflex Traffic Systems immediately,” the petition states. The possible consequences of the revolt were not lost on city leaders who are expected to discuss the issue at an upcoming city council meeting. One of the camera system’s main supporters, however, blamed residents for the program.
CNN reports that the U.S. said goodbye to 1.2m jobs in 2008. One of them was mine. Last week, TTAC’s corporate mothership took a hard look at the books and concluded that the Managing Editor position is not part of TTAC’s best financial interest. This isn’t specific to The Truth About Cars. Advertising-driven websites follow a very young business model; when sites like Facebook and MySpace are having a hard time drawing in advertisers, you know it’s tough for everybody else. The Truth About Cars, as always, will keep going and be strong. While it doesn’t benefit me personally, this is the kind of decision we always criticize car manufacturers for not making: the right one. We all love The Truth About Cars, or at least many of us do, and for it to stay around, it has to be fiscally responsible. As a result, they’ve given me a jump start in looking for the next step in my career. Which is okay. Meanwhile, I’ll still be doing blog posts, reviews and the occasional editorial for TTAC. In all honesty, I can’t help but tell the truth.
Whether or not you like to read car magazines on the throne, it looks like the only paper with a future is rolled up beside the bog. Starting with the January 5, 2009 issue, AutoWeek will switch from a weekly to a biweekly magazine. According to the pub’s press release, less is more. “This change gives us the opportunity to grow as a brand,” opines brave-faced publisher Keith Crain, “and increase our reach to enthusiast consumers, making AutoWeek much more than just a weekly.” (Or, in fact, less.) Needless to say, AutoWeek will not become AutoBiWeek (although one wonders if that name might open-up new profit opportunities). “Modifying the frequency of the magazine’s distribution allows us to focus on more comprehensive editorial features and vehicle reviews. We look forward to providing lengthier and more comprehensive pimpatorials, although our paper quality will go down the toilet. So to speak.” I just made the last two sentences up, obviously. But not this: “I’m thrilled to be able to make a great brand better,” said AutoWeekEditor and Associate Publisher, Dutch Mandel. “The changes demonstrate our commitment to evolve in an ever-changing world. Our readers now demand news the moment it happens, which we provide to them at autoweek.com. These changes will allow us to deliver more in-depth coverage in our products. Our readers will be excited and pleased.” In fact, they already have a new strapline with which they can take delight. “AutoWeek is America’s only fortnightly automotive enthusiast consumer magazine.”
We’ve already put Detroit Free Press writer Mark Phelan through the Cassandra-o-meter— and found his logic more than slightly wanting. Today’s column reveals that Phelan’s cluelessness runs deep. Contemplating the collapse of the GM – Chrysler merger, Phelan says “Finding a foreign buyer to provide advanced engineering for sophisticated small vehicles in exchange for access to Chrysler’s U.S. dealer network and expertise in trucks, minivans and big cars is the best option.” Of course, Phelan’s theory assumes that an automaker would want to buy Chrysler. While everyone and their proverbial mother believes that Jeep is some kind of brand babe, other than that, what would be the point? How do we prod thee with a ten-foot pole? Let me count the ways. First, the U.S. automotive market is dead in the water. Second, any automaker stupid enough to assume tens of billions of dollars of ChryCo debt and obligations to a union (whose primary expertise is in wresting said benefits from overpaid execs), not to mention a roster of uncompetitive products and nothing in the propduct pipeline (although I just did), is also hurting in the worldwide auto industry meltdown. Third, if said automaker wants a piece of Chrysler, they’ll wait for the now-inevitable Chapter 11 or 7 and buy the best bits for pennies on the dollar. Phelan’s take? A ChryCo sale (as such) could happen. But that would suck. “Even in that best of all possible worlds, however, Chrysler will be a smaller company than it is today. It will have fewer plants and employees, but it can remain a major contributor to the U.S. economy and an important center of engineering and design expertise for a healthy global company. We can hope Chrysler’s next owners will value it more than the last two did.”
“The Scuderia Spider 16M is available in a choice of two new signature colour schemes: the standard version is black with grey trim, while a tricolour livery is also available as part of the Carrozzeria Scaglietti Personalisation Programme. [Translation:the 16M comes in a special color combo only available with this special edition– unless you’re willing to pay for it and wait an additional God knows how long.] The new car also sports a special plaque on its rear grille commemorating Ferrari’s 16th Constructor’s World title. The exclusivity of the interior is underscored by the silver ‘limited series’ plaque just above the air vents at the centre of the dashboard. [MONEY SHOT!] Other exclusive features include a roll-bar with carbon-fibre outer shell (hmmm) and a specific new generation audio system that can be combined with the removable customised Ferrari iPod Touch 16 GB with central dock just in front of the dashboard [not shown here because it probably looks like an after-birth, I mean after-thought].”
Soon after Inauguration Day, President-elect Barack Obama is expected to reverse about 200 Bush administration executive orders. One ot watch: a reversal of the December 2007 Environmental Protection Agency (EPA ) ruling prohibiting the enactment of California Assembly Bill 1493 (pdf). Passed back in 2002, AB1493 mandates a 30 percent reduction in car and truck carbon dioxide emissions starting in model year 2009. Depending on who’s doing the math, calculations suggest that California’s law would mandate a fleet average of about 40mpg. That’s about five mpg higher than the EPA’s latest Corporate Avererage Fleet Economy (CAFE) target. There is a loophole for small-volume manufacturers, but volume carmakers are going to be pissed as as hell (they lobbied heavily for the primacy of the EPA ruling). As expected, Obama has come out in favor of aiding the US automakers ASAP. Will the automakers plead poverty and ask for a delay in reversing the AB1493 ruling? Of course.
Hedge fund fornicator Luxury car maker Porsche has just announced their numbers for their last 2007/2008 fiscal. You guessed it: while the rest of the world is retching in the WC, Porsche’s profits are up a pornographic 52 percent. “The Stuttgart-based maker of the ass-engined sports car 911, IMS- challenged Boxster/Cayman and Cayenne SUV reported a net profit of nearly 6.4b Euros ($8.2b) for the year that ended July 31. That’s compared to the 4.2b Euros Porsche earned in the 2006-2007 year,” tickers The Associated Press to the world’s flabbergasted financial editors. The numbers are so mind-blowing that there are different accounts of the accounting data. The Wall Street Journal has on its wire that Porsche’s profits “soared 46% to €8.57 billion Euros, or about $10.9 billion.” (The €8.57b number is repeated by Deutsche Welle, the €6.4b figure is popular with Bloomberg. We’ll see. A few billion more or less don’t matter, we guess. Mum’s the word on Porsche’s Investors Relations page. We’ll probably have to wait until Monday, after they are done partying. Meanwhile…
Are you aware of the appalling rate of Boxster engine failures, which I’m only now becoming aware of through participation in some Boxster forums? Some estimates (Bruce Anderson, for one) are that 20 percent of Boxster engines don’t make it past 100,000 miles witout a catastrophic failure. The standard failure is what the cognoscenti universally refer to as the IMS–the intermediate shaft. It’s apparently bolted together, and the bolts fail, then everything internal claps hands and you’re looking at a replacement crate engine. I’m hoping the fact that Susan never revs past maybe 4,000 will spare us, but I’d be careful if I were you. There was a recent Porsche Club event that 11 Boxsters participated in. One had an IMS failure during the event and two of the other Boxsters participating had previously had their engines replaced due to IMS failures. Three out of 11 equals 27 percent. It’s a quiet secret within the Porsche community, and there are reasonably knowledgeable people who claim these engines were built as cheapies to get through the warranty period unscathed–which the apparently often don’t–and that PAG hasn’t the faintest interest in second, third and fourth owners. And they used to say the entry-level Porsche was a used Porsche.
Bad news (or, if compared to anorexic America, good news) from J.D. Power: Western European auto sales fell by 15.5 percent to 1,035,243 million units in October from a year earlier, reports Automotive News Europe [sub]. They say, the decline in new-car sales in Western Europe could be worse than a slump in the early 1990s. Contrast that to “the worst sales month in the post World War II era,” which GM’s Chief (Non-) Sales Analyst just saw for his employer in NA. Everything being relative, our relatives in the Old Country still have it relatively good. If J.D.Power’s crystal ball is still functioning, the Western European car market may decline by 8 percent in 2008, and go down between 10 and 11 percent in 2009. J.D.Power came to the not all to surprising conclusion that this would “place major strains on the European auto industry.” As opposed to the end of the world, as if we don’t know it already. Note: As long as VW stock goes for between €500 and €1000, depending what time of day it is, or the whims of Porsche may be, as long as BMW’s owneresse can afford millions to pay a gigolo, the European market will be just fine. All things, considered, of course.
Slipped that one in, eh? The official statement, via The Detroit News: “GM has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM’s financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term. While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside.” To which Chrysler CEO Boot ’em Bob Nardelli responded, “”Chrysler LLC neither confirms nor discloses the nature of its private business meetings, as many times they do not come to fruition. Returning Chrysler to profitability continues to be the key focus of the management team. We are significantly challenged by today’s economic environment and by the automotive industry’s unprecedented downturn. As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability.” Good luck with that, then.
The Wall Street Journal reports GM’s statement on its dismal Q3 results. The General’s general admits that “estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.” So, essentially, unless GM gets a federal bailout by 12/31/08, the artist formerly known as the world’s largest automaker will be forced to file Chapter 11. And no wonder, given GM’s cash burn reported [with all the numbers] by Yahoo! Finance. “Cash, marketable securities, and readily-available assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust totaled $16.2 billion on September 30, 2008, down from $21.0 billion on June 30, 2008… The change in liquidity reflects negative adjusted operating cash flow of $6.9 billion in the third quarter 2008.” The entire “money shot” quote after the jump.
While GM, Ford and Chrysler put the squeeze on the taxpayer’s elected (and appointed) representatives, their shift of investment out of the U.S. and into other countries continues apace. This morning, for example, the Associated Press reports on the grand opening of General Motors newest $300mfactory… in St. Petersburg, Russia. “This plant is GM’s first in Russia, where demand for cheap, well-built cars has exploded amid a decade-long economic boom.” Similarly, last month GM opening it’s second factory in India and launched a new $250 million Shanghai, China R&D palace. For the life of me, I do not understand how GM executives can continue to pay themselves outrageous sums of money, shut down American factories, put development programs into the deep-freeze, toss American workers on the ash-heap, invest the company’s dwindling resources everywhere else AND demand financial bailouts from American taxpayers. Oh yeah, and don’t forget that bit about blaming American customers for un-patriotic buying decisions. Speaker Pelosi, are you paying attention? Can someone please tell her from whence cometh the Chevrolet Aveo?
Kia’s booth at SEMA was quiet and empty compared to the Genesis-fest at sister firm Hyundai’s space. But fewer fans meant a chance for a closer look at several near-production concepts that point the way forward for the “other” Korean budget automaker. And though Hyundai seems to have Lexus in its crosshairs, Kia appears to be gunning directly after another Toyota’s Scion. First up, Kia’s Soul Burner concept looks like a (not quite production-ready) alternative to Scion’s xD. Strip away the flame-tread show tires, and a few other tuner-show fripperies, and it’s a practical, flexible, stylish little hatch. The styling doesn’t exactly put the “b” in subtle, but it’s a reasonable compromise between practicality and urban chic. Fit-and-finish clearly needs some work (paint bubbles on a show car?). But a cheaper, better-looking (in the eyes of this beholder) xD should have Toyota sweating more than a little. Kia’s Koup Concept has an equally laserlike-focus on stealing sales from the Scion tC. The stylishly unisex Koup sports clean lines, sharp-looking head- and tail lights, and a surprising impression of quality compared to the Soul Burner. Slap a Honda badge on the Koup and you might think it was the next Civic Si. Put it next to a tC with no badges at all, and you might have a hard time guessing which came from the world’s most successful automaker.
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