Back when Cerberus bought Chrysler from Daimler, the new owner’s spinmeisters were highly animated. “We’re quicker than quick,” they proclaimed. “Our private equity owners don’t answer to The Street. We can make decisions– and get things done– fast.” The party line was designed to counter fears that Cerberus had bought-in simply strip-and-flip Chrysler. Uh-uh. They were going to restructure the ailing American automaker. Right now. And then… nothing. As Billy Preston said, nothing from nothing leaves nothing. 

There’s plenty of mystery and inconsistency surrounding Chrysler’s short-term future. Several suppliers tell us ChryCo’s changed payment terms from 45 to 60 days, and unilaterally lopped-off five percent from their bills. We know of one supplier that’s owed millions, that hasn’t been paid in months. This indicates a severe and entirely predictable cash crunch for a company whose CEO admitted (just four months after Cerberus’ purchase) that his employer was “operationally bankrupt.” 

But Chrysler’s paying other vendors the full amount owed, on time. And one of our Best and Brightest reports that Chrysler’s upped its seat orders for minivans, Dakotas, Journeys and some Jeeps.  At the same time, we hear rumors that Chrysler will file for Chapter 11 by August, to maintain the option of suing Daimler for selling them a bill of goods. And yet Chrysler’s trotting-out octogenarian legend Lee Iaccoca to rally the troops. Why bother with the warm fuzzies if the pink slips are at the printers?

But it’s what Chrysler HASN’T done that’s the real news. Two months after Jim Press left the top of Toyota to join the over-moneyed executives in Auburn Hills, the nets were all abuzz with model termination. Sure enough, Chrysler Pacifica, Crossfire, convertible PT Cruiser and Dodge Magnum were lopped off the dealer menu. Chrysler signaled that there was carnage more to come. Only… there wasn’t. Despite journalists’ helpful lists of DOA-mobiles– Jeep Commander, Dodge Durango, Jeep Compass, Dodge Nitro and so on– the models are still in production.

That’s as far as anyone knows. Sales of these vehicles are so far down the rat hole (e.g. Durango sales down 68.8 percent in May), their inventories are so large (e.g. there’s a 117-day supply of Jeep Commanders), that Chrysler could stop building them without much impact on, well, anything. With GM closing four truck plants and Ford slicing production as fast as it can, you’ve got to wonder why Chrysler– the “quick one”– doesn’t cut bait and fish. Where’s their “cut your way to prosperity” turnaround plan?

Chrysler can’t afford it. Lest we forget, GM and Ford are paying mega-billions to buyout their excess union workers. ChryCo’s private equity owners have deep pockets, but any large-scale effort to downsize their automotive holding would force them to borrow big bucks, miring Cerberus even deeper into their Chrysler quagmire. Clearly, sensibly, they don’t want to go there.

Besides, the REAL game is strip-and-flip. (Always has been.) Why commission wholesale structural changes when you’re going to break up the parts and sell them off? A lick of paint for curb appeal (i.e. a hybrid or something) and Bob’s your uncle. Alternatively, if Cerberus’ longer-term dreams of The Mother of All strip-and-flips have become a cash conflagrating nightmare, Chapter 11 protections will give Chrysler’s eventual owners the freedom to kill models, shutter factories and “modify” union contracts. Call it the “screw this, we’ll unload this thing as a fixer-upper” strategy.

Again, the signs coming from Chrysler are not clear on ANY of these points. Why would they be? Cerberus didn’t get to a size where it could afford to buy Chrysler (at a whacking great discount) by telegraphing their every move to the press or, for that matter, their own employees. We’ll just have to watch the signs– Company-wide summer break? ResCap going under?– to see if and when Cerberus says draws a line under this misguided misadventure.

In that sense, the real question here is whether or not Cerberus is at the point where they’d rather take a hit to their reputation than a hit to their finances. This makes Chrysler’s immediate future a contest between expediency (i.e. greed) and ego (i.e. hubris). While I don’t think that the fact that Chrysler is purposely mistreating some of its suppliers indicates that the company is preparing to pin the blame on the donkey, as some of our commentators have suggested, it does tell us that the end game is near.

There's no question in my mind that Chrysler is headed for dissolution. If Cerberus was going to “save” Chrysler they would be doing something, anything to that end. Never mind all the announcements about foreign partnerships. Black Tuesday has revealed that the time to act is now. (Well, three years ago.) Chrysler’s silence speaks volumes. It tells us the once-proud automaker’s final chapter is about to be written.

The Toyota Camry is one of four vehicles (including the Corolla) that now sells more prolifically than Ford's dethroned F150 full-sized pickup. At the same time, the new Toyota Tundra pickup is a drug on the market; sales fell 34 percent vs. May 2007. Do the math. ToMoCo have. The transplant's looking at using its famed production flexibility to replace excess Tundra capacity with Camry assembly. Automotive News [sub] reports that Toyota is switching its Princeton, Indiana plant from cranking-out slow-selling Tundra/Sequoia trucks and Sienna minivans to producing the Camry, which sold 51,291 units last month. Though Toyota has not officially responded to the reports of production shuffling, though the company does say it's "looking at a lot of things to balance production." With Tundra production already slowed at Toyota's second truck plant in San Antonio, there's no doubt that Toyota (like many automakers) is over invested in a product that dropped sales to the tune of 31 percent last month. Camry spent much of the 1990's at the top of sedan sales records, and with the battle for the best selling vehicle in America wide open, boosting Camry production could help Toyota's champion snag top-spot bragging rights.

There's an interesting juxtaposition in today's news about the forthcoming VW Golf. Motor Authority reports that Volkswagens sixth-generation Golf will offer standard stop-start technology in its efficiency-oriented Bluemotion versions. VW director of powertrain research Wolfgang Steiger reveals that the the Bluemotion is shooting for a 30 percent gain in efficiency, begging the question of whether Bluemotion trim will bring a hybrid drivetrain to the table. VW has reportedly ditched diesel-hybrid plans for a cheaper gas-electric unit. But Steiger only mentions a new range of 1.0 and 1.2-liter compact gas engines, with a possible forced-induction three-cylinder in the works. Either way, it's all a bit academic. Future US-market Rabbits will be developed separately, on cheaper platforms. Which is funny, because Auto Motor und Sport reports that the new "too-pricy-for-the-states" Golf costs nearly $2k less to produce than the outgoing model. Even with rising steel prices and a strong Euro, VW has managed to realize savings by reducing material costs, increasing volume and producing on a four-day work week. So, despite reducing the cost of building the new Golf, VW will be challenging Toyota in the US market with an even cheaper replacement for the Rabbit? With the diesel Jetta already behind the Prius curve, VW should bite the bullet and bring the Euro-Golf stateside, and proliferate stop-start across its US model line. Or give up its goal of taking on Toyota NA for volume sales.

Problem: the Toyota Camry is being outsold almost 2-to-1 by Dodge's Avenger among black customers. "Here's this nameplate that's ubiquitous," said Monica Warden, account director for Burrell, Toyota's agency of record or African-American advertising. "But for an African-American woman, it's not even in her consideration set. Our preliminary testing found they think of it as suburban, not urban; as solid but boring. And for this woman, she doesn't see herself as boring." To raise sales of its best-selling dullard, Toyota hired the company responsible for the intriguing (at least to us fanboys) The Dark Knight (movie) viral ad campaign. The result this site: If Looks Could Kill. It features a subtle sales pitch, serial web movies and who knows what else. The Dark Knight campaign had fanboys running around the San Diego Convention Center in Joker facepaint; we'll see what curious activities will arise from ILCK.com.

Toyota's iQ is shaping out to be some of the toughest competition in the sure-to-grow city-car class. Winding Road has spy shots of the SMART-fighter road testing in Japan. Photos reveal the model's radical wheel-at-each-corner stance, facilitated by Toyota's newly developed differential, flat underfloor gas tank and angled rear suspension. By maximizing interior space, the Toyota will offer back row seating: room for three adults and one child or bag of groceries. The iQ is nearly two feet longer than the SMART, making it both more commodious AND better-proportioned. The small-but premium Toyota was caught in camouflage, but it's not hard to imagine the Geneva showcar's production-ready sheetmetal on this car. Toyota expects to sell 100k iQs per year, after launching the model into the teeth of the European city car market later this year. If it succeeds there, if gas prices continue their precipitous climb, don't be too surprised if the iQ shows up stateside, possibly in micro-ute Urban Cruiser form. We'll let you know.

Saturn is dead. Despite a thoroughly refreshed line-up– including a mild hybrid, a Lambda-dancing CUV, a sexy sports car and a cute ute– the brand can’t get wood. In fact, Saturn’s sales are the very definition of flaccid. Year-to-date, they fell 19.9 percent. In May, sales sank 32.7 percent. In this process of final dissolution, the once autonomous upstart GM brand has become an irrelevant Opel outpost. Saturn’s Spring Hill, Tennessee factory is now in Chevy’s hands. Plastic body panels and unique designs have been swapped for rebadged leftovers from the GM parts bin. Saturn’s slow homicide is more than a shame. It offers a discouraging glimpse into General Motors’ dysfunctional culture.

The Saturn brand was GM CEO Roger Smith’s $5b excellent adventure. Both internally and externally, GM sold its new brand dawning as the American automaker’s import fighter. And why not? The company’s homegrown initiatives to repel the import invasion– the Corvair, Vega, X- and J-cars, etc.– all flopped spectacularly. Equally important, Smith recognized the cultural paralysis within his own Empire. Something had to be done.

Saturn’s mission: drag GM kicking and screaming into the twenty-first century, the new era redefined by The General’s foreign competition. To do the deed, GM’s re-boot boasted all the hallmarks of the Toyota Production System– just-in-time inventory management, lean manufacturing methods, flexible job classifications– combined with plant automation that could eventually render the United Auto Workers irrelevant. In tandem with the California-based, joint NUMMI operation (with Toyota), Saturn would reinvent GM, if not the entire automotive business.

Smith singularly failed to cultivate the organizational buy-in necessary to implement the plan. Managers fond of rejecting anything remotely Japanese considered Saturn a parasite sucking resources from their pet projects. UAW leaders knew that Smith would use his beloved robots to sign their pink slips if given the chance.  Smith’s efforts to expand centralization and badge engineering among the existing divisions and his abrasive personality only deepened bureaucratic resentments.

Despite the acrimony, Saturn fulfilled its initial promises. Reviews were favorable. Buyer loyalty for the no-haggle proudly domestic car brand achieved cult-like status. But internal politics sealed the marque’s fate. Smith retired in 1990, just as Saturn’s first cars were launched.  Robert Stempel, Roger Smith’s loyal successor, resigned only two years later. As its champions disappeared, Saturn floundered no sooner than it had begun.

Saturn’s limited, aging lineup quickly stagnated. Sales peaked in 1994 at 286k units, well short of the 500k goal. In fact, 1993 was Saturn’s only profitable year.

Jack Smith became CEO following Stempel’s ouster.  Clearly no relation to Roger, the new Smith dismantled the trappings of his namesake’s regime. GM’s standby strategies favoring cost cutting and large, low R&D vehicles were restored. Smaller cars, sad aberrations best left to foreigners, would be obtained from overseas from marques such as Isuzu and Fiat. 

Current CEO Rick Wagoner continued Jack Smith’s agenda. Wagoner also peddled gas guzzlers, although this time to no avail, while completing the rogue Saturn’s dismemberment. If Jack Smith plunged in the knife, Rabid Rick twisted the blade.

Saturn really was “a different kind of company.” But resistance to change is a hallowed tradition within the GM family.

Peter Drucker, the father of management consulting, encountered GM’s insularity as early as 1946. His seminal study, Concept of the Corporation, extolled the automaker’s organizational successes, but advocated increased decentralization and empowerment of line workers. Drucker’s questioning of GM orthodoxy was considered blasphemy. Managers caught with the book were subject to termination. Then-Chairman Alfred Sloan was so incensed he later wrote his memoir specifically to rebut Drucker’s analysis.

Six decades later, little has changed. Success is perceived as an entitlement, deserved after decades of dominance. A not-invented-here mentality and superiority complex make meaningful change nearly impossible. Foreign rivals are still regarded with contempt, their tiny cars mocked as effete trinkets unsuitable to American tastes. Worker autonomy and equitable supplier relations, essential components of successful JIT lean production systems, are disdained for usurping management’s sacred duty of unilateral, top-down leadership.

From management’s perch above, the dismal sales of Aura, Outlook, and Astra confirm the fate of those who dare stray from the General’s path. Ironically, the dying legacy brands are adding to Opel West’s declining stature. Buick’s recent Chinese exploits and the baby boomer buzz of its Enclave crossover raise false hopes for the future of the Buick-Pontiac-GMC trifecta.

The upcoming redesigned 2010 Aura should deliver the knockout blow. GM intends to spoil that party by shackling the attractive Eurosedan with uninspired US-spec drivetrains. With their standalone stores and inadequate corporate support, Saturn’s dealers can expect to pay dearly for that mistake.

Sadly, the next Aura’s misfire will assure GM management of what it has believed all along: Americans don’t really want smaller cars. Caught within the quagmire of Michigan’s splendid isolation, Saturn never stood a chance.

Just when Detroit thought it was safe to go back into the red ink-stained waters, the Teamster's union has stolen their swimsuits. (Or something like that.) Automotive News [sub] pinged-us with news of a strike at the nation's number two car delivery hauler: Performance Transportation Services (PTS). "The action comes after a bankruptcy court judge gave the suburban Detroit company permission to cut the pay of its union drivers by 15 percent. PTS is operating under Chapter 11 bankruptcy protection for the second time in three years." This time 'round, it ain't just The Big 2.8 who could get slammed by a strike. PTS delivers an unknown percentage of its four million cars shipped annually to Honda, Hyundai, Kia, Mercedes, Mitsubishi, Suzuki and Toyota dealers. 

Even as Detroit races to turn-off the production spigot, dealer inventories are building to abandoned airfield levels. You want to talk trucks? In an industry where a 60-day inventory is ideal, every single GM truck has over a 100-day supply; some many more. While all three automakers swore they'd sworn off incentives (and blamed the move for reduced sales), that was then, this is now. Chrysler's Jim Press signals the fire sales to come. "It is inevitable from our standpoint because we have pricing pressure in terms of cost from steel and plastic," Press said during an interview with Dow Jones Newswires. "Incentives will be a key part but the focus will shift on those products that are facing the headwinds, such as trucks and SUVs, rather than those benefiting from the tailwind like cars." Chrysler? Cars? Tailwind? What tailwind? Anyway, the bottom line: "Chrysler's average incentive per vehicle sold in the U.S. in May was $3,714, the highest figure among the six top-selling auto makers for the month, according to Edmunds.com. Ford's average incentive totaled $3,326 followed by GM at $3,477. Nissan Motor Co.'s (NSANY) average U.S. incentive in May was $2,090, while Honda Motor Co. (HMC) was at $1,256 and Toyota was $1,045."

In response to Honda's upcoming limited release of the FCX Clarity fuel cell car, Toyota has announced plans to start leasing the seductively named "FCHV-adv" in Japan later this year. If this is a beauty contest, FCX kicks FCHV's butt.  FCHV-adv's main claim to fame: a range of 760 – 830 km (472 – 516 miles). Long term durability of the fuel cell unit itself is "subject to ongoing R&D," which means it isn't there yet. Meanwhile, "Honda Motor Co.'s revamped fuel cell vehicle for leasing in California is rolling off a Japanese factory floor later this month." Forget Ford vs. Chevy; the real battle today is Honda vs. Toyota. Which begs the question: what happened to the GM Hy-Wire concept vehicle Wagoner showed off way back in 2002 as the The Answer? And lest we forget, where's the hydrogen for these vehicles going to come from? Oil?

Well, Forbes has another one of its famous "lists of stuff." [Ed: I challenged them to send us a top ten list of their top ten lists. No dice.]  This time, the company started by the guy who collected anything that wasn't nailed down offers a list of the ten most reputable global companies. Apparently that means companies people like the most (as opposed to sue the least). Among obvious favorites like Google, two car companies have made the grade. India's Tata conglomerate, which just picked up Land Rover and Jaguar for a song is beloved. (Although it should be remembered that Tata makes all manner of products from steel to tea). And as irritating as it is to those of us "in the know", Forbes's research seems to suggest Toyota has an unending bag full of goodwill. Note to Toyota: don't get cocky. You can bet the 1960 version of that list would have included Ford and GM.

Thought that the LF-A will be a brand diluting agent for Lexus? Well, seems like the Japanese have something a lot better in mind for that job. Lexus has announced plans to sell a "luxury Prius." Lexus will present their HPV (Hybrid Purpose Vehicle sounds cheesy enough to me) alongside the next gen Prius at the next North American International Auto Show. Why make a luxury version of the Prius? God knows. I can only guess that tree-hugger superstars that used to drive Priora complained about the car's increasing popularity and plebeian interior. For this rendering, I tried to add some IS headlights onto a Prius. The resulting hybrid hybrid looked plain dumb. Once I decided that the "ordinary L-finesse" wouldn't work, I opted for some manga lines that emphasize the car's expensive-toy status. You know, Toyota might want to forget about the Hybrid Purpose Vehicle appellation, considering the whole human papillomavirus thing.

[For more Avarvarii photochopistry, click here]

Talk about your diminished expectations… Post-Black Tuesday, GM CEO Rick Wagoner's told the world [via The Financial Times] that his employer has enough cash to make it through '08. And while you're filing that under "methinks he doth protest too much," Wagoner defends GM's (and the rest of the 2.8's) reliance on big trucks and full sized SUVs by… pointing a finger at Toyota. By his way of thinking, you can't blame Detroit (i.e. him) for missing the SUV and pickup truck exodus because Toyota got caught building a new truck factory at the wrong time. Huh? Toyota added a full-sized truck to its product portfolio to compete vigorously in one of the few segments of the market where they were weak. (Lest we forget, they built the Prius in record numbers at the same time.) Sure it turns out that Toyota's Tundra timing was off, but they aren't at risk of closing up shop because of it. Bottom line: ToMoCo books more profit in one year than GM's entire net worth. Comparing GM's management decisions to Toyota's is patently absurd. Will no one rid us of this troublesome man? 

Honda was the first automaker to offer Americans a car-based SUV with a third row of seats. It didn't matter that an Odyssey minivan was more fun to drive. Families wanted a third row without the stigma of a minivan or the bulk of a conventional SUV. The Pilot outsold all other midsize car-based SUVs. Then new competitors piled into the segment: Hyundai Veracruz, GMC Acadia, Mazda CX-9 and more. Honda lost its place at the head of the class. For the 2009 model year, Honda has responded with a fully redesigned Pilot. Have they done enough to reclaim their supremacy?

It wasn't all that long ago that GM was focused on maintaining its 29 percent market share. Boy what they wouldn't sell give to be back at that point right now (not including executive pay). Automotive News [sub] reporting that GM's market share is below 20 percent for the first time in the company's history (dating back 100 years to 1908). As of May 2008, it's 19.1 percent to be exact. Meanwhile, despite a fall in sales number, Toyota's market share jumped up to 18.4 percent. Count out the impossible-to-count out fleet sales and you can be sure Toyota has passed GM in private market sales. On the positive side, least when GM isn't number one in its home market any more, a lot of the pressure to move the metal at all costs will decrease. Maybe. Alright, no.

Toyota has launched a site to preview their new Venza crossover wagonish type vehicle thingy. The site tells you everything you need to know about the Venza (auto-dimming mirror with built-in compass) except what you need to know (the mpg). Meanwhile, the Venza's front grill looks like a mutated Mach 3 razor, but aside from that Dali-esque design, it's a fairly upscale-looking product. ToMoCo's Ford Edge competitor comes with a 2.7-liter four-cylinder engine as standard, with an optional 3.5-liter V6. Within, the Venza's gear lever sits in the middle of the dashboard's center stack. (French car much?) Taken as a whole, the Venza's so strange that it's almost… interesting. Marketing-wise, it's meant to fit between the RAV4 and Highlander– in a market space formerly occupied by the old Highlander before its "grew up" (and out). Toyota's looking to sell 75k of these… things per year, as it continues its race to become GM.