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.

——

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.

——

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.

——

Top Gear’s Jeremy Clarkson drives the Ford Fiesta.

Is this the best road test ever???

–

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.

——

Thanks Albert!!

–

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).

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?

——

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?

——

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.

–

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.

—

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.

–

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.

——

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.

——

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…

——

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.

——

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.

–

So cut a long story short…you policy might have “sum insured” written on it somewhere, but if it’s a policy based on market value, then that sum insured figure is most likely going to be a maximum value and NOT necessarily the amount you’ll get paid if the car’s written off.

In the event of a writeoff, it seems to be the case that the insurance company can calculate a market value, which could well be lower that the sum insured figure on your policy document. If you’ve ever looked up your car’s market value at Redbook (Australian) or an equivalent service in your own country, then you’ll know that they typically provide a range of values for a vehicle based on age, mileage and condition.

Care to guess which end of the range your insurer is likely to use?

This issue has come up again because one of our TS mates has an insurance company trying to shaft him on the value of his car.

You should all recall Tim S’s story, told here recently. Tim lost control of his pristine 2002 Viggen recently and ended up intimately acquianted with a guard rail.

Tim was shattered enough after the incident knowing that his car would probably be a goner forever. Now he’s got a low-balling insurance company to deal with. Tim tells me that a Viggen in equivalent condition to his 2002 model would cost somewhere between US$10K and $13K to purchase.

The insurers have offered him $7.5K.

I imagine he will now have to take some steps to justify the condition of the car and the amount he believes he should receive for it. I’m not sure how he’s going to be able to do that, but I hope he finds a way because this was truly one of the cleanest Viggens around.

–

Again – the lesson to be learned here is that if you’ve got a valuable Saab, especially one that’s a limited edition like a Viggen, you should go for an agreed value insurance policy.

When I bought my Viggen a few years ago, it was simply a matter of taking it to the insurer’s office so that they could sight the vehicle. I proposed an insurance figure and upon seeing the car, they agreed. The value was written in as an agreed value and it was the amount I got paid after the accident.

It didn’t cost me any more and though it didn’t bring my car back from the dead, at least I knew the amount I was entitled to and could plan around that.

Check your policies, people.

–

Rev. 1 on Saab:

First things first. Yes, Saab is mentioned as being up for “strategic review”. What that means, we don’t know. Fritz Henderson has apparently said that they will look to sell Saab. That is certainly a potential outcome. But how about this little snippet?

Importantly, 22 of 24 new vehicle introductions in 2009-2012 will be cars and crossovers. Twenty of these models will come from GM engineering centers having a long history of designing vehicles for $6-$8 per gallon gasoline.

Hmmm…. only Opel/Vauxhall, Deawoo and Saab can make this claim, correct? Doesn’t Saab account for three of these models in the pipeline? (2010 9-5, 2009/2010 9-4x, 9x/9-1x) This seems to be a little in conflict with the idea that Saab will be sold.

Rev. 1 on Brand and Dealer Attrition

Interesting that 83% of GM’s sales are from these four, but this makes complete sense in desperate times to focus on the market makers that sell the volume.

Today, General Motors competes in the United States with 8 brands. Chevrolet, Cadillac, Buick, and GMC represent the company’s core brands, accounting for 83% of current sales. The company will focus substantially all of its product development and marketing resources in support of these brands. This will result in improvements in awareness, sales, and customer satisfaction for these 4 core brands.

I believe that the following statements are more or less true — GM’s real overlaps are in metropolitan areas and their rural locations are a competitive strength.

…the Plan focuses the company’s resources in the U.S. around a smaller, more profitable set of nameplates (40 by 2012) with further consolidations in GM’s dealer network planned to get to a more profitable and stronger dealer network.

…the number of GM retailers is expected to decline to 4,700 by 2012. This will occur primarily in metropolitan and suburban areas where GM has too many dealers to serve the market. In the Plan, it is projected these dealers will be reduced by 35%, increasing annual throughput for the remaining outlets to a more competitive level with other high-volume manufacturers. GM’s distribution strength in rural areas, which is a significant competitive advantage, will be largely preserved. GM intends to have the right number of brands, sold by the right number of dealers, in the right locations to obtain maximum profitability for GM and the retailer network.

Rev. 1 on profitable models

Swade, here’s the real reason for Cadillac…

The company’s increasing success with new model introductions is, importantly, being rewarded in very tangible ways. Specifically, contribution margins are improving significantly on our new models. As examples, the new Cadillac CTS and Chevrolet Malibu are generating contribution margin improvements of more than 30% and 50% respectively, with significant improvements in residual values as well.

And here’s what they plan to do to get buyers back into the showrooms.

While remaining a full-line manufacturer, GM will substantially change its product mix over the next four years, and launch predominately high-mileage, energy-efficient cars and crossovers.

Rev. 1 with contrition

GM is certainly eating some humble pie with this plan.

While GM acknowledges that it has made mistakes in the past, the company has been pursuing a major transformation of its business model for the past several years, and accelerating its plans to produce more fuel-efficient vehicles. This transformation has consumed a substantial amount of resources and accounts for a major portion of GM’s current financial leverage

GM has made mistakes in the past — in now-untenable provisions from prior collective bargaining agreements, and insufficient investment in smaller, more fuel-efficient vehicles for the U.S.

Rev. 1 on Bankruptcy

I think that GM is taking a little poetic license with this one, because I don’t think that people are as afraid of GM bankruptcy as they are afraid of GM as it is right now!

General Motors is requesting the loan facilities outlined above (term loan and committed credit facility) because recent significant declines in dealer orders are now adversely affecting first-quarter production schedules and revenue forecasts. This drop in dealer orders reflects both continued, abnormally low auto industry sales, due to the general economic decline, and mounting consumer fears about a GM bankruptcy. According to very recent market research (conducted by CNW Marketing Research), more than 30% of consumers who considered a GM vehicle and purchased a competitive product instead cited the possibility of GM bankruptcy as the top reason for not buying a GM product. This is more than double the percentage of the next highest reason.

Some have suggested that bankruptcy is a reasonable option. The plain fact is bankruptcy of an auto company is markedly different and much riskier than that of a steel company or an airline, with the potential for: lengthy delays, given the number of stakeholders; significant administrative costs; the very real risk of the lack of funding while in bankruptcy; and the stigma attached to our products in the eyes of consumers. On this latter point, it cannot be emphasized strongly enough how much a bankruptcy will depress sales of an auto manufacturer’s products due to consumer fears of long-term warranty, resale value and service-related issues. The company, as noted above, is already experiencing the effects of such speculation today.

Rev. 1 on Labor Cost reductions

Interestingly, it seems that the biggest benefit cuts have been made to salaried personnel packages rather than to hourly wage earners.

Most notably, GM agreed with the UAW to shift the liability of paying for health care for hourly retirees from GM to an independent trust (VEBA), scheduled to occur on January 1, 2010. Additionally, GM and the IUE-CWA have recently agreed to a similar arrangement to become effective January 1, 2012, for their retirees. For the salaried population, those hired on or after January 1, 1993, receive no healthcare benefit in retirement, and for those who retain coverage GM has capped retiree health care spending at 2006 levels. In addition, effective January 1, 2009, GM will no longer provide supplemental healthcare coverage to salaried retirees at age 65.

As for pension costs, GM no longer provides a defined benefit pension plan for salaried employees hired on or after January 1, 2001, and no longer provides a traditional pension plan for new UAW hourly employees. In addition, GM suspended matching contributions for salaried active defined contribution participants effective November 1, 2008

And, true to form, GM doesn’t directly address the UAW cuts that certainly must take place now, instead preferring to imply that they will come about due to attrition.

Reflecting labor negotiations completed over a year ago, General Motors’ total cost per hour for new hires can now be as low as $25, growing to $35 over time, significantly below the average fully-loaded labor cost for Toyota, which public sources indicate is between $45 and $50 per hour. With the recently negotiated wage rates, turnover expected in our workforce, planned assembly plant consolidations, further productivity improvements in the Plan, and additional changes to be negotiated, GM’s wages and benefits for both current workers and new hires will be fully competitive with Toyota by 2012.

Rev. 1 on Executive Benefits

Well, I’m not sure that I take all of this at face value, but it’s in the report, and so here it is:

It is longstanding GM policy for senior executives to have most (80% or more) of their compensation at risk based on the company’s performance to align with shareholder interests. For the past five years, executives have not received the majority of the value from this at-risk compensation as: all stock options are underwater; long-term plans based on relative total shareholder return have not paid out; and other equity-based compensation has significantly declined in value. GM’s Chairman and CEO and Vice Chairmen made voluntary reductions in their salaries by as much as 50% in 2006 and 2007, and are willing to make further sacrifices for 2009. Such sacrifices are as follows:

· The Chairman and CEO will reduce his salary to $1 for 2009. He will not receive an annual bonus for 2008 and 2009.
· Consistent with this action, members of the GM Board of Directors will reduce their annual retainer to $1 for 2009.
· The next four most senior officers (Executive Vice Presidents and above) will reduce their total cash compensation by approximately 50% in 2009, which includes no bonus paid for 2008 and 2009 and a 30% salary reduction for the President and COO, and 20% salary reductions for the remaining three.

The company believes the above actions on senior officer and performance-linked compensation recognize its obligations to both protect taxpayer interests and retain employees vital to a successful restructuring, and deliver maximum value to our shareholders.

And, of course, after the PR debacle last month, the aircraft must go.

GM is immediately ceasing all corporate aircraft operations, unfortunately impacting approximately 50 hourly and salaried employees. GM is currently exploring options for transferring the aircraft to another charter service operator and/or pursuing disposal of the aircraft. These actions are in addition to recently announced decisions to reduce the total number of corporate aircraft.