The deadline for culled dealers to apply for congressionally-mandated arbitration is midnight tonight, so if you lost your Chrysler or GM dealership in last year’s bankruptcy cull, you’d best get cracking. The Detroit News reports that at least 1,200 of the roughly 3,000 culled dealers had applied for arbitration, according to the American Arbitration Association. That number is expected to creep rise even higher by the time the deadline expires. Many observers had expected arbitration applications to be much lower, as GM and Chrysler had dragged out the proceedings, forcing many dealers to shutter their shops. GM has already reversed the closure of 80 dealers and Chariman/CEO Ed Whitacre has said he expects “hundreds” more to be reinstated in arbitration. Chrysler continues to take a hard line on the issue, a stance that is sure to make its arbitration proceedings considerably more tense.
Automotive News [sub] quotes CAW President Ken Lawenza as saying “supplier challenges” have shut down production of the Chrysler Group’s minivan plant in Windsor, Ontario. Chrysler confirmed that the plant would be closed until February 1, but refused to elaborate on the circumstances. According to Lawenza, “the reason is because if a supplier never lived up to their contract, then it could be legal ramifications. We let those guys hash it out legally.” The President of CAW Local 444 Rick LaPorte adds “it’s a piece for the key fob, so my understanding is that it’s a raw material issue. The good news is that it’s not an inventory adjustment problem or a lack of sales; it’s a good problem to have.” You know, relatively speaking. (Read More…)
The Chevrolet Volt dancing debacle was pretty embarrassing. So embarrassing that GM felt inclined to step in. Fox News reports that Maria Rohrer, the marketing manager responsible for the “dancing on taxpayers’ money” débâcle has been reassigned to become director of Chevrolet truck advertising. David Darovitz, GM’s PR spokesperson (the poor sod who had to explain the dancing spectacle to the public), confirmed that Maria Rohrer had been transferred but added that “The move had nothing to do with recent events in LA”. Which brings a couple of interesting scenarios. 1: Did GM think she did a good job and promoted her to director of Chevrolet Truck advertising? or 2: Or do GM value the Volt so much, they place it above their lucrative truck business? The Tweet by GM’s VP for Global Communication pictured above certainly indicates the latter. Either way, I’m filing this along with “Cadillac Cimarron”, “Saturn division” and “An American Revolution”, under “GM marketing disasters”.
GM withdrew its sponsorship of the US Olympic team after the 2008 games, because, as a spokesperson explained at the time, “we have other avenues to be able to reach this same audience without bearing the expense of being an official sponsor of the U.S. Olympic team.” However, GM is a main sponsor and official vehicle supplier of the 2010 games in addition to being the main sponsor of the Canadian national team. According to TNS Media, GM was the leading advertiser in the 2006 Winter Games, spending $111.6m and leading the auto sector to a resounding lead in ad spending (total $156.7m). General Motors has reportedly cut back its ad spend on Vancouver, but details aren’t being disclosed. And at least one GM investment in Vancouver-related publicity won’t be paying off: the General Motors Place is being temporarily renamed the Canada Hockey Place in order to comply with IOC standards. We’d normally make some crack here about your tax dollars at work, but Olympic sponsorships are lined up years in advance. Too bad that back in 2007, when GM was losing $2b annually, it denied that its financial status had anything to do with its removal of US Olympic team sponsorship. Had the firm been more realistic about its financial health… well, who knows where we’d be right now.
Optimism is a rare commodity in the auto industry these days, and nearly all of it comes from the so-called BRIC nations of Brazil, India, China and (to a lesser extent) Russia. India in particular is being targeted as one of the few growth opportunities for the industry’s global players. Nissan/Renault, Volkswagen, Honda, Ford and GM have all recently announced major initiatives to target growth in India’s entry-level market, and GM even gave up control of its Chinese operations in order to beef up its Indian presence. But, as the Hindu Business Line reports, India could be staring down the kind of overcapacity that is causing so many headaches for automakers in mature markets.
The Globe and Mail reports that Toronto-based Trillium Motor World has filed a $750m class action suit on behalf of 215 culled Canadian GM dealers. The suit names General Motors and, in an interesting twist, its law firm Cassels Brock & Blackwell LLP. According to a suit’s statement of claim, Cassels Brock was representing Canada’s federal government in bailout talks with GM at the same time as it was representing the Canadian Automobile Dealers Association, a relationship it never disclosed to the dealers. Conflict of interest much? (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.
Not surprisingly, the decision to close Antwerp is not sitting too well with Opel’s European Works Council. Their reply: Forget the wage concessions you wanted from us, and which are so critical for Opel’s survival.
Management at Opel wanted employees to contribute €265m annually to the cause. The unions were ready to deal, but wanted shares. Reilly reneged on the shares, which raised union hackles. Now, the offer is off the table. And with it, an essential piece of Opel’s future. (Read More…)
Belgium’s Antwerp can focus on its core competencies as a hub of the diamond trade. Opel will close their plant in the port city of Belgium within the next months, reports Das Autohaus, citing an announcement by Opel. The plant will be closed “to safeguard the future of the company quickly and sustainably.”
Nick Reilly expressed his supposedly sincere condolences: (Read More…)
Shortly after GM’s bankruptcy, we wondered why so many people were still trading “old GM” stock. After all, old GM stock is in a liquidation company with no chance of ever emerging from bankruptcy. In order to clear up any confusion, the SEC forced GM Liquidation (then GMGMQ) to change its ticker to MTLQQ. Apparently that didn’t work. CNN Money reports:
On Jan. 11, the first day of the big auto show in Detroit, about 41.6 million shares of MTLQQ exchanged hands. To put that in perspective, that’s more than the volume of Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and IBM (IBM, Fortune 500) combined that day.
Holy fiduciary responsibility, Batman! The report goes on to note that MTLQQ is the ninth most-researched stock of 2010 at CNN Money, beating stocks like Microsoft and ExxonMobile. TTAC has expressed skepticism in the past about GM’s forthcoming IPO on silly grounds like the firm’s lack of profit, turmoil in overseas divisions, weak sales and questionable strategy. Frankly, this news makes us question whether any of these things matter. If a 70 cent (but worthless) stock in a company that has no bearing on New GM can rack up that kind of trading volume, clearly there are some unfathomable dynamics at play. Maybe a $60b GM IPO market cap is possible after all!
In case you were wondering, Ed Whitacre’s assessment that the Volt will “make a margin” at a price point “in the low 30s” is the GM Chairman/CEO’s second big lie in as many weeks. Well, lie might be a bit harsh. Gross and willful misrepresentation is probably more accurate. GreenCarReports‘ John Voelcker got in touch with a GM spokesman who confirms what we all pretty much knew from the get go: GM “has not officially announced final Volt pricing, a price in the low 30’s after a $7,500 tax credit is in the range of possibilities.” In other words, we’re back to the same old $40k-ish number that GM execs have been throwing around for ages. Unless GM is talking about the electric-only (non-range-extended) Volt that Bob Lutz recently confirmed. But what about the margin thing?
Truck marketing is so out of ideas. Despite a few hesitant signs that the old “bigger, stronger, butcher” paradigm might be giving way to less primitive appeals to consumers, GM’s Tom Stephens has dragged truck marketing back to the stone age, issueing the following challenge to Ford [via Pickuptrucks.com].
You’re going to love our new diesel Duramax engine in the new Heavy Duty. You know what I want to do to prove it? I want to take our truck and Ford’s [new Super Duty] and chain them together back -to-back. Then I want to have them pull against each other. I know our truck will beat theirs.
Pickuptrucks.com has passed the memo on to Ford, in hopes of spawning a “V-Series Challenge”-type media stunt. Too bad it will never happen. When the trucks are evenly-matched, these contests tend to come down to driver skill, timing and luck. And what would that prove? Note to GM: if you want to market your trucks in wholly unoriginal ways, leave reality out of it and just make an ad showing your truck kicking the other trucks asses or mocking owners of competing brands. You know, the way the good lord intended trucks to be marketed. These guys have it figured out.
Grand news for owners of 1999 model year and later Pontiacs! Buick-GMC GM Brian Sweeney tells Automotive News [sub] that “one of our most important tasks is keeping [Pontiac owners] in the database and keeping them as service customers until such a time that the Buick portfolio has developed fully.” The plan: send owners of 1999 model-year and later Pontiacs coupons for free tire rotations and oil changes. GM sales boss Susan Docherty has spoken about the importance of these “free agents,” or GM buyers orphaned by the cutting of their brands. As well she should: it’s more cost effective for any business to keep existing buyers than win over new ones. But is it free oil change easy? If GM thinks it can make Buick believers out of the jilted Pontiac faithful, what does it say about the cynicism with which it approaches branding? Once again, GM’s need to build lost Pontiac volume for the Buick-GMC dealer net leads to the willful suspension of common sense.
An interview with Forbes the boss of the Korean Development Bank, which GM-Daewoo still owes several billion dollars, reveals that GM’s South Korean unit had a debt-to-equity ratio of 912 percent as recently as last June. GM “rescued” its crucial small-car development center by buying up all $413m of GM-Daewoo’s recent share offering, keeping the the KDB from imposing its will on the automaker. That was enough to keep the wolf from Daewoo’s door in the short term, but if Daewoo is ever going to develop a new generation of GM small cars and global products, it will have to address its $2b KDB debt and raise additional funds. For now though, GM-Daewoo is just hoping to keep a little momentum going.
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