There’s so much that’s been going on since I last wrote here that it’s hard to know where to start. Much of this is follow-up on previous themes we’ve explored here at TS.
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The biggest story of today is that the heads of the Detroit car companies are currently in front of what seems to be a reasonably hostile Senate hearing, arguing their case for a bailout.
The Detroit News blog is running some ongoing coverage that’s worth tuning into.
Automotive News are linking to live video of the hearing. I hope that link works.
In their prequel style summary, Automotive News predict a very, very uphill battle for the Detroit 3:
During a hearing of the Senate Banking Committee, most Republican members maintained a hard line against aid to the Detroit 3. Some Democrats on the committee called for more conditions on aid.
The committee is considering legislation that would enable General Motors, Ford Motor Co. and Chrysler LLC to tap into $700 billion in bailout funds for financial institutions. The George W. Bush administration and many Republican lawmakers opposed the measure.
In introductory remarks at the hearing, Banking Committee Chairman Christopher Dodd, D-Conn, said many of the domestic industry’s problems are self-inflicted. But he said the failure of one or all of the Detroit 3 would further harm the nation’s economy.
Dodd urged the Detroit 3 not to oppose federal regulatory efforts to improve fuel-efficiency standards and reduce emissions.
Sen. Richard Shelby of Alabama, the committee’s ranking Republican, said that the proposed $25 billion in low-interest loans might merely tide the carmakers over for a few months. After that, he warned, they could seek another $25 billion or more.
“Is this just life support?” Shelby asked.
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In other news, all this financial pressure has actually made GM’s bloggers come up with something useful.
Fastlane has an open letter to the New York Times’ occasional writer, Thomas L Freidman, who recently dumped a truckload of cow poo on them in an op-ed piece. This open letter summarises pretty well the reasons why I think GM deserves a shot at the moment.
It addresses some of the myths about GM. Whilst I don’t like GM’s facts and fiction website, I do think there’s a lot of misconceptions out there. I hear them in comments here, too.
My favourite one is “GM don’t build vehicles that people want”, which is an absolute crock. I don’t think they build enough of the types of vehicles that more people want, but the fact that their sales are still running around #2 in the world indicate that people are still buying them (i.e. they want them).
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CNN Money has some follow-up on the issue of Swedish assistance for their domestic automakers, which I covered yesterday:
STOCKHOLM -(Dow Jones)- The Swedish government is in discussions with the country’s automakers, Ford Motor Co. (F) unit Volvo Cars and General Motor Corp.’s (GM) Saab Automobile AB, about how it can help navigate the economic downturn.
Talks so far have revolved around boosting research and development aid and how to help employees who have lost their jobs, Volvo Cars spokeswoman Maria Bolin told Dow Jones Newswires.
The discussions, contrary to some Swedish media reports, have not involved a loan package similar to that under consideration in the U.S. to help General Motors Corp. (GM), Ford and Chrysler LLC.
“We’re not discussing any loans with the government,” she said.
Saab spokesman Eric Geers confirmed that his company is also talking with the government about potential support, but declined to be more specific.
Industry Ministry spokesman Hakan Lind said the government and the auto industry are having “an open discussion and are examining what, if anything, should be done.” He declined further comment.
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And there’s also expanding coverage on the possibility of GM Europe becoming its own entity if GMNA goes under:
Opel has also had a run of poor performances, losing market share steadily with cars considered poorly made and not in tune with consumer trends.
After implementing a programme of deep restructuring, the company has begun to turn things around and has become one of two main research centres run by GM worldwide.
“GM Europe is a good company with interesting brands, a nice range of products and a functioning distribution network,” IHS Global Insight analyst Christoph Stuermer told AFP.
Besides Opel, GM produces Saab and Vauxhall automobiles in Europe.
The international economic slump and financial crisis that has slammed GM now threatens to derail Opel’s recovery and as a result, there are growing calls for more independence, or even an outright separation from GM.
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If Wagoner lets things at GM NA get any worse than they already have, then you can bet Opel will do everything it can to break free and become it’s own entity. While GM NA has been building crappy product, racking up debt, and driving away consumers for the past 30 years, Opel has been quietly and steadfastly improving their products to the point that they’re now on par with VW and the other nice European volume brands. If I were Carl Peter Forster or anyone else who’s worked their back off to make Opel what it is today, I’d be damn pissed at the prospect of Lutz and Wagoner threatening the longevity of my work by running their half of the operation into the ground through their incompetent management.
I just hope that if Opel/Vauxhall splits, that they can find it in the goodness of their hearts to take Saab and Holden with them as well. Come to think of it, the decision to build the Delta II Astras in Trollhattan could likely save Saab’s bacon if Opel does in fact decide to split.
Or to put it this way, if CPF and crew can build that nice of an Opel in the Insignia, imagine the Saab they could come up with if they didn’t have Detroit muddling around their business, pilfering their engineering staff to design cobalt SS engines and keeping tabs to make sure they don’t outshine Cadillac.
I think a gradual process of GM Europe divorcing itself from GM North America would be a good and sensible thing. At the same time Saab should at least partially divorce from GM and attain a modicum of independance. I think that’s the only way it can survive.
There is one major problem with GME divorcing themselves from GM. They are a wholly owned subsidiary of GM. If GM declares bankruptcy (chapter 11) it will be for their N.A operations. They will continue to operate the rest of the company while they restructure N.A. The idea that Opel/SAAB can be profitable on their own is just not plausible. Part of their economies of scale come from the larger company.
GME by itself makes no sense. They’re two parts of the same whole, not two separate entities under one umbrella. They’re too integrated to split.
What do you meen by too integrated?
As far as I know GME doesn’t use GMNA platforms and GMNA doesn’t use GME platforms, except for some rebadged Saturns.
Also I see very little technology cross over. The European market requires far smaller cars and smaller engines than the US market would ever accept.
So I see no reason why GMNA and GME couldn’t split.
This blog is becoming some kind of “GM deathwatch” now…
Have you heard the saying of “wetting yourself to keep warm” ? Without having any financial knowledge, I think that is exactly what Detroit wants to do.
Without the cheering, Ken. I’m just trying to keep people abreast of things and relating it to Saab.