The Truth About Cars » Industry

Editorial: Bailout Watch 234: The Truth Will Set Them Free

Ken Elias — Wed, 03 Dec 2008 20:33:53 +0000

TTAC could have saved Congress a ton of time and billions of dollars if the politicos had just read these pages over the last few years. We’ve diagnosed the patients, begged them to seek help, outlined some cures, and prayed that our worst fears would never be realized. And yet, here we are – in the midst of the biggest industrial meltdown of all times for the US auto industry. So again, we’ll just try to neatly summarize the actions that Congress needs to take now. It’s not pretty, probably isn’t politically correct, and will piss off a whole bunch of people. We’re hoping to influence you – our audience – to spread the word to ensure that Congress makes the right moves. After all, this is a democracy. The press – which includes TTAC – can make a difference in getting to the truth, and that’s what Congress needs to know today.

Editorial: Does Detroit Have The Will To Succeed?

Ken Elias — Tue, 25 Nov 2008 15:20:03 +0000

Detroit's financial predicament today rests squarely on the shoulders of its executive leadership going back nearly four decades. The American auto industry failed mostly in its will to succeed in a changing business environment marked by the entrance of new competition, adoption of new technologies, and demands for greater fuel efficiency. Had Detroit taken those actions necessary to be leaders, rather than laggards, its overall situation of falling market share, reputation for poor quality (in comparison to certain foreign competitors like Toyota and Honda mostly), and weakening financials might have been avoided.

Editorial: Tomorrow, Porsche Will Disclose Their VW Plans. Any Bets?

Bertel Schmitt — Tue, 25 Nov 2008 15:15:09 +0000

If you think about flying to Stuttgart tomorrow, better book now. It will be a full house tomorrow at Porsche's annual "Bilanzpressekonferenz." The presentation of annual numbers to the press. At this confab, the information-hungry media will be fed with finger food and glossy brochures, drowned in champagne and a sea of PowerPoint charts. Why would anyone be interested in a small maker of sports cars that was nearly bankrupt when Wendelin Wiedeking took over? How did P.J.O'Rourke put it so nicely? "In the gutter in front of the razed crack houses was a brand-new Porsche 928 flipped on its back and wadded like Kleenex." That was then, this is now. Now, Wiedeking promises to reveal his timetable for the takeover of Volkswagen. "Waitaminute," I hear you say. "Don't they own VeeDub already?" Not exactly. Currently, Porsche holds 42.6 percent of the common stock of Volkswagen. It is also written that Porsche owns 31.5 percent in VW options, strike price and time to expiration unknown. Will Wiedeking say tomorrow when they'll finally go for the whole shebang? We doubt it. Will they go over 50 percent this year, as planned? Will they go to 75 percent soon as rumored? We believe, Wiedeking will keep everybody guessing. Despite the fact that Porsche is rolling in money, they are Swabian. And then ...

Editorial: Customer Care

Michael Karesh — Sun, 23 Nov 2008 13:59:15 +0000

The most ardent fans of Detroit accuse those who don’t buy domestic cars of being disloyal, if not downright un-American. But loyalty only makes sense when it runs in both directions. And Detroit has not been loyal to Americans, whether they be its workers, its suppliers, or its customers. But, assuming General Motors and Ford survive the current crisis, it’s not too late. Let’s focus on car buyers. What might Detroit do differently to deserve our loyalty? Well, a few things. But the most significant would be providing customer care that deserves the name. Most of those who refuse to “Buy American” do so because they were burned by an “American” car, sometimes multiple times. In these cases, not only did the car require too many repairs—which was bad enough in itself—but the manufacturer did little or nothing to accept responsibility for the design or manufacturing defect and take care of the affected car buyer. If Detroit does nothing to assist car buyers when design or manufacturing defects lead to expensive repairs, then why should car buyers support Detroit when it needs assistance? Read on ...

Editorial: Between the Lines: Pelosi/Reid Letter to Detroit

Ken Elias — Sat, 22 Nov 2008 12:49:33 +0000

So, the Motown millionaire's beggars' banquet blew town, retreating from Washington's corridors of power to their Detroit lairs to lick their wounds. To say the CEOs of Chrysler, Ford and GM were unsuccessful in their televised attempts to "liberate" $25b from the Troubled Asset Recovery Program would be like saying the Detroit Lions are struggling to get to the Superbowl. In many ways, it was over before it started. The CEOs arrived woefully unprepared, and left with admonishments to return next month after, how do I put this delicately, getting their shit together. House Speaker Nancy Pelosi and Senate Leader Harry Reid switched into CYA mode. As part of their campaign, they've written a letter to Detoit, telling that what needs doing the second time 'round. Having secured a copy of this missive, TTAC contacted our own Ken Elias to read between the lines on your behalf. As the automakers run out of cash, it all comes down to this.

Editorial: Detroit Bailout = Thermonuclear, Intergalactic Trade War

Bertel Schmitt — Sat, 22 Nov 2008 10:50:46 +0000

There may be another nasty aspect to the bailout: a full-scale trade war, launched by countries that don't (or even do) bail out their auto industries themselves. Bloomberg writes that "a U.S.-triggered spate of global carmaker-bailout proposals may spark trade disputes over whether the Americans are unfairly trying to subsidize their industry." Egged-on by the US bailout money that may, or may not, or may, or may not be in the offing, manufacturers all over the globe are holding up their tin cups. At the same time, the European Union threatens to lodge a complaint against any U.S. bailout on the grounds that it's unfair to the auto makers in the rest of the world, not to mention Renault, Fiat, Volkswagen, Daimler, BMW et al. China also may complain, although their complaints will ring a bit hollow, as the government owns most of the big automakers already. Probably won't stop them. "Now that we are in the WTO, we might as well use it." Payback is a bitch.

Editorial: Redlining the Domestics

Michael Martineck — Fri, 21 Nov 2008 23:37:52 +0000

Loans and leases are getting hard to come by for anyone interested in a car or truck from GM, Chrysler or Ford. Banks now routinely put out lists with “red lines” through makes and models they no longer want to finance. Those products are increasingly domestic in origin. Redlined vehicles are harder to sell, forcing down values, rendering loans even more unattractive, making those cars and trucks even harder to sell, forcing down... you can see where this is going. Major lenders in the US are not waiting for The Big 2.8 to file for bankruptcy. They’re treating them like it’s a done deal.

Editorial: The Battle At Midday. How America Can Win The War Against GM

Bertel Schmitt — Fri, 21 Nov 2008 14:29:42 +0000

Informa Global Markets (IGM) "is a world-class international supplier of real-time news and analysis to market professionals in the fields of foreign exchange, sovereign fixed income and corporate bonds." It's the stuff brokerage houses and investment bankers pay a lot of money for in order to look smart with their clients. Would definitely bust TTAC's budget. Some of my friends in high finance still hold a job, and one of them (you know who you are) was nice enough to forward me yesterday's IGM "Markets At Midday" issue. Reads like "Markets At Midway." With the appropriate ending: The bad guys lose.

Editorial: Bailout Watch 223: Planes, Trains and Automobiles

Robert Farago — Thu, 20 Nov 2008 13:39:27 +0000

While Detroit News columnist Daniel Howes gently chides Motown's hometown heroes-- even as they continue to bleed to death all over his carpet-- The Washington Post's Dana Milbank kicks the Big 2.8's CEO while they're down. But good. The WaPo scribe warms-up with a few gentle toe jabs, simply repeating the Big 2.8's testimony regarding their recent travel arrangements. "There's a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands,' Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. 'It's almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn't you all have downgraded to first class or jet-pooled or something to get here?" Fortress Detroit please note: no one mentioned the rejuvenating possibilities of a "convenient plane crash." Oops.

The LA Auto Show Must Go On. Mustn’t It?

Adrian Imonti — Thu, 20 Nov 2008 03:16:39 +0000

Auto shows are intended to be recipes for excess. Take one excessively large convention hall, fill it to capacity with excessive quantities of costly chrome and metal, mix in a few brigades of excessively attractive women, and cap it off with a cadre of excessively awkward journalists (present company excepted, er, we hope) to glorify the results with excessively vapid superlatives. But that was before Carmeggedon and the Great Credit Crunch of ’08 came to town, raining on the parade with an excessively nasty vengeance. Cars are a serious business, and 2008 is looking to be about as serious as it gets.

Editorial: Bailout Watch 220: “We’ll Be Back;” Chrysler’s Dead; Where’s Barack? Here’s the Bill

Robert Farago — Wed, 19 Nov 2008 01:13:10 +0000

The table of Motown's CEOs facing Senator Christopher Dodd at today's Senate Banking, Housing and Urban Affairs Committee Hearing looked more than a little like The Last Supper. If only. When Senator Bob Corker (R, TN) pressed Ford, Chrysler and GM's top suits for a pledge that they won't be back for more money-- should they be granted $25b in taxpayer-backed loans-- only GM CEO Rick Wagoner answered. And then Red Ink Rick waffled, pegging his promise to an economic upturn that no one believes imminent. It was the moment when Motown's begging bowl brigade went seriously south, in that oh-so-public C-Span sort of way.

Editorial: Bailout Watch, German Edition, Vier: Merkel To Opel: “You Wait Until Mommy Comes Home!”

Bertel Schmitt — Sun, 16 Nov 2008 07:44:19 +0000

This weekend's G20 meeting was pretty much a non-event. A Bretton Wood it was not. While German Chancellor Angela Merkel and her Finance Minister Peer Steinbrueck were still in DC, an urgent e-mail was sent to Carl-Peter Foster, chief of GM Europe. Also on the To: line: Hans Demant, head of GM's German Opel subsidiary. They were ordered to get their glutei maximi to Berlin. They were furthermore told to bring Opel's workers council chief Klaus Franz along. Bloomberg reports that the sit down's set for the Kanzleramt, right after mammy comes home and emerges from her Airbus 310 (named "Konrad Adenauer," after Germany's first chancellor, who's busy rotating in his grave).

Editorial: Bankruptcy Watch 189: Poll Position

Edward Niedermeyer — Fri, 14 Nov 2008 22:09:42 +0000

In December of last year, a certain Peter Hart wrote an opinion column for Fairness And Accuracy In Reporting (FAIR). Hart decried the prevalence of polling in political coverage. Not only did he cast aspersions on the accuracy and reliability of polls, he identified them as a sinister threat to no less than "American Democracy." "The more fundamental problem for the press — and for American democracy —" wrote Hart, "is that the media's overreliance on polls encourages a kind of political conversation that prioritizes strategic consideration and tactics over substance." He didn't know how right he was. Today, Peter Hart Associates released the results of a poll of their own, gauging support for an auto industry bailout. Read the results in the Detroit News and you might be surprised. Read the poll itself and the Hart Associates client list, and that surprise should evaporate faster than Mr Hart's ideals regarding polls and their cynical abusers.

Is the American automobile industry worth saving? Pt. 2

Robert Farago — Thu, 13 Nov 2008 19:31:19 +0000

The question presumes that A) Detroit’s ailing automakers ARE America’s automobile industry and B) using our tax money to protect Ford, GM and Chrysler from their own incompetence would benefit the U.S. car industry. Not true, on both counts. And by ignoring the flawed assumptions underpinning the argument for raiding the average American’s wallet, bailout proponents are misleading what they condescendingly call “Main Street.” To which I say no, no, and Hell no.

Is the American automobile industry worth saving?

Ken Elias — Wed, 12 Nov 2008 17:34:40 +0000

Do we need an American automobile industry? And by American, I mean those manufacturers, suppliers, and associated vendors owned and operated by US citizens – red blooded, football-loving, meat and potato types. (Ok, that’s a stereotype, but you know who I’m talking about.) I submit that it’s in our national interest to keep it alive and moving forward. Farago disagrees completely (editorial to follow).

Editorial: In Search of: Honda’s Hybrids

Steven Lang — Tue, 11 Nov 2008 12:35:57 +0000

Once upon a time, Honda represented everything that Detroit was not. Efficient, lean, reliable and most of all, innovative. While The Big Three soldiered-on with the same powertrains for decades on end, Honda constantly renewed, redesigned and released cars that genuinely improved their customer's lives. Profits and widespread admiration followed... until the Honda hybrids came along. Then Honda, long regarded as the technology leader, got its ass kicked by Toyota. What happened?

Editorial: How to Give GM DOE Loans AND Protect Taxpayers

Robert Farago — Sat, 08 Nov 2008 15:48:01 +0000

[Another one from our anonymous bankruptcy lawyer.] I've had a look at the rules for the $25b Department of Energy (DOE) direct loans for development of advanced technology and manufacturing facilities. To qualify, an automaker must prove that it is solvent. Either that or it must meet one or more of the stated tests that relate to financial liquidity-- tests that can be met even if the automaker is insolvent on a balance sheet basis. In announcing its huge third quarter loss, GM has made a statement that suggests that it may not meet the liquidity tests and may not qualify for the DOE direct loans.

Editorial: Why the GM/Cerberus/Chrysler Bailout is bad for taxpayers and doomed to fail without the benefits of a Chapter 11 filing for both Chrysler and GM

Robert Farago — Thu, 06 Nov 2008 17:59:08 +0000

[The following analysis was sent to TTAC by a New York City bankruptcy lawyer who wishes to remain anonymous. It's twice as long as our usual editorial, but I think you'll find it's well worth your time. Thanks to you-know-who-you-are.] Cerberus Capital, a highly secretive NYC-based vulture investment fund, wants the U.S. government and taxpayers to bailout its failed investment in Chrysler and its failing investment in GMAC. Its partner in this raid on the US Treasury is General Motors, a woefully insolvent automobile manufacturer whose CEO is paid $40k each day. Here's why a bailout for GM and/or Chrysler is a bad idea.

Editorial: Things Are Not Always What they SEMA

Edward Niedermeyer — Thu, 06 Nov 2008 10:48:38 +0000

Environmental exploitation is here to stay. Even the threat of industry collapse has failed to take the collagen out of American automaker's eco-friendly lip service. In this they are hardly alone. The litany of firms running advertisements professing their undying love for our Mother Earth, and building concept cars to show their unconsummated devotion, continues apace. 2008 is the first year that the SEMA has set aside a portion of its annual show for green trendiness. It's not a concept that sits well with the show's ethos of excess. But never underestimate the power of hypocrisy. And America's ability to co-opt controversy to unite our society under the banner of the almighty buck. Amen.

Editorial: A Funny Thing Happened on the Way to Bankruptcy…

Robert Farago — Wed, 05 Nov 2008 18:52:51 +0000

Back when the “first” Detroit bailout bill was headed for the President’s desk, U.S. automakers scrambled to justify their $25b call on the public purse. Read the goddamn label, they cried. It’s a LOAN. For building FUEL EFFICIENT CARS. Meanwhile, Michigan Senator Stabenow displayed the political instincts for which she is rightly famous. “It’s about jobs, jobs, jobs,” the Debster decried. Well exactly. And thanks to “jobs, jobs, jobs,” the domestics will get a second, third, fourth and fifth turn at the taxpayer trough. But first, there’s a little business to take care of: Cerberus.

Editorial: So… SEMA’s Boring Eh? Well, MAYBE NOT

Edward Niedermeyer — Wed, 05 Nov 2008 14:17:40 +0000

I waited all day for the fear to take hold. Wandering through a parking lot jammed with alien whips, I wondered when the icy fingers would make contact with my sun-baked scapulae. But it never came. As the desert sun faded to dusk and Las Vegas slowly came to life with humming neon, I couldn't help but take what alcoholics call a searching and fearless moral inventory. What had robbed these ferociously unnecessary monuments to excess of their terrifying power? Were they too much at home in glittering Babylon, little more than tiny microcosms of the glaring titans that loom over the Vegas Strip? Or had some infectious irony (gone pandemic in the face of national malaise) landed in this last bastion of shallow glitz, reducing each glittering status symbol to so much light parody? Or was I (and the creators of these mechanical beasts) simply preoccupied with said malaise, and the seemingly inevitable national transformation which has only now, as I write from my hotel room, been officially realized? Nobody goes to Vegas seriously expecting answers, but was a little existential fear now too much to ask for too?

Editorial: How Porsche NSFWed the Hedge Funds

Bertel Schmitt — Mon, 03 Nov 2008 19:45:44 +0000

So you thought Porsche financed the VW takeover by foisting overpriced floormats and trucks on their well-heeled buyers? Yesterday’s issue of Die Welt, Germany’s conservative newspaper, thinks different. They undug the dirt on Porsche’s takeover-machinations of Volkswagen. It’s a story that makes Cerberus look like a frisky puppy. It’s an account that makes banks and hedge funds look like morons.

Editorial: American Leyland: The GM - Chrysler Bailout That’s Guaranteed To Fail

Justin Berkowitz — Wed, 29 Oct 2008 14:34:49 +0000

After the initial media support for a potential GM-Chrysler hookup (e.g. Jalopnik.com's Ray Wert), the bandwagon began to roll like a snowball down the proverbial mixed metaphor hill, and everybody soured on the deal. We even charted how individual commentators changed their positions and eventually "threw Chrysler to the Wolves." In Monday's New York Times, Andrew Ross Sorkin said that GM CEO Rick Wagoner's continued employment is a "minor miracle." But the commentatorati are still behind the curve re: the government's rumored $10b "intervention" in the GM - Chrysler merger. In the main, they have't even acknowledged that the bailout is happening. That, and the critical fact that it's structurally designed to fail.

Editorial: General Motors Death Watch 203: GMAC Headed for Bankruptcy

Ken Elias — Thu, 16 Oct 2008 14:26:58 +0000

GMAC will go bankrupt. The U.S lending giant is cut off from all lending sources. Smart depositors will flee its small bank (relative to GMAC itself). And its majority owner, Cerberus, won’t save it. It’s a pure liquidation play now-- with the bank going into FDIC receivership, maybe as soon as this Friday. Whether or not all Hell will break loose is an open question, with many answers...

How to Make Money From GM’s Chapter 11

Ken Elias — Wed, 15 Oct 2008 16:26:19 +0000

There are winners in every financial disaster. There are always a few folks-- heroes or scoundrels depending on how they make their profits-- who understand that the Chinese symbol for danger and opportunity are one and the same. GM’s impending bankruptcy (and likely Ford as well) will produce some winners. But not without serious financial and psychological risk to those who seek their fortune from misfortune. For those of you with a robust constitution, here's one potential game plan for GM's C11. First, some background for those uninitiated in the ways of the American automobile business...

Domestic Car Sales and The Riddle of the Sphinx

Andrew Dederer — Tue, 14 Oct 2008 11:38:05 +0000

Whatever the qualifications and diplomas accumulated by auto executives, it’s a pretty safe bet that they failed mythology. Automobile names are a silly subject already, bring in some of the poorer choices, and you have the makings of high comedy.The assorted Zodiac names are harmless, if a bit silly. I’ll accept that no one at Chevy realized that Cobalt is a poisonous metal named for a demonic imp. But really, who green-lighted “Gremlin” back in the day? Odyssey is a cool-sounding name, but really, shouldn’t it be some sort of mid-life-crisis car? Well, maybe it’s a car for a “homer”. What would Oedipus drive? That’s easy: a black 300 with tinted windows cause he’s one baaad.. OK, I’ll stop. But mentioning the poster boy for tragic screw-ups reminds us of something that does have relevance for today’s auto market, the riddle of the Sphinx.

Between the Lines: Jalopnik’s Ray Wert on GM - Chrysler Merger

Justin Berkowitz — Sat, 11 Oct 2008 12:58:45 +0000

Last night, the New York Times “broke” the story that General Motors and Chrysler/Cerberus were discussing a merger. The report lacked only one crucial component: facts. As RF reported in his initial blog on the subject, the story unravels by paragraph two. We learn that the entire story is based on “two people close to the process.” While anonymous attribution is common new industry practice, a story without independent corroboration is a nothing more than rumor— especially when it defies common sense. General Motors’ assertion that they routinely talk to other manufacturers about collaborative efforts doesn’t count. But it does reveal the truth of the matter. [Continued]

America’s Love Affair with Horsepower, RIP

Robert Farago — Fri, 10 Oct 2008 12:09:11 +0000

I was walking the dog the other day when I heard a V8 bellow. I turned around to see a perfect example of a latter day muscle car: a Chevy Silverado pickup truck. I was surprised by my surprise. Although the Northeast represents Middle America’s automotive tastes about as well as Harvard professors reflect conservative political values, I wondered if society has reached the point where the sound of unabashed engine power has become, well, boorish. Has the average American automobile, once a symbol of status, virility and pride, been castrated? And is that a bad thing?

The Great Auto Industry Crisis of 2008: History

menno — Thu, 09 Oct 2008 16:39:15 +0000

Doesn’t the human race EVER learn? Why must we continually have to go through the same pains, trials and tribulations that our parents, grand parents and great grand parents went through? Same with the automobile industry. Same with how our nations handle their affairs-- economics included. Even politics. Forever, politics.

Aporkalypse Now: End Game

Edward Niedermeyer — Sun, 05 Oct 2008 14:29:11 +0000

Hear that sound? It's the fat lady singing a dirge for $7.5b of taxpayer money ($25b at risk in total). It's now as good as spent on a few undeserving automakers. Industry executives and union bosses alike are celebrating their lobbying victory, ignoring their still-dire position for the glorious moment. Congress may have made with the cash in short order, but they aren't rid of the freeloaders just yet. In fact, no sooner had the ink dried on President Bush's signature on HR2638 than industry backers were telling the media what TTAC has surmised all along: $25b is only the first step. In its first story on the new law, the Detroit News reports that “Michigan lawmakers plan to return next year to seek another $25 billion in loans for 2009 and 2010, and more flexibility in how the funds can be used.” And why wouldn't they?

Bailout Watch 72: No Excuses

Robert Farago — Mon, 29 Sep 2008 03:54:57 +0000

Back when The Big 2.8 were fighting the United Auto Workers (remember them?) for contract concessions, the automotive press considered it the battle to end all battles. Once the New Deal was ratified-- courtesy gi-normous union bribes and epic deferred costs-- the pundits proclaimed themselves satisfied. It was time for Detroit to roll-up its sleeves and compete. No more excuses! Well, it's been exactly a year since the UAW OK’ed the GM deal and we’re [still] hearing nothing but excuses. Oh, and the sound of your tax money lighting CEOs' cigars.

Oil Prices

William C Montgomery — Thu, 18 Sep 2008 13:04:09 +0000

Halleluiah! Oil prices are falling. Despite Nigerian revolutionaries attacking Royal Dutch Shell facilities. Despite hurricanes Gustav and Ike disrupting gulf production. And despite all of the hysteria of the last six months trumpeting the end of the era of cheap oil, oil prices have fallen as much as $55 per barrel after being pushed to a peak of $147.27 in July. Once the residual shock to gasoline refining by Ike dissipates over the next couple of weeks, consumers will begin to see a substantial difference at the pump. So is it safe for Americans to recommission their mothballed SUVs and muscle cars? A close look at financial events in recent days indicates otherwise.

Book Review: Traffic: Why We Drive The Way We Do (And What It Says About Us)

Stephan Wilkinson — Tue, 16 Sep 2008 15:50:41 +0000

Driving well has nothing to do with how well we late-apex Oaktree Corner at VIR, how cleanly we rev-match a heel-and-toe downshift or how much we know about F-bodies and Kappa platforms. It's all about simple movement and complex congestion, intuition versus intelligence, myth versus reality. Why We Drive the Way We Do by Tom Vanderbilt is a shot across the bow of the typically clueless, not very competent, generally thoughtless, surprisingly unsafe, unjustifiably over-confident average driver. In other words, you and me.

Aporkalypse Now: The Pick Of The Litter

Edward Niedermeyer — Thu, 11 Sep 2008 13:58:22 +0000

The great Detroit bailout of 2008 will not be debated in terms of economics. Free market considerations will take a back seat to the “consensus” on what’s good for our “national interest.” But Detroit is just one among many industries now nuzzling towards the warm embrace of a federal bailout. So what makes the American auto industry more equal than say, the mortgage sector or the airline industry? Not much, as it turns out.

Bailout Watch 36: Elias Votes Nay

Ken Elias — Wed, 10 Sep 2008 14:23:43 +0000

Selling eight brands’ worth of vehicles under the “Employee Pricing for Everyone” banner does nothing to reassure jaded “I won’t ever buy domestic” car shoppers that GM isn’t Wal-Mart. Even so, GM makes some great-- well very good anyway-- rolling stock. But a quick bailout from the Feds won’t fix the cash-burning automaker in time for consumers to discover this fact. It will simply prolong The General’s "we'll muddle through" mess until the next crisis. What GM’s North American ops really need is a full, head-on crash into the wall of bankruptcy, followed by private DIP (debtor-in-possession) financing. Meanwhile, it’s a real Saab story.

Bailout Watch 32: Farago Votes Nay

Robert Farago — Tue, 09 Sep 2008 13:49:01 +0000

Detroit refuses to contemplate the only possible savior for their broken businesses: bankruptcy. Unless Chrysler, Ford and GM use Chapter 11 protections to kill products, spike brands, close factories, “renegotiate” labor agreements, terminate dealers and generally reinvent themselves, they will continue to die by a thousands cuts. The automakers’ pride-- and their belief that “no one buys cars from a bankrupt automaker”-- prevents this radical move. So, instead, they’re pursuing a federal bailout. Only they don’t call it that. And therein lays the seeds of their final destruction.

Aporkalypse Now: The Chrysler Comparison

Edward Niedermeyer — Tue, 02 Sep 2008 11:49:00 +0000

Discuss Detroit's bailout plans with one of its well-informed backers, and they will inevitably bring up the Chrysler bailout of 1979. Chrysler's near immediate return to profitability after receiving low-interest government loans is considered proof that U.S. government intervention in the American auto industry can work. After all, Chrysler paid back all its federal loans seven years early. But this comparison doesn't hold water. If anything, the bailout of '79 points out the many reasons for opposing the next big Detroit giveaway.

Aporkalypse Now: The Bailout Boys

Edward Niedermeyer — Thu, 28 Aug 2008 11:07:47 +0000

The auto industry's $50b bailout plan should, by all accounts, be a fairly controversial issue. Detroit wants a re-do after chasing SUV profits off a cliff, but can't even guarantee that $50b will be enough. So why are industry pundits so unified in their support for the industry plan? To be fair, there is some opposition to the bailout plan among the chattering classes. Curiously it seems to be limited to John McCain, SUV-haters and everyone on Wall Street. Oh yeah, and TTAC. Meanwhile every buff-book columnist and "car-guy" commentator worth his junket airfare is parroting the same two basic arguments. First: it's not a bailout. Second: America, Fuck Yeah.

What Grinds My Gears

Justin Berkowitz — Tue, 26 Aug 2008 19:54:39 +0000

Psychologists tell us it's important to vent, so every so often I have to clear the air and discuss what really grizzles my gristle. I can't take it anymore, and it's possible-- even likely-- that I'm not alone on this. So, without further ado, you know what really grinds my gears?

Going Down

Andrew Dederer — Tue, 26 Aug 2008 16:15:42 +0000

Montagues vs. Capulets. Crips vs. Bloods. ‘Vette vs. Porsche. How do I plead? Nolo contendere. While I technically qualify as an "auto journalist," I'm a lot more interested in the companies that build the cars than in the cars themselves. I just don't have quite the same level of fire as some of my fellow writers, so it's pretty impossible for me to be much of a "car snob". Beer is a different matter.

Bail This!

Robert Farago — Fri, 22 Aug 2008 18:45:11 +0000

In George Orwell's Animal Farm, the farmyard creatures create seven commandments to ensure harmony and protect against human cruelty. The seventh commandment, "all animals are equal," eventually gets a rider: "but some animals are more equal than others." For most, it's satire. For others, it's a way of life. To wit: federal politicians, whose interest in special interests far outweighs their concern for the "average" voter-- if only because taxpayers are too busy earning money to pay their taxes to notice how the cash is being wasted. Except when they're not. The plan to bailout Detroit's automakers looks set to be one of those times.

Double Lutz?

Michael Martineck — Thu, 21 Aug 2008 19:03:50 +0000

What if GM Car Czar Bob Lutz is the kind of hero General Motors needs, hurling Volts from high atop the Ren Center to stave off Chapters 7 and 11? What if he's fighting the bureaucratic beast from within, under the guise of corporate tool, a double agent, if you will? Could Maximum Bob be one of the good guys? Double Lutz?

Taking Stock: Cars Rule and Trucks Drool in July’s Inventory

Frank Williams — Tue, 12 Aug 2008 14:50:44 +0000

The inventory levels and average sales per franchise (SPF) numbers as of August first are out and almost everyone looks good on the car side of the inventory sheet. Trucks are a whole ‘nother matter, though. Dealers are doing whatever they have to-- including half price sales-- to move body-on-frame trucks but inventory is still piling up. Just how bad is it? Well, let's take a look...

Guaranteed Trouble

Andrew Dederer — Thu, 07 Aug 2008 18:06:50 +0000

With the odds of at least one of The Big 2.8 filing for Chapter 11 rising, the analogists are crawling out of the woodwork. While the multiple and varied demises of the [now deceased] British Motor Industry make for interesting reading and some neat analogies, the truth is that such any such comparison is apples to oranges, or, more accurately, chalk and cheese. The first major point of divergence is the level of failure. Relatively speaking, the boys from Detroit haven't even BEGUN to fail.

EcoBoost: SVO Redo?

Sajeev Mehta — Tue, 05 Aug 2008 19:02:13 +0000

During the first energy crisis, pundits predicted the death of the American V8. In those dark days (as opposed to these dark days), Detroit was desperate to supply an alternative to the gas-gargling engines they'd planted under the hood anything that moved. They developed a few dogs promising V8 performance with the economy of a cylindrically-challenged motor, with much talk of mechanical miracles to follow. History repeats itself; Ford is once again trying their luck with EcoBoost turbo-four technology. Once again, they could be barking up the wrong tree.

The Dangers of Sciontology

Robert Farago — Mon, 04 Aug 2008 17:17:59 +0000

With great size comes great stupidity. General Motors' fall from grace-- from world's largest and most profitable company to bailout bait-- illustrates the point perfectly. And while it's about thirty years too early to suggest that GM's replacement will fall victim to the same size-related entropy, there are already hints that the profits powerhouse known as Toyota is capable of massive miscalculations. I speak here not of the full-size Tundra pickup, but of Scion, the brand that should have never made it out focus group.

ChryCo CEO Bob Nardelli’s Email to Employees V2: “Progress on all fronts”

Robert Farago — Sat, 02 Aug 2008 19:21:19 +0000

If brevity be the sole of wit, Chrysler CEO Bob Nardelli's latest email to his troops is a particularly humorless e-missive. Although ours is to question why (whether they do or die), it's the weekend. So I'll leave the parsing to TTAC's Best and Brightest. Suffice it to say Bob's commemoration of Cerberus' Chrysler purchase is a curious blend of woo-hoo, uh-oh and hey ho, let's go! We'll be sure to update our Chrysler Suicide Watch soon. Meanwhile, here's the text in full...

Buzz Hargrove: Still Full of Piss and Vinegar (Part 2)

Samir Syed — Thu, 31 Jul 2008 12:06:00 +0000

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?

Buzz Hargrove: Still Full of Piss and Vinegar (Part 1)

Samir Syed — Wed, 30 Jul 2008 15:14:57 +0000

Buzz Hargrove describes himself as "full of piss and vinegar." Well exactly. The combative Canadian has been instrumental in his country's union movement since 1964, when he represented a couple of thousand employees in Chrysler's Windsor plant. Now, having announced his 2009 departure from the Canadian Auto Workers' (CAW) presidency, Hargrove's enthusiasm for the labour movement remains undimmed. "I still love it," he says. "If I were 55, not 65, I'd be doing this for another 10 years." That said, Hargrove doesn't think Ford, GM or Chrysler will last that long.

The Truth About Leasing

Ken Elias — Tue, 29 Jul 2008 18:27:47 +0000

It comes as no surprise that GMAC and Chrysler Financial no longer offer leases in North America. Ford Motor Credit now joins the "no lease" club by pricing its leases sky high making them unaffordable. Why now? It's simple; the captive finance arms can't get the funding to support these transactions due to the deteriorating credit of the finance arms and their parent automakers.

Forbidden Fruit

Paul Niedermeyer — Mon, 28 Jul 2008 15:56:56 +0000

In The Land of the Free our choice of automobile brands is highly limited. Well, relatively. Dozens of European import brands have long fled our shores, curtailing our automotive freedom of expression. What happened to all those storied marques, such as Alfa-Romeo and Peugeot? And what’s keeping American pistonheads from once again enjoying the forbidden fruit of Europe’s exotic brands?

Ford Death Watch 46: The Toyotafication of Ford

Stein X Leikanger — Fri, 25 Jul 2008 13:12:27 +0000

At one time, the nations of Europe took great pride in their cavalry divisions, horses and men numbering tens of thousands. Then the Gatling gun made its debut, and all those horses and all that equipment became sausages and bric-a-brac. And so it is with the SUV. The Gatling gun of rising gas prices has laid waste to The Big 2.8's armies, throwing their plans into complete chaos. To its credit, Ford is attempting to regroup, rearm and re-engage. So how's it going?

As Go SUV Buyers, So Goeth Detroit

Andrew Dederer — Thu, 24 Jul 2008 14:51:46 +0000

Since this summer's sales slump, Detroit's stopped bitching about the so-called "perception gap." That's the alleged difference between consumers' idea of their vehicles' quality-- relative to their Asian rivals-- and "the reality." Suddenly, the concept is a lot less important than finding something, anything fuel-efficient to sell. Besides, there's a far more catastrophic "gap" in play, one that threatens Motown's very survival: the "gap" between what a SUV is worth new and its value come trade-in time.

The Camaro: GM’s Past, But Not Future

Justin Berkowitz — Wed, 23 Jul 2008 20:44:40 +0000

At 4pm Monday, GM pulled the wraps off the new Chevrolet Camaro. I didn't watch the live press conference. No surprise there. Literally. Everything about the car had been leaked in the week leading up to the curtain pull: exterior, interior, engines and transmissions. Other than that, only two numbers held any mystery: price and zero to sixty sprint times. GM only told us the latter. I'm excited, as a car fan. As an armchair CEO...

The World Car is Not Enough

Paul Niedermeyer — Wed, 16 Jul 2008 14:16:45 +0000

Ford’s survival may depend on the U.S. success of the European-designed Focus and Fiesta. An embattled GM agrees with FoMoCo's "world car" strategy, talking up its "global platforms." Meanwhile, Honda and Toyota’s dominant Camcordias were designed predominantly with the North American market in mind. Does success in the brutally competitive American market demand specifically tailored designs? Or are “world cars” the salvation to Detroit’s passenger car woes?

Detroit’s Silver Lining

Andrew Dederer — Mon, 14 Jul 2008 16:40:26 +0000

Things are bad for Chrysler, Ford and GM. The Big 2.8 are burning precious cash, shedding valuable market share, choking on unwanted trucks, attempting to nurture (or excise) damaged brands and outmoded models, and struggling to bring relevant products to market. Bankruptcy looms large. And yet, there’s a silver lining to the recent, calamitous downturn in the U.S. new car market. But before we reveal the sliver of hope, let’s check in with the main engines of their destruction: Honda, Nissan and Toyota…

By The Numbers: What is So Rare as a Truck Sold in June?

Frank Williams — Wed, 09 Jul 2008 17:37:40 +0000

Everyone in the car biz knows that June was a catastrophic month for the U.S. new car market. Total sales dropped by 18.3 percent. The big change this time 'round: it wasn't just light trucks that took it on the chin. Car sales received some body blows, as well. If you're an auto industry exec [still] living in denial, it's best to stop here. If not, read 'em and weep. [NB: As per TTAC policy, sales numbers not adjusted for "sales days."]

Ford’s Déjà Vu Moment, Part 2

Paul Niedermeyer — Thu, 03 Jul 2008 11:47:52 +0000

In the nineteen-eighties, Ford CEO Donald E. Petersen's recipe to save Ford from near-bankruptcy was "higher quality products... emphasizing smaller, more efficient cars." It worked, propelling Ford past Chevrolet to world-record profits. Current CEO Allan Mulally is banking on essentially the same ingredients: de-emphasize trucks and rejuvenate the car palette with global platforms largely designed in Europe. Ford's future, perhaps its very existence, is riding on it. Is the recipe still golden?

Ford’s Déjà Vu Moment, Part 1

Paul Niedermeyer — Tue, 01 Jul 2008 19:29:54 +0000

Oil prices have just hit record highs. Talk of recession is in the air. Ford's line-up of bloated, heavy vehicles is piling-up like cord-wood on the dealer's lots. The only car selling: its "Americanized" global compact. Ford stock is in the toilet and bankruptcy rumors are swirling. The top exec hired a year earlier is intelligent, unassuming and straight-talking. He commits Ford to building "higher quality products with stronger customer appeal... emphasizing smaller, more efficient cars." Ford in 2008? No, it's 1981.

TTAC’s Incredibly Useful Guide to Saving Gas

Robert Farago — Wed, 18 Jun 2008 15:16:16 +0000

High gas prices are a bit like the weather: everyone’s complaining but no one’s doing anything about it. Actually, that’s not true. At the sharp end, consumers are buying more fuel efficient vehicles. They’re driving less. We’ve even heard talk of gas-conscious automobilists driving more slowly. Now THAT’S serious, and, to mind, reprehensible. So, while the mainstream media is full of helpful advice on how to use less gas (e.g. take those gold bars out of your trunk), I hereby present TTAC’s unconventional guide to saving fuel this summer.

TTAC Doesn’t Do Motorsports - Except When We Do

William C Montgomery — Sat, 14 Jun 2008 12:52:10 +0000

Few things in this world are as dramatic as the start of a NASCAR race. War, for instance. Or the launch of a Saturn V rocket. The crowd rises from their seats in anticipation. The starter stands in his box with flag in hand as the bestickered phalanx of cars rounds turn four. After the pace car scurries from view into pit lane the violence of dozens of highly tuned V8 engines is unleashed in unison. You can sense the invisible force of the sound approaching. Like others, I reverently remove my radio headphones so that I can fully ingest the aural assault. I feel the high frequency vibration in the aluminum stadium seats beneath my feet. And then it hits – a sound so big I hear it with my entire body. You don’t get that on TV.

Saturn’s Sad Legacy: Nothing

Adrian Imonti — Mon, 09 Jun 2008 16:55:50 +0000

Saturn is dead. Despite a thoroughly refreshed line-up-- including a mild hybrid, a Lambda-dancing CUV, a sexy sports car and a cute ute-- the brand can’t get wood. In fact, Saturn’s sales are the very definition of flaccid. Year-to-date, they fell 19.9 percent. In May, sales sank 32.7 percent. In this process of final dissolution, the once autonomous upstart GM brand has become an irrelevant Opel outpost. Saturn’s Spring Hill, Tennessee factory is now in Chevy’s hands. Plastic body panels and unique designs have been swapped for rebadged leftovers from the GM parts bin. Saturn’s slow homicide is more than a shame. It offers a discouraging glimpse into General Motors’ dysfunctional culture.

Fixing A Hole

Andrew Dederer — Thu, 05 Jun 2008 21:38:05 +0000

May’s new car sales numbers are in and things are looking bleak for The Big 2.8. Their corporate Spinmeisters can blame a down economy and sky-high gas prices all they like, but sales drops well into the double digits are never good news. Market share declines aren’t exactly glad tidings, either. That said, truth be told, Black Tuesday is actually a good sign. It shows that the domestic automakers have finally “accepted” the market. Whether they’re too late is another question entirely.

The Truth About You

Michael Martineck — Tue, 27 May 2008 14:17:37 +0000

There are two kinds of people: people who split the world into two kinds of people and people who don’t. I usually consider myself part of the latter group. However, after spending a few years with The Truth About Cars, I’ve become fascinated by the variety of opinions from readers who share so much in common. Type in anything to do with the Prius and watch the battle lines form. Last year, The Cambridge Strategy Center published some ideas that go a long way towards explaining why this website isn’t always unified, taken as gospel and/or followed like law. It seems there are two kinds of car people.

The Lexus LF-A is a Mistake

Robert Farago — Fri, 23 May 2008 15:48:34 +0000

The fastest way to kill an automotive brand: sell a POS. The bloodletting caused by a brand new clunker can be spectacular. Anyone remember the 1981 Cadillac Fleetwood V-8-6-4? How about the Cimarron? It has taken Caddy more than 20 years to climb back from that double debacle if, indeed, they have. But there’s another, slower and more insidious way to ruin a storied car brand: distraction. When a carmaker builds a vehicle that muddies the marque’s core message, it mortgages its future. To wit, the Lexus LF-A.

The Truth About Detroit’s Export Dreams

Michael Martineck — Thu, 22 May 2008 12:49:22 +0000

Unlike arm wrestling or Martini making, when it comes to currency, there’s an upside to being weak. Especially if you are, say, an American car manufacturer fighting pesky foreigners. As the value of the dollar falls overseas, the price of American-made cars and trucks falls as well. Theoretically, a lower price should mean increased demand. So, is the declining U.S. dollar the cocktail Detroit needs to lift their spirits?

Between 2002 and 2007, American auto exports doubled, from about $25b to $50b. Over the same period, imports grew to $150b (they’ve leveled off for the last 18 months). The bad news: exports from General Motors, Ford and Chrysler combined equals a third of the vehicles the US imports. What’s more, roughly half of The Big 2.8’s exports are sent to Mexico and Canada.

The Truth About High Gas Prices, Or How I Learned to Relax and Pay $67 to Fill Up My SUV

William C Montgomery — Mon, 19 May 2008 16:49:57 +0000

Why is gasoline so damn expensive? The mainstream media has rounded up the usual suspects. They demonize oil companies (for excessive profits), lambaste environmentalists (for blocking domestic drilling and refining), and sock it to speculators (for fear mongering over supply). Simply put, the current crisis is a speculative bubble whose impact to American consumers is exacerbated by domestic economic conditions. I fully expect crude oil will trade below $80 a barrel in the not too distant future. Meanwhile, let’s tackle this one myth at a time.

Buick and the Detroit Zombies

Andrew Dederer — Fri, 25 Apr 2008 20:44:15 +0000

There’s an often-repeated statistic: U.S. Buick dealers sell just four cars per dealer per month. It’s true, but c’mon; that was last year’s totals. In March, Buick sales slipped to three cars per dealer. Thanks to TTAC’s Frank Williams, I’ve had a chance to examine the exact dealer and sales stats for the Beyond Precision people. Having deconstructed the data, I can declare that this seemingly absurd three cars a month number, while strictly true, isn’t the whole story. The “whole story” is much worse.

Ford Death Watch 44: Wither Volvo?

Steven Lang — Mon, 21 Apr 2008 16:46:17 +0000

My next door neighbor is one of those classic 'car traders.' He buys, fixes, drives, fixes, drives, fixes, etc. When the repairs finally get to be too much time and hassle, he sells the car. I've seen a lot of nameplates come and go through his driveway. Hondas and Nissans stay for a while. Saabs require constant weekend tinkering. And Volkswagens need more plastics than a Barbie factory. Only one brand has stuck around, for nearly a decade now: his family Volvo wagon. And therein lies the tale.

The Inevitable

jurisb — Sat, 12 Apr 2008 12:32:41 +0000

I am comfy, reclining in my chair. It’s not a power-actuated Connolly-wrapped throne, but it supports me well enough, like the bench seats of American cars of yore. It’s so easy, sipping a coffee, commenting on the honour of an automotive world passing by. I’m enlightened by Edison’s accomplishment, a light bulb born of endless attempts, scribbling down the wretched lifestories of Detroit, seeing the sad eyes of jobless people. I can not print down my tears on the keyboard, nor teleport the saltiness of its character.

The 2008 Dallas Auto Show. Yes, Dallas.

William C Montgomery — Wed, 09 Apr 2008 12:44:50 +0000

My personal highlight of Last year’s Dallas Auto Show was watching Sajeev work his magic on GM’s regional marketing director. He’d met her at the Houston Auto Show some weeks earlier, where they’d had a productive conversation. Apparently the Powers That Be within GM didn’t think that was a good idea. She was talking gaily with other scribes when we approached her. When she turned to greet us, her face darkened the moment she recognized the dashing Mr. Mehta. Visibly agitated, she hissed, “I can’t talk to you,” spun on her heels and scurried away. After a moment of stunned silence I asked TTAC’s lonely lothario, “Do you have that effect on all women?”