Barrons [sub] offers Inside Baseballers a lengthy interview with former Merrill Lynch auto industry analyst John Casesa,. GM’s bestest best friend thinks the GM – Chrysler merger “looks terrific on paper.” That said, JC (coincidence?) thinks the resulting mega-domestic would have too many brands and dealers. “So this is a deal that would be difficult to execute operationally, although it could happen because the motivations are so strong on both sides… Just because GM has 22% share and Chrysler has 11% doesn’t mean the combined entity will have anywhere near a 33% share.” OK then. So what does the walking quote factory make of Kirk Kerkorian’s Ford share sell-off? “He’s not one to give up easily. The sale is alarming.” Less alarmingly, Casesa likes Toyota and Honda because of their strong balance sheets and well-hedged technology bets. [ED: For that he gets paid?] Barrons offers an excellent graphic comparing the debt loads of Ford, GM and Honda per vehicle sold. Ford was sitting on almost $4k in debt for every vehicle sold LAST YEAR and GM’s number was just a few hundred dollars less. The equivalent figure for Honda: $119. Strong balance sheet: Priceless. For everyone else: Disaster.

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The Financial Times reports that Toyota’s suffered its first quarterly sales decline “since the months after the September 2001 terrorist attacks, underscoring that even Japan’s biggest carmaker will not escape the worldwide motor industry slump.” Uh, shouldn’t that be the world’s largest automaker? Anyway, ToMoCo global sales were yanked downwards by America’s carmageddon, falling by 4.3 per cent to 2.236m vehicles. As you might expect, the aforementioned worldwide collapse has hit Toyota’s share price hard. The AP reports that Japanese stockholders holding shares in export-heavy domestics are running for the exits, propelled by a soaring yen. “The U.S. dollar… plunged below 93 yen, a 13-year low, as traders reacted to dismal U.S. jobs data that spurred speculation the Federal Reserve might cut interest rates. The combination of the two — the yen’s surge and Sony’s revision — unnerved investors in Tokyo, who dumped shares of exporters like Toyota, Sony and Panasonic.” On the positive side, Toyota’s U.S. Prius production is sending jobs stateside. The Clarion Ledger reports that Mississippi is getting ready to welcome its sixth Prius-related supplier. “Toyota Tsusho America will open a joint venture steel processing facility on the Toyota site.”

We’ve identified NYT (and former Detroit News) scribe Bill Vlasic as a Motown cheerleader ever since ever. Bill’s not happy with that assessment. Can’t see it. Which is kind of strange. I mean, read this piece in The Times chronicling GM’s slide into bankruptcy and try and find one– one– instance where Vlasic takes CEO Rick Wagoner and Co. to task for running what was once the world’s largest automaker into the ground. It’s full of the usual weasel words and waffle. To wit: the headline. “Driven to the brink.” Not driving over the brink. Driven to the brink (by external events, of course). Vlasic and his partner lead their “story” with the termination of GM’s CXX SUV program (you hurt your what?). “‘It would have been very difficult in today’s environment to spend a couple of billion dollars to do a replacement [for the GMT900 SUVs],’ said Robert A. Lutz, G.M.’s vice chairman and head of product development. ‘Reality had set in.'” And when did Maximum Bob get this wake-up call? May. Of this year. There’s more, but those of you who easily offended by GM’s mismanagement and media stooges should avoid the jump.

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Now that Bill Heard’s Chevy-heavy dealership chain has entered Chapter 11, thanks to gas prices the consumer credit squeeze the economic meltdown increased floorplan costs the owner’s greed, avarice and criminal business practices, you’d think it was time for the pain to stop. As if. The Georgia Governor’s Office of Consumer Affairs has issued a postmortem Consumer Alert. As much-missed tipster Frank Williams puts it, “apparently, Bill heard is screwing over some customers when it comes to paying off their trade-ins.” More technically, “If you are a consumer who has recently purchased a vehicle from one of these dealerships, and traded in a car or truck as part of this purchase, but the dealership has failed to pay off your trade-in, you may have some recourse under what is known as the Federal Trade Commission’s “holder” rule, 16 CFR 433.” How screwed are these people? How would you like to be looking at the following advice?

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Shocked by growth rates below the usual double digits, Chinese automakers are postponing plans for new car launches. China’s National Business Daily reports that Great Wall Motor has put off the rollout date for its Coolbear sedan to ’09. (The Coolbear made headlines for being a more or less exact copy of Toyota’s Scion xB.) FAW’s own luxury brand Besturn has moved the launch of its long awaited  A-class car B50 to the beginning of next year. Besturn hasn’t done much yet, except become the target of caustic remarks. “Separate the two words,” says  China Car Times, “and you get Best Urn – not the worlds most confidence inspiring name for an auto.” Hyundai’s NF and Ford’s new Fiesta will also be postponed. More delayed launches are being expected from China’s 60-odd car brands. Analysts fear that the lack of new models will put an even bigger dent into the already sluggish sales. Rao Da, Secretary General of China Passenger Car Association, estimates the year-on-year growth for Chinese auto sales may slow to five percent in 2008. J.D. Power disagrees. They reckon it will be 9.7 percent. Whoever is right, 2008 growth rates in China will be a far cry from the 24.1 percentage growth achieved in 2007.

Before I rip you-know-who a new you-know-what, let me just say that if you haven’t sampled Alex Nunez live blog diary (oxymoronic but there you go) of the new Knight Rider TV show, it really is worth the jump. I don’t know if Alex is gay, but it’s the cattiest thing in the history of the world, ever. Pulitzer-prize poetry, I kid you not. (e.g. “Now we get to the part where Mike curries favor with Cooperman. KITT’s got Mike’s six. Mike punches Cooperman’s girlfriend in the face, because she talked more trash to him, and he wasn’t tied to a chair with a firehose blasting him in his grille. We go to commercial.”) OK, now to the intra-blog attack… “Green car advocate proves first hand how small cars aren’t deathtraps” is a completely irresponsible post. While we’re happy that gas2.0.org’s Nick Chambers walked away from a bad smash in a Toyota Yaris (three-star front and rear side safety ratings), his anecdotal experience proves precisely nothing about small car safety. As our post on small car insurance indicates, statistically, there’s another, more credible POV on this. We’d expect Autoblog to be more responsible in its reporting. Or, in fact, not. And as long as they’re not, TTAC will be there.

It’s an open secret in Chinese industry circles: within the next six to eight years, the domestic auto industry wants to stand on its own technological feet, instead of relying on U.S., European and Japanese joint venture partners. At after-work hangouts, such as “Schindler’s Anlegestelle” around the corner from Volkswagen Group China’s headquarters in Beijing’s bar and embassy district Sanlitun, fare-well parties for managers heading home are already decreasing. In the name of the almighty efficiency, most foreigners have already been replaced by supposedly cheaper Chinese. And now, no more pussy-footing around. According to Gasgoo.com, which read it in the Beijing News, which cited a faceless industry analyst, Chinese industry giant FAW is “focusing its human, financial and material resources on making cars of its independent brands.” The joint venture partner of Volkswagen,  Mazda, and Toyota “aims to sell two million vehicles by 2010, and half of them must be FAW’s own-brand vehicles.”

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Automotive News [sub] begins the day with a snippet from former Chrysler and current Chrysler Prez Jim Press. The headline grabs a quote from Jimbo’s address at the ironically-named Convergence 2008 conference. Press’ exhortation tells a tale of corporate defiance and American grit: “Dontcha wish your pension was hot like mine?” Just kidding. “We’re going to be here,” Press pronounces. How inspirational is that? But credit Jim for a sense of humor, you know, providing you don’t actually work for Chrysler. “He said he had to acknowledge ‘the elephant in the room,’ then quipped, “There is a lot of distraction in our industry that is fueled by speculation. All I ask is stop reading the newspaper.” What’s a newspaper? Anyway, like any Motown exec wearing a golden parachute, he just had to take it that one step too far, explaining why GM is intent on swooping down on ChryCo to hoover its cash and pick its bones clean and leave it for dead (which it will be). “Our strategy is working. Maybe that’s why lots of people are sniffing around the Chrysler vault lately.” Yeah, that must be it.

While Toyota has frozen its full-size pickup truck and SUV production lines, GM is, surprisingly enough, about to do the opposite. A few months ago, GM announced production cutbacks at the Arlington, Texas plant that produces the Yukon, Tahoe, Suburban, Escalade and Dual-Mode Hybrid SUV’s. In addition to the usual two-week summer break, the plant was scheduled to be closed for five more weeks through the rest of the year. Ostensibly, the cutback was designed to prevent the trucks from piling-up on dealer lots. Starting next month, the previously laid-off workers will be back for an additional four-and-a-half hours overtime per week, plus a few Saturdays. GM cites the recent decline in gas prices and hefty incentives as the reason behind the volte-face. The General claims the “back to work you scurvy bastards” decision has nothing to do with the impending December 2008 closure of Janesville, Wisconsin plant–that also builds Yukahoes. Nor anything to do with future production cuts. What say you?

Automotive News [AN, sub] reports that “Growing political interest in another federal spending package to stimulate the U.S. economy is opening the door to more government aid to the auto industry.” Excellent! I recommend Uncle Sam buy as much Toyota stock as possible. And while we await more details on this, the real bailout, it’s nice to see AN join the journalistic march towards quoting anonymous sources as much as humanly possible. “Automakers and perhaps suppliers would have more flexibility in using the new money than they do with retooling loans that have been approved but not issued, industry officials say.” Who? Anyway, we all know where the United Auto Workers (UAW) stands on federal teat sucking– although they seem to want us to believe that their enthusiasm is a recent development. “Now we’re looking at the effect of a recession and depressing sales overall and what that does to the industry,” said Alan Reuther, the UAW’s legislative director. The next round of funding, rather than being tied to fuel economy, ‘would just be flat out in order to survive an extended recession,’ Reuther told Automotive News this week.” This week? What’s the hurry with revealing the info? So guess what Ford (a.k.a. the last domestic standing in waiting) thinks of the idea…

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The Wall Street Journal’s Business World by Holman W. Jenkins Jr. exemplifies the dangers of always looking at the course through the same binoculars. His “Uncle Sam Goes Car Crazy” (WJS Oct. 22, 2008) rant is an attempt to view Detroit’s troubles through Government is Bad glasses, filtering out all other reasons for the slide. He’s wrong, and in a dangerous way.

We can start where we agree: The American automotive industry is cart wheeling into the stands, parts are flying off and people are scared. Jenkins and I part ways mid-tumble. He believes Detroit has “accrued an almost incalculable baggage of government intervention, which explains why more intervention is needed today.” A traditional free-market loyalist, when there’s trouble, Jenkins’ finger points to big government first, automatically and without much input from rest of the body, it would seem.

First, Jenkins blames GM, Chrysler and Ford’s labor inflexibility on the Prohibition-era Wagner Act, claiming the Government makes automakers dole-out higher compensation than the market dictates. I’ll crack open a 70-year-old bottle of rye and toast laws that never change. Salut.

Labor contracts over the last few years have actually added second and third tier employees, mitigating the effect of Wagner. Not that it should have mattered. The labor laws in Germany are even more stringent and their Big 3 seem to be surviving. (Not that any car maker is raking it in a the moment, but Porsche/Volkswagen, BMW and Mercedes are nowhere near putting their respective bellies up.)

Second, Jenkins bemoans the 50s franchising laws, which certainly add to Detroit’s problems, but wouldn’t if they were moving vehicles, which they’re not. Ironically, if The Big 2.8 had not fended off the government’s attempts to raise fuel efficiency standards for a generation, dealers might have more competitive products to push right now. They’d all be selling more cars and trucks. The number of outlets matters, but to a lesser extent.

Next up, off-shoring vehicle construction, as in Detroit doesn’t do enough. I’m not entirely sure whose job Jenkins is trying to save with this argument; it’s not Joe the Tool and Die guy. Jenkins believes that saving American car manufactures means making cars someplace else. I just assume buy an American made truck, despite the Toyota badge on the tail, but that implies the tack is valid in the first place. Anyway, The Big 2.8 build plenty of cars in other countries. Fuel and safety dictates haven’t hampered that effort in the slightest. In fact, due to a limpid dollar, building in good ‘ole US of A hasn’t been this attractive in years.

Lastly, Jenkins states that American companies build better cars overseas and can’t bring them here, again because of an ignorant, intrusive federal government. I’m gathering he’s never been to a Saturn lot. Maybe he’s still confused by the fact that his Ford Focus doesn’t corner like the one he rented in Glasgow. A choice Ford made all on it’s own.

Yes, there are differences in standards from nation to nation. The differences, themselves, do not prevent a world car. The European Ford Focus is built on the Mazda 3 – Volvo 30, 40, 50 platform, that runs nicely on American highways. Its one of the many things Allan Mullaly noticed when he took charge of Ford. He’s been trying to slim and unify ever since. AND he’s not breaking any laws in the process.

Strangely enough, Jenkins misses the Big Kahuna:  mandatory health care. GM, Chrysler and Ford have to offer it to their workers, and It costs them a fortune, adding thousands of dollars to the cost of every Trailblazer, Explorer and Durango rusting on the lot. And, you know, helping people survive cancer, heart disease and other ailments along the way.

A national, single-payer health care system would alleviate these costs and level the field Americans play on against Japan, Germany and Korea, as the Chinese stretch out on the side lines. “Socialized Medicine” is beyond Jenkins’ scope, though, regardless of how good it looks as applied to this industry. Government is never the answer in Business World.

“The only thing wrong with corporate longevity,’ Jenkins writes, “are the legal encrustations that accumulate.” To which I say: build better cars and customers will buy them.

There are times when you’ve got to put the binoculars down and take in the full course. Even when you may not like what you see. Laissez faire is a fine ideology; it should never be confining. There are times when other strategies need apply, like… now (for example). One of the world’s foremost authorities on business issues got it wrong four out of four. I expect better of the Journal. With industry leaders getting this kind of advice through their headsets, it’s no wonder the American automotive industry’s spinning off the track.

Yes, I know “Saved by Zero” is a song by The Fixx. I respect New Wave. But I don’t like how it tastes when Toyota crams it down my throat for my own good.

Bloomberg reports that Toyota has sold more cars in China than GM over the first nine months of this year. Sales at GM’s biggest Chinese venture, Shanghai GM, have been down two years in a row, while Toyota sales have grown at about triple the market average since opening a new Chinese Corolla plant last year. GM has long been the number two automaker in China, trailing only China pioneer VW/Audi for over a decade. (Quite an accomplishment when you consider war-born Chinese antipathy to all things Japanese.) The General’s ouster from the second highest sales spot couldn’t come at a worse time for GM. “China is very important to GM and losing share there makes life even more difficult,” said Daiwa Associate Holdings analyst Ricon Xia. “Japanese automakers know how to make cars for Chinese consumers and they have been expanding in China at a very steady pace.” Needless to say, passing GM in China means Toyota is that much closer to finishing the year as the top-selling automaker in the world, replacing GM after decades of dominance. With growth in the Chinese market slowing, GM will also have fewer opportunities to regain ground on Toyota, who opens yet another giant factory in Guangzhou province next year.

Reuters reports that the wait is over! GM has finally picked a water pump supplier for its plug-in electric – gas hybrid Hail Mary, the Chevy Volt. That’s right, Morrisville, N.C.-based Buehler Motor will supply 12-watt and 50-watt auxiliary water pumps necessary to circulate coolant through the Volt’s subsystems. Not that cooling is something to take lightly, as the Volt’s Lithium-Ion batteries will probably need some fairly extensive thermal management. (Laptop dancing anyone?) Despite publicly acknowledging that the batteries are the Volt’s most crucial component (duh), GM has still not decided on a battery supplier for its E-FLEX platform. The long-running competition between LG Chem and Conti-A123 for a lucrative battery supply contract is still ongoing, despite the intense pressure on GM to meet its 2010 rollout goal. So is GM testing both batteries in vehicle applications, or is it leaving reliability and performance in the hands of in-house development testing? It’s anybodys guess at this point, and every day 2010 gets just a little bit closer. For GM, and its competitors.