Posts By: John Horner
Bloomberg reports on Toyota’s pickle vis-à-vis Fremont, California-based NUMMI. New GM is leaving its NUMMI ownership share in the hands of Old GM. Thus, Old GM and Toyota together own NUMMI in a 50/50 joint venture. Old GM will be selling off its moribund assets over a period of a year or more as the long slow process of liquidating the discards and paying creditors pennies on the dollar plays out. (Old GM is looking like an economic stimulus program for a small band of lawyers, accountants and realtors.)
Ford is jumping on the recently-signed Car Allowance Rebate System (a.k.a. Cash for Clunkers) to lure customers into the showroom. Ford’s home page includes a highlighted link to the “Recycle Your Ride” program. A prospective Ford buyer can enter details about their current vehicle into a drop-down menu system and quickly see if it qualifies for scrappage. They can also discover which Ford models earn the $4500 or $3500 federal voucher against the crusher candidate. So far the Dodge, Chevrolet, Honda and Nissan websites have nothing. Toyota and Volkswagen both offer primitive informational pages, but nothing to match the sophistication of Ford’s effort. You would think the government-owned auto companies would be all over the government-run incentive program. But no. And get this: KBB’s man tells the New York Times that the consumers might be better off without the vouchers . . .
After a short, suspense filled couple of laps under the yellow, the US Supreme Court has dropped the green flag on the Chrysler-Fiat deal. The New York Times sums up the court’s view that “the Indiana funds ‘have not carried the burden’ of proving that the Supreme Court needed to intervene.” Also, earlier today, the Chrysler dealer slaughter was also given the go ahead when Judge Gonzalez approved that aspect of the deal. So, that pretty much closes this chapter of the saga. The deal is going down as planned by Fiat and the US Treasury. Now the really hard part begins.
Although Judge Gonzalez has so far given Chrysler-Fiat just about everything it has asked for, approval of the dealer cull still isn’t a done deal. The AP reports that: “U.S. Judge Arthur Gonzalez will hear arguments Thursday on the Auburn Hills, Mich.-based automaker’s motion to eliminate the franchises. Chrysler executives are also expected to testify. The motion was expected to be heard Wednesday.” In parallel actions, the Senate is holding hearing today on the very same issue. Again from the AP : “Lawmakers contend the dealership closings will put thousands of people out of work and offer few savings to GM or Chrysler, which have received billions in federal aid as they attempt to restructure and return to profitability.”
The grand poobahs at the PTFOA are Wall Street bankers and political insiders. None of them have built or run real businesses designing, marketing, selling and supporting high priced consumer products. Everything they think they know they learned from books and lectures, not from actually doing stuff. The old story goes: “When your only tool is a hammer, every problem looks like a nail.” To the Wall Street types, slash and burn is the hammer they know. Even President Hope has taken to using their favorite phrase “Lean and Mean.” Surely we need lean, productive companies, but who needs mean?
Credit reporting agency TransUnion has released its analysis of the US’ auto loan situation and finds that, unsurprisingly, things have deteriorated. “The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) edged upward between the third and fourth quarter of 2008 from 0.80 percent to 0.86 percent. Year-over-year the delinquency rate increased 8.86 percent in the fourth quarter.” That works out to about one out of 116 auto loans being delinquent. “Delinquencies were highest in Mississippi, at 1.62 percent, followed by California, at 1.46 percent, and Louisiana, at 1.37 percent. The states with the lowest auto loan delinquency rates were Alaska, at 0.19 percent, North Dakota, at 0.34 percent and Wyoming, at 0.41 percent.” Oddly enough, these delinquency rates by state only roughly track unemployment rates.
Senator Corker must be so proud of himself. He held Ford’s feet to the fire . . . oh, no, wait, Ford didn’t bother with that meeting. Anyway, today Ford is crowing [via AP] that its revised UAW contract gets close enough to wage parity with the transplants to call it a done deal. Which is kind of strange, because Ford’s accounting puts the all-in costs under the newest deal at $55/hour compared to the $48-$49 number people toss around for the transplants. Hmmm, maybe I’ll try that kind of “close enough” math when I pay my bills. Ford’s spin-meisters could have pointed out that nobody outside the transplants really knows what they are paying, but they didn’t. Absent a published union contract, all we can do is guess.
The boss men at Legacy Ford Lincoln Mercury Toyota of Scottsbluff, Nebraska, have arranged a personal economic stimulus program; by running off with 81 cars and trucks valued at over $2.5 million (before or after rebates?). Lacking a “Tales from the Dark Side” section, the AP put the story out as auto industry news. The missing Fords were trucked away on Saturday but the Toyotas had to wait their turn until Monday. By Wednesday, some of the missing vehicles already started popping up at auctions in Utah and Arizona. Floorplan banker Toyota Financial said: “If the dealer and the cars go missing there’s an issue.” Ya think? “Arrest warrants had been issued for owner Allen Patch, controller Rachel Fait and general manager Rick Covello, who are wanted on suspicion of theft.” Up until now, none of these clowns had an arrest record. Oddly enough, Legacy so far remains open for business. Personally I wouldn’t leave my ride there for service unless I wanted it to disappear. Meanwhile, rumors of a movie deal starring Robin Williams, Chevy Chase and Al Pacino run rampant.