These are stressful times for Detroit. All that Motown’s mavens held dear is dead or dying. The shock is equally brutal for the town’s cheerleaders, whose teams have all been routed and now, publicly humiliated. Automotive News’ [sub] Edward Lapham has snapped. The Executive Editor has penned a column that sounds not a small amount like a suicide note: “See! See what you’ve made me do! Well, I’ve done it. I’ve killed myself. NOW how do you like it?” To wit: “Those of us who want the Detroit 3 to avoid bankruptcy need to think outside the box. I hate to admit it, but there’s some hidden wisdom among the silly things said by politicos and others who don’t understand the auto industry. No, not all the talk about letting General Motors, Ford and Chrysler use Chapter 11 as a kind of boot camp to whip themselves into shape; that’s just too asinine to consider. I mean the admonishments to be more like Toyota, Nissan and Honda. Think about it. Now that the Detroit 3 have narrowed the gaps in productivity, quality and labor costs, the transplants have one obvious advantage: Their headquarters, engineering staffs and main product development operations are all overseas. To them, America is a colony. So GM, Ford and Chrysler ought to move. Great! That’s settled. Now the only question is: Where should they go?” Some outside observers who’ve listened to the domestics’ camp followers unseemly combination of whining and bullying– as expressed here– might suggest some place consistently hot. But I couldn’t possibly comment.

Infiniti had a lot of nerve to officially unveil this object of yuppie contentment on a day that the Dow rediscovered the wrong side of 8,000 points. But wouldn’t you know it if the hardtop G37 convertible still manages to strike an attractive pose. There aren’t many surprises here; pre-launch images were released last summer. In the flesh, the kinship with the coupe is obvious, although Nissan corporate claims unique sheet metal aft of the A-pillars and a slightly wider track in comparison to the garden variety G-series. The powertrain includes a 325hp variant of the same 3.7-liter VQ twin cam that powers the coupe and sedan. Transmission choices include either a 6-speed manual or a 7-cog autobox. A sport package will be an available option. If you like the lines and the interior of the standard versions, then you’ll probably take a fancy to this topless edition. Prices aren’t yet available, which is probably for the best if your 401k has been practicing the swan dive along with the rest of Wall Street. This G37 won’t be hitting the showrooms until sometime around the spring of 2009. That should leave the aspiring class with plenty of time to rebuild their portfolios.

When America gets out of bed, Tokyo is heading home in crowded subways, and Europeans still finish long lunches. While America Slept (WAS) 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. Due to popular demand, today, no sordid jokes. Get A1 if you want spice.

Aussie wants SAIC to buy Holden: In the SAIC-buys-GM saga, Melbourne-based publisher of GoAuto.com.au, John Mellor, said to Gasgoo that “Holden could wind up in the hands of SAIC and being Asian-owned could help springboard the local industry into the growing Asian car markets.” While Dear John was at it, he also opined that Australia could be bought by the Indian-based Tata Group.

Opel stunt a derivates play? As reported, the German company SolarWorld AG offered €1b to buy Opel Germany. German wags think the SolarWorld is a “marketing stunt” at best. Other think, SolarWorld lost their mind. For sure, SolarWorld’s stock tanked on the news. SolarWorld’s CEO Asbeck denies this morning via Reuters allegations that the matter was a derivatives play. Asbeck still claims he’s serious, and that he has “received a different answer from GM HQ than from Opel.” Opel yesterday said: “Nein.”

Opel survival guaranteed: In its final hour, the parliament of Hesse approved up to €800m in loan guarantees for Opel, writes the Rhein-Neckar Zeitung. After the money was approved, the parliament dissolved itself. New elections are scheduled for January. The loan guarantees are in place for the unlikely case that GM goes bust. Wait, there’s less …

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Auto shows are intended to be recipes for excess. Take one excessively large convention hall, fill it to capacity with excessive quantities of costly chrome and metal, mix in a few brigades of excessively attractive women, and cap it off with a cadre of excessively awkward journalists (present company excepted, er, we hope) to glorify the results with excessively vapid superlatives. But that was before Carmeggedon and the Great Credit Crunch of ’08 came to town, raining on the parade with an excessively nasty vengeance. Cars are a serious business, and 2008 is looking to be about as serious as it gets.

This year’s extravaganza is most noteworthy for what isn’t happening. For starters, General Motors is a non-starter. GM has canceled both of its planned new vehicle debuts. Neither the new Buick Lacrosse nor the Cadillac CTS Coupe made the trip. Car Czar Bob Lutz, who was previously scheduled to make an appearance, is also staying home. Maximum Bob isn’t having lunch at the RenCen by himself; every other spokesperson within the GM public relations squadron, i.e. anyone who might have been required to field skeptical questions from a editorially-liberated pack of hacks, is likewise giving this show a wide berth.

Not to be outdone by its erstwhile merger partner, the Cerberus-Chrysler team was apparently too preoccupied by the Mervyns bankruptcy liquidation to dispatch anyone here, either. Aside from a few electric concepts, Chrysler has no product launches and provided no PR staff to manage and dazzle the press corps. It gets worse – according to the Los Angeles Times, the Three Headed Dog is offloading much of the cost of this year’s fete onto its Southern California dealers. The Auburn Hill Boyz have been establishing a now-familiar pattern of cramming down their problems onto their retail network, and the LA show is proving to be no exception.

Renault-NIssan head Carlos Ghosn established the weary-although-optimistic tone in his keynote speech, which opened the event. Ghosn is probably the closest thing to a rock star that you’ll find in the auto industry, and his talents for salesmanship and managing a room are top notch. Le Cost Killer fired on all cylinders, masterfully packaging the greenbacks-for-green-tech message that has been offered far less convincingly by Detroit’s troika of CEO’s.

Few seemed to notice the irony of Ghosn touting his vision of an emissions-free future on the very same day that Nissan was launching its 370Z sports coupe and Infiniti revealed its convertible, abundantly-pistoned G37.

Other subtle signs of the industry implosion are evident throughout the floor. A deathly quiet hovers across GM’s vast acreage, which occupies what should be a high-traffic area in the middle of the Convention Center’s South Hall. Much of the obligatory well-dressed eye candy seems to have been given the day off. Most painful for a hungry, coffee-powered observer such as yours truly, the customary sponsored sit-down luncheon was quietly nixed, replaced by a haphazard buffet of small stale sandwiches that made Quizno’s seem like Spago in comparison.

In keeping with the theme of tough times, many an automaker press conference made at least a passing mention of the stumbling economy, even as they proudly touted their new models. Despite the pall, everyone claims to be confident that the current tumble in auto sales is a manageable bump in the road.

The Dearborn side of the hall was considerably more cheerful. Undaunted by bailouts, the brink of bankruptcy and Congressional hearings, FoMoCo debuted the new Fusion and its badge engineered Mercury Milan sedan twin, as well as the Mustang pony car and Lincoln MKZ sedan. During their upbeat presentation of the new Fusion, Ford EVP Mark Fields and Marketing VP Jim Farley seemed not to notice the faltering car market. Crisis? What crisis?

This year’s show includes new world debuts from Bentley (Azure T Convertible), Infiniti (a convertible version of the G37), Lexus (RX 350 and RX 450h Hybrid), a brace of Porsches (Boxster and Cayman) and Nissans (370Z and Cube), as well as the new Mazda 3, an electric Mini and a VW (the TDi version of the Touareg.). Four concept cars make their premiere show appearances here: a Honda FC Sport fuel cell sport concept, Hyundai Sonata Hybrid, a Kia Borrego fuel cell vehicle, and a Toyota CNG Camry Hybrid. Tomorrow’s events will include the presentation of the Green Car of the Year award, which promises to be less controversial than last year’s Tahoe Hybrid.

Not that this will matter much.  Anyone who is paying attention knows that the country’s most important auto show is not being held in Los Angeles or Detroit or Chicago or New York, but in Washington, under the DC big top, where big bailout bucks are the order of the day. It can’t help but make one wonder whether next year’s show will be considerably smaller than this one.

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…

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.

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While America Slept (WAS) is a daily round-up of the news that happened in other continents and time-zones while America suffers bailout-or-no-bailout-induced nightmares. Around the world, a network of bleary-eyed TTAC correspondents provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off.  Today in TTAC’s morning zoo:

Renault in dire straits: “Will Renault be the next car-casualty?” asks the Frankfurter Allgemeine Zeitung. This after Renault guided its year-end prognosis way down. Renault’s troubles will be Nissan’s pain. Both are joined at the aching hip. In an interview with the WSJ, Carlos Ghosn, double-head of Renault and Nissan, said he would “push for Europe to offer a €40 billion ($50 billion) loan program targeted at retooling,” (the books, presumably.) He also said, Japan should follow suit.  Gimme the money, s’il vous plait.

China pulling out of Russia: China’s largest SUV and truck maker Great Wall Motor Co said to Gasgoo that they will “terminate their joint venture in Russia because of hard industry protectionist measures in the country.” No Landwinds for the Russkies. Wait, there WAS more …

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Those who know the least are screwed the most (both figuratively and literally). Case in point. 1997 Nissan Pathfinder XE. No leather, but a roof and a helluva good look. 206,852 miles. It sold for the mind numbingly high price of $3800. Why? Well, to find the answer you have to go back to the good old days of the 1970’s when odometers were turned back more often than a stoner at the Lion’s Club. This one will undoubtedly be sold to an immigrant who knows as much about Carfax as yours truly knows about Lawrence Welk’s bubble making machine. As for the domesticated mastodons, a 2004 Explorer repo with 94k miles sold for $4100 and a 2003 Trailblazer with leather and all the options checked, but 131k, sold for $4700. As they say in Detroit Yiddish, “Oy vay! [sic]”

Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today. [A National Enquirer the paper is not. It is one of China’s leading business newspapers, with a daily readership over three million.] The paper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?

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While America Slept (WAS) is a  morning round-up of the news that happened in other continents and time-zones while America was tossing and turning. From Japan to Jakarta, a network of sleep-deprived TTAC correspondents provides round-the-clock coverage of everything that has wheels. Or that has its wheels coming off.  Here are the latest animals in TTAC’s morning zoo.

Ford dumps Mazda. Tormented U.S. automaker Ford Motor Co may announce plans to sell a 20 percent stake in long-time affiliate Mazda Motor Corp as early as today, Japan’s Nikkei business daily (sub) reported as the sun rose in the land of the rising sun. Japanese broadcaster NHK had reported more than a month ago that Ford is looking to severely lighten-up on Mazda. Currently, Ford has a controlling stake of 33.4 percent in the Japanese automaker, but Ford needs the cash.

Sell-off drives up shares: Selling a 20 percent stake will net Ford around $850 million, or more. Mazda’s shares jumped 6.4 percent on the report of Ford’s sell-off.  The estranged lovers share vehicle platforms and engineering resources and own several assembly plants together in the United States, Thailand and China. With Ford out of control at Mazda, those plants should receive some Japanese gardening.

Deal done. Later in the Japanese day, Mazda sent out an official release confirming the story. It’s in Japanese, but a usually reliable source (my Japanese wife) says it’s the real McCoy-San. Ford is down to 13 percent. Kawaii!

GM-Europe-VP: “The end may not be near.” Brent Dewar, multipurpose VP for Sales, Marketing, and After-Sales at GM Europe penned an inspirational letter to dealers: “As bad as the current results may sound, we don’t know whether we already have reached the end of the crisis.” Autohaus has a copy. From his bunker in Zurich, Dewar commands his sales forces to “fight to the last sale.”

And that WASn’t all, there’s …
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As the domestic auto companies appear to be circling the drain, there’s been debate about the extent of the impact of their failure on their supplier base, the impact on the industrial manufacturing base of the United States, even possible negative implications for Toyota and Honda. One party in all this that has rarely been mentioned are the consumers. While a few automotive analysts, pundits and bloggers have touched on how an implosion of the Detroit based car companies will affect consumers, almost all of the discussion has centered on whether or not people will buy a car from a bankrupt manufacturer, and the related issue of how product warrantees will be covered if their manufacturers go belly-up. A more basic consumer issue: how the loss of GM, Ford and Chrysler from the US auto market would affect the prices, features and technology of new cars.

While some critics of the domestics would have us believe that nobody is interested in cars built by the domestics, the fact remains that The Big 2.8 still sell millions of new cars a year in the North American market. October was a sales disaster for the domestics, with GM’s year to year sales falling 45 percent, Ford 33 percent and Chrysler seeing a decline of 37 percent. Foreign brands also saw declining sales but the decline was not as steep. With consumer confidence at the lowest level since just after the 9/11 attacks by Al-Qaeda, sales will not likely pick up anytime soon. The overall industry is on pace for a 10.6 million unit year, down from 16 million in 2007, and down over 40 percent from the record year of 2000. Still, between them the domestics sold just about 400k cars in October, good for 55 percent of the total US car & light truck market.

It’s a simple fact of business that competition puts downward pressure on prices. Critics of any bailout for the domestics like to say how their customers won’t go away; they’ll just buy Toyotas, Hondas, Nissans and Hyundais. What they don’t say is how much more expensive Toyondisssandais will be without competition from GM, Ford & Chrysler. You simply cannot remove competitors with a 55 percent share of a market without seeing the remaining vendors raise prices. Without competition from domestic competitors, the foreign brands have much less of an incentive to keep their prices down. Also, the structural costs of the domestics (at least until the cost reductions due to renegotiated UAW contracts kick in in  2010) create a price ceiling foreign brands can undercut. Take away that ceiling and watch Toyota raise its prices.

Conversely, take away that structural cost disadvantage for the domestics and you’d see lower prices right now on all brands, foreign and domestic, because of real price competition. Look at India. That market is very price sensitive. Just about all the global manufacturers are active in India, but the growing indigenous Indian auto industry led by Tata and Mahindra creates price competition for the transplants. Since Tata announced the sub $3000 Nano, Renault-Nissan, which already produces the low cost Dacia Logan, has announced a joint venture with Bajaj, maker of scooters and three-wheelers, to compete with the Nano at the new entry level price point.

A Detroit meltdown would affect more than just new car pricing. Say what you will about the domestics, but their presence in the market forces the other manufacturers to compete on features and technology as well as price. I’m not saying that a disappearance of The Big 2.8 would return the days of “radio and heater optional,” but there’d be less incentive for remaining companies to keep content level high. The Honda Accord’s initial market success in the late 1970s was partly attributable to a higher level of standard equipment than the domestics offered.

Regarding technology, the list of innovations introduced to the market by the domestics and their suppliers is almost endless: electric starters, seat belts, catalytic converters, modern refrigerants, car audio, defoggers (forced hot air and electrically heated), turbochargers, magnetically controlled dampers/shocks, and on and on. Without the billions the domestics spend on R&D ($15.6b for Ford & GM in 2007, not counting Chrysler which is privately held and doesn’t publish proprietary data or the moneys spent on R&D by domestic auto suppliers) the pace of technological improvements will slow significantly.

The domestic car companies’ disregard of their foreign competitors in the 1970s and their poor quality in the 1980s have so alienated consumers (and their now adult children) that it’s easy to see why so many people either don’t care if the domestics disappear or actively wish for their demise. If they think, however, that such a disappearance will be good for consumers, in terms of price, features and technology, they’re sadly mistaken.

Barron‘s, the weekend edition from those warm and fuzzy people at the Wall Street Journal, is little known outside the financial world, and read by everyone inside it. Today Barron’s is hyping Honda stock, big time.  Writer Jay Palmer loves him some Honda. He cites the 200 FCX Clarity fuel cell cars motoring around Santa Monica as clear evidence of technology leadership. Never mind that the hydrogen economy is about as likely as the Moller Skycar. More urgently, “amid a savage sales slump that has led the Detroit Three to plead for government aid, threatens to bankrupt General Motors and has battered most European and Asian vehicle makers, the Japanese car manufacturer is a standout.” Honda, along only with Subaru, managed to keep unit sales above 2007 levels throughout the first nine months of 2008. “Recently, however, the downturn’s severity has taken a toll on Honda. Its U.S. sales plunged 25% in October, but that still was better than the overall industry’s 32% slide. Honda now expects its 2008 U.S. sales to be off 2.4%, the first yearly decline in 15 years. But the company remains confident; it will open a new plant this month in Greensburg, Ind., that soon will be turning out 30,000 vehicles a month. And it has opted not to follow Toyota, Nissan and others in offering 0% financing.” That last bit is interesting. Honda isn’t following Toyota’s lead into the Saved by Zero swamp.

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According to Canada’s Financial Post, Toyota and and Honda are freaking-out about the potential failure of Detroit’s three car companies. “We’re very concerned” about a Detroit meltdown, ToMoCo spokesman Mike Goss told the Post. “In the past couple of days I’ve been asked ‘Wouldn’t it be great for Toyota if others fail?’ We think the opposite is true.” Toyota is concerned about a Motown meltdown’s catastrophic effect on its NA supplier base; “The vehicles Toyota builds in North America contain an average of 75% domestically sourced parts and systems, and Toyota is reliant on many of the same suppliers used by GM, Ford Motor Co. or Chrysler LLC. The Japanese automakers are working to identify which suppliers have the biggest exposure to the Detroit firms. They are also developing emergency plans in the event they need to replace a company providing them with parts. “Everything’s on the table about what we might have to do,” Mr. Goss said. Meanwhile, the industry shills at the Center for Automotive Research seized on the comments to predict, you guessed it, carmageddon…

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The question presumes that A) Detroit’s ailing automakers ARE America’s automobile industry and B) using our tax money to protect Ford, GM and Chrysler from their own incompetence would benefit the U.S. car industry. Not true, on both counts. And by ignoring the flawed assumptions underpinning the argument for raiding the average American’s wallet, bailout proponents are misleading what they condescendingly call “Main Street.” To which I say no, no, and Hell no.

Clearly, unequivocally, the American auto industry does not consist of Ford, GM and Chrysler. In fact, these three Detroit-based companies COMBINED no longer control the lion’s share of the American automotive market. Foreign-owned manufacturers– the so-called transplants– account for over 50 percent of all new vehicle sales within the U.S. For better or worse, they constitute the core of the American automobile industry.

Feel free to debate amongst yourselves whether or not the fact that the transplants’ profits return to their home country is a crucial difference— just as long as you understand that Ford and GM’s North American divisions have been living off of their foreign ops’ profits for at least the last two years. And that this financial flow inwards is decades old.

And don’t forget another, equally salient detail: Detroit-based car companies are, right now, importing hundreds of thousands of cars and millions of parts from outside U.S. borders. For more than a decade, Ford, GM and Chrysler have been Hell bent on “saving” the American automobile industry by destroying it, sending U.S. manufacturing jobs to Canada, Mexico, South Korea, China and elsewhere.

Anyway, if we accept the idea that BMW, Mercedes, Toyota, Honda, Hyundai and Nissan’s American production facilities are a vital and yes, equal part of the American automotive scene, it raises an interesting and completely ignored question: is the federal bailout for Detroit good for the REST of the American automobile industry? Does it “save” them?

The surprising answer is yes. By supporting Detroit’s inefficiencies, a bailout would help maintain a suitably high “floor” for new car prices. So your tax subsidy to Detroit would protect the transplants’ profits, and by extension, their American workers.

On the downside, a federal bailout screws the consumer. It would help prop-up new car prices, stifling the kind of competition that leads to innovation, and increased value-for-money. As far as the non-Detroit-related taxpayer’s personal pocketbook is concerned, letting American-owned automakers fail is the best possible course of action. The American consumer would get a better product at a lower price, for no extra charge.

Sorry. I know: it’s about jobs, jobs, jobs. Inherent in the idea of “saving” the [strictly defined] American automobile industry is “saving” American automotive jobs, upon which the entire U.S. economy supposedly rests.

Again, you can discuss the “ripple effect” of a combined Ford, GM and Chrysler C11 on the wider U.S. economy without my interference. But however great the impact, it doesn’t alter the truth: the word “save” here means “subsidize,” to no appreciable end. I mean, is there any one amongst you who truly believes that injecting $25b of federal capital into Ford, GM and Chrysler will put them back on their feet, so that their workers and products can compete with non-Detroit automakers? If so, you simply haven’t been paying attention.

And once we’re doing a reality check, if saving the American automobile industry is a euphemism for “giving The Big 2.8 a bridging loan so they can get healthy and competitive at some point in the not to distant future,” we need to face facts: Ford, GM and Chrysler will have to shed jobs anyway. Bailout or no bailout, they’re too damn big for the U.S. car market, now that the new car “bubble” (which they created) has burst.

Enough of this misdirection. Let’s get down to brass tacks. The real question is this: is Detroit worth saving?

No, it’s not. Not in its current form. In this I refer you to General Motors Death Watch 1, wherein I proposed that GM should be parted out. I asserted that its current management should take a hike and its constituent brands reconstituted as independent car companies. (Or not.) In the last three years, I’ve seen nothing to dissuade me from this opinion. As for Ford, it too needs to shed brands and reinvent itself. Chrysler, well, Chrysler’s a basket case. Only Jeep may live on.

So yes, the American automobile industry is worth saving. Only it’s not in any real danger. The only part of the U.S. car biz that’s on the ropes is the Detroit contingent. And the only way to save that bit is to let it fail, so that it may be reborn. But no matter how you slice it, and sliced it will be, “bailing it out” is against the interests of the American taxpayer AND the American consumer who, after all, must foot the bill.

At the end of the proverbial day, a federal bailout for Ford, GM and Chrysler would simply prolong the automakers’– and their workers’– agony. Yes, there will be pain. Lots and lots of pain. But sometimes the more painful the mistake, the more important the lesson. This is one of those times. Detroit can not be saved from the reality that they’ve studiously, callously, stubbornly ignored. Nor should they be.

Germany’s industry rag Automobilwoche [sub] is running an interesting ballot. “Who do you think would profit the most if GM goes bust?” (or German words to that effect). The options are kind of odd. Only Ford, Renault/Nissan, Toyota, and Volkswagen are eligible. But keep in mind, Automobilwoche is a German rag. They could have asked “What if Opel would die?” But they didn’t. Do they know more than we do? 846 souls have voted so far.