UAW members protest a Modesto, CA Toyota dealer, as part of the union’s wider effort to punish Toyota for its decision to shut down the NUMMI factory in nearby Fremont [via the Modesto Bee]. “We are not telling people not to buy Toyota products,” explains one worker. “We’re telling people that Toyota needs to be a responsible corporation and keep jobs in California.” And though there couldn’t be a better time to blame Toyota for just about anything, the NUMMI plant was closed because GM ditched the joint venture during its bankruptcy and government bailout. Toyota, like GM, was faced with overproduction in the US market, and because GM had pulled out of NUMMI, the plant was an obvious candidate for closure. So really, these protesters would have some sinister version of GM’s logo on their sign if they were really interested in fairly assigning blame for the NUMMI shutdown. However, their UAW pension fund owns 17.5 percent of GM, so simply blaming Toyota is a lot more convenient. Especially since Toyota is already attracting so much well-deserved (if wholly-unrelated) negative media attention.
The Colorado House’s passage of HB-1049 [PDF here], a bill requiring restitution for dealers culled during the Chrysler and GM bankruptcies, has drawn a $60,000 “no” campaign from General Motors. The Denver Post reports that GM’s ad campaign, which features lines like “we must keep driving forward to repay our government loans,” and “don’t let special interests stick taxpayers in reverse,” has riled up local lawmakers more than ever, drawing such timeless put-downs as: “they must be spending tax dollars on Botox to say that with a straight face.” The bill would require OEMs compensate culled dealers for signs, parts, dealer upgrades and more, as well as offer them the right of first refusal for any new area dealerships.
Everyone in every business everywhere thinks they are at least somewhat underpaid, and for most, there’s a certain amount of truth to the sentiment. But then, most Americans don’t have jobs that allow them to destroy billions of dollars in value over the course of their careers. Nor does the Detroit News give most of us a forum to whine about our perceived underpayment. Having helped lead GM into bankruptcy and bailout (with thousands of Americans losing their jobs along the way), Bob Lutz still isn’t happy about executive pay limits at GM, and he clearly has no compunction about airing his grievances to the DetN.
What you see is what you get, and it ain’t a lot. All I know is, right now, we are given our responsibility, and given the rigors of the job and demands and the accountability, I would say we are being paid way, way, way below market. Right now, that isn’t a problem, but over time, clearly a company that undercompensates senior executives is going to have a retention or recruiting problem
Transportation Secretary Ray LaHood’s get-toughquotes during the Toyota recall have generated significant backlash against an administration that is already knee-deep in the automotive industry. The governors of Mississippi, Kentucky, Indiana and Alabama (all of which host Toyota plants) laid into the NHTSA and Obama administration in a letter covered by the Detroit News. The governors argue:
Despite the federal government’s obvious conflict of interest because of its huge financial stake in some of Toyota’s competitors … it has spoken out against Toyota, including statements U.S. government officials have later been forced to retract… Toyota must put the safety of drivers first and foremost. However, they deserve a level and reasonable response from the federal government – one that is not tainted by the federal government’s financial interest in some of Toyota’s competitors
Strangely, the governors of Texas and West Virginia, where Toyotas are also assembled declined to sign onto the letter. Still, the attack isn’t being simply written off has home-state selfishness. One bellwether for the issue is the fact that the Detroit News looked past its own hometown interests and ran an editorial by the Cato Institute’s Daniel Ikensen, amplifying the governors’ critique. And sure enough, Obama decided to take the issue on head-on in an interview yesterday. (Read More…)
This week saw the Volt’s price point issues return to the public eye, as GM’s Chairman and CEO made it clear that he takes the government’s $7,500 tax credit for granted. But Whitacre’s dissembling revealed once again GM’s fundamental problem with the Volt: getting people past the sticker shock. Though GM’s short-term viability doesn’t hinge on the Volt selling like gangbusters, it’s clear that the Volt’s initial success or lack thereof will be a crucial factor in GM’s ability to hold a successful IPO and extricate itself from government ownership. Which, according to The Big Money‘s Matt DeBord, is one of the reasons the government should expand the Volt’s credit of $10k. Another reason: the Volt’s competition is too good!
with the base Prius selling for just over $20,000 and the base Honda Insight hybrid for under $20,000, the feds may have to start thinking about how to enable innovative electric and gas-electric plug-ins to survive. The EPA mandate to raise fleet fuel-economy standards to average of 35.5 mpg by 2016 looms, and a component of that target should be EVs and plug-ins. Otherwise, carmakers may abandon the tech, leaving it stillborn to cynically massage their fleet numbers by importing small cars from foreign operations to North America—cars they know Americans will only grudgingly purchase and that may force the government to chuck the 35.5 requirement.
Money Control reports that the French government threatened to increase its stake in Renault from 15.01% to 20%. Not because it believes in the company and its products (would you trust a Renault Megane over a Honda Civic or Toyota Auris?), but to further exert control over Renault. Why would it want to do that? Well, that could probably have something to do with the French government’s invite to Carlos Ghosn for a little “sitdown” over the rumours that Renault may produce its new generation of Clio in Turkey, rather than its plant in Flins, France, where the current generation is built.
The TARP bailout of GM finance partner GMAC is being criticized by a congressional oversight panel [full report in PDF format here], reports the Detroit Free Press. The panel alleges that the Treasury
has not yet articulated a specific and convincing reason to support the company… It has never stated that a GMAC failure would result in substantial negative consequences for the national economy. If Treasury has made such a determination, then it should say so publicly.
My commitment is to the American taxpayer. My commitment is to recover every single dime the American people are owed… We want our money back and we’re going to get it.
Without even getting into the politics of President Obama’s proposed “financial crisis responsibility fee,” it’s easy to see that the initiative holds a wealth of implications for America’s TARP-recipient automakers. In Obama’s new rhetoric, taking TARP money put businesses in a new category of special obligation to the taxpayers. Though the fee is targeted at financial institutions, the principle applies just as much to Detroit.
Chrysler may file a suit challenging the congressionally mandated dealer cull arbitration, reveals CEO Sergio Marchionne to Automotive News [sub].Why? Because it’s just not fair that dealers pressured congress to give them a fair shake. Wounded by the arbitrary backlash against his arbitrary cull, Marchionne threw his head back and cried unto the heavens:
Ask me what fairness is involved in all this. Why doesn’t anyone ask what’s fair to Chrysler?
Having been told by the Secretary of Transportation that the Chrysler Group’s motley assortment of new trim level names, rebadged Lancias, decal-sporting special editions represents “the cutting edge of developing the kind of products that I think people in this country, and also in other countries, are really going to feel very favorable toward,” CEO Sergio Marchionne apparently thought enough had been said about his struggling bailout baby. As CBS reports, Marchionne suddenly canceled a 45-minute scheduled press availability before he had the chance to confirm LaHood’s astonishing opinion.
It’s a bit early in the day to be crowning a QOTD, especially considering there are sure to be plenty of juicy quotes coming out of the NAIAS today. Still, this one deserves a special place at TTAC for the sheer bold-faced shamelessness of its untruth.
I think (the government bailout was) well placed, and I think they’ll make a lot of money. GM’s on its way back. We’ll be back. The government’s made a good investment. We appreciate their support. We’re glad they’re here.
So said GM Chairman and CEO Ed Whitacre to reporters from the Detroit News today. As I recently explained in an op-ed in the NY Times, unless GM’s market cap soars to its highest level in history (a pipe dream if ever there was one) the taxpayer losses on the GM “investment” will be in the billions. Even the government estimates losses on the GM and Chrysler bailouts to reach $30b. Whitacre surely meant that a GM IPO will generate some kind of money for the Treasury’s 60 percent stake in GM, but the way it came out makes it sound like the bailout will be a positive investment for the government. That’s an impression that GM desperately needs to foster in order to have a chance at emerging from government control. Too bad it’s just an old-fashioned fib.
Hey, we’ve finally found someone who believes in the Volt and Chrysler’s alleged new products. Too bad he’s from the government that owns 60 percent of GM and 15 percent of Chrysler… and he can’t explain his optimism in anything but the broadest platitudes. Did Transportation Secretary Ray LaHood properly disclose his relationship with the state-owned automakers per FCC standards? Probably not. But that’s OK, since few probably took him seriously to begin with.
Thanks to the unionization of the US auto industry, its politics (and accordingly, those of the state of Michigan) tend to be of the center-left persuasion. This tendency was doubtless aggravated over the last year, as a congressional bailout of the industry was denied by southern Republican senators. But even in Michigan, the union-industry alliance isn’t strong enough to counter the trend towards ever more divisive politics, as two recent stories show some of the ideological cracks forming in this now highly politicized industry. First,according to the Freep, the National Tax Day Tea Party will re-open last year’s political wounds by staging a rally outside the RenCen during the Detroit Auto Show this year. The idea behind the rally is to “make a peaceful yet clear statement against government takeover of America,” specifically the government ownership of General Motors. Though it’s clearly an empty gesture intended to rally political support more than change anything, it will be a jarring contrast to the usual convivial mood at the NAIAS. And it’s just one of several ways in which the politicization of the industry is becoming steadily less containable.
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