OK, so the latest GM Fastlane PR exercise is actually entitled “What Is GM Doing With The Money?” Defensive much? Anyway, coming from Fastlane, there’s obviously no mention of giving Cadillacs away. Or throwing cash down the Delphi hole. Or paying Brazilian workers to sit on their hands. No, having received $13.4b, GM’s Steve Harris reveals that GM’s plan is to (wait for it) comply with the terms of the loan! In other words, “prove that we can repay the loan, achieve a positive net present value, and meet federal fuel efficiency and emission requirements, and manufacture advanced technology vehicles in the U.S. ” And with the federal money, GM is “making progress,” says Harris. How? By building concepts like the Cadillac Converj. And announcing vehicles like the 2010 Equinox (Saturn Vue cannibalism!) and the 2012 Spark and Orlando (which debut after the loan is due). Hallelujah!  And though Harris mentions the UAW Job Bank shutdown and “discussion” of plans to reduce dealers by 400 per year, his effort to “do a better job of communicating our successes (and) how we will be changing going forward” leaves out all the interesting bits.

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If you’re familiar with Delphi—a former GM division with the words “bankrupt since October 10, 2005” over the door—then you’ll know that they’re a not-so-hidden cancer on GM cancerous corpse. Even as The General seeks to survive with a federal IV stuck in its metaphorical artery, it continues to peel off just enough cash—now your cash—to keep the parts maker making parts. For vehicles no one’s buying; but that’s how the industry doesn’t roll these days. So, some bad news from the oracle then. First, GM’s told their pals at the SEC (accounting scandal forgotten) that they’re accelerating a $50m payment to Delphi. [NB: Delphi had asked GM for a $100m hurry-up.] Can you say running on fumes? Delphi can. “The Company believes the amendment and accelerated GM support will enable it to preserve available liquidity given the difficult economic environment, particularly in the global automotive industry,” Delphi said in a filing with their pals over at the federal bankruptcy court. Judge Robert Drain, no less. And the cutbacks keep on happening!

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Saw this ad on TV for the first time whilst fantasizing about a Rachel Maddow vs. Bill O’Reilly death match (rules upon request). The first thing that struck me: the Aptera is the only car in the world with less sideways visibility than the 1938 Bugatti Type 57SC Atlantic Coupe. Second, what is that hulk those guys are washing, and does the man from Griot’s Garage wince every time he sees that paint-scratching action? And lastly, I reckon the Volt has had its day in the sun. It’s not a profound Insight, but by the time Chevy’s not-so-slammed electric/gas hybrid appears, the Volt’s gee whiz factor will have drained off into the gestaltosphere. The Volt will have to compete with real cars in the real world, offering real advantages to real buyers. As you may have noticed, GM isn’t so good at reality. Still, where there’s a will, there’s an Uncle Sugar. The feds are lining up some $10k worth of tax credits for GM’s Hail Mary. Per vehicle. Is it enough? And will the clock run out before The General can even send in the special teams? Your guess is better than theirs.

Or so goes the logic of Brent Snavely and friends over at the Detroit Free Press. Sales down 37.1 percent? The lowest seasonally adjusted annual selling rate (SAAR) since 1982? No way is it going to get worse before it gets better! “This is not real. This is artificially low,” says Jesse Toprak, executive director of industry analysis for Edmunds.com, who goes on to warn that “the industry might not recover without some sort of external stimulus.” Not here, not now! And yet in the midst of all this turmoil, a strained and unconvincing optimism abounds. Well, at the Freep anyway . . .

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An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Tokyo this week.

GM flirting with FAW: GM is holding discussions with major Chinese automaker FAW Group to form a partnership for light commercial vehicles, Reuters reports. The two parties have already registered a name with the State Administration for Industry and Commerce, which is the first step of Chinese joint venture courtship. GM already makes light commercial vehicles in China in a three-way tie-up with SAIC and Liuzhou Wuling. GM manufactures Buicks in Shanghai with SAIC, China’s largest auto maker. FAW, one China’s three biggest automakers, operates car manufacturing ventures with Volkswagen and Toyota. SAIC is also in a joint venture with VW. SAIC and FAW have been considered bitter rivals, although there are reports of a thawing. GM said its commercial vehicle venture in China sold 19.7 percent more vehicles in January than a year earlier, helped largely by sales of the Wuling Sunshine minivans.
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In fourteen days, GM and Chrysler will submit realistic plans for viability to Congress. See what I did there? With January’s sales slaughter revealed, it’s obvious neither automaker can survive without a huge and ongoing injection of working capital from the nation’s working capitol. Even if Uncle Sam provides this staggering amount of money (more than enough to start a car company from scratch), GM and Chrysler wouldn’t make enough profit to pay the interest and the principal during the loan’s term. The plans the automakers are about to present to your elected representatives are a fictional moon shot—with a make-believe launch vehicle that couldn’t propel a chimpanzee ten feet.  

Chrysler will point to its deal with FIAT as their lifesaver. In truth, it’s nothing more than a “free look” for the Italians to figure out what pieces of Chrysler they want to buy when the liquidation sale begins.

Worse, if Congress bails out Chrysler with more of YOUR dollars, the deal gets even sweeter for FIAT. Entry to the US market on the back of the taxpayers, a significant ownership stake and eventual control (for $25m) of Chrysler and the time to try and make it all work. That’s some plan. For FIAT.

But here’s the kicker. Nardelli says Chrysler needs “only” three billion dollars more of your money to get there. Are Bob Corker and Dick Shelby the only two guys in Washington that can see the sheer and utter stupidity of this? It’s as clear as daylight that this dog won’t hunt.

What’s the point of throwing $7b (or more) into a company that has no reason to exist in the US market?  A company that needs import technology for small cars and engines to meet the new standards from the Green Party? Heck, save our money and let FIAT come in on their own.

In GM’s case, the plan will look like everything else Wagoner and his team have presented in the past. Goals and actions that have no hope of realization. So far, the UAW hasn’t made the accommodations required—and never will—to the terms of wage/benefit/work rule parity with the transplants.

The unsecured bondholders and other financial creditors might take a cramdown BUT . . . one of the most skillful members of this group (PIMCO) has already pulled out of the negotiations. How about restructuring of the brands and dealer network? They’ll reveal their latest “no plan” plan (i.e., “we’re still reviewing all options”).

The facts are self evident. GM alone lost 122k units of sales in January 2009 versus last year. At an average wholesale to GM of say $24k/unit, that’s a loss of nearly $3b in revenues for the month. Or a run rate of $36b/year. Throw in the drop in sales in Europe and elsewhere around the world, and it might be another $1b to $2b dollars a month in lost revenues. Combined, it could be as much as $50b revenue hit (annualized) for the first half of this year. GM simply can’t cut its expenses fast enough.  

As for Chrysler, it’s worth repeating what Jim Press told his dealers. (“Without orders, the company has to liquidate.”) Uh Jim, your dealers have over 350k units on the ground and you sold 62k units in January. Do you really expect them to “stock up” now?

Bottom line: the car market will suck for the next six months, if not longer. It makes no sense for Congress, the President or the Car Czar to try and craft a plan that saves Detroit with taxpayer dollars without a bankruptcy.

GM and Chrysler have no viability plan that can work in the current sales environment (not that they had one during better times). If anything, now IS the time for bankruptcy, not later. Let the bankruptcy court system do what it’s designed to do best: figure out what’s worth saving (GM) and what’s not (Chrysler).

When the market does come back—and it will—a restructured and reorganized GM will be well suited to offer a smart and sensible line of brands, cars, and dealers that will all earn substantial profits. Parts of Chrysler will still exist (Jeep, Mopar, a couple of others). And Ford might be able to survive on its own as it gains share from the pieces shed by its Detroit rivals.

Why go to all this trouble of proving a case that doesn’t meet the sniff test to the most junior financial analyst on Wall Street? Is it pure politics to save union jobs and avoid the shame of bankruptcy? Or has Washington, DC and the Messiah Crew (Obama, Pelosi, Reid, and the Democrats in Congress) simply lost all sense of the common good with your tax dollars?

Forget it. Let’s not spend any more taxpayer dollars on a moon shot from Detroit.

Well, not so wild ass, obviously. Other than getting sued by disenfranchised Saab
dealers—which isn’t so much of an issue now that Uncle Sam is paying for everything—why wouldn’t GM shutter Saab? When it comes to buying car brands, no one is. Or will be. For a very, very long time. If ever. And GM needs to show its Congressional overlords that it’s doing something about something™. So we’re passing along a tipster’s assertion that yesterday’s resignation of Percy Barnevik from GM’s Board of Directors signals that the axe is about to fall on the Born From Jets brand. The divine Mr. B. was born just (pronounced youst) outside Trollhättan. If he ever wants to show his face in Sweden again, he has to distance himself from the author of Saab’s neglect, abuse and final destruction. You know, GM and its Board of Directors . . . which he joined six years after GM scarfed the Swedish brand, during which time it produced the America-only 9-7x (a TTAC Ten Worst winner). For that alone, I’d be worried.

Post Titanic Tuesday, GM is desperate to do something, anything to move its moribund metal. I speak here not of the pricing blowouts, finance deals and BOGO offers at the sharp end. I refer to the manipulation of dealer relations. Forcing dealers to stock vehicles that no one wants to buy. Back in the day, they used to call this practice “channel stuffing.” These days, they call it “pretending we’re a viable business to our Congressional overlords.” Automotive News [sub] reveals GM’s latest contribution to the genre: the more-than-slightly-ironically named “consensus program.”

The program has two parts. First, GM assigns dealers a sales objective through March 2. Second, GM “recommends” a “consensus number” to dealers—the number of vehicles for the dealer to order. Sweet, eh?

The bonus cash payout ranges up to $1,250 per vehicle depending on the percentage of consensus that the dealer orders and the percentage of the sales objective the dealer sells, dealers familiar with the program say.

At the high end, if a dealer takes 100 percent of the consensus and sells 100 percent of the sales objective, the dealer gets $1,250 per vehicle. At the low end, if a dealer takes less than 75 percent of the consensus and sells 60 percent to 99.9 percent, the bonus is $250 per vehicle.

So, if one dealer declines The General’s “request” to show the automaker’s inventory love during the time of war, that dealer suffers. A nearby competitor (i.e., a nearby GM dealer) who takes additional inventory earns more GM bonus cash. They can charge a lower price for the vehicles he or she doesn’t sell.

The trade calls this manufacturer-sponsored internecine conflict “two tier” pricing, or, to use a more technical term, “the same old shit.”

GM justifies their most recent dealer abuse as an effort to keep their inventory under control.

At the end of January, GM had 801,000 vehicles in inventory, down 103,000 units from January 2008. Cars make up 64 percent of current inventory and trucks the rest. . .

During a sales call today, GM sales chief Mark LaNeve said supply is about 105 days and GM would like to have “a little less inventory.”

“We’d like to run more at a 75- to 90-day rate,” said LaNeve. “We keep trying to get there. We are planning production schedules to get to the 75- to 90-day supply. It’s God’s work. We have to keep after it.”

As far as I know, GM marketing maven Mark LaNeve is not a Jesus freak. I’ve never heard him inject God or, God forbid, morality into a discussion of his work. However, if this is a true come to Jesus moment, rather than simple blasphemy, one wonders why God’s son would instruct the head of GM sales and marketing to bother himself with GM’s inventory levels. As Ken Elias has pointed out, LaNeve would be far better off seeking truth and reconciliation than filling GM dealer lots with unwanted product.

Yes, sixty days’ supply is the generally accepted industry ideal. But this is pre-meltdown math. New vehicle sales sank 37 percent across the board in January. They’re heading south from there. Bottom line: Chrysler and GM aren’t building much of anything—they’re just trying to clear out their existing inventories. The “days supply rate” for today’s car market is about as useful a metric as “rolls of toilet paper” at Graceland during Elvis’ terminal constipation days.

As one of the Apostles would have said (if he’d been Welsh), get your own house in order, boyo. If LaNeve still has a purpose in life, or at least within GM, sorting out the mess that is GM’s branding is it.

Obviously, LaNeve’s not calling the shots in terms of product (who needs product?) or brand culling (who needs eight brands?). Product is Car Czar Bob Lutz’ baliwick. Brand-i-cide is CEO Rick Wagoner’s responsibility. Good luck with that. Even so, LaNeve could, even with the current lineup, help GM at least start to find its way through the wilderness.

He could define GM’s brands.

GM’s marketing maven could/should make the case for whatever brands GM decides to keep. How about a series of ads: “This is what a BLANK is” (one USP per brand, please)? The current models don’t have to actually meet the criteria. Again, nobody’s buying cars. But a tightly-focused coherent example or eight of “the vision thing” would give Americans a reason to support GM. For Joe the Taxpayer, $40b+ of long-term debt is a meaningless abstraction. Cars they understand.

These are the times that try men’s souls. By thy deeds thy shall be known. The times are making it increasingly, inescapably clear that GM is a shell of a company led by lost souls. It’s a perfect time for someone with guts, character, passion and humility to step up and show what they’re made of. Unfortunately, men without these traits continue to pilot GM to its death.

An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Tokyo this week.

India‘s car sales up: Just like neighbor China, India reports rising cars sales for January. Most car companies registered positive sales despite the withdrawal of price rebate schemes, India’s Economic Times reports. Tata Motors continued its negative run, with its passenger vehicle sales declining by 9 percent.

Toyota losses spreading: Toyota’s parts arm Denso and four other Toyota Motor Corp. affiliates are expected to suffer group net losses for the year ending March 31 as the automaker’s drastic output reductions battered businesses along the supply chain, the Nikkei [sub] writes.

Hitachi lowers volume of auto biz: Hitachi considers cutting in half the number of 85 marketing and production sites handling automobile-related equipment, the Nikkei [sub] says. Hitachi group company Clarion has already decided to close a factory in Hitachinaka around the end of 2010 and keep just one domestic factory open. In the US, where Hitachi operates Hitachi Automotive Products (USA) Inc. in the state of Kentucky and three other production bases, two locations may be closed.

Mazda sees red: Mazda expects its first loss in eight years for this fiscal year due to damage sustained from a strong yen and a sharp downturn in consumer sentiment, the Nikkei [sub] reports. The Hiroshima-based company now expects a net loss of ¥13 billion for the current fiscal year through March, compared with its previous forecast for a ¥50 billion profit.

Ford moving to China: Ford Motor Company’s Asia Pacific and Africa region headquarters, will be moving from Bangkok to China, Gasgoo reports. Bangkok will continue to serve as Ford’s ASEAN regional headquarters. In 2004, Volkswagen AG and General Motors relocated their Asia Pacific regional headquarters to China.

Small getting bigger and bigger: Underscoring China’s move from big to small, SAIC-GM-Wuling, a Chinese venture of GM and leading manufacturer of mini-trucks and mini-vans in China, reported all-time high sales of 75,168 units in January, Gasgoo writes. The record sales were largely on the strength of Wuling Sunshine, which remained the best-selling model and saw its sales volume hit 1.4 million units by the end of January 2008.

Not a good start for Deutschland: Germans bought 14.2 percent fewer cars in January 09  than in January 08.  Saab (-60.7 percent), Chrysler (-53 percent), Land Rover (-51.9 percent), Nissan (-51.1 percent), Jaguar (-31 percent), Skoda (-30.7 percent), Mercedes (-30 percent), Porsche (-24.7 percent) and Opel (-22.7 percent) were the big January losers in Germany’s car market, Automobilwoche [sub] reports.  Ford sold 25.9 percent more. Smaller importers such as Hyundai (+50.8 percent), Mazda (+27.2 percent) and Lancia (+13.7 percent) gained. The trend goes from big to small.

Out with a Bangle: After 17 years with BMW, U.S.-born Christopher Bangle resigns as chief designer of the BMW Group. The Bavarians go Dutch with Adrian van Hooydon. According to Reuters, Chris Bangle is “one of the most well-known and controversial people in the auto industry.” Bangle was the object of multiple online petitions calling for his sacking. After his 2002 redesign of the 7 Series sedan, the vehicle was voted one of the 50 worst cars of all times by Time magazine, along with such other infamous models as the 2001 Pontiac Aztek and the 1998 Fiat Multipla.

Despite looking at a half-sized Q1 production plan, GM says it will bump truck production in the month of March. Production will be restored and escalated in March at GM’s Flint and Arlington truck plants, meaning there will be more Silverado, Sierra, Tahoe, Yukon and Escalade models. So, uh, why? “As far as our 2008 and 2009 mix goes, we’re significantly down on 2008 models, where most of our competitors have a lot of 2008 to get rid of. So anticipating a spring selling season, we’d like to increase our 2009 inventory,” GM’s Pete Ternes tells Automotive News [sub]. GM’s truck inventory has dropped noticeably, from a 122-day supply on December 1. But with 90 days of light truck supply, there’s still no real reason to increase production. Most industry-watchers consider a 60-day supply ideal. So what’s up?

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It’s the hottest road race of the year. Who are the champs and who are the chumps of the global auto industry? Everybody who’s somebody wants to become a statistic in “world motor vehicle production by manufacturer.” Officially, that race is not over until the fat lady at OICA, the “Organisation Internationale des Constructeurs d’Automobiles” or International Organization of Motor Vehicle Manufacturers, sings. OICA still has the 2007 numbers on their website. Yet, General Motors has already conceded the top post to Toyota. All other manufacturers have already announced their numbers. While OICA is taking their good old time counting, the Nikkei [sub] performed its own tally.

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