Bailout Blues: Welcome to the new GM: Government Motors

Although US President Obama said yesterday, his government has “no intention of running GM,” by showing the Detroit automaker’s CEO the door, changing its boardroom lineup and guaranteeing its product warranties—hey, Barry, guess what?—you’re now running the second largest car company in the world.

Welcome to the new General Motors: aka Government Motors. And already, in its evaluation of the automaker’s viability plans submitted back in February (as an argument to receive more bailout money) the Detroit automaker’s new executives in Washington are pointing out some harsh realities that GM’s old brass would never admit too:

• over 12 years after its debut, GM never was able to come up with a flagship green car to compete against the Toyota Prius;

• it continued to support eight brands as its US market share plummeted from the mid-40 to the current 20 per cent range;

• and the Chevrolet Volt—the gas-electric plug-in that was to be the GM’s halo car and ready for sale in 2010—will simply cost too much to be a commercial success.

Over at Chrysler, the future is both clearer and dimmer.

Washington highlighted what most industry watchers (and former parent Mercedes-Benz) already know: Chrysler relies too much on trucks and SUVs for profits, and it’s too small of a player to go on independently. The ultimatum: get the deal done with Fiat in 30 days, or the bailout money tap runs dry.

Thirty days. Think about it.

From the venture capitalist team at Cerberus who took over the automaker from Mercedes back in 2007 (and led by a former hardware store exec) that doesn’t have any idea on how to run a car company? Er, good luck with that.

The cold reality is that both GM and Chrysler may end up in bankruptcy court to shed unrelenting debts before the Canada Day long weekend.

The other slap-in-the-face/wake-up-call from yesterday’s historical pronouncements was directly aimed at the unions: make concessions on wages and benefits or else your employers will not exist.

Do you think 60 days is enough to turn GM around?

Or how about half that time for Chrysler?

Bailout Blues: Prez Obama holds the keys to the future of GM and Chrysler

After being CEO for eight years and at GM for more than thirty, forget whether or not soon-to-be-former General Motors head honcho, Rick Wagoner, deserved to stay or go. The symbolism couldn’t be more clear: Like the old Russian automakers Lada, Volga or Moskvitch, GM and Chrysler will be state-run enterprises.

We already know that GM is getting a reprieve, and within the next 48 hours, we’ll get all the messy the details from President Obama’s Presidential Task Force on Automobiles, but it’s to easy to see the road ahead based on an excerpt form the PTFOA’s “Restructuring Fact Sheet:”

 “While Chrysler and GM are different companies with different paths forward, both have unsustainable liabilities and both need a fresh start. Their best chance at success may well require utilizing the bankruptcy code in a quick and surgical way. Unlike a liquidation, where a company is broken up and sold off, or a conventional bankruptcy, where a company can get mired in litigation for several years, a structured bankruptcy process – if needed here – would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success while they keep making cars and providing jobs in our economy.”

The PTFOA has also laid the groundwork for Chrysler’s liquidation and GM’s entry into Chapter 11 by creating a new Warrantee Commitment Program that will guarantee Chrysler and GM vehicle purchases, even if (when) the automakers go belly-up.

And expect the Chrysler-Fiat deal to end up where it started—in the garbage can. As The Truth About Cars analyst, Ken Elias, thinks, to do the deal, Chrysler’s secured bank lenders would need to write off their loans.

“Why would they? They would get more in a Chrysler liquidation. And even if they make a ‘deal’ with Fiat, so what? How does it solve the problems for the next several years before any Italian technology (small cars, small engines) shows up in Chrysler products?

So Chrysler goes to liquidation. And all this Chrysler-CAW chatter becomes a lot of wasted hot air.

What will happen to GM’s orphan brands—Saturn, Saab and Hummer?

Do you think Jeep is worth keeping around?

Are the days of GM and Chrysler making cars in Canada a thing of the past?

[Sources: Automotive News, The Truth About Cars]

Bailout Blues: Chrysler keeps everyone guessing

Weekend negotiations on reducing labour costs at beleaguered Chrysler are dragging with a looming deadline for submission of a company survival plan to the federal and Ontario governments so it can qualify for (more) critical financial aid.

Officially, Chrysler says: "We all recognize that we are in unprecedented times as it relates to the global economy and current financial crisis.”

Indeed.

So while The Crank enjoys some family time, The Answerman has stepped in to give some insight on a bewildering situation:

Why do you think talks are taking so long?

There’s a lot of stake here for Chrysler. And these talks with the CAW are just part of the equation.

To get additional bailout loans (Chrysler has received $4-billion and is seeking an additional $5-billion from Washington,  $2.9 B and a pardon on $1B in back taxes in Canada; General Motors has received $13.4-billion in federal loans and is seeking an additional $16.6-billion), governments on both sides of the border have asked both GM and Chrysler to reduce their labour costs to be more competitive with the likes of Honda and Toyota.

More complicated with Chrysler, however, is, if they don’t get these loans, their proposed agreement with Italian automaker Fiat (which would make small cars for Chrysler in North America) goes away.

And if that happens, then Chrysler is left with a product portfolio that won’t meet future and more stringent fuel economy regulations.

Why were negotiations so much easier with GM?

In some aspects, GM may think there are in a less dire situation.

They sell in more foreign markets than Chrysler, they already have small cars and hybrids in their lineup, and in general, their products are more competitive.

However the current GM management team in Detroit has a history of not being able to make hard decisions. Its one of the reasons they are stuck with such a bloated brand and product lineup.

I don’t know anyone outside of GM or the CAW who thinks the $7 an hour reduction (from $70 to $63) that GM negotiated with the CAW was enough.

Especially when you look at Chrysler demanding to get an hourly wage reduction down $19 to $57 an hour.

What are the chances of a deal before this Tuesday’s deadline?

I guess the question is how motivated is Chrysler to stay in Canada?

The Canadian government has already committed to follow suit with its bailout money if Washington gives additional funds, which leaves Ottawa little room to back out—even if Chrysler doesn’t cut a deal with the CAW.

Chrysler may feel they’re getting their bailout money from the federal and Ontario governments, CAW deal or not.

What would be the consequences if no deal is reached by the deadline? Could Chrysler REALLY leave Canada??

Some say this week’s deadline for government loan approvals may soften, as long as the legislators see some, any kind of progress on the part of GM or Chrysler.

As Chrysler has stated: they’re quite prepared to close up shop and take the vehicles they make in Canada and move them to underutilized factories in the US.

Keep in mind: in the last 12 months, the US new car market—the engine that drives the North American car and parts industry—has shrunk dramatically from around 13 million units a year to a projected around 9 million for 2009.

Somebody has to take a hit on this, and there’s no reason to think Chrysler’s Canadian plants are immune.

[Source: Chrysler]

Deja vous styling dulls Tesla's latest debut

While its drivetrain is fairly original, Tesla Motors’ designers lazily went to the Xerox machine for the bodywork of its new radically Model S electric sedan concept, pictured left.

The first Tesla, the Roadster, didn’t require much creative energy from the California electric carmaker, either.

They basically took the Lotus Elise and dropped in a bunch of batteries.

But the electric kool aid kids seem to have missed a huge opportunity to communicate the new Model S’s revolutionary propulsion system.

Instead of something original, fresh or futuristic, the Model S is clothed in frumpy old clothes: specifically, the front is a blend of Maserati Gran Turismo and Quattorporte, while the back is a clone of the Jaguar XF.

The other problem? The new Tesla looks eerily similar to its main rival, the Fisker Karma.

Oh well.

Maybe Tesla figures only old guys have the cash these days to afford luxury EVs these days.

[Source: Jalopnik]

Tata Nano launched: Apparently, it's a "real" car

Indian automaker (and purveyor of such sticky wicket Brit brands Jaguar and Land Rover) Tata started taking orders for its Nano microcar Monday, and the first reviews are starting to hit the InterWeb.

Steve Cropley, over at British mag, Autocar, says the Nano's "a real car," and at about one third the price of the cheapest car in the U.K., could get a few current motorcyclists off two wheels and into four.

It's a bit scary watching Cropley lean the Nano into a few corners like a loaded Loblaws shopping cart. But at only $2,500 (and only in India for now)  and 4.2L/100 km, how can you complain about the Nano?

Do you think Canadians will ever take to the Nano?

Can you see one surviving a winter of potholes and snowbanks?

[Source: YouTube]

Common Sense Dept.: VW sends its Rabbit back into its hole

During the media launch of the new Volkswagen Golf MkVI GTI going on right now in St. Tropez, France,, Jochen Sengpiehl, executive director of Volkswagen marketing, confirmed what many of us have been asking for—the ditching of the ditzy Rabbit name for North America.

"The car will be called the Golf again in North America," he told buff book Car and Driver.

If you may recall, three years ago, VW in the US hired a new brand guru, Kerri Martin. Working with the same team at ad agency Crispin Porter + Bogusky (that was behind the successful launch of the new Mini in 2002) over a weekend brainstorming session decided to drop the Golf badge (and all the decades of brand equity and “Germaness” it stood for) and a rescurrect the Rabbit badge.

At the time, Martin said, "Volkswagen customers want a relationship with their cars. Names like The Thing, Beetle, Fox, and Rabbit support this."

Remember the first Rabbit? 

The poorly-made, "Americanized" Golf that VW built in its now closed Pennsylvania plant between 1978 and 1984.

Obviously Martin didn't.

In hindsight, C&D thinks the Golf MkV—a.k.a. Rabbit—will most likely go down in history as the shortest-lived generation of the model ever.

Are you upset that VW has killed its Rabbit?

Do you think reverting to the Golf badge helps or hurts VW’s image?

[Source: Car and Driver]

Autopocalypse Update: Can mean be green?

We all know that fuelish and fun are taking it between the headlights during the current Autopocalypse.

But can mean and green live together in one car?

Looking like it’s taking the lead from Cadillac’s sporty Converj plug-in hybrid concept, a rumour is floating around that Toyota is thinking of reincarnating its iconic MR2 mid-engine cheapy sports car, right below, but this time as a hybrid.

After confirmation that its compact rear-drive sports coupe it was planning on building with Subaru has been put on ice, the speculation has Toyota moving towards something like: take the Prius’s Hybrid Synergy Drive; add steering wheel mounted paddle shifters; move the powered wheels to the back of the car; cloth it something looking like the FT-HS concept from the 2007 Detroit show, above… et volia! Instant mean and green!

Do you think an environmentally conscious sports car is a dream come true, or an oxymoron?

In deference to rabid MR2 fans, should Toyota come up with a new name for its hybrid sporty car?

[Source: Auto Express]

The Muscle Car Wars move overseas

It’s been well documented that the place to stake your performance car’s street cred is in de Fatherland’s notoriously tricky Nurburgring Nordschleife circuit.

Last year, Nissan and Porsche got into a royal snit about who was zooming who in regards to ‘Ring lap times

But as most of us know, different drivers at different times driving different cars in different weather conditions ain’t exactly the most scientific way to compare cars. Try, however, telling that to the marketing wanks who can’t resist the Teutonic tug of a decent ‘Ring time.

This time its General Motors who have made the overseas trip—again. Specifically, its new 2010 Chevy Camaro SS, also being introduced to media here in North America this week.

GM says the Camaro SS officially lapped the Nordschleife in 8 mins 19 seconds. Which is OK. But its nowhere near the fastest GM product that’s circled the famed track. That honour goes to the $100,00-plus Corvette ZR1’s 7:26 is tops.

Heck, a big ol’ luxury sedan, the Caddy CTS-V did it in 7:59.

The only GM vehicle the new Chevy pony car beat is the four-door Camaro SS—the Pontiac G8 GXP—and only by19 seconds.

Do you think Amare-i-cun muscle car owners give a rumbly exhaust about lap times at a foreigner’s unpronounceable track?

Are you waiting with bated breath for ‘Ring lap times from the Ford Mustang GT, or Dodge Challenger SRT-8?

Or does the Camaro SS’s estimated sub-$35,000 price tag give it a free ticket to such criticism?

[Source: Jalopnik]

Hybrid Wars: What's a fair price for Honda's new Insight?

Driving enthusiasts may never see another year like 2008.

With the introduction of the likes of the Corvette ZR1, Nissan GT-R, Mitsu EVO, Dodge Challenger, Subie WRX STi, BMW M3, ‘Benz C83 AMG—and more—last year may end up as the  last kick at the performance car can. Especially when you look at the plethora of green cars coming in 2009.

Ford’s Fusion Hybrid, the third coming of Toyota's Prius and Honda’s new Insight hybrid will more than likely dominate the year end COTY nominations.

Based on US pricing announced last week, though, the Honda may be the most relevant for our times.

Sales of premium priced hybrids are running face first into a brick wall called "the recession."

Which is why Honda is pricing its five-door Insight starting at $20,470 south of the border, including shipping. That’s around US $2,300 less than a Prius, making the Insight the cheapest hybrid in America.

Despite the relative dollar store pricing compared to the Prius (which boasts a significantly better fuel economy rating) Honda USA is reporting 18,000 pre-orders to date.

But what about Canada?

Honda Canada says it will announce Insight pricing during its April 7 spring dealers meeting.

My esteemed colleague, Mr. Kenzie, has already previewed the car. He had the Insight's starting price estimated at $23,000. That’s nearly $8k more than an almost equally fuel efficient Honda Fit.

But what price do you think Honda Canada needs to put on its only dedicated hybrid to make financial sense to you?

[Source: Wall Street Journal]

Bailout Blues: Don't worry—VW Routan will save Chrysler Canada jobs

Kudos to Chrysler Canada. At least it’s calling a spade a shovel.

Ever since the auto bailout talks started last fall, the only collateral the Detroit Three ever really had to pry out tax payer moneys was the threat of losing good paying union jobs on the assembly line.

The “jobs-or-else…” play was basically the only trick in General Motors, Chrysler and Ford’s collective bag when they showed up in Washington last November with their tin cups in hand.

Now, here’s Chrysler president Tom LaSorda, telling it like it is.

He threatened the federal government’s Subcommittee on the Automotive Industry this week that the automaker could shut down its plants in Canada if it doesn't get significant labour concessions and about US$2.3 billion in aid from Ottawa and Ontario.

Or else?

Or else 10,000 Chrysler Canada employees hit the bread line.

When one of the Canadian federal members of parliament sitting on the Subcommittee asked LaSorda what guarantees the company could provide to not kill yet another shift at its Windsor minivan plant, like it did last week, if they got its bag of cash, he cited that the Volkswagen Routan—a rebadged Chrysler Town & Country—would be built there on contract for another six years.

I don’t know about you, but I’m not getting any warm-and-fuzzies about getting back a penny of my tax money based on the success of the slow selling Routan.

So, over to you.

Do you think Chrysler deserves its ransom, bailout loans, despite the lack of job guarantees?

Do you think threatening to pull out of the country helps them on the showroom floor?

Are we all being too naïve thinking that Chrysler has a hope in Hades to make it into next year as a viable business?

Or should we be more like our province's esteemed Premier, and keep whistling, “don’t worry, be happy”?