Steve Rattner, President Obama's car czar, has released galley proofs of ``Overhaul,'' a book that gives an insider's peek at the government's restructuring of the U.S. auto industry, most notably the two automakers that filed for bankruptcy, General Motors and Chrysler.
The 320-page memoir, to be published October 14 by Houghton Mifflin, lauds the government's efforts, spicing the tale with tittle-tattle such as the four-letter expletive aimed at the UAW by President Barack Obama's chief of staff Rahm Emanuel. A White House source, speaking without attribution, told the Washington Post that Emanuel defended and advocated for the autoworkers.
In his first communication with employees, new General Motors CEO Dan Akerson relayed in a Labor Day letter extended his hand to the company's unions and gave employees a pat on the back.
Akerson, officially installed this week as GM's fourth CEO in 17 months, shared a conversation he had recently with UAW President Bob King and UAW Vice President Joe Ashton at the union's downtown headquarters, known as Solidarity House.
"We agreed that, while we will not always see eye to eye on everything, GM will succeed to the extent that management and labor work together. I believe very deeply in that, Akerson wrote.
He added in the missive: "Coming from a union family, I know on a very personal level the good things that unions can do."
The 2011 Chevrolet Cruze, which goes on sale next week, will feature a Smartphone application through General Motors' OnStar that allows the owner to check the fuel gauge, lock and unlock the car, set off the horn and lights alarm and perform onboard diagnostics, such as checking tire pressure, by remote.
The Chevy Connect feature will be available at the end of September, company executives told reporters during a test drive of their new compact car in Birmingham, Mich., today.
Company executives also reported that they had received word from the U.S. Environmental Protection Agency within the past 24 hours that the Chevrolet Cruze Eco version, equipped with an automatic transmission, would achieve highway mileage of the targeted 36 mpg. The Cruze Eco with a manual transmission has not been certified yet by the EPA but is targeted to achieve 40 mpg.
The Cruze Eco models go into production in December and goes on sale after the first of the year.
Don't expect to see the new CEO of General Motors, Daniel Akerson, appear in a corporate television ad the way his predecessor, Ed Whitacre, did several months ago. At least not if Joel Ewanick has anything to say about it.
Recently hired as GM's chief marketing officer, Ewanick is chomping at everything like an over-caffeinated Pac-Man as he bounces around corporate headquarters, the labyrinthine Renaissance Center in Detroit. He's removing a brand chieftain and replacing him with an old colleague. He's devouring bad advertising slogans. He's terminating fledgling agency relationships.
And while he won't say so, it's not hard to imagine Ewanick informing his new boss there won't be any more CEO appearances in TV ads, even if someone thinks it's a good idea to promote GM's upcoming IPO to would-be investors across the country.
"General Motors is not a brand," said the 50-year-old Ewanick, on the job here now for three eventful months, in an interview with AutoObserver.
he future for the species known as the midsize pickup is getting darker with the news this week that the Volkswagen Group isn't interesting in entering the market and Ford Motor Co. seemingly is unmoved by recent overtures asking the company to reconsider the scheduled closure of its Ranger assembly plant in Minnesota.
Edmunds.com's Inside Line reported yesterday that VW officials closed the door on longstanding speculation the company was eying the U.S. market for introduction of the Amorak, a midsize pickup that essentially could be seen as VW's interpretation of the Ford Explorer Sport Trac. In Brazil, one of the prime markets for the Amorak, media relations manager Gilberto dos Santos told Inside Line, "Volkswagen is not planning currently to market the Amarok in the U.S.
"It is destined for South America, Europe, Russia, Australia, South Africa and New Zealand," The VW public-relations official continued. "Capacity of the General Pacheco manufacturing plant in Argentina is 100,000 units yearly, and the planned demand will be fully met. Other markets such as the U.S. and Asia are not in the company's plans."
Auto-industry executives keep talking about how they've trimmed down in order to bulk up profits, but that's only partially true. Many indeed are profitable at today's sharply reduced global sales rates - but they've still got some work to do in cutting the fat from their manufacturing empires.
The latest data from Oliver Wyman's prestigious Harbour Report that tracks the auto industry's manufacturing trends shows that there remains an enormous amount of excess assembly-plant capacity in the U.S. and Europe, despite the fact major automakers such as General Motors Co. Ford Motor Co. and Chrysler Group LLC have shuttered more than two dozen plants in North America alone since 2000.
Regardless of that seemingly major downsizing, the report indicates that in the northern U.S. and Canada, automakers still are tied to the capacity to manufacture more than 3.5 million more vehicles than they currently need - or another 14 more assembly plants of unnecessary capacity.
August new-vehicle sales will remain steady at a Seasonally Adjusted Annual Rate (SAAR) of 11.8 million, according to data from Edmunds.com, but when totals are finalized next week, the month certainly won't be able to compare to last August's Cash For Clunkers-fueled SAAR of 14.1 million.
August new-vehicle sales (including fleet transactions) are expected to be 1,028,200 units, a 17.7-percent decrease from August 2009, when Cash For Clunkers pushed the industry to 1,261,799 sales. Total August sales will represent a 1.4 percent decrease from July 2010, according to Edmunds.com data., while August's projected 11.8-million SAAR compares with 11.5 million in July.
"Comparing to last August is a waste of time since Cash for Clunkers distorted the market so badly last year," said Jessica Caldwell, director of industry analysis for Edmunds.com "It is likely that the current slow sales pace can be partly attributed to the thousands of 'pull-ahead' sales that last year's CARS program stole from subsequent months."
General Motors Co.'s Chevrolet Volt extended-range electric vehicle and Nissan Motor Co. Ltd.'s Leaf battery-electric car both are scheduled to launch in December and there's been plenty of debate about whether the two will compete for buyers.
Many analysts don't believe so, largely because the two cars essentially are different animals: the Leaf has a maximum driving range of about 100 miles, after which its lithium-ion battery pack must be recharged. The Volt's all-electric driving range is approximately 40 miles - but after that, an onboard gasoline engine kicks in to generate electricity for the batteries and extend driving range to 300 miles or more.
Chevrolet has said the Volt's layout is the more appealing and makes the Volt a more viable "only car" because it does not have the limitation of battery-only range. And a new study by the Consumer Electronics Association may give foundation to GM's side of the argument.
General Motors Co., seemingly anxious to nurture its rebound in the U.S. market and in the eyes of still-cautious consumers, announced today it has hired Chris Perry to be vice-president of marketing for the Chevrolet brand.
Perry, was vice president of marketing for Hyundai Motor America and will report to U.S. vice president of marketing Joel Ewanick, who before joining GM earlier this year also was a fixture of surging Hyundai's marketing operations, serving in the same role Perry now vacates to join GM.
On the way out after a brief stint as Chevrolet's head marketer is Jim Campbell, who will become vice-president of marketing for GM's Performance Vehicles and Motorsports unit.
With the required papers now filed, General Motors' management will kick off a road show to convince potential investors to buy the automaker's stock in its Initial Public Offering. Their challenges are many, according to analysts and investment bankers interviewed by AutoObserver.com.
Topping the list of concerns about the GM IPO are timing and management. Does the timing of GM's IPO have more to do with politics than good business judgment? And after the constant churn of CEOS and other executives in the past year or so, is the current management team the one to lead GM into the future?
After a bit of fumbling and a few false starts, General Motors Co. issued its prospectus for common stock on Wednesday afternoon, conveying an impression that the automaker's leadership remains in a state of confusion and turmoil that - for GM's sake - must finally settle down.
Selling stock, especially an initial public offering following a bankruptcy, is largely a test of public confidence in a company's management. On September 1 GM gets its fourth CEO in 18 months, Dan Akerson, a board member and seasoned executive with no experience managing in the auto business. His appointment to the top job seemed almost an after thought to last week's earnings announcement. GM's prospectus highlights Akerson's lack of experience in automaking, as well as CFO Chris Liddell's lack of experience in automaking, as "risk factors." In other words: buyers beware.
Longstanding partners General Motors Co. and China's SAIC Motor Corp. Ltd. established a venture this week to develop a new 4-cylinder engine family and a dual-clutch automated-manual transmission.
The timing of the announcement may be unintentional accidental, but leaves industry watchers wondering if SAIC, which already has deep ties with GM in a 13-year relationship, may be looking to invest in the company now that GM officially filed this afternoon the paperwork to begin the process for its initial public offering of stock and the company's return to public ownership.
It might not be coincidence, either, that this latest GM-SAIC tie-up comes as GM's filing the S-1 document for the IPO confirms the company will issue preferred shares alongside the common shares that will make up the bulk of the offering. Some have speculated the issuance of preferred shares will facilitate and even incentivize purchase by interests other than financial institutions and other "conventional" investors.
General Motors has filed the documents for its highly anticipated Initial Public Offering of stock that would reduce the U.S. government's stake in the automaker.
The filing of more than 700 pages with the Securities and Exchange Commision (SEC) on Wednesday reveals few details about the offering itself. It does not say when the shares will go on sale, though it is believed it will be November or December. It does not provide a price range for the common and preferred shares, the number of shares in the offering nor the dollar value of the proceeds from the sale. GM said those will be determined by market conditions at the time of the sale, which also was not revealed.
It is believed the offering could be the nation's second-largest IPO in history. It is speculated it could raise as much as $16 billion; only Visa's IPO of $19.7 billion was larger.
The U.S. Treasury will sell some of its shares, the filing said. The amount the government will sell was not stated, but it is believed the government's stake would fall to under 50 percent of all GM stock. The U.S. government gained its majority stake in GM by providing $50 billion in taxpayer money to get the automaker out of bankruptcy last summer.
Despite the lowered stake, the government would still effectively control GM as any shareholed with that large of a position would.
With General Motors Co. expected to announce at any moment it has filed the paperwork for an initial public offering of stock and the company's return to public ownership, a well-detailed picture is emerging of how Wall Street's banks and financiers scrambled for a piece of the action.
Most tellingly, coverage by Reuters this week shows it wasn't about the handsome fees banks typically earn to underwrite an IPO - instead, the jostling to be a part of the GM deal is the promise of lucrative future business from the resurgent automaker. Not to mention the possibility of creating a more-cozy relationship with government sources involved with other large-scale financial dealings.
In fact, as was reported earlier this year, the two financial institutions chosen to lead the underwriting of the IPO, Morgan Stanley and JPMorgan, were willing to accept a fee of far less than the industry norm. The lead underwriters will make a 0.75-percent underwriting fee instead of the 2 percent or more that is common. There will be other lead underwriters, Reuters reports, but even with the IPO filing imminent, it seems the final list of lead underwriters was not final.
General Motors Co. detailed its second consecutive quarter of profitability after exiting bankruptcy last July. That is a good thing for GM and everything and everybody connected.
But with the economy plodding and U.S. auto sales in lockstep, GM's best days - at least for this year - may already be behind it. In a conference call with reporters and analysts Thursday, CFO Chris Liddell acknowledged it.
"The second half (of this year) will be lower than the first half. You'll see some moderation," in GM's performance, Liddell said.
Bright Automotive this week hired ex-Tesla Motors executive Mike Donoughe to run the company's operations, as the Indiana-based company looks to speed up development of its IDEA plug-in hybrid-electric commercial van after General Motors Co. recently agreed to invest in the company.
As executive vice president for vehicle engineering and manufacturing, Donoughe helped Tesla develop its all-electric Roadster, a car that has become the poster vehicle for new-age automotive technology and development. He also worked on cars such as the 2004 Chrysler Pacifica and 2007 Jeep Wrangler as a former executive with Chrysler.
"Mike is a perfect fit for Bright because he understands the rigor required to bring a successful, high-volume truck to market," said Reuben Munger, chairman and CEO of Bright Automotive, in a statement. "And having served in a leadership role at Telsa, he knows how to lead in a young, advanced technology-focused enterprise."
Steve Rattner, the former Wall Street banker who headed the U.S. Treasury's reorganization of General Motors and Chrysler, said Thursday that the abrupt resignation of Ed Whitacre as GM chief executive officer ``shows him as a man who meant what he said," that he didn't want to run GM long term.
``From the beginning, Ed made it clear he was willing to help out but he wasn't willing to have another long run as CEO.'' Whitacre was a retired CEO of ATT when he was tapped by the U.S. to reconstitute GM.
General Motors Co. chairman and CEO Ed Whitacre announced today he will give up his title of CEO on Sept. 1 and will leave the company at the end of the year.
Taking over to lead GM is Daniel F. Akerson, currently a member of the GM board of directors and managing director and head of global buyout at the Carlyle Group. Akerson has been a member of the GM board since July, 2009, when asked to take the position by the Obama administration's Automotive Task Force that helped to oversee GM's restructuring and bankruptcy proceedings.
Akerson, 61 years old, is a trained engineer, earning a B.S. in engineering from the U.S. Naval Academy, but has spent the bulk of his professional career in the communications and financial sectors. Prior to joining the Carlyle Group, Akerson served in various executive leadership positions at MCI Communications Corp.
General Motors, which emerged from Chapter 11 bankrupty a year ago, earned $1.3 billion in the second quarter as it prepares to launch its initial public offering, documents for which could be filed with regulators within the next few days, if not today.
"I am pleased with our progress on achieving our business objectives," said Chris Liddell, vice chairman and chief financial officer in the company's statement, which said nothing about the timing of the IPO that would result in a return to public from largely government ownership.
"We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow," he added.
General Motors moved a step closer to its highly-anticipated initial public stock offering today by filing with federal regulators its rules covering board and shareholder meetings.
The filing comes on the eve of GM reporting second-quarter earnings, expected by Wall Street analysts to be its best results in six years.
GM, which refuses any comment on the filings, is rumored to be filing a preliminary prospectus with the Securities and Exchange Commission as early as Friday, according to CNBC. SEC approval is required before GM can make its pitch to potential investors.
GM CEO Ed Whitacre, in a speech given last week at an auto industry event, that the automaker was in a hurry to get the government out of its business. "We don't like this label of 'Government Motors," he said.
National Public Radio's On Point program used the occasion of President Obama's visit to a Ford assembly plant in Chicago to look under the hood of the U.S. auto industry. Only a year ago, Ford was struggling financially, while General Motors and Chrysler had just emerged from Chapter 11 bankruptcy.
Last week, the President was in Detroit visiting GM and Chrysler plants, hailing the governments $60 billion bailout of GM and Chrysler as a victory. A guest to the On Point program today, Ron Bloom,chief advisor to the U.S. Treasury Department on the auto industry -- the " Car Czar" -- was more cautious in declaring mission accomplished. Michelle Krebs, senior analyst and editor at large for Edmunds.com, was a guest on the program. So too was Edmunds AutoObserver.com contributor and Pulitzer-Prize winning writer Paul Ingrassia as well as Kentucky dealer Jack Kain, of Jack Kain Ford.
With a long-discussed initial public offering looming, General Motors Co. chairman and CEO Ed Whitacre reiterated several times in an appearance at an industry conference today that GM is aching to shed the derisive "Government Motors" moniker, while at the same time saying the company is thriving.
"We don't like this label of 'Government Motors," Whitacre groused as a wrapup to the Center for Automotive Research's Management Briefing Seminars in Traverse City, Mich., today.
"It turns off customers," Whitacre said. "It turns us off. People at GM are embarrassed by that."
General Motors Co. is studying several possible additions to its vehicle lineup, including a new midsize pickup, a stretched version of its European minivan, a Cadillac flagship and a diesel engine for cars, Bloomberg News reports. A new Chevrolet Corvette is already in the works.
GM CEO Ed Whitacre has told his staff to explore adding new models to its future portfolio, according to unnamed sources cited by Bloomberg. Among vehicles he wants them to consider are: small, youth-oriented cars for Chevrolet, a large prestige sedan for Cadillac, a minivan and a midsize pickup.
Not all of the vehicles under consideration are guaranteed for production. GM did not confirm the report.
However, Whitacre did confirm a new Chevrolet Corvette is under development.
Toyota sold more Corollas than Honda did its Civics. In fact, Toyota sold more Corollas this July than last, whereas Honda sold less this year than last. The Hyundai Elantra, due for replacement in the coming months, came on strong in July. The current Ford Focus is winding down to pave the way for the new one. Similarly, the Chevrolet Cobalt is making way for the all-important Chevrolet Cruze. The Nissan Sentra helped the division achieve across-the-board increases this July.
At an auto-industry conference Tuesday, Toyota's engineer in charge of the company's plug-in hybrid program said plug-in versions of the Prius hybrid-electric vehicle should deliver significant fuel economy gains - even for those who travel further every day than the 13 miles of all-electric driving available from the car's lithium-ion batteries.
At the Center for Automotive Research Management Briefing Seminars in Michigan, Justin Ward, Toyota Motor Engineering and Manufacturing North America Inc.'s advanced powertrain program manager said Toyota's first plug-in hybrid - just now starting with a 150-vehicle test fleet in the U.S. - will deliver significant fuel economy gains over the 51 miles per gallon rating of today's non-plug-in Prius.
Ward said that official U.S. fuel-economy figures haven't been finalized, but testing in Europe has proven the plug-in car to be about 42 percent better than the Prius.
Edmunds.com CEO Jeremy Anwyl and Edmunds.com analysts Karl Brauer, Jessica Caldwell and Michelle Krebs discuss July car sales, which were not as robust as predicted, considering the attractive deals available. Disappointing July sales foreshadow a continued rocky ride ahead for car sales in the remaining months of 2010.
General Motors confirmed Tuesday it has invested $5 million in Bright Automotive, a relatively new entrepreneurial venture based in Indiana that is developing small highly fuel-efficient commercial vehicle.
Bright Automotive becomes the first beneficiary of GM's recently established $100 million venture capital fund intended to drive development of new fuel-efficient technologies.
The benefit to GM, which now owns an unspecified minority stake in Bright, is being involved with an "innovative start-up with a unique product and business-model concept," said GM Ventures President John Lauckner in a conference call Tuesday. GM will provide engines and transmissions to Bright and may gain a vehicle to sell against the Ford Transit Connect, which is available with electric power.
The deal gives Bright cash and star power to attract other investors to re-start development of its vehicle, originally set for launch in 2012. However, development was put on hold during the recent recession and financial crisis. No date has been given for the vehicle's debut.
General Motors, Ford and Volkswagen reported higher sales in July as both manufacturers said they are seeing consumers cautiously coming back into dealer showrooms.
GM sales were just shy of 200,000 vehicles -- 199,692 to be exact -- for a 5-percent increase from a year ago. GM noted, however, combined sales for the four brands that the automaker will move into the future with -- Buick, Cadillac, Chevrolet and GMC -- were up 25 percent over a year ago. Buick and Cadillac brands each sold more than twice as many vehicles in July compared with a year ago, GM said.
Ford sales rose 5 percent as well to 166,092 Ford, Lincoln, Mercury and Volvo vehicles sold.
Volkswagen sales rose 16 percent in July from a year ago -- its best month since December 2005, excluding last summer's Cash for Clunkers period.
Edmunds.com forecasts that when industry sales are tallied at the end of today the Seasonally Adjusted Annualized Rate will hit 11.8 million vehicles, the highest level since last summer.
President Obama didn't come to Detroit last week to drive a 2011 Chevrolet Volt off the assembly line at General Motors Co.'s Hamtramck plant; he came to tacitly declare a success of the federal bailouts of GM and Chrysler Group LLC.
But, like his predecessor George W. Bush when he stood on the deck of an aircraft carrier and infamously summarized the then-fledgling Iraq war as a "mission accomplished," President Obama is a smidge premature in effectively closing the books on the controversial bailouts and proclaiming victory.
True, GM and Chrysler are barely a year removed from bankruptcy and seem to be in improving health, despite a far from resolute rebound for the auto industry as a whole. Both companies' empires are much slimmed-down and their debt all but eliminated. Their executives talk commitment to the new-age business practices that, at least in part, had to be forced upon them.
Don Runkle's weekend plans were disrupted by the media uproar over the iPhone and indignant counter-claims by Apple. So instead of scooting about Pine Lake on a speedboat at his home in West Bloomfield, Michigan, or riding his Suzuki Hayabusa motorcycle, Runkle and his family visited an Apple store to learn more.
Technology has always held a special allure for Runkle, even when society isn't quite ready for what he sees as the proper solution for the problems of the day. Perversely, the public often will focus on difficulties he sees as "overblown." "The problems with the iPhone aren't nearly what the media has cracked them up to be," he said, adding with a sardonic grin: "As usual.'' Unimpressed with the reports that the latest model's reception might be weak, he bought an iPhone 4G for his wife, son and for himself.
General Motors Co.'s Chevrolet Volt may be able to travel 40 miles on its battery charge, but early adopters might be in for a bigger jolt when they try to avail themselves of the highly attractive lease GM touted when releasing the Volt's $41,000 base price this week - it appears at least one of the 600 Chevrolet dealers due to take part in the initial rollout in December isn't planning on letting any Volts pass through his doors until buyers pony up a rather substantial extra "charge."
Forgetting the electricity-related wordplay, it's what people in the auto business know better as a "gouge." A giant one.
A couple of Edmunds.com researchers thought GM's announced $350 per month (with $2,500 down) lease payment sounded "too good to pass up." One emailed a California dealer to lease a Volt. You know, sign on the dotted line right now.
The auto industry is swimming against poor economic tides and will end up with a healthy July sales rate that is the best since the halcyon days of last summer's Cash-For-Clunkers program. Analysts at Edmunds.com project July's Seasonally Adjusted Annualized Rate (SAAR) to be 11.8 million.
July sales are expected to total about 1,064,000 units - an 8.4-percent jump compared with July of last year and an 8.9-percent improvement over June's troubling 983,000 sales that translated to an 11.1-million SAAR.
Equally important is a projected improvement in retail sales. A large portion of the industry's aggregate volume gains so far this year have been driven by outsized sales to fleet customers, not individual households.
"July sales numbers should be the highest we've seen since last August's 'Cash for Clunkers' frenzy," reported Edmunds.com Senior Analyst Ray Zhou. "Retail demand for new cars this month has been the strongest of the year, even more than in March when Toyota launched an aggressive incentive campaign and other automakers followed suit."
Pickup-truck sales have strengthened a bit so far this year, and there's a nascent confidence in Detroit - which makes nearly all of the pickups sold in North America - that the segment's recovery from a deep trough will acquire still more steam through the end of 2010.
General Motors, for instance, is calling for trucks to grab 0.3 percent more of the overall U.S. market by the end of the year than in the first half.
"Our dealers still remain very optimistic, particularly on pickups, for the next six months of the year; they're a big part of our media spend and our promotional focus," said Brian Sweeney, general manager of GM's GMC truck brand. "In some of our big pickup markets, the economy is bouncing back, so we're very positive about the next six months with Sierra sales."
George Rogers, head of Ford's Team Detroit advertising agency, believes that "there is still a tremendous amount of pent-up demand in the [pickup] market that isn't reflected in current figures."
General Motors finally announced the exact price of its upcoming 2011 Chevrolet Volt extended range plug-in hybrid: prices start at $41,000 and climb to $44,600 before tax incentives.
The price is higher than many industry observers anticipated; many thought it would come in below $40,000 -- about $35,000 with tax incentives. It also is priced higher than the all-electric Nissan Leaf that starts at $32,780, with the upgraded model adding about $1,000.
This story has all the makings of a Robert Ludlum spy novel.
On Thursday, the U.S. government arrested a Troy, Mich., couple on charges of conspiring to steal General Motors' hybrid technology secrets and attempting to sell them to Chinese automaker Chery, a GM competitor in China. Chery has told wire services it had no knowledge of the case.
If the new General Motors truly is a different company, it can ratify that claim by shrewdly managing AmeriCredit, a Texas-based subprime lender it's buying for $3.5 billion. More broadly, GM has to learn once again how to profit from automotive finance while remembering that its main business is car-making.
The old GM's management of its GMAC lending subsidiary was dreadful. In the bad old days, GMAC financing became the tail that wagged the dog, providing incentivized leases, cash rebates and 0 percent financing as catnip to shoppers unimpressed with GM's vehicles. Old GM morphed into an automaker that sold deals, not cars.
General Motors Co.'s plan to purchase Fort Worth, TX-based auto-financing company AmeriCredit Corp. is firing speculation about GM's judgment in purchasing a finance operation that focuses on lending to those with less-than-perfect credit, but the numbers show GM's decision to hold little actual risk.
Although AmeriCredit's focus is on financing auto buyers with below-prime credit, financing buyers in that segment - and those with even lower credit scores - does not necessarily bring outsized risk. According to data from credit-information company Experian Automotive, the industry repossession rate was well less than 1 percent in the first quarter this year. And in the month of April, just 1.9 percent of all auto loans were in default.
General Motors announced Thursday morning that it has signed an agreement to acquire AmeriCredit, one of the nation's leading independent auto finance companies, for $3.5 billion. The purchase will help GM obtain automotive financing for its vehicles, particularly for subprime and lease customers.
Easier customer access to financing will help drive GM vehicle sales, said GM Vice President Steve Girsky in a conference call with media and analysts Thursday morning. AmeriCredit becomes GM's captive financing arm, a function had been filled by GMAC before GM sold its controlling interest in the finance company in 2006. Girsky said Ally Financial, the new name for GMAC, still will provide financing for prime customers, the bulk of GM's business.
However, Girsky added that GM "has no intention of getting back to a full-blown captive finance arm."
Scarce wonder that General Motors Co. and Chrysler Group LLC are eying buyers with sub-prime credit as the next growth market: in the wake of the recession-led credit crunch, only about 9 percent of sub-prime borrowers have their auto loans approved, said an article by the Associated Press.
The astonishing current reject rate for sub-prime auto lending represents a huge drop from historic standards that, prior to the economic meltdown, saw about 60 percent of sub-prime auto loans approved. Today's 9-percent approval rate is a bonanza for sub-prime auto loans compared with last year, which saw the approval fate fall to just 5 percent, the article said.
Just weeks ago, General Motors Co. announced it is forming a new regional organization to administer to South America and this week chief rival Ford Motor Co. is indicating it, too, will be placing more emphasis on its Latin-American business.
In a reorganization of its Canada, Mexico and South America business units, Ford is appointing Eduardo Serrano, current president and CEO of Ford of Mexico, as executive director, Latin America. Serrano now will have responsibility for South America and Mexico.
A new annual award from Edmunds.com provides the auto industry and consumers with a detailed measure of how well newly launched vehicles perform in the market. The first winner of the Edmunds.com Launch Breakthrough Award is General Motors Corp.'s Chevrolet Camaro.
The Launch Breakthrough Award measures and analyzes 18 variables to derive a single score for each of the 54 eligible vehicles, which had to be launched during the 2009 calendar year. Each vehicle had to be totally new or redesigned and must sell at least 100 units per month.
Exclusion of auto dealers from the financial reform bill working its way through Congress does nothing for the little guy - the consumer, argues James Surowiecki, author of The Wisdom of Crowds, in his column entitled "Masters of Main Street" in New Yorker magazine this week.
Auto dealers, who are middlemen between borrowers and lenders, aren't "as shady" as the middlemen mortgage brokers that were culprits in the nation's financial meltdown. "But they're not angels, either," Surowiecki writes.
General Motors Co. CEO Ed Whitacre has been fond of saying the "new" GM's mission is one thing and one thing only: designing, building and selling the best cars and trucks in the world.
It hasn't taken GM long to stray from the cause, however. Barely a year out of bankruptcy, the company seems so concerned about making the case for its craved initial public offering that one wonders if, as with the GM of the past, the "building and selling world's best cars and trucks" thing isn't already losing its charm.
General Motors Co. has been anxious to sell off its widespread but cumbersome Nexteer steering-systems business ever since it emerged from bankruptcy and reacquired the operations from Delphi Inc. when that formerly colossal supplier itself exited bankruptcy late last year.
General Motors announced today it has a buyer for Nexteer in the form of Pacific Century Motors, a company formed by China's Tempo Group. Tempo is described as "an affiliate of the Beijing Municipal Government," a financing and investing unit for that entity. Neither GM or the Tempo Group detailed terms for Nexteer, which has 22 manufacturing operations and six engineering facilities around the globe.
Delphi, formed in 1999 when GM spun off many of its parts-making operations, had difficulty operating the steering-components businesses profitably under United Auto Worker wage structures and after reacquiring the operations when Delphi exited bankruptcy, GM also quickly began maneuvering for wage concessions even as it sought a buyer for the supplier that develops and manufactures electric and hydraulic power steering systems, steering columns and axles.
If every General Motors dealer were like Mike Love, company executives could count on smooth sailing with the owners of their retail-distribution network and look to them as yet another reason for optimism about the future.
Love owns Love Chevrolet in Columbia, S.C. But until last year, he also operated Love Hummer and Love Saturn in Columbia. Then GM pared brands and made those franchises moot. Love's Saturn store "was better than most Saturn dealerships were" and he had spent millions of dollars on the quonset-hut format for the dedicated Hummer franchise that now looks like some remnant of an old military base.
But Love is taking the high road. "It was all disappointing, but we'll put our best foot forward and go on," said the third-generation GM dealer. "You can't worry about the things you can't control."
Despite expected weak sales in June and signs of a slowing economic recovery, automakers are remaining vigilant in keeping inventories low so they don't require expensive incentives to move the metal.
Edmunds.com data shows another dip in incentive spending in June. The average incentive was $2,661 per vehicle sold in June 2010, Edmunds.com estimates. That's down $36, or 1.3 percent, from May and down $196, or 6.9 percent, from June 2009.
Automakers report sales Wednesday, which are expected to by up from the dismal levels of last June but down from weak May of this year. A year ago, incentives were high because inventories were high and sales were particularly depressed as consumers awaited details of the governments Cash for Clunkers program.
General Motors reported Thursday that its June sales were 11 percent higher than a year ago, and sales of its four core brands were up 36 percent.
Edmunds.com forecasts June will be up from the year-ago June but, more importantly, weaker than May. June's Seasonally Adjusted Annualized Rate (SAAR) of sales is expected to come in at about 11.2 million vehicles, down from 11.6 million in May. June sales likely will total about 992,500 vehicles, a nearly 17-percent increase from June 2009 but a 9.5 percent decrease from May, Edmunds.com predicts.
GM, the first automaker to report June sales on Thursday, said it sold 195,380 vehicles, up 10.7 percent from the 176,571 it sold last June when the automaker was in Chapter 11 bankruptcy. GM also forecasts an 11.2-million SAAR for June.
A year ago as General Motors was sprinting through bankruptcy proceedings and its future appeared iffy, shoppers were scouring dealership lots for bargains. The conventional wisdom suggsted great deals were to be had from the automaker's new and used vehicle inventories.
Turns out, conventional wisdom was wrong: there were no great bargains in either used- or new- GM vehicles.
In fact, Edmunds.com's newest analysis shows that the industry, in general, has seen the highest year-over-year used-car prices since at least 2004 and some of the most dramatic examples of those price hikes can be found in the GM stable.
In a lengthy conference designed to update the investment community about its present and near-term business performance, General Motors Co. executives in charge of each of the company's major global regions Tuesday presented an optimistic tone about the "new" GM's operations - as well as its potential to flourish once again as a publicly-held company.
GM held the conference largely to impress upon the investment community the potential for the company to hold a successful initial public offering. It is widely believed GM would like it to happen before the end of this year. An IPO would return GM to public ownership and begin to unwind the company from its current government and autoworker-union ownership that has earned it the derogatory nickname "Government Motors."
Chairman and CEO Ed Whitacre told financial analysts assembled at the company's technical center in Warren, Mich., that the new GM is nothing like the former company that declared bankruptcy last year, saying the old GM was "constrained in attitude as much as action," and became a company too focused on its internal operations and that would "overthink even the smallest decisions."
Privately held companies' initial public offerings, or IPOs, were the Valhalla of the investment and "dot-com" sectors a decade ago. And despite the comparative financial bust the dot-com frenzy turned out to be, IPOs haven't totally lost the glamor they gained during that time.
Now it's the auto-sector's turn, with the heavily-hyped IPO of California's darling electric-vehicle company, Tesla Motors, ready to go IPO tomorrow. With IPO activity - and success - dropping precipitously during the recession, the Tesla offering will prove an interesting barometer of the appetite for IPOs in general and in particular how the merging of the auto, financial and "green" sectors affects the equation.
The reception for the Tesla IPO also may be an indicator for how well the hunkered-down investment community views this year's really big nut on the IPO tree: General Motors Co.'s return to the publicly-held domain, coming perhaps sometime before the end of this year.
On Thursday, automakers will report how many vehicles they sold in June and how many they sold in the first half of 2010. Edmunds.com's senior analysts Karl Brauer, Jessica Caldwell and Michelle Krebs share their thoughts - and concerns - about the year so far.
General Motors recently made a series of personnel and organizational changes in its product planning area, ones that Mark Reuss, president of GM North America, said will make the automaker more efficient by developing technologies and fuel efficiency strategies globally. During a visit to Edmunds.com's Santa Monica, Calif., headquarters, Reuss spoke with Inside Line Senior Editor Ed Hellwig about those changes as well as GM's product, fuel-efficiency and technology strategies.
With all the positive things that have begun accruing to General Motors as it attempts to leave 2009's bankruptcy behind, the biggest one of all has only begun to materialize: GM's fast-improving manufacturing-cost position versus its biggest foreign rivals.
That's right: GM likely has begun enjoying a new cost edge. Some analysts say that it already has reached as much as $2,000 a car over models built by Japanese competitors in the United States and that GM's overall cost advantage may soon become as much as double that amount. Other experts peg GM's improving manufacturing-cost comparison not as optimistically -- but at no worse than a draw compared with any of its major competitors at this point.
GM's costs will be much discussed at its first annual Global Business Conference June 29. GM announced Thursday that the conference will be hosted by GM Vice Chairman and CFO Chris Liddell and several senior leaders to provide updates on the company's global business. The conference clearly is a warm-up for GM's upcoming initial public offering ofits stock.
Toyota's highly publicized safety recall of 2.2 million cars in February seemed to precipitate a run of recent safety recalls by other automakers including General Motors, Chrysler, Honda and Hyundai. And 2010 overall is on pace for what could be the highest number of total recalled vehicles in this country since 2005.
But new analysis by Edmunds.com also demonstrates that the number of vehicles affected by industry safety recalls these days has declined dramatically compared with the record levels of a decade ago.
In a telling reversal of longstanding trends and perceptions, domestic automakers' brands, as a whole, have pulled ahead in overall quality as measured by J.D. Power and Associates' benchmark Initial Quality Study, now in its 24th year. It's the first time domestic brands have, in the aggregate, surpassed imports in initial quality, Power said today. The domestics brands' watershed performance in the 2010 U.S. Initial Quality Study was driven by quality improvements by new models from the surging Ford Motor Co. and the industry's trend in improving the general quality of newly launched vehicles.
True, the domestic triumph was not overwhelming: domestic brands experienced 108 problems per 100 vehicles compared with the 109 problems per 100 vehicles for imports. But the symbolic impact remains - domestics, overall, have better quality than imports.
"Domestic automakers have made impressive strides in steadily improving vehicle quality, particularly since 2007," said David Sargent, vice president of global vehicle research, in a release. "This year may mark a key turning point for U.S. brands as they continue to fight the battle against lingering negative perceptions of their quality."
General Motors Co.'s 2011 Buick Regal - trickling from its German assembly plant into showrooms for about the past month, is the linchpin to the Buick's expansion plans in the U.S. where, surviving the company's post-bankruptcy brand purge, Buick is quickly going about replacing the old with the new.
The aged Lucerne sedan represents the last of Buick's old guard and soon will be put to rest. That will leave the well-received Enclave crossover - launched in 2008 - as Buick's oldest model. The LaCrosse midsize sedan was launched last year and now the 2011 Regal will anchor the lower end of the midsize segment.
Buick sources expect the Regal, which starts at $26,995, to become the brand's volume seller.
When General Motors filed for bankruptcy protection in June 2009, the headlines were appropriately dramatic. "End of an Era", posted CNN.com, while the Wall Street Journal read, "GM Collapses into Government's Arms." Edmunds' own AutoObserver.com remarked it was "History in the Making."
The tone was funereal -- and rightly so, as the move would cut four entire divisions, thousands of dealerships and of course even more jobs. Still, a few saw something of a silver lining in the news: the potential to get some great deals.
But a funny thing happened on the way to the estate sale: the bargains didn't show up -- not right away, at least.
Pulitzer Prize-winning author and Edmunds' AutoObserver.com contributor Paul Ingrassia returned to Detroit recently to give a talk on his latest book "Crash Course," which chronicles the General Motors and Chrysler bankruptcies. The former Detroit bureau chief for the Wall Street Journal expressed concern that the automakers' future success will require a vast improvement in union-management relations. This week, the United Auto Workers union is holding its annual convention in Detroit, where it is electing a new president and setting the course for the union's future.
By the time Ed Whitacre took on the title of CEO at General Motors Co. last December, the draconian bankruptcy-and-bailout process had radically shrunk America's most iconic manufacturer.
To give GM another shot at long-term viability, the new chief decided that his most important task was to transform the culture of one of the most ossified large corporations in America.
The former AT&T CEO already has made a big impact on how his new company operates. Whitacre has shaken up the ranks of top management more than once. He has streamlined decision-making with a few bold strokes. He has set high goals and has frowned on excuse-making. And when it comes to GM's crucial product-development and manufacturing operations, Whitacre has left well enough basically alone.
But that is only a start toward a goal made more urgent because of how successful the other auto-industry outsider, Alan Mulally, has become in turning around GM's crosstown archrival, Ford Motor Co.
"GM is at a precipice where it still can go in either direction, and the direction they go is going to be based 100 percent upon the leadership that they have," said Dennis Zeleny, who has headed human resources for a number of Fortune 500 companies, currently Sunoco Oil. "They need to be change-oriented, have courage and make better decisions."
A year after General Motors filed for Chapter 11 bankruptcy, the hot topic is no longer whether GM deserved to be bailed out by the government, but how much the "new" GM might be worth on Wall Street -- and whether taxpayers, who own 60 percent of the automaker, stand a chance at getting their money back from the federal bailout.
After its brush with death, GM executives are eager to issue an initial public offering and return to being a publicly traded company. GM CEO Ed Whitacre repeatedly speaks of an IPO taking place as early as later this year or early 2011.
On Thursday, the U.S. Treasury Department, which owns 61 percent of GM, said in a statement that the IPO won't come before October and that the timing is up to GM.
A stumbling block in selling an upbeat General Motors story to Wall Street as the automaker seeks to make an initial public offering later this year or next is the automaker's unprofitable European subsidiary, Opel. That chapter of the GM story took another downbeat turn this week.
Early in the week, the German federal government refused to provide GM with the loan guarantees it had requested to restructure Opel. Instead, German Chancellor Angela Merkel said Thursday that GM will have to go begging for funding to the four German states that are home to Opel operations.
Rick Wagoner, who got the boot from the Obama Administration as General Motors CEO, has joined the board of directors of The Washington Post Co., the media and education company announced Thursday.
The company also owns Newsweek, which is up for sale, as well as Kaplan education company, which accounts for more than half of its revenues.
"Rick ran one of the biggest advertisers in the world; GM was a very large-scale buyer of advertising," Post Co. Chairman Donald E. Graham said Thursday as reported by the Post. "Kaplan is becoming more of an international company, and Rick has managed companies around the world. He also has quite an extensive financial background, and that's also very valued."
Graham said he had known Wagoner for years. Other Post Co. directors include Warren E. Buffett, Barry Diller, former Xerox chairman Anne Mulcahy and Melinda French Gates, wife of Bill Gates.
BMW and Saab are discussing parts and technology sharing for a new Saab 9-2 small car, according to media reports.
The potential partnership calls for BMW to provide Saab with engines, gearboxes and the Mini platform for Saab's much-needed small car, according to sources quoted by Bloomberg News, which added that talks were in the early stages and no agreement was imminent. An agreement would take at least two months, one source told Bloomberg.
Edmunds.com, parent of AutoObserver, today named vehicles in 21 distinct segments the leaders in its proprietary True Cost to Own (TCO) metric that establishes total vehicle ownership costs.
Vehicles by Japanese automakers dominate the 2010 TCO list, placing 14 of the 21 winners. Domestic automakers placed four models and European makers had three winners.
Six of the winners are made by Honda Motor Co. Ltd., the most by any manufacturer.
Edmunds.com's TCO pricing system estimates total vehicle ownership costs over a five-year period. The calculation incorporates projected average depreciation, financing, taxes, fees, insurance premiums, fuel costs, regional variances, maintenance and repairs for each model.
Great products underlie the most effective promotion, and in that regard General Motors is on a promising path with its new vehicles. But GM hasn't done itself any favors with its marketing for a long time, and consistently poor execution in that arena threatens to undermine much of the progress being achieved in the marketplace by its hot car launches.
Three of GM's four remaining brands are still at least somewhat amorphous. The company continues to churn up not only in-house marketing leadership but also its crucial advertising-agency relationships. Dealers remain restive partly because of GM's continuing efforts to weed out the unproductive dealerships.
"I've never seen anything like their agency merry-go-round," said a marketing executive for a primary competitor of GM. "If your partners are in flux and your leaders are in flux, people at GM don't even know who they're supposed to answer to. And they haven't been able to communicate a plan to a distribution system where dealers need to plan six to nine months in advance."
General Motors came under scrutiny yet-again -- this time for giving away a Chevrolet Corvette to Detroit Tigers baseball pitcher Armando Galarraga, who was robbed of a perfect game on an admitted bad call.
The New York Times, in an article headlined "GM's Gift of Luxury Stuns Few," questioned whether GM, as a mostly taxpayer-owned company should be giving away cars. USA Today more pointedly asked "Was Taxpayer-owned GM Right to Give Away a Corvette to a Detroit Pitcher?"
General Motors Co. may be owned mostly by the government, but that isn't stopping the company from acting like venture capitalists: GM announced today it is creating a new subsidiary to "help the company identify and develop innovative technologies in the automotive/transportation sector."
General Motors Ventures LLC will be headed by former GM global vice president of product planning Jon J. Lauckner, who will report to vice chairman of corporate strategy and new business development, Stephen J. Girsky.
The company said the new subsidiary has been funded with a cool $100 million to get started and "is currently exploring equity investments in a number of auto-related technologies and business models."
For the second consecutive week, a post by AutoObserver Senior Editor Bill Visnic asking "What's Wrong with Honda" was the most-read item on the Web site by a long shot.
The first in an AutoObserver month-plus long series of stories on the first anniversary of General Motors filing for and emerging from Chapter 11 bankruptcy also captured the interest of AutoObserver readers, including an overview piece by Visnic, a column by Pulitzer Prize-winning writer Paul Ingrassia and a post by Contributing Writer Dale Buss on the changing attitudes of some Americans regarding GM.
May sales reports from automakers came in stronger Wednesday than even Edmunds.com forecasted, suggesting a modest recovery is, indeed, under way. Edmunds.com CEO Jeremy Anwyl and analysts Karl Brauer and Jessica Caldwell discuss the 19-percent year-over-year sales rise in May, a month that came in at a 11.6 million Seasonally Adjusted Annual Rate of sales.
It's about time that the U.S. auto market followed script for a change, and May was that month: There was a modest increase in sales compared with last May, befitting the annual gain of 10 percent or more that the industry has forecast for the year as a whole. Steady as it goes was the byword.
For the month, automakers sold 1,099,000 vehicles in the U.S., 19 percent higher than the nadir of May, 2009, and an improvement from about 982,000 this April. More important, the pace of sales in May was about 11.6 million units on a seasonally adjusted annualized rate (SAAR) basis, a significant uptick from the 11.2-million rate posted in the previous month and right in line with the industry consensus that full-year sales will end up between 11.5 million and 12 million units compared with 10.4 million for 2009.
"This supports the thesis for the moderate recovery we've been forecasting," said George Pipas, head of U.S. industry analysis for Ford.
Rich Scholl is not a bitter man, but he's not a forgiving one either. He was a lifelong customer of General Motors: first a '63 Chevrolet, then a '72 Olds convertible, a '70 Cadillac, a '77 Buick, a new Pontiac 6000, a new Olds Intrigue, and on and on. In 2002, the state insurance-department trainer in Mt. Prospect, Ill., bought a Chevrolet Silverado pickup truck.
But that might be the last. When GM management went hat in hand to the federal government in the spring of 2009, the 63-year-old retiree was finished with GM. Sure, he worried about practicalities such as whether it would be more difficult to get warranty work done as the company shook out its dealer ranks. Yet Scholl was far more motivated by disgust.
"I just really had no faith in the fact that the government was taking over GM," he said recently. So after the GM bailout, Scholl and his wife bought a 2010 Mercury Milan from Ford, which hadn't asked for government money.
Saab Cars North America delivered its first monthly sales report Wednesday under the ownership of Dutch sports car maker Spyker instead of General Motors.
Saab. which only recently cranked up production in its factories again, sold 174 cars. Of that total, Saab sold 130 9-3 models; 25 units of the new 9-5; and 19 9-7X SUVs.
According to Edmunds.com's estimates, Saab spent more per vehicle than any other brand on incentives in May. Saab is estimated to have spent $6,813 per vehicle on average for every vehicle sold. Saab also spent the most as a percentage of vehicle price at 17.1 percent of sticker price spent on incentives, according to Edmunds.com incentives.
General Motors, the first automaker to report May sales Wednesday, posted a nearly 17-percent increase in sales from a year ago as Edmunds.com predicts the industry's selling rate will come in at 11.4 million vehicles.
In total, GM sold 223,822 vehicles, up 16.6 percent from year-ago May sales. All but about 1,500 of those sales came from the GM's remaining four brands -- Chevrolet, Buick, GMC and Cadillac.
Those four brands combined had a sales rise of 32 percent from last May.
As anniversaries go, June 1 doesn't come close to V-E Day, Neal Armstrong's lunar landing or even Goose Goslin hitting into four double plays in one game. (It was April 28, 1934, in case you forgot). June 1 is the day in 2009 that General Motors, once the richest and most powerful company on earth, declared bankruptcy with the financial support of the United States government. Chrysler had taken the plunge two months earlier.
It's a good time to take stock and ask some basic questions.
Was the government's rescue of GM and Chrysler the right thing to do?
Will we taxpayers get repaid in full?
And will the new General Motors and Chrysler forge secure, prosperous futures?
The short answers are yes, probably not and nobody really knows. But of course the answers are rather more complicated than that.
It took 101 years for the "old" General Motors Corp. to run itself out of gas, officially going out of business on this day one year ago. It won't take that long to determine if GM 2.0 is structured to hold up for another century.
Today's General Motors Co., formed when the remnants of the original company emerged from bankruptcy July 10, 2009, closes in on completing its first year of existence in better shape than even optimists thought possible. This is the company whose former CEO, among others, insisted bankruptcy would destroy it.
So GM lives. The "new" GM looks -- and is -- healthier. But can it last? It is a vastly different company now, for better and worse. And bankruptcy didn't fix everything.
It may not be an all-new model just yet, but Detroit's two healthiest automakers are getting underway with a facelift for their decimated manufacturing operations in Michigan.
The two automakers have husked their home-state manufacturing of thousands of jobs during the past several years' reorganizations and downsizing. Many of those jobs may never return, but the two companies are beginning to make good on the promise of new-age manufacturing to replace at least some of the old.
Ford announced Monday it is investing $135 million in new Detroit-area operations to assemble lithium-ion battery packs and hybrid transaxles for its next-generation compact and midsize hybrid-electric vehicles coming in 2012. The company says 220 new jobs will be created.
General Motors announced Monday that Susan Docherty has been appointed GM vice president, International Operational Sales, Marketing and Aftersales, effective June 1.
Docherty had been left with no job at GM after the automaker announced a couple weeks ago that Joel Ewanick, formerly of Hyundai and Nissan, would head marketing for GM North America.
"Growth in China and other emerging markets is important to the company's future," said GM Chairman and CEO, Ed Whitacre. "We are counting on Susan to make a significant contribution and I am glad to have her running this critical part of our business
Emerging trends in the auto industry and government investigations of possible vehicle defects captured the interest of AutoObserver readers this past week.
The National Highway Traffic SafetyAdministration's (NHTSA) investigation into Ford and General Motors vehicles was the most read post on AutoObserver by a wide margin last week. NHTSA is investigating complaints on the Ford Windstar for have rear axles that can potentially break. NHTSA is investigating the Chevrolet Corvette for complaints over leaky gas tanks.
Edmund.com analysts talked with the media in recent weeks about the Toyota-Tesla link, a drop in Toyota's sales, a rise in Ford sales, conventional versus electric cars, the best family cars, leasing and General Motors marketing and rising profitability.
Early May car sales indicate sales for Toyota Motor are down 15 percent for the same period last month despite aggressive incentives, according to an analysis by Edmunds.com, which also noted General Motors and Nissan sales up from a month earlier.
"Toyota's incentive program is falling on deaf ears. Most people who were open to getting deals from Toyota already made their purchases," said Edmunds.com Senior Analyst Jessica Caldwell. "Toyota has not yet recovered from recent image problems."
The number of consumers defaulting on auto loans is dropping, while at the same time General Motors Co. said this week it would like to be able to offer auto loans to more buyers with sub-prime credit.
General Motors currently is bound by the lending standards of its financing partner Ally Financial; Ally formerly was GMAC Financial, the captive lending unit of GM, but GM now owns only a small portion of Ally - although Ally calls the shots regarding which new-vehicle loan applicants are approved when applying for financing through a GM dealership.
Mark Reuss, GM president of North America, was blunt in telling the Associated Press that Ally's current conservatism in lending to sub-prime applicants is a hinderance to expanding GM's sales numbers, saying in an interview, "it would sure help the company's sales in North America if we were able to get access," to more loans for sub-prime borrowers.
It's not just Toyota Motor Corp. falling under the newly-watchful eye of the National Highway Traffic Safety Administration and its vehicle-recall powers: Ford Motor Co. and General Motors Co. each have a vehicle under the NHTSA microscope this week.
The NHTSA opened a formal investigation into 900,000 1999-2003 Ford Windstar minivans for the potential for the rear axle beam to corrode and potentially break. The administration's Office of Defects Investigation launched a formal inquiry this week after noting on its website that it had received 234 complaints about the condition and had begun a preliminary evaluation "to assess the scope, frequency and safety consequences of the alleged defect in the subject vehicles."
At GM, the vaunted Chevrolet Corvette is also the subject of a NHTSA investigation after 30 consumer complaints about fuel or fuel vapor leaking from the car's gas tank. The investigation covers about 33,000 2004-model vehicles.
Striving to return to a solid financial footing after emerging from Chapter 11 bankruptcy last summer, General Motors Co. reported today its first quarterly profit in three years - and what may be the start of a sustainable turnaround for the former No. 1 automaker that spent years of serially racking up debt.
GM made $853 million in the first quarter this year, a substantial reversal compared with the nearly $6-billion loss for the same period in 2009 when the former GM struggled to stay afloat prior to declaring bankruptcy in June. For the quarter, GM's net revenue was $31.5 billion, a bulging 40-percent gain over the first quarter of 2009.
The company's first-quarter operating income was $1.2 billion, compared with a $5.9-billion loss in the January-to-March period last year. GM also said it produced nearly $1 billion in free cash flow during the quarter.
GM and the investment community believe it is crucial to demonstrate a pattern of profitability and healthy operating parameters if the company is to issue a public share offering and unshackle itself from its current government ownership.
Over the decades OEMs have gone their separate ways on a number of big strategic matters that ended up becoming major determinants of the industry's winners and losers. Front-wheel drive or rear-wheel drive? Unionized or non-union factories? Global mega-merger or not?
Automakers likewise are diverging around the question of how to approach the onboard "infotainment" revolution. Platforms including General Motors' OnStar, Ford's Sync and Mercedes-Benz's mbrace represent early commitments to widely varying answers.
And Hyundai's recent announcement of tie-ins between iPad and the company's upcoming 2011 Equus luxury sedan is further indication that every OEM believes the procurement, packaging and presentation of wireless content and connections going into, coming out of and bouncing around within vehicles can make a huge difference.
"It's the next big battleground in the industry," said John Wolkonowicz, senior auto analyst for IHS Global Insight, a market-research firm in Lexington, Mass. "It is addressing what people under 50 years old today find absolutely mandatory in their vehicles."
A survey conducted for NBC News and the Wall Street Journal appears to indicate attitudes about General Motors Co. are improving.
The survey asked 1,000 adults their position on politicians and a range of political topics such as health care and immigration, as well as the general direction of the country, with one question being their attitude about GM.
When asked to rate their attitude about GM on a 5-response scale ranging from "very positive" to "very negative," survey respondents indicate a better feeling about GM in the nearly one year that has elapsed since GM's federal bailout and emergence from Chapter 11 bankruptcy.
In June of last year, 23 percent of respondents said they were "very negative" about GM. The number dipped to just 10 percent when the question was posed to one-half of the respondents this month.
The number of respondents who said they were "very positive" about GM climbed from 6 percent in June, 2009, to 11 percent this May. And GM even converted some to at least become neutral: In December, 2008, 23 percent of respondents indicated a "neutral" attitude about GM. The number rose to 30 percent in June, 2009 and stood at 31 percent this month.
Since last summer General Motors has changed CEOs; launched a handful of highly acclaimed new products; shed four clunker brands; streamlined its dealer body; and even repaid a $6 billion chunk of its obligation to the U.S. taxpayer.
The biggest thing GM hasn't accomplished since its federal bailout, however, is the most important: selling as many vehicles as it wants. Its share of the U.S. market declined to 18.7 percent during the first four months of this year compared with 19.1 percent in the same period last year, despite a sales rise of 14 percent.
That's why CEO Ed Whitacre felt compelled to import Joel Ewanick, the reigning rock star of automotive marketing, as GM's new chief marketing officer for the United States.
General Motors likely will report a first-quarter profit next week, almost a year after filing for Chapter 11 bankruptcy, the former head of President Barack Obama's automotive task force said Monday.
"GM is on a path to sustained profitability, given the rate of car sales and its lower cost base," Rattner said in a speech delivered to a conference held in Michigan Monday.
For the first time in the history of the 10-year-old study that looks at the relationship between automakers and their suppliers, a U.S. automaker -- Ford -- ranked in the top three. It was third, with Honda and Toyota in 1st and 2nd place, respectively.
The annual North American OEM-Supplier Working Relations study, done by Birmingham, Mich.-based Planning Perspectives, closely follows supplier perceptions of their working relations with the top three U.S. and top three Japanese automakers across 14 commodity purchasing areas. About 45 percent of automotive suppliers in Planning Perspectives' database participated in the study.
"When the U.S. automakers were in bankruptcy, or in Ford's case near bankruptcy, they knew they could not come back alone," John W. Henke Jr., president of the management consulting firm, told AutoObserver in an interview. "Alan Mulally (Ford president and CEO), a big proponent of good supplier relations since his days at Boeing, has been taking a more active role in getting top management to strive for strong supplier relations."
With savvy muscle car aficionados clearly holding back in anticipation of the showroom appearance of the heavily revised 2011 Ford Mustang, its chief rival Chevrolet Camaro is pulling ahead in the sales competition between Detroit's new-generation muscle cars.
And while sales for the high-powered Detroit muscle cars remain comparatively healthy, sales of almost all other sports cars remain troublingly depressed - including for the Camaro's big brother and Chevrolet-brand halo, the Corvette.
General Motors swept aside marketing chief Susan Docherty to make way for the arrival of Joel Ewanick, the marketing whiz who helped Hyundai soar to new heights.
It had been speculated that Docherty was not long for GM's important top marketing job at this crucial stage when GM absolutely must move the metal in order to make money and get the government out of its business. Docherty had been in charge of both sales and marketing, but the sales job was dropped from her duties in a recent reorganization.
Ewanick's appointment, however, is a stunner. Nissan had just stolen Ewanick away from Hyundai in March, but obviously his feet had barely touched ground on Nissan soil -- if at all -- when GM made its move.
In a sign of modest progress for the American car market, sales in April were up 20 percent from a year ago, though they declined by 8 percent from March. Still, auto company executives and outside analysts pronounced the industry's modest recovery remains on track - and, in fact, is expected to strengthen - as the year goes on.
Industrywide sales of 981,659 vehicles compared with 817,096 sold last April. But last spring marked the depths of the Great Recession, and so a better comparison for the current market actually was March 2010. Sales in April eased to a Seasonally Adjusted Annual Rate of about 11.2 million from 11.8 million in March, but higher than last April's 9.2 million.
Within the next couple of months, General Motors will be selling no more vehicles from its four brands it is eliminating as it will have no more to sell.
GM executives said Monday the automaker has only about 2,000 Hummer, Pontiac and Saturn vehicles in inventory, giving each brand in the triple digits and those should be gone in about 60 days.
During April, GM sold 52 Pontiacs, 373 Saturns and 481 Hummers. Ironically, it was Hummer's best sales month since August 2009 when GM sold 777 Hummers.
GM sold Saab to Spyker so Saab sales are no longer counted in GM's totals.
General Motors, the first automaker to report April sales on Monday, said its April sales were 6 percent higher in April from April 2009, but that is well below the increase expected for the industry in total.
Edmunds.com forecasts the industry will post roughly a 20-percent increase in April from a year ago.
GM noted retail sales of its four remaining core brands - Buick, Cadillac, Chevrolet and GMC - were up 20 percent form a year ago.
While some automakers carried over their rather hefty incentive programs from March into April, including popular zero-percent financing and discounted leases, their effectiveness appears to be waning, according to estimates by Edmunds.com.
"The automakers that need extra marketing support will have to pull out a new trick for May," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Industrywide, manufacturer incentives dropped in April from last April and March. Sales, being reported by automakers Monday, are forecasted to be well ahead of last April but slightly down from March.
Honda may prove the exception. Its incentives hit a record high in April and its sales may be up.
General Motors Co.'s recovery from both Chapter 11 bankruptcy and the past two years' horrid auto-sales climate couldn't be categorized as being anything but in its infancy. But that isn't stopping Wall Street and the analyst community from breathless speculation of the initial public offering that has never been far removed from GM's own post-bankruptcy posturing.
The company emerged from bankruptcy last July 10 and almost immediately began the dialogue about getting back to public ownership via an IPO. Just three months from bankruptcy in early October last year, then-CEO Fritz Henderson's delivered the first meaningful update about the "new" GM, but his discussion was not limited to the operational matters most believed GM should be focused on: instead, one key talking point was the company's preparation for an IPO.
Accelerant was poured on the always-smoldering IPO dialogue by Bloomberg story today in which some analysts are projecting a GM stock price of "$113 to $137 per share, depending on dilution (generated by holders of GM stock warrants)" that leads to an equity value of $68 billion, by one estimate.
It was one year ago today that Chrysler officially filed for Chapter 11 bankruptcy.
A year later, as one dealership group CEO remarked to AutoObserver on the eve of this dark anniversary -- almost in awe: "We're here. We're still here."
Survival was by no means a given a year ago. The betting was Chrysler was a goner. General Motors was in critical condition. It wasn't clear if Ford could stay out of bankruptcy. Death appeared near for a host of parts suppliers, dealerships, ad agencies and other businesses that draw life from the auto industry.
But most are still here a year later, and the picture brightened even further this week. Good news was in abundance. Still, the industry needs to be cautious about becoming too exuberant as this turnaround remains an early work in progress.
Mark Reuss, General Motors' North American president, said the automaker will make more announcements about plant investments and expansion this year, like the one made Wednesday regarding plants in Kansas and Michigan.
In addition, GM could be hiring plant workers this year, though he didn't provide details about plants and timelines. However, he noted that plants producing GM's newest models are at full capacity and struggling to eke out more.
"When you start talking about people, livelihoods and jobs and adding more of those, you want to do it in a way that we're sure what we're doing is absolutely needed by the company for a long period of time," Reuss said.
General Motors confirmed Wednesday it has paid back in full the $8.4 billion in loans from the U.S. and Canadian governments..
GM Chairman and CEO Ed Whitacre also announced the automaker will invest $257 million in the next-generation Chevrolet Malibu.
Whitacre made both announcements at GM's plant in Fairfax, Kansas, which will be the primary source of future Malibu models. The plant will receive $136 million of the total Malibu investment to prepare for the next-generation Malibu. The plant already builds the Malibu as well as the Buick LaCrosse.
When it goes on sale in September, it's a lead-pipe cinch General Motors Co.'s 2011 Chevrolet Cruze compact car is going to be markedly more expensive than the creaky Chevrolet Cobalt it replaces.
The Chevrolet brand always has been about the "value" thing, but the times they are a-changin' at GM, with a prime product-development and marketing mantra being to build better cars - and charge more for them.
After driving U.S.-specification versions of the Cruze last week that GM engineers say are at least 80-percent representative of the final product, it's obvious the Cruze is way more car than the Cobalt. But the compact-car market is cutthroat and a lot of the Cruze's more costly content might be considered stuff the segment's typical buyer doesn't have a history of paying for - so a serious price hike could be a risky move at a fragile time in GM's rebound.
But Chevrolet seems to have a plan: if the Cruze's radically more-refined driving experience and superior specification isn't enough to justify a more ambitious price point, then maybe a big safety story can seal the deal.
Edmunds.com is sticking with its long-held 2010 sales forecast of 11.5 million vehicles as other forecasters up theirs some.
Ford executives this week expressed growing optimism based on improved economic metrics and higher March sales, which were boosted by incentives, including low interest and even zero-interest financing led by Toyota. Ford has been saying sales would be between 11.5 million and 12.5 million (including heavy and medium-duty trucks).
Despite considering a boost, Edmunds.com is staying with 11.5 million (light vehicles only) for now.
General Motors, which already is selling more vehicles in China than it is in the U.S., will stretch the gap even further as it predicts it will sell three million vehicles a year in China by 2015. It will add 25 new or updated models, including more fuel efficient ones.
For 2010, GM said in a statement it is on track to sell more than 2 million vehicles in China this year, four years ahead of schedule. GM sold 1.83 million vehicles in China last year.
Engineers leading development of General Motors Co.'s 2011 Chevrolet Volt extended-range electric vehicle through its final stages told reporters the car will be "right up there with (GM's) most emissions-efficient vehicles," but will not be certified by the Environmental Protection Agency as a zero-emissions vehicle, as are pure battery-powered vehicles.
Also: fuhgeddabout that 230 miles-per-gallon city-cycle fuel economy rating GM so controversially touted last summer. Although GM's Volt engineers aren't saying it won't happen, they said the number was based on a preliminary fuel-economy measure proposed by the EPA for vehicles like the Volt and that the actual fuel-economy rating methodology is still to be decided.
But listen between the lines and it's clear the 230-mpg claim - rumored to be hotly disapproved by Volt developers when the company and then-CEO Fritz Henderson gaily hyped it last August - almost certainly will not be supported by whatever test methodology finally determines the Volt's official fuel-economy number. The 230-mpg number was outsized because of the Volt's ability to travel relatively long distances without burning any gasoline.
Edmunds.com analysts had their say with a number of media outlets on various topics including: GM's financial report; the Transportation Department's fine against Toyota and the release of Toyota internal documents; the pick-up in truck sales; and Washington's promotion of the benefits of last summer's Cash for Clunkers program.
Saab Cars now is under the ownership of Dutch supercar maker Spyker Cars NV, but Saab's ties to longtime owner General Motors Co. look like they're going to run deeper -- and longer -- than any near-term product-development impact Spyker will provide.
Britain's AutoCar reports this week that the next generation of Saab's entry-level 9-3, due in 2012, will continue to be based on the current 9-3's GM-developed compact front-wheel-drive platform known as Epsilon. It's an architecture that's already been used for the 9-3 since 2002 and started development well more than a decade ago.
General Motors, in issuing its first financial report since emerging from Chapter 11 bankruptcy last summer, revealed that it lost $4.3 billion in late 2009.
GM came out of bankruptcy on July 10, 2009. Between then and December 31, 2009, GM lost $4.3 billion, had revenues of $57.5 billion and generated $1 billion in cash on operating activities.
"Despite these results, GM has a chance of achieving profitability this year, at least on an operating basis," said Chris Liddell, GM's new vice chairman and CFO in a conference call with analysts and media Wednesday morning. Liddell recently joined GM from Microsoft.
Last week's New York auto show wrapped up for the media just as the industry's rough-and- tumble first quarter also came to a close. It was impossible not to connect the hardware on the New York show floor with the direction some of those vehicles' makers are headed as the industry writhes through what may or may not be labeled a recovery.
Judging from what's on display in New York, if there's a recovery underway, it's definitely going to treat some automakers better than others.
Using new products as the springboard, a scorecard of who's winning and losing so far this year:
American consumers returned to showrooms in force during March, driving overall sales to their best levels since last summer's peak around Cash for Clunkers. But there already were signals that the springtime spurt of sales momentum may not amount to much for the long term.
Automakers sold a total of 1,065,555 vehicles in the United States last month, the highest absolute number of sales since the federal government's massive buyback of late-model used cars sent sales skyrocketing last August. Last month's number also was 25 percent ahead of March, 2009.
Toyota, seeking to come back from recalls, quality issues and negitave publicity, set new heights for its incentives as it offered zero-percent financing and discounted leases throughout March, accourding to Edmunds.com's estimates.
The average automaker incentive in March was $2,742 per vehicle, up $100, or 3.8 percent, from February 2010, but down $423, or 13.4 percent, from March 2009.
Those hefty incentives offered by Toyota and other automakers who followed suit are expected to lift March car sales to their highest levels since last summer's Cash for Clunkers program, Edmunds.com Senior Analyst Jessica Caldwell predicted.
Hoping to reconnect with consumers after a lengthy "dark" period in which no new cars were delivered to showrooms, Saab Cars North America Inc. plans to reach out with aggressive lease deals focusing largely on existing customers, president and COO Mike Colleran told AutoObserver at the New York auto show Wednesday.
The switches were turned on again in Saab's Trollhattan, Sweden, assembly plant last week after no new cars were built for months as Saab transitioned from General Motors Co.'s 20 years of ownership to new owner Spyker Cars NV.
As automakers put the finishing touches on their March car sales numbers that will be announced on Thursday, it appears that the month came in like a lion but went out like a lamb, according to Edmunds.com's ongoing tracking of actual sales transaction data.
The month started off strong as Toyota launched aggressive incentives, which included zero-percent financing and attractively discounted lease prices, and other automakers followed suit. But the great deals look as if they fizzled by month's end. That raises the question -- even if automakers continue heavy incentives through April, will they be effective?
Everyone's certain to be sensitive to the industry "mood" at this week's New York auto show. Projections for March's Seasonally Adjusted Annual Rate are calling for hefty leaps over February, as well as compared with the same time last year when the auto industry had reached its depths.
However, with March sales figures pumped by oversized incentive spending incited by Toyota Motor Corp. and more large-scale fleet purchases, some analysts suspect March performances may be painting an artificial picture of a rebound that isn't there - or at least isn't sustainable.
So with all this background - not to mention gasoline prices steadily inching upward - automakers and industry watchers will be looking at the New York show for even the subtlest of signals, much the same way the finance industry hangs on every word of the latest Federal Reserve meeting.
Hefty incentives, spurred by Toyota with others following, are forecasted to send the Seasonally Adjusted Annual Rate of vehicle sales to 12.4 million this month from February's 10.3 million, according to Edmunds.com.
Toyota will get a big bang for its incentives bucks with sales up 80 percent from February, Edmunds.com forecasts. And Ford is expected to outsell GM again in March as it did in February.
"Although this SAAR sounds promising, it's too early to wave the flag and say that the economy has turned the corner," Edmunds.com CEO Jeremy Anwyl said. "Incentives drove sales this month, but those incentives were defensive moves by Toyota and its competitors, and are unlikely to last because inventories are simply not high enough to justify them."
Saying it heralds "a new era for the Swedish premium car maker as an independent company," Saab Automobile restarted production this week at its retooled assembly plant in Trollhattan, Sweden, making the first-ever Saab cars under the company's new owner, Spyker Cars NV.
The company said the first car off the lines after a seven-week idling as Saab transferred ownership from General Motors Co. to Spyker was the new-generation 9-5 sedan. Saab said the line also is producing the 9-3 convertible and by the time the SportCombi wagon body style of the 9-5 comes next year, the Trollhatten plant will be assembling five distinct models.
Former auto executive Jerome York is dead at the age of 71 after suffering a brain aneurysm on Tuesday.
In the 1970s, York held high executive posts at Ford Motor Co. and Chrysler Corp. and was a central player in Chrysler's early 1980s turnaround, yet always was a vocal and strident critic of Detroit automakers for what he characterized as a myopic management culture.
York's seemingly perpetual prediction that Detroit would fall if it did not change essentially came to fruition with last summer's bankruptcies at General Motors Corp. and Chrysler.
York had a colorful career for someone who often was characterized as relentlessly methodical and calculating - a perception that may have cost him the CEO chair at Chrysler when legendarily emotional Lee Iacocca retired in 1992.
Overall vehicle dependability has improved 7 percent and for the first time in more than a decade, a domestic vehicle is the industry's dependability leader, says the latest Vehicle Dependability Study from J.D. Power and Associates.
Power's latest version of its widely-watched dependability study was based on 52,000 responses from owners about their experience over the last year with their 3-year-old, 2007-model vehicles.
General Motors Co.'s Cadillac DTS was the study's leader, beating all individual models with 76 problems per 100 vehicles; the industry average was 155 problems per 100 vehicles, a 7-percent improvement over the average 165 PP100 reported by owners last year.
Porsche was the overall nameplate leader at an average of 110 problems per 100 vehicles and Ford Motor Co.'s Lincoln brand climbed six rungs since last year to finish in second place with a 114 PP100 rating. Overall, 25 of 36 brands improved their rating from last year and 14 brands performed better than the industry average.
New car sales in Europe rose 3 percent in February to 1 million vehicles due largely to the return of Cash for Clunker-like programs in some countries.
Sales were up double digits in France, Italy, the United Kingdom and Spain where the programs were in effect. In contrast, sales in Germany fell 30 percent where the scrappage program had expired in late 2009.
A downturn in vehicle sales this year is predicted for Western Europe.
Robert C. Stempel, General Motors' CEO in the early 1990s, is joining the board of directors of Genesis Fluid Solutions Holdings, a water purification company in Colorado Springs, Colorado.
Stempel was chosen for the company's board for not his automotive experience but his chairmanship of the Council of Great Lakes Industries. That experience provided him with valuable insight into the complex problems that plague America's largest bodies of water, said Genesis Chairman Michael Hodges in a statement.
With its sale by General Motors to Dutch sports-carmaker Spyker complete, Saab now is setting up its North American shop away from GM headquarters, building its management team in Europe and preparing to build and sell cars again.
AutoObserver's lead item posted on Wednesday that chronicled Honda Odyssey transmission problems and owners' inconsistent response as discussed on Edmunds.com's forums was the best-read item on the site this week.
And, not surprisingly, items related to Toyota's continued recall and quality woes ranked among AutoObserver's best-read features this week.
Hefty incentives offered by Toyota to rejuvenate sales and market share -- and copied by some competitors - sent U.S. industry sales soaring in the early going of March, according to Edmunds.com's forecast.
In the first eight days of March, the Seasonally Adjusted Annual Rate (SAAR) of U.S. sales climbed to 12.5 million units, the highest level since September 2008, excluding August 2009 when Cash for Clunkers was at fever pitch.
"Generous incentives from Toyota and General Motors have stimulated this boom," Edmunds.com Senior Analyst Ray Zhou, PhD. "But we anticipate that it will cool off, and that the month will end closer to 11 million or so."
AT&T has agreed to buy two of the first electric-powered Ford Transit Connects, despite the fact that the company's former CEO, Ed Whitacre, is now CEO of Ford-competitor General Motors and, it was revealed this week, still flies AT&T corporate planes as his retirement perk.
GM, where insiders have criticized the Transit Connect for its raw simplicity, almost crudeness, has nothing to directly compete with Ford's clever compact cargo van. The Transit Connect is carving out a new segment for urban delivery vans and, largely for that reason, was voted by journalists as the 2010 North American Truck of the Year in January.
So what will the 78-year-old Bob Lutz, who has spent nearly half a century in the auto business, do in what he quips is his "early" retirement?
He's got a long to-do list: write, talk, fly, advocate and entertain other options put before him.
Last week's Geneva motor show was abuzz with the rumors that Lutz, who had already announced his retirement from General Motors once, would do it again at any moment.
At the dinner he hosts with media during the show on what turned out to be the eve of the announcement, Lutz dodged the question of when but the conversation clearly sounded like swan song.
An executive position at General Motors Co. with a long tradition for power and attracting ambitious -- and often quirky -- personalities has been eliminated in the top-to-bottom management restructuring GM unveiled for its four sales divisions last week.
The role of division general manager -- the executive who for decades wielded the almighty last word on everything from marketing to manufacturing -- is gone, the historic position replaced by a structure that assigns sales and marketing functions to separate executives at each of the Chevrolet, Cadillac and Buick/GMC divisions.
"It's become extremely clear to me since taking this role that there is a better way to structure this organization," Mark Reuss, GM North America president, said in detailing the new management configuration. "The premise of the structure is simple -- a clearer marketing focus to sell more vehicles, and freeing our sales and service experts to focus on customers and dealers.
"We've worked with a small group of executives to align this model and appoint the best candidates for each job," he added.
Say goodbye to one of the last vestiges of GM's management-style history: the single and all-powerful division general manager.
Doubts abound whether a "new General Motors" truly is emerging from the old GM with its old, stodgy and coddling culture, but the reported ouster of a trio of marketing executives associated with struggling Cadillac may be a sign that, in fact, the times are a-changing.
Quoting eight unnamed sources familiar with the situation, trade journal Automotive News reported last week that GM had terminated Steve Shannon, John Howell and Jay Spenchian, all associated with Cadillac.
Being fired by the old GM was almost unheard of. One had to be stealing from the company, sexually harassing co-workers or doing something so outrageously obvious that it couldn't be overlooked. Underperforming or playing a key role at an underperforming operation was rarely grounds for dismissal, it seemed.
The story that Ford Motor Co. outsold General Motors Co. (by 471 units) for the first month since August, 1998, has made the rounds.
But February's sales charts served up some other noteworthy numbers. Here is a selection:
Ford and GM's totals were No.1 and No. 2 in the market, and figures for the "Big 7" automakers were rounded out, in descending order, by Toyota Motor Sales USA at 100,027; Chrysler Group LLC at 84,449; Honda Motor America at 80,671; Nissan Motor Co. Ltd. at 70,189 and the Hyundai Group (Hyundai and Kia brands combined) at 58,056.
General Motors Co. vice chairman Bob Lutz, the company's energetic and often combative product guru - and long the embodiment of the auto industry's quintessential "car guy" executive - will retire May 1.
The company announced Lutz's retirement today.
The 78-year-old Lutz has had a larger-than-life automotive career that begin in 1963 and included stopovers with significant executive roles at each of the Big Three automakers and BMW AG prior to rejoining GM in 2001.
February marked the first month since August, 1998, that Ford Motor Co.'s monthly sales topped those of chief rival General Motors Co., providing an unexpected jolt in a month when the broad industry was handicapped by severe winter weather in the northeast regions of the country - and by the spillover from Toyota's safety-recall debacle.
Total U.S. auto sales for the month were 779,743 units, an increase of about 13.5 percent from year-earlier sales of 687,182, when the American automotive market was at the very bottom of one of its biggest slumps ever. And the February pace represented a seasonally adjusted annual sales rate of 10.4 million units, a number at the upper middle of most SAAR projections.
"The good underlying news is that the industry hasn't gone into reverse in terms of its recovery," said Jessica Caldwell, senior industry analyst for Edmunds.com.
Several media sources reported late Monday General Motors Co. is dropping plans for a Cadillac-badged version of the high-tech Chevrolet Volt extended-range electric vehicle so Cadillac can focus on less-expensive plug-in hybrid-electric vehicles.
Apparently a Cadillac version of the Volt would be too weighed down by the expected luxury and comfort features to replicate the Volt's 40-mile electric-only driving range without extensive extra cost, a Bloomberg report said. Sources suggested achieving even a 20-mile driving range solely on battery power might require $30,000 of added cost, the report added.
The loss of the proposed Cadillac variant of the Volt casts more doubt on the near-term applicability of the Volt's battery-intensive, series-hybrid design.
Some GM executives had argued a Cadillac version of the Volt would help reduce costs -- mostly centered around the expensive lithium-ion batteries -- and speed wider adoption of the Volt's technology.
General Motors Corp., prodded by impatient chairman and newly named CEO Ed Whitacre to start hiking sales and market share, reportedly is planning a new management restructuring that will place more power with GM North America president Mark Reuss.
Automotive News reports Reuss will take over responsibility for sales from vice president of sales and marketing Susan Docherty, who will continue to head GM's marketing functions.
Each of GM's four remaining sales divisions -- Buick, Cadillac, Chevrolet and GMC -- will have newly appointed chiefs for both sales and marketing, with divisional sales bosses reporting to Reuss and divisional marketing heads reporting to Docherty.
Currently, division heads are in charge of both functions.
Despite all the questions asked during Congressional hearings on Toyota's recalls this week, the nagging question that won't -- and maybe can't -- be answered is: are today's cars safe, at least from accelerating of their own volition?
Toyota happened to be the company at the witness table for vehicles that -- for one reason or another, identified or not -- have the possibility of unintended acceleration, potentially endangering not only Toyota drivers but drivers, passengers and pedestrians around them.
Yet, while Toyota is under the microscope and, in fact, has more reported complaints than its competitors, unintended acceleration is an industry-wide problem that requires industry and government attention.
"The current emphasis in the hearings seems to be about who learned about what/when and they are skirting the core issue of what's really causing unintended acceleration in the first place. With this being an industry issue, what's called for is an unprecedented, cross-company and government safety agency collaboration to pool data and resources, getting to the bottom of the problem once and for all," said Edmunds.com CEO Jeremy Anwyl.
Despite Toyota's recall woes and snowy weather covering most of the country, February vehicle sales will be higher this February than last year's dismal lows and also higher than January's numbers, Edmunds.com forecasts. Still, February sales weren't as strong as many had hoped or expected.
February sales reports from manufacturers, to be posted Tuesday, also will show who made sales and share gains at Toyota's expense. Toyota's sales will be about even with January and down about 10 percent from a year ago. Its market share likely will fall to 12.6 percent, its lowest level since 2005.
In contrast, Hyundai and Nissan will post their highest U.S. market shares ever, Edmunds.com predicts. Ford's share increased, while market share for General Motors and Chrysler dropped.
Optimistic that its upcoming Chevrolet Cruze small car will be a hit, General Motors announced Tuesday that it is cranking up production at its Lordstown, Ohio, plant by adding a third shift and hiring 1,200 workers.
The 2011 Chevrolet Cruze goes on sale in the third quarter. The Cruze is the first of a new family of Chevrolet small cars.
"Cruze is a perfect example of how GM's turnaround is focused on the right products at the right time," said GM North America President Mark Reuss at a plant press conference. "This is a global car already kicking goals in 60 international markets. Based on that reaction, we expect the plant will be busy building a hot seller for North America."
General Motors and Dutch sports car maker Spyker confirmed Tuesday they have finalized the purchase of Saab.
Saab and Spyker will operate under the Spyker umbrella, and Spyker will assume responsibility for Saab operations. The previously announced wind down of Saab operations has ended, GM said in a statement.
This is a great day for Saab employees, dealers and suppliers, and a great day for millions of Saab customers and fans worldwide," said John Smith, GM vice president for corporate planning and alliances.
At Congressional hearings this week, federal administrators responsible for automotive safety will be on the hot seat as much as Toyota executives will be.
Amid accusations of foot dragging and influence pedalingregarding the National Highway Traffic Safety Administration (NHTSA), Toyota and their handling of consumer complaints and recalls, safety administrators likely will be grilled about what is standard operating procedure in dealing with consumers' complaints. The overriding question at the hearings will be was NHTSA lax in holding Toyota's feet to the fire on vehicle problems. Edmunds.com's analysis of NHTSA databases reveals little consistency in dealing with consumer complaints. The analysis shows no clear pattern in terms of the number of consumer complaints that trigger an agency investigation. The length of time it takes from an investigation to a recall being issued varies widely.
Whether NHTSA's process works properly and quickly enough and whether it is transparent enough is highly questionable. Ultimately, this week's Congressional hearings may be as revealing in uncovering defects at NHTSA as defects in Toyotas.
The book, "Crash Course," by veteran automotive journalist and Pulitzer Prize-winner Paul Ingrassia is the first book about last year's bailouts and bankruptcies of General Motors and Chrysler. While the book, which was published this month by Random House, focuses on the dramatic events of 2009, it covers the history of the American auto industry from the Model T onward. This excerpt from the opening chapter, published courtesy of Random House, begins in the bleak final months of 2008; it summarizes the mounting crisis and how Ford avoided the fate of its Detroit competitors.
It really wasn't intended to be a prophecy. It was just a smart-alecky tee-shirt worn for years by local teen-agers to annoy their parents, and show their perverse pride in the Motor City's tough-town image. It said: DETROIT: WHERE THE WEAK ARE KILLED AND EATEN. But the menacing message seemed all too appropriate in the bleak winter of 2008-2009, when signs of weakness -- indeed, desperation -- erupted everywhere in Detroit.
Toyota's mounting product quality and public image woes have prompted Edmunds.com to revamp its sales forecast for 2010, lowering Toyota's share and raising the share of other automakers.
Edmunds.com's most current forecast of 11.5 million vehicle sales for 2010 has Toyota losing market share that will be picked up by Ford, General Motors and Honda.
Ford's sales gain, in fact, likely will push the American automaker to the No. 2 sales spot in the United States, ahead of Toyota, Edmunds.com predicts. Toyota took the No. 2 position from Ford in 2007 and has held it ever since.
"It now seems clear that Ford will overtake Toyota to reclaim its position as the second biggest automaker in the U.S. market," Edmunds.com Senior Analyst Jessica Caldwell said at the Chicago auto show.
After a January of piddly auto sales propped up mainly by fleet buyers didn't deliver any momentum from December's strong selling, slightly nervous automakers hoping 2010 will be a solid rebound year are looking to the Chicago auto show -- said to still be the nation's leading show in terms of bringing patrons through the turnstiles -- to stoke up winter interest.
Nobody's expecting any blowout introductions, but the Chicago show's slate of new-vehicle intros runs a wide gamut. Unveilings begin Wednesday, the first press day.
Most titillating for industry watchers is Nissan Motor Co. Ltd.'s late-in-the-game decision to return to the Chicago show. Nissan skipped the Detroit and Chicago auto shows in 2009 and came up missing again at the Detroit show last month.
January car sales had automakers jousting for new positions in the sales rankings.
General Motors retained its No. 1 sales spot. But Toyota's recall and stop-sale order on eight of its best-selling models caused the Japanese automaker to slip to No. 3, behind Ford.
Ford had lost the No. 2 sales spot to Toyota in 2007 and has been fighting to win it back. It closed 2009 by slashing in half the gap with Toyota. This could be the year with Ford gaining momentum and Toyota in reverse with its quality woes.
The U.S. auto market in January continued its recent strengthening trend, with overall sales just shy of 700,000 vehicles (698,456 vehicles) for the month rising by nearly 7 percent compared with 654,757 vehicles in a very weak January 2009. The seasonally adjusted light-vehicle sales rate ticked up to about 10.76 million units versus last year's 9.59 million - and roughly in line with the firming picture of recent months.
Toyota was clearly the biggest loser in January due to its recalls and stop-sales order on eight of its bestsellers. Yet, January's results varied widely for its top competitors that may have tried to take advantage of Toyota's problems with special incentives meant to lure disaffected Toyota customers in particular.
Incentives paid by manufacturers in January dipped below year-ago and December levels despite last-minute promotions by Toyota's competitors to capitalize on the automaker's recall woes.
The average incentive was $2,382 per vehicle sold in January 2010, down $160, or 6.3 percent, from December 2009, and down $326, or 12.0 percent, from January 2009, Edmunds.com estimates.
"January incentives were not particularly generous or compelling - until some automakers began trying to conquest unsettled Toyota owners and shoppers late in the month," stated Jessica Caldwell, director of Industry Analysis for Edmunds.com. "January sales numbers are up from a year ago largely because of fleet sales."
Toyota-brand sales will drop 75 percent during the sales suspension of its eight best-selling models and some potential Lexus and Scion sales will be collateral damage.
"As long as sales of recalled Toyota models are suspended, Toyota will suffer about a 75 percent hit in sales," said Edmunds.com Senior Analyst Ray Zhou, PhD.
Even though no Lexus of Scion models are covered under the sticky gas pedal recall and sales suspension, their sales may be down as well.
"During this period, Scion may be down about 20 percent and Lexus may be down about 10 percent because of damage to the Toyota corporate brand," added Zhou.
Toyota's market share in January is expected to plummet to lows not seen since 2006, because the automaker issued a stop-selling order on eight models representing more than half of the automaker's U.S. sales this week.
Toyota's share is likely to drop to 14.7 percent of U.S. sales in January, Edmunds.com forecasts; the last time it was that low was March 2006 when its share was 14.2 percent.
In contrast, Ford is expected to have its best month for market share since May 2006. Edmunds.com forecasts Ford's share at 18.0 percent in January. The last time it was that high was in May 2006 at 18.4 percent.
In total, U.S. sales in January, buoyed by hefty hikes in fleet sales and offset by lower retail sales, will total of 701,000 vehicles, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annualized Rate (SAAR) of car sales at 10.7 million vehicles, down from 11.2 million December but up from 9.6 million in January 2009.
General Motors and Spyker Cars confirmed Tuesday that GM has agreed to sell Swedish automaker Saab to the Dutch sports car maker.
"Today's announcement is great news for Saab employees, dealers and suppliers, great news for millions of Saab customers and fans worldwide, and great news for GM," said John Smith, GM vice president for corporate planning and alliances, who will hold a press conference later in the day.
Spyker told Bloomberg News it has agreed to pay $74 million in cash and $326 million in preferred shares in the new company that would emerge from the deal, to be called Saab Spyker Automobiles, which will carry the Saab brand forward. The sale is subject to Sweden agreeing to guarantee a 400 million-euro ($563 million) European Investment Bank loan for Saab.
The sale is expected to close in February and Saab will exit an orderly wind-down process in line with the timetable, the Dutch company said.
General Motors Co. announced Tuesday it will enhance its ability to develop and build future electric vehicles by designing and producing its own electric traction motors, effectively the "engines" that propel fully electric vehicles.
GM says the decision to design and manufacture its own traction motors makes it the first domestic automaker to make the commitment to in-house development. The company says it is investing $246 million in electric motor and electric drive facilities in the U.S.
Tom Stephens, GM vice chairman, global product operations, said in a media event with reporters the company believes committing to developing its own traction motors will save money, improve performance and allow better optimization of the entire electric drivetrain.
General Motors Chairman and CEO Ed Whitacre said at a Monday morning press conference that the automaker has no announcement regarding Saab despite media reports swirling around the globe that a deal to sell the Swedish automaker to Spyker is imminent.
"As of today, we have not changed our direction on the wind-down (of Saab)," Whitacre told reporters in Detroit. "There have been advanced talks but we do not have a deal to announce this morning. If and when that changes, we'll let you know. And that's my only comment on that issue."
General Motors Chairman Ed Whitacre announced Monday morning that he will stay on as permanent CEO at the request of the automaker's board of directors. Whitacre said the board called off a search as it looked to create a stable situation at the company that went into and out of bankruptcy and has had a series of CEOs in the past year.
"The board asked me at a special meeting last week if I would be willing to stay on," Whitacre said at a press conference Monday. "I'm honored and pleased to accept this role. It's a great company with a terrific future, and I'd like to be part of it."
The best-read post on AutoObserver this week - by a long shot - was an item on Chevrolet Corvette sales plummeting to a 50-year low in 2009.
As sports car sales in general nosedived, Chevrolet sold only 13,934 Corvettes, the worst sales for the nameplate since 1961 when the car was still in its first generation.
General Motors announced an attractive price on its 2011 Buick Regal, which is generating a lot of positive buzz. But the automaker likely will lose money or at least not make much on every one it sells in the early going.
The Regal, which begins arriving in dealerships in spring, will start at just under $27,000. But pricing the Regal was tricky business.
The new Regal is based on the German-made Opel Insignia, and the earliest versions to be sold in the U.S. will be made in Europe. That means the dollar-euro exchange rate is highly unfavorable. The situation changes in the first quarter of 2011 when Regal production shifts from Russelsheim, Germany, to GM's plant in Oshawa, Ontario, Canada.
General Motors' restructuring of its Opel operations in Europe have begun with Thursday's announcement that the automaker - as expected - will close an assembly plant in Antwerp, Belgium, mid-2010, eliminating 2,600 jobs.
The Belgian plant builds the Opel Astra, which had been sold in the U.S. as the Saturn Astra before the Saturn brand was eliminated. The plant was selected because Astra and other models it assembles are made elsewhere so capacity shifts can be easily accomplished, Opel CEO Nick Reilly said in a news conference in Brussels.
"The decision to announce this today, was not taken lightly; instead, it is the unfortunate result of the current business reality," Reilly said. "We must make this announcement now so that we can secure a viable future for the entire Opel and Vauxhall operations."
If it works for General Motors, why not Japan Airlines?
U.S. bankruptcy experts insisted last summer that new laws were being written during government-backed "quick rinse" Chapter 11 proceedings of GM and Chrysler. Now international companies were looking to those bankruptcies as the way to get the job done.
Japan Airlines Corp. (JAL) filed for bankruptcy - Japan's sixth-largest bankruptcy ever - this week. Analysts are looking at GM's bankruptcy to determine how much JAL's investors will be re-paid. Based on the GM scenario, they expect JAL investors to recover 20 to 25 percent of their investment.
Despite going through bankruptcy last summer, General Motors is upholding its commitment to be one of the prime sponsors of the Vancouver Winter Olympics.
GM, Royal Bank of Canada and Canadian retailer Hudson's Bay Co. are among corporate and government sponsors reportedly paying more than $760 million (Canadian) in total to be associated with the games. Organizers are looking to sign one more major sponsor before the games begin next month.
Even as it talks of the need to ramp up production at several U.S. assembly plants, General Motors Corp. is sending another message to the handful of former Delphi Inc. plants it "reacquired" as part of Delphi's departure from bankruptcy: costs have to be reduced.
The Detroit News reports today GM is seeking wage concessions from the United Auto Workers union workers who staff the components plants. The gambit likely was inevitable: GM spent billions to purchase the plants when Delphi exited its protracted bankruptcy late last year in order to assure the orderly delivery of vital parts - but GM reportedly is seeking to sell many, if not all of the facilities. The company already announced earlier this month it is selling the Nexsteer steering-components plant in Saginaw, MI.
The report that GM wants to reduce labor costs hardly is a surprise, then, as it brings these plants - and the thinking that originally created Delphi - full circle.
The 2010 North American International Auto Show is one of the most restrained editions of the Detroit confab many can remember.
But the show's comparative scarcity of high-impact concept and production vehicles didn't stem the avalanche of opinion on the most notable vehicles.
After scores of media outlets have weighed in, AutoObserver cuts through the clutter to give the real score on the 10 most significant - for better or worse - vehicles of the 2010 Detroit auto show.
When automakers revealed 2009 full-year sales on January 4, data analysts from Edmunds.com unearthed a remarkable fact: sales of General Motor Co.'s seminal Chevrolet Corvette sports car fell to a low not seen in almost 50 years.
The Corvette's 13,934 sales were the worst for the nameplate since 1961, when Chevrolet sold 10,939 models - and the car was still in its first generation.
As recently as 2006, Chevrolet sold more than two-and-a-half times as many Corvettes -- 36,518 -- as it did last year, as sales for almost all premium sports cars were pummeled.
Most of the energy at this week's Detroit auto show epicentered at Ford Motor Co.'s display, with eddies splashing out to General Motors Corp.'s guardedly optimistic stand and Audi AG's gleaming base of operations.
But the majority of automakers were laying low, and media crowds were visibly reduced at the show with a reputation for over-the-top product introductions and boastful talk about the coming year.
There was no avoiding the 2010 Detroit auto show's subdued and geared-down mood, fashioned from the collective attitude of automakers licking their wounds and hoping the worst is past.
It also was yet another evolution of the show itself: there was plenty of room thanks to fewer automakers opting to display and fewer journalists opting (or fewer existing) to attend. A surprisingly expansive area of main-floor real estate was occupied by seemingly inappropriate electric vehicles of all manner, few of them of the road-going passenger variety.
The Ford Fusion Hybrid and the Ford Transit Connect won the 2010 North American Car and Truck of the Year awards, it was announced Monday morning at the Detroit auto show.
The Fusion Hybrid won over two other finalists for the prestigious award -- the Buick LaCrosse and Volkswagen Golf. The Transit Connect beat out the Chevrolet Equinox and Subaru Outback.
"Winning both of these prestigious awards is confirmation that the One Ford plan is working, delivering industry-leading product for our customers," said Mark Fields, Ford president of The Americas.
Thanks to the beat-down 2009 threw on almost every automaker, the 2010 installment of the North American International Auto Show in Detroit this week isn't expected to be one of the more ebullient in the storied show's history.
Most makers are laying low. And that's the ones who are even coming. Like last year, many automakers are taking a pass: Nissan and Porsche, for instance.
Many makers let the hometown companies make the biggest splashes, but Chrysler, for one, is displaying vehicles but having no press conference (our hopes remain Chrysler will import some Italian food to feed the media masses).
You can get a rundown of what will be displayed at the Detroit show at Edmunds.com's Inside Line. But we're adding a new twist: in addition to a scorecard of what some automakers are showing at the Detroit auto show, AutoObserver is adding what each automaker ought to be showing.
General Motors confirmed Friday morning that it is moving ahead with the wind down of its Saab division, despite 11th-hour bids from interested buyers.
GM said it had selected AlixPartners "to supervise the orderly wind down of Saab, and has requested approval of the selection by the appropriate authority in Sweden." AlixPartners is the same company GM has employed to wind down its other discontinued divisions, Pontiac and Saturn, and to rid the old GM of unwanted assets.
GM also confirmed that it has received several proposals for Saab and is continuing to evaluate these proposals.
General Motors Chairman and Interim CEO Ed Whitacre said the automaker has a shot at earning a profit in 2010, but he sees little hope to a rescue of Saab.
In a wide-ranging conversation with media in Detroit on Wednesday, Whitacre said GM's top priority to is earn a profit so that it can pay back its government loans and become a public company again. Going public wouldn't happen earlier than late this year, however.
General Motors' Bob Lutz, in an editorial on AutoObserver's sister site, Edmunds' Inside Line, lays out the automaker's 2010 to-do list.
Top to bottom of the list is a focus on product.
"GM builds cars and trucks and crossovers. That is what we do," writes Lutz. "In 2009, we were given an opportunity to continue doing so, and we must not squander that opportunity.
"Therefore," adds Lutz, "we are resolved, if you will, not to lose sight of the fact that if we don't build the best cars, trucks and crossovers on the planet, that opportunity will go for naught."
Only a couple thousand Saturn and Pontiac vehicles remain in General Motors' inventory as the two brands are discontinued.
GM's top sales executive, Susan Docherty, told reporters and analysts in the automaker's sales call Tuesday that only 796 Pontiacs and 916 Saturns remain in inventory.
The Ford Mustang, thanks to a December sprint to the finish, won the pony car sales race over the Chevrolet Camaro.
And it wasn't as close as anticipated.
Ford Mustang sales came in at 66,623 vehicles; General Motors sold 61,648 Chevrolet Camaros. The Camaro went on sale in March so did not have a full year of sales.
Some day, automakers hope to look back on 2009 as the year that both sales and corporate fortunes finally bottomed out. It's far too early to tell if history will treat last year that way, but for now, at least, the industry is taking heart from a definite surge of sales momentum as the decade closed.
Automakers sold about 10.4 million units last year, a disastrous tally that comprised the lowest total of light-vehicle sales in this country since 1970.
The winner of the sales race between the Chevrolet Camaro and Ford Mustang will be revealed when the auto industry reports sales Tuesday. And the finish will be a close one.
General Motors already is hailing a victory, announcing the Camaro will win. And, based on Edmunds.com estimates, it's possible even though at the end of November Mustang was ahead.
"It looks feasible that the Camaro could outsell Mustang," said Edmunds.com Analyst Ivan Drury. "The two will be only a thousand or two thousand units apart when final sales are reported."
Still, through the end of the November, the Mustang was ahead.
Despite the year-end incentives blitz and holiday marketing campaigns, automakers actually spent less on incentives in December than they did a year ago or even in November.
Edmunds.com estimates the average automotive manufacturer incentive was $2,542 per vehicle sold in December, down $167, or 6.2 percent, from November, and down $320, or 11.2 percent, from December 2008.
"In December, only about a quarter of new cars sold were leftover 2009 models. That sent the average incentive expenditure lower compared to November and last December when the old model-year vehicles made up closer to half of the new car sales," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
The speculation on who will become the next chief executive officer of General Motors has begun with the latest rumor putting Apple COO Tim Cook at the top of the list for the job.
The Netherlands' Spyker Cars, the small exotic-car maker cajoling General Motors Co. to allow it to purchase GM's failing Saab Automobile AB unit, would at the beginning set its sights on nothing more radical that selling the two wholly new products in Saab's pipeline that are ready to go, according to a report over the weekend from AOL Autos.
After setting an end-of-2009 deadline to complete a viable deal to sell Saab, GM extended the cut-off date to this Thursday as the two companies try to hammer out an agreement the Swedish government also would like to see happen in order to save thousands of jobs in Saab's hometown of Trollhattan. The town also is the site of Saab's "home" assembly plant, where the 9-5 is slated to begin production.
Car shopping on Edmunds.com surged in the waning days of December, prompting the Web site to suggest sales for the month may come in higher than previously expected -- and could be the highest non Cash for Clunker month of the year.
"The industry potentially could reach a seasonal sales rate of 11.7 million vehicles in December, given the current site traffic trend," noted Edmunds.com Senior Analyst Jessica Caldwell.
"Our Web site activity is through the roof," added Caldwell. "That makes sense as there are so many bargain-hunters scrambling to get year-end deals and cash in on the sales tax deduction opportunity that expires on December 31st."
An improving economy likely has helped as well. Edmunds.com Web activity in late December is 60 percent higher than the historical pattern for the period. Brands enjoying particularly strong activity are BMW, Ford, Honda and General Motors' Chevrolet, Pontiac and Saturn brands.
GMAC Financial Services, which provides vehicle loans to General Motors and Chrysler dealers and customers, reportedly is close to receiving $3.5 billion in additional aid from the U.S. government, on top of the $12.5 billion already received since December 2008, the Wall Street Journal reports.
The new capital likely will go its ailing mortgage business, not its car-loan business, the paper said.
General Motors' convoluted $7,000-incentive offer to dealers to put remaining Pontiac and Saturn vehicles into their fleets and then sell them as used vehicles was described by the media as a fire sale. But Edmunds.com's analysis shows the so-called fire sale is no hotter than the prices currently being offered.
GM already has been offering incentives valued at up to $6,500 on Saturns and Pontiacs, including the always attractive zero-percent financing for up to 72 months, according to Edmunds.com calculations. In addition, consumers are allowed to write-off the sales tax on their new vehicle purchase now.
"The newest program is more hype than substance," said Edmunds.com Senior Analyst Jessica Caldwell.
General Motors Co., in an effort to clear the decks for the new year, is offering hefty incentives to dealers to sell thousands of vehicles from its discontinued Saturn and Pontiac brands.
In a December 23 letter to dealers, obtained by the Wall Street Journal, GM said it would pay dealers $7,000 for every new Saturn or Pontiac that it moves to a rental-car or service-vehicle fleet operated by the dealer and then sells as a used vehicle to a customer. The offer expires January 4.
There's no guarantee the $7,000 will go from the dealer to the customer. However, a dealer can use some or all of the cash to make the deal more attractive to the customer. In the case of Pontiac's cheapest vehicle, the G3, that would mean almost half off if the dealer passed along all of the incentive.
Desperate times require desperate measures, as the saying goes, and 2009 was about as desperate as it gets in the auto industry.
Companies sometimes do the most interesting things when they're desperate -- and that maxim seems particularly relevant to auto companies. Because their products are so visible, with such potential emotional impact. Because their executives and designers and engineers are in charge of the process that creates those products.
Desperation in 2009 -- as defined by coming up some 6 million sales short of the industry's glory days of just three years ago -- generated products and strategies that ran the gamut from ridiculous to sublime. Some ideas were inspired; some were just tired.
Here are a few of the best and worst ideas from the auto industry in 2009:
Not only is 2009, one of the single most tumultuous years for the auto industry, drawing to a close, but so is the first decade of a new century.
As the year winds down, data analysts at Edmunds.com are cranking away at numbers that are certain not only to entertain but also demonstrate how cataclysmic 2009 turned out to be, particularly viewed through the prism of a closing decade's worth of sales-performance trends: market share destroyed, market share gained. Years of growth turned upside down. Surprising sales-volume gains, foreboding losses.
The ever-present import-versus-domestic battle in almost startling perspective.
In what will go down in history as the auto industry's most tumultuous year in recent memory, AutoObserver readers couldn't get enough information about what was happening in the industry and how automakers and the government reacted.
High on that list were posts about how automakers reacted in terms of closing plants, shuttering brands, particularly General Motors' Saturn and Pontiac, terminating dealers and setting vehicle prices and incentives.
The best thing that might be said about the year the auto industry - and an economically battered nation - is preparing to close: it probably can't get any worse.
The year 2009 brought two high-profile bankruptcies, billions of dollars in government bailouts and funding for Cash for Clunkers and thousands of lost jobs. Similar upheaval - though not as catastrophic as predicted - came to the tightly integrated supplier industry. Several historic brands were relegated to the archives.
General Motors announced Monday it has hired as its new CFO Chris Liddell, most recently CFO for Microsoft Corp.
"Chris brings a depth and experience to this job that were unmatched in our search for a new financial leader," Ed Whitacre, GM chairman and CEO, said in a statement.
"Chris will lead our financial and accounting operations on a global basis and will report directly to me," Whitacre added. We're also looking to his experience and insights in corporate strategy as a member of the senior leadership team in helping our restructuring efforts."
Five new models displayed at the recently wrapped-up Los Angeles auto show are generating tremendous buzz on Edmunds.com. The five most talked-about vehicles are the Buick Regal, Ford Fiesta, Hyundai Sonata, Toyota Sienna and Cadillac CTS coupe.
General Motors confirmed Sunday it has received "inquiries from several parties" for Saab, after the automaker announced Friday a deal with Dutch sports car maker Spyker to buy the Swedish brand collapsed. However, GM is not identifying new bidders nor is it commenting on any of the new offers, which include a new one from Spyker.
"We will not comment further until these evaluations have been completed," GM said in a terse statement.
Spyker confirmed over the weekend that it has presented GM with a new offer - one that expires Monday night.
At last fall's Frankfurt auto show and at the Miami auto show shortly after, Saab's flagship 9- 5, completely redesigned and ready for launch in 2010, made its debut.
Saab executives billed the launch of the 9-5 as the kick-off of a new era for the Swedish brand. Over the next 16 months, Saab said it would introduce four new models - the redesigned Sweden-built 9-5 sedan and SportCombi wagon along with the the all-wheel-drive 9-3X and the compact 9-4X luxury crossover.
Instead, on Friday, General Motors announced that plans to sell Saab to a new owner had failed, and it would wind-down the brand.
But could those new Saab models show up elsewhere? It's possible, a GM executive said.
General Motors announced Friday its planned sale of Saab has failed, and the Saab brand will be eliminated, resulting in the loss of 3,400 jobs and 1,100 dealers globally.
After Swedish sports car maker Koenigsegg Group AB last month withdrew from negotiations for Saab, GM took up discussions with Dutch sports car maker Spyker Cars. The deal, which failed Friday morning, was considered a long-shot due to the short timeframe to close the deal -- GM set a Dec. 31 deadline. In addition, Spyker is a small and unprofitable company, plus financing in any deal is challenging in these times.
"Despite the best efforts of all involved, it has become very clear that the due diligence required to complete this complex transaction could not be executed in a reasonable time. In order to maintain operations, Saab needed a quick resolution," said GM Europe President Nick Reilly.
The former AT&T CEO held his first media roundtable since adding the CEO title two weeks after the ouster of Fritz Henderson.
At the press briefing, Whitacre said GM's priorities are paying back $6.7 billion in government loans by June and selling more cars and generating more revenue. He also called GM's sale of Saab to Dutch sports car maker Spyker is "possible" by year-end, but, if not, Saab would be eliminated.
Chevrolet's "Like A Rock" trucks and SUVS may be gathering a little moss in the coming years as General Motors Co.'s most important division shifts gears to concentrate on cars and crossovers, said new Chevrolet general manager Jim Campbell at a media event in Detroit Wednesday.
Noting that many would be surprised to know the now fully global Chevy sells 61 percent of its volume outside the U.S., Campbell said the home turf will be where the action is in the coming years.
"Chevrolet's biggest growth opportunity is right here in our own country," Campbell said, adding that new expansion will come "on the back of cars and crossovers."
In his first media roundtable since adding CEO to his title only 14 days ago, General Motors Chairman Ed Whitacre said: the automaker would pay back $6.7 billion in government loans by June; selling more cars and generating revenue are GM's top priorities; and a sale of Sweden's Saab to Dutch sportsmaker Spyker is "possible."
Whitacre, the retired CEO of AT&T who became GM chairman at the request of President Obama's automotive task force following GM's emergence from Chapter 11 bankruptcy July 10, said GM will make a $1.2 billion payment on the loan it received from the Treasury Department's Troubled Asset Relief Program (TARP) this month.
GM then intends to make quarterly payments until June 2010 when it will pay in full the $6.7 billion in TARP funds it owes. At the same time, GM will make payments on its loans from the Ontario and Canadian governments.
With the doors closed last weekend on the 2009 Los Angeles auto show, the vehicles that premiered there will soon be arriving in dealer showrooms. What ones will sell in the marketplace?
To answer that question, AutoObserver watched the behavior of Edmunds.com visitors who came to the car-shopping Web site for vehicle information and turned to Edmunds.comstaffers who covered the show.
Edmunds.com visitors appeared most interested in the Buick Regal, Chevrolet Cruze, Ford Fiesta, Hyundai Sonata, Mazda 2 and Toyota Sienna, with those vehicles seeing the biggest rise in shopping consideration.
Clearing the path for the arrival of a new CFO, General Motors announced Monday morning its current CFO Ray G. Young has been named vice president of GM's international operations, a newly created post.
President Obama's automotive task force, and particularly its member Steve Rattner, took GM to task for its poor financial management. As a result, GM launched a search for a new CFO. Ed Whitacre, GM chairman and interim CEO, said in a Web chat last week that a new CFO was close to being appointed.
GM said Young will remain as CFO until that replacement is named, likely by Feb. 1.
General Motors confirmed Monday morning it had reached an agreement with Beijing Automotive Industry Holdings Co., Ltd. to sell some Saab assets to the Chinese automaker.
Meantime, talks with potential bidders to buy the rest of the Swedish automaker continue. The deal with BAIC could improve GM's prospects for finding a buyer for Saab, though Saab's survival remains questionable.
"This arrangement (with BAIC) is excellent for both parties, now and for the future," Jan Anke Jonsson, Saab Automobile managing director, said in a statement. "We have developed a good relationship with BAIC and look forward to working with them to integrate this Saab technology into their future vehicles."
In webchat with a "consumer" audience that seemingly was populated by plenty of industry-savvy questioners, new General Motors Co. North America president Mark Reuss said Friday one of his first initiatives since assuming his new role early this month will be to streamline some of the corporate structure.
Reuss said his planned new system comprises just five direct reports that are "laser focused" on sales, marketing, manufacturing, Canada/Mexico and GM's OnStar telematics-service unit. He said recently-resigned CEO Fritz Henderson "had a lot more to do," inferring that the reporting to Reuss can be simplified because of the different duties of CEO and North American president positions.
Reuss also insinuated he will be working to solidify the ties between GM's North American engineering activities and its Adam Opel AG European Operations. After a lengthy period in which GM made preparations to sell off Opel, the company's board decided to retain the division. Now, Reuss said, he plans to leverage the engineering and product-development experience at Opel to the benefit of all GM vehicles.
The personal and business fallout for his "indiscretions" continues for professional golfer Tiger Woods, as a variety of companies and organizations do the damage-control two-step to the certain detriment of "Woods Inc.'s" bottom line.
But at least one former corporate sponsor managed to avoid having to be in the position of judging Woods as his personal life becomes a tabloid bonanza: General Motors Co. Owing to its shaky finances, GM had to cut loose Woods and his big-bucks contract nearly a year ago.
For the nine years prior to parting ways with Woods at the end of 2008, GM reportedly had paid the golfing phenom a heady $8 million per year to be a spokesman for the Buick brand. That had to stop -- leading up to its federal bailout and eventual bankruptcy, GM jettisoned everything with the appearance of extravagance, from corporate jets to corporate golf spokesmen.
General Motors Co.'s crucial Chevrolet division has a new general manager as yet another long-serving executive is leaving GM.
The company announced late Wednesday that Brent Dewar, 31-year GM veteran and vice president, global Chevrolet, will retire effective April 1, 2010. Taking over immediately as Chevrolet general manager is 45-year-old James M. Campbell, who had been in charge of GM's Fleet and Commercial Operations.
Since GM emerged from bankruptcy in mid-July, chairman Ed Whitacre has emphasized GM is striving for younger faces and fresher thinking -- not to mention fresh blood from outside -- to reinvigorate GM's hidebound executive culture.
Chevrolet's new general manager is appropriately young, perhaps, but is no newbie at GM, having been with the company since 1988.
Penske Automotive Group Inc. said Tuesday Jill Lajdziak, former general manager at General Motors Co.'s now-disbanded Saturn division, is joining Penske's Smart USA Distributor LLC unit as vice president, sales and marketing.
Lajdziak's appointment seems a strategy to address the startling drop-off of Smart car sales after the brand's second year on the market. Currently the brand's only model for sale in the U.S. is the two-seat Fortwo city car, sold exclusively by Penske at 79 Smart "retail centers."
General Motors Co. chairman and interim CEO Ed Whitacre conducted a Web chat with automotive media Tuesday and the most that can be said is he obviously takes seriously the light connotation behind the term "chat." Although fielding several questions, Whitacre industriously said almost nothing of substance.
The media left the Web chat session with little more than the last time it met with Whitacre face-to-face, when he refused to answer questions following his announcement of CEO Fritz Henderson's resignation last week.
Since 2001, Bob Lutz has been the North Star for everyone who cares about the product at General Motors Co.
But the GM executive firmament is rapidly evolving thanks to a Big Bang orchestrated by chairman and temp-CEO Ed Whitacre, one that likely will lead to Lutz's departure sooner than later, some GM insiders believe.
The de-emphasis of vice chairman Lutz's role (although not title) to "advisor" on global product development and design could be the result of persistent rumors there's not enough room in a room for both Lutz's and Whitacre's egos.
Or it could be just what it appears: at 77, Lutz is a highly visible contradiction to everything Whitacre -- and the government-dominated GM board of directors -- professes needs to change with GM's moribund "lifer" executive culture: that GM management is dominated by executives who are too old or have been at GM too long. Or both.
Reports from Europe late on Monday indicate General Motors Co. and China's Beijing Automotive Industry Corp. (BAIC) may be edging closer to a deal that will transfer some of Saab's hard assets to BAIC -- but also appears to set the stage for GM to liquidate the Saab brand.
Reuters reported GM was talking with BAIC about a deal to sell existing tooling for the Saab 9-3 and 9-5, both of which were due to be replaced by new-generation models based on GM architectures. Saab had already unveiled the 9-5 at this year's Frankfurt motor show and its launch was ready.
General Motors announced Monday that it will invest $336 million in the Detroit-Hamtramck assembly plant to begin production of the Chevrolet Volt electric car in 2010.
GM said that brings its total Volt-related investments in Michigan to $700 million, covering eight facilities.
"We expect the Detroit-Hamtramck plant will be the first facility in the U.S. owned by a major automaker to produce an electric car, Jon Lauckner, GM vice president of global product planning, told the company and government officials gathered at the plant Monday.
Maybe tiny Suzuki Motor Corp. no longer has to be concerned that sales for its American Suzuki Motor Corp. unit have been evaporating towards near-nonexistence: information from Europe says the burgeoning Volkswagen Group has plans to take over Suzuki by the end of the year.
A report in Britain's Car magazine, authored by Georg Kacher -- a writer with historically reliable and highly-placed sources -- says VW has been negotiating for months to acquire Suzuki and that the company had planned to announce the consummation of the deal at the Tokyo motor show in October, but last-minute contractual negotiations delayed the timeline.
Now, Kacher says in Car, VW should announce by the end of the year it's completed a deal to own Suzuki, making the Japanese minicar specialist VW's 11th brand.
General Motors Vice Chairman Bob Lutz is being reassigned to a new role and some younger execs will be moved up in the continuing shake-up of the management ranks, being outlined later Friday morning.
Chairman Ed Whitacre, who replaced ousted Fritz Henderson as interim CEO, is building a team until a replacement CEO can be found, Bloomberg News reports.
Younger managers are being given "more prominent" positions, thus triggering the reassignment of 77-year-old Lutz to a product adviser role, the Wall Street Journalreports. Board member and auto analyst Stephen Girsky becomes an adviser; Mark Reuss, recently appointed vice president of global engineering, gets an expanded role, Bloomberg reports.
First it was one-off exotic-car builder Koenigsegg Group. With that deal part of history, a new one-off exotic-car maker, Netherlands-based Spyker Cars NV, formally confirmed yesterday it is talking to General Motors Co. about acquiring GM's twisting-in-the-wind Saab Automobiles.
Spyker is backed by its majority owner, Russia's Conversbank Financial Group, which owns 29.9 percent of Spyker, currently best known for its gullwing C8 Aileron sports car. Spyker reportedly has 132 employees and has sold less than 25 cars through the first half of this year. Saab currently employs about 4,500 and sold 93,000 vehicles last year.
U.S. auto sales clocked in about flat in November compared with a year ago -- and in line with widespread expectations that the market will only gradually creep upward for at least the next year. But industry executives and analysts mostly chose to interpret the American auto market as a glass half-full.
November sales were 746,544 vehicles compared with 743,605 in November, 2008. On an absolute basis, that number of units represented a 0.4-percent year-to-year monthly sales increase -- or call it flat. But taking into account the fact that the industry enjoyed two fewer "selling days" this year compared with last November, sales actually increased by 9.1 percent last month on an apples-to-apples basis.
General Motors Co. Chairman Ed Whitacre, now acting CEO, told employees Wednesday that it may take up to a year to find a replacement for Fritz Henderson, who was ousted by the board on Tuesday, according to a report by Bloomberg News quoting employees who watched Whitacre's 30-minute broadcast.
Those employees told Bloomberg that Whitacre, who spoke conversationally from a few notes, said the search would not be rushed and will be given as much time as is needed.
That suggests that GM's marketing chief Bob Lutz is ruled out. A number of media reports speculated he could be Henderson's successor. It is more likely that his replacement will come from outside of GM.
General Motors' just-ousted CEO Fritz Henderson had been slated to speak at the Motor Press Guild's breakfast Wednesday to kick off the Los Angeles auto show's press days. But a day earlier, Henderson got the boot. GM's marketing chief Bob Lutz was called upon to fill in.
He dodged all Henderson-related questions, which reporters didn't hesitate to ask. USA Today's Jim Healy asked: "Isn't it a bad time to lose your CEO?" The normally loquacious Lutz responded, "Next question." The room erupted in laughter.
General Motors' Bob Lutz said the first Chevrolet Volts will go on sale in California beginning late next year, fulfilling GM's long-held promise that the Volt would be in production by November 2010.
Lutz, speaking to the Motor Press Guild at the opening of the 2009 Los Angeles Auto Show Wednesday, announced GM's new partnerships with three California utilities. Those utilities will receive a total of 100 Chevrolet Volts for their company fleets. He said consumers and fleets would take delivery roughly at the same time.
General Motors' CEO Fritz Henderson has resigned and government-appointed chairman Ed Whitacre has assumed control as interim CEO of the automaker. A search for a CEO begins immediately, Whitacre confirmed late Tuesday at a hastily scheduled press conference at which he refused to answer questions.
The decision had been made at the GM's board of directors monthly meeting earlier in the day.
In a prepared statement that Whitacre read to reporters gathered at GM's global headquarters in Detroit's Renaissance Center and aired via webcast, Whitacre praised Henderson for his career-long service to GM, including steering the automaker through bankruptcy this past summer. But his statement indicated that while progress had been made post bankruptcy, the pace need to accelerate.
"While momentum has been building over the past several months, all involved agree that changes needed to be made," said Whitacre, retired chairman of AT&T and former college professor.
General Motors Board of Directors said Tuesday it has received "expressions of interest in Saab" and will evaluate those potential bids through the end of December.
"At that time, we will determine whether a suitable arrangement for Saab exists," GM said in a statement. "If not, we will begin an orderly wind down of the global Saab business at that time."
Higher Incentives on 2010 models, luxury cars, Hondas, Toyotas and General Motors' orphan brands along with an increase in leasing and lease deals pushed the average automaker incentive in November beyond that of October and that of November a year ago.
Edmunds.com estimates the average incentive at $2,713 per vehicle sold in November, up $52, or 1.9 percent, from October , and up $32, or 1.9 percent, from November 2008.
"With inventories of 2009s being cleared away and 2010 models hitting dealership lots in greater -- more normal -- numbers for this time of year, incentives on those new models are increasing," stated Jessica Caldwell, Director of Industry Analysis for Edmunds.com.
Thanksgiving week saw the blow-up of yet another deal for a cast-off General Motors Co. brand, but unsurprisingly, nobody's yet declaring Saab Automobile a dead turkey.
A Bloomberg News report from China early Monday had Beijing Automotive Industry Holding Co. (BAIC) president Wang Dazong insinuating his company is considering its own play for Saab after Sweden's Koenigsegg Group unceremoniously dropped its bid for GM's perennially money-losing Swedish auto division. BAIC was part of the consortium led by Koenigsegg that originally planned to take over Saab.
And yes, venture capital - the reddest of flags for flailing auto companies - appears to be involved, too.
Just as General Motors was about to seal the deal to sell Saturn to the Penske Automotive Group on Sept. 30, French automaker Renault, which had pledged to supply small vehicles to the venture, backed out, an executive involved in the negotiations told a Detroit newspaper.
Tom LaSorda, retired Chrysler president who was helping Penske negotiate the Saturn-Renault deal, laid to rest any notion that it was Penske who wanted to back out of the deal. "Somebody got cold feet" at Renault, LaSorda told Detroit Free Press columnist Tom Walsh, whose article ran in Wednesday's edition.
"We were shocked," LaSorda told paper in his first public comments on the aborted Saturn sale. In fact, little has been said by anyone involved since the deal went sour.
General Motors confirmed Tuesday that its planned sale of Swedish automaker Saab to Koenigsegg Group AB has collapsed with Koenigsegg terminating the sale.
What's next for Saab has yet to be determined.
"We're obviously very disappointed with the decision to pull out of the Saab purchase," GM President and CEO Fritz Henderson said in a statement issued by GM. "Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB.
"Given the sudden change in direction, we will take the next several days to assess the situation and will advise on the next steps next week," Henderson added.
General Motors last week began sending out 1.8 million pieces of direct mail to what the automaker calls its "free-agent customers" -- customers orphaned by the wind-down of Pontiac and Saturn and the proposed sell-off of Hummer and Saab.
In this first of promised multiple mailings, GM is offering discounts of up to $2,000 on certain models to the nearly 1 million customers of closed GM dealerships, if they go to the next closest dealer by January 4. The automaker also is giving customers of closed dealerships a vehicle inspection and tire rotation at remaining dealerships through May.
"The challenge for us is to grab those customers by the hand and make sure they know where to go," Susan Docherty, GM's vice president of U.S. sales, said in a media conference call last week.
But GM's competitors also are eyeing those up-for-grabs customers.
After the sales plunge in the auto market began in earnest in the fall of 2008, automakers scrambled to reduce production schedules, sell off swollen inventories and otherwise deal with a drastically contracting U.S. market.
Now, after months of production cutbacks orchestrated by many automakers and the summer's outsized demand from the $3 billion Cash for Clunkers rebate program, bloated inventories are a thing of the past. Now, data researchers at Edmunds.com say the coming months may be a tug of war between still-cautious buyers and right-sized-but-cash-strapped automakers anxious to hold the line on pricing.
It could be a battle that sees winners and losers on both sides as uncommon market and industry forces collide in what will be an unpredictable sales environment.
It's early, admit General Motors prognosticators, but November could hit a Seasonally Adjusted Annual Rate of 11 million vehicle sales, making it the highest level this year outside of the Cash for Clunker months of July and August.
GM's top analyst Mike DiGiovanni told media in a conference call Thursday that the automaker is encouraged by positive economic signs and the automaker may turn in its fourth consecutive month of market share gain.
Edmunds.com's forecast, issued early Thursday, is less rosy, putting the predicted SAAR at about 10.34 million vehicles sold in November, which in the best of times is the worst month for vehicle sales except for January.
At the request of General Motors' new chairman, Ed Whitacre, the automaker's top engineers are calling the couple hundred customers who are returning or exchanging their GM cars under the 60-day money-back guarantee policy to find out why.
Mark Reuss, GM's recently appointed vice president of global engineering, told reporters Thursday that he personally is calling customers.
This evening, Reuss will call a customer who was dissatisfied with and returned a Chevrolet Malibu under the program. And he will call the buyer of a Chevrolet Silverado who reported the interior room wasn't roomy enough and the exterior paint and finish were unsatisfactory.
In order to prod soccer moms across the nation to plug a visit to the BMW dealership into their Blackberrys, BMW North America Inc. this week nonchalantly announced the price for its first "full" hybrid-electric vehicle, the ActiveHybrid X6: $89,725.
Welcome to hybridization as seen by German luxury marques, who, given their choices for showcasing hybrid technology, seem to be more intent on using their new hybrids to prove why their diesel-powered models make much more sense in terms of actually appealing to consumers.
At nearly $90,000, the ActiveHybrid X6 has a total of 485 horsepower, weighs more than 5,600 pounds, delivers a 2-mpg improvement over than the 6-cylinder X6 (4 mpg better in the city and 1 mpg worse on the highway than the V8 X6) - and still has plenty of extra-price options.
In the spring, BMW will follow up with the ActiveHybrid 7, the hybridized version of its 7-Series flagship. The car is certain to crack the 6-figure price barrier.
Engineers at General Motors Co. working on the 2011 Chevrolet Volt extended-range electric vehicle yesterday told the media development remains on track and that the start of production for GM's game-changing, fuel-saving 4-seater now is less than a year away.
When GM unveiled the Volt at the Detroit auto show in January, 2007, the promise of production seemed tantalizingly far-flung - and improbable, given the myriad technical problems GM admitted had to be solved. But chief engineer Andrew Farah says the accelerated development program is on schedule and GM will begin producing the Volt in less than a year's time.
And despite the recent drama involving the proposed sale of GM's Adam Opel AG European operations and the company's eleventh-hour decision to keep the division, Farah says Opel's version of the Volt, the Ampera, remains on target to hit showrooms about a year after the Volt.
But the patient's long-term prognosis, admitted CEO Fritz Henderson, isn't exactly a clean bill of health just yet.
"When you come away from it, we lost money (in the period from July 10 to Sept. 30)" said Henderson, calling the situation "not satisfactory."
And while GM's operating cash flow figure for the period was a healthy-enough $3.3 billion, one recurring malady has popped up on GM's first-ever post-bankruptcy report: North American operations didn't get the job done.
General Motors Co will unveil the U.S. production version of its Chevrolet Cruze small sedan at the Los Angeles auto show in early December.
The Cruze goes on sale in the third quarter of 2010. GM boasts it will achieve highway fuel economy ratings of up to 40 miles per gallon. The Cruze already is on sale in foreign markets.
GM also said it will announce plans for initial retail markets for the Chevrolet Volt extended range car during the auto show. GM has promised the Volt will be on sale in November 2010.
Michael Carpenter, a board member turned new chief of GMAC Financial Services, vowed to make the company into "a premier auto finance company," something it has not been of late.
Troubled GMAC provides loans to General Motors customers and dealers and eventually will do the same for Chrysler but itself has been living on government loans to survive.
"The top priority is to turn GMAC into a premier auto finance company and pay back the government in a reasonable time frame," Carpenter said. "I am confident we can achieve that."
General Motors, which reported its first financial results Monday since emerging from bankruptcy July 10, has boosted market share and hiked vehicle prices since its bankruptcy, but its typical profit per vehicle remains essentially flat, according to Edmunds.com.
GM's U.S. market share of 21.1 percent matched its high point for the year in October. Sticker prices are at their highest point of the year as well. However, higher share and higher prices aren't translating into higher profits per vehicle because, while consumers are willing to pay more for new GM models, they are unwilling to do so for the carryover ones.
General Motors said Monday, in releasing its first financial statement since emerging from Chapter 11 bankruptcy on July 10, it would make its first loan repayments to U.S. and Canadian taxpayers next month. At that time, it will pay back a total of $1.2 billion.
Still, the new GM reported a loss of $1.15 billion in its first 83 days of operation. However, that was an improvement from last year.
"We have significantly more work to do, but today's results provide evidence of the solid foundation we're building for the new GM," said GM President and CEO Fritz Henderson in a company statement. "With a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance. We'll achieve that by winning customers over, one at a time, with vehicles that deliver performance and value."
Top executives at General Motors Co. and Chrysler LLC have both gone out of their way in the past week to say their once-bankrupt companies are positioning themselves to pay back the tens of billions of dollars loaned to them by the federal government.
The man charged with overseeing the U.S. Dept. of Treasury program through which the money was loaned doesn't share their confidence.
Neil Barofsky, the special investigator assigned by Congress as the watchdog for the $700-billion Troubled Asset Relief Program, said at a conference in Washington D.C. that while GM and Chrysler may pay back some of the approximately $65 billion extended to them, the U.S. probably won't ever see full payback.
"Tens of billions of dollars are likely to be lost on the automotive bailout," Barofsky said flatly.
General Motors Co.'s Buick division today released images and information for the 2011 Buick Regal and is openly billing the new-age Buick as a sport sedan.
Given the new Regal's origins with GM's second-generation global midsize chassis that was engineered by Adam Opel AG - the Germany-based European division GM just retrieved from the clutches of mega-supplier Magna and Russia's Sberbank - there might be reasonable credibility for the sport-sedan claim.
In addition to being based on the German-engineered Epsilon II architecture also used by the well-regarded new Opel Insignia (not to mention Buick's new LaCrosse sedan), the 2011 Regal also will be built in Germany at Opel's Russelsheim assembly plant.
The Regal's lines may be some of the crispest ever to be seen in a Buick showroom and GM is calling out the Acura TSX, Volkswagen Passat, Mazda6 and even the Volvo S60 as competitors. The Regal goes on sale in the second quarter next year - and in a significant sign of the times, only 4-cylinder power will be on offer.
General Motors has made remarkable strides since emerging from bankruptcy July 10 and is "better positioned for success than I thought was possible" then, said Ed Whitacre in his first public speech since becoming GM chairman in July.
"We're getting into a fighting shape. We have a long way to go, but we're definitely on our way," he told an audience at Texas Lutheran University near San Antonio. The retired AT&T chairman taught at the university just before taking GM's top job at the U.S. government's behest.
Whitacre said there's a strong sense of urgency inside the automaker to repay the billions GM owes in government loans.
"I can't tell you when (we'll pay it back) but it'll be sooner than you think," Whitacre told a political science student who asked when the company would repay taxpayers.
General Motors will invest nearly $100 million in a Canadian plant and call back all laid-off workers to boost production of its Chevrolet Equinox and GMC Terrain, Toronto's Globe and Mail reports.
The investment will be made in CAMI Automotive Inc., a joint venture between GM and Suzuki Motor Corp. in Ingersoll, Ontario, near Toronto. The plant will call back 150 laid off workers, which means the plant will have no employees on layoff.
General Motors' decision to keep Opel has ruffled political feathers and rankled the union rank and file in Germany, but it is - and always was - the right business decision for the automaker.
While it is in dire need of restructuring that it clearly is about to get, Opel gives GM a presence in Europe that Chevrolet alone cannot. Even more important, Opel architectures and engineering expertise are the backbone GM's global growth.
The chief of General Motors European operations, Carl-Peter Forster, plans to leave the company after this week's u-turn that calls for the automaker keeping rather than selling Opel. European media reports claim. GM's head of all international operations Nick Reilly is said to be stepping in for the time being.
GM is not commenting on the personnel changes. However, on Thursday - the day after GM's announced it would keep Opel -- GM CEO Fritz Henderson told reporters in Detroit that a transition team is being quickly gathered to oversee the restructuring of GM's German subsidiary. GM also will keep its British subsidiary, Vauxhall
General Motor board of directors, meeting in Detroit Tuesday, has voted that the automaker keep its European subsidiary Adam Opel AG in light of the improving environment for GM and the importance of Opel and Vauxhall, its British entity, to its global strategy, the automaker said in a statement issued late Tuesday.
GM, however, will initiate a restructuring of its European operations "in earnest," it said.
GM has a tentative agreement to sell Opel to Canadian-Austrian parts supplier Magna International, with the financial backing of Russia's Sberbank.
Incentives paid by automakers dipped in October from September and a year ago as they launch new 2010 models, which don't need them yet, and wind down 2009 models, Edmunds.com reports.
The average automotive manufacturer incentive in the U.S. was $2,468 per vehicle sold in October 2009, according to Edmunds.com analysis of Total Cost of Incentives (TCI). That's down $329, or 11.8 percent, from September, and down $209, or 7.8 percent, from October 2008.
"Incentives declined because fewer old model-year vehicles were sold in October, and the newer vehicles are not discounted nearly as heavily," explained Jessica Caldwell, director of industry analysis for Edmunds.com. "Over 55 percent of vehicles sold in October were 2010 model year, compared with about 36 percent in September."
October car sales are expected to come in at the highest level of the year except for during the summer's frenzied Cash for Clunker months, Edmunds.com forecasts.
Industry sales, being reported on Tuesday, are expected to total 830,000 vehicles, almost even with a year ago and up 11.4 percent from September. That would push October's Seasonally Adjusted Annualized Rate (SAAR) to 10.35 million, up from 9.19 in September.
""There are clear signs that the automotive industry is finally starting to recover from the painful lows experienced earlier this year,"said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Less than 1 percent of the vehicles bought under General Motors' 60-day moneyback guarantee program have been returned.
Susan Docherty, GM's vice president of U.S. sales, said 142,000 vehicles have been sold under the program with 449 customers opting for the guarantee instead of the $500 cash rebate. Of those, four have returned their vehicles and gotten their money back on a Chevrolet Equinox, Chevrolet Tahoe, Chevrolet Malibu and Chevrolet Silverado. In total, 49 customers, including the four that already have returned their vehicles, are in the process of a return or exchange, she said.
General Motors predicts the Seansonally Adjusted Annualized Rate (SAAR) of car sales in October will come in at 10.7 million total vehicles, including heavy- and medium-duty trucks. On a light vehicle basis, GM forecasts at 10.5 million SAAR.
GM's top analyst Mike DiGiovanni told reporters Wednesday morning that October may be the first month since January 2008 that GM will report a year-over-year increase in sales and market share. The automaker expects its third consecutive month of market share increase for a total market share of 20 to 21 percent and 19 to 20 percent in retail market share.
"We're not here to declare victory," said Susan Docherty, GM's new vice president in charge of U.S. sales, during the "Straight Talk" conference call. "We're here to report progress."
The state of Delaware was the scene of some historic and trend-setting events this week, as the "old" business entities of General Motors Co. and Chrysler Group LLC both sold cast-off assembly plants as the companies as part of the companies' rapid downsizing.
The site of Chrysler's assembly plant in Newark will be sold to the University of Delaware for a new research center. The plant, which most recently built the Dodge Durango and Chrysler Aspen SUVs, was sold to the university for $24.25 million, according to the Delaware News Journal.
Fisker Automotive, the new-age startup company aiming to sell an expensive and high-tech extended-range electric vehicle next year, confirmed it has purchased an assembly plant in Wilmington, DE, from Motors Liquidation Co., the entity holding the assets of the former General Motors Co.
Fisker said in a media release the company paid $18 million for the plant, which most recently build the Pontiac Solstice and Saturn Sky 2-seat sportscars.
That's a great price to acquire what is essentially a fully functional auto assembly plant with a relatively new paint shop, one of the costliest areas of investment in any auto-assembly operation.
Fisker said it will invest another $175 million to retool the plant to produce a still-under-development plug-in hybrid sedan targeted to sell for considerably less than the $87,000 Karma extended-range electric sport sedan Fisker plans to begin selling next year.
The new compensation plan for General Motors Co. CEO Fritz Henderson made the headlines last week after particulars of the ruling from Kenneth Feinberg, the Obama administration's "pay czar" became known. But there were many other interesting details in that report - including the fact that of the 20 highest-paid GM executives whose pay packages had to be approved by Feinberg, only five work on the operational side of GM.
Fifteen of the 20 executives whose compensation packages came under review have nothing to do with GM's automaking business - they are employees of Promark Global Advisors, GM's asset-management company that until this past March was known as General Motors Asset Management.
Sometime right after the middle of this decade, just about everyone decided luxury crossover vehicles were going to be the industry's next big profit center.
Sales of traditional body-on-frame SUVs were falling off after a brief but consumer-mindset-shifting run-up of gasoline prices in the summer of 2006. The fuel-price scare came just as the crossover segment was starting to swell, pumping up buyer interest in the newly "invented" alternative to the SUV (and in some cases, pickup trucks).
But better still, Americans still were snapping up luxury items at an unprecedented pace, encouraged by ballooning home prices and easy credit.
General Motors Co. and Chrysler Group LLC executives are having their salaries cut - and like the often petulant professional-sports millionaires their typically outsized senses of worth so closely resemble - are at the same time getting some religion about responsibility and selfishness.
By now, anybody interested probably knows the details: direct salary for each company's token top 20 or 25 executives is cut an average of 31 percent at GM and about 18 percent at Chrysler. Salaries exceeding $500,000 are all but verboten. Instead, the big money that Detroit execs used to nail down just for phoning it in now is tied to longer-term company performance.
With another week gone by, October sales look to be on track for Seasonally Adjusted Annualized Rate (SAAR) in the low 10 million range, according to the latest data from Edmunds.com, which issues a more detailed forecast later this week.
General Motors' market share, which in the early going of the month stood at 22.4 percent, has slipped slightly to 21.7 percent in the latest Edmunds.com analysis.
In terms of sales by segments, the market appears to be returning to a pre-Cash for Clunkers equilibrium between large SUVs and trucks compared with small cars.
The "old" General Motors Corp. - now known by the name Motors Liquidation Co. - could be on the verge of completing a deal that would bring in some revenue to pay back some of the former GM's creditors, according to a report over the weekend from the Wall Street Journal.
Motors Liquidation reportedly is ready to sell its assembly plant in Wilmington, Del., to Irvine, Calif., new-tech automaker Fisker Automotive Inc. The company, whose CEO is Henrik Fisker, a former designer for BMW AG, has made headlines in recent years with his Fisker Karma extended-range electric vehicle, a slinky, nearly-$90,000 sport sedan set to go on sale next year. The Karma will be produced in Finland under contract with known low-volume vehicle assembler Valmet Automotive.
Anyone - or is it everyone at this point - hoping for an October finish for the saga of General Motors Co.'s sale of its Adam Opel AG European operations will have to wait at least a while longer.
In a blog at GM's website, John Smith, GM's group vice president of business development and the company's lead negotiator, said GM's deal to sell Opel to a consortium headed by Canada's Magna International Inc. and Russia's Sberbank will be on hold until at least early November.
The deal has won approval from the Opel Trust Board, but the European Union expressed concern about several details and their potential transnational effect on labor in various nations in which Opel operates.
The EU also "has been reviewing the Opel investor process and the circumstances surrounding the selection of Magna/Sberbank," Smith said in the blog. Some EU member nations have expressed skepticism that GM's decision to sell to the Magna/Sberbank group was based solely on business metrics.
The industry's best deals right now are in luxury cars, sports cars and convertibles as well as leftover 2009 models, according to Edmunds.com.
As for brands, Lincoln, Saab and Volvo are offering great deals, as are Pontiac and Saturn, which are being discountinued completely by General Motors.
"Dealers should be open to any decent offer since they know that these vehicles, which often sell to a fashion-conscious crowd, will drop in value once the 2010 model year vehicles roll in. There will be nothing harder to sell than a 2009 convertible in winter with 2010 fast approaching," said Edmunds.com Senior Analyst Jessica Caldwell. And there is ample inventory of 2009 models, she added
After dismal September car sales due to the hangover from the government's Cash for Clunkers program, auto manufacturers have ramped up incentives in October as they have ramped up production to refill the inventory pipeline, according to Edmunds.com.
The incentives show manufacturers are extremely eager to sell off 2009 models left in inventory. But automakers are also offering incentives on newly launched 2010 models.
"This year has been a wild ride for automakers, and it's not over yet," said Edmunds.com Senior Analyst Jessica Caldwell. "No segment is unaffected by the current round of incentives, though luxury models and trucks are being discounted particularly heavily."
Low-interest financing, including zero-interest financing, and cash rebates dominate the landscape, but subsidized lease programs, almost non-existent in the past years, are proliferating as well.
Coskata Inc. has pushed toward the front of the pack of second-generation ethanol producers by firing up its new "semi-commercial" facility for manufacturing cellulosic ethanol in Madison, Pa., near Pittsburgh. The $50-million result of research and construction is 65 feet tall and includes an 8,000-degree torch that processes the pine chips which serve as a raw material.
The opening of the facility last week moves the Warrendale, Ill.-based company closer to building a full-scale commercial plant, which Coskata anticipates opening by late 2012.
Put up or shut up, albeit in more polite European terms, is basically financial columnist Antony Currie's advice to Detroit's auto bosses.
The Big Three bosses have returned to one of their favorite past times, writes Currie on the financial blog site, Breakingviews.com: "... each of the Big Three's bosses has been indulging in painting rosy scenarios for their firms. But like pronouncements of the past, they're a tad premature."
General Motors is regaining some ground it lost in terms of market share this month, according to Edmunds.com.
If the early October trend continues, GM's market share should rise to 22.4 percent this month, a boost from the third-quarter average of 19.1 percent. Based on early October numbers, the Seasonally Adjusted Annual Rate (SAAR) of industry sales will come in at just above 10 million vehicles.
Launches of new models combined with a substantial hike in ad spending this month are helping.
Indeed, GM needs good news on the market-share front since its business plan is based on maintaining a market share of at least 19 percent with half the brands and fewer models, one of its board directors said Thursday.
Expect the "new" General Motors to play offense when it comes to marketing and communications, Bob Lutz, GM's chief marketing quarterback, told the media Tuesday.
"We have to shock Americans into a new awareness about the competitiveness of GM products," Lutz said. "We can't do it the way we used to do it by gently showing our products. We've got to take it on boldly and head-on. We can stand the comparison with just about anybody."
The recently launched May the Best Car Win, starring GM's government-appointed chairman Ed Whitacre was just the beginning.
The refrain from General Motors Co.'s Buick division is that it wants to entice younger buyers to forget about Buick's car-for-the-Medicare-crowd reputation. But Buick announced today it's nonetheless resurrecting an old name for its next midsize car: the model will be called the Regal.
"The Regal name has played a very important role in Buick's history for many years and continues to be one of the top Buick nameplates recalled by consumers, even though it's been out of the market for the past six years," Buick said today in a release.
In August, GM showed the media a midsize-sedan concept car but did not indicate the car's name, although it was speculated the Regal nameplate - still used in China - could be revived for the U.S. market.
China is on track to surpass the U.S. in vehicle sales this year. Automakers reported selling more than 1 million vehicles in September - a first - according to the China Association of Automobile Manufacturers.
China's total vehicle sales are expected to close the year at 12 million, as much as 2 million above what analysts project for the U.S.
General Motors CEO Fritz Henderson told reporters the "vast majority" of GM buyers are taking the $500 rebate instead of the automaker's 60-day money-back guarantee.
His admission suggests GM is attracting buyers already committed to the brands rather than convincing fence-sitters or converting intenders of competitive makes.
GM's money-back guarantee promotion, which runs through Nov. 30, allows customers to return their vehicles between day 31 and 60 of ownership nearly free of charge. However, after the program started, GM added a $500 rebate if they waive the policy.
General Motors CEO Fritz Henderson told reporters during his visit to China Tuesday that the automaker may sign its deal to sell a majority stake in Opel to Magna International and its Russian partner later this week.
Under the agreement, GM will sell a 55 percent stake in Opel to a consortium including Canada's Magna and Russia's Sberbank. The deal has created furor with Opel and Vauxhall unions because of the massive job losses anticipated and the ire of European governments, which are being asked to subsidize the deal.
General Motors CEO Fritz Henderson deserves the Nobel Prize more than President Barack Obama because he has the toughest job in the world, Wall Street Journal's Evan Newmark wrote in his Mean Street column.
Henderson "has to save GM, once America's proudest company and now its national disgrace," and he doesn't have four years to prove himself nor does he have Congress or Fox News to blame if things go wrong, Newmark writes.
Henderson has accomplished a lot in his inaugural months, most notably getting through bankruptcy. "None of that was easy. But now comes the difficult Nobel-worthy stuff - putting an executive team in place, overhauling GM's culture and making cars that Americans actually want to buy," Newmark points out.
General Motors, as expected, announced Friday it had signed an agreement with China's Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. Friday to sell Hummer.
The deal is subject to approvals by U.S. regulatory agencies and Chinese authorities. Tengzhong acquires ownership of the Hummer brand, trademark and trade names, as well as specific intellectual property license rights necessary to manufacturer vehicles. Tengzhong also assumes the existing dealer agreements.
The boss of the nation's largest auto-dealer chain is saying it now - and General Motors Co.'s Saturn knew it almost 25 years ago: GM has too many dealers.
Automotive News reports that Mike Jackson, CEO of AutoNation Inc., the country's largest auto dealership group, said in a speech this week that GM was right when it made the decision that as many as 40 percent of its dealers need to be closed if the newly restructured GM -- and its dealers -- are to survive in a vastly changed automotive market.
Consumers are paying 2 percent more this year for new cars and trucks than they were a year ago, according to Edmunds.com.
That's good news for automakers eager to turn profits on fewer sales, but bad news for consumers.
The average price of a car or truck sold in the United States was $28,492 for the first nine months of the year, compared with $27,945 last year, according to Edmunds.com. The average transaction estimate doesn't include manufacturer rebates.
A few years back, it was the first appearance of a Chinese automaker at the Detroit auto show that seemed to start the serious speculation about when the Chinese would crack into the U.S. market. Assessing the functional but rudimentary models on display, some predicted 2015 or 2020.
Instead, how about next year?
OK, it won't be with their own China-built models. But there are three pending brand-takeover deals -- General Motors Co.'s Saab and Hummer and Ford's Volvo Cars -- in which a Chinese automaker has a leading or secondary role. If any of the three purchases make it to completion -- and it's probable at least two will -- Chinese automakers will in effect be selling vehicles in the U.S.
The future success of the new General Motors Company rests largely on the bowtie of Chevrolet. With the automaker winnowing its brands from eight to only four, Chevrolet carries the load for sales and market share around the world.
And the weight of Chevrolet rests on the shoulders of Brent Dewar, who was named the vice president of Chevrolet Global after the automaker emerged from bankruptcy in July. He headed Chevrolet in the early part of the decade as the automaker made plans to take the brand global.
"Chevrolet needs to be the General Motors Company," Dewar told AutoObserver.com in an exclusive interview recently.
General Motors wasted no time in naming a new sales chief.
Susan Docherty, who was heading Buick-Pontiac-GMC, will become GM's vice president of U.S. sales, replacing Mark LaNeve, whose departure from the automaker was announced Wednesday morning.
"Susan will bring a wealth of experience from previous marketing and sales assignments," GM CEO Fritz Henderson said in a statement. "I have confidence that she will bring a new perspective to the position as she guides a new, lean and customer-focused dealer network."
Saying the "new" General Motors Co. that emerged from Chapter 11 bankruptcy on July 10 is mostly achieving its goals for cost and debt reductions and is exceeding its projections in some key business metrics, CEO Fritz Henderson said in a media conference call Wednesday that GM is making progress in its three-pronged future strategy to focus on customers, cars and changing its corporate culture.
Just 90 days into its new status as a private company, GM was long on generalities and brief of specifics, however.
Mark LaNeve, General Motors vice president of U.S. sales, is leaving the automaker effective October 15, GM CEO Fritz Henderson announced Wednesday morning.
The announcement comes as no surprise as GM has cut about a third of its management ranks since emerging from bankruptcy in July. GM sales and market share continue to shrink. In July, LaNeve's role at GM was narrowed to U.S. sales only. Bob Lutz, who chose to stay with the company instead of leaving as he had planned, took over marketing.
Henderson said his replacement has not been selected but that the company would move fast to find one. He also didn't rule out bringing someone from the outside.
LaNeve has taken a position in a business outside of the auto industry.
The day in July when General Motors emerged from Chapter 11 bankruptcy, CEO Fritz Henderson declared the new GM would focus on three things -- customers, cars and culture.
On Wednesday morning, Henderson is scheduled to give a 90-day progress report on how GM is doing.
So how is GM really doing in those three categories?
As for customers, GM, despite trying new ways to lure them, has found too few. As for cars, GM's new offerings are promising. As for culture, the jury's still out. And disappointments -- there have been a few.
Low gas prices and even lower demand in the luxury market have conspired to short-circuit sales of premium hybrid-electric vehicles. Now, as the fourth quarter begins to wind down a fairly lousy year for auto sales - and new 2010 models are shouldering their way onto dealer lots - automakers are piling on some fantastic incentives in the hope of clearing out leftover big-money hybrids.
Toyota Motor Corp.'s Lexus premium division, owner of the market's most-expensive hybrid in its LS 600h L, rang in October with a bulging $10,000 dealer-cash incentive on the '09 model of the flagship hybrid. The company also is offered a bounty of $1,000 to any sales associate selling an '09 LS 600h L, which starts at $106,035.
Toyota doesn't break out sales of the hybrid LS in its monthly sales reports, but sales of the entire LS line are down 53.7 percent through September as sales in almost all luxury segments continue to fade.
U.S. auto sales in September dipped to predicted lows because the Cash for Clunkers program ended in August and there weren't many buyers left, car company executives reported Thursday. They're just hoping that the market's massive "payback" via September's sales drought isn't extended into the fourth quarter.
Americans bought just 745,516 vehicles in September, a 23-percent drop from a year ago. That represents an abysmal Seasonally Adjusted Annual Rate (SAAR) of sales of just 9.2 million units - the lowest since February and roughly the laconic pace at which economically shell-shocked consumers purchased cars during the first half of the year.
And it was far below -- 41 percent, to be exact -- the relatively breathtaking sales rate of 14.1 million units that prevailed for August, when most buyers took advantage of a total of $3.5 billion in rebates under the federal government's clunkers program and purchased more fuel-efficient vehicles. September's sales volume plunged by more than a half-million units compared with August.
General Motors head of sales said its California experiment listing dealer inventories on eBay's Web site is not cancelled for good; rather it is postponed.
"By no means was it a failure," said Mark LaNeve, GM's vice president of sales, said in Thursday's sales conference call. "It was a pilot and we're not ready to go full bore with it but we think we've got something that could work with some tweaking of the model."
He added: "It was an interesting program with interesting results."
A Renault executive confirmed negotiations to provide Penske Automotive Group with vehicles to sell as Saturns broke down at the last minute.
"We negotiated with them but we were unable to reach agreement at the end," Renault COO Patrick Pelata told Bloomberg News in an interview on the sidelines of a Paris news conference Thursday.
Pelata said Renault CEO Carlos Ghosn didn't recommend approval of an agreement with Penske to the board, which met Wednesday.
After five straight months of decline, incentives are on the rise again, according to Edmunds.com.
The average manufacturer incentive totaled $2,557 per vehicle sold in September, up $83 or 3.4 percent from August, Edmunds.com estimates. That was down $344, or 11.9 percent from September 2008.
This summer's Cash for Clunkers program substituted as a manufacturer incentive but with the program over and vehicle inventories being replenished, consumers aren't buying, as will be seen when automakers report September sales Thursday. Edmunds.com forecasts sales for the month will come in at only about a 9.3 million Seasonally Adjusted Annual Rate (SAAR).
In a surprise move, Penske Automotive Group terminated discussions with General Motors to acquire Saturn due to its inability to secure agreements for the future supply of vehicles beyond what it had negotiated with GM. As a result, GM will wind down Saturn much as it is doing now with its Pontiac division.
In a statement issued by the Penske Group late Wednesday, on the eve of the expected close of the deal, the auto retailing group cited "concerns directly related to the future supply of vehicles beyond the supply period it had negotiated with GM."
Retailers who had signed franchise agreements for the new Penske-run Saturn group were as shocked as anyone. They were scheduled to attend meetings with company founder Roger Penske next week, after the deal was closed, to hear about plans for product and timing. Instead, they head through the media - not the Penske group, Saturn or GM -- that the deal had fallen apart. Some are hoping something can be salvaged of the plan.
Detroit media reports that General Motors will announce Wednesday or Thursday it has completed the sale of its Saturn division to Penske Automotive Group, though no one from either GM or Penske will confirm the report.
GM and the Penske group have been negotiating the deal since June. In an exclusive interview with Edmunds' AutoObserver.comthen, Roger Penske laid out his vision for Saturn as a different kind of global motors -- one that sells GM-made models but also sells vehicles made in other parts of the world by offshore manufacturers.
General Motors will end its listing of cars online through eBay this week because it didn't generate sales, a newspaper report says.
The program had been set to end September 8 but was extended through the end of the month. GM had been optimistic that it would be successful and would be rolled out nationwide. But it has not generated sales, the Wall Street Journal reported, citing sales figures and dealer comments.
As a result, GM will not extend the eBay venture beyond September, the newspaper reported. A GM spokesman did not confirm the report.
Automakers will have their resolve to scaleback incentive spending tested in the coming months as their assembly plants ramp up production to beef up inventory and sales continue to be soft.
Incentives on General Motors, Ford and Chrysler vehicles plummeted by 26 percent to $3,278 per vehicle in August from a March peak, according to Edmunds.com, parent of AutoObserver.com. Industrywide incentives fell 22 percent to $2,474 per vehicle.
"Automakers have to pull the lever and increase production in an unknown market," Edmunds.com Senior Analyst Jessica Caldwell told Bloomberg News. "They could find there are no buyers out there and have to raise incentives again. It's a vicious circle."
General Motors launched its latest marketing campaign, "May the Best Car Win," a couple of weeks ago. It includes a 60-day money-back guarantee to buyers of its Buick, Chevrolet, Cadillac and GMC models through Nov. 30, which could be extended, a GM execuctive said Friday.
September's hangover from August's Cash for Clunkers program appears to be easing.
New vehicle sales for the month are expected to total 742,000 units, off 22.9 percent from September 2008 and down 41.1 percent from August when Cash for Clunkers was in full swing, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annual Rate (SAAR) of sales at 9.34 million vehicles. Automakers report U.S. sales on Oct. 1.
"The aftereffects of Cash for Clunkers are still being felt: a significant number of September sales were pulled ahead into August, and many September shoppers left showrooms empty-handed after finding low inventories and high prices," said Edmunds.com CEO Jeremy Anwyl. "However, the industry's sales rebound is gaining momentum, so there is room for a small upside surprise on sales announcement day."
It's been just over a week now since GM announced its new 60-day money-back guarantee. The good news is that car shoppers in Edmunds.com's CarSpace forums are talking a lot about it. The bad news, though, is that they don't have a lot of nice things to say.
Almost everyone agrees that the promise sounds great. But, like most savvy shoppers, they're wary of the fine print. Specifically, they want to know exactly how much dough they're getting back if it turns out they don't like that new Chevy Malibu after all.
General Motors Co. is counting on the 2010 Buick LaCrosse to be one of the company's first post- bankruptcy models to prove the company is serious about its professed new focus on developing only outstanding new products.
The LaCrosse may in fact be the most competitive and progressive Buick of the last 20 years. But whether the car can help change the perception of the brand and turn the heads of the luxury-car customers Buick is targeting is something that remains to be seen, according to data from Edmunds.com.
Buick officials have said they think the LaCrosse's blend of style, content and value will put the car on the consideration list of intenders for import entry-luxury sedans such as the Lexus ES 350 and Acura TL.
At least a couple of automakers are headed into the 2010 model year donning boxing gloves.
Feisty billboards popping up across the country have the Buick LaCrosse taking dead aim at Lexus ES 350. One shows the LaCrosse with the line "Another thing for Lexus to relentlessly pursue" in a play on Lexus' ad tagline.
General Motors' Buick division launches a major advertising campaign with the first ads starring the new LaCrosse and premiering the new tagline -- "The New Class of World Class."
The Buick ad, airing for the first time in prime time Monday, is one of the promised brand- and model-specific follow-ups to come on the heels of a GM corporate marketing program that was heavily promoted last week.
Edmunds.com has completed its final tally of the most popular vehicle purchases and most frequent trade-ins under the Cash for Clunkers. The Ford Focus held its No. 1 spot as the favorite buy; the Ford Explorer remained the No. 1 trade-in.
Indeed, the top 10 lists in both categories wound up little changed from the early scoring on Edmunds.com's lists.
And, in fact, many of the top clunker buys are the industry's bestsellers in non-clunker times. Eight of the 10 vehicles on the top 10 clunker buy list are also in the top 10 for the year so far in total; only the order is changed.
General Motors 60-day moneyback guarantee is generating increased interest in Buick, Cadillac, Chevrolet and GMC vehicles, according to Edmunds.com.
Shopping consideration for GM vehicles on Edmunds.com's Web site -- which can suggest future sales -- has trended upward in the last three days, in the range of a 15 to 17 percent.
Chevrolet and GMC are getting the biggest consideration lifts from the ad campaign, according to Edmunds.com's data. Specific models getting more shopper attention than before are: the new Chevrolet Camaro sports car; the near-twin GMC Yukon and Chevrolet Tahoe SUVs; the new GMC Acadia crossover; and the GMC Sierra pickup.
General Motors' just-launched marketing program that provides the consumer with a 60-day moneyback guarantee on the purchase of a Buick, Cadillac, Chevrolet or GMC vehicle is generating interest in the early going, according to Edmunds.com and GM data.
Shopping consideration for GM vehicles on Edmunds.com's Web site -- which suggests future sales -- shows a 10 percent increase in the first couple of days since GM's "May the Best Car Win" campaign and the accompanying advertisements, featuring government-appointed chairman Ed Whitacre, hitting the airwaves on Sunday.
"What we'll be watching if GM's consideration stays at those levels or whether it rises or drops," said David Tompkins, Ph.D., Edmunds.com's executive director of Business Analytics. If it stays at 10 percent, he noted, that could result in a market share hike of 2 percent.
But it is too early to know which way GM consideration will go, he added.
President Obama is visiting General Motors' assembly plant in Lordstown, Ohio, Tuesday, giving a speech on jobs, the economy and, of course, the mention of health care to a packed house of auto executives, local dignitaries and United Auto Worker union employees.
GM CEO Fritz Henderson will host the president at the more than four-decades-old plant that now builds the Chevrolet Cobalt and will soon convert to building GM's all-important Chevrolet Cruze.
The trip marks the president's first one to an auto plant since the federal government's bailout of GM and Chrysler from bankruptcy. He visited several auto manufacturing facilities during his campaign.
AutoObserver's senior contributing editor Bill Visnic will be chronicling the president's visit to the plant on Twitter @autoobserver.
"Don't worry about the profit margin -- you'll make it up on volume."
Anyone familiar with any kind of retailing has heard that platitude, but General Motors Co. dealers will be the latest to find out if it works.
GM reportedly plans to chop a half-percent from dealer margins as the company -- goaded by new chairman Ed Whitacre -- scrambles to regain slipping share and revenue.
General Motors Co. announced Thursday it will sell a majority interest in its European Adam Opel AG and Vauxhall units to a consortium comprised of Canada's Magna International Inc. and Russia's Sberbank.
But a key aspect not prominently discussed in GM's months-long process to shed its currently unprofitable European operations: The company will retain a significant 35 percent interest.
General Motors will launch a marketing campaign it calls "May the Best Car Win" that offers buyers of Buick, Cadillac, Chevrolet and GMC vehicles a 60-day money-back guarantee.
The promotion will kick off with an advertising blitz on Sunday during morning news shows and NFL football games. The ads will feature GM's chairman Edward Whitacre.
Though GM has not provided advanced viewing of the advertisements, there's a hint of deja vu from Chrysler's first emergence from bankruptcy when then-Chairman Lee Iacocca challenged American consumers to buy Chrysler cars with the tag line: "If you find a better car, buy it."
An independent panel overseeing the government's loans to General Motors and Chrysler has revealed that U.S. taxpayers probably won't be entirely paid back by the two just-out-of-bankruptcy automakers.
The Congressional Oversight Panel (COP), in its latest report issued Tuesday, said it is highly unlikely that the government will recover all of the $81 billion in loans to the auto industry. The panel did not say exactly how much in total it expected to recover.
The report did say Chrysler is "highly unlikely" to repay $5.4 billion of its $15 billion in government loans, and GM probably will pay back little of the initial $19.4 billion of its total $50 billion in government loans. In a statement, GM insisted it intended to pay back the loans.
Since early this summer, a handful of the nation's large banks starting paying back their share of emergency bailout loans taken under the controversial, $700-billion Troubled Asset Relief Program fund created by the Bush Administration last year. T
It was reported recently that eight major banks and investment firms that received TARP loans have repaid - and that the U.S. Department of Treasury's profit was about $4 billion and a tidy 15-percent return on the investment.
Although the money repaid represents only a small portion of the TARP funds extended to scores of banks large and small, some banks' prompt repayment is certain to lead the discussion to General Motors Co. and Chrysler Group LLC, two non-banks - along with their closely-aligned financing operations - that were extended a collective $65 billion in TARP funding.
Audi of America President Johan de Nysschen said to a reporter last week something to the effect of "people who want to buy Chevrolet's Volt (General Motors Co.'s endlessly hyped extended-range electric vehicle) are idiots."
Strong sentiment, to be sure. But worthy of the Internet firestorm the remark (in whatever form) fueled through the Labor Day weekend? Hardly. Auto industry and media: get a life. Relax. Enjoy a holiday every now and then.
There is something about the Volt - and what it represents as an environmental statement - that some think makes it above reproach. As de Nysschen discovered, criticism of the Volt often is interpreted as a political incorrectness manifesto.
Maybe America's love affair with pickup trucks isn't over. It's just getting smaller.
In both size and volume.
The recently ended federal Cash for Clunkers incentive was a giant boost for fuel-efficient cars. They dominated the top 10 list of new vehicles purchased by those trading clunkers. But if August sales reports are any indicator, more than a few of those Cash for Clunkers vouchers were used to buy midsize (formerly "compact") pickups.
General Motors and eBay Motors announced Tuesday they were extending their promotion that allows consumers to shop and start the buying process for Chevrolet, Buick, GMC and Pontiac vehicles voluntarily listed by the automaker's California dealers. The promotion, launched Aug. 11, was to expire Sept. 8 but has been extended through Sept. 30. It could eventually be rolled out nationally.
Meantime, Edmunds.com, parent of AutoObserver.com, has analyzed pricing of GM vehicles on eBay and is advising consumers to avoid the "Buy It Now" pricing option. Instead, consumers should choose the "Make an Offer" option. Otherwise, they are apt to pay too much.
The U.S. government's Cash for Clunkers program finished its job in August, boosting industry-wide U.S. sales to 1,261,799 vehicles, a 1.3-percent increase from a year earlier and a 26.7-percent boost from July, as American consumers rushed dealerships to turn in their well-used vehicles for more fuel-efficient new ones.
Automakers revisited long-abandoned, almost heady levels of sales, with the August results translating into a Seasonally Adjusted Annual Rate of 14.1 million units - equivalent to a yearly pace about five million units faster than the sales rate for the first half of this year, and much higher than the 10.5-million to 11-million-vehicle pace that industry executives still expect to prevail for the rest of 2009.
With American taxpayers footing the bill for Cash for Clunkers, automakers were able to lower their spending on incentives in August. And, in fact, automakers may still have paid more than they needed to in incentives.
The average automotive manufacturer incentive was $2,475 per vehicle for every vehicle sold in August, Edmunds.com estimates. That's down $231, or 8.5 percent, from July and down $327, or 11.7 percent, from August 2008, continuing a downward trend of several months.
"The industry spent a record $3,165 per vehicle in March, but ever since then, incentives have continuously fallen," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
However, the story may change in the coming months, she added, with the Cash for Clunkers program over, vehicle inventories low due to production cutbacks and brisk clunker sales. But now, factories are ramping up production to fill up the pipeline again -- production that may come into a market that isn't in the mood for buying.
It's leaving the General Motors Co. empire by the end of this year, but GM nonetheless issued the press material detailing Saab's next-generation 9-5 flagship, a car that goes on sale next year after Saab effectively is no longer under GM management. The car will be unveiled at the Frankfurt motor show next month.
Although there are well-executed Saab-esque design details, including a feint at the Saab-signature wraparound windshield and an angular sideglass/C-pillar junction reminiscent of the 900 Series, the bodysides betray a hint of Buickness that shouldn't surprise: the all-new 9-5 is built around the GM global midsize architecture on which rides the new Buick LaCrosse, not to mention Europe's well-received Opel/Vauxhall Insignia.
Leveraging the global midsize underpinnings means the new 9-5 is markedly larger than the current flagship, some five inches longer in wheelbase and nearly seven inches longer overall.
Toyota Motor Corp. announced late Thursday it will end its production contract at the New United Motor Manufacturing Inc. assembly plant in Fremont, CA, next March, shifting assembly of NUMMI-manufactured Tacoma midsize pickups to Toyota's recently built plant in San Antonio, TX.
The NUMMI facility was a joint-venture operation between Toyota and the General Motors Co., but in June, just prior to its Chapter 11 bankruptcy reorganization, GM said it was vacating the NUMMI operation and leaving its ownership in the venture with the "old" GM.
GM did not see a future for NUMMI and shortly thereafter Toyota also began to send signals it, too, might abandon the venture that began in 1984. GM ended production of the Pontiac Vibe (a badged variant of the Toyota Matrix) on Aug. 17.
Thanks to the government's Cash-For-Clunkers program, new-vehicle sales bounced around throughout the month of August, one of the most volatile periods in automotive history. Edmunds.com predicts the annualized sales rate could land at just more than 13 million for the month.
"Cash for Clunkers sent the sales rate on a wild roller coaster ride," said Edmunds.com Senior Analyst Jessica Caldwell. She said the Seasonally Adjusted Annualized Rate (SAAR) of sales exceeded 19 million in late July - the peak of Cash-For-Clunkers selling - and fluctuated around the 15-million mark in early August. But the SAAR has plunged to an 8-million rate in the post-Clunkers final days of the month.
"Ending August on such a low note does not bode well for September," Caldwell warned.
Prior to the Cash-For-Clunkers sales explosion, the last thing automakers would have considered was increasing production in their North American factories.
In answer to the worst industry sales slide in more than a generation, most had for more than a year being doing just the opposite - slashing production schedules - in an attempt to reduce bloated inventories suddenly and catastrophically out of line with consumer demand.
But Cash-For-Clunkers changed all that: in just four weeks, the federal incentive program squeezed more than a half-million buyers into showrooms. So much for that troublesome inventory.
Now the auto industry has to deal with the wholly unpredicted consequence of Cash-For-Clunkers' success: almost overnight, nobody has enough new vehicles to sell. And the equally ironic solution: raise production.
Just days after the General Motors Co. board of directors countered the company's management and ordered a reexamination of the favored bid to take majority ownership of GM's Adam Opel AG and most of the company's associated European operations, reports from Europe say GM may announce within a matter of days -- or even hours -- the course it will take with Opel.
GM's abrupt reversal in the months-long process that seemed to be proceeding toward selling Opel to a consortium led by Canadian auto supplier Magna International Inc. riled sensitive German politicians and the country's powerful labor unions, all of whom had made it clear they preferred the Magna bid -- which seeks to minimize German job losses -- to the rival offer from Belgium's RHJ International.
GM's about-face last week, in which it announced the board effectively told company leaders to reconsider GM's options, seemingly signaled to the German interests that GM now might be trying to hedge in light of improving auto-industry and economic conditions on both sides of the Atlantic.
Reports from Japan earlier this month indicated Honda Motor Co. Ltd. -- like other automakers with models that proved popular in the just-ended Cash for Clunkers new-vehicle rebate program -- is planning to increase production to replenish starved U.S. inventories.
But a Honda spokesman told AutoObserver today the company won't detail the amount of its production increase.
"We're not attaching figures yet to our production," said the Honda spokesman, adding that the company doesn't expect to forecast production for the remainder of the year.
With the news-dominating Cash for Clunkers program now officially finished, the auto industry can get back to normal: battling U.S. and global recessions and trying to figure out who's going to own half of the former divisions of General Motors Co.
The last month's news was devoted almost exclusively to Cash for Clunkers, so anybody could be forgiven for not being caught up on what's been happening with the sales of GM's Hummer, Saturn, Saab Automobiles and Adam Opel AG divisions. Here's the updated scorecard:
Opel
Suddenly, Opel is GM's problem child.
The company's board last week slapped down the bid from a consortium led by Canadian mega-supplier Magna International Inc., a deal that was favored by GM's management and had the vital blessing of the German government, which was to provide billions in assistance in exchange for Magna's vow to minimize job losses.
The newly reconstituted board of directors for General Motors Co. might turn out to be a little more "activist" than originally presumed.
The Wall Street Journal reported late last week the new GM board has rejected the bid of management's favored suitor for the company's Adam Opel AG automaking unit.
A consortium headed by Canadian auto supplier Magna International Inc. has been vying with RHJ International, a Belgian investment firm, for control of Opel, but GM leaders and much of the German government have long been reported to favor Magna, which for one thing resolved to minimize job losses in Germany, the main base of operations for Opel and the other portions of GM's European operations up for sale.
Over the weekend, Reuters reported German Chancellor Angela Merkel as expressing a need for urgency in the situation.
The much-examined Cash for Clunkers new-vehicle rebate program ends August 24 and the armchair quarterbacking has already started. Most evaluations of the program will focus on the government's inability to quickly process applications and reimburse dealers for the $3,500 or $4,500 rebates given to buyers.
The backlog of payments certainly affected dealer cashflow, particularly for smaller operations.
But according to new data from Edmunds.com, dealers (and automakers, ultimately) did enjoy more than a few offsetting perks: Besides hiking sales volumes, the Cash for Clunkers program, along with the resulting accelerated reduction of new-vehicle inventories, was responsible for immediately jacking up average transaction prices, margins -- and dealer profit.
No auto dealer is complaining about the extra customer traffic the Cash for Clunkers program has generated in the past weeks. But although the federal program has been a solid lifeline in what surely would have been a dead summer for sales, the Car Allowance Rebate System (CARS) is amounting to the ultimate in profitless prosperity for too many dealers.
Complicating the situation, data from Edmunds.com indicates that with the program nearing its conclusion - just announced to be Monday, Aug. 24 - Cash for Clunkers transactions are slowing markedly from highs of 40 percent or more of all new-vehicle sales to less than one in five new-car deals.
Despite the CARS program's undeniable invigoration of previously tomblike showrooms, angry and dispirited dealers across the nation said they had no choice but to give up on Cash for Clunkers participation. The government was so slow in repaying the $3,500 or $4,500 rebates they literally couldn't afford to keep selling new vehicles.
The government foot-dragging was so endangering the final days of the CARS program that General Motors Co., Toyota Motor Corp., Honda Motor Co. Ltd. and others stepped in today to say they will provide cash advances on Cash for Clunkers transactions so dealers don't have to wait for the feds to pay up.
Barely a week after showing it and many other pending new models and concept vehicles to the media and a select group of the public, General Motors Co. is pulling the plug on a Buick variant of the Chevrolet Equinox/GMC Terrain compact crossover the company only first confirmed weeks ago it would build.
The company announced the new Buick crossover just last month during a high-profile industry conference at which the recently-emerged-from-bankruptcy GM seemingly sought to generate some positive news. So the company said Buick -- the brand's minders still flush with the comparative success of the Enclave full-size crossover -- would try again to catch lightning in a bottle with its own model based on GM's global compact crossover architecture.
Better still, Buick would launch a plug-in hybrid variant in 2011, allowing GM to get some green mileage from the investment it made in the plug-in technology originally intended for the Saturn Vue version of this crossover family.
All that was before the media and GM's hand-picked "civilian" viewers got a look at the still-unnamed Buick, though.
General Motors Co. confirmed it is boosting production of several models to restock depleted inventories of vehicles popular in the ongoing Cash for Clunkers rebate program and to address "consumer reaction" to new 2010 models such as the Chevrolet Camaro, Cadillac SRX and CTS Sport Wagon and the Buick LaCrosse.
GM says it will add production shifts at the Lordstown, Ohio, plant that produces the Chevrolet Cobalt, a popular choice for buyers replacing a "clunker," and at its CAMI facility in Ingersoll, Ontario, Canada, that assembles the new 2010 versions of the Chevrolet Equinox and GMC Terrain compact crossovers. The company also will add overtime and reinstate previously scheduled downtime at other plants.
In all, GM said it expects to add about 60,000 units of increased production -- the bulk coming in the fourth quarter, when many of the new models will be well along in their launch cycles.
General Motors Co. and Honda Motor Co. Ltd. are the latest automakers to spool up U.S. vehicle production to answer inventories depleted by the ongoing "Cash for Clunkers" new-vehicle rebate program.
GM will add one day shift at the Orion Township, Michigan, plant that assembles the Chevrolet Malibu midsize sedan; the plant currently is on a four-day work week. Also ramping up with the addition of a two-shift day will be the automaker's plant in Lordstown, Ohio, that produces the Chevrolet Cobalt compact cars, Dow Jones reported.
GM is expected to announce more production increases as it adjusts a third-quarter output that had been drastically reduced from year-ago levels. In extending the Car Allowance Rebate System, the official name of Cash for Clunkers, from the original $1 billion in funding to a total of $3 billion, the program has put unanticipated pressure on the stock of many of the most popular vehicles purchased by those trading clunkers.
WARREN, MI - Bryan Nesbitt has been on the job as Cadillac's new general manager less than a month, and at a recent media event here, the former vice president of General Motors Co.'s North American design isn't afraid to admit he's still getting up to speed on direct product issues for the company's premium-vehicle division.
One, he told AutoObserver, is diesel engines.
GM product-development higher-ups are adamant that diesels are too costly for the U.S. market. They require complex and expensive exhaust aftertreatment ("onboard chemical factories" is one term repeatedly employed) to comply with the world's toughest diesel-emissions standards - and U.S. diesel fuel is not taxed advantageously, as it is in Europe, where diesels have captured more than half of the region's light-vehicle market.
That includes an outsized presence in Europe's premium sector, where diesel has made distinct inroads because of its combination of efficiency and primary technical advantage: huge torque output, the perfect attribute for engines used in heavy and large luxury models.
General Motors Co. probably won't win many friends who are concerned about pollution from mercury with its position the "new" GM won't continue participating in an auto-industry coalition to recycle the mercury used in many auto components.
Tens of millions of mercury switches were used for lights and braking systems in the 1980s and 1990s and excesses of the toxic metal have been linked to neurological problems in fetuses and children. A large proportion of the switches were in GM-made vehicles.
The auto industry formed the End of Life Vehicle Solutions Corp. (ELVS) in 2005 to stop escape of mercury from vehicles sent to salvage-yard crushers. The ELVS program is slated to run through 2017 and reportedly has recycled 5,600 pounds of mercury from some 2.5 million automotive switches.
It's not unusual for General Motors Co. and other big car companies to show the media a
couple year's worth of pending new models. The difference this week was that GM showed the goods - and allowed reporters to tell all about what they saw.
With the U.S. Treasury Department holding some $60 billion of its markers, GM must quickly convince all its stakeholders the company's got stuff people will want to buy. Good stuff - better than the stuff it insisted was good in the past. The kind of stuff that generates revenue that pays back the kind of debt GM's run up.
Notwithstanding the 230-miles-per-gallon Chevrolet Volt coming next year, GM brags it has some two dozen new-model launches scheduled between now and 2011, but this quantity indicates nothing about the more-important factor: whether a significant number of these new models are winners.
What GM wouldn't allow was photography. But we'll describe with a division-by-division analysis of the new products, most of which are coming by 2011:
A controversial U.S. investor and part owner of Koenigsegg Automotive AB - the exotic sportscar maker planning to buy Saab Automobile from the "old" General Motors Corp - is out of the picture as the Koenigsegg Group progresses with its plan to acquire Saab.
Swedish business media report that Mark Bishop, who made a name and a fortune as an investor in securitizing sub-prime mortgages, sold his holding in Koenigsegg to another investor. Tiny Koenigsegg is hoping to acquire Saab by the end of this quarter.
Although General Motors Co. has submitted compensation proposals for its 100 executives to U.S. Department of Treasury "pay czar" Kenneth Feinberg, CEO Fritz Henderson said Tuesday the GM executives who fall under the still-pending government compensation guidelines effectively are working without knowing exactly how much they're being paid.
"We need to get some definition" about what type of executive compensation may be considered acceptable, said Henderson, who admitted government oversight of pay structure is limiting GM's ability to attract outside talent.
General Motors CEO Fritz Henderson said Tuesday morning that he sees "positive effect" of the Cash for Clunkers program continuing through August and September and, as a result, GM may ramp up production.
Henderson said at a press conference and Web cast that the automaker's new executive committee meeting Tuesday will decide if production should be increased as the government's Car Allowance Rebate System (CARS) has depleted inventories of many of GM's models.
Edmunds.com forecasts Cash for Clunkers is running out of steam, though the slight overall improvement in the economy may boost vehicle sales in the second half.
General Motors CEO Fritz Henderson announced Tuesday morning that the upcoming
Chevrolet Volt will achieve the equivalent of 230 miles per gallon in city driving, based on new Environmental Protection Agency (EPA) mileage ratings.
Though he didn't give an exact number, Henderson said the combined city-highway mileage will be in the triple digits. The Volt, which has an onboard gasoline engine that recharges the battery -- also rechargeable via a household electrical outlet -- is designed to travel 40 miles on pure electric power. That's the distance most Americans commute in a day.
GM had hinted about the mileage rating through an anonymous ad campaign featuring a 230 mpg with a smiley-faced electrical outlet in place of the 0.
Debbie Dingell, wife of powerful House Democrat John Dingell, will retire from her long-held post at General Motors.
She was vice chairman of General Motors Foundation and executive director of public affairs and community relations. She is one of many GMers who had to decide last Friday to stay with the new GM or take a buyout to leave the automaker, which is winnowing its executive ranks by at least a third.
Beginning Tuesday, General Motors dealers in California can begin listing their inventories of
some Buick, Chevrolet, GMC or Pontiac vehicles on online shopping site, eBay.com, in an effort to draw more consumer eyeballs to the automaker's cars and generate sales leads for dealers. GM and eBay executives detailed their partnershipMonday morning, after GM CEO Fritz Henderson hinted about it amonth ago when the automaker emerged from Chapter 11 bankruptcy. Henderson used it as an example of new ways the new GM would go to market.
The eBay venture is hardly groundbreaking. Already, about 30,000 dealers nationwide list their vehicles -- mostly used but some new -- on the site. In fact, GM was the first to coordinate with eBay to list dealer inventories of Certified Pre-owned Vehicles on eBay.
The newest GM-eBay venture is the first "virtual showroom online" by eBay with an auto manufacturer, said eBay Motors Vice President Rob Chesney in a conference call with media Monday. While exclusive to GM now, similar ventures with other automakers are possible, he suggested.
Magna International Inc. is embroiled in a bidding war with Belgium's RHJ International SA to take over General Motors Co.'s European operations, but Aurora, Ontario, Canada's Magna has another hassle in the form of its balance sheet: the company lost $205 million in the second quarter.
Magna's sales for the quarter slumped to $3.71 billion, a 45 percent drop, the company said.
Press reports that a deal is done between General Motors and Canadian auto supplier
Magna International for Opel are greatly exaggerated, the GM executive in charge of the Opel talks wrote Thursday on the company's blog.
"We have had constructive meetings with both Magna and [Belgian private equity firm] RHJ International this week," wrote GM Group Vice President John Smith, who is chief negotiator for the sale of a stake in Opel and Vauxhall in Europe.
Should the federal government fund a Cash for Clunkers extension, and is it worth the added
$2 billion cost as an economic and environmental stimulus?
Those are the questions the Senate considered this week as it debated the extension the House already passed. Data based on real Cash for Clunker transactions by Edmunds.com shows clearly vehicles turned in as clunkers -- mostly gas-guzzling trucks and SUVs -- would have been traded in at some point even without the program.
However, those vehicles were traded for vehicles that were more likely to be cars than trucks or SUVS and vehicles that deliver better fuel economy with the $3,500 to $4,500 government vouchers provided under the Car Allowance Rebate System (CARS).
Further, the clunker plan appears to have had a rub-off effect. The program created a feeding frenzy, with the last week of July generating a seasonally adjusted selling rate of a stunning 19.6 million vehicles. And those consumers buying vehicles regardless of trade-ins opted for smaller, more fuel-efficient cars during the Cash for Clunker program at a higher than usual rate.
Barely noticed in the clamor over the Cash for Clunkers effect was that General Motors Co.
announced this week it is reviving its leasing business with a pilot program rolling out for vehicles in each of its four marketing divisions.
The revived leasing program is earmarked to last for just a month.
GM said that just a year ago, leasing accounted for about 17 percent of sales; the ratio has plummeted to around 1 percent thanks to a variety of industry and credit-market travails.
Pressing U.S. Senators to pass a $2-billion extension to the Car Allowance Rebate System
(CARS) -- the riotously accepted "Cash For Clunkers" program projected to run through its original $1 billion backing in little more than a week - the Obama administration is citing the program's impact on reducing fuel consumption.
A note from the administration reportedly being distributed to lawmakers says the average fuel-economy gain between traded-in clunkers and the new vehicles purchased to replace them is 9.6 miles per gallon -- a 61 percent improvement. Purchased vehicles that improve fuel economy by at least 4 mpg net the clunker owner $3,500. New vehicles that achieve 10 mpg or better than the clunker they replace win the owner a $4,500 CARS rebate.
The crescendo of activity in American auto showrooms around the Cash for Clunkers program late last week produced a correspondingly huge surge in U.S. auto sales, and consumers kept scrounging through the weekend for fuel-efficient vehicles to buy under the generous government rebates.
Consequently, sales for all of July for the industry came up only 12 percent short of their level a year ago - when $4-a-gallon gasoline also was goosing shopper interest in fuel-efficient vehicles.
Canadian auto-parts supplier Magna International reportedly has increased the amount of
upfront capital it will inject into its offer for General Motors' Opel. No word on whether its competitor RHJ International has countered.
Unnamed government sources have told various news outlets that Magna is now offering 350 million euros ($700 million U.S.) of its own capital immediately and 150 million euros in a convertible bond.
Toyota Motor Corp. held onto the No. 1 position for global auto sales in the first six months
of this year despite being outpaced by General Motors in the second quarter. GM lost its more than seven-decade world reign to Toyota in 2008.
Toyota reported Tuesday it sold 3.56 million vehicles worldwide in the first half that ended June 30; GM sold 3.55 million. In the April-June quarter, GM sold 1.94 million vehicles, due to strong sales in China, compared with Toyota's 1.80 million.
Something strange happened on the way to bankruptcy court Monday morning: General
Motors Co. and private equity firm Platinum Equity LLC lost out on a seemingly done deal to acquire the assets of long-bankrupt auto-industry mega-supplier Delphi Corp.
The Wall Street Journal reported that several investment funds that owned some $3.4 billion in Delphi debt chose to forgive that debt in a bid to retain Delphi's assets rather than see them auctioned to GM in a procedure that largely would have resembled the recent Chapter 11 bankruptcy restructuring GM itself undertook.
With a combined $65 billion invested in the turnarounds of General Motors Co. and the
Chrysler Group LLC, the federal government Monday expressed an optimism for those companies' future that would have made their own executives blush: Ron Bloom, new chief of the Presidential Task Force On Autos, said the feds want to recoup the taxpayer dough as soon as possible after GM's planned initial public offering next year.
Not yet a month emerged from its Chapter 11 bankruptcy, General Motors Co.'s promised
upper-management transformation begins with - not much in the way of transformation.
There's nobody new from outside the company, a few respected old hands are retiring and the five remaining seats on the "new" GM's board of directors have been filled, although not with anybody who would have been out of place on the "old" GM board.
Anyone searching for "mavericks" would instead do better to procure a supply of recycled Sarah Palin campaign posters - the most excitement to be found in the list of new GM executive appointments is the seeming formation of two potentially volatile factions, one charged with sales and the other ostensibly with marketing.
And the most one might say for "diversity" or different thinking from the five new appointees to the GM board is that two of them are women.
General Motors reportedly will name designer Bryan Nesbitt to head its flagship Cadillac
division, the Wall Street Journal
Reports.
Nesbitt started his automotive design career at Chrysler where he soared to fame for his design of the innovative Chrysler PT Cruiser. GM lured him away where he penned the similar Chevrolet HHR.
Nesbitt then headed design operations in Europe, returning to the U.S. to head North American design.
DETROIT --
There were plenty of offsetting numbers in General Motors Corp.'s second-quarter report on global sales, reflecting the heavy transitions GM -- and the broad industry -- is absorbing.
But GM executives say the overall trends appear positive, despite the company's brief bankruptcy and the quarter's 1.94 million sales representing a drop of 15.4 percent from the second quarter last year.
The new General Motors Co. said it has received three final offers for its Opel division in
Germany, without naming the bidders. GM had set aJuly 20 deadline for final bids.
And then comes the tricky part. GM will examine the bids, present them to the various European government entities who are being asked to help finance the deal and, with their counsel, accept one of the bids.
As the Financial Times notes, however, the best deal businesswise for GM may be at odds with the offer that is in the best interest of the governments, mainly the German government.
On the FastLane blog
at General Motors Co.'s Web site, vice chairman Bob Lutz now concedes the company can't make a business case for rebadging the suddenly lamented Pontiac G8 sport sedan, the car that caused a first-week-on-the-job train wreck between Lutz's vision of GM's product-strategy future and that of CEO Fritz Henderson.
Days before and barely hours into his return to GM's salaried-exec payroll, Lutz said GM was going to rebadge the underappreciated, Australia-sourced Pontiac G8 as a Chevrolet, calling it a car "too good to waste."
The pronouncement flew directly against an earlier thumbs-down verdict about the G8 from Henderson, who said he does not favor rebadging and insists every model in GM's line "pay its own rent."
The U.S. House of Representatives approved a plan to restore franchise agreements with dealerships canceled by General Motors and Chrysler during their bankruptcy proceedings.
The automakers as well as President Obama and his task force opposed the provision in a spending bill that is part of the 1020 fiscal year budget beginning Oct. 1 and was passed 219 to 208 Thursday.
One of the bright spots in a bleak inventory of sales numbers for the new General Motors Co. has been the 2010 Camaro. GM executives in recent weeks have pointed to the new-age Camaro as the example of how GM can connect expressive cars with customers willing to pay full price.
Luckily for GM, the car has a receptive audience -- after just three months on the market, the Camaro made a major statement by outselling the Ford Mustang in June -- because the Camaro's launch has been anything but smooth, largely due to quality-control issues.
Canadian auto supplier Magna International and Belgian financial investor RHJ International
SA are have the inside track for the purchase of General Motors' Opel division as the automaker reviews all final bids in Germany early next week.
GM Executive Nick Reilly said in a Bloomberg Television interview from his Shanghai headquarters Friday that that a decision may come next week and Magna and RHJ are "probably the front runners" for Opel.
When General Motors Corp. announced 14 plant closings or standby shutdowns as part of its bankruptcy restructuring, the news hit hard - particularly for the thousands of workers tied to those facilities.
GM, which emerged from bankruptcy last Friday, has acknowledged its manufacturing empire must be smaller, leaner and meaner to match its emaciated market share as well as its profitable rivals' costs. While 14 facilities sounds like a lot, the move may not go far enough for the consolidation required to align production with the demands of a company with only four divisions.
General Motors and Chrysler will be challenged by weak future product plans while Ford
stands to gain market share with a relatively strongfuture product plan, a new report says.
Called Car Wars, the annual competitive analysis is produced by Banc of America Securities-Merrill Lynch and reported on by the Detroit Free Press Thursday, predicts:
- GM's market share losses will be greater than the automaker expects because of its skimpy future product plan;
- Chrysler's weak product pipeline is "an ominous sign"
- Ford's relatively strong future product plan could help it gain market share.
Like Sally Fieldwhen accepting her Best Actress Oscar, consumers seemed to be saying of
their new and redesigned vehicles "You like me ... you really like me."
Indeed, J. D. Power and Associates 2009 APEAL study, released Thursday, consumer satisfaction with their new and redesigned models at a three-year high. Report highlights include:
- Porsche ranked highest among nameplates for a fifth consecutive year; - Volkswagen captured four segment-level awards--more than any other vehicle nameplate in 2009; - new and redesigned models scored higher than last year's new and redesigned models and higher than this year's carryover models. - seven new and redesigned models ranked highest in their respective segments: Dodge Challenger; Ford F-150; Ford Flex; Hyundai Genesis; Nissan Maxima; Volkswagen CC and Volkswagen Tiguan.
Old General Motors, now known as Motors Liquidation Co., has appointed another outside restructuring expert to its board and revealed compensation for its execs in filings with the Securities and Exchange Commission.
The new-old company is headed by Al Koch, as president and CEO, who will be paid $835 an hour. Koch, is vice chairman and managing director of Detroit restructuring firm AlixPartners. He has been joined by James Selzer as vice president and treasurer; he is also a director of AlixPartners. He will receive $555 an hour.
They will be in charge of the sale and liquidation of the old GM's assets, including Pontiac, Hummer, Saab and Saturn.
This week's departure of Steven Rattner fromPresident Obama's automotive task force suggests the panel soon could be dissolved now that General Motors and Chrysler have emerged from bankruptcy.
The possibly imminent dissolution of the task force suggests what its members and President Obama have insisted all along - but have not been believed - that they do not want to run the day-to-day business of GM and Chrysler
Former General Motors Chairman and CEO Rick Wagoner, who got the boot from the Obama
Administration in March, will officially retire in August with a compensation package worth more than $8 million in the first five years, the company said in a report filed with the U.S. Securities and Exchange Commission.
That's substantially less than the $20 million he was entitled to at the end of last year.
Wagoner, who is 56 and spent 32 years at GM, officially retires Aug. 1.
U.S. industrial production is being dragged down by the lowest auto and auto parts
manufacturing in more than a decade, but it could get a boost from vehicle output as plantscrank up production in the coming months.
The government reported Wednesday that U.S. industrial production fell again in
June for the 17th consecutive month to its lowest level since July 1998.
But good news was the drop was smaller than experts had forecasted and it was the smallest decline in more than a year, suggesting manufacturing is stabilizing.
The automotive sector continued to drag down all factory output because of extended General Motors and Chrysler factory shutdowns during their bankruptcies. However, a major bump in vehicle production is expected this quarter.
DETROIT - Larry Burns, General Motors vice president of R&D and strategic planning, plans
to retire from the auto company. His departure is the one of many upcoming retirements and involuntary departures as the new GM sheds a third of itstop executives.
Burns informed GM CEO Fritz Henderson of his decision to retire a month ago, the Detroit Free Press reported Tuesday.
Dubbed GM's "Mr. Environment" in a 2007 profile by The New York Times, Burns was the automaker's most visible spokesman on green issues, long before it was trendy and often when it was at odds with more traditional-minded executives.
Burns is considered a pioneer in the development of hydrogen-powered fuel cells for vehicles. His group oversaw the development of such vehicles as the GM Hy-wire with its by-wire operations and skateboard chassis containing fuel cells a hydrogen tanks; the also hydrogen-powered Chevrolet Sequel; and the recent Segway-based GM P.U.M.A., unveiled at this year's New York auto show.
The ink wasn't yet dry on Bob Lutz's new contract with the newly constituted General Motors Co. to be vice chairman of, ah, just about everything, and Lutz was back to the business of baiting the media and most likely making his peers and superiors (if he has any) slightly crazy.
Exhibit 1: Lutz - whose job GM loosely and rather unnervingly describes as "vice chairman for all creative elements of products and customer relationships" - had Automobile magazine slurping out of his hand when he tossed out the remark that GM isn't going to let the rear-drive G8 sport sedan slip away with Pontiac when the division shuts down at the end of the year. The G8, Automobile breathlessly reported, will "live on" in the Chevrolet division as a new-age Caprice.
"The last time we looked at (the G8), we decided that we would continue to import it as a Chevrolet," Lutz told Automoblile.
The problem: GM CEO Fritz Henderson was widely quoted last month, including here on AutoObserver, as summarizing his product-development preferences by saying, "I'm no fan of rebadging," squarely implying the G8 would not continue under another nameplate after Pontiac's shutdown.
The seesaw saga of auto industry mega-supplier Delphi Corp. is over after coming full circle: General Motors Co. is buying most of the assets of the supplier formed in 1999, ironically, as a way for GM to offload from its balance sheet many very same operations it will once again purchase.
Barely a month ago it was reported GM and a division of the private investment firm Platinum Equity Group would purchase Delphi's assets after Delphi has stumbled in bankruptcy for nearly four years - with Platinum Equity paying more than $3.5 billion to assume much of Delphi's operations and GM taking only strategically vital portions of Delphi.
But it appears the roles have been reversed: GM, just days removed from its own Chapter 11 "quick rinse" bankruptcy and the recipient of an eventual $50 billion or more in government loans, is instead acquiring the lion's share of Delphi - and investing vastly more than Platinum Equity.
DETROIT -- Fritz Henderson, the president and CEO of the new General Motors that emerged from bankruptcy Friday, lists changing the corporate culture as one of his top three priorities, along with focusing on taking care of customers and producing great cars.
To that end, Henderson said in a conference call with reporters that over the next few weeks, new faces will rise to the top at GM.
"You'll see some unusual names in some jobs," he hinted. "Stay tuned."
DETROIT -- The new General Motors will be closer to the customer and will employ high-tech as well as low-tech ways to do so.
Next week, the new GM will launch a "Tell Fritz" Web site that allows consumers and others to send ideas, questions and concerns directly to GM CEO Fritz Henderson.
"I will personally review and respond to some of these every day and will encourage other executives to participate as well," Henderson said at a Friday news conference.
Assembly plants for the new General Motors Co. will start to fire up again next week after the newly reconstituted GM left Chapter 11 bankruptcy today and the company completes its traditional two-week shutdown, said president and CEO Fritz Henderson.
The new GM, after leaving many of its plants and other operations with the cast-off assets of the "old" company, should begin to "run our plants on a stable basis going into the second half of the year," Henderson said in a press conference today to announce GM's emergence from bankruptcy and to detail other organizational changes for the new company.
How the company will be organized is important, but the immediate concern is to sell new vehicles in a U.S. auto market that stubbornly refuses to break a Seasonally Adjusted Annual Rate of sales in excess of 10 million units -- the industry sales volume GM continues to say it needs to at least break even selling vehicles in the U.S.
DETROIT -- The new General Motors, unveiled Friday, will be leaner particularly at its top
levels, which is begging the questions who goes and who stays?
The North American management structure is completely eliminated. So what happens to high-level, high-profile executives like Troy Clarke, who had held the post of North American president, and Mark LeNeve, who headed sales and marketing for North America.
CEO Fritz Henderson reiterated 35 percent of the U.S. management, largely at the highest
levels, will be eliminated. Who goes, who stays and what jobs those who stay will hold will be rolled out by the end of the month.
DETROIT -- The new General Motors that emerged from bankruptcy Friday is planning
an
experiment witheBay foronline car buying.
"We're working on new ways to make car buying more convenient for our customers, including an innovative new partnership with eBay in California to revolutionize how people buy vehicles online," GM CEO Fritz Henderson said at a press conference.
DETROIT -- General Motors' Bob Lutz will stay on with the new version of the automaker as head of not only product development but also GM's brands, marketing, advertising and communications.
Earlier, Lutz, 77, had announced plans to be an advisor through the end of the year when he would retire entirely. He turned over his day-to-day duties as head of global product development to Tom Stephens on April 1.
In his new role, Lutz will report directly to GM CEO Fritz Henderson and will be part of the executive committee. Lutz will work directly with Stephens and Ed Welburn, vice president of design.
DETROIT -- The world was introduced to the "new" General Motors company Friday, one thatis largely owned by U.S. taxpayers and will be focused oncustomers, cars and culture.
"Going forward, the new General Motors is fully committed to listening to customers, responding to consumer and market trends, and empowering the people closest to the customer to make the decisions," GM CEO Fritz Henderson said at a Friday morning press conference.
"Our goal is to build more of the cars, trucks and crossovers that customers want, and to get them to market faster than ever before," Henderson said.
General Motors' retiring Vice Chairman Bob Lutz could be back for an encore performance.
Fox Business is reporting that Lutz will return to GM in a new capacity when it emerges from bankruptcy Friday.
Lutz announced earlier this year that he was stepping down from his day-to-day duties as vice chairman of product development, turning that job over to Tom Stephens on April 1. Lutz was to finish out the year in a senior advisor role until his official retirement at year end.
Still, there had been much hand-wringing about GM without Lutz and who would be the champion for the product. Lutz threw out some tantalizing comments to Detroit's Automotive Press Association in May when he said he would "do something else" and "would not be unemployed."
Lutz is said to be staying on at the new GM indefinitely in a new, yet-to-be-announced operating capacity.
NEW YORK -- A U.S. bankruptcy judge has cleared the way for General Motors to leave Chapter 11 by approving the sale of some of the automaker's assets, including the Buick, Cadillac, Chevrolet and GMC divisions, to a new, largely government-owned company.
Judge Robert Gerber of the U.S. bankruptcy court in New York ordered the approval of asset sale, despite the filing of 11th-hour appeals. GM will close the sale Friday morning and hold a press conference immediately after to provide details.
Judge Robert Gerber wrote in his ruling that allowing the sale was in the public's best interest, by saving jobs and health-care coverage for hundreds of thousands of employees and retirees globally as well as the tax base of communities. "If GM were to have to liquidate, the injury to the public would be staggering," he said.
Former General Motors Chairman Rick Wagoner will find out in days about his exit package,
the Wall Street Journal
reports quoting an unnamed Obama administration official.
Wagoner, who had agreed to work for $1 a year as part of the deal to obtain federal funding for GM, was forced out of his job by President Obama in late March but technically remains a GM employee.
Pay and benefit packages for executives -- including exit packages for the many executives who will leave -- will be revealed as the "new" GM emerges from Chapter 11 bankruptcy, likely on Friday. Wagoner was eligible for about $20 million in compensation accumulated over his 32-year career at GM.
WASHINGTON -- A bill approved by the Appropriations Committee of the U.S. House of Representatives requires General Motors and Chrysler to restore franchise agreements with auto dealerships they terminated as part of their bankruptcy proceedings.
U.S. Rep Steve LaTourette, R-Ohio, who sponsored the bill, said the automakers failed to show cost savings associated with having fewer dealers and called the White House backing the elimination of dealers as "un-American."
The "new" General Motors that emerges from bankruptcy by the end of this week may well
usher in the event with a new logo -- one that is green instead of blue.
People briefed on its plans told the Associated Press that the company is looking into changing the background color of its corporate logo from blue to green in an effort to show consumers that it is leaner and greener, more focused on fuel-efficiency and better able to make quick decisions.
The wire service reported that Ed Welburn, GM's vice president of design, is leading a group that is studying name and logo changes, but no recommendation has been made yet.
General Motors is seriously considering an offer for its Opel unit in Europe from Chinese
automaker Beijing Automotive as talks with Canadian auto supplier Magna International and the German government continue.
BAIC made a non-binding offer for Opel this week that requires less government help, cuts fewer jobs and provides for expansion of Opel in China more than an offer by Canadian auto supplier Magna International.
DETROIT -- A U.S. bankruptcy judgehas approved General Motors' plan to sell its "good" assets to a new company andleave "bad" assets with the old one, paving the way for the automaker to emerge from bankruptcy proceedings.
Late Sunday night, Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved the sale of substantially all of GM's to a new company to be called General Motors Company and to be funded by the U.S. Department of the Treasury.
In his ruling, Gerber wrote the sale is needed to avoid "immediate and irreparable harm" to GM.
The Russian connection is becoming a complicated one for General Motors Corp.
GM, emerging from Chapter 11 bankruptcy in the U.S. while simultaneously working to offload its Adam Opel AG division and operations in Europe, looked to have sealed the Opel deal with a consortium including Canada's Magna International Inc. and Russian automaker GAZ.
But last week, it appeared the presence of GAZ was a fly in the ointment, as GM (and perhaps other interests) reputedly balked at GAZ gaining access to certain GM technologies via the Opel purchase.
It may not come exactly on the Fourth of July, but the Obama administration is directly threatening some of its own fireworks -- the financial kind -- if the ever-quickening pace of General Motors Corp.'s bankruptcy procedure isn't concluded by July 10.
That's barely six weeks since the automaker filed for Chapter 11 bankruptcy protection on June 1.
Automakers expressed more optimism about the U.S. car market despite the fact that overall sales in June fell by 28 percent compared with a year ago, to 859,420 vehicles. That represents only a slight improvement in year-ago comparisons over results for the first five months of this year.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, characterized the month cautiously. "It means, if nothing else, that things are not getting any worse, although things are not getting that much better, either. There was a lot of volatility, but there were signs of life."
Toprak added that June was "probably the best retail-demand month of the year."
General Motors announceda 72-hour sale offering zero-interest financing for72 months on some 2009 and 2010 modelsto get the second half off to a quick start.
In addition, GM is promoting its 74 models eligible for the Cash for Clunkers program to kick in later this month.
NEW YORK -- The cost to wind down the "bad General Motors" after a sale of its good assets
to the U.S. Treasury is rising to more than $1 billion, a company representative testified Tuesday.
Albert Koch, appointed GM's restructuring chief who will head the old, bad GM if a sale is completed, testified in bankruptcy court that a wind-down would cost "slightly in excess of $1.25 billion." The funds, more than the $950 million budgeted, will be used to dispose of assets the "new GM" ditches and to pay some creditor claims.
SANTA MONICA, Calif. -- Automakers spent more in June on incentives than any June on record, Edmunds.com reports.
The average automaker incentive was $2,930 per vehicle sold in June up $489 -- or 20 percent, from a year ago, Edmunds.com estimates. Incentives were down a scant $22, or 0.8 percent, from May.
"June incentives have never been higher, but we anticipate that the tide is about to turn," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "The effects of recent production cuts are starting to be felt, and as supply dwindles, incentives will fall."
Although it has for some time enjoyed a preferred-bidder status to buy Adam Opel AG and the European operations of General Motors Corp., the grip of Canada's Magna International may be slipping.
The Financial Times
reports GM is weighing a restructured offer from Belgian holding company RHJ International after detailed negotiations with Magna and its consortium partners became snarled by new conditions.
The Magna-led consortium includes Russia's second-largest automaker, GAZ, and the FT reports the group's offer to GM includes conditions that allow access to certain GM technologies, some of which GAZ seemingly intends to wield for Opel-based vehicles built in Russia.
The industry remains cautiously optimistic June vehicle sales in the U.S. will hit a seasonally adjusted annualized rate (SAAR) of 10 million units for the first time in 2009, a milestone analysts think may indicate the deep freeze in auto sales is at least beginning to thaw.
Automakers will report June sales on Wednesday, and Ford Motor Co. chief sales analyst George Pipas told reporters the company believes total industry sales will see less than a 30 percent decline (compared with the same period last year) for the first time since early last fall.
Ford is confident enough in an improving outlook that it will slightly increase its production for the third quarter -- the first time it's hiked scheduled production since 2007.
The status of the New United Motor Manufacturing Inc. General Motors Corp.-Toyota Motor Corp. manufacturing joint-venture assembly plant in Fremont, California, is decided:
GM is out.
Speculation about GM's involvement in the NUMMI facility -- opened in 1984 -- began immediately after GM's filing for Chapter 11 bankruptcy reorganization on June 1. The two companies currently make individually badged versions of the Toyota Matrix/Pontiac Vibe at the NUMMI site; Toyota also makes versions of the Tacoma pickup.
GM announced today its ownership in NUMMI will go along with the company's discarded liabilities in the "old" GM it seeks to form as part of its Chapter 11 restructuring.
Hoping to mitigate legal speed bumps that might slow its sprint through Chapter 11 bankruptcy, the "new" General Motors Corp. will take responsibility for product-liability claims, even for vehicles produced and sold by the company prior to bankruptcy.
The Washington Post
reported the new GM will assume responsibility for all future product-liability claims, a point that raised the ire of some consumer groups and state Attorney's General when it became known part of the company's restructuring blueprint included a plan to shield the new company from any exposure to any liability claims on vehicles the company produced up to the point of its bankruptcy. The objectors said the legal maneuver to shield the restructured GM from such liens was improper.
General Motors's Chapter 11 bankruptcy is winding its way toward completion -- perhaps even quicker than the lickety-split Chrysler bankruptcy restructuring. And everybody knows the plan, as it was with Chrysler, is to leverage the now-famous section 363 of the bankruptcy code to create a "good" GM that sallies forth with all of the company's best assets.
In addition to the numerous hard parts -- assembly plants, stamping facilities, powertrain- and other major component-making operations -- the "good" GM will comprise four major marketing divisions: Chevrolet, Cadillac, GMC and Buick.
Chevy need make no excuses: it is the domestic counterpart of Toyota, a sales channel for unapologetically mainstream cars and trucks that remains one of the most effective brands on the planet.
But Buick, Cadillac and GMC? Be careful, "new" GM and Obama Administration Auto Industry Task Force: recent sales and market-share data compiled by Edmunds.com shows these brands may not be the rock-solid foundation for the leaner, meaner GM they've led the company's new taxpayer-owners to believe is coming.
General Motors execs obviously won't admit it, but clearly politics played a part in their decision to build future small cars in Michigan instead of Tennessee.
After all, it was Republican Sen. Bob Corker from Tennessee who was among the harshest critics of GM, Chrysler and Ford when they came to testify before Congress last fall about their financial woes.
Corker insisted they should be allowed to go into bankruptcy. He scolded the automakers for doing a poor job of running their business and howled about union benefits. Their business models were unsustainable, he said.
DETROIT -- General Motors North America President Troy Clarke said the automaker has yet to find a model that is suitable to build at the GM-Toyota joint venture plant in California, New United Motor Manufacturing Inc.
GM will stop making the Pontiac Vibe at NUMMI in August as it winds down the entire Pontiac brand. The Vibe is based on the Toyota Corolla and Toyota Matrix.
"We've just not found a product that suitable for NUMMI," Clarke told reporters Friday in a conference call on GM's small car plans. "They've been great partners...and the dialogue continues."
DETROIT -- General Motors selected the Orion Township, Michigan, assembly plant to build its all-important future small cars that represent "the fastest-growing segments in both the U.S. and around the world," Troy Clarke, GM North America president, said in a media conference call Friday.
Clarke wouldn't flat-out confirm what models will be built at the plant, but it appears the plant's primary product will be derived from the next-generation Chevrolet Aveo (also sold now as the Pontiac G3 and currently built in Korea by GM-Daewoo) with some production of the Chevrolet Cruze also possible at the facility.
Clarke insisted the widely speculated Chevrolet Spark, an A-class size that is smaller than the Aveo and Cruze, will not be made at the plant.
German automaker Volkswagen reportedly is seeking a partnership with or stake in Japan's Suzuki Motor Corp., various global media outlets are reporting.
The buzz is Volkswagen would take a 10 pecent stake in Suzuki, which has seen its stock rise dramatically in recent days on the news.
DETROIT -- General Motors will announce later Friday that its future small car, likely the Chevrolet Spark, will be built at a Michigan plant and not plants in Spring Hill, Tennessee, or Janesville, Wisconsin.
GM President North America Troy Clarke will host a media conference call Friday afternoon to make the official announcement, although word already had leaked out by Thursday's evening news.
The Orion Township, Michigan, plant, located in the Detroit suburbs, assembles the Pontiac G6 sedan, which will be discontinued when the entire Pontiac division is eliminated at year-end. The plant then added production of the popular Chevrolet Malibu, which is also made at a Kansas plant.
General Motors has a tentative deal for Canadian-Austrian auto parts supplier Magna International for GM's German subsidiary, Opel. But, just in case, GM apparently is negotiating backup plans.
GM may sign non-binding agreements with RHJ International, a Belgian industrial company that originally bid for Opel, and Chinese automaker, Beijing Automotive Industry Holding Co., which assembles Jeep and Hyundai vehicles in China, to take on Opel, Bloomberg News reported.
DETROIT - One of the world's largest auto-parts suppliers, Lear Corp., is preparing to file for Chapter 11 bankruptcy as soon as next week, sources have told the Wall Street Journal.
Industry experts have predicted that as automakers bring assembly plants back onstream after summer shutdowns and inventory-adjustment shutdowns, cash-strapped suppliers will not be able to come back onstream.
SANTA MONICA, Calif. - June vehicle sales will hit their highest level of 2009 with a
Seasonally Adjusted Annualized Rate of 10.1 million when manufacturers report them Wednesday, Edmunds.com
forecasts.
"The SAAR is finally back in double-digits," observed Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "We're still a long way from 16 million unit sales, but things are moving in the right direction.
General Motors and Chrysler, which both were in Chapter 11 bankruptcy during the month, are expected to post market share gains in June compared with May, proving yet-again -- contrary to conventional wisdom -- that consumers will, indeed, buy cars from a bankrupt manufacturer, at least in these current tumultuous times.
Honda and Hyundai also are forecasted to show May-to-June market share gains. The gains come at the expense of share declines for Ford, Nissan and Toyota. Despite Ford's dip, the share for Detroit automakers is estimated to come in at 47.0 percent in June, up from 46.6 percent in June 2008 and from 46.5 percent in May.
Vehicles sold by General Motors and Chrysler, both of which filed for Chapter 11 bankruptcy
in recent months, dominated a list of the 15 slowest sellers in May, according to an analysis by Edmunds.com
, parent of AutoObserver.com
.
Of the 15 slowest-selling vehicles, 12 were made by American automakers. GM and Chrysler dominated the list. Ford had one vehicle on the list - the Mustang.
"It's really a reflection of a misstep of the American automakers," Edmunds.com analyst Jessica Caldwell.
Models from Korean brands, Kia and Hyundai, rounded out the list of 15 slow sellers.
During a recent Webcast with reporters, General Motors Corp. CEO Fritz Henderson said that when the Pontiac division turns out the lights at year-end, its critically acclaimed G8 sedan won't be picked up by any of GM's four remaining brands.
The CEO added: "I'm not a fan of rebadging."
If that's one of the reasons the G8 won't be seen wearing another division's crest, then Henderson has long suffered his distaste for rebadging: almost from its origin, GM's modus operandi has been rebadging, probably the most callous examples coming in the 1980s, when precious little in the way of genuine engineering differentiated one brand's vehicle from another.
And rebadging looks to be at least part of the modus operandi of the "new" GM to emerge from Chapter 11 bankruptcy.
DETROIT -- The financial turbulence of the global auto industry has not hurt vehicle quality. Quite the opposite, according to new data released Monday by J.D. Power and Associates.
"Vehicle quality is better than it has ever been," Dave Sargent, J.D. Power's vice president of automotive research, told the Automotive Press Association here as he announced the results of the 2009 Initial Quality Study. The study measures defects reported by buyers in the first 90 days of ownership.
"There's a positive disconnect. There's no correlation between the financial side of the business and the production side," said Sargent. "Despite the turbulence on the business side and concern for the future of their own jobs, the people who design and build vehicles are getting on with their jobs and keeping their eye on the ball. That's remarkable."
DETROIT -- General Motors declared the end of the Pontiac Vibe in August.
GM, as part of its Chapter 11 bankruptcy restructuring, will eliminate the Pontiac division entirely by the end of the year.
However, GM will end the production of the Vibe, which is built at a GM-Toyota joint venture plant known as New United Motor Manufacturing Inc. (NUMMI) in Fremont, California. The Vibe shares its underpinnings with the Toyota Corolla and Toyota Matrix.
GM says it is in "active discussions regarding potential future production at NUMMI." Toyota reportedly has been considering building the Prius hybrid there.
When gasoline prices plunged early this year, sales of hybrid-electric vehicles went South, too.
Quickly.
The timing may be unfortunate, but major hybrid players Toyota Motor Corp. and Honda Motor Co. Ltd. launched new hybrids this spring -- and both seem determined to grub out a larger portion of the yo-yoing hybrid market. That battle, the latest summertime jump for gasoline prices and the U.S. auto market's continuing gyrations are once again cranking up the attention on hybrids.
MONROE, La. -- Mystery solved. Or at least the players behind it.
Mazda Miata designer Tom Matano and Texas billionaire investor T. Boone Pickens are key figures behind acar plant being established in Louisiana to build environmentally friendly vehicles by a start-up company that has never beforebuilt cars.
V-Vehicle Co., of San Diego, is a start-up company being financed by California venture capitalists. Its CEO is Frank Varasano, a former executive vice president of Oracle Corp. who is described as the project's visionary.
Company chairman is Ray Lane of the California venture capital firm Kleiner, Perkins, Caufield & Byers, which has been extensively involved in environmentally friendly projects and companies, including Fisker Automotive. John Doerr, a managing partner with the California venture capital company, is a V-Vehicle board member. Former Vice President Al Gore recently joined the firm. Matano will direct design.
WASHINGTON -- The U.S. Department of Treasury turned down a request by auto suppliers for additional financial aid, saying it believes the supply chain is stable enough without immediate assistance -- and besides it isn't the government's role to interfere in the contraction of the supplier market.
Two trade associations representing suppliers had asked for the government to guarantee between $8 billion to $10 billion in loans so banks will lend to the suppliers. That's in addition to the $5 billion the government provided to suppliers earlier this year. Those funds are administered through automakers.
President Obama's auto task force, however, did say it would step in if the supply chain unravels and vehicle assembly plants are forced to close due to parts shortages.
Eight of 10 U.S. voters want the federal government to sell its stake in General Motors and Chrysler as soon as possible, according to a telephone survey done by Rasmussen Reports.
The federal government owns 60 percent of GM and 8 percent of Chrysler.
In fact, 64 percent of the 1,000 likely voters surveyed over last weekend said they favor a proposal that would force the government to sell their stake in the auto companies within a year. Only about 11 percent of the 1,000 likely voters surveyed over the weekend said they wanted the government to retain ownership.
In a wide-ranging and comparatively wide-open web chat with the automotive media on Tuesday, General Motors Corp. CEO Fritz Henderson confirmed GM has rescinded the decision to close at least a few dealers, is committed to further cutting its executive ranks and believes it will benefit - to a degree - from the still-debated "cash-for-clunkers" legislation.
Henderson took on several questions about the contentious decision to deny franchise renewal to some 1,100 dealers by the end of next year. He said that of the reported excess of 800 dealer requests for review of their franchise termination, GM has relented on 49 and will be done with the review process this week.
After months of shopping it and years of unsuccessfully operating it, General Motors Corp. is selling its Saab Automobiles AB division to a tiny maker of exotic cars that will return Saab to its homeland of Sweden.
GM announced Tuesday it has a memorandum of understanding with Koenigsegg Group AB for the company to purchase Saab with the boost of a $600-million funding commitment from the European Investment Bank that is guaranteed by the Swedish government.
In a statement, GM also said it and Koenigsegg will provide "additional support" to fund Saab operations and program investments.
DETROIT - Ford Motor Co. Chairman Bill Ford Jr., kicking off a National Summit in Detroit this week, called for the U.S. government to establish a national industrial policy aimed at bolstering the nation's competitiveness and to institute a policy that would stabilize "gyrating" gasoline prices.
"The industrial base is eroding and prosperous nations don't let their industries erode," Ford said. "Government, industry and academia all have to be on the same page. Too many times they throw bombs at each other rather than working together."
Baton Rouge, La. -- A company described as a well-financed start-up reportedly is close to
choosing a shuttered north Louisiana site to start a new automobile manufacturing facility -- its first, creating up to 1,500 jobs, two elected officials from the region told the Associated Press.
A formal announcement on the mystery company could come Wednesday from Gov. Bobby Jindal, Rep. Jim Fannin told the wire service.
Fannin said the vehicles would be the company's first, they would be fuel-efficient ones and they will be built at a former Guide Corp. plant.
You knew the lawyers would make out on the General Motors' bankruptcy, and they are.
GM's primary law firm, Weil, Gotshal & Manges LLP, earned $54 million in fees and expenses in the six months leading up to GM's June 1 bankruptcy filing, according to a recent court filing by the law firm and reported on by the Wall Street Journal
. The firm's lawyers are billing GM at a rate of $355 to $950 per hour, the Journal
reported.
And there's more. The paper said much of the $54 million didn't relate strictly to GM's Chapter 11 so more big paydays could be in store for the firm.
In a throwback to a simpler era, the new Ford F-150's drop-down tailgate step has become an entertaining flashpoint in the marketing war between heavyweights in the pickup-truck segment.
In a current TV ad for the Silverado, Chevrolet's celebrity pitchster, Howie Long, tweaks the addition of the "man step" to the F-150 as an embarrassment -- because it only helps make up for the unreasonably long reach required to get over the tailgate to the bed of the F-150.
But Ford executives assert that Chevy's gambit actually highlights an appealing innovation for potential truck buyers -- and makes them more likely to choose an F-150.
"Our steps have done very well, because they're selling at about 30 percent of the mix of our F-150s," said Doug Scott, Ford's truck marketing manager. "So I hope GM keeps running the ad [in which] they're panning it."
Bo Andersson, who resigned last week as General Motors Corp.'s group vice president-global purchasing and supply chain, is taking a position with Russia's second-largest automaker, GAZ.
The company said Andersson, who served as GM's top procurement executive since 2001, will be the chief consultant to the Russain automaker's board of directors. GAZ is one partner in a group led by Canada's Magna International Inc. to take over GM's Adam Opel AG and most of the company's European operations, including the United Kingdom's Vauxhall.
The announcement of Andersson's departure came abruptly last week and it was speculated he could be leaving GM to be part of a new management team for GM's Saab unit, which GM also is in the process of selling and currently is under bankruptcy protection in Sweden. Andersson began his GM career as a Saab executive.
The Detroit News reported GAZ as saying there is the likelihood Andersson also will be elected to the GAZ board of directors when the company meets to elect a new board on June 29.
The political and financial jockeying has started among three General Motors Corp. assembly plants in competition to win the job of building a new generation of compact cars sometime around 2011.
And there is criticism GM -- currently in bankruptcy and earmarked to be more than 60 percent owned by the U.S. government -- is using the promise of the new work to coerce additional tax dollars from the three states hoping to prevail.
The company reportedly has been offered $44 million in long-term tax abatements from the township of Orion, Michigan, site of one of the three competing plants. Countering that are reports GM suggested to Tennessee governor Phil Bredesen the company might choose to build the small cars in the GM plant in Spring Hill -- if the state coughs up $200 million.
The Chrysler Group's bankruptcy is over, General Motors Corp.'s is accelerating like a Corvette and both companies are moving and losing significant personnel in sync.
None of this is unexpected, particularly as Chrysler is sure to be entertaining a certain amount of Fiat S.p.A executive injections now that Fiat is Chrysler's operational owner. And most insiders and industry analysts say GM still has plenty of management dead wood to burn and will see more voluntary separations, too.
GM still dealt a serious surprise when announcing Friday that purchasing chief Bo Andersson is leaving the company. Andersson was generally well-regarded in the supplier community, despite its usually tumultuous relationship with Detroit automakers for the past decade or more. Andersson had a reputation for being demanding and calculating but eminently fair in one of the toughest jobs in Detroit, if not the entire auto industry.
The auto industry is an easy target for comics and this week's acquisition of the Chrysler Group by Fiat and the announcement of General Motors Corp.'s new chairman added new fuel to the comedic pyre.
PLYMOUTH, Mich. -- Through the months of the unfolding General Motors Corp.'s bankruptcy story, one plotline has been clear and unwavering: the Chevrolet brand will be the backbone -- and linchpin -- of GM's attempt to restructure and revitalize with a lot fewer brands and a lot smaller operational footprint.
At an event this week to launch the new 2010 Equinox compact crossover, Chevrolet North America Vice President Ed Peper reiterated GM isn't planning to wear the bankruptcy label for long, and added that Chevrolet is ready to drive GM's recovery. He said Chevrolet is loaded with coming products that should resonate in the new patterns of the U.S. auto market.
General Motors has chosen Swedish luxury sports-carmaker Koenigsegg Automotive AB as the
front-runner to buy its Swedish auto company, Saab, sources have told Bloomberg News
.
Bloomberg's source said Koenigsegg was chosen because it committed to invest in restructuring Saab and because it's a carmaker.
Other bidders included U.S. billionaire Ira Rennert's Renco Group Inc. and Merbanco Inc., a group of investors from Wyoming.
A GM spokesman told the paper the automaker has a "sufficient stock of 2009s" and starting up production in the near future is "possible, but not likely."
DETROIT -- General Motors, which last week filed for Chapter 11 bankruptcy, is extending summer shutdowns at seven plants.
The automaker is adding up to four weeks to temporary shutdowns at plants in: Detroit, Lansing and Orion Township, Mich.; Spring Hill, Tenn.; Shreveport, La.; and Oshawa, Ontario, Canada.
GM said the extended closures are to lower inventories of unsold vehicles.
WASHINGTON -- Right-wing radio hosts says there's only one choice for conservatives angry
about government involvement in the auto industry: Boycott GM.
"Nobody wants to support an Obama company," Rush Limbaugh told his audience, citing a poll showing that 17 percent of Americans backed a boycott of GM, the Detroit News reported.
Limbaugh didn't outright call for a boycott, but said he understood why people would want to avoid GM vehicles. "They don't want to patronize Obama. They don't want to do anything to make Obama's policies work."
Added conservative host Hugh Hewitt online: "Every dollar spent with GM is a dollar spent against free enterprise."
DETROIT -- Edward E. Whitacre, Jr., former chairman and CEO of AT&T Inc., will become chairman of the new General Motors that emerges from bankruptcy later this summer, the automaker announced Tuesday morning.
GM's interim chairman Kent Kresa will continue in his post until the launch of the new GM.
Monday marked another historic day in the General Motors saga.
The automaker, which last Monday filed for Chapter 11 bankruptcy, has been removed from the Dow Jones Industrial Average after more than 80 years as an index component.
GM will be replaced by technology firm Cisco Systems. Banking giant Citigroup also is being dropped, replaced by Insurer Travelers.
DETROIT -- General Motors announced Monday it will stop making the medium-duty
Chevrolet Kodiak and GMC TopKick trucks July 31 as it has found no buyer for the operations.
The trucks are built at a GM plant in Flint, Michigan, which also builds the Chevrolet Silverado and GMC Sierra pickups.
The factory employs about 2,100 people, with most of its production in pickups. Last year it made more than 22,000 medium-duty trucks for GM and Isuzu.
DETROIT -- Roger Penske's dealership group doesn't hold a single Saturn franchise, but now he's offered to buy from General Motors the whole kit and caboodle.
Penske's vision, as he laid it out in an exclusive interview with Edmunds' AutoObserver.com Friday shortly after GM and the Penske Group announced they had made a deal for Saturn, is twofold: to sell GM-made models in Saturn showrooms while shopping the globe for other vehicles to sell, eventually convincing the offshore manufacturers of those vehicles to make them in the United States.
DETROIT -- General Motors confirmed Friday morning that it has a deal to sell its Saturn brand to the Penske Automotive Group. If completed, the deal would save more than 350 dealerships and 13,000 jobs at Saturn and its retailers in the United States, and would preserve the customer-focused Saturn brand, GM said in a statement.
At the same time, GM's agreement to sell Hummer to a Chinese company is hitting a roadblock with China's government, and Magna's proposed partnership with Opel looks to be floundering.
WASHINGTON -- General Motors CEO Fritz Henderson and Chrysler President Jim Press found themselves on the hot seat yet again in Congress Wednesday as they testified that it is essential to cut thousands of dealers in order to survive.
And once again, much as Detroit Three executives were at last fall's hearings for federal loans, the executives were grilled and skewered by members of Congress. Dealers being put out of business and dealer association executives chimed in as well.
Barely 48 hours into its new era as a bankrupt company, General Motorsexecutives hustled to backtrack on a provocative statement from its chief financial officer that also was tinged with an arrogance that could damage the company's need to appear contrite before customers and politicians.
GM CFO Ray Young told the media that thanks to its now-bankrupt status, GM technically is a private company -- and as such is not obligated to make available the same depth of corporate financial information as are public corporations.
General Motors Corp. confirmed yesterday it has a memorandum of understanding to sell its Hummer brand and assets to China's Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd a privately held company that makes heavy-duty industrial equipment.
In a statement, GM said Tengzhong intends to retain Hummer's current production capabilities (a GM assembly plant in Shreveport, Louisiana, that also builds GM's midsize pickup trucks -- the Chevrolet Colorado and GMC Canyon) and management team. GM said the deal could save 3,000 U.S. jobs.
Following nearly four years of wallowing in Chapter 11 bankruptcy protection, automotive super-supplier Delphi Corp. now has a substantive plan to emerge - curiously enough, just as its "inventor" and largest and closest customer, General Motors Corp., begins its own bankruptcy proceedings.
Delphi says it will sell most of its assets to private-equity firm Platinum Equity LLC, with a GM "affiliate" purchasing some of Delphi's parts-making operations, according to a report in the Wall Street Journal.
DETROIT - It's far too premature to break out the champagne and even too early to finally call the absolute bottom of one of the worst auto sales slumps in decades. But May sales reports from auto manufacturers in the U.S. hinted the worst just may be over.
"We saw glimmers of hope in May sales reports," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com.
General Motorsmay stop building cars at a factory it owns with Toyota in California, known as NUMMI, following
the Detroit-based carmaker's bankruptcy filing Monday, Bloomberg News
reports.
The only GM product the plant builds is the Toyota Corolla/Matrix-based Pontiac Vibe, which will be eliminated as the automaker closes down the Pontiac brand.
The plant also builds the Toyota Corolla and Toyota Tacoma.
DETROIT -- General Motors announced it has signed an agreement to sell Hummer, though it hasn't yet revealed who the buyer is or how much GM will receive for the SUV company.
GM said it expects to close the deal by the end of September, pending various approvals. The sale of Hummer will save 3,000 U.S. jobs in manufacturing, engineering and at Hummer dealerships, GM said.
The arrangement includes the new buyer contracting vehicle manufacturing and business services during the transition. GM's Shreveport, Louisiana, plant continues to contract assemble the H3 and H3T through at least 2010.
DETROIT -- President Obama, in a White House press conference Monday, said General Motors' filing for Chapter 11 bankruptcy "marks the end of an old GM and the beginning of a new GM."
The president, recalling the famous quote of former GM CEO and U.S. Defense Secretary Charlie Wilson in the 1950s, that "we'll be able to say again what's good for General Motors is good for America."
And in a statement less than an hour later, GM president and CEO Fritz Henderson called the action a "defining moment in the history of GM."
GM, which only last year celebrated its centennial, made history Monday by filing Chapter 11 bankruptcy protection from its creditors in the Southern District of New York in Manhattan. Henderson said the company expects the bankruptcy to be complete in 60 to 90 days.
DETROIT -- While General Motors filed bankruptcy on Monday, so, too, did its Saturn Corp., in a move that seems to set up Saturn for a buyer and, perhaps, to first cull its dealership network.
Meantime, Saturn lost a case brought by one of its once most supportive dealers in New Jersey courts last week.
DETROIT -- General Motors will close or idle 14 manufacturing plants and three service and parts operations as part of its bankruptcy filing.
That brings GM's U.S. assembly, powertrain and stamping facilities from 47 in 2008 to 34 by year-end 2010 and 33 by 2012. GM will reopen an unnamed, now-idled, now-closed plant to build future small cars.
DETROIT -- Once the largest and one of the mightiest corporations on the planet, General Motors, which only last year celebrated its centennial,makes history Monday, June 1, as it files for bankruptcy.
The automaker is asking the Southern District of New York court to grant it protection from creditors under Chapter 11 of the U.S. bankruptcy court early, to approve the transfer of most of its global assets to a new GM entity and to allow GM's operations to continue operating uninterrupted during the process.
"Today marks a defining moment in the reinvention of GM as a leaner, more customer-focused, and more cost-competitive company that, above all, can quickly generate winning bottom line results," GM President and CEO Fritz Henderson, who will hold a press briefing later Monday, said in a statement.
The timing of the announcement is curious, but General Motors Corp. said Friday it will build unnamed, next-generation small cars in the U.S. using a currently idled assembly plant and stamping facility and United Auto Workers union labor.
The small car GM plans to build on U.S. soil likely will be based on the Chevrolet Beat concept introduced at the 2007 New York Auto Show and paraded around other shows as well as Washington, D.C., events as GM's small, fuel-efficient car of the future.
Various press reports on Friday indicate Canada's Magna International had reached a tentative agreement for ownership of General Motors Corp.'s Adam Opel AG automaking unit and most of GM's European operations, including Britain's Vauxhall.
The move would fulfill a long-held ambition forMagna, known mostly as an auto-industry supplier, to evolve into an automaker, although the company's European unit, Magna Steyr, has a strong background of low-volume and niche-volume vehicle production for a variety of automakers, including Mercedes-Benz, BMW and Chrysler.
SANTA MONICA, Calif. -- May car sales, due to be reported by auto manufacturer Tuesday, remain off by double-digits from last year, but the sales increase from April to May is in line with typical April-May seasonal bumps and the drop from a year ago is largely due to lower fleet sales, according to Edmunds.com's forecast.
For May, manufacturers are expected to report new vehicle sales -- retail and fleet -- of 890,000 units, a 36.1 percent decrease from the 1.4 million sold in May 2008 but an 8.9 percent increase from the 817,000 sold in April. A typical seasonal increase between April and May is a 9 percent rise. When adjusted for this difference in the number of selling days in May versus a year ago, sales decreased 33.6 percent.
That would put the Seasonally Adjusted Annualized Rate at about 9.5 million vehicles, up from 9.3 million in April.
DETROIT -- General Motors' Bob Lutz predicts the "new" GM will be "smaller and leaner but a powerhouse" that is very profitable after the "cleansing fire" ofthe radical restructuring the automaker is undergoing.
Lutz would not confirm to reporters at an Automotive Press Association luncheon in Detroit Thursday if, indeed, a Chapter 11 bankruptcy filing is inevitable. Speculation is that GM will file for bankruptcy Monday and transfer its good assets to a newly created company.
Lutz did say if GM files for bankruptcy, it would be a quick one. "We intend to get in and out very soon," he said. "The U.S. government wants its money back, and our plan is to pay it back as quickly as possible. The U.S. government doesn't want to own auto companies."
DETROIT -- A committee of General Motors' bondholders, after soundly rejecting an earlier debt-for-equity swap by the automaker, has accepted a sweetened deal backed by the U.S. government that paves the way for a quick pre-packaged bankruptcy a la Chrysler's, CNBC reported.
GM, in a statement issued Thursday morning, said the U.S. Treasury had proposed incentives for GM's unsecured bondholders that would allow GM to pursue a pre-packaged bankruptcy under section 363 of the U.S. bankruptcy code.
"Implementation of this proposal would result in a new GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success," the automaker said.
Ford is on pace to overtake General Motors this year as the top North American producer of
vehicles, according to a forecast by IHS Global Insight.
Ford, which has been No. 2 for decades, gets a boost from GM idling its plants in the next couple of months to produce an estimated 1.7 million vehicles in North America this year.
Mark McNabb, who has done stints with Nissan and General Motors, will take over as president and CEO of Maserati North America
on June 1.
McNabb announced he was leaving GM only weeks ago. During his short stint at the Detroit automaker, McNabb was vice president for GM's premium brands, which include Cadillac, Hummer and Saab. Before joining GM, he held senior positions with Nissan.
BERLIN -- The German government is pressing the bidders for Opel to add last-minute
sweeteners to their offers before officials select the preferred partner for General Motors' German subsidiary.
German Chancellor Angela Merkel's administration has been considering offers from Italy's Fiat, Canadian auto parts supplier Magna International and Belgium-based industrial holding RHJ International.
Chrysler is close to emerging from bankruptcy, well ahead of the 30 to 60 days the U.S.
government had promised when it entered April 30.
Chrysler was widely seen as the trial run for the even bigger and more complex Chapter 11 bankruptcy filing by General Motors, likely to come within days, if not hours.
A major step forward toward the end of Chrysler's bankruptcy comes Wednesday when federal bankruptcy Judge Arthur Gonzalez in New York considers a motion to sell most of Chrysler's assets to a new Chrysler under the control of Italy's Fiat.
The judge's expected approval would result in one of the biggest and fastest bankruptcy proceedings of its kind. Of course, Chrysler's bankruptcy -- as would be GM's -- would be unprecedented because of the intense involvement of the U.S. government, which has been criticized by business and some bankruptcy experts.
DETROIT -- About the only question regarding a General Motors Chapter 11 bankruptcy filing that remains is what day it'll be filed.
GM announced Wednesday morning that bondholders, who had until midnight, to trade $27.2 billion in debt for a 10 percent stake in the restructured GM, had rejected the automaker's offer. GM confirmed that the number of bondholders who agreed to the deal "was substantially less" than the amount required by the U.S. Department of Treasury.
Beijing Automotive Industry Corp. has submitted an offer to buy Germany's Opel, on the eve
of the German government announcing which bid it prefers for the General Motors subsidiary, Reuters
reported.
Meantime, German officials are pressing the three other Opel suitors to improve their current offers. The three are Italy's Fiat, Canadian auto supplier Magna International with its backing of Russian investors, and Belgium-based RHJ International.
The U.S. government -- or rather U.S. taxpayers -- will hold a majority share in the new General Motors after it emerges from Chapter 11 bankruptcy, which it is expected to file at any moment.
The U.S. Treasury Department will receive about 70 percent of the new GM in exchange for $50 billion in financing for its restructuring, unnamed sources told The New York Times.
General Motors has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy by the end of this month, Reuters reports.
GM failed to gain anywhere near the 90 percent of bondholder support needed, sources told the newswire Tuesday. Bondholders have until midnight to make their final decision on the tender. As of midday Tuesday, the company had only "low-single-digit" interest from bondholders, one source said.
Reuters' sources said GM will likely file for bankruptcy some time after midnight Tuesday, but before June 1.
GM's bondholders are balking at the automaker's offer to reduce its $27 billion debt in exchange for a 10-percent stake in the restructured company, a stake smaller than that being given to the United Auto Workers union.
Indeed, the UAW told its representatives gathering in Detroit Tuesday that the union, through its retired employee health-care fund, would own 17.5 percent of GM. The union would receive the company stake in lieu of the full $20 billion GM owes the fund, though GM would still make some cash payments.
General Motors could file for bankruptcy as early as this week even while it faces significant decisions by its unions, its bondholders and the German government involving its restructuring.
GM has until June 1 to reach concessions with its stakeholders and rid itself of some assets, under its agreement with the U.S. Treasury Department as part of its loan package.
With a barely noticed new "draw" of $4 billion from the U.S. Treasury Departmentlate last week, General Motors Corp. is sputtering its way to a long-expected bankruptcy announcement that some insiders speculate could come as early as Wednesday.
Last week's cash infusion to GM brought the total government investment in the company to $21.6 billion by June 1, The New York Times reported. In addition, GM has said in Security and Exchange Commission filings that it will need more than $7.5 billion after June 1 to continue operations.
Evidently seeking to up the ante in its gambit to take over General Motors Corp.'s Adam Opel AG, Fiat S.p.A. Chief Executive Sergio Marchionne said over the weekend that job losses from the takeover would be far fewer than press accounts have speculated, reported the Associated Press.
Marchionne told the AP that Fiat's plan for restructuring Opel and integrating it and most of GM's European operations into a mega-automaker consisting of Fiat, Opel and Chrysler (the assets of which Fiat expects to acquire through Chrysler's Chapter 11 bankruptcy) would mean less than 10,000 job losses in Europe - not the 18,000 some reports have suggested.
The United Auto Workers Union (UAW), under pressure to make concessions to General Motors Corp. as the company approaches a June 1 restructuring deadline, said today it will propose to its rank-and-file members key givebacks to help GM's long-term future, according to a report in the Wall Street Journal.
The union reportedly has agreed to allow GM to fund its remaining $20 billion obligation to a retiree health care plan with about $10 billion in cash and a 39 percent stake in the company -- whatever "company" may mean after June 1, when many industry experts and financial-community analysts expect GM still will declare Chapter 11 bankruptcy, despite the proposed concessions from the UAW.
General Motors confirmed that three bidders made the Wednesday deadline for formal offers
for a stake in the automaker's European operations, which include Germany's Opel and the U.K.'s Vauxhall.
The bidders are Canadian parts supplier Magna International, Italy's Fiat and the Brussels-based RHJ International, a car parts holding company formed by the founder of private equity firm Ripplewood Holdings. A fourth bidder is possible though no details have been released. Bidders have been asked to come up with about $890 million.
Saab Automobile confirmed it is in talks with three potential buyers, but did not identify them. The automaker has asked the Swedish court overseeing its restructuring for more time to conclude a deal with a buyer. The original reconstruction process was scheduled to end Wednesday.
Although General Motors Corp. has not made public the names and locations of the more than 1,100 dealers with whom the company plans to part ways by 2010, the Huffington Post is running an ongoing list of dealers known to have received the dreaded FedEX package notifying of GM's intent to not renew the dealer's franchise.
DETROIT -- General Motors notified 1,100 dealers Friday that their franchise agreements would not be renewed when they expire in October 2010, and GM will help them wind down in an orderly way.
GM, which has not filed bankruptcy but likely will, is taking a different route than Chrysler, which is now in bankruptcy. Chrysler immediately terminated 789 dealers on Thursday. Unless they pursue legal action, those Chrysler dealers will go out of business quickly and with no financial support from the automaker.
GM has chosen to wind down the 1,100 dealers over the next 18 months with its financial support. In addition to the 1,110 dealers, who were not revealed, the future of 500 Hummer, Saturn and Saab dealers has yet to be determined as well.
Some General Motors dealers, believed to be more than 1,000, are receiving letters from the
automaker Friday that tell them they are underperforming and their franchise agreements will not be renewed when they expire in October 2010.
GM will not release a list of those dealers, as Chrysler had to Thursday in its Chapter 11 bankruptcy filings.
Mark LaNeve, GM North America vice president of Vehicle Sales, Service and Marketing, will provide more details in a noon conference call with the media.
With investors nervously interpreting the General Motors Corp. tea leaves, GM's stock price plunged to $1 on Wednesday - leaving for Americans the choice between a value-menu order of French fries or a share of GM stock.
After the dip, GM's share price bounced back some 25 percent or better by midday, but the price range nonetheless reflected levels GM common shares hadn't visited since the 1930s.
GM's stock price has been steadily declining in the past months - and since the bankruptcy of Chrysler LLC on May 1 - as media reports and industry-analyst talk underscore an increasing certainty that GM, too, will have to make a trip to bankruptcy court when the company's June 1 restructuring deadline given by the Obama Administration arrives.
The rumors started not long after General Motors Corp. accepted its first loan under the U.S. Treasury Dept.'s Troubled Asset Relief Program late last year: GM was looking to leave its global headquarters in what is downtown Detroit's most prestigious and recognizable building, the Renaissance Center.
This week, the Detroit News
reports the nearby suburb of Warren, Michigan -- longtime home to GM's rambling Technical Center -- is actively encouraging GM to cut loose of the expensive "RenCen" HQ and relocate to Warren. One major carrot: Warren has no city income tax; workers currently located at GM's RenCen headquarters pay a 1 percent tax to the city of Detroit.
And Warren Mayor Jim Fouts reportedly is dangling tax abatements if GM relocates its HQ to his city. The paper said Warren already has delivered $100 million in tax cuts to GM in recent years.
Fouts was quoted as saying the city's offer could "save" GM.
Anything and everything in General Motors Corp.'s multinational manufacturing empire is under scrutiny as the company approaches a June 1 deadline to present the U.S. Treasury Dept. with a new restructuring plan, but GM CEO Fritz Henderson today issued reassurance the high-performance (but not entirely politically correct) Corvette is going to be a part of the "new" GM's future.
Rumors and speculation about the Corvette's future in a drastically downsized -- and presumably more environmentally progressive -- GM have circulated for some time, but in a public webchat at GM's FastLane
blog Monday, Henderson said the Corvette is "one of our strongest (if notour strongest
) nameplates in the entire GM lineup. We intend to keep this car fresh and in a segment-leading position."
DETROIT -- With a June 1 government-imposed deadline for a new viability plan looming, General Motors CEO Fritz Henderson said, as he has before, that bankruptcy is more probable than it was.
"Given the objectives set out, it's more probable that we would need to accomplish this in bankruptcy," Henderson said in a conference call to update media on GM's restructuring progress. "The task we have in front of us is large. But there's still an opportunity to do this outside of court."
As if the auto industry needs more to worry about, this week's "stress test" for banks' compliance with new government liquidity regulations puts auto-sector mega-lender GMAC Financial Services in a difficult light.
The Wall Street Journal reports that GMAC needs $11.5 billion in capital and "makes outright government control of the auto-finance company look increasingly likely," as it is presumed few private investors would step up to take that kind of position in GMAC, which also will assume the in-house financing role for Chrysler vehicles sometime near the middle of this month.
DETROIT -- General Motors stillhopes to accomplish its restructuring outside ofbankruptcy court, but is preparing for bankruptcy nonetheless, most notably by monitoring Chrysler's Chapter 11.
GM's chief financial officer, Ray Young, normally cool, calm and collected, expressed in passionate terms, during his conference call with media and analysts on financial results Thursday, that GM wants to avoid bankruptcy.
"If we go into bankruptcy, it is imperative that we get in and out quickly," Young said, adding the automaker is watching and learning from Chrysler's current Chapter 11 proceedings.
DETROIT -- With a June 1 deadline for a finalized restructuring plan or bankruptcy filing looming, General Motors posted a $6-billion loss in the first quarter of 2009, about double what it lost in the same quarter a year ago but smaller than what analysts had forecasted.
Revenues this year were about half of last year's, reflecting the global economic downturn. GM spent $10.2 billion more than it earned.
"Our first-quarter results underscore the importance of executing GM's revised viability plan, which goes further and faster to lower our breakeven point," GM CEO and President Fritz Henderson said in the company's press statement issued Thursday morning.
Fiat CEO Sergio Marchionne's plan to create a mega-automaker by
combining Fiat's auto operations with Chrysler and General Motors Corp.'s Opel and other European operations may yet face competition from a previously named interested party: Canada's Magna International.
Just-auto.com reported a Russian news source as saying Magna is allying with Russia's Sberbank and GAZ Group to make a controlling-stake bid for Opel, which GM is anxious to offload and Marchionne covets in order to create a new automaker from Fiat, Opel and Chrysler.
DETROIT -- The Penske Automotive Group confirmed it is indeed interested in General Motors'
Saturn brand.
In a statement issued Tuesday morning, Penske Automotive Group, headed by Roger Penske, said "we confirm that we have an interest in looking at future opportunities with the Saturn brand."
The company's statement continued: "Penske Automotive buys and sells dealerships as part of our normal operations; we have experience in the distribution business and are constantly looking for opportunities to grow our business and further diversify our overall operations."
The group, which also has the U.S. distribution rights to Daimler's smart franchise, said it has not made a proposal to GM. "The time frame involved is extremely tight," the company said.
Around mid-February when General Motors placed Saturn on the chopping block, number-crunchers at Edmunds.com
were shocked to discover how badly the brand had eroded -- already more than a year ago.
Edmunds.com figures showed that way back in January 2008, Saturn customers were demonstrating the least loyalty of any in the entire U.S. auto industry: Fewer than 5 percent of those who traded in a Saturn purchased another one.
That paltry showing contrasted with a loyalty factor for all of 2008 of more than 51 percent for Subaru, nearly 49 percent for Hyundai, and more than 47 percent even for Saturn's sibling brand, Chevrolet.
"Saturn's numbers even back then were horrendous," said Jessica Caldwell, industry analyst for Santa Monica, California-based Edmunds. "They had lost their message along the way. Saturn wasn't sporty, wasn't utility-oriented, wasn't even necessarily value-oriented. It had just become a one-off of other GM products."
With Chrysler LLC now in bankruptcy and its assets all but promised to Fiat S.p.A. as part of a months-in-the-making ownership and alliance proposal, Fiat's hyper-acquisitive chief executive Sergio Marchionne already is laying out a plan to take over General Motors Corp.'s foundering European operations.
And yes, Marchionne's already throwing around the "S" words: synergies and savings.
April's auto sales numbers looked pretty much like those from March, and February, and January - abysmal. Industrywide sales plunged by 34 percent last month compared with a year earlier, continuing the first-quarter trend of dreadful comparisons tied to a moribund economy.
But in those April results, carmaker executives and analysts on Friday also thought they saw more than just the latest in a long string of awful comparisons with 2008. Almost to a person, they interpreted April's performance and other economic data as painting at least a near bottom of the dreadful U.S. car market - and as the harbinger of an eventual recovery.
"We won't truly be able to call the bottom until summer when we can look back at three consecutive months of increase in the annualized rate of sales," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "We had expected April would be the start of that. And April's annualized sales rate, while lower than March, still didn't dip to February level."
The dance of the seven veils continues as General Motors recently began offering early, early test drives of its highly anticipated 2011 Chevrolet Volt.
Edmunds'Inside Line Senior Editor Dan Pund was among the early test drivers of the engineering development car, commonly known in the industry as a "mule."
Pund called his test drive more of a progress report than a final assessment and reports its development is coming along nicely. But much more is yet to be known about the Volt, that is supposed to come out near the end of 2010.
DETROIT -- General Motors will eliminate or dispose of the Saturn, Saab and Hummer brands by the end of 2009 and Pontiac by no later than the end of 2010, under the automaker's most recent viability plan unveiled on Monday.
Eliminating the Pontiac division was a tough decision and "an intensely personal one" for many at the auto company because of its heritage, GM CEO Fritz Henderson said in a press conference Monday. "But it is one that needed to be taken."
Under the original plan, GM was to make Pontiac a niche brand as the marque is generally sold alongside Buick and GMC vehicles. "We concluded that we didn't have a strategy that would allow us to win with the Pontiac brand," said Henderson. "We didn't have the resources in the form of product or marketing muscle behind the brand."
He said GM will discontinue production of Pontiac vehicles "no later than 2010."
DETROIT -- General Motors CEO Fritz Henderson, calling this a "defining moment" for the automaker, laid out his "go faster, go deeper" restructuring plan that includes more cuts in jobs, plants, dealers and products, including elimination of the Pontiac brand.
The revised viability plan also includes a debt-for-equity swap for bondholders, the union retiree health-care fund and the U.S. taxpayer.
"We have an opportunity to restructure GM, and we're going to do it once," Henderson said in a press conference Monday morning.
Henderson said GM still prefers to restructure out of court but will do it in bankruptcy court if necessary -- a strong signal to unions, dealers and bondholders that they'd better get on board with the new plan. Henderson said the chances of filing bankruptcy are higher today than they were earlier largely because of the bondholder exchange.
SANTA MONICA, Calif. -- April vehicle sales are looking like they will come in at a Seasonally Adjusted Annualized Rate of 10 million. That's certainly nothing to brag about in normal times and compared with the last decade. Still, April looks to be the best month in several and up from 9.1 million in February.
"The industry is slowly picking up much-needed momentum; a 'cash for clunkers program' could help while an automaker bankruptcy could hurt, depending on how consumer confidence is affected," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
DETROIT -- General Motors CEO Fritz Henderson will host a media briefing at 9 a.m. Monday
to provide an update on the automaker's revised viability plan, the company said Sunday night.
Though GM is not providing detail about what he will say, Henderson is expected to announce more cuts, including the elimination of the Pontiac brand. Other moves could include permanent plant closings and job cuts. Initiatives to reduce the number of dealers and obtain a debt-for-equity swap from bondholders likely will be addressed. And the shakiness of parts supplier Delphi Corp. may be on the agenda as well.
With President Obama's economic advisor saying only that the administration is "hopeful" Chrysler LLC can wrap up a deal with Italy's Fiat S.p.A. by the end of the week in order to stave off a trip to bankruptcy court, key constituencies made gestures over the weekend a willingness to help keep alive the Chrysler-Fiat deal.
Pressured on all fronts to right-size its business in order to stave off a bankruptcy that's likely to happen anyway, General Motors Corp. next week is likely to announce the latest casualty in its crash-dive restructuring: its lost-in-yesteryear Pontiac division.
Edmunds.com's Inside Line
, like AutoObserver
a part of the Edmunds.com organization, reported yesterday that a source at GM indicated the company is likely to announce on Monday that it will fold Pontiac, a name that has been part of the GM empire since 1926.
Citing unnamed sources, Bloomberg today also reported GM will shelve Pontiac, which achieved its true prominence in the 1960s when it introduced the GTO in 1964, a car widely credited with beginning one of Detroit's most beloved marketing and engineering phases -- its muscle-car era.
DETROIT -- The U.S. Treasury Department is preparing a Chapter 11 bankruptcy filing for
Chrysler that could come as soon as next week, The New York Times
is reporting.
The paper, quoting unnamed sources, says the Treasury has an agreement in principle with the United Automobile Workers union, whose members' pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing.
The Times further says Italy's Fiat would complete its alliance with Chrysler while the company is under bankruptcy protection.
DETROIT - General Motors announced late Thursday it is scheduling multiple weeks of down time at 13 assembly plants in North America to reduce dealer inventories of unsold new vehicles, eliminating 190,000 vehicles from the production schedule for the second and early third quarters.
"We are pursuing an aggressive inventory strategy so we can get our dealers and ourselves ready for a clean and quick start to 2010 model year and capitalize on upturn when it occurs," Troy Clarke, GM's North America President, told reporters in a conference call Thursday afternoon.
Clarke said another reason for the production cuts was possible parts shortages caused by "the complicated and difficult negotiations" with auto supplier Delphi Corp., which has been in bankruptcy since October 2005, and "its debtor in possession lenders." He would not elaborate.
General Motorsappears set to shift a majority stake in its German unit
Opel,possiblytoItaly's Fiat, though GM is in talks with other potential investors as well, according toEuropean media reports Thursday morning.
GM also is talking to other parties, including Magna Steyr, the Austrian unit of Canadian auto supplier Magna International, reports say.
GM could sign a letter of intent with one of them as early as Tuesday.
DETROIT - General Motors plans to extend its usual summer shutdown from two weeks to as much as two months for many of its North American assembly plants as it attempts to reduce its record-high inventories of unsold vehicles.
GM's inventories, among the highest in the industry, are the highest since Edmunds.com began keeping records. Sales, and in turn revenues, have not picked up as GM had hoped as the slow sales months of the summer approach.
The move clearly is anticipation as well of a possible Chapter 11 filing that, GM has long argued, would shut off the sales tap even further as customers steered clear of a bankrupt company.
DETROIT -- Most members of a panel of electric vehicle and battery experts at the Society of Automotive Engineers World Congress here say President Obama's goal of having 1 million plug-in hybrid-electric vehicles on the road by 2015 is possible -- but will be difficult.
But when asked if automakers or battery suppliers will be able to make a profit on the coming generation of electrified vehicles -- hybrids, plug-in hybrids and extended-range electric vehicles such as General Motors Corp.'s Chevrolet Volt and others -- that need advanced (but more expensive) lithium-ion batteries, the chances are even slimmer.
The Obama administration, as promised, is providing more funds for Chrysler and General
Motors as working capital to keep them afloat as they try to meet the government-imposed deadlines.
Chrysler received about $500 million to get it through the end of April. The Obama administration has set an April 30 deadline for Chrysler to negotiate a final deal with Italy's Fiat in order to be granted $6 billion more in government funds or face bankruptcy. And the government will end its support of Chrysler if it goes into
bankruptcy.
GM is receiving $5 billion through May to help it meet its June 1 deadline to return to the Obama administration with a viable restructuring plan or it faces bankruptcy, during which the government will provide funding.
Hustling to clean up its balance sheet and deal with some atrophied tentacles of its overseas operations prior to a June 1 deadline from the Obama administration, General Motors Corp. could be preparing a deal to offload -- for a paltry sum -- its cash-poor Adam Opel AG European operations, the Financial Times reported today.
The paper says GM wants an investor to pay the equivalent of about $650 million for Opel/Vauxhall. But GM would then invest the money in the new company formed by its European operations, becoming one of, if not the largest, of the new company's shareholders.
Moreover, given the complexity of GM's current financial situation and the compressed time frame for GM to right its ship lest the Obama administration's Automotive Task Force decree GM should be taken through bankruptcy, GM wants this Opel proposal to proceed in a matter of weeks, the Financial Times story said.
DETROIT -- General Motors CEO Fritz Henderson, in a Friday morning conference call, brought the media up to date on the progress of the automaker's latest "go deeper, go faster"plan required by the U.S. government and tried to dispel some reports that have been circulating.
Henderson reiterated bankruptcy still is not GM's preference, but it remains a possibility and is more probable as time marches on. He said GM is planning two tracks -- one for restructuring out of court and another within the bankruptcy court. Should bankruptcy be required, Henderson said, the plan in the works is to do it quickly, something many experts doubt can happen.
On other topics, he said: potential buyers and investors are lined up for a look at Saab, Saturn and Opel; more job cuts are coming; and no other brands, namely Pontiac and GMC, have been targeted for elimination as of now.
DETROIT -- Reports have heated up of late that General Motors will file for Chapter 11
bankruptcy in late spring or early summer, emerging as a smaller but viable company in as little as two weeks or two to four months at most in a so-called "quick rinse" bankruptcy.
Both of these scenarios are exceedingly optimistic, say bankruptcy experts at the Detroit-based law firm of Plunkett Cooney. And done too quickly, a GM bankruptcy may become a 'rinse and repeat' bankruptcy," said Doug Bernstein, head of Plunkett Cooney's Banking, Bankruptcy and Creditors' Rights practice group.
DETROIT - General Motors Corp. reportedly is considering dropping its Pontiac and GMC
brands as part of its massive cost-cutting efforts, unnamed sources told Bloomberg News
.
That comes as no surprise. GM already has said it was paring Pontiac back to a niche brand. GMC long has been questionable since every one of its models is sold under a different GM nameplate, most notably the much larger Chevrolet truck.
Sources told Bloomberg that Chevrolet, Cadillac and Buick are likely safe from cuts, but GMC and Pontiac are being studied for
elimination. Already GM has said Saturn will be phased out by 2011 unless the brand is purchased, and GM supposedly has multiple parties interested in acquiring Saturn. Hummer is gone or sold soon. Saab leaves the GM family by year-end.
Headlines declared the auto industry achieved a showroom mini-victory in March by markedly improving sales over a dismal February. But the improved numbers were something like lipstick on a pig as March's boost nonetheless concealed some ugly realities.
One of the most foreboding trends to continue despite the March uptick: the still-accelerating plunge of the full-size pickup truck market. If segment sales do not stabilize this year, revenue-ravaged automakers may have to take drastic measures.
DETROIT -- An investor group that includes a number of Saturn dealers said it has
approachedGeneral Motorsto acquire and operate the principal assets of Saturn, the Wall Street Journal
reports.
The investors say Saturn would benefit as an independent entity. If successful, the new company would outsource Saturn production, initially to GM, and eventually sell "smaller, fuel-efficient vehicles" from a range of companies.
GM said in its February 17 viability plan submitted to the federal government that it would phase out Saturn by 2011, when most of its models reach the end of their life cycle, unless a new arrangement could be made.
SANTA MONICA, Calif. -- Inside Line, Edmunds.com's online car magazine and sister site
of AutoObserver.com
, announced Wednesday that the 2010 Chevrolet Camaro SS took first place in its latest comparison test of iconic muscle cars.
"Car enthusiasts can rejoice that all three of these legendary pony cars have made a comeback," says Jay Kavanagh, Edmunds' Inside Line Engineering Editor. "But the 2010 Chevrolet Camaro SS leads the pack with its combination of power, speed and attitude."
Just what General Motors needs right now -- a massive recall -- as it struggles to convince wary American consumers that it builds quality vehicles and it will survive its current financial crisis.
But that's what GM has. The automaker is recalling 1.5 million vehicles because of potential engine fires.
In global news, the auto industry criticized Prime Minister Gordon Brown's subsidy for electric cars, Nissan and Renault announced plans to supply China with electric cars by 2011; U.S.-based Tesla is expanding to Europe; and vehicle sales in Australia tumbled in the first quarter.
Saturn dealerships are closing at a steady rate despite pleas from General Motors
executives to hold on, trade journal Automotive News
reports.
On January 1, Saturn had 420 stores in the United States. That dropped to 405 on February 15 and 384 on April 6. Last week, three dealerships in the Kansas City area and one in Springfield, Missouri, closed.
Saturn and its dealers are looking for an alternative ownership situation, one that may allow for the distribution of non-Saturn and non-GM products, including those from emerging markets like China and India.
NEW YORK -- Yet another newspaper report claims General Motors is preparing to file for
bankruptcy at the urging of the Obama administration.
This time, it is The New York Times reporting in Sunday's edition that the U.S. Treasury Department is directing the automaker to lay the groundwork for a bankruptcy filing by June 1.
Citing unnamed sources supposedly briefed on the GM's plans, the Times reports the goal is to prepare for a fast "surgical" bankruptcy if the automaker can't reach agreement with bondholders and the United Automobile Workers union for a debt-for-equity swap.
LONDON -- It's not all doom and gloom if General Motors and Chrysler go bankrupt, a new report says. In fact, some automakers will benefit from their bankruptcy.
GM and Chrysler competitors could gain pre-tax profit of more than $24 billion if the companies are forced to dramatically downsize after some kind of bankruptcy, says a report from Bernstein Research in London and reported on by the Detroit News.
In the U.S., Ford would benefit most with GM and Chrysler customers deflecting to its brand. Ford would be followed by the Japanese automakers and Germany's Volkswagen.
DETROIT -- The ouster of General Motors CEO Rick Wagoner grabbed all of the headlines at the start of this month, but, at the same time, another changing of the guard was taking place quietly inside the auto company.
GM career engineer Thomas G. Stephens took over April 1 for the industry's most consistently anointed "car guy," Bob Lutz, who stepped down from daily responsibilities and will remain a GM advisor until his official retirement at year-end.
Stephens is an executive with no paltry credentials -- and plenty of his own car-guy chops.
WASHINGTON -- Sen. Bob Corker, the "let the Big Three go bankrupt" Republican from
Tennessee, is now whistling a different tune since General Motors' potential bankruptcy could hit his state.
Corker, according to the Detroit Free Press, has been arguing in news releases, interviews and columns in Tennessee newspapers that GM should not close its assembly plant in Spring Hill, Tennessee, plant -- the one built in the 1980s to build Saturns and that now builds the Chevrolet Traverse. The plant now employs 3,000 voters --- er -- people.
WASHINGTON -- As President Obama promised a week ago, his administration is advancing plans for the purchase of new government fleet cars to spur U.S. vehicle sales and improve the fuel-efficiency of government-owned cars.
The government's order is for 17,600 fuel-efficient vehicles from General Motors, Ford and Chrysler by June 1. The total tab comes to $285 million, which will be drawn from the $787 billion economic stimulus package.
In the first quarter this year, 271 auto dealers in the U.S. went out of business, according to
the National Automobile Dealers Association.
NADA reports at the end of the first quarter, the U.S. had 19,738 auto dealers, down from 20,009 year-end 2008.
The trade group predicts about 1,200 dealers, mostly representing General Motors, Chrysler and Ford brands, to go out of business this year, about 20 percent more than last year.
Europe is now experiencing the same counterintuitive phenomenon that was recently noted in the States: that some new cars are selling for less than their used counterparts.
The Financial Times in London points out in a story published Thursday that aggressive discounts on new vehicles and a shortage of high-quality, late-model used cars that has pushed up used car prices is resulting in new cars selling for less than used cars.
Earlier this month, an analysis by Edmunds.com, parent of AutoObserver.com, showed the same situation in the U.S.
The U.S. Treasury Department will start releasing $5 billion in government funds to auto suppliers next week. The Supplier Support Program will funnel the money through General Motors and Chrysler, which have loans from the government, to their shakiest and most vital suppliers.
Chrysler plans to use $1.5 billion; GM expects to use $2 billion. The remaining $1.5 billion would be available at the request of GM or Chrysler.
Ford has declined to participate as it has with government loans for itself. Instead, Ford is lending money to its suppliers.
SANTA MONICA, Calif. -- Ford's choice and ability to avoid taking loans from U.S.
governmentis paying dividends inincreased shopping by consumers.
An analysis of shopping on its Web site by Edmunds.com, parent of AutoObserver.com, shows the number of visitors who shopped for Ford vehicles in the first three months of this year rose 12 percent compared with the same period a year ago.
At the same time, the number of shoppers considering vehicles from General Motors and Chrysler, both of which have taken loans from the U.S. government, declined 19 percent and 15 percent respectively during the same period.
A team from the U.S. Treasury Department is in Detroit this week and next helping General
Motor devise a plan to save the company froma potential June 1 bankruptcy.
The Treasury Department's Harry J. Wilson, a former partner in Silver Point Capital LP, and about 14 other people including advisers from Boston Consulting Group and Rothschild Group are part of the group, Josh Earnest, a White House deputy press secretary, told Bloomberg News. Earnest added that the team will work to speed existing cuts and identify new savings.
Three bidders with offers from $100 million to $200 million are interested in General Motors' Hummer brand, media outlets are reporting.
None are automakers, one is from the U.S. and two are from overseas, Reuters reported Thursday.
In addition to paying GM cash, the buyer would assume GM's liabilities for its 125 Hummer dealers in the U.S. and commit further investment to engineering, marketing and sales, Reuters reported.
Abu Dhabi's royal family might invest in General Motors' German subsidiary Opel, press
reports saidMonday.
Family member Sheikh Hamdan reportedly had a meeting with German regional premier Juergen Ruettgers of the state of North Rhine-Westphalia, home to an Opel plant. Hamdan was quoted by Westdeutsche Allgemeine Zeitung newspaper as saying the meeting was "very positive."
Agence France-Presse quoted Hamdan saying "no decision has been taken yet."
Swedish automaker Saab told a court in its homeland Monday that it has 20 "active" suitors
and expects to be sold by the end of June. The automaker hasn't named those potential buyers. However, some indications are that Chinese and Swedish suitors are among them.
A Swedish court granted Saab an extension of the period it is protected from creditors to give it more time to restructure and find a buyer. Guy Lofalk, the lawyer in charge of Saab's restructuring, said the sale of Saab is a "crucial prerequisite for a successful reconstruction."
What do college basketball and troubled U.S. automakers have in common?
Plenty this year. The NCAA championship is taking place in Detroitand the "blue-collar" hometown team, Michigan State University, is in the final Monday night, to the surprise of many and the upset ofthose playing the brackets.
Indeed, as Wall Street Journalcolumnist Austin Kelley noted in Monday's edition, sports fans who wanted to forget General Motors' troubles and divert attention to college basketball were out of luck this weekend. "The specter of the ailing automaker was everywhere," he wrote.
President Obama sent a message this weekend to auto workers and residents of
auto towns that the U.S. "cannot let our auto industry vanish."
President Obama, in a column under his byline that appeared in select Midwest newspapers, said the reason the U.S. government is supporting General Motors and Chrysler with loans is because the auto industry "is an emblem of America" that helped build and sustain the middle class."
Obama acknowledged auto workers and auto towns had been through much pain and indicated they needed to brace for even more.
In both interviews, Henderson insisted the automaker still prefers to avoid bankruptcy court to accomplish its restructuring, "but if it's required, that's what we'll do."
Henderson reiterated on Meet the Press what he'd told the media in his first press conference last Tuesday that GM needs to "go deeper and we need to go faster" in its restructuring. "We either accomplish this job outside of bankruptcy in the short term, or alternatively, if it's necessary, we'll go into bankruptcy in order to get this job done," he said."
A late-month uptick caused March car and truck sales to surpass forecasters' expectations, providing a glimmer of hope to the U.S. auto industry that the long and ugly drought is nearing an end.
"We started to see some signs of life in the March numbers," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com. His remark echoed similar comments made by auto company executives and analysts as they delivered their March sales results Wednesday.
Particularly encouraging to everyone was the rise in the annualized rate and the above-average hike in sales from February to March.
SANTA MONICA, Calif. -- Automaker incentives set a new all-time high in March, even though it appears they didn't helpsales much, according to Edmunds.com
.
The average automotive manufacturer incentive was $3,169 per vehicle sold in March, the highest industry average on record.
"Automakers are pulling every lever in their effort to attract buyers, as evidenced by the new programs from Ford and General Motors," stated Jesse Toprak, Edmunds' executive director of Industry Analysis. "The typical incentive programs simply do not resonate in today's economy."
DETROIT -- General Motors' newly appointed CEO Fritz Henderson said a decision on the future of Hummer is close.
Henderson said as his first press conference as CEO Tuesday that he had originally set a March 31 deadline to decide whether to sell or eliminate the Hummer brand. However, he said GM remains in talks with "several interested parties -- not just one" on the possible purchase of Hummer.
"We don't have a decision today but within weeks or days -- not months -- we'll be making a judgment on a sale or not," Henderson said.
DETROIT -- Frederick "Fritz" Henderson, the newly appointed CEO of General Motors, said in his first press conference Tuesday that the automaker understands what the U.S. government wants from GM and promises to get the job done.
"We will get the job done," Henderson told reporters emphatically with confidence and calm. "We'll do it in court or we'll do it outside of court. But we will get the job done."
DETROIT -- General Motors Tuesday announced a comprehensive package of customer
incentives andprotectionit callsGM Total Confidence.
The elements of GM Total Confidence, which are in addition to zero- or low-interest financing incentives, cash rebates and customer loyalty promotions, include:
- car payment protection for the first 24 months of ownership so that if the buyer loses income, GM makes nine payments of up to $500 per month;
- a protection plan that ensures the value of a buyer's trade-in;
- OnStar's safety and security plan for a year as standard fare;
- fully backed, 5-year/100,000-mile limited powertrain warranty with roadside assistance and courtesy transportation.
DETROIT -- General Motors has always reserved its top spot for executives with strong financial backgrounds. So from that perspective,Fritz Henderson, previously GM president and chief operating officer, is a natural to take over for just-departing CEO Rick Wagoner, who also rose through the company's treasurer's office.
But the highly regarded Henderson faces at least two big problems if he hopes to extend his "interim" as GM's new CEO into a permanent gig.
DETROIT -- Rick Wagoner finally ran out of tomorrows. The man who had survived at the helm of General Motors as it suffered unprecedented financial losses and a freefall in market share ultimately couldn't shake an even more procrustean force -- the vagaries of a U.S.-government bailout.
The 56-year-old former wunderkind beancounter resigned at the suggestion of the Obama administration as the new federal auto task force deals with the very latest of the recent disappointments overseen by Wagoner: GM's inability to coax and cajole unions, bondholders and other constituencies into agreeing to a sweeping new viability plan for the automaker. The government will have to extend GM's taxpayer-funded lifeline and try to wrap up a restructuring under a new CEO.
General MotorsCEO Rick Wagoner has been asked to resign as a condition of extending addition federal aid to the auto company he's run for nine years.
"On Friday I was in Washington for a meeting with [Obama] administration officials. In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have," Wagoner said in a statement early this morning.
The prospect of Wagner's leaving or being forced to resign first emerged last fall when the Detroit Three automakers initially reported to Congress about their deteriorating businesses and GM and Chrysler LLC proceeded to accept federal "bailout" loans from the U.S. Department of Treasury's now-infamous Troubled Assets Relief Program (TARP).
DETROIT -- President Barack Obama, scheduled to take to the airwaves later this morning to discuss the plight of General Motors and Chrysler, gave the two automakers failing grades on their current viability plans and has given them more time to revamp them.
The viability plans submitted to the U.S. Treasury Department on February 17 "did not establish a credible path to viability," President Obama's automotive task force determined, and "are not sufficient to justify a substantial new investment of taxpayer resources."
The Obama administration will provide "adequate" working capital to give GM another 60 days to re-do its plan. Chrysler, which the task force concluded cannot survive on its own, gets another 30 days to complete its alliance with Italy's Fiat.
SANTA MONICA, Calif. -- March car sales to be reported April 1 by manufacturers look a lot like February car sales, and that's not a good thing since March traditionally marks the kick off of the busy spring selling season.
"If sales continue at this pace all year, we're looking at a Seasonally Adjusted Annual Rate of only 8.9 million vehicles sold, which is slightly more than half of 2007 sales," said Edmunds.com CEO Jeremy Anwyl.
The future of General Motors' Cadillac division in Europe is becoming increasingly cloudy,
with the automaker reportedly withdrawingits luxury brand from half of Europe's 25 markets due to the financialstruggles of itsdistributor, the Netherlands-based Kroymans Corp.
In another blow to its European aspirations, Cadillac confirmed to AutoObserver earlier this week that it has shelved plans for a new long-needed diesel engine for its rear-drive cars, like the CTS and STS, sold in Europe, where diesels are a must-have for luxury cars.
Roger C. Altman, chairman and CEO of investment firm Evercore Partners and currently an
advisor to General Motors in its restructuring, says he doubts bankruptcy is the way struggling automakers likeGM and Chrysler will go.
Altman was asked in an interview with the Financial Times, if we will see prepackaged bankruptcies for some carmakers. "The administration hasn't entirely made clear its position on that. So I'm not sure, but I would be skeptical that's the route this will go," he responded.
"I think the companies -- and let me focus particularly on General Motors, because that's the one I know best because we represent GM -- have made much more progress than people realized, in improving product quality, improving fuel-efficiency, streamlining themselves, lowering labor cost differentials dramatically relative to the transplant costs, and so forth," he added.
General Motors Corp.'s Cadillac division, long ambitious to expand its brand in Europe, has canceled a long-needed diesel engine that was earmarked to power Cadillacs sold in that market.
The loss of the diesel engine -- currently a virtual requirement to successfully compete in Europe, particularly in premium-vehicle segments -- is another blow to Cadillac's European aspirations and is certain to cause a serious setback and realignment of Cadillac's strategy. Or even an outright surrender in Europe.
GM and Cadillac sources confirm the diesel for Europe has been canceled, but division spokesperson Joann Krell said the engine's official status, as with many diesel engine programs recently shelved, is "indefinitely delayed."
In Global News Wednesday, Ford Motor Co. is negotiating with three bidders for Volvo, General Motors and Saab agree to share technology for five years, and Porsche obtained $13.5 billion in financing.
DETROIT -- And here comes yet another survey showing that Americans oppose government loans to General Motors and Chrysler, just as the two face a March 31 deadline to convince the government they have made progress, deserve to keep the money they've received and should get more.
This survey comes from Detroit-based R.L. Polk & Co., released on Monday. It shows 61 percent of Americans oppose the loans.
In global news, General Motors' distributor in Europe has filed for the equivalent of bankruptcy protection from creditors, U.K. auto production is plummeting, and Germany's largest steelmaker is cutting thousands of jobs.
Representatives of General Motors' bondholders, facing a March 31 deadline to negotiate concessions with the automaker, charge in a letter to federal regulators that GM's proposed restructuring will not necessarily keep GM out of bankruptcy, and if GM does file bankruptcy, their investments would be worthless.
GM's restructuring plan submitted to the U.S. Treasury Department on February 17 may not keep GM out of bankruptcy as it appears "the company is putting too much faith in a near-term turnaround in the economy that would enable annual car and truck sales to reach previous levels," said the letter sent Sunday to Treasury Secretary Timothy Geithner as well as Lawrence Summers, Steven Rattner and Ron Bloom, who serve on President Barack Obama's automotive task force.
President Barack Obama didn't give any hints about which way his administration was
leaning in terms of more loans to domestic automakers, General Motors and Chrysler. But he did acknowledge the unpopularity of such loans by the American public, during his interview with CBS' 60 Minutes
, which aired Sunday night.
The President said he is still committed to helping GM and Chrysler avert bankruptcy, but he says they have yet to demonstrate they can remain economically viable. And there are major political obstacles.
DETROIT --
Back when the car business was fun and nobody knew one hydrocarbon from the next, muscle car talk was big-block V8s, cam-lobe profiles -- and, of course, mine's got more horsepower than yours.
Now, you'd be forgiven for wondering if the new-generation 2010 Camaro -- a nameplate with a storied history built around all of the above -- even offers a V8.
The new Camaro hit showrooms this week. In the information distributed to the press, the overview summarizing the 2010 Camaro carries the headline, "The Chevy Camaro -- A Fun, Efficient Sports Car for the 21st Century." There is lengthy discussion about the new Camaro's design, interior, even safety features, but not a word about the engines that power this reincarnation of the brand's most famous muscle car.
In news from around the world Thursday, Ford of Europe offered support for General Motors Europe's request for government aid, the 2010 British International Motor Show was canceled, Brazil car sales this month are rising and union workers for Volkswagen's Seat subsidiary approved a two-year pay freeze to prevent layoffs.
President Obama didn't spend much time during his historic appearance on The Tonight Show
talking about the auto industry to car-crazed host Jay Leno. But what he did say made it sound like he understoodthat new-car sales are simply too low for the industry to be successful.
President Obama noted that the U.S. car sales are running at an annual rate of 9 million vehicles, well below even the usual rate of replacement for worn-out vehicles, and that 14 million new cars a year would be more normal.
DETROIT - General Motors has gone public with the fact that it has issues with the Wall Street Journal's
coverage of the automaker's situation and its constant focus on a GMbankruptcy.
In a blog post on GM's Fast Lane, the automaker points out that: "In headline after headline, story after story, the front pages of the paper have promoted bankruptcy as a solution for GM."
The final straw for a frustrated GM was a Journal story this week entitled "GM's Chief Shifts Posture on Surviving Bankruptcy," calling it "yet one more distortion of GM's position on this critical issue."
WESTLAKE VILLAGE, Calif. - Buick and Jaguar ranked highest in vehicle dependability, in a tie for first place in the J.D. Power and Associates 2009 Vehicle Dependability Study released Thursday morning.
Buick climbed to the top this year from sixth place in the 2008 rankings; Jaguar moved up from 10th place. Both surpassed Toyota and its luxury division Lexus, though Toyota and Lexus immediately followed in the No. 3 and 4 spots while also nabbing the most individual categories for vehicle dependability.
"Buick has ranked among the top 10 nameplates each year since the study was last redesigned in 2003, while Jaguar has moved rapidly up the rankings," David Sargent, vice president of automotive research at J.D. Power and Associates, said in a statement.
"Lexus remains a very strong competitor in long-term quality. In particular, the Lexus LS 430 sets the industry standard for dependability, with fewer problems reported than any other model in the study," Sargent added.
BERLIN - Aid from the German government for General Motors' Opel subsidiary is
stalleduntil GM submitsits final restructuring plan and obtains U.S. government approvalfor that plan at the end of the month.
"Contracts between GM and the U.S. Treasury have to be put on the table and then we can get the clarity we need," said Dagmar Woehrl, Germany's Deputy Economy Minister, following a closed hearing in Berlin with Carl-Peter Forster, GM's top European executive.
In global news Tuesday, Mazda said it was seeking financial help from the Japanese government, China is giving incentives to rural dwellers to buy cars, and Kia slashed its forecast for Russia.
DETROIT -- German automaker Daimler AG plans to locate an engineering center near Ann Arbor, Michigan, home of the University of Michigan, to develop hybrid technology, if it receives tax incentives and finds suitable property, state and local officials say.
The subsidiary, to be called Mercedes-Benz Hybrid LLC, would employ about 223 engineers and technicians and would receive tax credits valued at $7.5 million over 10 years.
President Obama and others on Capitol Hill expressed their indignation Monday over the revelation that American International Group Inc. (AIG) plans to reward its top executives with $165 million in bonuses despite the fact that the insurance giant is being kept afloat by U.S. taxpayers.
But no one is more outraged about the AIG bonuses than those in the auto industry, especially those in Detroit.
Michigan Congressman Gary Peters introduced a bill Monday night, one he's been promoting on the airwaves of business programs all day Tuesday, that allows the AIG bonuses to be paid -- and then taxes them at 100 percent to recover the cash for taxpayers.
Plans to use clean-running diesel engines for U.S. passenger are being shredded almost daily as troubles in the auto industry deepen, with the latest backtracking said to be coming from Nissan Motor Co. Ltd.
Nissan confirmed in early 2008 it would launch a sophisticated 3.0-liter V6 turbodiesel -- developed by partner Renault S.A. -- for the U.S.-market Maxima flagship later this year. That plan now is likely to change, as industry sources speculate Nissan will join several other makers to recently retreat on diesel-launch strategies.
In news from around the globe Thursday, Germany's Daimler AG announced layoffs at its truck plants, General Motors won financial aid from the Spanish government, and Fiat's long reign as sales leader in Brazil is under threat from Volkswagen.
The cuts just keep coming for Swedish automakers Saab Cars and Volvo Cars; in response to weak demand, Saab announced significant job cuts this week; Volvo reportedly will idle plants in Sweden and Belgium for months and cut pay.
Saab recently sought bankruptcy protection in Sweden and is scheduled to sever business ties with current owner General Motors Corp. on January 1 next year; Volvo
owner Ford Motor Co., meanwhile, is laboring to rid itself of the unit for which it paid nearly $6.5 billion in 1999.
General Motors Corp. said today the company won't be needing $2 billion in loans it previously requested for March.
GM said in a statement issued primarily to announce new labor-agreement modifications with the Canadian Auto Workers union that the company "advised the Presidential Task Force on the Auto Industry that the $2 billion of funding previously requested for March would not be needed at this time.
"This development reflects the acceleration of GM's company-wide cost reduction efforts as well as proactive deferrals of spending previously anticipated in January and February," GM added.
DETROIT - General Motors Corp. caused a stir when it confirmed yesterday that it is shelving an innovatively designed diesel engine that was earmarked to provide something of a fuel-efficiency revolution for its light-duty pickup trucks andpossibly itsfull-size SUVs.
The Duramax 4.5-liter V8 diesel design "was complete," according to a GM spokesperson, who added that GM engineers "were doing the vehicle engineering development work associated with integrating the diesel into the vehicle." GM had billed the Duramax as a 2010 engine and was set to begin building the engine at a longstanding powertrain manufacturing site in Tonawanda, New York.
DETROIT -- As General Motors and the German government wrangle about how to fund and structure GM's German subsidiary Adam Opel, a video now posted on YouTube
illustrates what many at Opel think of their corporate parent.
Despite being in German, the gist of the video for even those who don't understand German is crystal clear: GM has stripped Opel cars of content, robbed Opel's till of cash and now is strong-arming the German government for money to keep the automaker afloat.
General Motors has put on "indefinite hold" its previously announced plan to add a Duramax
4.5-liter V8 diesel engineto 2010Chevrolet Silverado and GMC Sierra light-duty trucks.
The ailing automaker cited the current economic climate as the reason for the decision, adding that it "remains optimistic that the Duramax 4.5-liter V8 diesel may be a viable option in its future portfolio," according to the company's statement.
DETROIT -- You could imagine a collective sigh of relief as General Motors and Chrysler executives closed their doors late Monday behind the most important guests they've ever had visit.
And you could imagine them wondering what kind of impression they had made on the representatives of President Obama's automotive task force that will decide their fate. "So what did they think?" they must have been asking.
Yet those task force members, none of whom have automotive experience, remain as poker faced as any card player, not providing even the slightest hint about their impressions of their Detroit visit, their thoughts on the precarious situations of GM and Chrysler and their plans for what they will do when the March 31 deadline arrives.
You just know Jerome York is dying to say it: "I told you so."
The former Chrysler executive who served on General Motors' board of directors representing the interests of billionaire Kirk Kerkorian, had insisted the Detroit automakerditch money-losing Saab and Hummer. ButGM executives refused to entertain the notion. They insisted the automaker's many brands were an asset: not, as York contended, a drain on resources.
Now look where GM is -- staying afloat on government loans as it sets Saab loose and has Hummer on the auction block with a plan to eliminate it if no buyer is found.
Rank-and-file members of the United Auto Workers union yesterday gave the union the authority to make amendments to the union's 1997 contract with Ford in order to help the automaker further ease its labor costs and debt burden.
The positive vote was not overwhelming: The Detroit News reports only about 58 percent of the UAW's production and skilled-trade members who work for Ford agreed to the contract changes. But the majority of UAW workers went for the deal, meaning Ford has won another important battle in the war to improve its balance sheet.
DETROIT -- Representatives of President Barack Obama's automotive task force are visiting
Detroit Monday. Their trip includes a tour of a Chrysler assembly plant and General Motor's Technical Center and a test-drive of the Chevrolet Volt.
All the while, auto company executives will try to convince them further federal assistance is a worthwhile investment for taxpayers.
Their visit comes as Republicans cranked up the volume on their opposition to support Detroit automakers and yet another survey showed the American public generally is opposed as well.
DETROIT -- General Motors made history again Friday as its stock price plummeted to a 75-year low, dropping for the first time below Ford's share price.
GM's stock closed at $1.45 a share on Friday, but during the day dropped to $1.27 a share, a price not seen since May 4, 1933. That put GM's market capitalization at about $885 million.
Nissan just announced that it plans to stay away from the North American International Auto Show in Detroit next year, as the company did this year. It also plans to skip other major U.S. shows and dozens of smaller ones scattered across the country, as well as the Frankfurt exhibition this September.
But as auto company executives, suppliers and the global news media gathered in Geneva last week for one of the most prestigious regular shows, Nissan appears to be alone in its strategy of making draconian cuts in its annual exhibition budget to help get costs under control in this severe sales environment.
In fact, most other automakers -- even badly damaged Chrysler -- so far are making it a point to stick with their expensive investments in auto-show participation.
A top figure with the powerful German workers union IG Metall reportedly told a German newspaper this week that a failure of the Adam Opel AG unit of General Motors Corp. would cost some 400,000 jobs in the country. At the same time, a top German official said insolvency could be an option for Opel.
German politicians and GM representatives are scrambling to fashion a financial and organizational restructuring for Opel, a matter complicated by the fact GM itself now appears to be fighting a daily battle for survival.
With industry trade journal Automotive News this week quoting a spokesman from General Motors Corp.'s Saturn division as saying there are prospective buyers for the perpetually underachieving division, it occurred to AutoObserver that the auto-industry conventional wisdom on this subject is dead wrong: the global economic disintegration hasn't dissuaded anyone from considering investment in a money-bleeding car brand.
The New York Stock Exchange plans to delist the stock of ailing auto supplier Visteon Corp. on Friday and has warned another supplier, American Axle, that it could be delisted if certain criteria aren't met.
Visteon's stock has been at "abnormally low trading levels," the stock exchange said in a statement. It was trading at 7 cents a share Thursday morning, putting its market capitalization at about $7.8 million. A year ago, Visteon traded at about $3.70 a share.
General Motors CEO Rick Wagoner was paid a total of $5.5 million in 2008, down from $14.1
million in 2007, according to documents filed with the federal government's Securities and Exchange Commission Thursday morning.
In 2008, Wagoner received a salary of $2.1 million and earned no bonus.
Wagoner will work for $1 in 2009 as part of its loan deal with the U.S. government. Pay is cut to all GM executives in 2009 in order to keep the $13.4 billion in loans from the U.S. government and to possibly obtain as much as $16 billion more in additional loans.
DETROIT -- General Motors Corp., as expected,saidits auditors had raised "substantial doubt" about the automaker's ability to survive if it fails to end losses andits cash burn, according to the company's annual report filed with the federal government's Securities and Exchange Commission Thursday morning.
"Our future is dependent on our ability to execute our viability plan," GM said in its annual report. "If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. bankruptcy code."
Despite the fact that the auditor's "going concern" warning was anticipated, the already suffering stock market didn't take the news well. In early trading, the slumping market was down yet again, and GM's stock price had slid 15 percent to $1.86 a share.
DETROIT - Americans, unemployed or fearing they will be, hunkered down last month, cutting their household budgets, squirreling away money and avoiding dealer showrooms as February car sales sunk to their lowest level of any February in more than four decades.
Automakers sold 691,073 vehicles in February, down 40.9 percent from the 1,168,729 they sold in February a year ago. That marked the lowest level of car sales for any February since 1967, according to General Motors' record books. That fact is even more eye-popping when population is considered: in 1967, the U.S. had 103 million registered drivers; today the nation has nearly twice that many.
And it put the closely-monitored Seasonally Adjusted Annualized Rate (SAAR) at 9.1 million vehicles, the lowest SAAR since 1982.
Not coincidentally, consumer confidence, a key indicator for how vehicle sales will fare, sunk to record lows in February, according to at least two measurements. And much of that has to do with dimming employment picture as well as dwindling household worth.
A study by engineers from Carnegie Mellon University examining the economics of electricity-intensive "plug-in" hybrid-electric vehicles - a coming class of high-efficiency models typified by General Motors Corp.'s 2011 Chevrolet Volt - bases its primary argument on an outdated assumption, said one of GM's highest-ranking engineers.
The Carnegie Mellon study concluded that plug-in hybrid-electric vehicles (PHEVs) using large, high-capacity battery packs to enable propulsion for comparatively long distances solely on electric power are not the most economically viable path to higher-efficiency vehicles. It said PHEVs with more modest and less-costly battery capacity are the optimum approach.
GM's highly publicized Chevrolet Volt is categorized by the company as an "extended-range" electric vehicle, but in effect is a PHEV with the kind of large-capacity battery capability the Carnegie Mellon study said is not a cost-efficient solution.
Shares in General Motors Corp. got on board for another broad U.S. stock market plunge Monday as a new study from researchers at uber-egghead Carnegie Mellon University sayselectricity-intensive hybridssuch as GM's Chevrolet Volt "extended-range" electric vehicle won't be the ultimate environmental answer GM touts.
The Carnegie Mellon study, reported on by Edmunds Green Car Advisor Friday, is another setback for battered GM, whose stock price last week briefly visited a low -- $1.52 -- not seen since just after the Great Depression and today was again struggling to stay above the $2 mark as the Dow Jones Industrial Average slid to its own new lows. GM last week also reported an annual loss for 2008 of $30.9 billion, an amount exceeded in GM corporate history only by the $38 billion GM lost in 2007.
Americans' confidence in the U.S. economy fell in February, and it showed with a lack of activity in dealer showrooms last month. Automakers report February sales Tuesday, and the annualized rate is likely to be the lowest since the early 1980s.
A key indicator that drives car sales is consumer confidence, which had been edging up since last fall but fell back in February.
White House Chief of Staff Rahm Emanuel had some harsh words for General Motors on a Sunday news program, prompting questions about what the Obama administration has in mind for restructuring GM and Chrysler.
Emanuel told CBS' Face the Nation GM's situation is "a wakeup call to America" to increase energy independence and overhaul the nation's health care system. GM's plight is an example of "a day of reckoning," Emanuel said.
With another month of dismal sales predicted for February, three forecasts released this week revise U.S. car sales for 2009 downward.
- Edmunds.com has cut its forecast by more than a million units to 10.1 million vehicle sales for 2009.
- J.D. Power and Associates has shaved its forecast by a million vehicles as well. The company puts 2009 sales at 10.4 million vehicles, down from the previous forecast of 11.4 million.
- Even Ford Motor Co., which had one of the rosier forecasts, reported in government documents that it had reduced its downside outlook for the year to 10.5 million vehicles, the same amount GM said it had conservatively estimated.
A survey conducted by theUSA Today newspaper and Gallup poll this week found only 25 percent of Americans believe the government should continue lending money to Detroit automakers.
"That's a huge, and fast, change of heart," said USA Today's Jim Healey, who added that in December, before the government approved emergency auto loans, 61 percent favored federal help for the automakers.
With the United Auto Workers (UAW) submitting to its rank and file a proposed Ford Motor Co. amendment to the 2007 labor contract that asks the UAW to accept half of Ford's obligation to the union's Voluntary Employee Benefit Association trust, UAW leadership appears to be choosing the lesser of potential evils.
If any of the Detroit Three automakers that owe payments to the VEBA -- an amount totaling nearly $60 billion -- declare or are otherwise forced into bankruptcy, the trust that was established to fund health-care costs for UAW retirees could be shattered, says one bankruptcy expert.
SANTA MONICA, Calif. -- The still-deteriorating economy and the continued uncertainty about employment kept consumers away from buying new cars again in February despite the record-breaking deals available to them.
February car sales, to be posted by automakers Tuesday, are expected to be down about 40 percent from a year ago to 685,000 vehicles sold for the month, according to Edmunds.com, parent of AutoObserver.com.
That puts the closely watched Seasonally Adjusted Annual Rate (SAAR) for the month at 9.3 million vehicles, down from 9.6 million the previous month.
"The fluctuation in car sales and the instability of the stock market are just two examples of the volatility in the marketplace, which is wreaking havoc on consumer confidence and hampering any economic recovery," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
DETROIT -- As expected, General Motors announced Thursday morning a loss of $30.9 billion
for 2008, the second largest loss in the company's 100-year history --second only to the $38.7 billion the automaker lost in 2007.
The worst came in the final quarter of 2008 when GM lost $9.6 billion, even more than analysts had predicted. During the fourth quarter, GM burned through $6.2 billion of cash.
GM is staying afloat only with the help of government loans, of which it is seeking more.
"2008 was an extremely difficult year for the U.S. and global auto markets, especially the second half," said GM CEO Rick Wagoner, who is in Washington, D.C., pleading the automaker's case this week for additional federal loans to President Obama's newly formed auto task force.
Details in the hundred pages-plus of General Motors Corp.'s 2009-2014 restructuring plan submitted to the U.S. Dept. of Treasury last week show the General to be confident and optimistic on several matters regarding its survival and planned revival. Perhaps exceedingly so.
And GM offers more than a few intriguing strategic and business-plan revelations that are worthy at least of a raised eyebrow.
General Motors' shares sunk to their lowest price in 74 years on Friday, as the stock market
in general fell and nagging questions about GM's future arose.
At one point on Friday, GM shares fell to $1.52, the lowest level since July 26, 1934. The price rebounded some, to close at $1.77, a nearly 12 percent drop.
Friday's drop briefly sent GM's market capitalization below $1 billion; in other worse news, GM was worth less than $1 billion based on the value of outstanding shares.
Although the press release comes on the letterhead of "former" owner General Motors Corp., Saab Automobile issued a statement Friday saying, "After 20 years of foreign ownership, the future of Saab Automobile is once again in Swedish hands."
Saab made official what had been speculated for weeks, that it's separating from GM after nearly 20 years of at least partial GM ownership. GM acquired full ownership of Saab in 2000.
WASHINGTON -- President Barack Obama's newly established automotive task force met for the first time Friday morning to consider the latest requests for as much as $21.6 billion for new government loans by General Motors and Chrysler and review the companies' viability plans submitted to the U.S. Treasury Tuesday.
The panel, still reviewing the hundreds of pages of documents submitted by GM and Chrysler, was not expected to make any decisions at its first session. Still, the panel does have substantial power to make critical decisions, including if GM and Chrysler should receive more loans, if they should file for bankruptcy or if they should merge. They can approve or reject any major transaction of the companies of $100 million or more. And they can recall the loans.
DETROIT -- General Motors is moving toward a spin-off of its Saturn brand and is open to
selling vehicles from other automakers through the Saturn dealer network, according to a letter sent to Saturn owners.
Such a move would be a perfect door into the U.S. market for Chinese and Indian automakers.
If an alliance with Chrysler fails to materialize, Fiat -- long chomping at the bit to return to the U.S. with its Alfa Romeo models and launch its popular Fiat 500 here -- would be another possibility.
DETROIT -- Saab Automobile AB will file for
reconstruction -- the U.S. equivalent of Chapter 11 reorganization -- at a board meeting at 11 a.m. local time in Sweden, a newspaper there is reporting.
Spokesmen from General Motors, Saab's parent, and Saab declined to comment to AutoObserver Thursday morning, saying they had nothing more to say about Saab than what was in GM's viability plan submitted to the U.S. government on Tuesday.
Saab's plan to file for reconstruction as well as end payments to suppliers was first reported by the highly respected Dagens Industri, Sweden's equivalent of the Wall Street Journal. The paper, citing unnamed sources, said GM's request for a capital injection into Saab by the Swedish government was unsuccessful.
DETROIT -- General Motors Corp. said on Tuesday it could need a total of as much as $30 billion in U.S. government loans, more than double its original request.
The request came as part of GM's viability plan filed with the U.S. Treasury Department late Tuesday.
In addition, GM said it had accelerated its cost-cutting plans to include a reduction of its global workforce by 47,000 people this year and close another five U.S. plants by 2012. GM will close or sell Hummer by March 31, will try to sell Saab and will wind down Saturn by 2011 unless Saturn dealers or another party takes it over. GM said it continues to negotiate with its bondholders and unions for concessions.
DENVER -- President Barack Obama's chief spokesman said the administration can't rule out a restructuring through bankruptcy for struggling automakers, while adding the industry is "tremendously important" to the economy, Bloomberg News reported Tuesday afternoon.
Traveling to Colorado on Tuesday with the president, who signed the economic stimulus package, White House press secretary Robert Gibbs told reporters the administration won't "prejudge" the next steps for General Motors and Chrysler until the automakers present their own plans under terms of a government aid package. Those plans are to be filed after the stock market closes today.
The auto companies "represent a huge part of our manufacturing base, and to have a strong and viable auto industry is tremendously important for the future."
DETROIT -- Today is V-Day -- Viability Day -- for General Motors and Chrysler.
As part of their acceptance of $17.4 billion in government loans to stay afloat, the two must submit reports on their progress regarding how they are becoming economically viable.
Increasingly experts believe one or both ultimately will file for Chapter 11 reorganization under U.S. bankruptcy laws, particularly because auto sales have continued their plummet.
"If I were betting, I'd say it (Chapter 11 filing) will happen," said Douglas Bernstein, a lawyer specializing in bankruptcy and a managing partner with the Detroit law firm of Plunkett Cooney.
WASHINGTON -- In placing the duty of overseeing the restructuring of the businesses of General Motors Corp. and Chrysler LLC in the hands of a federal-agency coalition rather than a single "car czar," the administration of President Barack Obama could be signaling that the automakers will have more time to reorganize beyond the originally intended March 31 deadline.
Given the fluid nature of the industry's upheaval and the nation's economy, having definitive reorganization plans in place by March 31 may be asking the impossible: Filing their interim restructuring reports Tuesday, GM and Chrysler still face a rapidly devolving industry landscape -- and several sources are saying a government-managed bankruptcy is not out of the question.
This week's Chicago auto show isn't expected to be chock-full of prominent concept- or production-car introductions, as automakers hunker down to evaluate how best to absorb still-disintegrating auto sales.
More important, Chicago comes after a definitely somber Detroit auto show - and just before General Motors Corp. and Chrysler LLC are scheduled to present the next phase of their restructuring "blueprints" to federal officials on Feb. 17. From there, the two automakers must present the full case by March 31 that they are "viable" and worthy of more government investment - a cash infusion both say they need to avoid bankruptcy.
So the Chicago show will make the most of introductions that are, for the most part, likely to reflect these less-ebullient industry times.
DETROIT -- General Motors will eliminate 10,000 jobs from its global salaried ranks, with more than a third of thosebeing in the United States. Remaining salaried workers in the States will see their pay cut temporarily, beginning May 1.
"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability," GM said in its statement issued Tuesday morning.
General Motors will cut salaried jobs and cut salary of remaining salaried employees, various reports quoting unnamed sources say.
GM -- and Chrysler -- have a February 17 deadline to meet and show the government they have viability plans that will allow them to keep the government loans they received. GM has received $13.4 billion.
DETROIT -- General Motors Vice Chairman Bob Lutz, who heads global product
development,will retire at the end of 2009.
The 76-year-old Lutz will be replaced by Tom Stephens, 60, who now heads global powertrain development.
Lutz steps down from his current post on April 1, becoming vice chairman and senior advisor, while Stephens takes over Lutz's previous duties.
Lutz's retirement is not entirely unexpected, though many thought he would stay on through the launch of the Chevrolet Volt in November of 2010 since he has been the car's biggest champion. But clearly the automaker's current financial crisis and GM's forced restructuring required as part of its acceptance of government loans accelerated Lutz's retirement.
General Motors and Chrysler may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, Bloomberg News reported Monday.
Automakers have long argued bankruptcy would be sure death, as consumers will not buy cars and trucks from a bankrupt automaker. Still, experts argue placing them in bankruptcy is possible due to the priority line for creditors.
A report from Europe late last week says General Motors Corp. and the government of
Sweden could be hurrying to broker an arrangement for GM's wholly-owned Saab Automobile AB that would effectively re-establish Saab as an independent automaker.
GM's Karl-Peter Forster was reported as saying GM and the Swedish government are working quickly to refine the details of a deal - authorized and financed by Sweden - that would establish independent, Sweden-based management for Saab and re-establish most, if not all, of the company's auto manufacturing once again in the Scandinavian nation, said a story by Britain's AutoCar
magazine.
GM is rushing to tie-up the plan so that Saab might at least technically no longer be a part of GM when the company presents its next restructuring blueprint to Congress and other federal entities on Feb. 17 in order to be considered "viable" and worthy of receiving continued government funding.
The Motor & Equipment Manufacturers Association (MEMA) this week submitted a request to the U.S. Dept. of Treasury for $25.5 billion in federal aid to help its auto-industry supplier members weather the deepening financial crisis that has gripped the domestic auto industry.
The Wall Street Journal
reports MEMA's request came to light this week as U.S. House members met with representatives from the state of Michigan to discuss the auto industry's troubles. MEMA represents some 400 auto-industry suppliers, a significant portion of which are believed to be mirroring the financial distress of their primary customers, the Detroit Three automakers, and, to a lesser extent, transplant manufacturers who also are battling a prolonged downturn in U.S. auto sales.
Two huge drags on the U.S. auto market - an utter lack of consumer confidence, and a paucity of credit -- persisted in January and were joined by a new one: at least a temporary evaporation of the fleet market.
Industry-wide sales in January cratered from a year earlier, falling by 36.9 percent, to about 677,000 units from 1.06 million vehicles sold in January 2008. The seasonally adjusted annual sales rate fell to fewer than 10 million units for the first time in more than 26 years. And the American auto business sold fewer cars than for any month since the depths of a recession in December 1981.
SANTA MONICA, Calif. - Automakers, in an effort to clear out old inventory and pare rising stockpiles of unsold cars, boosted incentive spending dramatically from a year ago, according to estimates calculated by Edmunds.com
, parent of AutoObserver.com
.
"Automakers need to clear out leftover inventory from the 2008 model year, and that effort is boosting the average incentive cost for the industry," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Last month, 27 percent of all new vehicles sold were from the 2008 model year while during January 2008, only 12 percent of new vehicle sales were from the previous model year's inventory."
Super Bowl audiences will see a dearth of car ads during Sunday's big game, and they will see none from Detroit's ailing automakers. Only Audi and Hyundai, back for the second year as they seek to increase market share in the game, and Toyota will advertise during the game.
The cost of the ads, which hit the $3-million mark for a 30-second spot (of which there will be nearly 50) this year, is significant barriers to entry for automakers with auto sales slumping to their lowest levels since the early 1980s and most companies struggling to turn a profit. And the payoff is mixed for advertisers, even though the Super Bowl attracts millions of eyeballs.
The auto industry seemed to have reached agreement earlier this month to hunker down and allow the geared-down Detroit auto show to flicker on without anything as distracting as news to interfere.
That all changed this week, as it seems everyone's talking, dealing, reporting, conjecturing and speculating. Plenty of this news is explicitly bizarre.
A rundown of some of this week's happenings, along with the between-the-lines summary courtesy of AutoObserver's branded decoder ring:
SANTA MONICA, Calif. -- U.S. car and truck sales in January are expected to come in at a weak 730,000 units when automakers report them Tuesday.
January sales are expected to be down 18.1 percent from very weak sales in December, Edmunds.com estimates, largely due to significantly lower rental-car and corporate fleet sales. Retail sales will be about flat with December's.
"Our research indicates that retail sales are pretty much flat compared with December," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "However, automakers' decision to cut fleet sales and make other production cuts will cause a large sales decline to be recorded on the books."
DEARBORN, Mich. -- Ford said Thursday the United Auto Workers (UAW) union agreed to end its Jobs Bank for laid-off employees as the union had done with General Motors and Chrysler.
Elimination of the controversial Jobs Bank, which gives laid-off workers nearly full pay though they aren't working, was a requirement for GM and Chrysler to keep their loans from the U.S. government. Though Ford has not taken federal money, the automaker insisted it would not be disadvantaged and expected the same concessions the union granted to GM and Chrysler.
General Motors confirmed Wednesday it extending the delay in construction of its four-
cylinder engine plant in Flint, Michigan. The plant is to build the 1.4-liter engines for the Chevrolet Cruze and Volt.
Last month, work was suspended pending a review in the first quarter, GM said at the time. No specifics about the most recent delay were provided.
GM insists the engine plant should be done in time for the start-up of production of the Cruze at the Lordstown, Ohio, plant and the Volt at the Hamtramck plant in Detroit.
Welcome to the club - the corporate jetless club, Citicorp executives. You are in good company.
Despite taking $50 billion in federal funds to stay afloat, Citicorp only canceled delivery of a fancy $50-million corporate jet when the American public found out -- and a U.S. Senator gave bank officials a public tongue lashing.
U.S. Sen. Carl Levin, D-Mich., who advocated federal help to Detroit automakers, has been cheesed about Congress' double standard for the banks and the automakers.
DETROIT -- In Washington, the talk is of what cars automakers will produce in 2011, 2016 and 2020, but the auto industry faces an immediate demand: sell cars today.
Dealers, particularly, face a challenging dilemma as to just how to do that. The auto manufacturers, notably General Motors and Chrysler, are pressuring them to order more 2009 models so that factories can remain open and the automakers can book revenue.
Yet, dealers are buried with bulging stockpiles of old models, becoming increasingly expensive to keep and eating into their bottom-line. Yet, even hefty incentives aren't attracting buyers.
So starts the auto industry's cautious waltz with the administration of new President Barack Obama.
Anxious to reverse negative environmental perceptions (most of them realities, to be sure) about the Bush administration, President Obama has instructed the U.S. Environmental Protection Agency (EPA) to make haste in deciding the case of application for waiver by California -- and 13 other states that have adopted California's auto-emissions regulations -- to regulate vehicular carbon-dioxide emissions.
General Motors will eliminate shifts at plants in Ohio and Michigan, eliminating 2,000 jobs.
Those plants make its Lambda-based SUVs, including the Buick Enclave and GMC Acadia, as well as the Chevrolet Cobalt compact. GM will cut production at 13 other North American plants in the second quarter.
In Lansing, Michigan, GM will begin alternating between morning and afternoon shifts at the plant that builds the Enclave and Acadia sport-utility models from February 2 until it eliminates the afternoon shift March 30. That will eliminate 1,200 jobs.
The United Auto Workers (UAW) union has agreed to end its controversial Jobs Bank at Chrysler that pays workers on layoff, effective Monday.
The Jobs Bank became a lightening rod during last fall's Congressional hearings on government aid to U.S. automakers and its elimination was part of the agreement to obtain the federal loans.
Timothy Geithner, President Barack Obama's nominee for U.S. Treasury Secretary, testified to Congress Wednesday that the new administration intended to assembly a team of experts to oversee the loans to automakers.
Geithner told the Senate Finance Committee during his confirmation hearings that the team would have "expertise in manufacturing, in restructuring, who understand how these labor contracts work."
Automakers should be thrilled at the news since it was frighteningly evident during last fall's Congressional hearings on aide to U.S. automakers that most government officials and Congressmen are generally ignorant about the extremely complex auto industry. Finding a single individual who understood all of the aspects of the auto industry would be impossible. And if President Obama's picks for other government posts are any indication, the car czars will a bright, talented and pragmatic lot.
DETROIT -- Expect another month of dismal sales in January, a General Motors forecaster says.
"Don't be surprised to see a SAAR [seasonally adjusted selling rate] under 10 million vehicles," warned Mike DiGiovanni, GM's top sales analyst, said in a conference call with media and analysts Tuesday.
That's even lower than the SAAR of the previous three months, which ran at a rate of about 10.5 million each month.
Toyota displaced General Motors as the global leader in vehicles sales in 2008, a spot the Detroit automakers had held for 77 years.
Toyota sold 8.97 million vehicles worldwide in 2008; GM sold 8.35 million, it announced Wednesday morning. Toyota's sales slipped 4 percent in 2008 from 2007; GM's fell 11 percent.
"The story has yet to be written" as to whether Toyota will maintain that No. 1 spot, said GM's analyst Mike DiGiovanni in a Wednesday conference call on global sales with media and analysts.
The Japan Automobile Manufacturers' Association reportedly plans to meet later this month
about whether or not to hold the 2009 Tokyo Motor Show. A decision likely will be announced shortly thereafter.
An official of the organization was quoted as saying the show, held every other year, may be canceled due to the global economic crisis.
The Tokyo show has struggled in recent years to maintain its status as an international show because of Japan's largely closed market. Automakers have opted instead to shift their auto show dollars to China.
Remember those diesel-engine light-duty pickups we're supposed to be seeing this year? Get ready to hear the words "back burner" in relation to those product plans.
General Motors Corp., Ford Motor Co. and Chrysler LLC all said as long ago as 2007 they would have diesel engines, respectively, for the GMT 900 pickup line (Chevy Silverado/GMC Sierra); the Ford F-150 and the Dodge Ram. GM is developing an in-house 4.5-liter V8; Ford, an in-house 4.4-liter V8 derived from a European diesel and Chrysler said it would collaborate with longstanding diesel-engine partner Cummins Inc. to produce a V6 diesel.
DETROIT -- In announcing a plan to assemble in Michigan the lithium-ion battery packs for the Chevrolet Volt extended-range electric vehicle, General Motors Corp. also is forming an education cooperative that aims to train a new breed of engineer that can commingle electrical and automotive knowledge.
Part of GM's multi-faceted approach to build a foundation for the domestic development and supply of advanced batteries for the auto
industry is a $5-million, five-year program that establishes at the University of Michigan in Ann Arbor the GM/U-M Advanced Battery Coalition for Drivetrains (ABCD).
Encouraged by their initial exposure to an uncommonly creditworthy bunch of customers, General Motors and Chrysler have expanded regional test programs of discounts for credit union members into nationwide campaigns.
Both of the troubled automakers have announced their participation in a program they're calling Invest in America, encompassing nearly 8,000 credit unions nationwide who have nearly 90 million members.
Nearly 3 million U.S. auto sales evaporated in 2008, and plenty of that blood was lost by the Detroit Three: General Motors Corp. sales were down 23 percent, Ford Motor Co. sales slid by 20 percent and Chrysler LLC sales dropped by 30 percent.
Total U.S. sales plunged from 16.1 million units in 2007 to 13.2 million for 2008. Equally interesting -- and troubling, for Detroit -- was that not only did the pie get painfully smaller, the domestic automakers' portion, market share, once again lost ground.
According to data from Edmunds.com, the Detroit Three lost a collective total of 3.7 points of market share in 2008. Chrysler led the group, ceding 1.9 points of share (from 12.9 percent of the market in 2007 to 11 percent in 2008). GM lost 1.4 percent (from 23.8 percent in 2007 to 22.4 percent). Ford gave back 0.4 points of share (from 15.5 percent to 15.1 percent for 2008).
Striking every attitude from empathy to ambivalence to something resembling snarkiness, automakers have been using new TV-advertising campaigns to try to jolt consumers off their couches and into dealer showrooms.
The headwinds are daunting, but automakers have been launching a greater variety of messages than at any time in recent memory - attempting to find something, anything that punches effectively through the pervasive gloom in American households and reignites their desire and confidence to make a major purchase.
U.S. auto sales continued their precipitous tumble in December, closing the books on the industry's worst year since 1992.
Five of the Big Six automakers -- General Motors, Ford, Toyota, Nissan and Honda -- saw sales slide another 30 percent each in December; Chrysler's plummeted 53 percent. No automaker showed higher sales December to December. The lucky ones saw mere single-digit dips.
For the full year of 2008, all of the Big Six automakers reported sales declines. In total, the industry sold 13.2 million vehicles for an 18 percent drop from 2007's 16.1 million.
"It was an unbelievable year -- not one I want to repeat," said Mark LaNeve, GM's head of sales and marketing in a conference call with reporters. "Hopefully, 2009 will improve from December's low point rather than deteriorate as 2008 did."
SANTA MONICA, Calif. -- Automaker incentives set a new record in December, Edmunds.com estimates, and, surprisingly, leasing showed a remarkable jump despite reports of its demise.
"Never before has the December average incentive been this high," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Automakers have been pulling out all the stops to keep motivating shoppers during these tough times."
Slowing sales have struck virtually every automaker and every market segment. U.S. auto industry sales for December and the full-year of 2008 are being reported Monday. December sales are expected to look a lot like the dismal levels of October and November -- and down from in the neighborhood of 30 percent or more from December 2007. Full-year sales are likely to be the worst since 1992.
DETROIT -- In stark contrast to banks who still largely refused to give consumers loans despite receiving billions from the government to do so, General Motors wasted no time in pumping federal cash into car loans for consumers.
GM announced Tuesday morning it was offering no-interest financing for up to 60 months and low-interest loans on select 2008 and 2009 model-year cars and trucks through January 5, 2009. The loans will be provided through GMAC and be more widely available to consumers as GMAC has lowered its credit criteria.
The zero-interest and low-interest loans were made possible by GM and its financing company, GMAC, because the Bush administration Monday expanded its bailout of the U.S. auto industry by buying $5 billion in equity in auto and mortgage finance company GMAC and increasing a loan to GM by $1 billion.
Perhaps now, at age 91, Las Vegas billionaire Kirk Kerkorian has finally given up on the auto industry that has not been particularly good to him.
On Tuesday -- just in time to take year-end losses -- Kerkorian sold the last of his investment in Ford. The move came just six months after Kerkorian's Tracinda Corp. bought a 6.49 stake in Ford and carries with it deep losses. Kerkorian's purchase was seen as a vote of confidence in Ford's turnaround strategy and its management led by former Boeing exec Alan Mulally.
GMAC LLC, the finance arm of General Motors Corp. that also lends money for home mortgages and lines of credit, on Decemcber 24 was granted status as a bank holding company by the U.S. Federal Reserve.
The move was vital for GMAC in order for it to qualify for relief loans from the storied Troubled Assets Relief Program (TARP), passed in October to provide emergency loans to distressed banks and other financial institutions.
General Motors Rick Wagoner is staying on the job.
"Do you think I would have gone through what I did the last two months if I were thinking of leaving," Wagoner asked a reporter during Friday's news conference on GM and Chrysler receiving government loans.
Indeed, numerous people from various quarters, including U.S. Congress, had called for the resignation of Wagoner, who has led GM for the past eight years when it racked up billions in losses.
"I'm absolutely not leaving," Wagoner said adamantly. "We're more energized than ever now that we have funding."
And how do he and GM win the confidence of the American people, he was asked. "Test drive a Chevy Malibu," Wagoner said in forceful salesmanlike talk that he should have used during Congressional hearings.
The Bush administration announced Friday morning that it will provide $13.4 billion in short-term loans to General Motors and Chrysler; the automakers will receive another $4 billion in February.
President George Bush admitted reluctance about providing government loans to the Detroit automakers but noted the beleagured U.S. economy would suffer a harsh blow if one or more of Detroit's automakers collapsed into a "disorderly bankruptcy" at this time.
"These are not ordinary circumstances," Bush said. "In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action."
SANTA MONICA, Calif. -- The deteriorating economy, the precarious employment situation and the lack of available credit will push the annual sales rate in December for U.S. car sales to their lowest level of the year below 10 million units, Edmunds.com forecasts.
December sales (retail and fleet) are expected to total 852,000 units, a 38.4 percent decrease from December 2007 but a 14.6 percent increase from November, Edmunds.com predicts. Typically, December sales are about 18 percent higher than November's.
With the year closing on a low note, U.S. vehicle sales for all of 2008 will total just over 13 million, a decrease of almost 3 million vehicles, or 18 percent, from 2007. Automakers report December and 2008 sales figures January 5, 2009.
A day after Chrysler LLC announced it is suspending operations for at least a month at all of its North American assembly plants, General Motors Corp. is denying a Wall Street Journal report saying the two companies resumed merger talks.
Chrysler and GM are awaiting word from the Bush Administration regarding promised emergency funding to carry the automakers into early 2009. Without a loan of billions, both companies have said they may not have sufficient liquidity to continue funding daily operations.
Separate from Chrysler's drastic move to curtail all manufacturing, GM already had announced a major production cutback for the first quarter of 2009 and is delaying other manufacturing spending, including the construction of a plant to build the engine for the high-profile Volt extended-range electric vehicle.
The president's expected short-term bailout of the Detroit Three automakers will leave the industry with lots of short- and long-term issues. One of the biggest is who will lead them.
As they pulled the plug on their own rescue deliberations last week, some in Congress seemed to believe they could run the Detroit Three automakers better than the CEOs do. President-Elect Barack Obama also has suggested that some top auto executives have a "head-in-the-sand approach" and should lose their jobs. And the American public, at least as measured by polls, don't seem to want to give a break to the automakers' current leadership either.
Could others actually perform better as CEOs of General Motors, Ford or Chrysler than Rick Wagoner, Alan Mulally or Robert Nardelli have -- and will? If so, where would these executive savants come from? And will we ever see any of this new blood in Detroit?
General Motors' Vauxhall division in the U.K. is offering a temporary furlough plan to its 2,200 workers at its Ellesmere Port plant that builds the Astra model sold under the Vauxhall and Opel brands in Europe and Saturn in North America.
All but key employees are being offered a furlough of between two and nine months between January 1 and September 1, 2009. They will receive 30 percent of their normal pay but retain holiday pay and pension benefits.
President George W. Bush said Monday an announcement on an auto industry rescue was not imminent, leaving the Detroit Three's fate clouded in uncertainty for a little longer, Reutersnews service reports.
"We're not quite ready to announce that yet," Bush told reporters on Air Force One during a flight from Baghdad on an unannounced visit to Afghanistan.
How bad is it? General Motors Corp., currently hoping for "bridge" funding extended by the Bush administration to keep the company from imminent bankruptcy, isn't buying into any optimism about the potential for an economic turnaround -- the company announced today it is slashing a quarter-million units from its first-quarter 2009 production schedules.
It's an outsized reaction that projects a downbeat outlook for the U.S. auto market's prospects in early 2009.
The U.S. Treasury said it is willing to provide financing to Detroit automakers after the Senate Thursday night failed to approve $14 billion in loans to General Motors and Chrysler.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," Treasury spokeswoman Brookly McLaughlin said in an e-mailed statement.
Detroit Free Press columnist Tom Walsh reminds senators from the Gulf States, many of
whom oppose the loans to Detroit automakers,to recall Hurricane Katrina as they cast their votes on the bailout bill tonight.
"When Hurricane Katrina slammed into Louisiana and Alabama on Aug. 29, 2005, the automobile companies of Detroit did not harrumph that the Gulf Coast should have been better prepared. They didn't sit back and wait for New Orleans to submit a detailed plan for future repair of the ruptured levees," Walsh wrote in Thursday's edition.
The U.S. Senate rejected legislation that would have provided $14 billion in federal loans to keep afloat General Motors and Chrysler, which say they will be out of money by the end of the year.
At the same time, GM reportedly has hired lawyers and bankers to consider whether to file for Chapter 11 bankruptcy. Those advisers are among the best known in the bankruptcy and restructuring business who would handle what would be one of the largest bankruptcy filings in U.S. history.
Former Federal Reserve Chairman Paul Volcker looks to have the inside track for the newly
created post of car czar, if the federal loans for Detroit automakers is approved by the Senate today -- an approval that is in doubt.
Nevertheless, the Bush White House reportedly is coordinating with the incoming Obama administration in choosing a new "car czar" to oversee the auto company restructurings required under the loan legislation passed by the House Wednesday night. Volcker appears to be acceptable to both sides.
The 81-year-old Volcker has been an important economic adviser to President-elect Obama and on November 26 was named head of Obama's Economic Recovery Advisory Board. Volcker has the added benefit of automotive bailout experience -- he was Federal Reserve Board chairman and a principal government participant in the Chrysler bailout. He and the oversight board played a key role in winning concessions from the United Auto Workers union and from Chrysler's banks..
The U.S. House of Representatives approved emergency loans to General Motors and Chrysler Wednesday night. Now the focus shifts to the Senate where Republican opposition threatens to stall or kill the bill altogether.
Senate Republicans, who will vote on the bill together, say it doesn't have the votes to pass.
The House approved the $14 billion in loans in a vote of 237-170. The loans would go to General Motors and Chrysler to stay afloat through March; Ford has said it doesn't need the funds immediately but would like access to a line of credit in case the economy worsens beyond its projections.
In their bailout blueprints presented to Congress last week, automakers presented forward-revenue assumptions based on forecasts for 2009 auto sales. In General Motors Corp.'s case, for example, it projected "downside," "baseline" and "upside" sales forecasts for the U.S. market, correlating how much funding the company believes it will need based on each sales scenario.
If a new survey of the nation's economists has any relevance, the beleaguered automakers had better strap in for a bumpy ride that may make a reality of those "downside" assumptions.
Bloomberg News' December survey of economists released this week paints a bleak outlook for 2009. The prominent economists comprising the survey sample predict consumer spending will plunge by a rate not seen since the 1940s, with household spending retreating by 1 percent, which also hasn't happened since World War II.
Both General Motors and the Credit Union National Association would like to expand a just-announced pilot partnership that provides a 4 to 5 percent purchase-price discount to members of nearly 1,300 credit unions who buy GM vehicles in four Midwestern states.
After the June 30 wrap-up of the program launch, GM would like to roll it out to other regions or nationwide, Mark LaNeve, the company's North American vice president of sales, said today. And a credit-union executive invited Ford and Chrysler to consider their own versions of a test program that aims to bring some of America's most creditworthy middle-income consumers into GM dealer showrooms.
With the deal that began this week, GM is seeking broader access for its customers to one of the few reliable pools of auto-financing funds, especially because the company's finance arm, GMAC, is making practically no new loans these days.
GMAC, the auto loan and mortgage lender owned by General Motors and Cerberus Capital Management, said Wednesday too few of its bondholders have agreed to swap their debt, raising doubts that it can become a bank holding company and putting its very survival in question.
It also exacerbates GM's precarious situation as GM relies in large part on GMAC to finance its dealers and its car buyers. Already, GMAC has substantially tightened credit standards making it extremely difficult for dealers and their customers to receive loans.
Struggling to make inroads in Europe with its U.S. brands, General Motors will no longer use Kroymans, a Netherlands-based dealer group, to import and distribute Cadillac, Chevrolet Corvette and Hummer vehicles in Europe beginning next year, according to published reports.
General Motors opted not to renew its sponsorship deal with the Pittsburgh Pirates, the team's president said this week. At the moment GM has a sponsorship agreement with Major League Baseball that runs through 2010.
But with GM in cost-cutting mode and a federal car czar likely overseeing its operations as a result of the automaker accepting proposed federal loans, all bets may be off. Already, GM ended its sponsorship with golfing great Tiger Woods.
Experts predict significantly more cuts in corporate sponsorships of sports and other activities, especially by troubled automakers.
The House of Representatives could vote as early as today on the $15-billion loan package for U.S. automakers after the Congressional Democrats and the White House reached an agreement in principle on Tuesday night.
If the legislation now being crafted is passed, the low-interest loans could make their way to General Motors and Chrysler by next week. The automakers have said they could run out of money before the year ends. The $15 billion in loans is intended to keep them afloat through March. Ford has said it doesn't need loans now but would like access to a line of credit if the economy worsens more than the automaker expects.
With a pending vote Congressional vote on a bailout package to extend so-called "bridge loans" to Chrysler LLC, Ford Motor Co. and General Motors Corp. by perhaps as soon as this week, New York Times
columnist Thomas L. Friedman -- often prominent for his provocative views on the auto industry -- is calling for one unique "string" to be attached to federal bailout funds: forcing the domestic automakers to present plans to hybridize their entire model ranges in three years.
Friedman has been a vocal advocate for hybrid-electric technology and has been criticized for a view of the industry that typically is unkind to the Detroit auto-industry establishment. Friedman often argues in favor of the management style and operational practices of Detroit's chief competitors, the Japan-based automakers -- and caused fireworks when he once suggested GM should go out of business and let Toyota assume GM's longstanding role.
As the numbers on the U.S. economy worsen, resistance to federal assistance for the struggling Detroit Three automakers dissipates, with reports from Washington, D.C., saying Congress could vote on a hastily crafted bailout package as early as Tuesday.
White House spokesperson Dana Perito told reporters today it appears the Bush administration and congressional leaders, squabbling mostly about from where "bridge loan" funds would be appropriated, have to come to agreement, although Congressional Democrats need to construct a bill.
Results released from a survey conducted by CNBC and Portfolio.com confirmed what the heads of Detroit's auto companies testified to in Congressional hearings the last months: Consumers are reluctant to buy a car from an automaker in bankruptcy.
A bankruptcy filing by General Motors and Chrysler would cost U.S. taxpayers four times more than the amount of federal bridge loans being considered this week by Congress, a new study finds.
A bankruptcy, or even a prepackaged restructuring outside of bankruptcy court, cannot control a wild card unique to automakers -- the car-buying consumer -- noted a joint study by international consulting firm BBK and Michigan-based Anderson Economic Group.
The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.
This column by Detroit Free Press auto critic Mark Phelan originally was published on November 17 and was updated last Friday to debunk the myths as Congress was about to fashion an automotive rescue package.
The most dramatic and convincing moment of five-and-a-half hours of Congressional testimony on Detroit automakers' request for financial help came when Texas Democrat Al Green asked the panel of esteemed financial and industry experts simple, straightforward questions. Requesting them to raise their hands like third-graders if their answer was yes, he asked:
Was bailing out AIG in the national interest?
All six hands went up.
Is it in the national interest to bailout the Detroit automakers? All hands shot up.
Would it be damaging to the national interest not to take action to help Detroit's automakers? All hands went up.
"Then we must act. It is in our national interest," Green concluded.
The Canadian government will begin reviewing financial-aid requests this weekend for General Motors, Ford Motor Co. and Chrysler LLC. The automakers had a Friday deadline to submit detailed proposals for their Canadian businesses.
"We want to see long-term plans, and management has to be overseen if taxpayer money is involved," Industry Minister Tony Clement told Bloomberg News Thursday. The government will look at "various options" for help from this year's budget, Clement said.
UAW President Ron Gettelfinger testified before a Senate committee Thursday that General Motors could be bankrupt by the end of December.
"I believe we could lose GM by the end of this month unless something happens," Gettlefinger told the the Senate Banking, Housing and Urban Affairs Committee in the automakers' second plea for financial assistance.
Gettelfinger insisted a Chapter 11 bankruptcy or even a pre-packaged restructuring, as advocated by many in Congress, is not a viable option. He said consumers won't buy cars from a company in bankruptcy.
Indeed, GM CEO Rick Wagoner said the automaker needs in immediate $4-billion loan to stay afloat through the end of January.
This morning, Gettelfinger, Wagoner, Chrysler CEO Bob Nardelli and Ford CEO Alan Mulally are testifying for the second time before the House Financial Services Committee.
Every Senator and Representative in Congress are receiving on their doorstep this morning a special edition of the Detroit Free Press with a headline that screams "A Message to Washington: Invest in America."
The sole article on the front page is an editorial asking Congress to pass a rescue package for Detroit automakers.
In his explanation of why the paper was taking such unprecedented action, Editor Paul Anger noted that indeed it is the newspaper's job to inform, but "there are times when a newspaper needs to speak up for what's right."
It's still anybody's guess, but Congress seems to be warming somewhat to the idea of helping Detroit's automakers, if for no other reason than to keep the entire U.S. economy from collapsing on their watch.
On Friday, Detroit's auto chiefs were headed to Capitol Hill to testify again before the House Financial Services Committee. On Thursday, they were before the Senate Banking, Housing and Urban Affairs Committee for nearly six hours.
At the opening of Thursday's session, the potential for the Detroit Three automakers' proposed bridge-loan package of as much as $34 billion appeared to be steering towards the much-discussed - and much-dissed by the automakers - "pre-packaged bankruptcy" option.
But as the testimony wore on, the case against bankruptcy gathered a palpable momentum, and it now seems likely Congress will broker some kind of immediate funding General Motors Corp. and Chrysler LLC say they must have to survive to see 2009.
The real question now seems to be from where, how, and how quickly the help will come. GM CEO Rick Wagoner and Chrysler CEO Robert Nardelli were unabashed in reiterating their companies' need at least $4 billion each - by the end of the month.
As he testifies before Congress today and tomorrow, Richard Wagoner will be doing more than attempting to seal the deal for some $12 billion in government loans and a $6-billion line of credit that he has requested to rescue his employer, General Motors.
GM's chairman and CEO also may be auditioning to keep his job.
Wagoner certainly looks to be in better shape to hold on to GM's top post this week than he did a couple of weeks ago, after his singularly uninspiring first round of bailout testimony on Capitol Hill. He has done all the right things since then, inside the company and for external audiences.
DETROIT -- The leadership of the United Auto Workers (UAW) union, meeting in an emergency session here Wednesday, said it willnegotiatewith General Motors, Ford and Chrysler tomodify its current contractas part of the Big Three's plea to Congress for bridge loans.
UAW President Ron Gettelfinger said the union leadership also agreed to delay the Detroit three's payments to the Voluntary Employee Benefit Association (VEBA), which shifts retiree health care benefits for union members from the auto companies' books to a union-administrated fund.
Dongfeng Motor Group Co., China's third-largest automaker, said it had received proposals from investment banks to buy assets from General Motors as the carmaker tries to generate desperately needed cash, Bloomberg News reported Wednesday.
A spokesman for Dongfeng, which partners in China with Nissan, Honda and PSA Peugeot Citroen, said it had received e-mails and investment materials asking if the company would be interested in buying some of GM's assets. The spokesman, who wouldn't reveal the investment banks it was talking with or the assets offered for purchase, told Bloomberg it hasn't reviewed the materials and has not responded to GM.
A GM spokesman based in Shanghai denied the report, saying there were no grounds to the rumors.
General Motors Corp. Tuesday released the plan submitted to Congress in application for federal bridge loans to carry the company through 2009, when it expects a host of structural improvements and general downsizing to create "a new General Motors, one that is lean, profitable, self-sustaining and fully competitive."
What GM wants: up to $18 billion -- up to $12 billion in direct federal term loans and another $6 billion committed line of credit to guarantee the company can weather an auto-sales environment even worse than GM's projected 12-million-unit sales rate for 2009.
In case members of Congress needed any more reminding why the domestic automakers are hat-in-hand before them this week, the 37 percent drop in November sales has provided them with the latest bleak snapshot of a moribund U.S. vehicle market.
As the Detroit Three were presenting their restructuring plans in Washington, D.C., on Tuesday, the sales data rolling in from them and all other OEMs gave further dimension to the vast pall that has come over the nation's automotive market and quantified the paralyzing dread that is felt by American consumers.
As Congressman and industry experts suspected, the $25 billion in bridge loans Detroit's three automakers requested of the federal government is not enough.
In their viability reports submitted to Congress Tuesday, the three auto companies have requested a combined $34 billion.
General Motors wants up to $12 billion in loans in various installments to help it through 2009. GM also requested a $6 billion line of credit in case the economy gets worse. Ford is asking for a line of credit of $9 billion that it may not tap into but wants as a security blanket in case the recession extends well into 2009. And Chrysler wants $7 billion -- by Dec. 31.
SANTA MONICA, Calif. -- Domestic automakers eased off the incentive gas in November while import automakers revved up incentives, according to Edmunds.com.
"All three domestic automakers lowered their incentive spending this month, seeking to preserve cash during these incredibly tough times," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Meanwhile, the imports have poured more money into incentives, attempting to seize the opportunity to gain market share. Toyota's monthly incentives spend hit a new record high in November, and the company's market share might follow suit."
Scrambling to enlist the aid of the federal government in surviving the nation's drastic economic downturn, Ford Motor Co., General Motors Corp. and Chrysler LLC are submitting today their restructuring "blueprints" that will have at least one element in common: symbolic pay cuts for their chief executive officers and pledges to accelerate the introduction of higher-efficiency models and technologies.
Ford CEO Alan Mulally will work for $1 per year, Ford announced, and it is believed GM CEO Rick Wagoner will do the same when his company releases details of the company's plan later today. Chrysler CEO Robert Nardelli already had offered to work for $1.
General Motors announced Tuesday it is ceasing its operations at Detroit Metro Airport in an effort to cut costs.
The elimination of General Motors Air Transportation Services, known by GM insiders as G-MATS and that operated from its own terminal at Detroit's airport, comes on the heels of Congress criticizing Detroit auto executives for flying their individual corporate jets to hearings at which they were asking for $25 billion in government assistance.
With Chrysler LLC, Ford Motor Co. and General Motors Corp. set to return to Washington,
DC tomorrow to present Congress with a detailed plan for restructuring their operations under terms of a desired federal bridge-loan package, reports from Europe indicate the Swedish government may be considering an active role in assuring the continued future of Saab Cars and Volvo Car Corp., owned by GM and Ford,
respectively.
And Ford confirmed Monday it is exploring the possibility of selling Volvo - despite assertions
earlier this year the company did not want to part with its Swedish division - saying in a press release the company "will re-evaluate strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker."
The Detroit Three are putting the finishing touches and obtaining the blessings of their boards and upper management for the biggest sales pitch of their lives this week. They are preparing the viability plans due to Congress on Tuesday in order to obtain the $25 billion in bridge loans they are seeking.
Executives from General Motors, Ford and Chrysler worked through the Thanksgiving holiday putting together plans after Congressmen criticized them for lacking such plans in the last round of hearings. While each company's plan is individual to their unique circumstances, all are expected to detail even deeper cuts, including executive compensation and perks, than have already been made and an acceleration of environmental and fuel-saving initiatives. Their plans also are expected to include even more concessions from the United Auto Workers (UAW) union.
Meantime, the Detroit Three's plea for help is likely to get a boost from the continued deterioration of auto sales in the U.S., where automakers report November results Tuesday. Sales are expected to hit 25-year lows. That sales slide is spreading globally with a number of markets reporting dismal sales on Monday.
The plans the Detroit Three automakers are developing to submit on December 2 to Congress in justification for their entreated $25-billion federal loan probably are being more closely guarded than the manuscript for Sarah Palin's first book, but we can guess one aspect that seems certain to feature in the bailout blueprint of both Ford Motor Co. and General Motors Corp.: ditching some brands that have long dogged their ever-more-fragile bottom lines.
For at least a decade, critics have shouted down both GM and Ford for refusing to do what it now appears must be done -- stop supporting underperforming divisions.
Rumors howling in Detroit's November winds point to brand-burning as one of the primary ways the companies plan to demonstrate to Congress they will be able to sustain their operations in a U.S. auto market that is expected to be decidedly unkind for all of 2009 and possibly well into 2010.
Detroit's Big Three automakers are jousting with the U.S. Congress for their continued existence, and nobody denies that's serious business.
But as usual, what got the auto companies to this place has opened Detroit Inc. to plenty of ridicule -- and not all of it is mean-spirited.
Laughter may or may not be the best medicine for this predicament. Either way, here are a few examples of our favorite "bailout humor" that hit the national stage:
It's hardly front-page news at a time of high drama over the entire future of the domestic auto industry, but the cellulosic-ethanol business is advancing by baby steps at a time of significant financial peril for many of its members - and for the entire economy.
Startups linked with General Motors Corp. represent a huge microcosm of the unevenness of the so-called "second-generation" - non-food-based - ethanol business. Coskata Inc. has just inked a major deal with U.S. Sugar to site a 100-million-gallons-a-year ethanol plant in Florida that will use sugar-cane leftovers as the raw material.
But competitor Mascoma Corp. just laid off 10 percent of its executives and workers.
General Motors and golfing great Tiger Woods announced Monday they were parting ways.
GM's longtime deal with Woods, who served as spokesman for Buick for the past nine years, ends December 31.
For GM, it is a cost-cutting move as it struggles to survive. GM reportedly paid Woods $8 million a year for the endorsement. Woods claims he wants more personal time since he and his wife are expecting a second child in late winter.
SANTA MONICA, Calif. -- November car sales improved over October's historic lows thanks to lower gas prices and high incentives.
November new vehicle sales, including fleet and retail sales, are expected to be 850,000 units, a 27.6 percent decrease from November 2007 but showing a 1.9- percent increase from last month, according to Edmunds.com's forecast.
Still, the Seasonally Adjusted Annual Rate (SAAR) for the month is expected to be only about 11.5 million units.
Detroit Three automakers plan to return to Washington to make their second pitch for federal bridge loans next week and will also ask Washington to help them sell more cars by making car loans more available.
Carmakers around the globe are raising the alarm about the declining health of auto suppliers, whose problems they fear could ricochet back to hurt them.
Many suppliers that make parts for General Motors, Ford and Chrysler also supply their foreign-owned plants operating in North America and elsewhere. Rating agencies are warning about tightening credit conditions, falling orders, and the possible failure of a Detroit carmaker, which could bankrupt some auto suppliers and in turn hurt even relatively healthy carmakers' businesses, the Financial Timesreported.
The CEOs of Ford Motor Co., General Motors Corp. and Chrysler LLC loaded up on their much-maligned corporate jets and winged out of Washington, DC, this week with no bailout money -- but the assurance of a shaky holiday season.
After Democratic deal-makers conceded this week there would not be sufficient bipartisan support to approve a bill to "repurpose" the existing and already approved $25-billion Department of Energy loan (originally intended to promote the development of fuel-efficient technology and retool factories), the initiative was shelved until a possible vote on December 8.
That promises to be a rocky 17 days for GM and Chrysler, whose bosses insinuate the companies may not have the funds to enable them to see the New Year.
WASHINGTON -- A bipartisan plan to provide Detroit automakers and suppliers with bridge loans using the already appropriated $25 billion to retool to more fuel-efficient vehicles came and went in a matter of hours Thursday.
Democratic Congressional leaders, realizing they did not have the votes to pass the plan that was presented around noon Thursday, announced less than three hours later that they would not put it to a vote this week.
Instead, they are requiring automakers applying for the loans to submit a plan of financial viability with an explanation of how the loans will help them transform their business by December 2. Congress may then reconvene for a possible vote on December 8.
The odds of General Motors and Chrysler filing bankruptcy in early 2009 soars to 75 percent without a government rescue package, predicts forecasting firm IHS Global Insight. With federal loans, the odds drop to 25 percent.
"Without a loan package, the probability of both GM and Chrysler going bankrupt in early 2009 is about 75 percent -- almost a certain probability," George Magliano, IHS Global Insight's director of North America, said in a Webcast on the economy and auto industry Thursday morning.
General Motors Chairman and CEO Rick Wagoner told Congress a collapse of the U.S. auto
industry would have a devastatingimpact across the entire U.S. economy.
Wagoner defended GM's progress in transforming itself and negotiating a favorable agreement with its unions.
Here is Wagoner's opening statement to a U.S. Senate committee on Tuesday and a House Committee on Wednesday holding hearings on the bridge loans:
Chief executives from each of the Detroit Three automakers couldn't
have come to Tuesday's session of the U.S. Senate Banking, Housing and Urban Affairs Committee at a less-receptive time. Seeking $25 billion in emergency loans to keep their ailing operations afloat, they might as well have been kids who've gorged on all their Halloween candy and now are whining for more.
Although the committee is chaired by a receptive persona in Senator Chris Todd (D-CT), Republicans are largely presenting an icy posture regarding Detroit's plight - and senators on both sides of the aisle grilled Ford's Alan Mulally, GM's Rick Wagoner and Chrysler's Bob Nardelli with varying degrees of understanding and acidity. The three are scheduled for a House committee hearing Wednesday morning.
DETROIT - Any day now, the country and its decision-makers will decide whether to extend a massive financial lifeline to sustain Detroit's suddenly cash-anemic automakers. Judging from the rhetoric coming from the auto industry and sympathetic voices in Washington, DC, it needs to be any day now, or Detroit won't be around to hear the verdict.
And every day now, there are colliding opinions regarding whether an automaker bailout is wise - or politically and socially proper.
As has been said many times as the domestic auto industry continues its frenetic unraveling, there's plenty of blame to go around, and a portion of it lies with the unions. The United Auto Workers has rarely been out of the conversation of what's ruined Detroit Inc., but arguments centered on the notion that fat, uncompetitive unionized labor is the root cause of Detroit's ills are specious - and little more than an excuse for some good-old-fashioned union-bashing.
Richard Shelby, the top Republican on the Senate Banking Committee, took to the airwaves over the weekend as the chief opponent of loans to Detroit automakers. His premise: This is a Detroit problem not a national problem and taxpayers shouldn't subsidize these poorly managed dinosaurs.
"I don't believe they've got good management. They don't innovate. They're a dinosaur, in a sense, and I hate to see [them get government loans]," Shelby said on NBC's Meet the Press.
With all due respect Senator Shelby, this is not only a Detroit problem. It's an Alabama problem. It's a national problem. And it's a global problem. Recession is spreading around the globe like a California wildfire. Once-hot auto markets have caught cold. And automakers everywhere -- not just in the U.S. -- are asking their governments for a helping hand.
The future of the American auto industry rests in the hands of the U.S. Congress, which this week debates whether the government should make loans to Detroit automakers to get them through the current economic crisis.
Theoretically, we believe the free market is preferable to government intervention. But this isn't theory. This is reality, and an ugly one at that. The pragmatic answer to these unprecedented circumstances demand action.
The Associated Press reports today that President-elect Barack Obama, meeting yesterday with President George W. Bush, "suggested" Detroit's reeling automakers need financial assistance -- and need it now. Obama appears to believe keeping the domestic automakers afloat is vital to keeping the nation's flagging economic engine firing -- but he does not become president until January.
It appears Detroit's automakers can scarcely afford to wait.
DETROIT -- General Motors said Friday it lost $4.2 billion in the third quarter and was burning through cash ($6.9 billion in the third quarter alone) to the point that the automaker will be operating at minimal liquidity levels by the end of this year -- levelsthat will fall even further in next year's first half.
As a result its dire situation, GM announced it would cut more jobs and slash additional costs.
The U.S. Department of Energy Thursday issued the draft rules for automakers seeking the long-ballyhooed $25 billion in loans Congress recently approved for automakers (and suppliers) to retool factories to produce a new generation of more fuel-efficient vehicles.
Sure, strings had to be attached, or the automakers would burn through the dough like sailors on shore leave. But saying there are hoops to be jumped through in this "interim final rule" is an understatement.
The chiefs of Detroit's three automakers and the president of the UAW are scheduled to meet at 4 p.m. Thursdaywith a Congressional delegation in Washington, D.C., in an effort to obtain loans to keep them afloat through the next year.
General Motors' Rick Wagoner, Ford's Alan Mulally, Chrysler's Robert Nardelli and the UAW's Ron Gettelfinger were set to meet with Speaker of the House Nancy Pelosi as well as Michigan Congressman John Dingell and others to plea their case.
With operating revenue becoming an increasingly scarce commodity in Detroit, General Motors Corp.'s and Ford Motor Co.'s luxury of maintaining their premium-brand but low-performing Swedish automaking units is likely to earn deeper scrutiny in the coming months.
Skepticism regarding the wisdom of retaining Saab Cars has been around at parent General Motors Corp. almost since the day GM purchased 50 percent of Saab's automaking unit (actually underbidding future GM partner Fiat Group) in late 1989 for the paltry sum of $500 million. GM acquired the rest of the company
in 2000, and at that time, Saab was losing money and it has been widely believed Saab has never returned a profit under full GM ownership.
But rumors and innuendo about GM cutting Saab adrift have reached a higher pitch in the past weeks as GM, openly seeking cash injections, has shopped its Hummer brand and storied AC Delco aftermarket-parts division, and recently dealt with a crumbled plan to offload its commercial-truck business to Navistar International. The potential for a government cash injection -- never mind the complication of a proposed merger with Chrysler LLC - now seems GM's best near-term option.
As many as 3 million jobs and hundreds of billions of dollars will be lost from the U.S. economy if General Motors, Ford and Chryslercease operations, a new report shows.
The report by the Center for Automotive Research (CAR) details the job losses and economic impact of two scenarios: if all three Detroit automakers cease operations next year; and if Detroit automakers contract by half, likely involving two automakers going out of business.
"Either of these scenarios is possible, and indeed probable, within the next 12 months," the study says.
In both scenarios, the impact is devastating for jobs, income, the nation's tax base and consumer spending that could pull the U.S. economy out of recession.
Other automakers doing business in the U.S., including Toyota and Honda, also would be hit as would Canada and Mexico.
There were almost no words on Monday to describe how abysmal U.S. auto sales were in the woe-begotten month of October.
Bled by battered consumer confidence, by more expensive and harder-to-obtain loans, by financial-market disasters and Election Day anxieties, October sales limped in at only about 852,000 vehicles nationwide, a 32 percent plunge from a year ago.
"This level of sales is not sustainable for anyone in the industry," said Michael DiGiovanni, head of global market analysis for General Motors. "It doesn't matter how deep their pockets are. Everyone is pulling in their reins to one degree or another, but everyone is affected by this."
GM's sales slumped by a horrific 45 percent, the worst showing among the Big Six automakers selling in the United States. Chrysler's declined by 35 percent, Nissan's by 33 percent, Ford's by 29 percent, Honda's by 25 percent and Toyota's by 23 percent.
The industry total comprised its lowest sales volume for any month since 1992. And adjusting for population growth -- that is, on a per capita basis -- October auto sales were the industry's worst since World War II.
A merger between General Motors and Chrysler, which appears imminent, is not optimal but may be the best alternative for both automakers in the current environment, says a report by a restructuring company.
"Chrysler, as we know, it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice, which issued Thursday a report on the state of Chrysler and an analysis of a combined Chrysler and GM. "At this point, there are very few options available to either company."
Rodriquez believes it's in both companies' best interest to announce a decision that a merger will go forward by Election Day, with specifics to be hammered out later.
Ford Credit, the financing arm of Ford Motor Co., and GMAC Financial Services, the troubled financial arm part-owned by General Motors and Chrysler owner Cerberus Capital Management, will get federal help to access the locked-down commercial credit markets, news reports say.
The move should loosen up credit for customer car loans.
General Motors and Cerberus Capital Management continue to talk about a GM-Chrysler merger with some significant issues remaining on the table, sources tell Edmunds' AutoObserver. Among them are issues relate to United Auto Workers union, which is being asked to make some concessions but has not yet agreed to them.
Meantime, Reuters news service, quoting unnamed sources, is reporting the two sides, in fact, have resolved the major issues in a proposed merger, though the final deal is dependent on financing and government support.
Reuters also picked up a story out of Japan that claims GM is expected to ask for Toyota's help in turning around its business, Kyodo News reported on Wednesday, citing sources familiar with the plan. An AutoObserver source suggested the report is overreaching.
DETROIT -- General Motors CEO Rick Wagoner reportedly is heading to Washington, D.C.,
to personally lead a lobbying effort to obtain federal aid, paving the way for GM and Chrysler to merge.
GM and private equity firm Cerberus Capital Management, the custodial parent of Chrysler, reportedly are asking the federal government for $10 billion to help them merge.
Backs to the wall, the two companies apparently see no remaining options for survival beyond a government rescue, since such a merger defies business logic. Since Washington is doling out bailouts by the billions these days, the timing is right, and the two are clearly setting up a "too-big-to-fail" position to bolster their case.
The belt-tightening in the global auto industry is beginning to make itself shown in new-product plans in practically every region. Replacement models are being delayed, proposed new models are being canceled or reconsidered, and new-product investment, in general, begins to suffer the results of sagging sales and ever-tightening access to credit.
It seems to be getting more difficult for General Motors Corp., for one, to disguise the fact minimum comfortable levels of operating income have been reached. The company is enacting its first white-collar layoffs in decades and is seems increasingly desperate to find a ready cash stream.
General Motors Corp. reportedly has settled an important matter in the development of its Chevrolet Volt extended-range electric vehicle: the company is said to have decided on the supplier for the critical lithium-ion batteries necessary for the Volt to travel as far as 40 miles on a single charge.
GM reportedly will award the high-profile contract to Michigan-based Compact Power Inc., an arm of South Korea's LG Chemical. The company has been in competition for the Volt battery contract with a different, competing lithium-ion chemistry developed by Massachusetts-based A123 Systems and its systems integrator, Continental Automotive Systems.
DETROIT - Consumer Reports magazine delivered more bad news to Chrysler Thursday, noting the automaker's vehicle reliability has dropped since Cerberus Capital Management took over the company just over a year ago.
In contrast, Ford's reliability is now approaching that of Toyota and Honda with almost all of its vehicles achieving above-average reliability in the magazine's annual survey. General Motors' results were mixed.
"There has been a systematic, structural change within Ford,'' said David Champion, director of the magazine's auto test center, said. Champion revealed the magazine's survey results Thursday at the Automotive Press Association meeting in Detroit.
SANTA MONICA, Calif. - October auto sales are turning out to be every bit as bad as
forecasters predicted early in the month.
Edmunds.com forecasts October new vehicle sales, including fleet and retail, will again fall below the 1-million mark to 872,000 vehicles sold - about 30 percent below October 2007. October 2008 will mark the U.S. auto industry's lowest sales level since January 1992.
And the industry should brace itself for a terrible November, typically one of the lowest sales months of the year.
General Motors Corp., seeking alternative revenue sources, said today its longstanding ACDelco parts unit is for sale.
Several sources contacted by AutoObserver said, however, that for many reasons it is difficult to determine a valuation for ACDelco.
The current turmoil in the auto industry - strife from which parts suppliers like ACDelco have been anything but immune - and other considerations make it difficult to determine what GM might be offered for the parts-making unit.
DETROIT - At the Convergence 2008 Conference here, a biannual gathering of the auto and electronics industries that examines issues of meshing the two industries, automaker representatives agree electronics content in automobiles will continue to increase - while simultaneously insisting they must safeguard quality.
The quality issue resonated for most participants in a Convergence panel addressing broad issues regarding electronics usage in the auto industry.
General Motors is looking for a large investment from outside investors similar to the investment Warren Buffett made in General Electric and Goldman Sachs, the Financial Times reported Tuesday.
But the paper cited an unnamed banker as questioning the chances of GM finding an investor to do so.
A source briefed on the matter has told Reuters that representatives of GM and Chrysler's majority owner Cerberus Capital Management have approached at least one major investor with a pitch to invest in their deal. But the pitch for a capital injection for a merged automaker that would control about a third of the U.S. light-vehicle market was met with "a great degree of apprehension," the source said.
PARIS - At the recent 2008 Paris Auto Show, Renault unveiled its new C-segment Mégane hatchback and coupe. Sized and priced to compete withEurope's best-selling vehicle, the Volkswagen Golf,the Renault Mégane is vital to the French automaker's financial health that has been in decline in recent months.
DETROIT -- Late yesterday, a number of media outlets reported General Motors Corp. and Chrysler LLC were "accelerating merger
discussions" and suddenly have identified a reputed $10 billion in "cost synergies" (one-time? annual?) a merger would generate.
Ten billion is a very round, very large and very convenient number. And a number that is highly dubious. From whence would that plump $10 billion come?
Has the auto industry tanked mainly because consumers can't get credit, or because they just don't want to buy a vehicle right now? Withnew marketing campaigns that highlight loan availability, General Motors and Toyota aren't waiting for the debate to be settled.
In radio, newspapers and digital advertising that breaks today, GM is launching a program called "Financing That Fits" to highlight the fact that worthy consumers can still get car loans through its dealerships. As part of the initiative, GM is repackaging a six-year-old online database as a way for its dealers to help willing buyers find financing while they're still in the showroom. It is also reminding consumers that it is offering zero percent financing or up to $6,000 cash back on most of its 2008 models.
PARIS -- There's a lot of talk these days about how auto styling is converging -- or being ripped off.
At the 2008 Paris Auto Show earlier this month, there wasn't much mistaking the distinctive shapes presented by France's home-market biggies, Citroen and Peugeot; French styling remains unique (and largely uncopied, perhaps for a reason).
But a number of vehicles on display at the show looked strikingly similar to other vehicles on the show floor -- or ones we've seen elsewhere.
General Motors has been trying to peddle a suddenly outmoded Hummer brand for several months now, so far with no takers. But ask Mark LaNeve, GM's North American sales vice president, if the company would like to put any of its other ailing brands on the auction block, and get a bristling response.
"Why should one of mine go away?" he asked. "There are lots of brands that we outsell. Why doesn't one of them
go away?"
And while LaNeve's remark came before the recent buzz about GM-Chrysler merger talks, it's even more apropos in light of the possibility that two of the old Detroit Big Three could merge their brands as well as their operations. GM's brands would be largely likely to survive any such combination, while most of Chrysler's would likely disappear.
DETROIT -- It appears cooler heads prevailed at General Motors long before the media frenzy over a possible merger between GM and Chrysler started. Wisely.
The Wall Street Journal is reporting Monday that GM's directors "gave a cool reception" to the idea of acquiring Chrysler's automotive business when it was discussed at last week's board meeting.
The board's reception is the right one, in our view, as there's little in such a deal for either of them, especially for GM.
The Journal confirmed the story broken by The New York Times over the weekend which led to a media feeding frenzy that GM recently held talks with Chrysler's majority owner -- private-equity firm Cerberus Capital Management LP. Cerberus proposed swapping its 81.1 percent stake in Chrysler for GM's 49 percent stake in home and auto lending firm GMAC. Cerberus owns the other 51 percent of GMAC. The paper further reports talks between the two automakers have broken off for now, but could be revived.
After a week of intense battering, General Motors Corp. and Ford Motor Co. stock prices on Friday were at least standing their ground against a still-plummeting U.S. stock market. The problem is, that ground is practically below sea level.
After seeing its stock price plunge some 50 percent since the beginning of October and with the sub-$5 price hovering around 1950s levels, reports swirled Friday that GM is preparing another round of production cutbacks and possible plant closures. GM moved earlier this year to chop some 300,000 units of truck production from its manufacturing schedule and accelerated the shutdown plans of its SUV assembly plant in Moraine, Ohio.
General Motors is replacing its employee pricing program with zero-interest financing for up to six years on many 2008 models. The offer begins Oct. 1 and runs through Nov. 3.
GM is offering the longest loans large SUVs, including the GMC Yukon and Chevrolet Suburban as well as the Pontiac Grand Prix sedan. GM also is offering up to $7,000 in cash rebates on some models.
After Monday's stock market plunge and Tuesday's resurgence, General Motors shares closed Tuesday a tad higher, but Ford's stock price continued its slide.
GM shares rose 1.6 percent to $9.60, still 78 percent below its 52-week high of $43.20. Ford shares dropped 7.1 percent to $4.83.
SANTA MONICA, Calif. -- The average automotive manufacturer incentive in the U.S. was $2,801 per vehicle sold in September 2008, down $1, or 0.04 percent, from August 2008, and up $444, or 18.8 percent, from September 2007, Edmunds.com estimates.
"Although up overall from last year, incentive levels remained flat from August to September despite worsening economic conditions and weak auto sales," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "The high incentive costs of heavily discounted 2008 models are being offset by the low incentive costs of the 2009 models entering the marketplace."
Wheezing U.S. auto sales in September fell by 26 percent, coming in below one million units for the first time for any month in more than 15 years and prompting epochal comparisons to the dismal fall of 2001, when American consumers were frozen by the shock of the 9/11 terrorist attacks.
Overall sales for the month were only about 965,671 vehicles, compared with some 1.3 million vehicles sold in September 2007. In September, the seasonally adjusted selling rate -- the industry's most important interpreter of the sales picture -- fell to an abysmal 12.8 million units compared with a rate of 16.5 million last year.
No one is happy about the U.S. House of Representatives' rejection of the $700-billion federal bailout of the financial services sector and subsequent stock market crash - least of all automakers.
In the short term, auto stock prices for almost every global automaker and their suppliers tumbled on the news Monday - some plummeted to record lows. No bailout means no end to the credit crunch that is keeping belt-tightening customers from even bothering to go to a showroom as September sales to be reported Wednesday will show.
Longer term - and maybe not all that long term - even more belt-cinching by automakers will likely result in deepening production cuts and job losses.
DEARBORN, Mich. - The Dodge Challenger and the upcoming Chevrolet Camaro and Ford
Mustang might get a sales lift as truck owners, who bought pickups to show of their machismo, seek more fuel-efficient rides.
Rebecca Lindland, analyst for Global Insight, told the audience at the forecasting firm's economic outlook conference held here last week, that the days of fashion buyers for full-size pickup trucks like the Ford F-150, Dodge Ram and Chevrolet Silverado are over. "The designer buyer is gone," she said.
Bill Heard Enterprises, the nation's largest Chevrolet dealership group, filed for Chapter 11
bankruptcy over the weekend, after closing 14 showrooms and laying off nearly 3,200 employees last week.
It was not the first nor is it likely to be the last dealership to file bankruptcy. In its filing in U.S. bankruptcy Court in Decatur, Alabama, the Heard Group noted it is at least the eighth U.S. car dealer to file bankruptcy of late.
SANTA MONICA, Calif. - September vehicle sales to be reported by automakers on Wednesday are expected to drop to their lowest monthly level since 1993, Edmunds.com forecasts.
September new vehicle sales, including both retail and fleet sales, are expected to be 1.05 million units, a 19.7 percent decrease from September 2007 and a 15.7 percent decrease from August 2008, Edmunds.com predicts.
"February 1993 was the last time that fewer than one million new vehicles were sold in a month, and we're coming remarkably close to that volume again," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "Traditionally, October sales are even worse than they are in September, so we don't likely have much to look forward to next month."
Detroit automakers moved a step closer to obtaining the $25 billion in loans to re-tool their factories to make more fuel-efficient vehicles.
On Wednesday, the U.S. House passed a bill by a 370-58 vote that included a low-interest federal loans to automakers. Congressional leaders took steps to fast-track the money. The Senate was expected to pass the bill Thursday and President Bush is expected to sign it.
FLINT, Michigan - A symbol of the times: General Motors Corp. recently shuttered its historic engine plant here that produced a once-cornerstone of the company's engine lineup, a V-6 of 3.8 liters.
Replacing that in a $370-million investment that brought rousing cheers from a large crowd here is a fuel-stingy four-cylinder engine that at 1.4 liters is almost one-third the size. And one of the models the new engine will help power: the high-profile Chevrolet Volt extended-range electric vehicle - a model which itself has emerged as a symbol of GM's promise to be at the vanguard of alternative-energy transportation.
Not that it matters at this point, but almost two out of three people surveyed oppose government loans to help automakers, according to the latest Bloomberg/Los Angeles Times poll released Wednesday.
Congress could vote on as early as today - and likely pass -- a bill that includes $25 billion in low-interest loans to help General Motors, Ford and Chrysler develop more fuel-efficient vehicles.
At the same time, the Bloomberg/LA Times as well as a new Washington Post-ABC News poll show Americans growing increasingly pessimistic about the economy. Auto execs are the first to say consumer confidence is a key indicator for where auto sales go.
The U.S. Senate on Tuesday passed an expansive tax bill that had many automakers on full alert because it included provision of a tax credit for hybrid or fully electric vehicles with batteries that can be recharged from the electric grid - so-called "plug-in" vehicles.
If passed by the House, which is expected, the bill provides for as much as a $7,500 tax credit for purchasers of a plug-in vehicle. The credit, starting at $2,500, would increase in proportion to the vehicle's installed battery capacity up to the $7,500 maximum.
DETROIT - As part of its GMnext centennial celebration which concluded this week, General Motors Corp. released a list of its "Top 10 Production Vehicles" from the thousands of models it has developed since the company's inception in 1908.
And the "Like a Rock" crowd won't necessarily be pleased - although GM's full-size pickups often were best-sellers and profits from pickups and SUVs filled the corporate coffers for much of the 1990s and early part of this century, there's nary a truck or SUV on the list.
GM says the choices were selected by company archivists and historians and reviewed by "GM senior leaders." None of them must have been truck guys. Or Camaro guys. Or - okay, you get the idea: the list may be skewed by a kind of historian's mindset, and is unlikely to fully please even the most ardent GM supporter.
The company avoided further controversy by refusing to actually pick a No. 1 model. Instead, it lists the 10 most significant models in chronological order:
With so much pressure from every quarter on General Motors and other automakers to make huge leaps forward in fuel-efficiency -- and now! -- Christopher Borroni-Bird has become a major player on the most important stage in the global automotive industry.
And he understands the urgency of the task.
"There's more urgency than even six months ago," said the 43-year-old U.K. native, who is GM's director of advanced vehicle technology concepts in Detroit.
From his first job as a summerintern turning copper ingots into wire at a Packard Electric plant in Warren, Ohio, to his new post as vice president of human resources for the company's entire Asia-Pacific region, Jeffrey Kimpan has learned about as much as anyone could about General Motors and its people.
The bloody purge of the U.S. financial industry and its millions of shaky real-estate loans already have forced most automakers to cut way back on lease deals for their customers, an unavoidable blow given the importance of credit to the new-vehicle market.
But auto-company executives aren't giving up on the practice for the long term, believing that today's shakeout will help set the stage for a healthier leasing market in the future. Some of them actually are moving preemptively to ramp up leasing even in the short term instead of cut back.
Meantime, enormous pain is being inflicted on the many automakers that have grown dependent on leasing, the other part of a whopping double whammy that also includes the overall sales slide in the U.S. market.
Maryann Combs still remembers vividly her first assignment for General Motors: bolting generators to engine blocks on the Pontiac, Mich., truck-assembly line, as part of her internship while attending General Motors Institute.
"For a teenaged female right out of high school, it was an eye-opening experience," recalled Combs, who now is president of GM's Pan Asia Technical Automotive Center in Shanghai.
Beyond awakening, Combs found the experience transforming.
A few years ago, General Motors canned its initial task force that was charged with making sense of Internet sales and marketing, called eGM, and Mike Devereux was one of those who got dislocated. "EGM was wine before our time," he said.
But now, as GM's executive director of digital and CRM marketing, Devereux believes that he and the company finally are in the right places when it comes to exploiting the online medium. "The job I have now isn't wine before its time," said the 43-year-old native Brit. "It's prime time."
DETROIT - By lunchtime on the day General Motors Corp. chose to celebrate its 100th anniversary with a massive celebration here and an ambitious interactive program on the Web, it was apparent the world's largest automaker had the tech requirements figured out. There were no major glitches and GM deftly executed a global multimedia presentation - drawing from four additional regions around the globe - that would have done Microsoft proud.
The culmination, however, was the official unveiling of the vehicle that has emerged as the symbol - and rallying point - of GM's drive to remain as pertinent in the next 100 years of personal transportation: the Chevrolet Volt "extended-range" electric vehicle.
Carlos Barba will mark the 24th anniversary of his employment by General Motors on Tuesday - the same date, September 16, that GM itself was founded exactly one century ago today.
And in many ways, Barba, who is general director of GM's Latin America design studios in Sao Paulo, embodies so much of what has changed about the giant company. He's a designer working in an important developing market - but also a player in the increasingly integrated global design network that GM has been putting together to share best designs and best practices in each of its markets around the world.
As he worked his way up through the design ranks at Lotus, Audi, Mercedes-Benz and Saab, Anthony Lo proved his creative chops over and over again on models ranging from the Audi A4 to the Mercedes-Benz F200 concept car.
But now that he is executive director of design for GM of Europe, the demands on Lo are more often about organizing and motivating others, and balancing budgets and priorities - not only putting his stylistic imprints on future models. And he's willing to admit the different nature of the challenges.
It hasn't even been a year since Alain Visser became chief marketing officer of General Motors of Europe, but he can't learn from his predecessor: There wasn't one. As the division's first CMO, Visser is getting a chance not only to put a big stamp on the organization but also to define his own job.
"We didn't have a multi-brand marketing leader before, so it's a bit of a challenge for the organization," said Visser, a veteran auto marketer. "We believe there are more synergies to be found from a cross-brand point of view. But also, we want to keep [brands] apart and differentiated - that is my key objective."
As newly promoted vice president of engineering for General Motors of India, Sheila Jain Sarver is on the front lines of the company's crucial efforts to expand its share of the rapidly growing car market there.
Her recent promotion from the position of director of engineering and operations "underscores the significance of what we're doing in India to raise our technology footprint here in what we expect to be a key market," said the 44-year-old American born to parents of Indian descent. Increasingly, technology and vehicles GM develops in Bangalore, heart of the area known as the "Silicon Valley of India," also will be important in other markets ranging from China to the United States.
Sheila Jain Sarver, just promoted to vice president of engineering for GM of India, is one of General Motors' most promising executives in the whole world. Alain Visser, chief marketing officer of GM of Europe, also is considered an up-and-comer. And as a product manager who may know more about ethanol power than anyone else in the company, GM do Brasil's Henrique Pereira is becoming a more valuable player too.
But this isn't just inside dope. The whole world now knows GM's high opinion of these executives because -- among the many things the automaker has changed lately -- one of the most intriguing and even iconoclastic has to do with its people, not its cars.
As part of its centennial celebration that concludes this week, the automaker has designated Sarver, Visser, Pereira and about two dozen other executives and managers from throughout the company and around the world as the leading faces of a wide-ranging corporate self-tribute it called GMnext. AutoObserver will profile some of them in the coming days.
DETROIT - If images circulated on the Web
this week are representative of the Chevrolet Volt General Motors Corp. plans to deliver in two years, the General had better hope potential customers appreciate the engineering - because the Volt's design is a corporate brownout.
AutoObserver's all-day cruise around auto-related Web sites noted heavy-traffic comment about the leaked images of the Volt extended-range electric vehicle; some are mildly complimentary, but critics seem to outnumber approvers by at least four to one.
The most common reactions range in a bandwidth from disappointment to derision. The Volt concept car was widely applauded, and although GM subsequently warned certain aggressive aspects of the Volt concept would be sacrificed on the altar of production-car realities, the overwhelming blandness oozing from the images of what is purported to be the production Volt is inescapable.
DETROIT - Media manipulation or "human error?" Only General Motors Corp.'s public-relations office knows for sure.
Either way, images of the production version of the Chevrolet Volt "extended-range" hybrid-electric vehicle - possibly the most heavily hyped, highly anticipated vehicle in GM's history - made it to the Web Monday in what GM reputedly attributed to an accident. Until now, the Volt - which remains under a pressurized development schedule and is not slated to reach showrooms for more than two full years - had not been fully seen in final production form.
Sales of automotive luxury brands are struggling just like the overall U.S. market is.
Collectively, so far this year, upscale marques have only managed to hold on to their 11 percent share of the market from 2007. And some of the loftiest brands in the American auto business have been demonstrating some of the least resiliency.
Lexus, for example, is off 15 percent in 2008 sales through the end of August, and BMW brand has suffered a decline of 7 percent. Among domestic luxury makes, Cadillac has plunged 13 percent for the year, while Lincoln has eased by 19 percent.
KTALEGAON, INDIA - The next wave of small cars to come from General Motors could wear a "Made in India" label. GM India is rapidly expanding production capacity to build a new generation of small cars to meet consumer demand both at home and abroad. These Indian-built vehicles could arrive in U.S. showrooms as early as next year.
Located in the town of Talegaon, 110 miles southeast of Mumbai, the new factory will have an initial annual production capacity of 140,000 units. GM confirmed annual production at the $300 million dollar facility could be increased in the future. Combined with the 85,000-unit capacity at GM's other factory, in Halol, in the western state of Gujarat, GM India's annual output swells to 225,000 vehicles.
The factory in Halol currently builds no less than four (very different) Chevrolets: the Tavera SUV, Optra sedan, Aveo sedan and hatchback, plus the Spark city car. For now, the new Talegaon plant is scheduled to produce only the Chevy Spark. However, a GM India spokesperson told AutoObserver
the new-for-2009 Chevrolet Cruze compact sedan (debuting in October at the Paris auto show) is being considered for production in Talegaon. The Cruze goes on sale in the US next year, as a replacement for the aging Cobalt.
Automakers are moving forcefully into the online-marketing arena using a number of innovations in which their industry, arguably, has become the leader.
In Wednesday's part two of this three-part series on Internet marketing,Edmunds.com's AutoObserver
featured six ways that automakers are succeeding online. Here are the remaining six:
U.S. auto sales fell by about 15 percent in August compared with a year ago, to approximately 1.25 million units from around 1.5 million units -remaining in their summer-long trough. And a chorus of OEM executives agreed on Wednesday that their forecast for the rest of 2008 looks just about as dismal.
But something else also appeared amid Wednesday's sales reports: reasons to hope that the U.S. market already has flattened out.
"It appears we may have hit the bottom in terms of consumer demand in July," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "Because of factors like lower gas prices and generous incentive spending, we started seeing some improvement in August."
The U.S. automotive market has yet to reverse 2008's serious downward lurch, and automakers continue to pile on incentives to induce customers to purchase a new vehicle. Edmunds.com estimates August incentives were down a scant $3 from the 2008 high point set in July - and increased substantially when compared to the same period last year.
Edmunds.com estimates the average automotive manufacturer incentive in the U.S. was $2,642 per vehicle sold in August 2008, down $3, or 0.1 percent, from July, but up $173, or 7 percent, from August 2007.
Once again, domestic automakers shelled out the most. Combined incentives spending for domestic manufacturers averaged $3,832 per vehicle sold in August 2008, up from $3,762 in July 2008. In aggregate, the domestics spent $387 more per vehicle in August compared with July, which had set the year's record.
Over the last year or so, automakers have moved closer to the forefront of big-brand marketing online as they dramatically increase their expenditures on Internet advertising.
In doing so, OEMs are drawing on a dozen methods. Here are six of them. Look for the other six on Thursday in part three of this series on Edmunds.com's AutoObserver
:
Is the current downturn cyclical or are fundamentals changing so that the market will never return to normal?
We think there are cyclical elements of it and some structural elements of it, and we think there are more structural elements than cyclical elements at this particular point in time. When I say that, though, I'm talking about a market that should be running in the 14-million unit range, not a market that's running in the 12.7-million unit range... We think that is still somewhat of an anomaly...We think the market should be running probably just a little north of 14 million units."
SANTA MONICA, Calif. - Despite a slight improvement in sales from July to August, no significant upturn is on the horizon for this year, according to Edmunds.com's latest forecast.
New vehicle sales for August, to be reported by manufacturers on Wednesday, are expected to total 1.26 million units, a 14.4-percent decrease from August 2007 but an 11.4-percent increase from July 2008. "We saw a slight improvement in July, but don't expect to see a major recovery for the remainder of the year," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
Signaling fuel-economy concerns are making an impact in the luxury market, General Motors
Corp.'s Cadillac division let it be known last week - in the midst of the snobby Pebble Beach Concours d' Elegance, no less - that Cadillac will be using four-cylinder power for its upcoming new entry-level model.
The use of four-cylinder engines is something of a line in the sand in the luxury market, an option consumers in the past have embraced with mixed results. And believing four-cylinder engines imply a frugality and dearth of "power" inconsistent with the nature of the beast, many luxury marques - in recent years of low U.S. fuel prices, at least - have steadfastly refused to cross the line into small-engine territory.
SANTA MONICA, Calif. -- As industry vehicles sales have sagged, it's well known that that
automakers' incentive spending has edged higher in their effort to move the metal. Now Edmunds.com's
analysis of incentive spending shows a record number of models have reached the lofty level of $10,000 per vehicle in incentives.
A record 10 vehicles in July recorded a Total Cost of Incentive (TCI) of more than $10,000. (TCI is Edmunds.com's proprietary calculation of all incentives on a volume-weighted basis.) Two were BMW models; the rest were General Motors vehicles wearing Cadillac, Saab or Hummer nameplates.
A record two models - BMW's flagship 7-Series sedan and Saab's 9-7X SUV - have averaged a $10,000 plus incentive for the entire year so far. In fact, the 7-Series is approaching the $20,000 mark.
DUBAI - Two separate investors from the Gulf Arab region have expressed interest in buying
General Motors' Hummer brand, a GM executive in the Middle East told Reuters
Tuesday.
"For sure, there has been interest from various parties within the Gulf ... there is a precedent in the cases of Aston Martin, Ferrari or Daimler and those kinds of solutions could be very realistic solutions," GM Middle East Managing Director Terry Johnson said in an Reuters interview.
General Motors' plan to sell assets to raise much-needed cash may be easier said than done.
In July, GM outlined a plan for cutting expenses and selling assets in an effort to conserve and raise cash, which it is burning through so quickly that one investment firm said Wednesday the automaker needed $7.3 billion in fresh capital to pay its bills through 2009.
But also on Tuesday, Navistar International backed out of a deal to buy GM's medium-duty truck unit. And, while GM says it has received much interest in Hummer Division, a number of expected suitors have said no thank you in a variety of languages.
DETROIT - General Motors announced Tuesday it is offering employee pricing on nearly all 2008 models and some 2009 models in stock from Aug. 20 through Sept. 2.
GM is billing it as its 100th Anniversary Sales Event; the automaker celebrates its centennial officially on Sept. 16. But the fact of the matter is, GM needs to boost sales, which were down 18 percent for the first half of this year. "Desperate times call for desperate measures, and that's what we're seeing from GM," said Jesse Toprak, Edmunds.com's executive director of industry analysis.
Warren, Mich. - For a guide to its future as a global player, General Motors may want to look to its past. At least that's how Bailey Sisoy Isgro
put it on Tuesday, as she and GM's other design interns explained the Chevrolet concept vehicles they had created this summer, which are aimed at emerging international markets.
"We want to make the Chinese people GM buyers for life, so we need to create a car for every purse and purpose," said Sisoy Isgro, channeling Alfred P. Sloan and the strategy he created to dominate the U.S. market a half-century ago.
Think General Motors Corp.'s Chevrolet Volt concept car has lost some of its power as a supercharged hype-machine?
Hardly.
GM director of advanced design Bob Boniface this morning displayed mere images of the production-representativefront and rear of the advanced "extended-range" electric vehicle at the annual Center for Automotive Research Management Briefing Seminars, a longstanding elbow-rubbing confab of industry big wheels.
Result: by 1:00 p.m., GM's stock price soared by as much as 15 percent, ending the day hiked by a still-healthy 10 percent.
DETROIT - One of Russia's richest men Oleg Deripaska reportedly has held preliminary talks with General Motors to buy Hummer, sources told Reuters.
We're not surprised. As GM now has discovered, we guessed interest in Hummer would be high, especially from overseas investors. We figured Deripaska, with heavy interest in the auto industry and ties already with GM, was among them.
Deripaska owns Russian automaker GAZ and purchased a chunk of GM stock about a year ago. In May last year, Deripaska paid $1.54 billion for 20 percent of Canadian auto supplier Magna. It appeared his purchase was tied to Magna's attempt to purchase Chrysler, which Magna lost to Cerberus Capital Management.
More than 33,000 people have signed up on a symbolic waiting list to buy a Chevrolet Volt.
Lyle Dennis, a New York neurologist, created the customer sign-up on his GM-Volt Web site
in May to show GM that the Volt would be in high demand. Tuesday he announced 33,000 people had signed up on his waiting list.
Now Dennis is on a crusade to push GM to compel GM to build enough Volts, available initially only in modest volumes, "to build enough cars for us."
General Motors CEO Rick Wagoner said the worst in terms of job and capacity cuts, health
care costs and pension issues may be over for the automaker.
"I would say, from an assembly perspective [the pain] is largely behind us," Wagoner told the Financial Times in Shanghai, after attending the opening ceremony of the Beijing Olympic games.
Alert to the American medical community: new evidence proves severe lack of corporate operating capital causes dull and even impaired judgment.
How did I arrive at this breakthrough mental-health discovery? Reading early this week that General Motors Corp. and Ford Motor Co. reputedly are considering co-development of engines.
Its market share is near historic lows. Its stock price recently hit an abyss unvisited in more than a half-century. The CEO just announced yet another 20 percent cut in white-collar expenses now, to follow what already has been a few years of profuse bleeding.The dividend is gone, and some on Wall Street are predicting bankruptcy by 2010.
So how are General Motors and its employees supposed to celebrate the company's centennial on September 16 with anything other than inner angst and a stiff upper lip? GM's woes don't exactly create a formula that shouts, "Whoopee! Let's party like it's 1999!"
There may be a nationwide credit crunch, but it apparently doesn't apply to distressed Detroit automakers. General Motors Corp. is circling the banks, Ford Motor Co. is chewing away at the $18 billion it got in late 2006 for mortgaging just about everything the company owns, and this week privately owned Chrysler LLC said it's hitting up the lenders for a hefty $24 billion on its credit lines.
Detroit'srush to credit comes despiteGM's insistence it has $24 billion in cash and Chrysler's admonition the company made $1.1 billion in the first half of this year.
DETROIT -- One would have to dig into the history books back to 1992 to find a worse month for car and truck sales in the U.S. than July.
The Seasonally Adjusted Annual Rate (SAAR) fell under 13 million vehicles -- 12.55 million to be exact -- the lowest rate since the recession of the early 1990's. Of the Big Six automakers, only Nissan reported an increase in sales. Even Honda, which analysts had predicted would see an uptick, reported lower July sales. Detroit's Three slumped to their lowest combined market share -- 43.4 percent -- in history.
General Motors reported Friday a second-quarter loss of $15.5 billion, which included a
number of charges related to its latest restructuring moves. Excluding those charges, GM's loss was $6.3 billion.
GM shares initially tumbled 6 percent in reaction to the automaker's announcement of the deeper-than-expected loss, the third-largest quarterly loss in its history. The loss sent GM's stock back into the single digits.
"As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting radpily to the challenges facing the U.S. economy and auto market , and we continue to take the aggressive steps necessary to transform our U.S. operations," GM Chairman and CEO Rick Wagoner said in the company's statement issued early Friday morning.
SANTA MONICA, Calif. -- With automakers expected to report Friday that car and truck sales plunged to near-historic lows in July, it's no surprise that manufacturer incentives have reached all-time highs for the year.
Edmunds.com's estimates put July at the industry's highest level of incentive spending for the year so far and the highest level this year for not only for the domestic automakers but also the Japanese and European manufacturers.
The new world order of global auto giants is being shuffled. If first-half sales trends continue through the rest of the year, the new order of automakers, based on vehicle sales, will be: 1) Toyota, 2) General Motors, 3) Volkswagen and 4) Ford.
PONTIAC, Michigan -- The world's largest car company is ready to respond to the public's newfound craving for increased fuel economy with a range of smaller engines. But customers are going to have to indicate they're really serious about downsizing their powerplant expectations.
Thomas G. Stephens, General Motors Corp.'s executive vice president, global powertrain and global quality, said at the recent inauguration of the company's new Powertrain Engineering Development Center here that he's delighted with the engine options at his disposal for answering growing demand for better fuel economy. But that's going to mean U.S. customers will have to signal their readiness to accept smaller engines -- in effect reversing a long trend for ever-larger engines and more horsepower.
LONDON -- Two years ago, General Motors launched its then-new Opel Corsa at the inaugural British International Motor Show. The car became a runaway success. Now GM hopes for a similar performance from its new flagship, the Opel Insignia, unveiled in spectacular fashion prior to this year's London show.
Indeed, the Insignia, by far, was the star of the show, in part, for the way it was introduced. GM literally lowered an Insignia from London's famous Tower Bridge.
And GM is looking for towering things from its new flagship.
One doesn't need to be a fortuneteller gazing into a crystal ball to figure out that July vehicle sales, to be reported by automakers on Friday, continue to be in the tank. All one has to do is read recent headlines of downgraded 2008 sales forecasts, more production cuts and boosted incentives.
Edmunds.com released its July forecast Tuesday, predicting monthly sales will drop 10.7 percent from last July, adjusted for the difference in the number of selling days. The decrease is estimated at 3.3 percent on an unadjusted basis. Despite some last-ditch incentive efforts to save the month, all of the Big Six auto manufacturers, with the exception of Honda, are expected to report sales declines from a year ago. Similarly, sales of small compact vehicles continued to boom.
Toyota, as expected, lowered its global vehicle sales target due to the weak U.S. economy, and slow sales in Western Europe and Japan.
Toyota now plans to sell 9.5 million vehicles worldwide in 2008, down from its previous target of 9.85 million. In 2007, Toyota sold 9.37 million vehicles.
Still, Toyota plans to sell more vehicles globally in 2008 than it did in 2007. This could be the year that Toyota ends General Motors' 77-year-reign as the world's global sales king.
Despite dismal vehicle sales in the U.S., the world is on track to set yet-another record for vehicle sales in 2008, according to General Motors' forecast.
In total, automakers sold 18.5 million vehicles in the second quarter, up 1.6 percent from 2007, according to GM's tally. The automaker forecasts that total global auto sales will come in at 72 million vehicles for 2008, up 2.5 percent and the seventh-consecutive record. That is, unless the U.S. downturn spills over into global markets.
But global vehicle sales are uneven: up for emerging markets and down for mature developed ones.
The London paper said the prospect of the Merseyside plant being used for the venture was raised on Tuesday by GM Europe President Carl-Peter Forster after meeting with British Prime Minister Gordon Brown at the British motor show, which opened this week.
WARREN, Michigan - Nobody, and we mean nobody, is arguing the all-new 2010 Chevrolet Camaro, unveiled in production form for the first time here - isn't a great-looking modern interpretation of the brand's iconic pony car.
But everybody knows the shelf-life for even the best-looking coupes is slightly less enduring than a Hannah Montana tune. Sure the Camaro looks magnificent now, half a year before it even begins production. But it'll be languishing on dealer lots by the time the calendar catches up with the car's model-year designation, as is the case with all coupes.
Think again, said Ed Peper, Chevrolet general manager. He's so ecstatic about how well the production car's sheetmetal has translated from the universally acclaimed concept car that he is insistent the new-age Camaro's visual appeal will far exceed the 18 to 24 months coupes historically remain popular with their nefariously trendy clientele.
DETROIT - Here we go again, as General Motors Corp. once again unveils a host of coming models to reassure a jittery Wall Street, a speculating media and fleeing investor base that the company not only is on solid financial footing but that it has some decent stuff in the product pipeline.
Detailed
imagesof pending new product were shown in this week's presentation to media, analysts and the financial community to accompany GM's announcement that it is trimming its white-collar ranks, cutting more pickup production,scaling back investment in next-generation fullsize pickups and SUVs - and will seek capital infusion if reasonable credit terms present themselves.
The days of the U.S. being out of step with the rest of the world in terms of the vehicles Americans drive are nearing an end.
"We were the anomaly. We were the region with the artificially cheap fuel that created huge -- you could say unhealthy demand - for very large vehicles. But that has flipped," said Bob Lutz, General Motors' vice chairman in charge of product development, in a conference call with bloggers, including AutoObserver
, Tuesday.
GM Vice Chairman Bob Lutz is the greatest champion for the Chevrolet Volt, which runs on electricity but has a back-up gasoline engine to generate power for the battery. He became even more of a fan of the concept when his battery-powered motor scooter ran out juice.
However, one on of his first solo, long-distance rides, Lutz ran into trouble. "The gauge showed I had 19 miles of power left," Lutz related on a conference call of bloggers Tuesday. "But when it hit 17, it came to a complete stop. I had no battery left.
DETROIT -- General Motors' plan to generate $15 billion in cash through year-end 2009 in order to get through this major restructuring of the U.S. auto marketspreads the pain across all of the automaker's constituents: salaried and hourly workers; retirees; shareholders and evenexecutives.
"Today's actions, combined with those of the past several years, position us not only to survive this tough period in the U.S., but to come out of it as a lean, strong and successful company," Wagoner said in conference calls with employees, media, Wall Street analysts and investors.
General Motors CEO Rick Wagoner, outlining to employees, the media and the investor
community how the automaker will generate $15 billion in cash throughyear-end 2009, announced Tuesday the automaker will cut more truck and SUV production, suspend the dividend,eliminatesalaried costs by20 percent and eliminate health care coverage to salaried retirees when they reach age 65.
Wagoner said the strategic review of the Hummer brand is continuing and the focus on GM's other brands is on profit improvement.
"Today's actions, combined with those of the past several years, position us not only to survive this tough period in the U.S., but to come out of it as a lean, strong and successful company," Wagoner said.
General Motors announced that Chairman and CEO Rick Wagoner will hold a news conference and a conference call with analysts Tuesday morning to discuss actions the company is taking "to align the business to current market conditions."
No details were provided ahead of the announcement. However, Reuters reports the announcement will include white-collar job cuts, including some in engineering. Those job cuts will reflect a shift in emphasis away from developing and marketing trucks and SUVs, a person familiar with the matter told Reuters.
GM already announced plans to close four truck plants in North America that employ 100,000 workers.
Fueld by sales of the Chevrolet Aveo, Celta and Corsa, General Motors broke another sales
record in its Latin America, Africa and Middle East region in the second quarter.
GM LAAM, as it is called, sold 346,1000 vehicles in the second quarter, up 52,100 over the 2007 second quarter. GM's volume increase of nearly 18 percent for the quarter again exceeded the industry growth rate of 13 percent. In addition, GM's market share in the region climbed to 17.5 percent for the quarter, up .7 share points year-over-year.
General Motors Corp. CEO Rick Wagoner, insisting the automaker has the cash it needs, dismissed speculation that the automaker might file for bankruptcy.
His remarks came early on a day that GM's stock plummeted to another low -- under $10 a share -- not seen in a half-century.
Comments in the past week about a potential bankruptcy are "not at all constructive or accurate," Rick Wagoner said Thursday.
GM has $24 billion in cash and $7 billion in credit facilities, he said.
"Under any scenario we can imagine ... our cash position will remain robust through this year" and the company has options for raising cash beyond that, Wagoner said at a lunch meeting of Dallas business leaders.
The bankruptcy speculation has increased and GM stock has been hammered over the past two months, losing more than half its value. Dealers are worried that the negative chatter will hurt sales, and Wagoner conceded that consumers wouldn't want to buy cars from a company in bankruptcy.
"That kind of news isn't helpful, but as long as we can get the dealers the right information ... I think we can address it," he said.
GM shares continued their slide Thursday, falling 64 cents, or 6.2%, to $9.69 in New York trading. Last week, GM stock closed under $10 for the first time since 1954.
U.S. vehicle sales have slumped from an annual rate of about 17 million to 15 million so far this year, and even lower in the past few months. And in the wake of rising fuel prices, the mix of vehicles has changed away from profitable trucks and big SUVs to cars.
Wagoner said the trend toward cars is permanent and his company is planning for the change and for higher oil prices: 18 of the next 19 GM models under development are cars or crossovers, not trucks.
But, he added, the company didn't foresee oil prices doubling in a year.
"We missed that, but I think us and 99.9% of the rest of the people in the world did, too," he said.
Still, he insisted that changing tastes won't force GM to "ride off into the sunset."
A Merrill Lynch & Co. analyst had said July 2 that GM may need to raise $15 billion and that bankruptcy is "not impossible" should U.S. economic conditions worsen.
"Some of the critics call this the end of the U.S. auto industry as we know it," Wagoner said in the speech. "We're taking the tough but necessary actions to keep GM competitive over the long, long term."
GM was not alone in seeing its stock value drop.
On a day when the price of oil rose more than $5 a barrel, many auto stocks tumbled.
Ford shares fell 37 cents, or 7.5%, Thursday to close at $4.58.
Among U.S. auto-parts makers, shares of Lear Corp., Federal-Mogul Corp., Noble International Inc., and American Axle and Manufacturing Holdings Inc. all fell by more than 5%
DETROIT - Following the lead of rival General Motors Corp., Chrysler LLC weighs in with its own zero-percent/72-month financing incentive - but specifically to help clear the decks of '08-model Ram pickups prior to the pending launch of an all-new Ram for '09.
Chrysler announced Thursday the special financing deal on 2008 light-duty versions of the Ram Quad Cab and Mega Cab - for "fans of the current model." The company says the zero-percent incentive (plus a an extra $1,000 bounty for financing with Chrysler) will run only through the end of July, but as has been the case with recent incentives - not to mention the heavy stocks of unsold pickups - there's every reason to believe the deal may be extended past July 31.
DETROIT - It's not like the domestic automakers need more worry, but another of their sacred cash cows, the diesel-powered medium-duty pickup, is being slaughtered.
The Detroit Three's "heavy duty," commercially oriented three-quarter ton and one-ton pickups have long been outsized profit centers, largely because their buyers are famously wedded to diesel engines, an expensive option loaded with profit margin.
The industry's overall pickup business already is enduring a well-publicized battering - but now, inflated diesel fuel prices have the historically diesel-favoring heavy-duty customer - those who are still buying, that is - fleeing for the comparative comfort of engines that use $4 gasoline instead of $5-plus diesel.
The business world enjoys some leftover fireworks to start the week following a Wall Street
Journal report that General Motors Corp. likely will cut into its white-collar ranks and may be ready to take a tougher stance on the always controversial subject of paring its brand portfolio.
Discussion about GM's strategies and financial health has intensified recently, coming to a head last week with a downgrade from a major financial institution and revival of talk that GM could be facing conditions leading to bankruptcy. The Wall Street Journal
last week also ran a story questioning the effectiveness of leader Rick Wagoner's 8-year tenure as CEO and the industry has begun to buzz about whether Wagoner can or should remain at his post in light of GM's seemingly degenerating financial and competitive situation.
DUBAI -- The Dubai government's vision of using clean, environment-friendly vehicles received a boost when General Motors officialsformally handed over to the Roads and Transport Authoritythe first batch of 10hybrid vehicles.
As part of the authority's year-long trial program, the RTA's fleet of more than 6,000 vehicles now will include five Chevrolet Malibu Hybrids and five Chevrolet Tahoe Two-Mode Hybrids.
Led by a startling drop in the stock price of General Motors Corp. to a low not seen in 50-plus years, several major auto suppliers also are along for the wild and not-so-enjoyable ride.
GM's stock price, which had stumbled into single digits earlier this week, recovered slightly just before the market's long pause for the Fourth of July holiday weekend, closing at $10.18.
And as GM goes, so go the suppliers, apparently -- some of whom had marched to reasonable recoveries earlier in the year. But as analysts downgrade GM and other major automakers such as Ford Motor Co., the fortunes of their major suppliers are slipping as well, some also into concerning territory.
Mega-supplier Visteon Corp., for one, this week slid to its lowest price since the company was spun off from Ford in mid-2000. Visteon closed Thursday at $2.18, off nearly 75 percent from this time just a year ago.
ArvinMeritor Inc., which supplies numerous components for both the auto industry and similarly hard-hit trucking sector, also approached a low not seen since its inception in 2000. The company also appeared to be rebounding after tumbling late last year, but now at $10.75 stands with a stock price that has receded nearly two-thirds from its 2002 high point.
Even BorgWarner Inc., supplier of in-demand turbochargers and all-wheel-drive systems and widely considered one of the healthiest of major automotive suppliers, has endured a dip in its stock price of nearly 30 percent just since mid-May.
Zero-percent financing deals aren't anything new to the industry, but General Motors Corp.'s latest riff on that old tune appears so far to have generated some success, even in these most desperate of times for auto sales.
According to exclusive data from Edmunds.com, sales of select GM vehicles -- mostly trucks -- may have enjoyed a shot in the arm from the zero-percent-for-up-to-72-months spiff, which originally was supposed to run only for the final week of June, but GM not unexpectedly extended through the July 4 holiday weekend.
American car buyers became very discouraged in June. Beaten down by high gas prices and other contributors to growing household financial stress, they bought 8 percent fewer vehicles than a year earlier.
And supply constraints actually depressed sales even further, because those who were in the market wanted more small cars than could be built by the industry as it tries to catch up with consumers' desire to downsize.
June sales for the U.S. auto industry were 1.19 million units compared with 1.46 million vehicles during June 2007. (The 8-percent decline is stated on a daily-sales-rate basis because this June, with three fewer selling days, provided significantly less sales opportunity than a year earlier.) On an unadjusted basis, industry sales came in 18 percent lower than a year ago.
General Motors' stock was the biggest loser among the Dow Industrials for the second quarter. GM's share price for the April-June period dropped about 40 percent, even briefly dipping below $11 a share.
The Dow Industrials were off a total of 7.4 percent for the quarter, coming perilously close to what's considered a bear market.
SANTA MONICA, Calif. - Locked in a battle for No. 1 sales in America in June, General Motors and Toyota were the only automakers to hike incentives in June this year compared with last year, according to estimates by Edmunds.com.
"Toyota incentives reached a record high," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver. "General Motors' last minute 72-hour sales campaign , which is giving buyers no-interest financing for 72 months on most models, helped increase its incentive spending for the month, and Toyota needed some additional dollars to move its large SUVs and trucks from dealer lots."
In total, the average automotive manufacturer incentive in the U.S. was $2,356 per vehicle sold in June, down $22, or 0.9 percent, from June 2007, but up $32, or 1.4 percent, from May.
Still incentives unlikely had little impact as the auto industry is expected to post its worst sales since the 1990s when reports come in on Tuesday. Edmunds.com forecasts a double-digit decline in industry sales. Some analysts predict Toyota may outsell GM for the first time in history when June sales are tallied.
SANTA MONICA, Calif. -- High gas prices, the housing crisis and general economic
uncertainty are motivating consumers to look for the least expensive cars to own and operate. But a new study by Edmunds.com
shows that many compact and subcompact vehicles are actually better choices than hybrids for consumers looking to save money.
The Chevrolet Aveo topped the list of best values based on Edmunds' True Cost to Own data, which accounts for total vehicle costs over a five-year period. No hybrids made the top 10 list.
"When consumers think about cars that will save them money, hybrids are typically top of mind because of their fuel efficiency," said Jesse Toprak, Edmunds.com executive director of Industry Analysis. "But when you take a look at the real-world costs of car ownership, you realize that many subcompact and compact cars are actually a much better value proposition."
DETROIT -- General Motors has enlisted the help of Citibank to help the automaker review its strategic options regarding its Hummer brand.
Mark LaNeve, GM's vice president in charge of North American sales, told reporters during a conference call Monday that Citibank will help GM consider all options regarding Hummer, including the revamping of its product line, licensing deals and contract manufacturing arrangements. Citibank also will review offers GM may get from potential buyers, LaNeve told reporters in a conference call.
"We believe Hummer is a strong global brand and has value," LaNeve said.
After showing immense restraint in its use of massive incentives by trying to keep production in line with demand for its vehicles, the Detroit automaker Monday announced a fire sale: zero-percent financing for 72 months on most of its models through the end of June.
"This is an absolute screamin' deal," said Mark LaNeve, GM vice president in charge of North American sales, in a conference call with the media.
One bizarre fallout from the wild-ride shift in consumer tastes is a spate of new or soon-to-be-released models that were designed and developed under assumptions about the U.S. market that now are absolutely invalid.
The result: a slew of white elephants designed when gasoline was $2 per gallon (or less) and Americans were still buying 800,000 F-Series pickups and everything else that looked big, sucked gas and telegraphed that you had arrived at that special entitlement heaven espoused by Rush Limbaugh and everyone else who insisted cheap energy and cheap mortgages are an American birthright.
It might be almost laughable if the U.S. domestic auto industry weren't in such disastrous shape -- and had the luxury of time to once again make amends for decades of single-minded product-development choices.
Here's a short list of our favorite vehicles that, thanks mostly to the new rules governing the auto industry, suddenly look titanically dumb:
General Motors hasn't announced what it plans to do with its endangered Hummer brand yet, but at least one of the nation's most successful auto dealers isn't waiting around for his supplier to decide.
Bergstrom Automotive plans to move its standalone Bergstrom Hummer Milwaukee dealership -- perched on Interstate 45 prominently overlooking one of the city's most important thoroughfares -- into its nearby, new Bergstrom Chevrolet dealership.
"Our truck business [including Hummer] is off about 30 percent this year," John Bergstrom, chairman and chief executive of Neenah, Wisconsin-based Bergstrom Automotive, told AutoObserver. "We believe that there's long-term change in our market -- that people are going to buy more cars and fewer trucks."
General Motors confirmed it is postponing the redesign of its full-size pickup trucks and large SUVsas part of areview of its entire product line in light of higher gas prices and the weak economy that are pushing consumers toward cheaper fuel-sippers. More stringent fuel-economy standards are another factor in GM's decision.
Trucks like the Chevrolet Silverado and GMC Sierra and SUVs, including the Chevrolet Tahoe, Cadillac Escalade and GMC Yukon, were scheduled for redesigne around 2012. GM isn't saying how long it will extend their lives in the current form. GM said it would focus, instead, on supplying the U.S. market with more fuel- efficient cars.
Chrysler is touting the fact that it has priced its 2009 Dodge Durango Hemi Hybrid and 2009 Chrysler Aspen Hemi Hybrid below similar ones offered by General Motors and that it is moving up their introduction to August.
Hold your horses -- or kilowatts -- Chrysler.
Chrysler is very late to the hybrid party. In fact, it is dead last among the Big Six automakers selling vehicles in the U.S. And even these hybrids are later than Chrysler had promised.
Plus a price discount compared with GM models is consistent with the current price ladder; Chrysler's non-hybrid versions of its SUVs are priced less than its competitors.
In a move that was not entirely unexpected, Ford Motor Co. reportedly is studying a plan to implement a hasty and wide-ranging retooling of many of its North American assembly plants, shifting them from production of large pickup trucks and SUVs to smaller, lighter and more fuel-efficient vehicles.
The Detroit News
reports manufacturing executives and local labor leaders will meet in Dearborn on Friday to discuss the plan, which reportedly centers on retooling several plants from production of traditional body-on-frame pickups and SUVs to models and vehicle architectures currently being used in Europe.
It is a strategy many industry analysts have said must be undertaken by all the truck-reliant Detroit automakers. The only surprise, perhaps, is the haste with which Ford is reacting -- a lightning stroke relative to past Detroit responses to major macroeconomic and consumer-preference shifts.
Hummer has always appealed to in-your-face consumers. Get out of the way of a tanklike, wide-stanced Hummer or suffer the consequences. And, oh do those hefty models absolutely devour gasoline? Whatever.
That unapologetic approach worked for most of the decade General Motors has owned the Hummer brand. But now that GM's leadership has decided to about-face away from their long reliance on sales of large, heavy, gas-hogging vehicles, the company announced this week that it is re-evaluating Hummer's future.
GM CEO Rick Wagoner can't just wish away the Hummer dilemma. He has four main options: Sell Hummer, as Ford recently sold a Land Rover-Jaguar group that had become an albatross; discontinue Hummer as GM did Oldsmobile a few years ago; revamp the division and its lineup with some sort of greener cast; or basically stick with a bully-on-the-block persona that, until very recently, had made Hummer a vital and growing niche brand.
General Motors CEO Rick Wagoner defended Detroit automakers' dependence on sport-utility vehicles and pickup trucks, dismissing criticism that the companies were to blame as demand for those vehicles has collapsed.
"Is it the U.S. manufacturers who are stupid? I don't think so," Wagoner said in an interview with London's Financial Times. The criticism was "not fair," said Wagoner. "It's not just the 'Big Three.'"
Earlier in the week, Wagoner announced at the company's annual shareholder meeting that GM would close truck and SUV production at four North American plants. Those plants make such vehicles as the Chevrolet Silverado and GMC Sierra pickup trucks. Wagoner also announced this week that Hummer was under "strategic review" with all options, including its sale, being considered.
For months, somebody on Wall Street has been convinced something's going on at Rochester Hills, Michigan's, Energy Conversion Devices, parent company of the Cobasys LLC joint venture that develops and produces nickel-metal hydride batteries for all manner of consumer devices, including some of General Motors Corp.'s hybrid-electric vehicles.
Despite the fact ECD stock has no earnings, pays no dividend and the company's operations have not had positive cash flow for the past five years, the stock price has tripled since January and gained almost another 10 percent yesterday with reported news GM may be trying to acquire Cobasys.
By Dale Buss and Michelle Krebs
Only a few months into the Slump of 2008, at least two things are painfully clear in what has become a topsy-turvy U.S. auto market.
The bigger the carmaker, the harder the ride these days -- even Toyota. General Motors' sales declined the most in May compared with a year ago, by 30 percent; Chrysler's fell by 25 percent; Ford, by 16 percent; and Toyota, by 8 percent. The Detroit Three's domestic market share in May, 45.5 percent, was a record low for any month.
And the larger the vehicle, the faster its sales are teetering into the abyss. Sales of pickup trucks and traditional SUVs plunged across the board in May. So, GM said it is permanently shuttering some truck and SUV plants, adding some car-making capacity, and considering ditching Hummer.
But newly popular small cars are popping up like life preservers on the industry's troubled ocean. Honda's Civic was the top seller for the month, at more than 53,000 units.
Other highlights of GM's latest restructuring plan include: new small cars for Chevrolet; a new high-efficiency engine for the U.S.; funding for the Chevrolet Volt extended-range vehicle; and the addition of third shifts at two U.S. plants to boost production of popular Chevrolet Malibu and Cobalt as well as the Pontiac G6.
Wagoner said GM's moves were prompted by soaring gasoline prices that are rapidly changing consumer behavior and significantly affecting the U.S. auto industry's sales mix. The shift, he noted, is a structural shift, not a cyclical blip.
Some analysts predict General Motors may see its share of the U.S. vehicle market slipl below 20 percent on Tuesday when the auto industry reports May vehicle sales.
However, a forecast by Edmunds.com, parent of AutoObserver, predicts GM will stay above the 20-percent mark, coming in at 20.9 percent market share for the month. GM's market share slumped to 20.8 percent in April, according to Edmunds.com's calculations.
General Motors is among almost three dozen of the biggest U.S. companies with dividends in jeopardy because annual payouts exceed cash flow, Bloomberg News reported Monday.
GM, which holds its annual meeting Tuesday in Wilmington, Del., produced 33 cents a share in so-called free cash flow last year while maintaining a $1 dividend, Bloomberg said.
Just as school kids are heading home with report cards, so too is the auto industry receiving grades this week on sales, overall performance, quality and productivity.
At General Motors Corp.'s annual meeting Tuesday, the stickiest questions may not be about the actual dollars and cents of GM's business. Instead, the major issue may be whether - and how - GM can deal with the shocking plunge in demand for full-size pickups and SUVs, the profit machines that have kept the wandering giant afloat for the better part of two decades.
Punishing fuel prices and increasing environmental awareness have all but crushed the "supersize me" mentality of the American auto customer, and now GM and its Detroit-based rivals Ford Motor Co. and Chrysler LLC, with their manufacturing empires witheringly overweighted to address full-size segments, have little to offer the new age of economy-minded consumers.
Equally troubling, the domestics have scant prospect of reversing the situation any time soon - and the heat may be on Detroit executives to begin explaining yet another instance of their collective inability to identify and adjust to emerging auto-market and macroeconomic trends.
SANTA MONICA, Calif. -- April 2008 was a terrible month for vehicle sales in the U.S., but it looks like May, though worse than the year-ago May, might be a tad brighter than April and especially for some vehicles and some makes, Edmunds.com forecasts.
Toyota looks to be a winner with a projected record market share. Honda likely had a good month as well. The Big Three, however, are predicted to show a near-record low combined market share.
And the trend of buyers selected smaller, more fuel-efficient vehicles instead of larger ones likely accelerated in May, according to Edmunds.com's forecast.
Automakers scrambling for quick fixes to polish up vehicle economy numbers in the eyes of fuel-price-fatigued U.S. customers are reaping real results from their -- and the supplier community's -- investments in the new generation of six-speed automatic transmissions.
The powertrain sector's shift to six-speed automatics has been coming since as early as 2001, but $4-per-gallon gasoline and $5 diesel fuel has turned up the heat on vehicle engineers to deliver more or less immediate efficiency enhancements for existing vehicles.
BOSTON -- Buyers in Saab's single largest marketsuddenly are very concerned about the price of gasoline, and there's maybe no premium brand in the industry better positioned to give 'em what they want, said Roger McCormack, Saab Automobile USA's new marketing director.
The big players such as Ford Motor Co. and even Saab's ever-patient owner, General Motors Corp., are all starting to talk about what it's going to take to improve fuel economy, and a big chip on the table is smaller "downsized" engines strapped with turbochargers to help mimic the performance of the big V8s and V6s from which Americans are starting to wean themselves.
That's a tune Saab's been playing for 30 years, says McCormack, who believes it may help give the niche Swedish maker a leg up in the coming fuel-economy wars -- a leg only a tiny number of buyers cared about during the horsepower wars that dominated the U.S. market for nearly the last two decades.
As the arrival of Memorial Day weekend unofficially kicks off summer in America, huge and discouraging obstacles stand in the way of motorists: all the signs on street corners reading "Gasoline, $4.00 a gallon."
But gamely, the industry is trying to get U.S. consumers to look past the truly shocking ascension of gas prices, or at least to get maximum leverage out of fuel economy concerns when they do draw potential buyers to dealer showrooms.
General Motors has reached a tentative local agreement with striking UAW workers at its
Fairfax, Kansas, plant, which builds the Chevrolet Malibu and the Saturn Aura. Both models have bucked the industry's downward trend so far this year.
Workers are voting on the contract Wednesday and could be back on the job, with the hot-selling Malibu back in full production, by Thursday. The strike and sheer popularity of the new Malibu have left GM short of supply. Edmunds.com's analysis shows the Malibu with an extremely low 26 days-to-turn rate, meaning it takes only 26 days for the Malibu to be delivered to the dealership and driven away by a new owner.
General Motors is negotiating to add a third shift at its Orion Township, Michigan, plant for a
third shift in order to boost production of the hot-selling Chevrolet Malibu to offset lost production from a strike at a Kansas factory, a United Auto Workers local official told Bloomberg News.
Workers at GM's Fairfax, Kansas, plant, which also makes the Malibu, walked off the job May 5 over differences in the local union contract. The strike is estimated to be costing GM as many as 650 Malibus a day, Bloomberg calculated.
DETROIT -- The United Auto Workers (UAW) union finally settled its 84-day strike against American Axle and Manufacturing Holdings Inc., a major supplier to General Motors, on Friday.
After holding information meetings Sunday described as "ugly" by one union official, the UAW is holding ratification votes, scheduled to begin Monday and run through the week at various plants. The contract requires a majority approval by the 3,650 striking workers, and there's no guarantee it will pass as many workers are angry about the large pay cuts.
The costs for this long and bitter strike have been high for all involved. For striking workers, it has been 11 weeks of lost wages and benefits. For American Axle, it has meant lost business. For GM, it has resulted in lost vehicle production and financial losses.
DETROIT -- General Motors' Denise Gray talks a little fast, a little earnestly. We don't think it's because she's nervous -- more like she's got a lot to tell you about things you likely don't understand, and she figures her time is limited.
In a way, her time is quite limited -- Gray is in charge of delivering the most critical component for one of the highest-profile vehicle-development projects GM has ever undertaken, the Chevrolet Volt "extended-range" electric vehicle.
It looks like General Motors soon will resume production of its hot-selling Buick Enclave, Saturn Outlook and GMC Acadia crossovers as well as launch its new Chevrolet Traverse now that the union members who build those vehicles have settled their month-long strike with the automaker.
Early Thursday morning, GM announced it had reached an agreement with UAW Local 602, which represents the 3,300 workers at GM's Delta Township, Mich., plant who build the crossovers. Officially workers will remain on strike until they ratify the contract; it was unclear Thursday morning when that vote might be taken.
Also on Thursday morning, the Canadian Auto Workers union (CAW) announced it had reached a tentative agreement for a national contract with GM. The CAW also reached a tentative agreement Chrysler Thursday.
And GM averted a strike with one of its locals in Ohio.
WARREN, Michigan -- General Motors inched closer to making the Chevrolet Volt a reality in November 2010 as thevehicle's innovative gas-electric powertrain is being test-driven for the first time on public roads and is hitting its target of 40 miles on pure electric power.
"Today is a big day," GM Vice Chairman Bob Lutz told Edmunds' AutoObserver in an exclusive interview Tuesday. "Today is the first day it is running on the street on battery power."
Lutz said the Volt's powertrain, comprised of an advanced lithium-ion battery and a small gasoline engine, was installed into a mule vehicle and is being driven on public roads around the automaker's proving grounds in Milford, Michigan. More important, Lutz said, the battery is hitting GM's goal of 40 miles on pure electric power.
TROY, Michigan -- Behind the introduction of the Saleen S5S Raptor at the New York International Auto Show in March is the story of a corporate reorganization that blends two companies previously struggling on their own.
The new Saleen Inc. combines Motor City grit of the former ASC and the California glamour of the former Saleen operations in finely calibrated balance, said Paul Wilbur, CEO of the new Saleen.
Wilbur told AutoObserver that the Raptor is the first project in which both sides of the house have contributed. It combined the efforts of Saleen engineering and ASC's creative team, which usually labors in anonymity for big clients such as General Motors.
Wall Street is abuzz with the news that Hewlett-Packard is buying Electronic Data Systems for $12.6 billion.
Old-timers in the auto industry may remember that General Motors, with the late and controversial Roger Smith at the helm, purchased EDS, founded by H. Ross Perot, in 1984 for $2.6 billion. GM's purchase of EDS along with Hughes Aircraft and a host of small high-tech companies was part of Smith's vision to create the high-tech 21st Century car company.
It didn't work out that way. Perot, who served on the GM board, complained all too publicly of how hidebound and slow to act GM was, prompting GM to buy out Perot, who went on to form another company and run for U.S. president, and spin off EDS. GM remains one of EDS's largest customers; EDS employees occupy two towers of downtown Detroit's Renaissance Center, purchased last week by GM and used as its corporate headquarters.
As gasoline prices go higher, many hybrid-electric vehicles currently on sale are proving to be even wiser investments, says new data from Edmunds.com.
Considerable past discussion about hybrids has focused on "payback" time, or the period required for savings from a hybrid's enhanced fuel economy to recoup the initial higher purchase price a hybrid commands. Detractors often claimed that, from a strictly fiscal view of hybrids, most vehicle purchasers would never save enough in gasoline costs to recover their investment in expensive hybrid technology.
But with every increase in gas prices, the hybrid payback time becomes consequently shorter - to the point where some popularly priced hybrid models can pay back their owners' investment in as little as 18 months, according to the new Edmunds.com study.
It was almost two years ago to the day that General Motors announced a fuel price protection program, much like the one Chrysler launches on Wednesday. GM offered buyers of certain vehicle models, mostly large SUVs, in Florida and California a guarantee of gasoline capped at $1.99 a gallon for a year.
The promotion didn’t move the needle on sales, and it opened the floodgate of criticism of GM, especially in a now-famous column by The New York Times’Thomas Friedman.
We're betting GM won’t be following Chrysler’s lead -- and we're wondering if Friedman is dusting off his old column to blast Chrysler.
The United Auto Workers union struck -- literally -- General Motors where it hurts most -- at the automaker’s Kansas City, Kansas, factory that builds the fast-selling Chevrolet Malibu, already in tight supply.
The 2,600 UAW workers in Kansas walked off the job Monday morning after a strike deadline passed with no local contract. The supposed hangup is over seniority issues and work rules. However, many experts believe the strike -– and ones threatened at other GM plants –- has less to do with local GM issues than it does to show support of its union brothers at American Axle, on strike against the GM supplier for more than 70 days.
Whatever the case, a strike cutting Malibu production is damaging to GM, especially if it lingers.
Americans rushed to swap their thirsty trucks and SUVs for fuel-efficient cars in April, making the month a turning point for the industry’s biggest segment shift in memory.
The stampede to cars left in the dust a Detroit Three that simply weren’t ready for its magnitude because of their reliance on truck-based vehicles, while it lifted Japanese automakers whose traditional strength has remained in small cars.
As U.S. consumers definitively reacted to $3.50-a-gallon gasoline, passenger cars outsold truck-based vehicles for the first time in at least 20 years. The move comprised a shift of six percentage points for the industry compared with last April, to 54 percent car sales.
With its second major equity investment in a biofuels startup company in the space of five just months, General Motors is moving front and center in what may become a pivotal global economic development of our time: the rapid rise of the cellulosic-ethanol industry.
GM’s announcement on Thursday that it has made an equity investment in a Boston-based company, Mascoma Corp., is a bookend to its January deal to help fund Coskata Inc., based in Warrendale, Ill. The two companies, partially nurtured by academics, use two different processes to yield similar crucial results: the production of ethanol for fuel from non-grain, essentially waste sources.
SANTA MONICA, Calif. — As gas prices rise this summer, automakers may well turn to marketing programs that include free gasoline instead of or in addition to cash rebates and low-interest financing, Edmunds.com predicts.
“Gas prices are having a profound effect on the psychology of car-buyers, so we expect that automaker and dealer marketing tactics may include free gasoline programs this summer,” stated Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "As indicated in Edmunds’ True Market Value Predictive Alerts, transaction prices of gas-guzzling large SUVs and trucks will likely continue to fall.”
Meantime, Edmunds.com estimated Thursday that the average automotive manufacturer incentive in the U.S. was $2,449 per vehicle sold in April 2008, up $13, or 0.5 percent, from March 2008, and up $39, or 1.6 percent, from April 2007.
Chevrolet Malibu is helping put Detroit back on the map in the mid-size sedan segment. Even the three-year-old Pontiac G6 and Ford Fusion are helping out on that front as well.
Of course, the real Big Three of the so-called “C†segment of the market remain solidly entrenched atop it: Honda Accord, Toyota Camry and Nissan Altima. Accord was the nation’s hottest-selling vehicle during the first quarter, according to Edmunds.com data, overcoming a sluggish start since the new model’s debut last fall to move 88,000 units from January through March. Camry, at 84,000 units, and Altima, with 76,000 sales, were right behind.
But domestic automakers nevertheless are encouraged by recent glimmers of hope in a crucial segment in which they haven’t been competitive for several years -- even though mid-size sedans used to be the Big Three’s bread and butter. At least the progress lately is a place to start.
General Motors plans to announce Thursday a second partnership with a cellulosic ethanol maker. The automaker is providing no further details until GM President Fritz Henderson makes the announcement in Washington, D.C.
GM already has announced a partnership with an Illinois-based cellulosic ethanol maker, Coskata Inc., and last week said Coskata was establishing a pilot plant in Pennsylvania to demonstrate its innovative process of converting a variety of materials, from garbage to agricultural waste, into ethanol.
GM's partnerships for developing cellulosic ethanol come against a backdrop of increasing outcry for the industry to quit using corn-based ethanol, as food prices rise.
Previously more optimistic than other automakers, General Motors Wednesday announced it had downgraded its U.S. vehicle sales forecast for 2008. GM now expects industry sales to come at in the mid to high 15 million units range, instead of the low 16 million. GM had predicted some upturn in the second half.
GM President Fritz Henderson, in a conference call with analysts and media on first-quarter earnings Wednesday, said April sales, which will be reported Thursday, look like the weak sales throughout the first quarter.
General Motors Wednesday reported it lost $3.25 billion in the first quarter due slow U.S. vehicle sales, losses at its finance unit and plant shutdowns caused by a strike against one of its suppliers.
Analysts expected GM to post a loss, which was the automaker's third consecutive quarterly loss and compares with a profit of $62 million in the year-ago quarter. However, the loss was less than analysts had forecasted thanks to GM's rising sales in Asia and Latin America that helped offset the slump in the U.S.
Continued slow sales prompted General Motors to announce Monday that it will cut
production of large pickup trucks and sport-utility vehicles this year.
In total, GM said it is slashing production by about 10 percent, or about 138,000 vehicles at four plants in the U.S. and Canada. About 3,550 workers will be out of jobs as a result.
The question being asked is will sales of those high-profit vehicles, in light of skyrocketing gasoline prices, ever bounce back?
The news that Ford reached an early agreement with its Canadian union is being overshadowed by Las Vegas billionaire Kirk Kerkorian's purchase of the automaker’s stock, but the Canadian deal is every bit as significant -- maybe even more so.
Talks between Detroit’s three automakers and the Canadian Auto Workers union regarding a new contract to replace the current ones that expire in September appeared as if they could be extremely rancorous. A strike appeared to be a distinct possibility.
But Ford’s announcement Monday that it had reached an agreement with the Canadian union -- especially in an unheard of four months plus ahead of schedule decreases -- lessens the odds.
SANTA MONICA, Calif. – As gas prices skyrocket, the biggest growth in April vehicle sales
are expected to be in small cars and small SUVS. In total, April vehicle sales likely will show a decline from April of last year but increase from this past March, according to a forecast by Edmunds.com.
Automakers are expected to report new vehicles sales, including fleet sales, of 1.3 million units for April, a 2.2 percent decrease from April 2007 and a 3.7 percent increase from March 2008, Edmunds.com predicts. April 2008 had 26 selling days, two more than last April 2007. When adjusted for this difference, sales decreased 9.7 percent from April 2007.
“It’s clear that gas prices are weighing heavily on car-buyers’ minds," observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis. “We predict that this month, the segments with the most year-over-year growth will be compact SUVs and compact cars at 52 percent and eight percent, respectively.â€
He’s back and Ford is the object of his affection this time.
Last Vegas billionaire Kirk Kerkorian, through his Tracinda Corp., has amassed 100 million shares for a 4.7 percent stake in Ford just this month. Further, Tracinda said it plans to buy up to 20 million more shares at a premium to last week’s closing price.
Kerkorian’s move on Ford is a vote of confidence for Ford management led by CEO Alan Mulally and the company’s turnaround prospects.
PITTSBURGH – Coskata Inc., developer of a unique process that uses specialized bacteria to produce cellulosic ethanol – and with whom General Motors Corp. formed a partnership last January – announced Friday it will begin construction near here for the first production facility to demonstrate the process.
The demonstration plant, Coskata says, will start early next year and run 24 hours a day to produce about 40,000 gallons of cellulosic ethanol derived from almost any organic waste material, including agricultural waste and municipal garbage that might normally be placed in landfill.
General Motors Corp. says its first-quarter 2008 global sales reached 2.25 million vehicles, a drop of less than one percent despite the drag of lagging North American sales.
GM sales of 947,000 units in North America was a roughly 10 percent drop compared with 2007’s first quarter. GM executive director of global market and industry analysis Mike DiGiovanni said the number “exceeded our internal forecasts,†but also says, counter to some industry analysts, GM does not expect U.S. sales to shore up in the second quarter. DiGiovanni said the company does not anticipate a firming U.S. market until at least the second half of the year.
As Earth Day comes around once more, there are a few different scoreboards for tracking the relative progress of automakers in their attempt to win the green derby.
According to Toronto, Canada-based consumer-research firm BrandIntel’s recent survey of online discussion, for example, Toyota, Honda, Mercedes and Volkswagen have the most “green credibility†due to their hybrid and diesel vehicles. General Motors and Chrysler have been stuck among the least-credible because of their large fleets of trucks and SUVs and weaker lineups of hybrids and diesel options. Ford sits in the middle.
But several automakers are forging strategies for changing such scoreboards in their green credentials. A look at a few:
Toyota clearly donned it for awhile. Ford tried it on for size. American consumers seem to think it fits Honda pretty well these days. But no one covets it more now than General Motors.
We’ll call it the “green mantle:†a figurative decoration on the shoulders of automaker that tells the world, and competitors, that their company is the most environmentally renowned in the industry, both for their products and technologies and – perhaps even more important – in the public’s overall regard.
And taken particularly in the context of an annual worldwide recognition such as today’s Earth Day, it seems at least as important for any corporation to earn the perception of environmental responsibility as to actually be doing something tangible.
It was bound to happen. General Motors Corp., once the granddaddy of the American corporate world, is gradually becoming a less-influential player on the nation’s business chessboard.
The Associated Press reports GM has dropped one place, to No. 4, on the Fortune 500 list of U.S. companies with the largest revenues. Last year, GM was No. 3 behind Wal-Mart Stores Inc. and Exxon-Mobil Corp. But thanks to a loss of $38.7 billion last year – dropping its revenues to $182.3 billion, GM slips behind oil giant ChevronTexaco Corp., which recorded $210.8 billion in revenue in 2007.
BEIJING – No more models dressed in cheesy mermaid costumes. Not a pink fur-covered Hello Kitty car in sight. Beijing’s auto show, like China’s auto industry and the country itself, has grown up and gained sophistication rivaling other global entities –almost.
And it has happened fast, as life does in China – life lived in fast-forward, as one expatriate auto company executive described it.
The Beijing auto show is an analogy to the China auto industry – and Chinese economy generally: spectacular progress and phenomenal growth in the blink of an eye, but still a tad off in the final bit of refinement necessary to be considered world-class – a level assured to be achieved at some point.
Chinese production of the hybrid LaCrosse begins in June with sales following in July. Specifications on the car, which likely uses the same hybrid system as the U.S.-sold Chevrolet Malibu and Saturn Aura hybrids, will be disclosed at GM's auto show press conference Sunday. They did say the LaCrosse hybrid achieves fuel efficiency 15 percent better than the non-hybrid LaCrosse sold here with 15 percent lower emissins. Price has not been revealed though it will be higher than the non-hybrid model.
The hybrid LaCrosse is part of a grander GM scheme to go green in China, which if confronted with energy and environmental issues of monumental proportions.
The massive gears of the auto industry’s manufacturing sector continued to grind out a changing tune this week, reacting to larger, macroeconomic forces in the U.S. economy that are mandating interesting, if not wrenching, change, particularly for the domestic Big Three automakers.
On Thursday, union leaders for United Auto Workers Local 602, representing workers at General Motors Corp.’s Delta Township assembly plant near Lansing, MI, called a strike because the local has yet to sign a plant-level contract with GM, despite what it claims have been months of negotiation. The plant assembles GM’s new generation of crossover utility vehicles, the GMC Acadia, Saturn Outlook and Buick Enclave. The Enclave and Acadia have been selling briskly.
General Motors has hired former Nissan executive Mark McNabb and reorganized its sales, service and marketing divisions.
GM will have four brand channels -- Chevrolet, Saturn, Buick-Pontiac-GMC, and Cadillac-Hummer-Saab. McNabb will head the "premium" channel of Cadillac-Hummer-Saab.
General Motors said the UAW strike against supplier American Axle & Manufacturing Inc.
will not stop production of the hot-selling Chevrolet Malibu, as had been feared.
Bo Andersson, GM's group vice president of global purchasing and supply chain, told reporters in Detroit that the company has “a good plan,†details of which he would not disclose, to keep up production of the Malibu. "We have been able to produce vehicles in all of our car plants, besides one. I don't see anything changing from where I sit," he told reporters.
Negotiations are continuing between American Axle and the union.
General Motors announced Monday it will build a $200 million engine and parts plant in Brazil, where sales are booming and GM is the market leader.
The plant will employ 500 workers and will start production in the fourth quarter of 2009. When it reaches full capacity, it will produce 120,000 engines and 50,000 cylinder heads a year.
The strike by United Auto Workers union employees against Detroit parts supplier
American Axle & Manufacturing Inc. is headed its seventh week with no end in sight, and it is threatening to close General Motors' assembly plants that produce some of the automakers most popular vehicles, including the 2008 Chevrolet Malibu.
In the latest development, the UAW rejected the company’s request to bring in a federal mediator to settle the strike.
Last year's landmark labor contracts and the weak U.S. dollar are breathing new life into U.S. auto plants as Detroit automakers boost exports of U.S.-made vehicles, the Wall Street Journal reports.
General Motors plans to export U.S.-made vehicles to Europe, China and Latin American markets such as Brazil; Chrysler is shifting production from Europe to the U.S. to take advantage of lower costs and available plant capacity; and Ford is considering ramping up exports if it can bring labor costs down, the business journal reported in Tuesday’s edition.
When the last of the No. 1 seeds take the floor for the NCAA Men’s Basketball Championship game in San Antonio on Monday night, the contest will represent the zenith of one of the most successfully symbiotic sponsorships in television sports.
Pontiac has been the exclusive domestic-brand automotive sponsor of the final weekend of March Madness for four years now. It is one of only three “corporate championship partners†with the tournament, along with AT&T and Coca-Cola. Last year, the televised tournament attracted more than 132 million people to CBS, roughly 46% of all American viewers. That includes not only youthful potential car buyers but millions of college alumni.
So, according to both brand executives and Edmunds.com analysis, the relationship is boosting consumer consideration of Pontiac and its vehicles – especially the new G8 – making rival other strong TV-marketing properties for automakers.
Battery talk has become favorite dinnertime discussion throughout the industry.
It’s been that way at least since General Motors Corp. started pumping up the volume about its Chevy Volt — a so-called “extended-range electric vehicle†concept car everyone wants to see come to production. But it won’t unless battery developers now working feverishly to perfect lithium-ion chemistry can whip up the right formula to allow the car to run for 35 or 40 miles purely on battery power.
DETROIT — General Motors Corp. executives and engineers said Thursday they’re confident they can hit the ambitious target of 40 miles of battery-driven range for the company’s high-profile Chevrolet Volt “extended-range†electric vehicle.
What the company’s not saying is which of its competing lithium-ion battery developers — Compact Power Inc. (using cell technology developed by Korea’s LG Chemical) or Continental Automotive Systems (cells from Boston’s A123 Systems) — might prevail.
DETROIT — After a three-week impasse in which negotiations went nowhere, there are finally some signs of movement in the talks aimed at ending the United Auto Workers month-long strike against American Axle and Manufacturing Inc.
American Axle CEO Richard Dauch disclosed the company had turned over sensitive financial data the union had requested. The UAW said it was evaluating the new information from the company, which has been pressing for pay and benefits concessions.
Automakers in March finally experienced the full brunt of two huge economic problems that had been nibbling at their market for months: rising gasoline prices, and American consumers’ falling economic expectations.
Sales for the industry dropped 11.9 percent in March, to 1,351,838 units, the worst performance for the month since 1993. Even more significant, the results accelerated a market deterioration that saw overall U.S. auto sales fall by 7.8 percent to 3,565,828 units for the first quarter. Annual sales rates, seasonally adjusted, slipped to near 15 million units.
A wicked combination of $3.50-a-gallon gasoline, higher prices for food and other necessities, mortgage woes and a shaky stock market left many American consumers more nervous and dispirited than anyone had expected them to be just a few months ago.
“We’re seeing new-car sales decline, not because people can’t afford them, but because there’s a lack of trust in the stability of the economy,” said Jesse Toprak, chief industry analyst for Edmunds.com. “There’s been a real erosion of wealth, and consumers are not in the mood to shop for a car. This is more of a psychological impact more than the inability to purchase a new vehicle.”
The 2009 Hyundai Genesis premium sedan, going on sale this summer in the U.S., already looks to
be a winner in its home market of South Korea.
Hyundai reported Tuesday its March sales in Korea rose 12 percent, thanks to the Genesis it launched in January to challenge Mercedes-Benz and BMW in the luxury-car market there.
The Genesis will be Hyundai's flagship, its first rear-wheel-drive car sold in the U.S. and its first car to offer a V8 engine.
SANTA MONICA, Calif. — The average automaker incentive was largely unchanged in March compared with February, but incentives generally are likely to rise for the next several months as automakers try to break the sales slump, Edmunds.com predicts.
"Incentives are likely to rise through the spring and summer," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. “We anticipate that this will be especially true for the European automakers, as long as the euro remains strong.”
SAIC-GM-Wuling, General Motors’ mini-vehicle joint venture in China, began mini-vehicle
production Monday at its second assembly plant in the coastal city of Qingdao.
Its initial product is a new mini-commercial vehicle powered by a 1.2-liter double overhead cam gasoline engine. The facility has an annual production capacity of 300,000 vehicles and can manufacture multiple vehicles on the same line.
A Delaware startup company is fronting an ambitious plan to construct 1,000 “Go Green Station” convenience store/fueling stations on the East Coast that will sell only ethanol-based E85 and other alternative fuels.
Alternative Fuel Distributors, created last year to “develop, construct, own and operate convenience stores dedicated to supplying alternative fuels to retail customers,” said it expects to have 100 of the company-owned and trademarked Go Green Station convenience stores open by first-quarter 2009 in Pennsylvania, New Jersey, Maryland and Delaware.
The United Auto Workers union reported its membership dropped below a half-million people for the first time since World War II.
In U.S. Labor Department filings, the UAW said it closed 2007 with 464,910 members, a decline of 14.7 percent or 73,500 members from the previous year and more than two-thirds below its peak of 1.5 million members in 1979. It marks the union's low-water mark of membership since 1941.
DETROIT — General Motors' Detroit-Hamtramck car assembly plant, which builds the 2008 Buick Lucerne and 2008 Cadillac DTS, will shut down March 31. The closure is due to parts shortages caused by the strike by workers against supplier American Axle & Manufacturing Holdings, which is entering its second month.
GM confirmed Thursday it will close the plant for an indefinite period.
A GM plant in Janesville, Wis., which builds the 2008 Chevrolet Tahoe and Suburban and GMC Yukon, also will close next week, leaving GM with only two plants producing large SUVs and pickup trucks. An Ohio plant that builds the 2008 Chevrolet Cobalt is at risk for closure soon as well.
Mary Barra isn’t the new kid on the block. She is a tested General Motors veteran. She isn’t even that new to her new job as vice president of global manufacturing and engineering. Barra, a native Michigander, has been around GM — in particular around manufacturing and plants — for 27 years.
We’re well beyond writing stories about the first woman plumber or jockey, or indeed the first woman anything. Barra is worth a story because of her job, global responsibility for stamping and die plants around the world — Poland, Brazil, Russia, China and yes, Wisconsin, among others. This is part of GM's new focus — trying to create one company out of many. At GM they think it is the key to survival.
SANTA MONICA, Calif. — Despite an abundance of rich incentive deals, March
vehicle sales for the industry are expected to be lower than March 2007 and even lower than February when automakers report results Tuesday, Edmunds.com
has forecast.
March new-vehicle sales, including fleet sales, are expected to total 1.33 million, a 13.2 percent decrease from March 2007 and a 13.9 percent increase from February 2008, according to Edmunds’ forecast on sales figures not adjusted for the difference in selling days.
The forecast is less dreary when adjusted for the difference in selling days. This March had 26 selling days, two fewer than last March 2007. When adjusted for this difference, sales decreased 6.5 percent from March 2007.
Analysts and industry-metrics powerhouse J.D. Power and Associates already are predicting a heavy downturn in auto sales for March, based on sales figures from the first half of the month. Now, analysis from Edmunds.com is providing perspective on how bad not just March, but first-quarter sales are likely to be when announced next week.
Based on average sales for the first two months of 2008 compared with last year, the Detroit Three automakers have virtually insurmountable deficits to recover to match first-quarter sales from last year. But longstanding sales juggernaut Toyota Motor Corp. — and several other Japanese automakers — won't be likely to fare much better in what is shaping up to be the brutal retail-sales environment many had predicted.
Indeed, everyone predicted 2008 car sales would be worse than those in 2007; the analysis shows just how much worse in the early going. Some forecasts predict an uptick in the second half; others do not.
Alfa Romeo is returning to the U.S. next year, the Financial Times reports in
Tuesday’s edition.
Fiat Chief Executive Sergio Marchionne told the London newspaper Alfa would beginning selling cars in the U.S. next year and be producing them in North America by 2011 or 2012 — with a partner.
This news ought to go over well on the picket line: Supplier American Axle & Manufacturing Holdings Inc., the Detroit automotive supplier embroiled in a strike now entering its fifth week, boosted the total compensation for CEO Richard E. Dauch by 9 percent after he restored the company to profitability last year.
Dauch's pay package, including salary, stock and option awards, and change in pension value, rose to $10.2 million from $9.3 million, the company said in its annual proxy statement filed Monday and cited by Dow Jones. Four other top officers also got raises.
Meantime, the company has told workers — 3,650 of them United Auto Workers union members who have been walking the picket line since Feb. 26 — they must reduce wages and benefits by more than half to compete against lower-cost rivals.
Not surprisingly, major automakers saw retail sales drop in the first half of March compared with the same period a year ago, according to a report by research firm J.D. Power and Associates. The firm predicts total March sales will hit an annual selling rate of 15 million, dramatically lower than the 16.2 million rate of a year ago.
J.D. Power said in a report to its clients cited by Dow Jones that March saw year-over-year double-digit declines in retail car sales at General Motors, Ford and Chrysler. Toyota's sales also were off in the early weeks of the month.
J.D. Power recently reduced its 2008 car sales forecast to below 15 million, which would be the lowest level since 1994.
General Motors and UzAvtoSanoat have established a joint venture to manufacturer and distribute vehicles in Uzbekistan. GM said the joint-venture company will play a defining role both in the automotive industry of Uzbekistan and in the continued, rapid global growth of GM’s largest brand, Chevrolet.
GM said the new joint-venture company, called General Motors Uzbekistan, has the potential in the mid-term to build as many as 250,000 Chevrolet models in the country and distribute a variety of Chevrolet cars and SUVS through a network of more than 60 dealers.
General Motors’ Saturn division plans to launch a pilot program within three months that is intended to allow integrated online execution of just about every aspect of a vehicle purchase that can be legally and physically accomplished outside a dealership.
AutoObserver has learned that Saturn’s test — with as many as 10 dealers nationwide — will allow customers to perform several functions on a dealer’s Web site that currently either must be handled in the showroom or executed only piecemeal online, including checking dealer inventories, applying for credit and scheduling a test drive.
The pilot also is expected to test ways to use the Internet to facilitate the evaluation of customers’ trade-in vehicles and to negotiate price using online chat and e-mail between dealership personnel and customers.
NEW YORK — The New York International Auto Show opens to the public Friday, and what a difference a year makes.
Toyota is the nation’s second-largest brand not Ford. Jim Press is the vice chairman and president of Chrysler, not Toyota. Cerberus Capital Management, not Daimler, owns Chrysler. The national average price for a gallon of premium gas is $3.60, not $2.80.
And the most interesting cars at the New York auto show are diminutive and original, not colossal and extravagant.
You know the economy is bad when the endlessly thriving Toyota says it may not hit its sales targets.
Remarks by Toyota executives in South Korea on Wednesday about the economy echo those being made by other auto company executives during this week's press days for the New York auto show where the economy, more than the cars, grabbed the spotlight.
NEW DELHI, India — General Motors said Monday it plans to build a second minicar in India, only a year after it launched its first one — the Chevrolet Spark — there, Dow Jones Newswires
reported.
Dow Jones quoted GM’s president of Asia Pacific operations, Nick Reilly, saying: “We believe there is space for us to have another entry in the minicar segment in India.â€
Reilly said the new minicar, which he did not identify, could be introduced within two years, could be exported from India and will be built at GM’s second plant in India. The new plant is just now gearing up for full production by the fourth quarter of this year. GM has invested $300 million in the plan to build 140,000 vehicles a year.
In relation to the mainly heavyweight environmental message emanating from the Geneva Motor Show, this week’s New York auto show practically delivers a let’s-dirty-a-little-air counterstroke.
After all, the 2008 New York show, bringing the international auto show circus back to U.S. domestic automakers’ soil, is headlined by seemingly desperate V8 volleys from General Motors Corp.’s Pontiac and Chrysler LLC, the latest twist on BMW’s V8-toting M3 and some big-bore but low-volume fireworks from the likes of Lamborghini and Toyota Motor Corp.’s Lexus.
Shares of General Motors and Ford plummeted to historic lows Thursday after Morgan Stanley Research cut its earnings forecasts based on a lowered outlook for U.S. auto sales. The report came on top of waning consumer confidence, higher gas prices, tightening credit availability and issues with auto suppliers.
The United Auto Workers strike at American Axle & Manufacturing Inc. that affected 28 General Motors plants across the country could easily last through April, one industry expert said Thursday.
Sean McAlinden of the Center for Automotive Research in Ann Arbor, Mich., said of the strike against American Axle: "I could see it going 60 days. The union has been telling people its members can stay out 60 days or longer if necessary, and I believe them."
General Motors has laid off 45 workers from its Shreveport, La., assembly plant, less than a month after 68 other workers were idled, The Associated Press reported.
The plant employs about 1,200 hourly workers to manufacture the Chevrolet Colorado, GMC Canyon and Hummer H3. GM said the layoffs of the skilled-trades workers (not assembly-line workers) were due to the economic downturn and slow sales. Trucks and SUVs, like those made by the plant, have been particularly hard hit by slumping vehicle sales.
A top General Motors executive said the automaker is concerned by the two-week strike against parts supplier American Axle & Manufacturing, which has slowed or stopped production at 29 GM plants. But he said GM won’t intervene in the dispute.
Fritz Henderson, promoted last week to GM president and chief operating officer, told The New York Times in an interview Monday that GM would be more concerned if it were losing sales due to lean inventories. The strike has mostly affected plants that make GM’s pickup trucks and large sport-utility vehicles, which are in abundant supply and low demand.
General Motors Corp. appears to have set the stage for shuttering its SUV assembly plant in Moraine, Ohio, by offering buyout packages to the 2,346 union-represented workers there.
The plant builds GM’s aging midsize SUVs, the Chevrolet TrailBlazer, GMC Envoy, Saab 9-7X and Isuzu Ascender — and it has long been thought GM plans to close the Moraine plant, near Dayton, as it moves to a new generation of more refined crossover vehicles built elsewhere.
Despite stock prices and market shares nosediving toward near-historic lows, Detroit scions General Motors Corp. and Ford Motor Co. once again are doling out bonus cash to blue- and white-collar workers alike — but the implied justification that “turnaround†goals are being met is, in the grandest tradition of car-town back-slapping, a bit self-serving.
General Motors reports a strike by workers at supplier American Axle & Manufacturing has closed or slowed production at 29 assembly and component plants across North America. The automaker said it is losing production of about 18,300 vehicles per week.
Negotiators for the United Auto Workers union and American Axle returned to the bargaining table over the weekend but have yet to reach an agreement to settle the two-week strike.
More than 30,000 General Motors employees from 19 different plants could be idle by Monday as the fallout from the United Auto Workers strike at American Axle & Manufacturing Inc., now in its second week, spreads, GM officials reported Thursday.
General Motors said it would close another assembly plant, and still another is at risk for closing due to a strike by workers against Detroit-based supplier, American Axle & Manufacturing Inc.
At the same time, bargaining teams for the company and the United Auto Workers union, which represents the hourly employees at American Axle, were scheduled to resume negotiations Thursday, for the first time since the strike began Februrary 25, largely over wages.
General Motors has offered to provide up to nearly $3 billion in loans to help supplier Delphi Corp. emerge from bankruptcy. That could ultimately bring GM’s total contribution to the emerging-from-bankruptcy effort to $10 billion or more, above the previously estimated $7.5 billion.
The Geneva auto show turned out as expected: It was a singular stage featuring fuel-efficiency and carbon-dioxide-reducing abilities as essentially the only act. Most automakers showed up in Geneva with actors capable of assuming roles in this new-age play. Those without the talent promoted the understudies’ virtue, that primarily being performance.
But what we liked most about the eco-positive hardware fronted in Geneva is how visually and intellectually appealing some of it turned out to be. In no particular order, our green favorites:
General Motors Corp.’s hybrid electric vehicle engineers announced at the Geneva auto show today they will have advanced lithium-ion batteries ready for the company’s next generation of “mild†hybrids coming in 2010.
The batteries, which GM says are being developed by Japan’s Hitachi Vehicle Energy Ltd., will improve performance and efficiency of the Saturn Vue Green Line and Aura Green Line and the Chevrolet Malibu Hybrid, GM sources say. Fuel economy, for example, will be some 15 to 20 percent better than the same vehicles with conventional gasoline-engine powertrains.
February was an awful sales month for the U.S. auto market. If the
industry isn’t in its own recession against the backdrop of general
economic uncertainty, it’s surely looking for the bottom.
Overall sales dropped by 6 percent compared with February 2007,
following a year-over-year decline of 4 percent in January. The pace
represented a seasonally adjusted annual rate of 15.5 million to 15.8
million vehicles, General Motors said. In the first two months of the
year American consumers bought about 2.2 million cars and trucks, or
about 126,000 fewer than in 2007.
DETROIT — The strike at American Axle & Manufacturing Holding Inc. in Detroit is continuing to chew into General Motors production as two more assembly plants have run out of key components.
GM spokesman Tom Wickham said the strike is expected to shut the assembly line used for the Hummer H2 on Tuesday. Hummer H2 is built for GM at an AM General plant in Mishawaka, Indiana, which is expected to run out of parts supplied by American Axle.
Despite the latest closings, GM Chairman Rick Wagoner told a reporter at the Geneva Motor Show that the automaker isn't in a panic yet. GM is still keeping a couple of plants running, producing trucks and SUVs that use American Axle parts and has good inventories of vehicles affected.
Our editor in Geneva, Switzerland, says this week's international auto show there is buzzing about Daimler AG’s reputed breakthrough in the development of lithium-ion batteries for hybrid-vehicle applications.
Daimler’s Mercedes-Benz unit is claiming the “first patented integration of a lithium-ion battery into a series-produced passenger car†when it launches the Mercedes-Benz S400 BlueHYBRID starting in 2009.
Mercedes’ 2009 rollout, in effect, trumps the earliest-known planned deployment of lithium-ion for production vehicles, believed to be General Motors Corp. for its own hybrid applications in 2010, and Toyota Motor Corp, also sometime in the 2010 timeframe. GM, of course, most famously promises its own lithium-ion battery breakthrough for its highly promoted Volt “extended-range†electric vehicle (E-REV), which also is earmarked for introduction around 2010.
Automakers will always do brand building via traditional advertising media such as TV, radio, outdoor and print. But in an ever-toughening marketplace, they’re more and more intent on obtaining solid sales leads and on buttressing relationships with existing customers — so they’re putting their marketing resources into the channels that best deliver on those goals.
That’s the main reason the Internet will be vacuuming up a much bigger share of vehicle-advertising dollars in the U.S. market in 2008.
The politicians in Washington aren’t on the same page on every issue with the U.S. auto industry. But it’s increasingly clear the most important of them see eye to eye with some major automakers when it comes to cellulosic ethanol.
Remaining presidential candidates have made a point of touting cellulosic ethanol — which can be made from a number of sources other than corn — as an important alternative fuel. On Thursday morning President Bush added to the chorus of support at his White House news conference. He emphasized cellulosic ethanol as a crucial part of the short-term answer to problems of fuel pricing and availability, as well as a long-term solution.
WINDSOR, Ontario — Strike fever is spreading in the auto industry.
On Thursday, 175 members of Canadian Auto Workers (CAW) Local 444 employed at a TRW Automotive plant in Windsor, Ont., went on strike after contract negotiations reached an impasse.
The TRW plant supplies suspension frames used on the 2008 Chrysler Town & Country and 2008 Dodge Grand Caravan. Chrysler’s Windsor assembly plant, which produces the minivans, was forced to shut only hours after the CAW strike began.
DETROIT -- The strike by the United Auto Workers against American Axle & Manufacturing Inc. has begun to pinch production of General Motors' pickup trucks, including the 2008 Chevrolet Silverado and 2008 GMC Sierra.
GM shut its assembly plant in Pontiac, Michigan, Thursday as the strike created shortages of critical parts. GM said it has not yet decided whether to close more truck plants. GM hopes to keep other pickup truck plants in Flint, Michigan, and Fort Wayne, Indiana, running at least into next week, sources said.
Actress Jennifer Garner may have felt mugged on the red carpet outside Hollywood’s Kodak Theatre on Sunday night, but at least she was safe once the Oscars telecast began inside.
General Motors enjoyed no such haven after the curtain rose. Abysmal ratings were the company’s reward for its 12th consecutive year as the auto industry’s exclusive national-TV advertising sponsor of the Academy Awards. The Oscars drew the fewest viewers in more than three decades, reaching only about 32 million people, according to Nielsen’s initial calculations.
SANTA MONICA, Calif. — February car sales likely will be off some from year-ago levels but improved from dismal January when automakers report them Monday, according to a forecast by Edmunds.com.
February’s new-vehicle sales are expected to be 1.22 million units, a 2.3 percent decrease from February 2007 but a 16.8 percent increase from last month.
"The month is proving better than some industry watchers may have expected," observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis. “This month should exceed the typical 10 to 15 percent boost in sales from January, historically the slowest car-sales month of the year.”
More than 3,650 members of the United Auto Workers (UAW) began a strike early Tuesday against American Axle & Manufacturing Holding Inc., a key supplier to both General Motors Corp. and Chrysler LLC, which could quickly feel the impact of the walkout.
The strike began shortly after midnight when the company and union negotiators reached an impasse over wage cuts for employees at American Axle plants in Michigan and New York.
LONDON — Ford’s sale of Jaguar and Land Rover, to be finalized within days, and General Motors’ continued stumbling in search of a role for its Saab subsidiary, which shows off new concepts at next week's Geneva Motor Show, remind me of something I saw during a tour of the shabby, sprawling AvtoVAZ factory in the Soviet Union in the early 1980s.
The events are unrelated except for the way in which they highlight the laughable results of central planning. For the Kremlin then, read Dearborn and Detroit today.
General Motors and Chrysler undoubtedly are paying close attention to labor negotiations taking place at Detroit supplier American Axle & Manufacturing Holdings, as their truck production is at stake if workers strike. The contract between American Axle and the United Auto Workers union expires at midnight Monday.
News that will come as a welcome fillip for the team at General Motors: Cadillac's new CTS has landed in Japan and has been earning rave reviews after the first media drives.
GM's local arm, GM Asia Pacific (Japan) recently laid on a ride-and-drive for the media down in Yokohama. This was the first local drive of the 2008 CTS following its launch back at the 2007 Tokyo Motor Show.
GMAC, the financial services group owned by General Motors and Cerberus Capital Management, said it would close 15 of its 20 offices and eliminate 930 – or 15 percent – of its jobs in North America.
The cost-cutting moves come on the heels of GMAC reporting a loss of $724 million in the fourth quarter of 2007, compared with a $1-billion profit a year earlier. GMAC’s troubles are due to the crisis in the housing and subprime lending businesses. In addition, delinquencies on car loans are rising.
New labor contracts negotiated between Detroit’s automakers and the United Auto Workers union last fall, combined with upcoming buyouts and retirements of aging baby boomers, may lead to a healthy hiring spree of engineers and hourly workers by auto companies nationwide, according to a new study.
The overall employment level for workers at auto companies in 2016 will be about the same as in 2007 — about 355,000 people — well off this decade’s peak of nearly 500,000, says a study on automotive hiring trends released this week from the Center for Automotive Research in Ann Arbor, Mich.
Auto-marketing executives know they’ll be advertising more on cell phones and other mobile devices in the coming months. But they still have a “prove-it†attitude toward the medium, as mobile-service providers work through issues such as image enhancement and platform standardization.
“The biggest issue with mobile is still that we have to do everything different for each different carrier,†said Gregg Benkendorfer, Toyota’s national manager of media and digital. “Until they really sort that out, I don’t think you’re going to see tremendous growth.â€
Christine MacKenzie, Chrysler’s executive director of multi-brand marketing and agency relations, said mobile-advertising providers still can’t “provide us enough data to justify a major move into mobile yet.†She added, “it’s still an area where we’re learning, and we’ll continue to learn.â€
But carmakers clearly are moving into mobile in a significant way nonetheless, encouraged in part by the booming popularity of Apple’s iPhone and the richness of its interface.
Maybe, more than six years after 9/11 and nearly five years after the start of the war in Iraq, consumers are tired of patriotic pitches. Maybe the unmitigated globalization of auto production makes it just too hard. It might be that “green” marketing doesn’t leave room for the red, white and blue. Or perhaps the idea is just in a lull.
But whatever the reasons, the use of “Made in America” themes in car marketing seems to be at a generational low these days.
Back in the good old days, when an engine was still an engine and not some fuel-sipping mockery of locomotion, Chrysler dusted off its Hemi tradition, gussied up a powerful new V8 and wrote a great chapter in sub-branding history by promoting its robustness. Consumers went nuts from 2002 through 2006 selecting the 5.7-liter option and turning "That thing got a Hemi?" into a cultural touchstone.
What a difference two years and $3-a-gallon gasoline can make. Nowadays, Chrysler still touts the Hemi. But it is repositioning the iconic engine brand into a platform for powertrain diversity that notably includes a version that boosts fuel economy by shutting down half of its cylinders at cruising speeds.
The evidence is mounting. Big engines and huge horsepower no longer are the keys to the car-buyer’s heart. In fact, it quickly may become the opposite.
Installation rates for V8 engines -- the bread-and-butter powerplant for the horsepower wars that have dominated the U.S. market for more than a decade -- are dropping. And data from Edmunds.com extrapolating the purchase intentions of consumers actively shopping for a new vehicle show those potential customers are markedly less interested in V8 power.
Certainly, it’s a time of deep but swift transition for the U.S. light-vehicle market. At the recent Detroit auto show, there were numerous examples of high-horsepower wares, but they most decidedly were presented in modest tones, taking a back seat to whatever fuel-efficient and eco-friendly model or technology was available. The chest-thumping days of explosive, twin-Hemi concept SUVs are done.
Despite improvements in its overall global auto business, General Motors posted losses for 2007 and for the fourth quarter of 2007.
GM's financial results show the automaker is flourishing in emerging growth markets but is still struggling in its North American auto operations. It also has been hurt by the housing and subprime lending crisis in the U.S.
In an effort to cut costs in North America, GM announced Tuesday it had reached an agreement with the United Auto Workers union for an even more attractive buyout program for hourly workers than the last one offered in 2006.
It’s hard to outshine the glitz and glamour of Detroit’s North American International Auto Show. But the Chicago auto show has always drawn crowds, and this year is cause for a true celebration because the nation’s biggest and oldest auto show marks its 100th anniversary.
This impressive milestone is well chronicled on the show’s official Web site, where the history of America’s automobile culture can be viewed through myriad photographs gathered from manufacturers’ and private collectors’ archives. Simply click on the decade of your choice and you can practically hear the music.
The Chicago show was closed during World War II and reopened with well-deserved fanfare in 1950. Through the next two decades you can see America’s soaring confidence, initially through fins and chrome, and then through muscle cars. But signs of a breakdown began to show in the late 1960s. First came Ralph Nader and the safety crusade, and then the oil shock of 1973.
The boom in crossovers is the biggest product story in the U.S. auto market these days. Sales increased to more than 2.8 million last year, extending a seven-year surge, and now more than 50 separate models of utility vehicles are offered on car-based platforms.
A couple more joined the fray at the Chicago Auto Show this week when General Motors unveiled the Chevrolet Traverse and Ford showcased a spiffed-up Ford Edge Sport.
Funny thing is, the more new crossovers that emerge, the more they look and feel essentially the same. One after another they’re being launched by automakers up and down the price scale, but more often than not they pretty much end up looking like some model year of the Lexus RX.
CHICAGO – Kicking off media days at the Chicago Auto Show, Troy Clarke, General Motors Corp. group vice president and president, GM North America, said GM, like the presidential candidates in the news, has a new platform in order to win the “vote†of U.S. customers. That platform: “energy solutions.â€
Clarke said GM is determined to proceed with future vehicle-development programs that focus on “what people want to buy, not what we may want to sell them.â€
In a piece of business left over from last year’s labor negotiations, General Motors and the International Union of Electrical Workers are making a bid this week to wrap a new contract.
Jim Clark, IUE president confirmed the two sides were scheduled to talk after a hiatus for the holidays. Traditionally the IUE-GM contract is very similar to the agreement between GM and the United Auto Workers.
One key remaining issue in the IUE talks, however, is the fate of the GM assembly plant in Moraine, Ohio, where GM now builds midsize sport-utility vehicles including the fading Chevrolet TrailBlazer, GMC Envoy and Saab 9-7X.
General Motors Corp.’s announcement this week of a large investment to produce a new variant of its largest diesel engine, one that complies with
emissions standards in all 50 states, likely foretells GM’s plan to use the engine for the Chevrolet Suburban SUV, in addition to other large SUVs, pickups and vans already using the current 6.6-liter Duramax diesel V8.
Currently, even the largest versions of the Suburban have made do with GM’s gasoline 6-liter V8. The gasoline-engine Suburban 2500’s 12 mpg city and 17 mpg highway fuel-economy ratings appear to be an increasing liability, however — a liability diesel power could help to alleviate.
But there’s a new complication: Current federal Tier II emissions standards created a new category of vehicles — Medium Duty Passenger Vehicles, which, beginning in 2009, must meet the same emissions standards as every other passenger vehicle on the road.
The small-truck market is disappearing, but it appears some automakers are at least giving some thought to trying to resuscitate it by reinventing it.
“It’s pretty bleak,†said Jessica Caldwell, Edmunds.com’s manager of pricing and industry analysis, of small truck sales of late. “They may be even worse than minivan sales.â€
Still, with small cars making a comeback due to high gas prices, automakers such as General Motors, Toyota and Ford think the small-truck segment could be brought back to life as well.
After the giant outpouring of product at last month’s Detroit auto show, there’s barely time for anyone to come up for air before taking in this week’s Chicago Auto Show.
At Chicago, automakers, rushing to grapple with a rapidly changing U.S. market, will stage a bevy of facelifted models and continue to promote fuel-efficient options such as more-powerful but more-efficient four-cylinder engines.
But more important will be new models and concepts that hope to revive interest in two flagging market segments: vans and compact pickups.
When General Motors announced two years ago it selling off part of its cash cow GMAC Financial Services, many industry observers thought it was a crazy plan.
Today, as GMAC, in which GM owns a 49 percent stake, posted a fourth-quarter loss of $724 million compared with a $1.02 billion profit a year ago, the automaker looks a tad smarter. And an investor group led by Cerberus Capital Management (owner of 80 percent of Chrysler), which bought the rest of GMAC appears less than brilliant.
GM CFO Fritz Henderson told AutoObserver in an interview the automaker never could have weathered the situation had it fully owned GMAC, which has had its home-lending unit clobbered by the turmoil in the mortgage, housing, subprime lending and capital markets.
The New York Giants certainly achieved their Super Bowl objectives Sunday. Did car companies?
It’s too early to tell. But automakers led the way in a field of Super Bowl ads that largely disappointed on their creative merits and failed to generate the kind of instant excitement that could help them meet their marketplace goals. In some cases, it didn’t seem as if their advertising approach was actually consistent with the strategic challenges faced by the company.
And when you’re paying $2.7 million for 30 seconds of rapt attention by the biggest TV audience of the year, you really should take advantage of the opportunity.
Ethanol derived from cellulosic “waste†sources –- rather than the corn-based stock that produces almost all of the ethanol used today –- takes a big step this week, as the nation’s first cellulosic ethanol plant begins production.
The cellulosic ethanol plant, engineered and operated by KL Process Design Group of Rapid City, S.D., is located near Upton, Wyo. The plant processes soft waste wood into ethanol and is the result of a 6-year cooperation between KL and the South Dakota School of Mines and Technology. Cellulose is the primary structural component in all green plants.
A General Motors analysis shows Americans will quickly spend a big chunk of the rebate checks they receive under the economic-stimulus package proposed by the federal government and expected to be passed soon by Congress.
And they may well spend some of it on cars.
Mike DiGiovanni, GM’s executive director of global market and industry analysis, said during a Friday conference call with analysts and media regarding January car sales that GM’s analysis shows Americans will spend about 40 percent of their rebate checks within the first four months of receiving them. Rebates are expected to range from $300 to $1,500, depending on income.
SANTA MONICA, Calif. – The average auto manufacturer incentive in the U.S. was $2,401 per vehicle sold in January, up $167, or 7.5 percent from January 2007, and down $56, 2.3 percent, from December 2007, Edmunds.com estimated Friday.
“In January, automakers decided to be more generous in their incentives spending in hopes of counteracting the slowdown in demand,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
“We do not foresee a dramatic turnaround in market conditions for at least the next several months, and yet the race for increased market share is in full force,” added Toprak. “This will provide a test of the automakers’ discipline about incentives, especially that the of the domestics who have been employing a ‘value pricing’ strategy quite successfully recently."
Where would Buick be without Tiger Woods? General Motors executives can’t decide if they really want to find out. They believe the golfing phenom and global celebrity (leading in this weekend's Dubai Desert Classic) is so popular he -- rather than Buick vehicles -- became central to the brand over the years.
But now that the Enclave has rescued Buick from the sales doldrums, a new advertising campaign shows division executives are unafraid to put a renascent Woods front and center with the stylish crossover vehicle.
“These spots are very significant because they represent both Buick and Tiger moving to another stage in our life cycle,†Maria Rohrer, Buick’s marketing director, told AutoObserver. “We’ve used him in testimonial before, but we’ve never used him in this kind of emotional way. It’s wonderful when the stars align like this.â€
GMC will air its first in-game Super Bowl ad Sunday when the General Motors division shows off its new Yukon hybrid in a 60-second commercial during the second quarter of Fox’s broadcast of the game.
GMC Marketing Director Steve Rosenblum told AutoObserver the division has “had plenty of ads during the pregame shows†on previous Super Bowl Sundays “but we haven’t had one in-game as far as I can remember.â€
GM’s announcement that GMC would occupy its single in-game slot Super Bowl Sunday ended an internal derby of sorts for what brand or products would land the spot.
In unveiling the Cadillac CTS-V at the recent Detroit auto show, General Motors announced it would -– for the first time ever -- sell the performance sedan outside of North America.
The 2009 Cadillac CTS-V will be sold in Europe, the Middle East and Asia.
If you’re one of those cynical types who think people are buying hybrid-electric vehicles mainly to demonstrate their environmental hipness, results of a new fuel-price study by Edmunds.com indicate hybrid buyers may not be nearly so superficial:
They’re buying hybrids to save gas.
Edmunds analyzes the number of visits for every vehicle in the market to that model’s Vehicle Details page at Edmunds.com. It correlated those visits to extrapolate what would happen if the price of gasoline rose from its $3.01 price in December to a theoretical $4 per gallon.
Bottom line: Online vehicle shoppers flock to hybrids. And flee traditional midsize SUVs.
A Web site for fans of the Chevrolet Volt plug-in hybrid, which GM hopes to have in production by the end of 2010, says it has now collected the names of more than 10,000 people who want to buy one of the cars, according to Edmunds’ Green Car Advisor.
In an item posted on its site Saturday, GM-Volt.com said it is logging more than 100,000 "visitors" a month and has a "waiting list" that has surpassed the 10,000 mark.
The site was started by New York physician Lyle Dennis within days after GM introduced the Volt as a concept car in January 2007 at the Detroit auto show.
DETROIT – General Motors Corp. this week put its top performance-vehicle
development engineer in charge of a new global team oriented to going fast in another fashion: speeding development of GM’s new hybrid-electric and so-called “extended-range” electric vehicles – and the critical battery-storage technology to enable those next-generation vehicles, like the Chevrolet Volt.
Robert Kruse, executive director of vehicle engineering for hybrids, electric vehicle and batteries, is running the new engineering team. Kruse, most recently head honcho at GM’s Performance Division, is well-regarded in the GM empire and should be an ideal engineer-executive to direct GM’s efforts to implement high-tech, electrically oriented powertrains.
General Motors introduced its first China-made hybrid car during a ceremony in
Shanghai Tuesday.
The Buick LaCrosse Eco-Hybrid is made by GM's joint venture with Shanghai Automotive Industry Corp.
Available at dealerships sometime this year, the LaCrosse hybrid model achieves fuel economy of 8.3 liters per 100 kilometers. In comparison, the non-hybrid version gets 9.8 liters/100 km, the statement said.
DETROIT – Yes, in a tactical move that speaks volumes about the current environment in the automotive industry, General Motors recently halted the development program of an all-new, overhead-cam V8 for premium cars.
But the company’s powertrain boss cautions the move doesn’t necessarily write the epitaph for the V8 at GM – or the auto industry at large.
Tom Stephens, GM’s Group vice president, global powertrain and quality, says in an interview with AutoObserver at the recent Detroit auto show that current regulatory and market trends – not to mention customer preferences – are skewing acutely to increased fuel economy and less environmental impact. The impact of the transformation cannot be conscientiously ignored, he says.
Iconic muscle cars from Detroit automakers faced off at the 37th annual
Barrett-Jackson Collect Car Event held in Scottsdale, Ariz., over the weekend, raising nearly $2 million in charity.
The first 2009 Chevrolet Corvette ZR1 raised $1 million; a 2008 Ford Shelby GT500KR sold for $550,000; and a 2008 Dodge Challenger went for $400,000.
General Motors is looking to take advantage of its new contract with the United Auto Workers union by offering buyouts to 46,000 of its blue-collar employees in the U.S. – roughly two-thirds of its hourly workforce.
GM is hoping at least half of those offered the buyouts would accept them. And if GM needs to replace outgoing workers, it can do so in some cases by paying about a third less in wages and benefits than the current workers make, based on the UAW contract agreed to last fall.
Another sign the automotive times are a-changin’: Customers grabbing up General Motors Corp.’s all-new ’08 Malibu midsizer don’t mind a couple less cylinders.
Speaking to reporters, GM Chief Executive Rick Wagoner says some early data on engine take-rates for the Malibu show customers opting as much for the car’s smaller 2.4-liter 4-cylinder engine as they are for the Malibu’s grunty and sophisticated 3.6-liter dual-cam V-6.
WARRENVILLE, Ill. –- Here in a cluster of tiny laboratories, in a nondescript one-story office building, in a cookie-cutter industrial park in suburban Chicago, scientists and engineers –- as of Sunday, officially partnered with General Motors –- may be coming up with one of the most feasible solutions yet to the wrenching problem of global dependence on oil for gasoline.
It’s called cellulosic ethanol. It’s created by proprietary strains of bacteria that convert farm waste, wood chips, old tires, landfill plastic and a whole bunch of other organic materials into ethanol. The process was licensed and is being commercialized by a startup called Coskata Inc.
Specifically, the promise is that Coskata plans to produce enough cellulosic ethanol here by later this year to begin fueling the GM test fleet at the Milford (Michigan) Proving Grounds. And if that works, Coskata projects that it could be running its first commercial-scale plant, producing 50 million to 100 million gallons of ethanol annually, by 2011 –- including the two years it will take to build the plant.
“This can revolutionize the transportation-fuel business,” said Bill Rowe, a three-decade veteran of the water-treatment and process-chemical industry who now serves as Coskata’s CEO. “Just as important, it’s a speed-to-market play.”
Kid Rock, pictured rehearsing for his performance at the GM Style gala on Saturday night, almost had a different career than music.
His father wanted him to be a car dealer.
In the early days of his career, Kid Rock’s father, Bill Ritchie (Kid Rock’s real name is Bob Ritchie), desperately wanted his son to settle down into a real career in the family car business.
By attempting to spread the design and sales impact of the highly successful Enclave crossover throughout the rest of the Buick vehicle lineup, General Motors executives are trying to borrow a page from the old Walt Disney Co. playbook.
And the future of Buick likely depends on whether they succeed.
Disney executives used to talk about “pixie dust†– metaphorically collected from the colossal success of their theme parks – as the company’s particular brand of Midas touch that graced practically everything they did from the Eighties through the Nineties.
Buick hopes that “Enclave design and quality cues†provide comparable contagious magic for them.
In a story posted on Edmunds’ Green Car Advisor, automakers voice their concern that recent laptop computer battery fires don’t lead to safety concerns for batteries in hybrid cars.
The latest such incident, reported earlier this week, was with a computer outfitted with a lithium-ion battery manufactured by Korea’s LG Chem – one of two battery makers General Motors Corp. has charged with developing the lithium-ion battery pack for a production version of its tirelessly-touted Chevrolet Volt hybrid-electric vehicle.
Fortune
magazine suggests there’s reason to be optimistic about General Motors’ future in an article written by auto veteran and long-time GM watcher Alex Taylor and entitled “Gentleman, star your turnaround.” The subtitle is “Rick Wagoner’s overhaul of GM is producing cooler cars and a glimmer of hope.”
GM CEO Rick Wagoner tells Fortune what he’s been saying often in recent weeks is that 2008 will be another tough year for the automaker. He cites the same headwinds as his counterparts at other companies cite: weaker economy, high commodity, steel prices and energy prices. "Frankly, more headwinds, especially from the first two, than I would have hoped. We're going to be in soupy water for a while," Wagoner told Fortune.
Still, he added, he feels good about GM’s progress.
Having just reported record sales outside of the U.S., General Motors has made some employee appointments to bolster fast-growing regions, especially Russia and Turkey.
Chris Gubbey, appointed chairman and managing director, GM Holden Ltd., in Australia only months ago, becomes GM Europe vice president and managing director, responsible for GM Russia and CIS (Commonwealth of Independent States).
GM, like most automakers, is scrambling to expand in Russia to keep up with growing vehicle demand there.
NEW DELHI , India -- With all the attention focused on tomorrow’s launch of Tata’s much-anticipated “1-Lakh†($2,500) city car, it’s all too easy to forget all the other industry news and car launches taking place here at the New Delhi Auto Expo.
Several companies choose to think large, and used the first press day to unveil a variety of sport-utility vehicles and crossover vehicles. Chief among them were General Motors with its Chevrolet Captiva and Tata with its Sumo Grande.
LAS VEGAS – At the enormous and ever-growing Consumer Electronics Show here this week, General Motors Corp. Chief Executive Rick Wagoner leaves a telling indicator about his view on the hierarchy of the automotive and electronics industries, saying autos essentially have become electronic devices.
“If the automobile were invented today, I’m pretty sure it would debut at CES,†Wagoner says. “Because more and more, that’s exactly what today’s cars and trucks are – highly sophisticated consumer electronics.â€
Wagoner’s keynote address is the first by an auto executive in the 41-year history of CES, a trade show whose hype is exceeded only by its audacious size. And if anyone thought Wagoner was clinging to any old-school notions that the electronics industry is subservient to the auto sector, Wagoner went on to describe his view of a world in which consumers will begin to see automobiles in the same light as a cell phone or an MP3 player.
LAS VEGAS -– Is General Motors Corp.’s timeline for development of a production version its Chevrolet Volt hybrid-electric concept car a little too aggressive?
Break out your corporatespeak decoder ring for an answer.
GM Chief Executive Officer Rick Wagoner set off an explosion of speculation last week when he said in an online chat session –- kicking off GM’s 100th anniversary celebration -– that he “can’t guarantee at this time†the 2010 production launch of the Volt. The 2010 target long has been a cornerstone talking point for Volt chief proponent and GM Vice-Chairman Bob Lutz.
Don't read too much into Wagoner's comment, the engineer in charge of the Volt told AutoObserver.
About three-quarters of General Motors' car and truck sales will come from outside the U.S. within a decade, Chief Executive Officer Rick Wagoner told Bloomberg Television
in an interview.
GM plans to push sales in the fastest-growing markets as demand in the U.S. stagnates, Wagoner said. In the third quarter of last year, 58 percent of GM's sales came from outside its home market. GM relied on the U.S. for most of its volume as recently as 2004.
Auto analyst John Casesa, managing partner at Casesa Shapiro Group in New York, told Bloomberg, that’s the kind of sales mix “that will eventually save GM.†Casesa said: "Overseas growth is an absolute necessity if GM is going to compete, not just with Toyota, but with emerging market automakers.''
Withering vehicle demand and a dollar battered on world currency markets means 2008 will see many automakers beginning a high-stakes dance to make more efficient use of production capacity in North America.
The efforts are most critical for Detroit’s Big Three automakers – General Motors Corp., Ford Motor Co. and Chrysler LLC. Each is struggling to rationalize fading market share with a 2008 vehicle-sales forecast projected to be the U.S.’s lowest in a decade or more.
Underutilized plant capacity is an immense black eye for the bottom line in the best of economic environments, much less a 2008 expected to flirt with full-blown recession and what some believe is a dangerously weak currency.
Each of the Big Three recently won momentous labor-cost concessions from the United Auto Workers union, but that won’t change the fact each still must markedly downsize their manufacturing footprints.
The year 2007 was historic for motor vehicle sales in the U.S. on a number of fronts.
Overall, the U.S. auto industry, which reported December and full-year 2007 sales on Thursday, saw sales drop to their lowest level in a decade.
For the first time since 1931, Ford Motor Co. was not the No. 2 automaker in the U.S.; Toyota was, even though Toyota suffered sales declines in some months for the first time in years.
Depending on what you count in the numbers, Toyota Division could be considered the best-selling brand in the U.S. Chevrolet objects, claiming Toyota shouldn't add into its totals Scion-branded vehicles in order to steal Chevrolet’s long-held sales crown.
And in 2007, for the first time in history, domestic automaker’s share of their home market fell below 50% in July, though for the year, they stayed above the 50% mark. Consider it was only in the mid-1980s that they owned 75% of the U.S. market.
Poor spy photographers. A car generating some of the biggest buzz – the
Chevrolet Camaro – is already uncovered.
General Motors Vice Chairman Bob Lutz ordered the camouflage removed from pre-production Camaros, supposedly so further evaluations can be done for aerodynamics and cooling efficiency, according to Chevrolet General Manager Ed Peper, writing on GM’s FastLane blog Thursday.
However, it appears there’s a little marketing thrown in.
GM Chairman and CEO Rick Wagoner said on Thursday that the company is “currently benchtesting batteries†for Chevrolet Volt and added that, while beginning Volt production in 2010 “would be great,†he “can’t guarantee it at this time.â€
GM previously has indicated that it will launch Volt around 2010, though some outside observers are skeptical that GM will have the batteries ready for the plug-in hybrid.
Toyota Motor Corp. overtook Ford Motor Co. to become the No. 2 automaker based on U.S. sales for 2007. Ford held the No. 2 spot behind General Motors for 75 years.
The battle for brand leadership between Toyota and Chevrolet is muddied -- but close and intense.
If sales from Scion, sold through Toyota Division showrooms, are included in 2007 sales totals, Toyota wins over Chevrolet for the first time as the top-selling brand in the U.S.
Take out Scion, however, and Chevy holds onto the top spot, but by a narrow margin -- one that has been narrowing in recent years.
The average automotive manufacturer incentive in the U.S. is estimated to have been $2,472 per vehicle sold in December 2007, up $197, or 8.7 percent, from November 2007, and up $157, or 6.8 percent, from December 2006, according to calculations by Edmunds.com.
Domestic automakers as well as European, Japanese and Korean ones raised incentives in December in an attempt to end the year on a high note.
However, sales reports, being released on Thursday, indicate that note was not so high. Industry sales for the year are expected to come in at 16.1 million, the lowest level since 1998.
When General Motors Chairman and CEO Rick Wagoner began an online chat today at 10:07 a.m. with members of the worldwide automotive news media, he formally kicked off a corporate centennial celebration that will culminate with a huge Sept. 16 observation of exactly one official century of existence for GM.
But in his chat, Wagoner didn’t focus on The General’s glorious history as the globe’s largest and most accomplished automaker. Rather, he talked up the company’s future, from its plans to boost Daewoo, its Korean affiliate, to the possibilities for producing the Volt, GM’s plug-in hybrid vehicle that so far exists only in prototype.
Wagoner’s thrust was purposeful, because the future will be the focus of the entire centennial celebration that the company is calling GMNext. About 85% of GMNext activities and resources will be devoted to projecting GM’s second century and only about 15% to reveling in its first hundred years.
Often a particularly challenging year is sent passing into the history books with a collective “good riddance” and sigh of relief. And while automakers selling vehicles in the U.S. surely are glad the tough 2007 is over, they are bracing for rather than embracing the arrival of 2008.
On Thursday, automakers report December and full-year 2007 vehicle sales. 2007 is likely to see the lowest sales since 1998.
Forecasters predict 2008 sales will be even lower. But 2009 could be a turnaround year.
Expect future Buick vehicles to rip a big page from the success of the aggressively styled Enclave crossover and move quickly away from design-legacy retreads such as the company's Lucerne and LaCrosse midsize sedans.
Ed Welburn, GM’s vice president of global design, told AutoObserver that Buick is shifting decisively toward “bold†and “dramatic†design statements such as Enclave while still trying to retain some “elegant†and “romantic†elements from its design theme over the previous generation. He said to expect more iterations of the sort of overstated approach used with Enclave, which is distinguished by cues such as big curves in the sheet metal, lots of chrome exterior trim and huge, elongated headlights.
When Chrysler CEO Bob Nardelli didn’t like the negative stories being written about the automaker in the
business press over the past couple of weeks, he didn’t write nasty letters to the editor that may or may not have been published. He didn’t call a press conference to discredit the reports.
He blogged.
He used Chrysler’s The Firehouse blog to set the record straight that the automaker was not in the dire financial straits that had been reported. He insisted Chrysler was making progress in its turnaround and had the full backing of new owner Cerberus Capital Management.
The day after Chrysler posted Nardelli's blog, newspapers covered it as a story, demonstrating one of the many ways automakers are using blogs to get their viewpoints across as well as to communicate with customers and potential buyers.
PITTSBURGH – General Motors Corp. is working on a deal that may net a few bucks from a manufacturing facility that was slated to be shuttered by the end of they year.
The company’s Pittsburgh metal-stamping plant in West Mifflin, PA, is not exactly on the inner ring of GM’s manufacturing universe, and GM announced in November 2005 it intended to close the facility by the end of this year. The plant was opened in 1951.
Now, the plant may be pulled back from the brink – and continue to produce for GM.
TV advertising is spiced with year-end incentives for auto buyers. Mercedes-Benz shows Santa’s elves tinkering in his workshop on E- and C-class sedans for its Winter Event program. It’s Happy Honda Days! General Motors is revisiting its now-annual Red Tag clearance sale for 2007 models.
Lexus has renewed its iconic incentive program that tries to lure consumers into putting big red Christmas bows on new vehicles and parking them in the driveway for their loved ones. And Lincoln is running a copycat campaign.
But don’t be fooled by airwaves full of incentive advertisements: as enticing as they seem, these offers only amount to a holiday treat. That’s because money-back and cut-rate-interest programs aren’t what they used to be in the auto industry.
General Motors has reached an agreement with Navistar for the purchase of the automaker’s medium-duty truck business.
Under the plan, Navistar would manufacture GMC and Chevrolet brand vehicles in the class 4-8 gross vehicle weight range – the GMC TopKick and Chevrolet Kodiak. Navistar also would sell a competitive line of Chevrolet and GMC vehicles and service parts through GM’s dealers in the United States and Canada.
With General Motors Corp. unveiling the ultra-high performance ZR-1 and its six-figure price, the possibility of the next-generation Chevrolet Corvette moving to a more exotic mid-engine configuration still is being discussed at the highest levels of GM engineering, planning and marketing, sources close to the situation tell AutoObserver.
The iconic Corvette has used a classic front-engine/rear-drive layout since its inception in 1953. But some factions within the company believe the car should migrate to a mid-engine design for a variety of reasons, not all of them engineering-related.
It is a virtual assurance, however, that a mid-engine design would dictate a price point well in excess of $100,000 – a matter many at GM believe jettisons the Corvette’s heritage for quasi-affordability.
SANTA MONICA, Calif. -- Edmunds.com recently selected six applicants from the “Editor for a Dayâ€
submissions to experience and write about a professional comparison test of three midsize family sedans: 2008 Chevrolet Malibu, 2008 Honda Accord and 2007 Toyota Camry.
The winners were flown to Los Angeles, given appropriate accommodations and training, then encouraged to put the comparison test vehicles through a series of driving exercises at Willow Springs International Raceway on November 29. The winners carefully evaluated the vehicles and their commentary was published on Edmunds.com.
“This is the first time we invited real consumers from around the country to work with us on an actual road test,†said Kevin Smith, editorial director for Edmunds.com.
In the end, three of the demographically and geographically diverse group were split: three (including the two women in the group) chose the Malibu as their favorite; three chose the Accord.
Here is a summary of the “Editor for a Day†winner profiles and their comparison test experiences:
General Motors Vice Chairman Bob Lutz insisted reports by the Associated Press, picked up by AutoObserver
Wednesday, of him considering retirement are not true.
"Read my lips: I am not thinking retirement," wrote Lutz in an e-mail to trade journal Automotive News, which also picked up the story. "The job is better than ever, and so is GM!!!!"
The Associated Press, of course, is standing by its story.
General Motors captured four of the six spots for finalists for the North American Car and Truck of the
Year awards; a Honda and a Mazda rounded out the roster.
Finalists for the 2008 North American Car of the year are: Cadillac CTS, Chevrolet Malibu and Honda Accord.
Finalists for the 2008 North American Truck of the Year are: Buick Enclave, Mazda CX-9 and Chevrolet
Tahoe Hybrid.
The finalists for the prestigious awards were announced Wednesday at a luncheon sponsored by the Detroit Economic Club to promote the Detroit auto show. Winners will be announced at the first press conference of the show on January 13, 2008.
GM swept the 2007 awards, with the Saturn Aura winning car of the year and the Chevrolet Silverado
winning truck of the year in January. An encore sweep could be in the offing. If that happens, it would mark the first time a manufacturer won both awards two years in a row since the awards were created in 1994.
DETROIT -- Robert Lutz, General Motors vice chairman for global product development, says he may
make the Chevrolet Volt his swan song.
The 75-year-old Lutz, who is credited with GM’s product renaissance, told reporters this week that he wants to retire GM after the Chevrolet Volt plug-in hybrid is introduced, around 2010.
Often heard ranting about the ridiculous of global warming and a pooh-pooher earlier on of hybrids like the Toyota Prius, Lutz has done somewhat of an about-face. He sees plug-in electric vehicles like the Volt as a paradigm shift in the auto industry.
SANTA MONICA, Calif. -- With 11 months of vehicle sales reported, the biggest losers and winners –- and those brands that are on the move to new sales rankings –- are being predicted by Edmunds.com’s analysts.
The biggest losers for 2007 look to be: Ford division; Isuzu; Buick; Hummer; Toyota’s Scion; and Jaguar.
The biggest winners for 2007 likely will be Mazda, Lincoln and Mitsubishi, all of which have surpassed total 2006 sales in just the first 11 months of the year.
WARREN, Michigan –- General Motors Corp. designers and engineers say they will have to figure out ways to seriously cheat physics if a production version of the company’s Chevrolet Volt plug-in hybrid-electric concept car is to deliver on the promised driving range of 40 miles propelled solely on battery power.
GM designers revealed at a media event here they have embarked on an all-out battle to minimize efficiency-reducing aerodynamic drag. And the company recently commissioned a new studio and a 45-strong staff dedicated to developing hybrid and full electric vehicles using its E-Flex “modular†propulsion system. Right now, that means the full staff is working on just one vehicle: the Volt.
DETROIT -- Oil prices were surging to near $100 a barrel. The housing downdraft was whacking economic optimism with each new report. General Motors’ sales were in the process of dropping by a double-digit percentage. And GM bean counters were putting the finishing touches on a quarterly statement that would yield an industry-record quarterly loss.
But still, it was a good November for Mark LaNeve, GM’s vice president of vehicle sales, service and marketing. That’s because he was seeing a bunch of other numbers, too -– the ones that showed significant and sustained upticks in the company’s market share, consumer purchase consideration of GM vehicles, product-quality scores and even the equity of GM’s brands.
And ever the salesman, LaNeve was touring the country, hitting 14 cities for meetings with 40 GM dealers and ladling out the Kool-Aid with the help of a 10-slide PowerPoint presentation that told the story of GM’s comeback and sounded a rallying cry as 2007 was nearing a close.
November car and truck sales weren't great, but, in light of current circumstances, they could have been worse, concluded Edmunds.com's analysis of November sales figures reported by automakers Monday.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, noted the retail market, despite the weakening economy, the fallout from the housing market and higher energy prices, remained relatively stable this November compared with the last one.
“We’re seeing modest gains though not robust ones,” he said. “We’re still doing fairly well considering the market and macroeconomic issues.
SANTA MONICA, Calif. – Incentive spending by automakers remain roughly flat in November, as manufactured tried to stick their plans for less incentive spending to boost profit margins. Yet, the plan may prove to contribute to softer vehicle sales, being reported by manufacturers throughout Monday.
"Even with the year-end sell-down upon us, the domestic automakers have stayed committed to the value pricing strategy that limits their investment in incentives,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
Roger B. Smith, the General Motors chairman who led the world’s largest automaker in the 1980s through a period of significant change, died in Detroit on Thursday after a brief illness. He was 82.
Smith served for only a decade as GM chairman, retiring on July 31, 1990, but, for better or worse, Smith changed the world’s largest manufacturing corporation more than any chairman since Alfred P. Sloan Jr., who chaired GM from 1937 to 1956 and had defined modern-day GM to that point.
And the change was tumultuous -– forced by external factors and brought about by Smith himself.
Roger Smith's name became a household one with the satirical so-called documentary about the fall of GM and the demise of Flint, Michigan, a GM town, in Michael Moore's first major film, Roger & Me.
Smith is credited -- or blamed -- with: dismantling the corporation and eliminating some of its sacred institutions, like Fisher Body; reconstructing the corporation in a new way; forming a joint manufacturing venture with now arch-rival Toyota to build small cars; introducing GM's first front-wheel-drive cars to compete with the rising Japanese makes; creating the Saturn division; and adding new entities with the purchase of Hughes Aircraft and H. Ross Perot's Electronic Data Systems.
General Motors opened a full-fledged design studio in India this week and is considering a design studio
in Dubai.
GM officially opened GM India Design Studio in Bangalore this week, and GM executives have been on recent scouting missions to Dubai for a possibly design studio focused on luxury vehicles there.
GM Design Chief Ed Welburn told AutoObserver he wants GM’s designers in India to become more involved with actually designing vehicles for their home market, one of the world’s fastest-growing car markets. The India studio will help with designs of future products for global markets, mostly small cars.
BOSTON –- General Motors used the New England International Auto Show in Boston this week for the North American unveiling of the Saab Turbo X, a limited edition sporty, turbocharged version of the 9-3 and available as a sedan or Combi wagon.
Boston is an appropriate place to introduce any Saab since 40 percent of Saab’s total U.S. sales are in the Northeast, Saab started its U.S. business more than 50 years ago in Boston and Steve Shannon, general manager of Saab Automobile USA, happens to be a native Bostonian.
Bryan Nesbitt, GM vice president of North American design, said the Turbo X was just the beginning and hinted that 2008 will be a significant year for Saab.
SANTA MONICA -- This month's new vehicle sales (fleet and retail) are expected to be 1.2 million units, virtually unchanged from November 2006 and 2.5 percent below October 2007, according to Edmunds.com.
"Given the industry trends, we have adjusted our year-end forecast," stated Jesse Toprak, Edmunds’ executive director of Industry Analysis. “We now expect 2007 sales to total 16.13 million units, and predict that no more than 16 million cars and light trucks will be sold in 2008."
Motor Trend magazine selected the 2008 Cadillac CTS as its car of the year. Cadillac won the award in the magazine’s inaugural year of 1949 with the DeVille.
The completely redesigned CTS is off to a blistering sales start. CTS sales soared by 75 percent in October over October a year ago for the sedan's best-ever sales month. At the end of October, inventories of the CTS stood at a scant 20-day supply, suggesting it is selling as fast as it arrives at the dealership.
Cadillac needs a boost. Its sales have been in a slump. For the calendar year to date, Cadillac sales are off about 6 percent. For October alone, the CTS pushed total Cadillac sales up nearly 20 percent over the year-ago period.
Cadillac was a highlight, being up nearly 20 percent from a year ago, though the luxury make is down 5.8 percent for the calendar year to date. Cadillac’s strength came from the newly launched CTS, which saw sales rise 74.5 percent for the sedan's best-ever sales month. Paul Ballew, GM’s top analyst, said CTS sales could best be described as "blistering." GM has a scant 20-day supply of the CTS since they sell as fast as they arrive at the dealership
Few true characters have filled the automotive industry’s top ranks, but John Rock, the former General Motors executive who put GMC on a growth path and later tried to resuscitate Oldsmobile, was one of those.
Rock, 71, died Friday after a brief illness at his ranch in South Dakota, where he’d grown up, the son of a Chevrolet dealer.
A hulk of a man, Rock strode into a room like a cowboy, commanding everyone’s attention by his very presence. His talk was as straight as a cowboy’s shot -- and every bit as salty.
Anyone who knew Rock, in fact, immediately recounts the famous John Rock angry cowboy story.
After nearly four months of earnest talk, surprise strikes at General Motors and Chrysler LLC and some creative wheeling and dealing, American carmakers finally have new labor agreements -- ones that almost wipe out the cost advantage enjoyed by Asian rivals operating in the U.S. without union contracts.
Sean McAlinden, vice president of research at the Center for Automotive Research (CAR) in Ann Arbor, Mich., said it will take U.S. carmakers two to four years to reap the benefits of all the changes embedded in their new contracts with the United Auto Workers.
But the cost savings are genuine and substantial, he said.
Did you like the way the long-slung Chevrolet Volt looks?
Well, forget about it. The production version won’t look like that concept. It's not aerodynamic enough.
"The final version of the Volt won't look like the concept,†General Motors Vice Chairman Bob Lutz told reporters attending the Los Angeles show at a dinner Tuesday night. “In the wind tunnel it was a cruel disappointment. We probably would've gotten better drag coefficient if we put it in the wind tunnel backwards. "
Now that the “regular-season super bowl†is over -- with the New England Patriots’ defeat of the Indianapolis Colts last Sunday -- football advertisers as well as fans are turning more attention to the official Super Bowl XLII on February 3.
And despite the fact that Fox already has sold out more than 90 percent of its commercial spots for the game broadcast, automakers aren’t among the major advertisers clamoring to get in.
In fact, General Motors and its divisions have decided to cut the company’s total number of in-game TV advertisements down to just one, compared with three during the 2007 Super Bowl, AutoObserver has learned. Honda has decided for the first time in four years to bow out of running spots during the Super Bowl telecast itself. And Chrysler seems likely, just as last year, to stay away from the game telecast itself.
Today’s the day designated for a second “takeover†of online advertising by the 2008 Chevrolet Malibu –- although this invasion will take a few days, unlike the car’s one-day blitzkrieg on October 17.
Having pronounced its earlier takeover a blazing success, Wednesday Chevrolet also planned to make it nearly impossible for Internet surfers to ignore its new midsize sedan. Chevy bought advertisements that occupy many of the highest-traffic home pages ranging from Yahoo.com to Amazon.com to FoodNetwork.com. Connected to the online effort is a big advertising push for Malibu on and around the Country Music Awards telecast tonight on ABC.
General Motors Wednesday reported a third-quarter net loss of $39 billion, its largest in history, after the automaker took a non-cash charge of future tax benefits.
Without those charges, GM still showed a loss for the quarter of $1.6 billion, compared to a profit of $497 million a year ago.
GM's North American automotive operations posted a loss of $247 million, an improvement from an adjusted loss of $660 million in the year-ago quarter. GM reported record high automotive revenue of $43.1 billion for the quarter, up from $29.6 billion a year ago.
While analysts had not predicted the write-down, most said it is largely a paper loss that does not affect GM's long-term prospects.
Fritz Henderson, GM's vice chairman and chief financial officer, said the charge does not imperil the automaker's long-term financial outlook.
"GM continues to believe that its new product introductions, combined with the new GM-UAW labor agreement, once fully implemented, will significantly improve GM's competitive position in the U.S.," Henderson said in a statement.
October car sales represented more of the same weakness seen in recent months.
Sales on a seasonally adjusted basis came in at 16.05 million vehicles, down from 16.35 million in October a year ago.
“There was nothing new this month, as we saw General Motors and foreign automakers continue to succeed,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. “Ford did better than expected because of its new products, mainly crossovers, and Ford has been able to hold on to its truck buyers, even with an aging product.
“We’re expecting that sales will continue to be sluggish for the rest of the year, and November has typically been a slow month for automakers,” he added.
General Motors Vice Chairman Bob Lutz says though the new Chevrolet Malibu, going on sale this month, has about the same list price as the old Malibu, GM could make more – significantly more – on the midsize sedan.
Lutz told the Detroit News at the Chevy Malibu launch in Memphis this week that GM could make $5,000 more on each new sedan sold compared with the older model. He said the Malibu will command a higher price premium than the previous Malibu, which was dragged down by deep discounts and heavy sales to daily rental fleets. Edmunds.com data shows the 2007 Malibu sells for about $2,800 below the Manufacturers Suggested Retail Price.
"My bet is that we're going from a car people have to be bribed to take, to a car people will actually pay for," Lutz told the newspaper.
The Chevrolet Volt moved yet-another step closer to reality Tuesday when, as scheduled, General
Motors took delivery on the first advance lithium-ion batteries to go into E-Flex operating system that powers the Volt.
The battery delivery buoyed the confidence of GM Vice Chairman Bob Lutz, who told the Detroit Free Press in an interview that he hoped GM would build as many as 100,000 Chevrolet Volts in the first year of production, set for around year-end 2010.
Lutz told the newspaper that the first-generation production version of the E-Flex will appear in a vehicle that will be called the Chevrolet Volt and will look similar to the concept car unveiled at the Detroit auto show earlier this year.
October’s new vehicle sales are expected to be 1.24 million units, a 2.4 percent increase from October 2006 on an unadjusted basis, according to a forecast by Edmunds.com. Automakers will report October sales results on Thursday.
This October had 26 selling days, one more than October 2006. When adjusted for this difference, sales decreased 1.6 percent from October 2006. (The chart below sets forth other adjusted and unadjusted comparisons.)
"Sales are strong for vehicles at the far ends of the price spectrum, as consumers affected by the housing market bust seek bargains while luxury buyers are largely untouched," observed Jesse Toprak, Edmunds’ executive director of industry analysis. “Meanwhile, sales of midrange vehicles like large cars and minivans are suffering."
Every year when the vehicle-customization industry gathers at the Specialty Equipment Market Association (SEMA) show in Las Vegas, one group of attendees is always more engaged than the year before: auto company executives.
Tapping into the customization and specialization craze is boosting their top lines and beefing up their bottom lines more than ever before, producing juicy double-digit growth that normally isn’t part of the landscape in the highly mature U.S. automotive market.
At least 14 automakers were expected to exhibit at the SEMA show that began in the Las Vegas Convention Center on Tuesday. Understandably, each automaker is getting more and more serious about pursuing slices of what has become a $36.7-billion industry, according to figures compiled by Diamond Bar, California-based SEMA.
Navistar International Corp. has disclosed it is “in discussions†with General Motors Corp. regarding a deal to buy GM’s medium-duty commercial truck operations.
A GM spokesman would not comment on Navistar’s release in financial filings, saying “We said before that we’re looking at options for the medium-duty [commercial truck] business.†He adds that GM is studying its strategic options but, “we’re not ready to announce anything yet.â€
Navistar is the widely known holding company for such brands as International trucks and MaxxForce diesel engines for commercial trucks. Earlier this year, Navistar also was at the center of a contentious supplier relationship with Ford Motor Co., for whom it currently builds the PowerStroke V8 diesel for Ford’s Super Duty pickup trucks.
TOKYO –— Honda announced at the Tokyo Motor Show that at the upcoming Los Angeles show it will
introduce a new hydrogen-powered fuel-cell vehicle based on the FCX concept, displayed here and at past shows. Honda will begin deliveries of the car to customers in the U.S. and Japan next year.
Honda executives on the sidelines were quick to point out that it will allow customers — both retail and fleet — to actually lease the fuel-cell vehicles on their own in contrast to General Motors’ recent program.
General Motors regained its title as world’s largest automaker when Toyota reported Monday it had sold fewer vehicles than GM in the July-September quarter.
The score with three quarters of the year over stands at Toyota selling 7.05 million vehicles and GM at 7.06 million sales. The race is tight, however. Toyota sold 2.34 million vehicles in the July-September quarter; GM sold 2.38 million.
At the half-year point, Toyota looked like it would take the No. 1 title GM has owned for 76 years. Analysts expect it to happen eventually. Toyota has an aggressive target to sell 10.4 million vehicles for 2009; GM’s best year was in 1978 when it sold 9.55 million vehicles. Where Toyota still has a firm hold on a No. 1 spot is in profitability.
Ford reported that engineer extraordinaire Richard Parry-Jones is retiring at year's end. General Motors announced that its oft-quoted top analyst Paul Ballew was moving on to a new job in the insurance business.
Today, on the Internet, Chevrolet begins to find out whether its hugely ambitious strategy for the new Malibu sedan is getting some traction. General Motors’ top sales division planned what it not so modestly is calling a “takeover†of online advertising in what really may be the most ambitious such effort yet by any major marketer.
“This will be the largest home-page takeover ever,†crowed Bill Ludwig, vice chairman and chief creative officer of Campbell-Ewald, Chevy’s longtime advertising agency.
The idea is to make the completely new vehicle unavoidable online and lend some early credibility to Chevy’s marketing theme for the 2008 Malibu: “The Car You Can’t Ignore.â€
DETROIT -- After years of sterling reliability, Toyota is showing cracks in its armor, according to data
from Consumer Reports’
2007 Annual Car Reliability Survey revealed Tuesday before the Automotive Press Association in Detroit.
By contrast, Ford’s domestic brands have made considerable improvements. Consumer Reports said 93 percent of Ford, Lincoln, Mercury models in the survey scored average or better.
“Ford continues to improve,†said David Champion, senior director of Consumer Reports’ Auto Test Center. “The reliability of their cars has steadily improved over the years, and is showing consistency.â€
He added, “We believe Toyota is aware of its issues and is trying to fix problems quickly.â€
Despite the problems, Toyota (including Lexus and Scion) still ranks 3rd in reliability among all automakers, behind only Honda and Subaru.
GM executives for the first time provided details of its new contract with the United Auto Workers (UAW) union. The automaker said the pact reduces its health-care obligations by $47 billion and cuts new worker pay in half.
GM’s U.S. hourly labor costs will drop to $10.1 billion in 2007 from $12.6 billion last year, declining “significantly” from 2008 to 2011.
GM’s stock closed last week at a three-year high, after UAW union members ratified its new contract with the automaker. GM’s stock closed at $42.64 on Friday, up nearly 12 percent from the beginning of the week. GM shares have gained nearly 50 percent since early September in anticipation of a favorable contract.
GM detailed how and how much it will contribute to the newly established union-run health-care fund in its Securities and Exchange Commission filings, submitted Monday.
With a fresh four-year labor agreement with the United Auto Workers (UAW) ratified last week, General Motors now can get on with the business of ensuring its UAW workers and U.S. assembly plants have desirable product to build.
During the negotiations, documents emerged detailing the commitments GM has made to the UAW for 16 U.S. plants. But while the question of who “won†and “lost†in the labor pact will be long debated, a more important concern for both entities’ long-term viability is how effectively those plants –- and, more vitally, the products they make –- can improve GM’s competitiveness versus fast-moving and still-leaner rivals.
The UAW’s goal is to keep jobs for its membership by keeping plants open, regardless of whether anybody’s buying what comes off the line. GM’s job is to make a profit by selling vehicles customers want to buy. Those goals are not mutually supportive: three decades of GM market-share decline has proven that keeping plants open to produce non-competitive products has not helped it, or the UAW, to thrive.
Based on the GM future-product information made public by the UAW, Auto Observer decided to grade each plant and its products on the potential to boost GM’s competitive outlook (UAW-represented labor figures as of April 30).
In his October 3 column entitled “Et Tu, Toyota?”New YorkTimes columnist Thomas Friedman expresses his shock and utter dismay that his beloved Toyota is siding with Detroit automakers in what he calls a Michigan-style “assisted suicide” –- opposing stringent fuel-economy standards proposed by the Senate.
In previous columns, the Pulitzer Prize-winning Friedman advocated Toyota take over General Motors and rule the automotive universe on the basis of its pioneering leadership in fuel-efficiency as expressed through a single model, the Toyota Prius hybrid.
Now, Friedman is disappointed and stunned: Toyota, along with GM, Ford and Chrysler, is opposing the tough mileage standards in the U.S. Senate’s draft version of the energy bill, and are lobbying for another bill that is more stringent and separates cars and trucks.
Toyota wasted no time in responding to Friedman's column. General Motors has as well. And so have other industry watchers, including columnists from Motor Trend and Fortune magazines
Automakers reported weak September vehicle sales against a backdrop of continued
economic headwinds. Still, some automakers -- especially those with new models -- fared better than those without new wares.
General Motors, Nissan and Honda reported gains; Ford, Toyota and Chrysler saw declines. Total industry sales in September ran at a seasonally adjusted rate of 16.23 million units compared with 16.6 million in September last year.
"This month was pretty much in line with what we expected," said Jesse Toprak, executive director of Edmunds.com's industry analysis. "Auto manufacturers that saw the most gains had new or freshened models -- GM with the Cadillac CTS and new crossovers, Honda with the Accord, Nissan with the Altima."
The average automotive manufacturer incentive in the U.S. was $2,293 per vehicle sold in September 2007, down $176, or 7.1 percent, from August 2007, and down $267, or 10.4 percent, from September 2006, according to Edmunds.com's monthly True Cost of Incentives (TCI) report.
"Some may have thought that this soft market would inspire the automakers to increase their incentives to boost sales, but that isn’t happening," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. Edmunds’ report on incentives was released just before automakers began reporting September sales, expected to be soft compared with a year ago.
New vehicle sales in September are expected to be 1.29 million units (retail and fleet), a 4.5 percent decrease from September 2006, according to Edmunds.com’s forecast.
"This month, the automakers with the most momentum are faring well even given the constraints of the marketplace," observed Jesse Toprak, executive director of industry analysis for Edmunds.com. "Especially in a soft market like this, compelling new products and effective marketing campaigns are the keys to success."
Honda, which just launched the Accord accompanied by a significant advertising campaign, is the only one of the six major automakers predicted to show a sales increase, on both an unadjusted and adjusted basis. This September had 25 selling days, one less than September 2006. When adjusted for this difference, sales decreased 0.7 percent from September 2006.
Now that General Motors has said it is proceeding with production
of the Chevrolet Volt, the question is where will it be built?
That question may have been answered by negotiators for GM and the United Auto Workers union as they hammered out a new four-year contract overnight.
The UAW gave GM the union-managed health-care fund the automaker wanted, in exchange for GM's commitment to build some future models in U.S. plants by UAW workers. Among those future vehicles was believed to be the Volt.
The United Auto Workers (UAW) union announced in the wee hours of the morning that a tentative contract, which includes a union-managed health-care trust fund, had been reached with General Motors. The agreement ends a strike that started Monday and puts GM's 73,000 U.S. workers back to work job beginning late Wednesday.
Both sides say the accord should help narrow the yawning gap in labor costs between GM and Asian rivals building cars in the United States.
The key to the tentative agreement is the transfer of a substantial chunk of GM's legacy costs for retiree health care to a Voluntary Employee Benefit Association, or VEBA. In exchange for agreeing to the VEBA, the union elicited from GM some guarantees regarding future models, like the Chevrolet Volt, being built in the U.S.
Driving into General Motors’ massive test facility in Milford, Michigan,
outside of Detroit Tuesday, three workers carrying “On Strike” picket signs stood guard at the entrance as cars piloted by the automaker’s white-collar engineers streamed in as if it were any other day.
Deep inside the massive 4,000-acre grounds, GM was holding its “GM Collection†press event, scheduled long ago before there was even a hint of a strike by GM’s United Auto Workers union employees. This event and others like it held around the country are intended to build upon the traction GM has gained with some of its new models, like its Saturns and crossovers.
For now, however, the assembly lines producing Saturns, crossovers and all the other 2008 GM models are still, while plans for where future products will be built are being discussed and horse-traded by GM and UAW bargainers who were returning to the negotiating table Tuesday.
Negotiators for General Motors and the United Auto Workers union were headed back to the bargaining table while workers walked the picket line in a strike that started at 11 a.m. Monday.
UAW President Ron Gettelfinger told a press conference that GM has treated the negotiations as "a one-way street," with the automaker expecting everything from union members while giving nothing back.
"GM pushed us into a strike," Gettelfinger said. He added that it appeared to the union bargaining team that GM, as of last Thursday, didn't care if the union went on strike.
Gettelfinger said the main open issue is job security, particularly related to plants like those in Fairfax, Kansas; Spring Hill, Tennessee; and Lordstown, Ohio, that have no future product planned. He emphasized the strike had absolutely nothing to do with the establishment of the union-run trust fund for retiree health care benefits, something the UAW has offered GM in previous negotiations but GM turned down, Gettelfinger revealed.
Following an all-night session, the United Auto Workers and General Motors remain in contract negotiations as the UAW's strike deadline of 11 a.m. Monday looms.
Despite the deadline, a strike isn’t necessarily a foregone conclusion. At 11 a.m., the union could, indeed, order a strike. Or it could set up picket lines without a full-blown strike or it could extend the deadline. The UAW has not struck GM since 1998.
While GM is completely mum and the UAW has only hinted about the hang-ups in the talks, which are into their tenth day following the official contract expiration, what is obvious is the intensity of both sides to achieve their goals: GM’s goal is to cut costs, especially health-care costs; the union’s mission is to protect jobs, pay and benefits to workers and retirees.
General Motors and the United Auto Workers union, at an impasse on a proposed union-run retiree health-care fund, reportedly have set aside that issue for the moment and moved onto other matters.
After negotiating all day Wednesday on health care, UAW President Ron Gettelfinger ended discussions on creating a Voluntary Employees Beneficiary Association (VEBA) for now.
Instead, negotiators for both sides are expected to be back at the bargaining table sometime Thursday – the sixth day since the September 14 expiration of the UAW’s four-year contract.
They will discuss other issues -- sticky ones. They include wage cuts for active employees, higher insurance co-pays for active workers, cutting back on overtime, outsourcing of jobs and a two-tier compensation structure that pays new hires less than current employees, gives them lesser health-care benefits and no pension, perhaps a 401(k) instead.
Negotiators for General Motors and the United Auto Workers union head back to the bargaining table Wednesday after a marathon session over the weekend. Talks ended at 9 p.m. Tuesday night.
Meantime, the union is making noise that it is growing increasingly impatient by threatening to set a strike deadline to speed up the progress. Frankly, the strike talk seems more like bluster than substance. A strike would be devastating to the union, which is bleeding jobs and thus paying members, even more than GM, which can shuffle vehicle production offshore.
While contracts of the past have been wrapped up within a couple of days of the expiration, it is not shocking that these talks are lingering on. Both sides are confronted with the most complicated issues in recent times.
In the summer of 2006, no one around the United Auto Workers (UAW) union would have been surprised if its president, Ron Gettelfinger, had decided to call it quits.
Rumors that Gettelfinger was tired of the union presidency floated through union halls for months prior to the UAW's constitutional convention in Las Vegas last year.
The 63-year-old Gettelfinger, however, said he never really considered retiring even though he is now caught in a tense struggle between the union's proud legacy and traditions and the forces of globalization, which have left American carmakers with only half of their home market.
Yet, in what is Gettlefinger’s swan song, a deal that both sides can live with appears imminent.
The United Auto Workers' contracts with General Motors (which the union selected Thursday as its strike target), Ford and Chrysler officially expires at 11:59 p.m. Friday.
What will happen as the clock strikes midnight?
Exactly nothing. At least as far as the outside world is concerned.
Ford and Chrysler have signed temporary extensions. And even with GM as the lead target and UAW’s local preparing strike posters, the talks likely will continue on past the witching hour and possibly days, if not weeks, thereafter.
Saturn will sell General Motors’ first plug-in hybrid –- a Vue compact SUV that can run up to 10 miles solely
on electricity and switch to an engine for longer trips -– “very quickly,” Brand General Manager Jill Lajdziak told the Detroit Free Press
in Frankfurt Wednesday.
“In 2009-ish,†Lajdziak said of the plug-in's introduction. The Vue plug-in will become the third hybrid version of the SUV. It will combine lithium-ion batteries and GM’s two-mode hybrid system, which can be recharged from a 110-volt household current.
On the first press day of the Frankfurt auto show Tuesday, automakers unveiled a steady stream of
vehicles in various shades of green -– diesels, biodiesels, bioethanol, E85, hybrids from mild to full, electrics and hydrogen fuel cells.
Automakers boasted of their miles –- or kilometers –- per gallon along with their grams of carbon dioxide per kilometer, as European regulators measure emissions. In some cases, automakers continued to brag about horsepower, insisting that increasingly demanding consumers will not trade-off performance for green.
But being green is neither easy nor cheap. Automakers collectively -- and some individually –- are investing billions in green technologies, and most are developing multiple technologies simultaneously to hedge their bets.
The question being asked is who will pay for going green? Will automakers eat all of the enormous additional expense? Or will customers be willing to kick in to pay a premium for driving green –- or not?
Though Toyota insists lithium-ion batteries preferred for plug-in hybrids are far from ready, General Motors is confident it could have more than one kind of lithium-ion battery ready for its Chevrolet Volt by its year-end 2010 target.
GM has development contracts with suppliers for advanced lithium-ion batteries. It may use batteries from more than one of them for its upcoming Chevrolet Volt and various other models using the Volt’s E-Flex system, including the Opel Flextreme, unveiled Tuesday at the Frankfurt auto show
GM Vice Chairman Bob Lutz told AutoObserver at the show both A123Systems and LG Chem -- battery makers with development contracts with GM but that use different chemistries in their batteries -- are “absolutely confident†they can meet GM’s requirements for the Volt’s battery. GM insists the battery provides 40 miles of pure electric power, charge and recharge 4,000 times, have a 10-year life and is ready for GM’s plan to have the Volt on the road by year-end 2010.
“Everybody feels good about meeting the specifications,†Lutz said. “There’s none of this ‘we hope we can make it.’â€
A California-based auto parts seller is recalling as many as 295,000 Chinese-made fuse sets that could be linked to electrical fires.
Harbor Freight Tools told the National Highway Traffic Safety Administration in an August 10 letter obtained by the Detroit News that the company was quickly recalling 295,000 aftermarket auto fuse sets -- which involve as many as 35 million individual fuses -- sold over a two-year period.
The biggest surprise to jump out of the August vehicle sales reports, issued Tuesday, was that General Motors sales were up, when they had been predicted to be down.
And, not as surprising, Toyota sales slipped for the second month.
Another surprise was the sales strength of crossovers and large trucks, especially crossovers like GM's Buick Enclave, as well as the surge of the Honda Accord.
With three-quarters of the year over, 2007 has proven to be far more difficult for automakers to sell cars than they had anticipated at the start of the year.
Worse, the rest of the year looks like more rough sailing.
Analysts and auto execs, commenting on August sales Tuesday, used the word “headwinds” frequently the headwinds of the housing market, the credit crunch and higher fuel prices, all of which lead to slumping consumer confidence.
September sales may improve, but don’t get your hopes up, warns Jesse Toprak, Edmunds.com’s executive director of industry analysis. Those market forces will still be with us through year-end.
The average automotive manufacturer incentive in the U.S. was $2,362 per vehicle sold in August 2007, down $159, or 6.3 percent, from July 2007, and up $51, or 2.2 percent, from August 2006, according to estimates issued by Edmunds.com Tuesday.
"It is unusual for incentives spending to fall from month to month this time of year, as manufacturers typically offer generous deals in order to clear old inventory," said Jesse Toprak, executive director of industry analysis for Edmunds.com.
"This year the domestic automakers are staying true to their value pricing strategy and carefully picking and choosing where to offer marketing support, rather than blanketing the whole lineup with incentives," he added.
The United Auto Workers union’s contract with General Motors, Ford and Chrysler expires in just over a week on September 14. While little has been reported publicly on the progress of negotiations, the towering cost of health care undoubtedly is the top issue in the talks.
How health care will be resolved has yet to be seen. And the recent turmoil in the financial markets makes one possible scenario more challenging.
Not surprisingly, based on the latest dreary economic news, August vehicle sales will be down, according to Edmunds.com’s forecast. Automakers report sales Tuesday.
Industry vehicle sales, including retail and fleet, are expected to be 1.42 million units, a 4.5 percent decrease from August 2006 and an 8.7 percent increase from July 2007. Big Three share is predicted to be below 50 percent for the second consecutive month.
"Early in August, sales were dismal," observed Jesse Toprak, Edmunds' executive directory of Industry Analysis.
"To generate showroom traffic, most automakers introduced incentives programs midway through the month," added Toprak. “That effort was relatively successful."
Still, noted Toprak, the uncertainty in the housing market is likely to continue suppressing consumer demand for new vehicles for some time.
Saying a planned new compact car coming in a few years is a “terrific opportunity for us,†Saab Automobile USA executives also claim owner General Motors is beginning to understand how to manage the niche brand -– just as the future of small-volume, premium brands such as Saab appears to be reaching a crucial juncture.
At a media event for the redesigned 2008 9-3, Knut Simonsson, executive director, Saab Global Sales and Marketing, tells AutoObserver that because of the increasing “globalization†of virtually everything –- common talk now is dominated by terms such as “global business†and even “global warming†–- consumers will increasingly gravitate toward brands that evoke strong images of heritage or national origin as a way to satisfy their desire for more “context†for their purchases.
General Motors, in an effort to stop its sales slide and give model year-end sales a boost, is giving dealers of some of its brands cash awards according to an internal GM memo obtained by Bloomberg News.
GM will pay dealers $250 for each vehicle sale made from August 23 through the end of the month, according to the memo from Jim Bunnell, general manager of GM's Buick, Pontiac and GMC divisions.
Summer sales, so far, have been lackluster industrywide, and August will show no recovery, according to Edmunds.com, which releases its forecast for August sales on Thursday.
"After some of the worst June and July sales in the recent history, it does not look like we will see much of a recovery in August for new vehicle sales," said Jesse Toprak, Edmunds.com analyst. "Despite the production cuts, domestic automakers are starting to experience inventory build-up issues on slow-selling models.
"Although not ideal," Tropak added, "high incentives spending becomes the only way to get rid of this excess inventory as we go into fall clearance time. We expect incentives to increase incrementally for the rest of the year for the current model-year vehicles."
Toyota and Isuzu announced Monday they will work together to develop a system to make diesel engine exhaust cleaner. Isuzu, an expert in diesel technology, will work with Toyota’s truck partner, Hino Motors on the green diesels.
House Energy and Commerce Committee Chairman John Dingell, D-Dearborn, Michigan, told reporters Monday that 163 House lawmakers have signed on as co-sponsors of a bill to require new cars to use fuel at a rate of from 32 to 35 miles a gallon on average, starting in 2022, less stringent than a plan approved by the Senate. Dingell pointed out that means lawmakers are adding their names to the measure at a rate of more than one a day.
General Motors’ Saturn division announced its European styled and built Astra
small car will start just shy of $16,000.
The 2008 Saturn Astra five-door XE, which is equipped with a five-speed manual transmission, starts at $15,995; the uplevel Astra five-door XR starts at $17,545; and the sporty Astra three-door XR starts at $18,495. All prices include delivery fees.
Here we go again. Parts suppliers to automotive blog sites are atwitter about the prospects for a midengine Corvette. Indeed, that discussion –- which has occurred repeatedly since the 1960s -– is heating up yet again inside General Motors.
Automotive Web site AutoExtremist.com claims to have inside information that the C7 going midengine is nearly a done deal; a final decision is due next month, it insists.
Not so, say sources. Such a move is a long way from being a done deal with the C7 not due until mid next decade, and a decision to go midengine is not imminent. In the meantime, numerous enhancements will be made to the C6 Corvette before the C7 arrives, around 2013.
To build buzz for the upcoming launch of its Saturn Astra, based on the German-
built Opel Astra
, Saturn
teamed with Edmunds.com
for a contest. The grand prize is a trip to Frankfurt, Germany, in September to attend the auto show, test-drive the Astra and blog for Edmunds.com.
Contestants visited a specially designated page on Edmunds.com and submitted an essay of less than 500 words explaining why he or she should be chosen.
The winner, to be announced Friday, will fly to Frankfurt on September 9, returning September 13. The winner will receive media credentials, access to General Motors’ Premier Night and an invitation to Astra launch activities. While in Germany, the winner will write for Edmunds’ Straightline blog.
General Motors may build as many as 60,000 of its Volt electric cars for their
inaugural year on the market, four times the sales of Toyota's Prius hybrid on its U.S. debut, people with knowledge of GM's plans told Bloomberg News
.
Production at that level may allow GM to sell the plug-in Volt for less than $30,000 (the Prius starts at $22,175 with 60,000 a year sold in the U.S.), the sources said.
Ask anyone at General Motors how important the upcoming 2008 Chevrolet
Malibu is and you’ll likely get a rather reserved response.
Like the one Chevrolet General Manager Ed Peper (PEEP-er) gave AutoObserver in an interview Monday: “It’s a very important vehicle for us.â€
That’s an understatement.
Still somewhat restrained especially for him, GM Vice Chairman Bob Lutz goes a tad further. In his GM FastLane blog, in which he wrote about his recent "weekend with a Bu," he called its introduction “one of the most important passenger car launches in recent General Motors history.†He added: “We’ve put a lot of blood, sweat and tears into this vehicle.â€
GM executives’ caution is understandable and wise, since the automaker has oft been accused of over promising and under delivering. But the launch of the 2008 Chevrolet Malibu is beyond “very important.â€
If The Graduate were remade today, the advice to Benjamin for a certain life of corporate success would center around “electronics” instead of plastics.
Indeed, about the only jobs in Detroit’s auto industry are in electronics to work on hybrids and the like.
As the U.S. auto-buying public resigns itself to handing over $3 for a gallon of gasoline or more, automakers are hitting high gear to firm up alternative-power strategies that certainly seemed much fuzzier at this time last year.
It’s come time to decide how to best save fuel, and for the next several years, the battle will be between hybrid-electric vehicles (HEVs) and sophisticated new diesel engines.
Forget about granola-nibbling Californians as the mainstay of electric cars. Gun-toting pickup drivers want ’em, too.
AutoObserver’s entry on General Motors’ Chevrolet Volt electric car generated quite the buzz when it was picked up on a forum of a gun-owners’ Web site, billed as the “Home of the Black Rifle.â€
The general consensus of those on the gun-owners' Web site was in favor of electric vehicles -- as long as they have the performance, range, price, etc. of their current vehicles. They want them not for highfalutin reasons like energy independence and energy security or environmental cleanliness but for gas and money savings.
After announcing Thursday that it had signed a contract with a little-known
Massachusetts company to develop lithium-ion batteries, General Motors hosted a dinner to introduce the growing team of engineers working on the electric-powered Chevrolet Volt and the newly signed-on battery makers.
David Cole, Ph.D., chairman for the Center of Automotive Research, which hosted the conference at which GM made its announcement, sat next to me. As the discussions with the engineers and, in particular, the battery developers grew deeper throughout the evening, Cole, a retired professor of mechanical engineering at the University of Michigan, could not stop saying: “Wow.â€
By evening’s end, Cole, who’s privy to lots of inside information at all the auto companies and has served on boards of technical companies, said he was now very optimistic about the future prospects for the Volt and subsequent GM electrified vehicles. “This is the game changer†unlike anything he’d seen in his long automotive career, he said.
Indeed, if GM succeeds with electrified vehicles like the Volt, the automaker may well turn the auto industry and nearly every business model within it on its ear –- from the kinds of cars we drive (electric versus gasoline) to the way consumers buy cars.
Cole sees the biggest risk to GM’s venture as something seemingly simple: cheap gas.
General Motors Vice Chairman Bob Lutz blasted so-called automotive experts who refer to Big Three auto executives as "Detroit Dinosaurs" during his speech delivered to the Center for Automotive Research's annual management conference Thursday.
"We have been routinely dismissed as dumb, unprepared, anachronistic, an endangered species...
On the day that the Wall Street Journal ran a story on Toyota delaying its
advanced hybrids due to potential safety problems with its lithium-ion batteries, General Motors announced it will co-develop lithium-ion batteries with A123Systems Inc., of Watertown, Mass.
The agreement is expected to help speed up GM's electric plug-in vehicles and fuel-cell vehicles using GM's E-Flex architecture, introduced in January on the Chevrolet Volt, possibly ahead of Toyota.
GM Vice Chairman Bob Lutz, speaking at the Center for Automotive Research's annual management conference in Traverse City., Michigan, Thursday, said A123Systems uses nanophosphate battery chemistry that is not only powerful but also safe.
Lutz said the various batteries being developed through contracts GM has signed with suppliers would be ready for testing in October, installed in mule vehicles by year-end and be in demonstration vehicles by next spring. The next phase -- the most challenging phase -- will be to have them in showrooms by the end of 2010.
China and, to a lesser degree, India have been the hot new players in the auto industry in the past few years. Now it is Russia.
Reuters picked up a story from Russian newspaper Vedomosti today that Russian billionaire Oleg Deripaska, owner of automaker GAZ, has bought about a 5 percent stake in General Motors. He's also been rumored to be making a bid for Ford's Jaguar and Land Rover, though he denies it.
And look for Chrysler to make a deal in Russia soon.
The profit-per-vehicle gap between the American Big Three and the Japanese Big Three automakers soared 32 percent between 2005 and 2006 to $3,814, according to a new report.
The results of the report, done by financial firm Stout Risius Ross and its managing director, Laurie Harbour-Felax, were revealed at the Center for Automotive Research Management Briefing Seminars being held this week in Traverse City, Michigan.
Reasons for the widening cap are a lack of commonizing parts and platforms as well as lower sales and market share of the domestic brands. Of the Big Three, GM made the most improvement.
General Motors, Ford and Chrysler would save only $500 a vehicle in production costs if they "get everything they are asking'' in U.S. labor talks, said Buzz Hargrove, head of the Canadian Auto Workers union, in a speech reported on by Bloomberg News Monday.
"Labor concessions cannot possibly have any meaningful effect on the Big Three's market share in their home market,'' Hargrove said at an analyst presentation in Dearborn, Michigan, according to a union summary of his remarks obtained by Bloomberg. Reporters weren't allowed to attend.
General Motors said it would not renew its $1 billion sponsorship of the U.S. Olympic Committee when its contract ends after 2008.
The automaker said its decision is a result of changes in its marketing strategy and came after GM evaluated the return on its advertising investment. The automaker said it has other avenues -– less expensive ones -– to reach the same audience.
The move is part of a bigger strategy of GM’s scrutinizing advertising spending and results of that spending. The examination covers digital, print, television and radio advertising, GM said.
Kudos to Bloomberg News for reporting what many of us covering the auto
industry noticed but hadn’t written -– and shame on us for not doing so: Toyota's recently announced plug-in hybrid
has far less range than does General Motors’ Chevrolet Volt
concept -– as little as half the range, in fact.
GM intends for the Volt to travel at least 40 miles after being charged; Toyota’s model may go no more than 20 miles on a single charge and possibly as little as 10 miles, Bloomberg reports, quoting sources familiar with the vehicles.
Interestingly, Bloomberg also quotes an unlikely source of praise for GM: Chris Paine, whose 2006 documentary, Who Killed the Electric Car? criticized GM’s decision to drop and destroy the EV-1.
What was Paul Ballew, General Motors' executive vice president of Global & Market Analysis, suggesting when he said Wednesday that the automaker will "accelerate (current) restructuring efforts where appropriate" ?
Does it mean more layoffs? Are more plant closings in the offing?
Ballew made the comment during a conference call with media and analysts regarding July vehicle sales, which, for GM, dropped by 18.5 percent, according to Edmunds.com's statistics.
July wasn’t kind to any automaker with Toyota registering its first sales decline in almost three years. But Detroit automakers made history: their combined market share of the U.S. vehicle market fell below 50 percent for the first time ever.
The combined market share for Chrysler, Ford and General Motors stood at 49.7 percent in July, according to Edmunds.com’s calculations. It was only the mid-1980s that their combined share was nearly 75 percent.
"It's probably a turning point for people who look at the record books. Domestics on their home turf are being beaten by the foreign automakers in terms of their market share," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
General Motors announced in mid-July that it wants to acquire from Penske Corp. a 50-percent stake in Italian diesel-engine maker VM Motori S.p.A.
Lost in the fine print is the fact that, as of this moment, that 50 percent isn’t Penske’s to sell.
Before GM can get its hands on its share of VM Motori, Penske must acquire the 49 percent of Cento, Italy-based VM that currently is held by GM rival DaimlerChrysler AG. Penske and DaimlerChrysler assumed joint ownership of VM Motori in 2003.
A Penske source tells AutoObserver a deal has been under way for DaimlerChrysler to sell Penske its 49-percent stake in VM and is awaiting approval from European regulators. The Penske source says that approval is expected imminently.
General Motors this morning posted a better-than-forecasted second-quarter profit of $891 million, compared with a $3.4 billion loss in the same quarter a year ago.
GM's improved financial performance suggests the automaker's turnaround plan is progressing.
Investors liked the news as GM shares were on the rise in early electronic trading, Reuters reported.
Now, the question is can GM be profitable for a full year after two years of losses?
General Motors began offering zero percent financing for up to 60 months on its
full-size Chevrolet Silverado and GMC Sierra pickup trucks over the weekend and will continue through September 4.
The incentives are in response to similarly aggressive ones being offered by Ford, Chrysler and Toyota on their trucks.
GM reports second-quarter earnings Tuesday and is expected to announce disappointing sales again for July. Edmunds.com is forecasting a nearly 19 percent fall in year-over-year sales for GM, which reports sales on Wednesday.
Summer 2007 is turning out to be rather unusual compared to summers of the recent past, and it is showing up in sales.
This summer, no big blowout, model-year-end incentives are being offered -- yet -- to consumers to clean up leftover inventories. In recent years, General Motors has led the parade with big campaigns that have forced others to follow, But throughout this year, GM has tempered its incentives.
As a result, in part, July new vehicle sales, to be announced next week, are expected to be down for the industry, according to Edmunds.com's forecast.
General Motors isn’t being shy about the pricing of its dramatically restyled 2008 Cadillac CTS
.
The base MSRP on the CTS, arriving in showrooms in late August, will be $32,990, including the $745 delivery fee.
That is $540 less than the base price of an outgoing 2007 CTS equipped with the same 3.6-liter V6 engine; the 2007 CTS started at $33,530.
Still, according to Edmunds.com’s analysis, only two of the CTS’s main competitors -– the Acura TL and Mercedes-Benz C280, have higher base prices. Those models are near the end of their product lifecycles so dealers are heavily discounting them, noted Michael Lumunsad, Edmunds.com product development manager.
Who knew there were still 2006 models on the lot collecting dust?
On the eve of the 2008 model year, General Motors is offering no-interest loans for up to five years on all 2006 models. The incentives started July 21 and run through the end of this month.
They’re all smiles now, but we likely won’t see many grins come September.
United Auto Workers President Ron Gettelfinger performed the ceremonial handshake with GM Chairman Rick Wagoner and Ford Chairman Alan Mulally today as the union kicked off talks with both companies. A similar ceremony at Chrysler was held Friday.
While all parties are amiable now, this round of contract talks is predicted to be the most contentious and high stakes of any undertaken in recent memory. The viability of the domestic manufacturers –- particularly Ford –- hangs in the balance in these talks, which could continue on after the mid-September deadline.
General Motors moved in front of Toyota in global sales in the second quarter, but Toyota, which beat out GM in the first quarter, retained the lead for the first half of the year.
This could be the year Toyota overtakes GM in global sales and production for the year. GM has been No. 1 in both for 76 years.
Toyota said second-quarter global sales totaled 2.37 million vehicles; GM’s global sales hit 2.41 million, lifted by strong sales in Latin America, Asia and emerging markets. In the first quarter, Toyota sold 2.35 million vehicles to GM’s 2.27 million.
That put six-month sales totals at 4.72 million for Toyota and 4.67 million for GM.
A showdown gets under way in Detroit today as domestic carmakers open contract negotiations with the United Auto Workers (UAW) union, contract talks that are more critical for both sides than any in recent memory with not only jobs but also the very survival of the automakers at stake.
Negotiations for a new contract to replace the one that expires in September begin today at Chrysler with the ceremonial handshake; talks at General Motors and Ford officially start on Monday.
The UAW enters negotiations with its influence greatly reduced. And GM, Ford and Chrysler are in a weakened condition. The Big Three can ill-afford the sort of winner-take-all confrontations that could produce the sweeping changes some analysts think are necessary to reshape Detroit's creaky business model.
"Everybody's scared," said one veteran UAW representative. "Nobody really knows what's going to happen.â€
General Motors reportedly is working on an all-electric car for the Opel brand that could go into production by the end of 2010.
Opel will unveil the electric vehicle, which uses the E-Flex technology shown in January in the Chevrolet Volt, at the Frankfurt auto show in September, according to a report from Thomson Financial, Germany’s Auto Motor und Sport magazine. The vehicle reportedly has a range of 60 kilometers without using a combustion engine.
Perhaps the car will eventually arrive in the U.S. -- as a Saturn, since Opel now supplies vehicles and designs to that American division of GM.
General Motors announced Monday it had reached a joint venture agreement with Penske Corp. to purchase 50 percent equity of VM Motori S.p.A, a designer and manufacturer of diesel engines based in Cento, Italy.
This investment builds on GM’s existing relationship with VM Motori. At the Geneva Motor Show in March, GM announced it will jointly develop a new 2.9-liter V6 turbodiesel engine with VM Motori to launch in the 2009 Cadillac CTS in Europe.
That engine could make its way across the Atlantic in the next-generation Cadillac CTS and the Saturn Aura. Last week, GM Vice Chairman Bob Lutz said in his FastLane blog that GM would introduce diesels in a Cadillac sedan and a Saturn with rollout to crossovers and other models to follow.
Saturn’s gutsy promotion that offers shoppers a test drive of its Aura midsize sedan against
as its competitors is working, Saturn General Manager Jill Lajdziak told Reuters
in an interview.
In fact, the success of the program may prompt Saturn to expand it to other models, including the upcoming 2008 Vue compact sport-utility. The Vue would be pitted against the Toyota RAV4 and Honda CR-V. Other General Motors divisions, specifically Chevrolet with its upcoming Malibu, may follow Saturn’s lead as well.
The showroom challenge is intended to shift public perception and demonstrate GM has, indeed, improved quality.
Yet another study forecasts diesels, of which there are few now, outpacing hybrids in the U.S. in the future.
Siemens VDO Automotive Corp. projects in an article in today’s AutomotiveNews that U.S. diesel sales will grow to 867,000 units in 2012, up from an estimated 653,000 units this year. Hybrid sales are projected at 510,000 units in 2012, up from an estimated 193,000 units this year.
This forecast could be perceived as self-serving since Siemens VDO Automotive is one of the largest suppliers of diesel fuel-injection systems. Nonetheless, the supplier has the inside scoop on who is planning what vehicles in the future.
In an effort to kick -– or at least taper back –- the incentive habit as
it was launching a host of new vehicles, General Motors announced that for the 2006 model year it was cutting prices on vehicles accounting for about 90 percent of its sales volume -– some by as much as $2,500.
The timing of the price repositioning came as GM headed into 2006 launching 19 new products representing more than 1.5 million sales. GM has introduced even more new models since then.
“This is a big step for us and arguably the biggest price repositioning in our history,†Mark LaNeve, GM vice president, North America Vehicle Sales, Service and Marketing, said in making the announcement at the 2006 Detroit Auto Show. “This move is in line with our customers’ desire for simple, compelling prices.â€
But not enough consumers have found the prices compelling, apparently.
Only a week after reporting unexpectedly dismal June sales that resulted in GM’s lowest monthly market share ever (aside from July 1998 when it was shut down by a strike), LeNeve gave GM’s so-called value pricing a B grade. In an interview with AutoObserver.com, LeNeve says value pricing has done positive things for GM but has not generated the hoped-for sales volume.
General Motors appears to be serious about focusing not on sales volume and
market share but instead on profitability and on not giving away the store when it comes to incentives.
GM announced a new round of incentives on Tuesday, a week after seeing June sales that tanked and a market share that sunk to its lowest mark, aside from one month when it was being struck. Despite its dismal June performance, GM’s new incentives remain relatively conservative, as they have been all year.
“To be honest,†remarked Alex Rosten, Edmunds.com’s manager of pricing and market analysis, “I expected something more than this.â€
The most significant change in GM incentives was on full-size pickup trucks, which now have zero percent financing for 60 months to match Toyota’s deal on the Tundra.
Still, GM is giving away nowhere near what its competitors are.
General Motors’ market share last month hit an all-time low, according to Edmunds.com’s analysis of June sales.
GM’s June market share slumped to 22.17 percent, the lowest level in recent history and dipping below the previous monthly low of 22.3 percent in October 2005, according to Edmunds.com.
In June, the industry sold 1,455,236 vehicles; GM sold 322,048 vehicles, down 24.2 percent from June last year. GM closed 2006 with 24.6 percent market share.
The stock market didn't like GM's sales results. GM shares fell $1.22, or 3.2 percent, Thursday, the first trading day after GM announced lower June sales.
“GM may have miscalculated the need for incentives in June, particularly as Toyota and Honda boosted incentive spending to their record levels,” said Alex Rosten, Edmunds.com’s manager of pricing and market analysis.
General Motors has scratched the Cadillac Sixteen and Buick Velite
concepts from any plans for future production.
GM Vice Chairman Bob Lutz, on the automaker’s Fast Lane blog, said environmentally friendly, high fuel-efficiency vehicles take priority over the Sixteen and Velite, which GM had hoped to produce.
Lutz said introducing the 16-cylinder, 1,000-horsepower Sixteen would “not be an extremely prudent thing to do†in terms of GM’s public image and would be “a display of a lack of sensitivity to environmental concerns.â€
In fact, instead of offering a bigger Cadillac, Lutz said Cadillac needs to look at a vehicle smaller than the current CTS.
If the auto industry does not involve more women in its product
decisions, it risks becoming irrelevant, French-born Anne Asensio, a former designer for General Motors and Renault, told the Automotive News Europe
Congress in Prague last week.
“The industry doesn’t need cars designed for women but by women,†she told the gathering as reported by the sponsoring publication.
On the face of it, her comments were predictable and hardly new. However, they are curious in terms of their timing.
French-born Asensio recently resigned -– ever so quietly –- from GM, and there’s lots of buzz about why.
GM announced today it will introduce a dramatic Opel concept at September’s Frankfurt show featuring its E-Flex propulsion system, first shown on the Chevrolet Volt at the Detroit auto show in January.
E-Flex is an electric-drive system that extends the vehicle’s range by using a secondary supplemental fuel system. In the case of the Opel concept to be unveiled this fall, it will be a diesel engine. The Volt had a small gas engine. GM unveiled at the Shanghai show this spring an E-Flex system supplemented by hydrogen-powered fuel cells.
GM’s announcement came as part of a larger presentation of General Motors Europe’s environmental strategy, that the automaker says focuses short-term on reducing CO2 emissions and long-term on introducing new propulsion technologies.
Don’t expect the automakers to fight for a product placement in this film!
The story of Robert W. Kearns, inventor of the intermittent windshield wiper systems used on most vehicles for decades, will hit the silver screen. Detroit’s Big Three automakers will play a starring role –- as the bad guys –- who lost after long court battles that ultimately reached the Supreme Court.
Actor Greg Kinnear, most recently appearing in the Oscar-winning Little MissSunshine, plays Kearns in Flash of Genius.
New vehicles sales for June (retail and fleet) are expected to be 1.55 million units, a 3.4 percent increase from June 2006, according to Edmunds.com. Automakers will announce sales on Tuesday.
“In order to understand the year-over-year comparisons of sales for each automaker this month, one must remember that last June was one of the best sales months of the year for some automakers, and was particularly disappointing for others,” observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis.
“This month, automakers seem to have achieved sales at more typical and sustainable levels rather than the dramatic highs and lows of last June,” he added.
General Motors, as has been speculated, has agreed to sell its Allison Transmission unit for $5.6 billion to private-equity firms to raise funds for its auto operations.
GM’s has a preliminary agreement with Carlyle Group LP and Onex Corp. to buy Allison, which builds transmissions for GM vehicles, including its large trucks. Canada’s Onex Corp. had been helping Canadian auto supplier Magna Corp. in its failed bid to buy Chrysler Group.
General Motors want to convince the world it is green.
To that end, the automaker has produced four videos for its “GM Going Green” channel.
The nearly 3-minute videos cover the topics of green buildings, the reemergence of solar power, GM large fleet of hybrid buses and the Challenge X competition in which engineering students competed to come up with the most innovative way to positively alter the automotive world.
Goldman Sachs raised General Motors’ share recommendation to “buy” from “neutral” because the brokerage firm sees the United Auto Workers union offering larger concessions than previously expected to the automaker.
"The stock is pricing in a level of concessions we think is highly probable,'' a Goldman analyst wrote in an e-mail. "That implies little to no downside and potentially large upside from the real possibility concessions end up even larger than what is priced in.''
If you’ve been watching television, you may have noticed an
advertisement in which golfing great Tiger Woods locks himself out of his Buick Enclave and calls General Motors’ OnStar to have the vehicle unlocked by remote.
The ad is an expansion of Woods’ role as pitchman for GM. He’s been a spokesman for the Buick brand since 2000. Now he’ll be in OnStar ads -– but always with a Buick.
Wonder when his new baby will play a role in GM ads. Perfect pitch for GM’s family mobiles.
Union work rules and job classifications at Detroit automakers have resulted in 8,200 assembly jobs that wouldn't be needed if the automakers had the flexibility of Toyota’s U.S. factories, according to study by Detroit turnaround expert, AlixPartners.
"Our analysis of the cost differential between the domestic automakers and Toyota just due to work rules and job classifications further points up just how important this year's labor negotiations are to the Detroit Three," John Hoffecker, managing director of AlixPartners, said in a statement, published in today's Detroit Free Press.
The study also confirms why private equity firms are so interested in auto companies and parts-making companies: they are getting bargains.
General Motors and bankrupt auto parts maker Delphi Corp. reportedly are near a deal with the United Auto Workers (UAW) union that would provide a cash payout to Delphi workers in exchange for lower hourly wages, according to news reports this morning.
The Detroit News reports the Delphi deal involves offering 4,000 UAW workers a cash payment in return for accepting lower wages that could range from $14 to $18 per hour. Workers could also take the lump sum and accept early retirement or return to GM. GM would fund the program, which could be a done deal in the next week or so, allowing Delphi to emerge from bankruptcy. Delphi filed for bankruptcy in October 2005.
The Delphi dilemma has been a dark cloud of uncertainty hanging over GM’s head -– and the heads of suppliers and customers of Delphi. A deal would provide everyone associated with Delphi relief.
It also sets the stage for this summer’s UAW negotiations with Chrysler, Ford and GM. The Big Three are seeking deep and unprecedented concessions from union workers in pension, health care and labor costs to make them competitive. The Big Three claim they are at a $30-an-hour labor-cost disadvantage against Toyota and Honda.
General Motors, Ford and Chrysler may propose in this year’s labor talks that the United Auto Workers (UAW) manage a health-care fund financed by the automakers, Bloomberg reports sources as saying today.
The U.S. automakers have discussed such a fund as a possible alternative to eliminate most of a combined $114 billion in retiree health-care obligations, sources told Bloomberg. Under the joint fund proposal, the companies would contribute a percentage of their retiree liabilities to the fund, whose assets and investment proceeds would cover retiree medical benefits.
Beginning today, General Motors' Saturn division will have in its showrooms a Toyota Camry and Honda Accord to test-
drive against the Saturn Aura
.
"This is a statement of confidence,†Scott McLaren, Saturn’s field and sales advertising manager, said in an interview with AutoObserver. “The Aura stands tall as the 2007 North American Car of the Year. We think this is the best light for it to be shown to the consumer.â€
The side-by-side-by-side test-drive officially runs through July 31, though Saturn dealers, who are responsible for obtaining the Camry and Honda for their showrooms, can continue it, said McLaren.
Chevrolet is considering a similar program for the fall when it launches the redesigned Malibu. Chevy is contemplating having a Camry, the nation’s best-selling car and the Malibu’s prime competitor, in its showrooms for test-drives against the Malibu.
Small cars are hot and getting hotter this summer. Big trucks as well as large, midsize and luxury SUVs are not. And the Buick Enclave looks like another winner for General Motors, according to Edmunds.com's analysis of consumer intent.
Consumer intent is determined by what vehicles consumers are shopping for right now on Edmunds.com and what they likely will buy in the next 30 to 90 days. That demand -– or lack thereof -– has a direct correlation to prices and incentives.
For consumers in the market for small cars, buy now because the prices won’t be better and might even go higher. For large truck and SUV shoppers, hold off; bigger incentives are on the way, says Edmunds.com CEO Jeremy Anwyl yesterday in a presentation to the Society of Automotive Analysts.
Here’s a rundown by category and individual models of what’s hot and unlikely to see higher incentives or increased discounting so now is as good time to buy as any. Also following is a listing of what categories and individuals aren't so hot, indicating buyers should hold off their purchases for richer incentives and deeper discounting:
Ford Motor Co. managed something of an upset Wednesday as J.D. Power & Associates released the results of its closely watched Initial Quality Study (IQS) of 2007 models. Neal Oddes, J.D. Power’s director of product research and analysis, said the results of the quality survey contained very good news for Ford.
“Fourteen Ford Motor Company models placed in the top three of their respective segments — an achievement unmatched by any other corporation this year — which is a testament to the improvement in quality for Ford Motor Company vehicle models and plants. In addition, their Lincoln nameplate, which receives two segment awards, improves considerably to rank 3rd in 2007, from 12th in 2006,” Oddes said.
General Motors CEO Rick Wagoner told shareholders at Tuesday’s annual meeting that the automaker is making progress in its turnaround effort.
Wagoner said GM, which lost more than $12 billion in the past two years, has made "major progress" in its restructuring. GM has cut more than 34,000 jobs and closed 12 plants. Wagoner said those changes have slashed GM’s structural costs by $6.8 billion in 2006. GM is on track to reach its target of cutting those costs by an additional $2.2 billion this year, he said.
Wagoner said this year's goals include closing a deal for Delphi Corp. to emerge from bankruptcy and cutting GM’s health-care costs, "a staggering $4.8 billion" in 2006, he said. He added that GM would be looking to the upcoming UAW negotiations to increase its cost-competitiveness.
General Motors has just awarded two development contracts for the lithium ion battery in the E-flex propulsion system to be used in its Chevrolet Volt plug-in hybrid.
A reliable battery, the biggest challenge in developing electric vehicles, could mean the Volt would be production-ready by 2010, GM has said.
The battery proposals were awarded to one small company and a giant, both offering completely different solutions, GM said.
As has been the case for years, automotive suppliers like doing business with Toyota and Honda but their relationships with General Motors are improving, according to a new report.
Toyota ranked first, followed by Honda, Nissan, Chrysler, GM and Ford, respectively, in their relationships with suppliers, according to the study by Planning Perspectives Inc., a consulting firm in Birmingham, Michigan, released today.
GM wins for most improved. It had the most dramatic year-over-year increase in the 15 years of the study, said company President and Chief Executive John W. Henke, Jr. GM has held last place for the past 15 years; now it ranks second to last above Ford. Henke credits the improvement with a program instituted by GM in 2005 to enhance supplier relations.
My son and I were piling into the Volkswagen Rabbit test car in
front of the 7-Eleven, loaded up with our favorite after-school snacks – frozen Cokes, Twinkies and Cheetos – when my teen noticed the woman passing in front of our car with two small children in tow.
“That’s a yoga mom,†he said matter-of-factly. I’d never heard the term before, but it rolled off his tongue as if it were an everyday label. And I knew what he meant.
Edmunds.com estimated today that the average automotive manufacturer incentive in the U.S. was $2,497 per vehicle sold in May 2007, up $44, or 1.8 percent, from April 2007, and up $123, or 5.18 percent, from May 2006. Honda, in fact, hit a record for incentives.
"The summer incentives hike has started," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. In previous months, we have seen year-over-year declines in incentives spending, but this month the trend reversed."
As the summer wears on, incentives will grow even bigger, Toprak predicts.
The North American auto industry received its first important grade on its
2006 report card today when Harbour Consulting revealed the outcome of its annual manufacturing productivity study.
Top scorers among the six major automakers evaluated (General Motors, Ford, Chrysler, Toyota, Nissan, Honda) are:
Toyota - first in total manufacturing productivity, which includes final car assembly as well as also stamping, engine and transmission production.
Honda - first in vehicle assembly productivity.
General Motors – first to win three of the four plant awards. No. 1 were GM Oshawa #2 for vehicle assembly; GM Spring Hill, engine assembly; GM Toledo, transmission production. Honda Marysville stamping took the fourth plant award.
“Toyota was the overall leader but with a slim and marginal lead,†said Ron Harbour, president of the Michigan-based Harbour Consulting.
The productivity gap among the six manufacturers was the closest in the nearly two-decade history of the study. That gap is so close, Harbour said, “There’s no telling who will be on top next year.â€
The Chinese government reported auto industry profits in the country soared 70 percent in the first three months of this year compared with last year.
The country's major automakers had a combined profit equivalent to $1.7 billion (U.S.) in the first quarter, jumping by 69.9 percent from a year before, the country’s Ministry of Commerce announced in Beijing Tuesday.
Interestingly, while Chinese automakers -- and there are many of them -- cumulatively made $1.7 billion in the quarter, the three U.S. automakers combined lost about $1.9 billion.
Automakers apparently hope to end what looks to be a flat-to-down month of sales in May on a high note by announcing Memorial Day sales that actually run through the end of the month.
General Motors’ "Memorial Day Sale" campaign, announced Thursday, runs through May 31. GM is offering zero percent financing deals for 36 months and a $1,000 bonus on several Buick, Chevrolet, GMC and Pontiac vehicles in its lineup, including large pickup trucks and SUVs from the 2006 and 2007 model years. GM is also offering zero percent financing for 60 months on three Saturn models -- the Vue SUV, Ion small car and Relay minivan. Separate sales incentives on GM's luxury Cadillac, Hummer and Saab brands will also be available.
On Wednesday, Ford began offering a $1,000 rebate on certain Ford F-Series Super Duty pickup trucks, specifically regular and super cabs, through the end of the month. Ford just launched the redesigned Super Duty truck as a 2008 model-year product.
The rebates, of which more are likely to be announced, come on the heels of dismal April sales and, as Edmunds.com predicts, a flat-to-down May during this normally brisk sales time.
New vehicle sales, including both retail and fleet sales, are expected to be 1.48 million units when May sales figures are announced next Friday. That’s down from last May, according to Edmunds.com.
This May had 26 selling days, one more than May 2006. When adjusted for this difference, sales decreased 4.2 percent from May 2006. On an unadjusted basis, sales this May are down 0.3 percent.
"As gas prices climb, many consumers are taking a conservative approach to car buying. Additionally, numbers are down because domestics continue to cut production, reducing fleet sales and better matching supply with retail demand. However, these factors are not causing sales to fall as dramatically as one might expect," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
India is predicted to be the fastest-growing auto manufacturing nation in the next few years, according to a forecast by New York-based PricewaterhouseCoopers. The firm predicts between 2006 and 2011, India –- not China -– will be the fastest-growing auto manufacturer among the world’s top 20 carmaking countries.
"Everyone is looking at India after what happened in China,'' Ashvin Chotai, who works in London as director of Asian automotive research for Global Insight, told Bloomberg News. "There's no other place that even comes close.''
In the year ending March 31, India’s passenger car sales increased 21 percent to 1.38 million. By 2015, they're expected to more than double, according to the Society of Indian Automobile Manufacturers.
The U.S. auto market will pick up in 2008, but Detroit’s three automakers won’t be beneficiaries, according to a new forecast from the London-based market research firm Global Insight.
Light-vehicle sales will rebound next year after dipping to 16.2 million in 2007, said George Magliano, Global Insight’s director of North America, at a conference in Tokyo and reported by Automotive News. Magliano said sales would rise gradually, but they won't regain the 17 million level -- last seen in 2001-- until 2010. By 2012, sales will climb to 17.7 million. Between now and then, General Motors, Ford and Chrysler combined will lose seven points of market share.
Palladium is this year’s best investment among precious metals, due to high demand, in large part from the auto industry, and tightening supplies, according to Bloomberg News.
A cheaper alternative to platinum, palladium is used in catalytic converters that reduce emissions from exhaust systems of motor vehicles. Palladium use has been increasing in all vehicles, and last year, it was used for the first time in diesel-powered cars. A palladium-based pollution-control device for diesels was
In his first communication with employees, new General Motors CEO Dan Akerson relayed in a Labor Day letter extended his hand to the company's unions and gave employees a pat on the back.
As executive vice president for vehicle engineering and manufacturing, Donoughe helped Tesla develop its all-electric Roadster, a car that has become the poster vehicle for new-age automotive technology and development. He also worked on cars such as the 2004 Chrysler Pacifica and 2007 Jeep Wrangler as a former executive with Chrysler. 
Taking over to lead GM is Daniel F. Akerson, currently a member of the GM board of directors and managing director and head of global buyout at the Carlyle Group. Akerson has been a member of the GM board since July, 2009, when asked to take the position by the Obama administration's Automotive Task Force that helped to oversee GM's restructuring and bankruptcy proceedings.
By Bill Visnic
At the Center for Automotive Research Management Briefing Seminars in Michigan, Justin Ward, Toyota Motor Engineering and Manufacturing North America Inc.'s advanced powertrain program manager said Toyota's first plug-in hybrid - just now starting with a 150-vehicle test fleet in the U.S. - will deliver significant fuel economy gains over the 51 miles per gallon rating of today's non-plug-in Prius. 
General Motors announced an attractive price on its 2011 Buick Regal, which is generating a lot of positive buzz. But the automaker likely will lose money or at least not make much on every one it sells in the early going. 
Anyone familiar with any kind of retailing has heard that platitude, but General Motors Co. dealers will be the latest to find out if it works. 
The company 
The United Auto Workers Union (UAW), under pressure to make concessions to General Motors Corp. as the company approaches a June 1 restructuring deadline, said today it will propose to its rank-and-file members key givebacks to help GM's long-term future, according to a report in the 
DETROIT -- General Motors CEO Fritz Henderson, calling this a "defining moment" for the automaker, laid out his "go faster, go deeper" restructuring plan that includes more cuts in jobs, plants, dealers and products, including elimination of the Pontiac brand. 
DETROIT - General Motors plans to extend its usual summer shutdown from two weeks to as much as two months for many of its North American assembly plants as it attempts to reduce its record-high inventories of unsold vehicles. 
It hasn't even been a year since Alain Visser became chief marketing officer of General Motors of Europe, but he can't learn from his predecessor: There wasn't one. As the division's first CMO, Visser is getting a chance not only to put a big stamp on the organization but also to define his own job.
Detailed 
GM Vice Chairman Bob Lutz is the greatest champion for the Chevrolet Volt, which runs on electricity but has a back-up gasoline engine to generate power for the battery. He became even more of a fan of the concept when his battery-powered motor scooter ran out juice.
