What unalloyed pleasure it gives me to welcome TTAC’s august founder, Robert Farago, back to these pages. Robert’s a little too busy with what might be the biggest firearms news site in the world to give us much more than this review of Mercedes’ four-door-not-really-a-coupe, but to paraphrase John Mayer, it’s hard for me to […]
Posts By: Robert Farago
In 2007, our founder Robert Farago wrote this piece. It is still bouncing around on Facebook. It never stopped being true, and it became extra pertinent with the launch of the new Corvette. People often accuse us of being “biased” against GM. My answer in private, today for the first time uttered in public, always was: “Not true. GM is biased against TTAC.”
In May 2011, with Ed still at the helm, I dragged him to Detroit, and up the escalators of RenCen to make an end to the useless war, and to make peace with GM. Sitting in Selim Bingol’s office, I explained that their old antagonist Farago is gone, replaced by young Niedermeyer and old warhorse Schmitt. New people at GM, new people at TTAC, let’s go forward. As an answer I had to hear from Bingol that at GM “we don’t negotiate with terrorists.” The meeting froze. I could unfreeze it. Former advertising people know how to talk their way out of a bad meeting, current PR flacks should have similar capabilities of instant insincerity. Smiles, handshakes, contradicted by body language. GM promised that all is good, it wasn’t. TTAC remained toxic at GM. The cold war continued. I did not know that Farago had tried before. Read this story from 2007. He sure did. – Bertel
Our man Mehta recently ran into a GM PR flack at an industry event. When Sajeev revealed TTAC as his spiritual home, the GM underling shook with rage. Still, it being the South and all, pleasantries were exchanged. After sweet talking the spinmeister, Sajeev promised I’d call and oil the troubled waters. (Read More…)
There’s a lot of analysis that needs doing re: GM’s first post-C11 financial statement. For now, let’s focus on the only important metric: cash burn. Never mind the headline—using taxpayer money to repay taxpayer money at a relatively paltry rate. How much cash does the nationalized automaker have, how much is it burning and when will it stop burning it? Taxpayer money given to GM (not including the Department of Energy’s $10 billion, 25-year, no-to-low interest “retooling’ loan): $52 billion. Current cash pile: $42.6 billion. Cash flow (according to Automotive News source): was $3 billion. And what of future cash flow? On this key issue—the only key issue—GM’s non-standard accounting of its accounts is, by no account, clear.
GM expects to have negative net cash flows in the fourth quarter of 2009 due to a number of factors including cash outflows relating to the Delphi settlement of $2.8 billion, the working capital impact of payment term adjustments of approximately $2 billion, payments for U.S., Canada, Ontario and Germany government loans of approximately $2.5 billion and continuing restructuring cash costs of approximately $1 billion. As a result, global cash balances at the end of 2009 are expected to be materially lower than third quarter levels of $42.6 billion.
As reported here on TTAC, Daimler has decided to start selling smaller, more fuel-efficient cars in the United States. For our international friends, the announcement is meaningless. Outside of The Land of the Free, Mercedes is about as exclusive as the YMCA. (In Germany, Mercedes taxis are a ubiquitous reminder that some Daimler-Benz products are more equal than others.) But for American pistonheads brainwashed by pre-90’s Mercedes products and marketing (“Engineered like no other car in the world”), the arrival of a B-segment Merc is the final nail in the coffin of brand idolatry. Which leaves what?
First, let’s get something out in the open.The Detroit Free Press’ story on the jobs impact of Uncle Sam’s Motown mega-order forgets to mention one salient fact. As TTAC reported back in June, one-third of the 17,600 vehicles ordered from Chrysler, Ford and GM were/are/will be assembled outside the United States. Any article about the order’s effects on American jobs should begin with that fact, which this one has. Surprise! The federal fleet sailing to The Big Three’s rescue did no such thing for American autoworkers. “The overriding purpose of the stimulus was to jump-start the economy and create jobs, though Obama never claimed the vehicle purchases would create jobs. While the latest reports from stimulus recipients show all three carmakers getting orders totaling $270 million so far, job creation from the purchases was nil.” Don’t you just love it when the media pre-apologizes for the President? How about when a major manufacturer lies about its federal blessing to please its federal taskmasters?
You might have thunk that car dealers would stop being skunks, what with the economy going thunk and the end of cash for clunk. But noooooooo. If anything, tough times have seen an increase amount of the same old story, same old song and dance down at the car lot. “You pay what we pay is back!” Little Rhody’s Flood Automotive Group proclaimed, before switching to free tires for life. And what of this? WYTV in Ohio reports [breathlessly] that Greenwoods Hubbard Chevrolet brought in the punters by selling used cars for $5. “Denny Denoi, General Manager of Greenwoods Hubbard Chevrolet said, ‘It’s just something that we wanted to do instead of taking some of these older cars to the auction we decided we would just sell them to the people of the Valley.'” That said, “The catch with this $5 car sale is that there were only 3 cars for $5, and those 3 lucky people’s names were actually pulled from a box.” But that’s OK, right? “Denoi said the sale was a success, and that most of the customers left the dealership happy, even though they didn’t get to drive away with a car for $5. ‘There’s [sic] some people who walked away with some great deals and some people who needed some cars that got some good transportation, and for the most part, I think 95-percent of the people are thrilled today.'” I wonder if GM’s new Sales Maven Susan Docherty will take that one national.
Speeding tickets are beginning to cross international borders in Europe, thanks to the European car and driving license information system, or EUCARIS. At the beginning of the year, Swiss motorists began being charged for speed camera tickets issued by French authorities. As of October, the French government had collected on a total of 10,000 citations from violations allegedly committed by vehicles registered in Switzerland. A total of 1800 tickets were issued last month alone.
As in Shiva, The Destroyer. It strikes me—has for some time—that nothing short of Chapter 7 could possibly “save” GM. (The title of GM Death Watch 1: “GM Must Die.”) The underlying idea is simple enough: capitalism is creative destruction. When something sucks, blow it up, start again. If the RenCen Mothership had been allowed to implode, its constituent parts (i.e. the brands, facilities dealers and talent worth saving) would have had a better chance of survival. As it stands now, with Fritz “The Lifer” Henderson and Ed “Everything Looks Like A Nail” Whitacre in charge, New GM is on a bear hunt (stumble trip, stumble trip, stumble trip) and they’re going to catch a big one (total dissolution). Alternatively, it’s like watching an endless, frame-by-frame version of MTV’s Scarred. With apologies to anyone who connects this video to “Buda’s wagon,” my question to TTAC’s Best and Brightest: what else needs blowing-up in the auto industry? The dealer experience is an obvious candidate. I nominate lapdog journalism. You?
Ford analyst George Pipas reckons the recession is over; the U.S. economy is on its way to recovery. New car sales will, uh, stay the same. “I think that we won’t fall backward from October. How much November might advance from the October level it is too early to say . . . The fourth quarter will be stronger from an auto sales standpoint than a pre-clunkers level.” Translation: the U.S. new car market is bumping along at the bottom. Lest we forget, Pipas’ “pre-clunkers level” promised land was already significantly down from pre-crash volumes. Anyway, Pipas admits that Ford 2010 sales gains will be “modest” thanks to . . . wait for it . . . the perception gap. “[Unemployment] is a drag on consumer psychology. The recession may be over and the recovery may have begun, but for many, many consumers it may not feel like it’s over even 12 months from now.” The Detroit News reports that Pipas also predicts $4 a gallon gas by next summer, cementing the consumer shift towards smaller vehicles. What’s more, “Consumers in the future will be more careful about living within their means.” And if not, even better.
As part of its eleventh-hour decision to hold onto its Opel subsidiary, GM has made a 200m euro ($300 million) payment on its German “bridge loan” reports the WSJ. GM Europe Chief Financial Officer Enrico Digirolamo announced that the nationalized automaker will repay the remaining 400m euros ($600 million) by the end of the month. The German government greeted the news with something roughly akin to a Gallic shrug. “If General Motors and its subsidiary are in the position to restructure through its own strength and financing, that’s good news,” German Ec0nomy Ministry spokesman Felix Probst opined. Translation: we’ll take it. Which is just as well, given that GM’s Chairman of the Board returned the money with some seriously sarcasm attached. “I think we won’t be needing money from your government for Opel,” Edward Whitacre said, according to Merkur newspaper. “If Mrs. Merkel declines help, we will pay for it ourselves. Maybe this make will your chancellor happy.” Yes, well, meanwhile, GM’s European operatives had the begging bowl at the ready. “The restructuring of Opel for long-term sustainability requires involvement and financial support from all stakeholders, including employees and governments. We remain in discussions with governments to engage our plan.”
You know how terrorism experts talk about increased “internet chatter” as foretelling some kind of attack? On Monday, GM will release its post-C11 financial results which, thanks to dubious accounting, could very well mean nothing. Even so, I’m getting the feeling that there’s some bad news a brewin’, ’cause the MSM is kissing some major GM butt today. First, the Freep shows GM’s Chairman of the Board the love that dare not grant it an interview. Now the Times’ Bill Vlasic, late of the Detroit News, shows up with a piece that supposedly reveals the depth and breadth of GM’s much ballyhooed “cultural change.” Mea culpa comes in the form of “After bankruptcy, G.M. Struggles to Shed a Legacy of Bureaucracy.” While I’m a firm believer that cultural change starts at the top—such as, I dunno, firing the ancien regime that led to GM’s nationalization—I’m all ears, Bill. Where’s the evidence that la plus ca change, la plus ce n’est pas la même chose?
In four day’s time, my byline will appear on this website for the last time. During the previous nine-and-a-half years, I’ve watched the mainstream automotive press slowly evolve from paid cheerleader to . . . nope that’s it. No progress there. Despite having written literally thousands of diatribes against the media’s willful ignorance on the auto industry, I’m still galled that people who call themselves professional journalists have such little moral fiber and testicular fortitude. Only more so, now that GM and Chrysler’s endless turnaround promises have been revealed as a combination of epic self-delusion, outright lying and near-as-dammit criminal conduct (e.g. we never got the bottom of that SEC accounting case). This morning’s Detroit Free Press continues the tradition. “GM Chairman Ed Whitacre clear he’s in driver’s seat” is the worst kind of non-journalism—the kind that enables the rape of the American taxpayer by a bunch of egocentric incompetents.