Thursday Snippets (w/Bailout News)

Thanks to all who wrote up their car coloUr infomation yesterday, especially to all the first-time commenters. Your contributions are most appreciated. We’re at 144 comments as I write this and many of them feature more than one car, so we’ve got a good basis for results.

If you haven’t added your car’s coloUr to the list, then please feel free to do so at the link above.

I’ll be tallying the results in the next few days and will present them soon. I’ll see if I can get some production coloUr information from Saab as well.

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Legislators and news outlets thought that there might be a vote today on the bill to allow loans to be paid out to GM and Chrysler.

There are some pretty stout provisions in the legislation, but it seems that a number of US politicians are still hesitant to end their best chance in ages to be in front of the camera commit to the bill and to the industry. From the Detroit News:

Sen. Debbie Stabenow, D-Lansing, urged President Bush to try to convince more Republicans to support the auto loan package and that the prospects for quick action in the Senate have grown dim.

“It has gotten very tough in the Senate in the last several hours. The optimism I had 24 hours (ago) has been tempered at this point,” she said. “This president and the Republicans in the Congress have got to decide if they are truly willing to pay Russian roulette with the lives of 3 million Americans and the economy. I hope that more rational heads will prevail.”

The reaction is a big setback for automakers and means supporters may have to go back to the drawing board to grant a federal auto czar more powers. Two supporters of the auto bill, Sens. Kit Bond, R-Mo., and George Voinovich, R-Ohio, said they will be seeking new changes.

“If there are changes needed, we will work with the leadership,” Bond said. “There needs to be a strong hammer and nails” to ensure they make changes. Voinovich said the bill was to give automakers “some oxygen while the patient puts a plan in place so they can stay alive.”

A number of Republicans are even proposing an alternate bill, which will see the government act as insurers for 50% of any amounts forthcoming from private investors to the embattled companies.

My thoughts, FWIW: these guys – all of them – seem to be doing a lot of talking and wielding a lot of big sticks. Meanwhile, the companies are dying. Literally. If they can’t pass a vote this week then a Christmas break will loom closer and closer. Somebody there needs the authority to make a decision.

UPDATE: The US House of Reps has passed the bill today, but the bill still has to go through the US Senate, which is where the tough guys are.

Sixty of 100 senators must agree to end debates on controversial measures. Democrats have a 50-49 advantage, including the two independents who side with them.

Senate Majority Leader Harry Reid, D-Nev., said he wanted to vote quickly, but opponents could delay final action from occurring until Saturday or Sunday.

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With that bailout legislation in mind, there’s a piece over at CNN Money that actually offers some level headed advice for the Car Czar, whoever they might be.

Full text at CNN Money, but here’s the bullet points:

1) Don’t ban the auto executives from their corporate jets.
2) Remember that developing a new car is like a pregnancy
3) Don’t expect the automakers alone to wean America from its gas-guzzling habits
4) Never forget that you can’t force consumers to buy cars they don’t want
5) Inflict equal pain on everyone
6) Don’t be too hard on the automakers

It really is worth a read.

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Top Gear’s Jeremy Clarkson drives the Ford Fiesta.

Is this the best road test ever???

Kroymans dump Cadillac in Europe

I should feel satisfied and vindicated by news like this, but it’s hard to do so when it means the livelihoods of a large number of people are placed in danger.

Albert VDB has sent through some news from Holland about Kroymans, the big Dutch importer who are the importer for Cadillac in Europe. Cadillac have been dumped.

Staff at the Cadillac & Corvette Experience Center in Breukelen were told of the initial plans late last week and word leaked to the Dutch newspaper, Telegraaf. This has now been confirmed.

The news translation from the original Dutch almost reads like a carbon copy of Rick Wagoner’s answers before Congress last week:

We’re preparing for the future and the recession of course also plays an important role. We have obviously made mistakes but which are in progress, now that happens once. We now go through the pain to go there more to come . This implies that the less well-performing enterprises are divested and profitable businesses that we will give extra attention.

So Kroymans are dropping Cadillac.

That means it’s most likely up to GM Europe to carry the can for the brand there, if they’re game enough to do so.

Maybe this whole worldwide recession thing, combined with the “nobody’s been buying Cadillacs in Europe anyway” thing, will be enough to convince GM Europe that it needs to invest in one of its native European brands that’s already in place, accepted, and in dire need of a fresh, rightsized model mix.

A move like that should be made from a position of strength, not as an act of desparation.

Cadillac didn’t have the vehicles in place to make a European move. It was the sheer force of Detroit’s will that saw them there, with a goal of selling 20,000 vehicles annually by 2010. That goal saw millions and millions of Euros invested with only around 25% of that goal fulfilled, if that.

I hope GM Europe take a good hard look at the business case for Cadillac in Europe and realise that right now, it’s a total waste of resources that could be better spent elsewhere. Continuing the debacle would be a textbook case of throwing good money after bad, which they can ill afford to do right now.

Plow that money into a new Saab 9-3 by 2012 and watch them profit.

Condolences to the people who at Kroymans who are going to be affected by this. It’s not only Caddy, Corvette and Hummer that are facing the axe. Kroymans also imports Saab and Alfa Romeo.

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Thanks Albert!!

Preliminary GM bailout legislation released

The US Congress has drafted the bill proposed to give the Detroit car companies a lifeline, at least until the Obama administration takes office on January 20. The bill is apparently now with the White House where, hopefully, there won’t be too much more to-ing and fro-ing before the money can start flowing.

CNN Money have the low-down on the basics:

Under the proposal being reviewed by the White House, the president would appoint an individual to write the guidelines for the loan, due by Jan. 1, and oversee the bailout. This person – a so-called “car czar” – would essentially be in charge of setting the terms for restructuring the Big Three automakers.

The official would have authority to negotiate with unions, debt holders, suppliers and other “interested parties” to help work out restructuring plans.

The plan would also give the Government Accountability Office a special role in overseeing the program.

Under the proposal, the government would receive warrants – the right to buy a stake in the companies at a certain price – equal to 20% of the loan’s value. That means taxpayers would take a significant share of GM, which has asked for $10 billion in loans.

The companies would also have to drop their lawsuits against individual states that have passed laws on emissions standards that are more extensive than the federal government’s.

More from the Detroit News:

The government would have the right to veto transactions over $25 million and would report to Congress on the companies’ progress every 15 days.

Automakers would be barred from having corporate aircraft, couldn’t pay bonuses to top executives and wouldn’t be able to pay dividends to shareholders.

Estimates say that the $10 billion GM are seeking should see them through to March next year. On March 31, the companies will have to file detailed plans as to how they will turn their businesses around.

I guess that means Saab are going to have to have something firmly in place well before then, and then they have to hope that that Car Czar doesn’t mandate the elimination of a small, as-yet unprofitable foreign brand (if it’s in their power to do so).

Inmates at the doors

Again, I must be brief today as the real world job has me booked solid.

Just a couple of notes of concern about some recent bailout news. Both of these stories are from Automotive News.

First, the UAW wants a seat on GM’s board in return for additional concessions:

In a posting on the UAW Local 2404 website, local president Marc McQuillen said union leadership had said rank-and-file workers would have to ratify new concessionary contract provisions for GM by March 31.

The UAW will also offer another round of buyouts in 2009 if government bailout funds are provided to GM and allowed to be used for that purpose, McQuillen said.

“In return for these actions, the UAW seeks an equity stake in the company most likely in the form of a board seat,” McQuillen said.

My initial thought was “holy schmozzoli! The inmates will be running the asylum” but then……if they’re smart enough to get the conditions they’ve been working under for the last XX years then maybe they’re smarter than their bosses after all.

Uhhhhh, no. On second thoughts, I don’t think their tactics would work at executive level. Can you imagine them mad at the US car buying public for not buying their cars? Would their response be to go on strike and stop making them?

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This second article is about the bailout conditions being considered by Washington:

The government overseer who would be in charge of emergency aid for the Detroit 3 should have the power to force an automaker into bankruptcy if the company fails to restructure for long-term viability, the White House said today.

White House Press Secretary Dana Perino outlined Bush administration criteria in negotiating emergency-aid legislation with Democratic leaders of Congress. At a briefing, she called a deal “very likely” sometime today, even though the White House hasn’t received draft legislative language from Congress.

Imagine working with that guy over your shoulder?

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I may be a panic-merchant sometimes, but when I hear stories like this it really makes me shudder.

With just GM at the helm of GM, Saab have a small chance of being understood and the potential for them to grow to be seen. With guys like either of these within earshot of the helm of GM, I really am left to wonder.

World car production map

In light of Sergio Marchionne’s prophecy that there’ll only be six major auto manufacturers in the future, this is an expecially interesting little snippet that ctm spotted in the Swedish news and sent through via email.

It’s a ‘map’ of worldwide automotive production and I’ve got to admit, I was a little surprised by some of it. Just the sheer number of different countries involved in automotive production is more than I first thought. I always thought that Australia had a reasonable-sized production capacity, but we’re dwarfed by near neighbors like Thailand and Malaysia.

The map is in Swedish, but don’t let that scare you. I’m sure you’ll make out most of the country names.

Click to enlarge.

Congress close to a decision done!

The following has just been sent out via an Automotive News alert:

WASHINGTON — Democratic leaders of Congress indicated this evening they have reached agreement on a bailout plan for the Detroit 3.

The agreement is designed to provide short-term loans to General Motors, Ford Motor Co. and Chrysler LLC to prevent an industry collapse and allow a comprehensive restructuring of the companies early next year, House Speaker Nancy Pelosi, D-Calif., said in a statement.

Congress is scheduled to vote on bailout legislation next week.

Democratic leaders also have reached agreement with the White House on the plan, a senior congressional aide told Reuters. The package totals between $15 billion and $17 billion, the aide said, speaking on condition of anonymity.

Pelosi suggested she was willing to fund the emergency loans out of a $25 billion package already approved to help automakers retool for fuel-efficient vehicles. Pelosi and Senate Majority Leader Harry Reid, D-Nev., had previously opposed that approach, which is favored by the Bush administration.

Under the agreement, Pelosi said she would demand “a guarantee that those funds would be replenished in a matter of weeks” and that automakers would not delay work on improved fuel economy.

The loans would allow the Detroit 3 to maintain operations until President-elect Barack Obama takes office Jan. 20.

There’s more detail over at AN for those who have a subscription.

This bridge loan at least should give Saab executives a sigh of relief. In conversations that I had with Eric Geers of Saab Sweden last week, he said it was his belief that they’d have a few mnths to come up with concrete plans for the funding of future Saab projects. These plans would form a critical part of the strategic review that Saab is currently going through.

This is a positive step and good news all round.

Bailout update

The second session of US Congress bailout hearings took place today. Yesterday’s session was before the Senate Committee, today’s was in front of the House Committee.

From my reading of it, it seems like today’s was a shorter and less dramatic session and in terms of outcomes, it seems like there’s still no real indication as to when a solution might arise.

Let’s cover the proceedings in brief, first, and then some thoughts sent in on a possible outcome.

There were two sites that I noted as having good live-blogging coverage of the hearings. The Detroit News, once again, provided great snippets throughout the day. The other good site was The Deal, which hd some excellent commentary.

A few highlights:

* Rep. Ron Klein, D-Florida, is proposing that Detroit’s Big Three consider combining their research-and-development operations into a single, perhaps publicly supported entity that he referred to as the auto industry’s “Manhattan Project.” All three CEOs supported the idea.

* Despite the lack of outcomes, there seems to be some optimism that something will get done, at least initially. The running theme I’m seeing is an initial bridge loan to get the big 3 through to the end of January, by which time a new President might be able to push things along a little.

Frank said the conclusion is sinking in that something must be done this month to help the Detroit 3 — even if it’s a smaller interim package that tides them over until next year. Then, a bigger loan package can be completed with stringent government oversight, milestones and possibly equity rewards for the risk of lending the money.

* As of Saturday, 240 Chrysler dealers have gone bankrupt because they couldn’t get funding, even with the government’s bailout of the financial sector, Chrysler CEO Robert Nardelli said. Another 250 dealers are on credit watch. Together, they represent 63,000 units, annualized, that are now gone from the system, Nardelli said.

* One of the house members wisely noted that running a committee is nothing at all like running a car company. Many eyes rolled, I’m sure.

Am I the only one who thinks there’s a fair bit of show going on here, and not as much go as there should be? Some of the joking that I’ve read about, and the whole performance of driving the last two miles of the trip in a Volt prototype…… I think the CEOs, not that I feel sorry for them, but they’re being treated like naughty kids in some aspects, and this coming from securely employed politicians who are enjoying their time in front of camera.

That’s how it seems to me, viewing from afar.

The Deal noted some similar thoughts:

Trying to wrap things up, perhaps it is best to quote Rep. Al Green (D-Texas, not the singer), who in urging his colleagues to support the bailout notes that the automakers have done everything that was asked by them by lawmakers.

“They have done everything except roll over and play dead,” Green said. “And I suspect if we had asked them to roll over and play dead, someone would have been willing to do it.”

Shame Bob Nardelli has already left. The image would be priceless.

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So, to the bottom line (for today)…

It looks like GM will get some sort of bailout, but on a smaller scale than expected with some pretty rigorous goals to be met along the way.

It looks like there’s going to be some sort of oversight in place to assess how things are going and feed these assessments into future considerations for further funding.

It looks like the big picture is going to get passed on to the next administration to address.

It looks a little like a combination of proposed micromanagement and a game of hot potato.

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Some thoughts from RJ, in Utah. I think these tie in pretty well with Barney Frank’s thought’s, which were noted above in a quote from Automotive news.

A local radio station was interviewing Senator Bob Bennett of Utah, a member of the Senate Banking, Housing, and Urban Affairs Committee. He’s waist deep in the crap like everybody else, I suppose, but he seems to have his head on straight as far as the technical knowhow and procedures go.

At any rate, his main point was this: Congress is still not close enough to accepting even in principle the auto makers’ proposals, which also need more work to be done. More importantly, he said there isn’t anyone yet who has even begun to draft a bill for legislation that would provide assistance to the industry. And that takes some serious time to do. Therefore, as he says, it’s very unlikely any sort of conclusion will be reached before Congress’ holiday break. What does this mean?

Well Sen. Bennett indicated that the problem will most likely be put back into Henry Paulsen’s lap, and therefore the big automakers will have to plead their case all over again to him. He was given the authority from Congress through the, uh, Temporary Relief Act, or some similarly named bill (I think that’s the troubled assets revovery program, or TARP, but I’m guessing – SW), which I believe they recently passed for the purpose of this current economic struggle.

Soo….I think it will be interesting to see how GM manages to raise cash if it’s really going to run out before year’s end, especially since the Administration will have to decide to deal or not deal with it, and then we’ll see what the new Administration does once it’s in. That is, if GM makes it that far…

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New GM recovery video

A representative from Weber Shandwick, who are obviously doing some PR work for GM, has sent me a link to a new video from GM, which details how they are going to use any funds loaned to them by the US government to rebuild their US car industry.

Here is the video, if you’d like to watch it:

Of course, what the video doesn’t tell you is stuff like the following:

* Many of the small cars that GM builds in the future will feature turbo technology developed primarily by Saab, who were/are their center of expertise for turbocharging.

* Many GM vehicles in the future will benefit from Saab’s stellar safety research and expertise, from things like vehicle construction to passive safety devices such as stability control

* Many of GM’s flexfuel vehicle in the future may incorporate turbo technology and E85 optimisation that Saab have been working on for some time.

* Many of GM’s front wheel drive vehicles that may get XWD in the future will have received that expertise from Saab, who were charged with the responsibility of adapting GM FWD platforms for the technology.

And the main thing that the video doesn’t tell you, and all the others that watch it:

* GMNA will hang Saab out to dry if that’s what it takes.

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To the people at GMNA and the people at Weber Shandwick:

I’m quite happy for GM to get the bailout they’re looking for because it’ll effect millions of people if they don’t. But my primary interest is Saab, and if GM don’t care about preserving Saab, then propaganda films like this one are like water off a duck’s back.

I do hope GM sell Saab to a good buyer. Somehow I get the feeling that we’re going to be together a little longer, however.