Bailout Blues: Despite headlines, Government Motors still has our money

Interpreted one way, General Motors announcement this week that the U.S. automaker has paid back $8.1 billion in government loans a full five years ahead of schedule could be considered “good” news.

Especially considering where GM was less than a year ago.

But let’s get one thing straight: GM—and Chrysler—still has a lot of Canadian and U.S. tax-payer money tied up in equity shares.

For those keeping score at home, GM received about $61.5 billion in loans from both the U.S. Treasury and Export Development Canada, with the majority of those funds converted into GM stock. (As of now, the U.S. Treasury holds a 60.8 per cent stake in the common stock of GM, Export Development Canada 11.7 per cent, the UAW health care trust 17.5 per cent and old GM, now known as Motors Liquidation, holds 10 per cent.)

Now, until GM can launch an initial public offering (IPO) that, in theory at least, would allow the governments to sell off their stakes in the automaker, tax-payers on both sides of the border should hold off on popping the champagne for awhile.

And remember, GM keeps on losing (our) money.

GM reported a net loss of $4.3 billion for the period from its emergence from bankruptcy in July through the end of 2009, including a $3.4 billion net loss for the fourth quarter.

So…do you think GM has done a good job getting back on its feet?

Do you think the investors will reward GM with a healthy enough stock price (when or if its IPO happens) so the company can pay ALL the tax-payer money back?

 

Bailout Blues: Hummer goes down without much of a fight

Not a surprise to many, Government Motors will wind down its Hummer brand after a proposed sale to China's Sichuan Tengzhong Heavy Industrial Machines fell through.

Hummer now joins Pontiac, Saturn and Saab in the GM abandoned brand bin.

Now, I never really understood Hummer. Okay, that’s only half true. Hummer was a fashion statement. Yeah, I got that.

Yet nothing said I-have-more-money-than-brains than owning what was effectively a GM pickup in military drag. And as with most fashion accessories, the best-before date is something that needs to be reckoned with. Unfortunately for GM, after all the GI Joe types bought the first Hummers, for the "normal" new car buyer, if made little sense to apply any kind of logic behind the purchase of one of the “civilian” H3 or H2 Chevy-truck based models.

That is, unless you were under the age of five. And liked playing in sand boxes. While making vroom-vroom noises.

Predictably, like other fickle segments (hello sports coupes!) Hummer sales fell off a cliff when the fashionistas moved on. Hummer's 67 per cent sales decline last year was the biggest of any mainstream brand in the U.S.

So although there were talks in the last few years to make Hummer GM’s “diesel” brand, and a much needed entry-level Jeep Wrangler-fighter (like the HX concept above, from Detroit two years ago, above) was planned, GM’s monumental financial collapse after gas topped $4 per gallon, and the start of the Great American Recession in fall 2007, meant there was simply no money left in the coffers to make any of these potentially saving Hummer graces come to fruition.

Outside influences aside, what I never understood was GM taking so long to figure out what Hummer could and should have been.

First, like Clint Eastwood and Elvis, Hummer was an American stereotype that could have been sold around the world. Arnie The Terminator smoking a stogie at the wheel of his Hummer said it all. And not giving the Wrangler any competition will go down as a major faux pas.

With the product mix, do you think GM, or anyone else, for that matter, could have made Hummer viable?

Or will the brand simply go down in history as an example of American hubris run amok?

 

 

Bailout Blues: Will Fiat ever deliver on its promise of new Chryslers?

With U.S. lawmakers taking Toyota to the wood shed this week, let’s take a look at another automaker with some, ahem, challenges: Fiat-run Chrysler.

It’s been a quiet few months for the U.S. automaker. Virtually taking the year off with no new models for 2010, Chrysler has had little or no presence on the auto show circuit. In fact, the new product tap has been virtually tuned off since the 2009 Journey, Challenger and Ram.

But last week, a puff of white smoke emanated from the Detroit automaker. Ralph Gilles, president and CEO of Dodge Car and senior vice president of Chrysler’s Product Design, presented a sketchy-looking teaser shot of a future, Fiat Punto-based Dodge subcompact hatch, above, during a Chicago auto show luncheon.

Trouble is, according to Fiat’s published product plans, the new Dodge subcompact isn’t due until 2013, giving fresh competition like the Ford Fiesta, Chevrolet Aveo, VW Polo and Mazda2 (plus the established Yaris/Fit/Accent/Versa clan) a couple of years head start in the marketplace.

Today, Chrysler has zero presence in the subcompact class. And although the Fiat 500 city car has been promised to be on sale in Canada by the end of this year, it’s a low-volume niche vehicle at best.

So what until 2013?

Fiat boss,, Sergio “The Don” Marchionne, has promised to “fix” the current bottom-feeder Chryslers, like the Dodge Caliber, Avenger and Chrysler Sebring, for the 2012 model year, and new versions of its big sedans and SUVs are on the way:

 “The first half of 2010 is going to be more difficult than the second, simply because the product offering doesn’t start delivering until the second half. The first real viable, tangible evidence of this is going to be the Grand Cherokee in [quarter two], which is brand new. Then we’re going to see the Wrangler coming out with a significant update. I think there are 14 other interventions, most of which are significant enough to warrant almost a new product launch – that will come out in [quarter three] or [quarter four] this year.”

For 2010, The Don has said Chrysler must sell 1.65 million vehicles worldwide to put the automaker in a "slightly positive" profit position, profit needed to re-pay government loans as he has promised.

That would mean about 1.1 million sales in the U.S. Trouble is, U.S. sales for January were down another 8 per cent compared with the same period last year; or about 685,000 annually. Not good.

Let’s face it: Sketches are cheap compared to real, new product development. So until Fiat does something tangible—like a competitive family sedan and crossover platform—its hard to fathom just what Fiat’s intentions are with the Chrysler and Dodge brands.

But with sales tracking at about half what is needed to stay alive, the numbers just don’t add up in The Don’s favour.

Do you think Chrysler can stay in business long enough to see these teaser shots become reality?

[Sources: Autobirdblog, The Chicago Sun Times, Edmund’s Auto Observer]

 

Spyker saves Saab! Maybe. Probably not.

Out of the burning ashes known as Government Motors, it appears as if boutique supercarmaker Spyker has won the rights to take over the money pit known as Saab.

After a long, drawn out affair, rose-colour-glass-wearing Saabistas are rejoicing that Swedish-designed Opels will continue.

Potentially still-born product like the next 9-5 sedan, 9-4X crossover, 9-3X and maybe even a smaller, compact 9-1, will keep the brand humming along nicely…

Maybe.Probably not.

Bailout Blues: Do GM and Chrysler need to offer Hyundai-like warranties?

Our friends over at The Truth About Cars have started using data from analysts at Morgan & Company. One of their first comparisons: long-term U.S. market share between the automakers formerly-known-as The Big/Detroit Three.

As you can see in the first graph, above left, it's been a long, downhill slide for Chrysler, Ford and General Motors since the early 90s.The exception is Ford, which is on a relative rebound.

Bailout Blues: Why the wrong Swedish car brand is dying

As both Ford-owned Volvo and Government Motors-owned Saab struggle to find new owners, it’s been nail-biting time if you’re a Swedish car fan.

As Saabistas are all too well aware, Saab’s days as a standalone brand look to be numbered today at eight: the time left until GM puts the final nail in the coffin on New Year’s Eve.

Yeah. I know. There was (another) last minute attempt by Dutch sports car maker Spyker to buy Saab. But then negotiations broke down (again) last week. So unless a miracle happens on East Jefferson Ave. (GM’s riverfront Detroit HQ address) existing 9-3s and 9-5s will live on in China, badged as products from BAIC, China's fifth-largest automaker.

2009 LA Show: GM’s rotating CEO chair keeps on spinning

LOS ANGELES – Jeez. You can’t take a cross-continent flight these days without Government Motors switching interim CEOs.

After arriving here in La-La Land for Wednesday’s first press day for the auto show, I find out GM interim CEO Fritz Henderson resigned. GM says, until its brain trust can find a permanent executive to take the job, the automaker’s chairman of the board, Ed Whitacre will play the role of CEO until an “international” search for a new leader is completed.

Okay. Couple of things right off the bat.

• One: No one really thought Henderson was a long-term proposition. He was always seen as a comfortable insider to get GM though last spring’s bankruptcy, and that was about it. However, as events unfolded, he had his chance for a permanent parking spot at GM’s downtown Detroit offices, and simply struck out.

Strike One was the Opel debacle. Henderson wanted the Russian-backed Magna deal to go through, but GM’s board wanted to keep its crown jewels.

Strike Two was the last minute failure of selling Saturn to Roger Penske.

Strike Three was the botched sale of Saab to the Chinese-backed Koenigsegg group.

Sorry Fritz, you’re ouutta there.

• Two: What a way for GM to kick off this year’s LA auto show. Couldn’t it have held off on announcing this decision for 48 hours?

Henderson was scheduled as the keynote speaker for tomorrow morning's media keynote kickoff (never meeting a microphone he didn’t like, Bob Lutz is stepping in.)

So now, instead of us media types talking about the new Buick Regal, Cadillac CTS Coupe, or Chevrolet Cruze, Henderson’s resignation and GM’s rotating CEO chair has become front and centre.

Do you care who’s running GM?

Or does it really matter these days? 

Bailout Blues: Can Buick be the new Saab?

For all those Saabistas mourning the (potential) disappearance of their brand, the reality is, Saabs will end up living on in the most unlikely of cars: Buicks.

Take a look at the new 2011 Regal sports sedan that media have been first driving recently. It's existence tells all you need to know about what's happened to the auto industry in the last year.

The reality is, the Regal is a rebadged Opel Insignia, originally planned as a Chinese market only-Buick. In North America, it was going to be sold as the next Saturn Aura, and provide the same underpinnings for the next Saab 9-3.

But now that it will soon be popping up for sale in Canadian Buick showrooms, the amount of “Saabness” in the Buick is quite remarkable:

• Sophisticated, fourth-gen Haldex all-wheel-drive system. Check.

• A full range of turbocharged, fuel-efficient small engines. Check.

• Six-speed manual transmission. Check.

• European-tuned driving characteristics. Check.

The Regal may as well be wearing a Saab badge, like above. At least Government Motors will be getting (some of) our tax money back from all those kroners that GM (allegedly) sunk into Saab over the past twenty years.

But what about you Saab fans out there?

Ironically, the Regal is targeted at the same premium-Japanese brands that basically stole Saab’s customers in the 1990s. Can Buick be GM's entry-level luxury brand? Can Buick be the new Saab?

Would you consider all this Saab technology, but wrapped in a Buick body?

Bailout Blues: GM lost $5,100 US on each Saab it sold

Perhaps this is why potential saviours Koenigsegg wants to double the price of Saabs.

According to the Swedish government and their consulting firm KPMG, parent Government Motors had lost $ 5,100 US on each Saab it sold during the last eight years.

I’ll let the business press figure out whether or not this is all a bit of creative accounting to make sure Saab gets the EU to approve the Swedish government’s guarantee of a loan to Koenigsegg group. But it makes you wonder how Saab can survive moving forward.

The only good news? GM has hard a time selling Saabs. Imagine the losses if it had sold more.

Even with up to $10,000 discounts, only 41 Saabs were moved last month in Canada—less than the number of Panameras Porsche moved. In fact, for the first 10 months this year, Saab Canada sales are down by half.

Look. We all know under GM’s watch Saab’s so-called premium products became nothing more than gussied-up, mainstream Opel Vectras. But that’s the game Honda’s Acura, Toyota’s Lexus, and Nissan’s Infiniti plays as well. Now please, you can’t tell me Honda loses over five grand on each Acura TSX (nee Euro Accord) it sells.

So what of this KPMG report?

Do you really think what few Saabs were sold really cost GM $5,100 US each?

And if so, does Saab have a future selling cars for profit?

[Source: di.se via TTAC ]

Bailout Blues: Canadian Saabistas still waiting their fate

Some more news yesterday from south of the border about the up-in-the-air future of U.S. Saab dealers.

To recap: The target date to close Government Motors' sale of Saab, to Swedish boutique sportscar maker Koenigsegg, is Nov. 30. A step in the process this week was Koenigsegg rejecting 81 of Saab's 218 U.S. dealerships.

The news sheds little light on what holds in store for Saab shops here in Canada.

According to GM Canada, this action "has no impact" on its previously announced plans to no longer distribute Saabs in Canada as of the end of the year. But there's still hope for Canadian Saabistas.

"Koenigsegg, as the potenetial new owners of Saab, will decide the future plans for Saab in international locations as their business plans are formulated," GM Canada's Director of Communications, Stew Low, told The Crank.

So Koenigsegg could still come in and swoop up a few Canadian Saab dealers. And sell the cars for twice their going prices. Or not.

If the deal to sell Saab falls through—as GM's deal to sell Saturn to Penske Automotive Group did—GM would close its North American Saab shops.

Do think forthcoming Saabs (like the new 9-5, above) are worthy of staying in Canada?

Or do you think the Swedish brand should revert to being a European regional brand only, as it started out as?

[Sources: Automotive News, GM Canada]