At one point, GMAC was the tail that wagged the dog. The captive finance company dumped billions in profit into GM's corporate coffers. As the American automaker's decline gathered pace, GM CEO Rick Wagoner sold 51 percent of GMAC to Cerberus (current owners of Chrysler). The finance company immediately hit the rocks. Today, the gash in the hull widened. GMAC reported a net loss of $2.48b. In the second quarter. "A soft economic environment and continued volatility in the mortgage and credit markets have significantly affected results," GMAC Chief Executive Alvaro de Molina told Reuters. "Higher fuel prices and weaker consumer credit prove to be headwinds." That's a bit like calling a tornado a light breeze. We repeat: GMAC's NA leasing is heading for termination. The results included a $716m write-down of vehicle leases. And… "GMAC said it ended June with about $18 billion of SUV and truck leases in those countries on its books, out of a total $32.8 billion of leases." Expect GM to have to write-off at least three billion of lost residual values on those leases [blog coming] when it reports its financial results on, of course, Friday. Oh and ResCap, GMAC's mortgage arm, lost $1.86b in its seventh straight unprofitable quarter. If ResCap fails, it's all over bar the filing. Whether GM would be dragged under is an open question. Dark days.

Much to GM Car Czar Bob Lutz' chagrin, hybrids are a bit more than the flash in the pan he predicted . A study from RCNOS titled "Global Hybrid Car Market Forecast to 2010" (reported by Research and Markets) predicts global hybrid sales will experience a Compound Annual Growth Rate (CAGR) of 12 percent in the next six to seven years. They also prognosticate that the hybrid battery market will grow by 10.4 percent between 2010 and 2015. From 2008 – 2012, the hybrid component market will increase at a CAGR of 17.4 percent. The U.S. is the top market for gas – electric vehicles. RCNS says American hybrid sales should crest the 1m mark by 2012. At the moment, there are only a few major (i.e. remotely credible) players in the hybrid game. But with the Koreans and the Chinese busily developing their own hybrids, the playing field could become crowded in a hurry. And since competition drives prices down, the consumer will be the overall winner. Not to mention air quality and CO2 emissions. 

Spy shots of what could credibly be a new Toyota Prius have finally surfaced. The next-generation of "America's Car" looks bigger than the previous iteration, but that's about it in terms of differences. The new Prius sports styling that is nearly identical to the outgoing model, with only a tightened greenhouse to spoil the rear vision freshen up the looks. Of course it will be more powerful and more efficient (according to Toyota). The spy photographers who sent these shots in to Nextautos speculate that the larger dimensions mean wagon and convertible versions could be forthcoming. Though these possibilities would be good news for ToMoCo's ambitions to build the Prius brand, they'll be sure to have their hands full just supplying demand for the standard version. Although, with Honda's unnamed Prius-fighting sedan in the offing, Toyota might want to differentiate the Prius from its blatant knockoffs.

Oil prices go up. Gas prices go up. American consumers switch en masse to the kind of vehicles promoted by CAFE (Corporate Average Fuel Economy) regs since 1975. They also help reduce American oil imports (and pollution) by driving 3.7 percent less over the first five months of '08. The reduced demand lowers the price of gas (OK, in theory). Everyone happy? Of course not. The same feds who want us to reduce our dependence on foreign oil are hit with a drop in federal gas tax revenue (currently 18 cents a gallon). And so the "acting head" of the Federal Highways Agency declares [via The Detroit News] that "without a doubt, our federal approach to transportation is broken." No, REALLY. "No amount of tweaking, adjusting or adding new layers on top will make things better." And he drops the other shoe. "Ray [that's MR. May sonny] said the Bush administration was in favor of a 'more progressive direct user fee' similar to a system that is currently being tested in Oregon. Under that pilot program, cars were equipped with on-board mileage counting equipment that was read by pumps equipped with mileage reader devices." Can you drop a third shoe? Sure! May also wants to "encourage" private companies to lease federal highways and maintain them through tolls. With ideas like that, what's the bet that the acting head is shuffled off-stage, and soon?

Buzz Hargrove doesn't mince his words. As demonstrated in Part 1 of this interview, the outgoing Canadian Auto Workers leader is fully aware of the Detroit domestics' dire financial peril. What's more, Buzz understands the balance between his members' welfare and the health of the automotive industry. Or lack thereof. "My first responsibility is to look after the interests of my members," Buzz admits. "But I tell my boys to look after the industry too. At every meeting." So, how's that going?

WSBTV.com seems somewhat surprised by a J.D. Power study that shows the obvious reveals a new trend: sporty crossovers appeal to younger women. Roger that. Women are generally attracted to the appearance of sportiness (witness the VW Tiguan's 61.7 percent female ownership and relatively dismal performance). J.D.'s mob says they also go for utility. Also "revealed:" women like 'tried and true' safety features (newer technological safety advancements tend to come with high price tags– something more 'rational' women tend to avoid when purchasing vehicles. No doubt crossovers appeal to women who are a bit gun-shy on a gas-guzzling SUV, but still want space, a higher riding position and the eventual child-hauling ability (yes, some women do think that far in advance). Another non-stunner: 90 percent of Corvette and Porsche 911 purchasers are men. Mid-life crises? What mid-life crisis? The real surprise: automakers still aren't marketing to women. J.D. reckons women account for about half of all auto purchases, and influence 80 to 90 percent of all auto-purchasing decisions. You'd think they'd be marketing something more than Beetles and Mercuries to the ladies by now…

A month or two ago, I had the brilliant idea to enter a rental car into a car show, and see what I would win. The Avis Hummer H3 I spent untold hours detailing won first place in the truck category. Being only slightly insane, I decided to try another rental car challenge (due to my Porsche still being in various pieces), and enter a weekend special into an SCCA Autocross. Nearly winning my division last year, I believed that winning was mainly due to the driver, not the car, so of course I would come out on top no matter what I was driving. $78 later in rental fees and race entry fees, I had a 2008 Subaru Outback, with a 173bhp, AWD and lots of cargo space. Despite ripping nearly 150lbs of weight out of the car, the Subie couldn't have been more disastrous. The Sportshift always held the wrong gear, and wouldn't let you shift manually under extreme maneuvers. The steering became so imprecise that I was no longer driving the car, I was guiding it. The AWD made the car understeer, or oversteer, in a completely unpredictable manner. The lack of low end power had me uttering strings of curses upon exiting nearly every corner. I was easily outrun by a similar 2.5-liter equipped Impreza. I was outrun by a Honda Civic, a Dodge Neon, and an automatic-equipped Toyota Echo. And then we loaded the wagon up with five people, kept to the starting line, and learned the joys of e-braking through the corners, where the Outback stopped skittering, and literally "hopped" around the bends. As a race car, the Scooby gets one-star. But I suppose you already guessed that.

With the McLaren-Mercedes SLR set to end production, McLaren wants to build a new supercar of its own (front mid-engine THIS). Auto Motor und Sport reports that Mercedes, which owns some 40 percent of McLaren, reckon the new hot rod would compete with its forthcoming Gullwing super-SL. And? Racing boss Ron Dennis and partner Mansour Ojjeh each own 15 percent of McLaren; the royal family of Bahrain own the other 30 percent. They're all hot for a new McLaren road car. Accordingly, two mid-engined prototypes are currently undergoing track testing, one of which sports a German-built V10 race engine. Mercedes is livid, threatening to cut all payments to McLaren if it doesn't halt development plans. Ultimately, Mercedes is going to have to bite the bullet and buy out the last 11 percent of McLaren if they want to call the shots (outbidding the royal family of Bahrain ain't gonna be easy). Meanwhile everyone has to make nice and work together on the F1 circuit, where McLaren-Mercedes pilot Lewis Hamilton is kicking ass and taking names. So who's writing the novel?

Nothing in Chrysler's dated portfolio needs attention more than its Camcord-fighting D-segment offerings, the Avenger/Sebring. The March departure of the lead on the Avengbring replacement didn't bode well. Motor Trend now reports that Project D is heading for disaster, gobbling-up huge engineering and design resources. Chrysler's in crisis mode. Option one: an all-new platform. No money. No way. Option two: deploy an existing chassis (e.g.  Nissan's Altima) and wrap it in new sheetmetal. Option C: rip off another automaker's work wholesale, a la VW Routan. Needless to say, these cop-out options will do nothing to improve Chrysler's rep for mediocre products. Then again a badge-engineered Altima might be better than what Chrysler can cobble together on a shoestring. Either way, with Project D seemingly doomed to mediocrity, what else can keep Chrysler alive? Hybrid minivans? Cherys? Government bailouts? Not good.