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?
Posts By: Robert Farago
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.
Automotive News [sub] reports that President Obama’s Pay Czar has done an about face. Kenneth Feinberg pledged to remove the $500,000 salary cap for NEW executives hired for TARP-recipients—if he’s convinced that a rule-busting pay boost would help the bailout queens return U.S. taxpayer’s money. Feinberg’s climb-down comes just two days after New GM’s federally-appointed Chairman of the Board said that Uncle Sam’s pay caps could be, indeed should be, “modified.” Of course, Ed Whitacre didn’t make his suggestion directly. Nor did Feinberg reveal the locus of his “come to Jesus with cash” moment. “[Feinberg] said the automotive firms did not appeal his rulings. But he said he would be open to requests to hire in new executives at competitive pay. ‘If General Motors or any other company wants to bring someone in laterally — laterally — and competitive pay packages require that lateral hires get certain competitive pay, what have you, we’re perfectly willing to examine that.’” So the new rule: GM can hire someone for more than $500,000 in cash per year if that person was already making $500,000 per year doing the same job, only better (one would hope). Which would exclude, uh, no one. And create mucho resentment at that special place where RenCen’s express elevators ascend to glory. More Feinbergian 180 after the jump, and a mystery to be solved . . .
Sex sells. Or does it? I’ve long argued that sex actually gets in the way of selling cars. Who can think about cars when they’re thinking about sex? Sure, the blog posts on The Babes of SEMEN—I mean SEMA get eight billion hits. But so what? Does a pretty face and a pneumatic chest do anything to stimulate people to buy the trash and treasure (mostly trash) on display at a show or available (God help us) via the web? The example here is a perfect example of why you catch more flies with honey than vinegar. But as far as I know, the only reason to catch flies is to kill them. Or at least trap them on a sticky stuff until they die. Hey, come to think of it, maybe sexual come-ons (so to speak) aren’t such a bad idea . . .
Times are tough. Margins are tight. Carmakers are looking for savings anywhere they can. As mechanical work performed by a dealer under a manufacturer’s warranty comes straight off the automaker’s bottom line, it’s not all that surprisingly that we’re getting reports that certain manufacturers (cough Chrysler cough) are dragging their heels on paying for warranty work. In specific, we’re hearing that owners of Cummins diesel-powered Rams are having to stump-up for the cost of engine repairs, as the mothership blames “issues” on driver negligence, poor operating conditions and the knock-out punch “contaminated fuel.” Are you having any trouble getting warranty work on your vehicle(s)?
Celebritycarsblog.com commentator sunbeam shows that the first cut isn’t always the deepest: “Cadillacs are for old people, or in the this case, maybe just people that are old news.” Ouch.