Too much happening around the globe to let a business trip stop me from reporting it. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. Who can sleep with news like that anyway?
Lutz loose cannon, shoots foot, “too good to die:” The folks at RecCen were so busy charging up the batteries for their trip to DC that they forgot to put a muzzle on Czarevitch Bob Lutz. GM selling brands? Fohgeddaboutit, said Bobbie in an interview to the Swiss business magazine Bilanz. It’s all over today’s press in Europe. GM off-loading brands like Saturn, Saab, and Opel? LOL-Lutz had never heard of it. “It’s as trying to remove single eggs from an omelet and put them on sale,” Lutz told the Swiss who choked on their Roesti. Shutting down some brands would be thinkable, but “it would cost one or two billion per brand.” Opel? Opel is too tightly integrated into GM, and besides, Opel “doesn’t have the critical mass to survive. The idea to separate Opel from GM is a pipe dream.” Comes from someone who said that global warming is a crock of excrement, and that the moon is made of green cheese. OK, made the last one up. The charitable assumption is that the magazine was in print while other announcements were made. On the other hand … Lutzie’s last words: “We are too good to die.”
Uh-oh. Japan to repatriate foreign investments, tax free: The Liberal Democratic Party’s tax panel decided Friday that dividends received by Japanese companies from overseas subsidiaries should be exempt from corporate taxes, “in a bid to encourage Japanese firms to repatriate more capital,” says the Nikkei (sub) this morning. It’s one of those things we usually won’t notice, but we do now.
Chrysler clueless in China. Chrysler has put most, if not all of its Chinese joint venture plans on hold, says Gasgoo. A deal with Chery has been put on ice. Which surprises nobody.
Chinese makers short on cash: Chinese auto makers Haima, Brilliance, and Changfeng said that they need cash urgently. “The listed automakers now have dropped the unrealistic hope of raising capital through the stock market; instead, they are turning to their parent companies or issuing corporate bonds to collect money,” says Gasgoo.
There is more …
Honda getting out of F1. Honda will withdraw from Formula One automobile racing at the end of this season, the Nikkei (sub) just learned. The team costs Honda approx $500m a year, and that “has been weighing heavily on its earnings at a time when carmakers are being pummeled by an industry wide slump.” They’ll try to sell the team or shut it down if no buyer is found. Honda had withdrawn from F1 racing in 1993. They returned in 2000 “as part of efforts to boost its brand value and train young engineers.” Yeah, sure.
Toyota starts Canadian plant, cuts output in half. Toyota launched operations at its second plant in Canada and seventh in North America, which brings Toyota’s NA annual output capacity to 2m units. The factory will produce the RAV4 sport utility, but will operate at about half its annual capacity of 150,000 units. “Production will be expanded when the market recovers,” says the Nikkei (sub) with not much conviction.
Honda UK has workers retire. Honda launched an early retirement program for its U.K. factory employees. This precedes a two-month production halt at its Wiltshire plant starting in February, as Tokyo’s Nikkei (sub) has it. Honda currently employs about 4,800 permanent staff in the U.K. The expected number of retirees has not been disclosed.
GM sales up – in China: Kevin Wale, president and general manager of General Motors in China said yesterday in Beijing that GM’s auto sales in China are up 8 percent so far. GM China has already sold 1 million units so far this year, said Wale, according to Gasgoo. GM sold about 1 million units in the whole of last year. With 8 percent growth, GM mirrors the Chinese industry trend.
Chinese will go German if America fails them: In China, German brand cars would be the big winner of a Detroit failure, says a survey quoted by Gasgoo. 56 percent said they will not buy a US brand car if the Big Three go bankrupt. Questioned what they would buy instead, 50 percent would take a German brand car, 22 percent would choose Chinese brand cars, another 21 percent would buy Japanese brand cars. The remaining buyers would go for South Korean and French brand cars.
A car is not a refrigerator: That’s what a number of Chinese appliance makers are finding out just now. China’s home appliances giant Midea has shut down its bus production and may totally drop out of the car business, reports Gasgoo. Appliance makers Chunlan, Ningbo AUX, Ningbo Bird, and Greencool Tech have all seen their auto-making dreams dashed. The only survivor in the car business is refrigerator maker Henan Xinfei Electric.
Skoda on target in Germany, makes Toyota eat dust. VW’s Czech brand Skoda will sell at least as many cars in Germany as last year (120K,) and will bypass Toyota in German sales, says Automobilwoche (sub.) This will make Skoda the second largest “import” brand in Germany, after Renault. In Germany, Toyota has lost some of its luster due to quality problems.
Law makers don’t let law makers vote drunk. Politicians in New South Wales, Australia’s could be breath-tested for alcohol before voting on laws, Reuters says. This was triggered by booze-induced excesses. State police minister Matt Brown for instance was dumped from his portfolio in September after allegedly “dirty” dancing in his underwear over the chest of a female colleague after a drunken post-budget office party. Depending on the outcome of the bailout debate, breath-testing could should be introduced to House and Senate also.
>>”…Shutting down some brands would be thinkable, but “it would cost one or two billion per brand.”…
Yes, one billion certainly is a lot of money when you are spending your own. On the other hand, 34 billion (this month) is a mere pittance to demand from the American taxpayer.
They returned in 2000 “as part of efforts to boost its brand value and train young engineers.” Yeah, sure.
I think that the first part actually IS the reason for car brands entering F1. I think that having a presence in motorsports and even better, winning in motorsports, is very important for a car brand to be able to sell products at a premium price.
I think Honda can afford to not be in F1 for some time, but what would happen if say, Hyundai/KIA entered F1 now and, in about 5 years, started winning races, while Honda is sitting on the side-lines?
As for training young engineers…Probably before they’d enter F1 you would hope they would have already been quite trained, so yeah, that will only happen in a very limited number of cases.
Also you could argue that Mad Max Mosley and the little big man are basically trying to shutter technological development in F1, especially on engine development, which is a crying shame and must have been tough on Honda, because that was/would have been their strong suit.
Lutz will occasionally do the “stuck clock” thing, and be right.
GM’s brands are interwoven, in that they are all based on the same platforms, and that they can probably only be rationally manufactured at volume.
But Lutz has a big climbdown to perform, in the dark, in the cold, in a blizzard, without ropes or gloves — and he’s just holding on for dear life now.
The one thing I’ll miss when GM is gone is Bob’s quotes.
“to good to die”-He’s a gem.
Bunter
Uh-oh. Japan to repatriate foreign investments, tax free: The Liberal Democratic Party’s tax panel decided Friday that dividends received by Japanese companies from overseas subsidiaries should be exempt from corporate taxes, “in a bid to encourage Japanese firms to repatriate more capital,” says the Nikkei (sub) this morning. It’s one of those things we usually won’t notice, but we do now.
This is something that most countries, including most European countries, do already, since they have “territorial” taxes that only tax what goes on in their locales, rather than taxing the foreign operations of companies based in their countries. The US is fairly unique in trying to tax overseas subsidiaries when capital is repatriated normally– though a law passed in 2004 created a brief tax-holiday allowing companies to repatriate capital during 2005 and pay only 5.25% on it. An enormous amount of capital was brought back to the US (and tax paid on it) that otherwise would have stayed elsewhere, much greater than predicted. (See here, for example.)
Now, the President-Elect ran on taxing overseas subsidiaries even before the capital is repatriated, encouraging US companies to divest foreign holdings and stay small. (Well, he didn’t put it that way; he said something about tax avoidance and about not creating jobs overseas instead of at home.) It’s not clear that he’s actually going to do anything now that he’s elected, though.
“dancing in his underwear over the chest of a female colleague after a drunken post-budget office party”
I am definitely in the wrong business
I know this sounds insane, but it would NOT be impossible for SAIC, for example, to buy up Pontiac “brand” and rights to dealers, for a song. GM has devalued the brand to nearly nothing, especially by intimating that it is a dead brand walking, and yet there is a residual core of buyers in North America (assuming they can get a car loan, I mean) and dealers who would potentially be willing to step up to the plate.
In fact, I looked things over and ironically, it’d be easier to hive off Pontiac than Saturn. Dealers could still retain Buick-GMC franchises, assuming GM doesn’t totally die, of course. Clearly, the Pontiac purchase would need to be done within 3 weeks from RIGHT NOW.
Here’s why Pontiac not Saturn: the Pontiac Vibe is manufactured in Canada on contract by Toyota, and the Pontiac Torrent is manufactured in Canada on contract by Suzuki (along with the Chevrolet Equinox) and the drivetrains for these SUVs come from the PRC, not from GMNA (GM North America).
Here’s a scenario that I put together in less than 1/2 hour.
SAIC (50%), Suzuki (35%) and US and Canadian Pontiac dealers (15%) purchase the Pontiac brand from GM, and form Pontiac Automotive Sales LLC, a Nevada company. Hell, I even found an HQ building and warehouse for sale for a song in Dayton, NV. The plan would be to take over the distribution of vehicles in North America, but not by purchasing any vehicles from GM. SAIC and Suzuki jointly own (with GM) GMDaewoo.
The initial (February 2009) line-up could be:
Wave G3 (South Korea)
Vibe (Canada)
Bonneville (USA)*
Torrent (Canada)
* The “new” badge engineered Bonneville would be contract manufactured, rebadged Mitsubishi Galant cars, from Normal, Illinois.
By the 2010 model year (determined by how long it would take to have the added vehicles pass the required US certifications), the line up would add:
LeMans (South Korea) (Badged Daewoo Cruze)
Catalina (South Korea) (Badged Daewoo Evanda with 2.5 litre six cylinder engine, priced/slotted below the Bonneville)
That’d be half a dozen car lines covering the more popular price ranges in the US / Canada, made up of a mediocre car but one with a very low price point (Wave), reasonably competitive car / better than prior Pontiac G6 (Bonneville), one of the better / more reliable small cars (Vibe), and a reasonably executed SUV to keep the hand in that market (Torrent), as well as the latest “try” by GM, Daewoo, SAIC and Suzuki (LeMans).
By the 2011 model year, the Bonneville would be four cylinder only (sourced from CMC in Taiwan) while a new V6 Parisienne line could be added (based on the upcoming Suzuki Kizashi, sourced from Japan, yet disguised / reskinned / facelifted sufficiently to differentiate it from its sibling). This would make for three selections of varying price-point in the ever popular mid-sized sedan market (necessary since Pontiac would not have its own manufacturing facilities and just in case sales started to pick back up, they would need a good number of cars).
See? GM’s wrong. Even the unwashed, supposedly ready to be given up on Pontiac line could be salvaged with a caring owner (which would include part ownership of the real customers in this case; the dealers).
If you think this is totally nuts, pull up a photo of a Mitsubishi Galant, squint and imagine a red arrow pointing down in the middle of the grill (which initially would be the only change seen). Yeah, it fits. Pontiac’s supposed performance image also fits the hot 3.8 V6 available in the Galant. (Except, of course, it’s “wrong way drive” for so much power).
Hell, I bet Mitsubishi would fall over themselves and offer Pontiac a rebadged Eclipse coupe and convertible as a “Pontiac Trans Am”, for that matter.
Any sale where you make a profit is a good sale in this environment.
The other little interesting tid-bit is that SAIC owns the MG brand and has several ex-MG-Rover car lines in production and being exported right now as MG’s.
The ex-Daewoo dealer network which GM yanked the rug from under in 2002 is still extant, though dormant…. no doubt it could be bought for a song….
See? Some of GM could be hived off and survive. There are a LOT of Pontiac dealers still hanging on by their fingernails; in fact, by this time, only the better dealers are probably still in business. Several thousand dealers putting in a small investment towards actually owning part of an independent Pontiac, might, might, might – just work.
I’d personally give it a better chance than GM surviving, anyway… Obviously under this scenario, if GM totally went Chapter 7, South Korean car production would not have to “end” since SAIC and Suzuki own a portion of GMDaewoo.
Not that I have any special place in my heart for Pontiac. I’ve had two; one was pretty poor, the other was okay, and my youngest son’s first car was a Pontiac and was utter crap (late 1980’s GM).
Listening to Lutz and to the CEOs before the Senate they remind me of coma patients who have been recently awakened. Duh!
@JohnThatcker: It don’t know the Japanese tax code, and I don’t want to try. I already signed a Japanese document without knowing what is in it, and was pronounced a husband. At least, that’s what they told me.
From a German standpoint: If a German company owns a subsidiary say in the US, the subsidiary can make all the profits they want. They will be taxed in the US, that’s it. As long as they stay there. However, if they profits are being brought home to the Fatherland, it becomes a taxable event in Germany.