Motor Trend (MT) is filling-up bandwidth and hyping-up baby boomers with a post on the forthcoming New Beetle Mk II. The bulk of it isn't all that earth-shattering: there will be a new New Beetle. MT reckons it will be based on the next Golf and it should arrive in 2010. There will likely be a hybrid version. Motor Trend says VW should (or could) make the New Beetle a hybrid-only model since "its distinctive style lends it the same kind of instant recognition as the Toyota Prius." Except that the Prius is actually aerodynamic; a far more important feature for efficiency-oriented cars than boomer nostalgiamobiles. But that isn't even MT's wildest bit of speculation. They speculate that VW's forthcoming city car, the up! could be restyled to look like a "Baby Beetle." Hmmm. The VW up! was planned as a rear-engine car, and it will cost enough to place it in the "small-but-premium" category. By giving it a Beetle-inspired shape, VW could use nostalgia to trump the price point. A light, rear-engined baby Beetle would capture more of the original kaeferwagen's appeal than another reskinned Golf. But there's a small problem with the theory. As Mr Berkowitz pointed out, the up! is no la rear-engine, rear-wheel drive car. That doesn't mean a baby Beetle isn't coming. But if it does, it will be just another reskinned FWD VW. Or will it?

Whenever we talk about alternative powertrains in development, some people (this writer included) inevitably say: gasoline and to a lesser extent diesel are past, present, and medium-term future. But a number of sources claim Mercedes Benz is thinking otherwise; they're dumping the need for petroleum-based fuels in their future products in favor of electric, fuel cell, and (yuck) biofuels. Apparently Benz has spent billions of Euros on a "sustainable mobility" plan. According to the UK's Sun, Mercedes plans to spend another $14b or so in the next seven years to further develop the petroleum-free lineup. Will Mercedes give up sales in all the parts of the world in which there is no infrastructure for electric or fuel cell cars? The hedging response: their cars would still be capable of running on gasoline or diesel– meaning that biofuel flex fuel cars would satisfy this wild claim from the British tabloid. Even still, huh?

GMInsidenews.com is quoting sources lacking even the thinnest euphemisms who whisper that Pontiac and GMC both could be on the chopping block. "At the moment," writes "nsap" of GMI, "the GM Board of Directors is leaning toward killing GMC as the brand is made up entirely of rebadges. The Board is also taking into consideration that GMC is mostly trucks and SUV's, both market segments that slowly dwindling." HUMMER is for sure dead (duh), and Saturn may get bumped to the PBG channel if (when) this all takes place. Not only does GMI fail to indicate a source, they attach a disclaimer. "Please remember that all of the above are RUMORS and should not be taken as solid fact." The only thing this rumor has going for it is that it makes a lot of sense. Neither brand really does anything Chevrolet can't, and in bad times that means they're expendable. BUT (caps lock off) GM can't kill anything without killing an entire channel (Buick, Pontiac, GMC)– and facing thousands of lawsuits. Unless they're in bankruptcy.

As Mark Phelan pointed out, GM would dearly love to unload the unloved HUMMER brand on some overseas sucker investor. The rumor mill is gristing the idea that India's Mahindra and Mahindra may scarf the tree hugger's least favorite vehicle of all time, ever. It seems only natural; the company's been building the AXE, a Humvee knockoff, for the Indian Army. Just-Auto cites an anonymous "senior official at M&M" who told them "Mahindra is very keen on acquiring the Hummer, because of many reasons, but I can't go into all of them but for one it is the most seen vehicle on TV in any country, these days at least the military version of it. It is still too early to talk of prices and timeframes but we are in the process of designing a civilian version of the Mahindra AXE and owning the vehicle it was modelled [sic] after would make a lot of sense." Not only that, HUMMER would give them a well-known premium brand to compete against rival Tata's recent Land Rover acquisition. Analysts think the HUMMER brand could put about $750m into GM's coffers. Or not.

If GM keeps all its brands and most of its vehicles, there is no road map to longer term success. In the end, there just isn't enough money or market share to justify or support The General's North American operations as they exist today– even in their downsized, strike-afflicted form. At some point, preferably ten years ago, GM needs wholesale consolidation to focus on three brands: Chevy, Caddy, and Saturn. Everything else is superfluous. The problem at the RenCen: they can't figure out how to shed brands/products. Alan Mulally has shown the way Fordward, but he's dismembering recently purchased assets. GM's decades old "damaged" brands can't be sold individually, and can't be terminated. Short of C11, GM's going to have to bite the bullet and tell its BPG (Buick, Pontiac, GMC) AND Saab and Hummer dealers that the corporate mothership will honor existing franchise agreements  until they expire, but they will not be renewed. Sure, it'll be the letter that'll launch a thousand lawsuits. But there's no other way for GM to survive in NA. None. 

While rumors that GM's letting the UAW run it into the ground (accidentally on purpose) are pretty far-fetched, it's highly likely that GM knows it's flaming-out (cash-wise), heading for C11 in a death spiral. So what's stopping them from using C11 to protect their current cash reserves (which they need for reorganization) other than, say, hubris and self-delusion? Chrysler. When Chrysler files ("how our employees spent their summer vacation"), GM and Ford will get a short term boost. Sales will come from former MOPAR devotees, rural areas without a large transplant presence and people who consider Chrysler's bankruptcy a "wake-up call" to start buying American. If GM files before Chrysler, ChryCo gets the dead cat bounce. Oh, and why not let Chrysler introduce Americans to the possibility of buying a car from a bankrupt carmaker? Look for a full editorial on the slings and arrows of a GM bankruptcy by the end of the week.

As the American Axle (AA) strike stretches into its second week, Automotive News [sub] reports that GM may be considering bailing out yet another troubled supplier. Thus far, GM has claimed the Axle-caused work stoppages gave them an opportunity to trim bloated truck and SUV inventories. But as the strike begins to halt all of GM's high profit North American truck production, and hobbles hundreds of other suppliers, this shit is getting serious. Negotiations between the United Auto Workers (UAW) and American Axle management are deadlocked. American Axle wants to cut UAW wages in half across the board, from $28/hr to $14/hr. The only viable scenario at this point: the now-standard package of buyouts, buydowns and flowbacks. Once GM has finished buying out enough of its own workers, it could move the holdout American Axle workers to its own payroll, freeing AA management to hire new employees at the now-competitive rate of $14/hr. But isn't the point of GM's buyout program to trim its payroll fat? And hasn't GM already blown its bailout budget on Delphi? Chapter 11 if they do, Chapter 11 quicker if they don't.

On the same day that GM announced its disastrous February sales figures, GM's Board of Bystanders OK'ed an executive reshuffle. Those of us expecting the Board to clock the prospect of a fourth year of declining sales, profits and U.S. market share, and then defenestrate GM CEO Rick Wagoner (to float away on his golden parachute) were surprised to discover the current CEO remained in situ. Meanwhile, Chief Financial Officer Fritz Henderson assumed the re-created post of Chief Operating Officer. While pundits aplenty saw this as a Henderson succession play, has Fritz already relieved Rick of command? The Wall Street Journal says "Speaking to reporters yesterday at the Geneva auto show, Mr. Wagoner outlined what his role will be in the auto maker's hierarchy, saying that he will focus on global growth, advanced technologies and environmental lobbying… Mr. Wagoner said he also hopes to at least double his amount of annual visits to China, a fast-growing new market where GM has become well-established. Visiting roughly twice a year in the past 'didn't feel right,' he said." If you ascribe to Ted Turner's Lead, Follow or Get Out of the Way philosophy, it's clear that Rick's now checking out any time he likes. But will he ever leave?

The last thing GM needs right now is a $2.25b bill to go splat on the mat. But if rumors are accurate, The General will spend yet more money on its bankrupt former parts maker Delphi. While examining various scenarios for Delphi to come-up up with the $4.5b in needs to exit Chapter 11, the Financial Times hypothesizes "the exit funding would consist of a USD 2.275bn first lien loan, while GM would assume a USD 2.25bn junior facility." GM would have to pay their chunk to take the remaining debt down to a size that current debt holders JPMorgan and Citibank could sell. They'll have to move fast, though. The current funding agreements will all be history by the end of April, and Delphi will be back to square one. Unless…  nah… GM wouldn't be stupid enough to try to pay all the debt, would they?Could they?

My pal Brock Yates single-handedly introduced CB radios to non-truckers by using one in a big Mercedes 300S for a precedent-setting Car and Driver article. So I installed a CB in my Saab 99. Whenever I’d put my ears on and key the mike to good-buddy, the Swede’s unshielded electronic fuel injection would die. (Good thing the ugly little hatchback could coast.) Today, something similar is supposedly happening in Manhattan. Rumors abound of an electronic Bermuda Triangle surrounding the Empire State Building. According to that bastion of reportorial excellence, The New York Daily News, "something" keeps certain vehicles' engines from re-starting. Wild-ass theories range from electronic emissions from the huge antennas atop the skyscrapers, to the increasing profusion of cell phone jammers, to juju from anti-terrorist devices protecting the building from attack. My favorite from one blog commenter: “Megaliths [such as a skyscraper] are electrical coils. Imagine a coil so powerful it can suck the magnetic force out of a car’s power system.”  (You’re right: Manhattanites don’t know how a car works.) The hysterics point out that 10 to 15 cars a day die near the Empire State Building. Considering the fact that 10 to 15 cars a day probably die near the Fulton Fish Market, once again, Occam's razor slices a crazy ass conspiracy theory to pieces. 

It seems as if our concerns about a Chrysler supplier "run on the bank" scenario– whereby the company's suppliers would demand cash-on-the-nail for goods and services rendered, throwing Chrysler into bankruptcy– are not without foundation. TTAC's Deep Throat has been making some calls. There are rumblings amongst the automaker's financially unstable suppliers. Something along the lines of "If we're going down, we're all going down together." Chrysler has been hammering its suppliers on price for years. And then outsourcing anyway. The company's decision to cancel Plastech's contract hasn't made The Crisis Corporation any friends. (Chrysler CEO Bob Nardelli isn't exactly known for that skill.) DT says it could be the tipping point. If and when the run happens, Chrysler will go down in a matter of days. The good news? Ford and GM will get a significant sales boost just when they need it most.  

This one comes to us as a logical extension of a factual story. The New York Times reports that the F.B.I has launched a criminal investigation into 14 companies in the sub-prime mortgage business. The feds are working with the Securities and Exchange Commission, which is conducting "about three dozen civil investigations into how subprime loans were made and packaged, and how securities backed by them were valued." We're talking accounting fraud, insider trading and/or other violations surrounding loans made to borrowers with weak, or subprime, credit. Hey! That sounds like the "anyone with a pulse" zero percent financing deals that kept the moribund metal moving for the last two years or so. Not to mention the bundling of said loans and the automakers' accounting for the true cost of the risk. To wit: New York attorney general, Andrew M. Cuomo is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Considering the amounts of money involved, if this blows-up for Detroit and other automakers, it will blow-up good.