GM Fire Sale Continues: RenCen for Sale
By Robert FaragoOctober 7, 2008 - 9 views
With a conflagration raging through GM’s cash hoard, with enough debt and ongoing obligations to bury Bolivia, with its credit rating in the proverbial toilet (CCC), with the North America market fire hosing the company’s books with red ink, GM’s access to operating finance is, shall we say, “limited.” To feed the flames, GM’s already sold just about everything that’s not nailed down: subdivisions, 51 percent of captive financier GMAC, land, factories, shares in foreign automakers, etc. It’s not enough. Three months ago, GM CEO Rick Wagoner announced he’d raise $15b in cash through additional asset sales. The Detroit News reports that the company’s Renaissance Center headquarters is now on the block. “General Motors Corp. wants to borrow about $500 million from one or both of Detroit’s pension funds to refinance the Renaissance Center, the automaker’s iconic world headquarters, in a move that could pump cash into the financially strapped company’s coffers. GM officials are scheduled to make a preliminary investment pitch Thursday to the city’s Police & Fire Retirement System and are trying to schedule a meeting with the pension fund representing general city employees.” If not that, RenCen’s for sale. Does it strike you as odd that GM’s hitting-up the unions instead of banks or real estate investors? Does this have anything to do with the United Auto Workers’ forthcoming VEBA payment? Anyway, at $500m, GM’s looking at a $201m loss on the deal. In theory. “We’re not going to do it because we don’t have that kind of money,” said George Orzech, police and fire pension board member. “There’s no interest that I know of, but stranger things have happened.”
Posted in Chapter 11 | New Cars | News Blog | no comments 
Question of the Night: Should TTAC Send Edward Niedermeyer to SEMA?
By Robert FaragoOctober 6, 2008 - 243 views
Edward Niedermeyer and I had a chin wag this evening. I was performing my “atta boy” management duties, complimenting our correspondent for his literary evolution, from calling people assholes to explaining why they’re assholes (a distinction without any diffidence.) A thought occurred to me: now that Niedermeyer The Younger has learned to curtail his automotive animus, he might like to cut loose a bit, and blog from the SEMA aftermarket show in Las Vegas. Needless to say, Eddy’s game. But the last thing I want on this site is 26″ wheel product reveals. “Have you ever dropped acid?” I inquired. Eddy’s response is on a need to know basis. Meanwhile, the question bedeviling me at this late hour: can our bad-ass blogger channel his inner Hunter S. Thompson without devolving into a pastiche? And would you, our Best and Brightest, like to read the results of this literary experiment?
Posted in News Blog | 9 comments
GM To Curtail New Product Plans– And Run Out of Money in 2010
By Robert FaragoOctober 6, 2008 - 830 views
OK, the credit analyst presenting the timeline works for gimmecredit.com. Take that as you will. But Shelly Lombard has done the math (for BusinessWeek): “GM had $21 billion in cash at the end of June. The company has a further $5 billion in available credit and cash and plans to save $10 billion from cost cuts. Assuming GM can also tap $5 billion to $7 billion in federal loans that the federal government has approved, GM has up to $21 billion in excess liquidity on top of the $14 billion it needs to run the company… Given GM’s cash-burn rate of more than $3 billion a quarter, the company has five to seven quarters before it gets down below the bare minimum it needs to buy parts and keep factories humming, Lombard says. GM’s best bet is to tap the government’s loan program and hope the market turns up.” Not to mention hunkering down. Oh wait, that too. “Several sources inside the company say GM is looking at product delays to save cash, hoping the company can weather the weak economy and liquidity crisis and make it through to 2010. All but essential programs are at least getting a review, the sources said. Even the next-generation Chevrolet Malibu could be on the table. GM wants each of its cars to get a makeover every 5½ years, but it may have to stretch that to 7½ years for some models to stay in the black. A GM spokesman says the company is delaying some product programs but that nothing major has been held up yet.” Stay in the black? What black? Anyway, that’s not exactly how I remember it…
Posted in Chapter 11 | News Blog | 10 comments
Delphi Headed for C7 Liquidation
By Robert FaragoOctober 6, 2008 - 477 views
As Edward Niedermeyer reported earlier today, the re-organization plan for Delphi pegs the bankrupt parts maker and former GM division’s worth at $7.2b (down from $12.8b). Delphi’s “valuation” is ridiculous; the company is still highly dependent on GM’s biz. Banking on GM is like entrusting a quasi-governmental lender to Rep. Barney Frank. To wit: today’s market cap for General Motors was under $5b, after the American automaker’s stock tumbled to its lowest level ($8.24 a share) in more than 54 years. Bottom line: Delphi is unlikely to emerge from bankruptcy; it will be liquidated. Meanwhile, let’’s hope misery loves company; Fitch Ratings downgraded Ford’s credit to GM’s sub-basement level: CCC. Oh, and Fitch dropped Ford Motor Credit to the same rating (explaining Mazda’s decision to cut bait and fish with their own auto loan sources). Bottom line: the credit crisis is hitting GM and Ford (and Chrysler) at both the sharp end (auto loans) AND the macro-level (access to working capital). The center will not hold.
Posted in Chapter 11 | High Finance | News Blog | 2 comments
Detroit Free Press Tries to Call Ford Flex A Flop; Fails
By Robert FaragoOctober 6, 2008 - 937 views
The Detroit Free Press’ Mark Phelan is one of Motown’s most reliable cheerleaders. So it was no surprise when Phelan gushed all over the new Ford Flex back in August. “The 300,000-plus people who used to buy Ford Explorer SUVs every year are the group who will decide whether the Flex experiment pays off. If 80,000 to 120,000 of them year plunk down $35K or more for the Flex, Ford’s future immediately starts to look brighter.” Notice the if? Ah, but then… “It should.” Anyway, big whoop. Phelan does this shit for a living. But why did fellow Freep Sarah Webster shiv Phelan in this morning’s paper? “Boxy Ford Flex isn’t selling as expected in brutal market” is the most ambivalent mea culpa I’ve ever encountered (other than Richard Nixon’s remarks to David Frost). Phelan’s fellow scribe starts by cataloguing the carnage. “Earlier this year, {Ford marketing maven Jim] Farley said Ford hoped to sell between 70,000 and 100,000 of the Flex crossovers annually. At its current selling rate, though, Ford would sell about 24,000 a year.” Then she recaps Phelan’s positive review, and other positive reviews, and customers’ positive reviews. So what gives? Bad marketing! Cue Farley’s black-is-white PR thing: “Farley said the market conditions are so bad that it’s tough to tell how the Flex would be selling otherwise. Putting aside the lower-than-expected sales volume, Farley said the Flex has actually been a success.” In other words, the operation’s a success but the patient’s dead. Focus people! Focus!
Posted in Media | News Blog | Sales | 23 comments
Question of the Day: What’s the Last Car that Took Your Breath Away?
By Jonny LiebermanOctober 6, 2008 - 1,162 views
If you like cars, it’s happened to you. There you are, minding your own business when suddenly a car rolls up and you start gasping. You’re suddenly 8-years-old and screaming, “DADDY! FERRARI!” Now, living in Los Angeles like I do, this happens to me fairly frequently. I mean, make an errant left hand turn and you’re next to a fully restored Jaguar Series I E-Type. In fact my girl and I were cruising through Malibu in the 1981 Corvette when at a single red light there was a burgundy E-type, a BMW 850 and a Dodge Viper. Though, the E-type was orders of magnitude more breathtaking. But, this is by no means a Southern California occurrence. I remember years ago walking out of a meeting in Montreal and there was a glossy red Ferrari 360 parked on the street. It was stunning. Just… I couldn’t believe the curves. Then, on the way to dinner I came across an orange 1975 (or so) Lamborghini Countach. Probably an LP400 .You know, the OG design before the wings and strakes made it into a Miami coke dealer stereotype. It was just perfect, especially sitting on the cobblestones of Côte Saint-Luc. The other day I was driving through Beverly Hills (don’t ask) and facing me, trying to make a left turn, was a white Maserati GranTurismo. It was as if time slowed down and there were mutli-colored refrigerators zooming all around this piece of fine art. But, the last car to totally disarm me attacked this very morning. I was exchanging a 2009 WRX for my 2006 WRX and there was a 1970 Porsche 911S. Completely stock. Black with a black interior. I even got to open the door and smell the leather. Magnificent. And check this out — the 911S used to belong to none other than Freeman Thomas. And he went over it with a very fine toothed comb. You?
Posted in News Blog | Question of the Day | 72 comments
Daily Podcast Lieberman Edition: Alfa 8C is Sold Out for U.S.
By Justin BerkowitzOctober 6, 2008 - 592 views
Duh.
Have your volume up for the vid.
Posted in Daily | Daily Podcast | News Blog | Podcasts | 4 comments
Daily Podcast: Jalopnik’s 10 Best Fall Weekend Trip Cars. Or Not.
By Justin BerkowitzOctober 6, 2008 - 836 views
Originally posted (without my snarky italicized comments) at Jalopnik.
10. Mazda MX-5 Retractable Hardtop
Starts off well. If you pack very light.
9. Jeep Wrangler Unlimited
Oh, this’ll be just great on the highway. I thought they said weekend trip, not off-roading camping expedition.
8. Maserati Gran Turismo S
Might as well add a Bentley while we’re at it.
7. Volkswagen Tiguan
Nope.
6. MINI Cooper Clubman
Do you have so much stuff it won’t fit in a Cooper with the rear seats folded?
5. Ford Ranger FX4
This is a joke, right?
4. Mitsubishi Lancer Evo X
I’m sure my girlfriend would love a 5 hour drive with me keeping one of these on a rolling boil.
3. BMW X6
I’d rather not send the villagers running.
2. Subaru Outback Limited 2.5 XT
Makes the most sense out of any car on the list.
1. Porsche 911 Targa 4
Sure, and do me a favor, fill the trunk with diamonds.
The Berkowitz list (and they’re all under $50k): Subaru Outback 2.5 XT, Dodge Challenger SRT8, BMW 335i, Ford Explorer, Ford Flex, Mazda MX-5, Volkswagen Jetta TDI or 2.0T, Saab 9-3 Convertible, MINI Cooper S, and Suzuki SX4.
Posted in Daily | Daily Podcast | News Blog | Podcasts | Whiskey Tango Foxtrot | 27 comments
Delphi Re-Ups The Re-Org
By Edward NiedermeyerOctober 6, 2008 - 384 views
Delphi has been lingering in Chapter 11 for nearly three years now, with little relief appearing on the horizon. Automotive News (sub) reports that the GM spinoff has filed a new reorganization plan, which appears to more realistically reflect its predicament. In the new filing, Delphi’s worth is estimated at $7.2b, down significantly from the $12.8b value the firm was said to carry at the beginning of this year. With its only investor, Appaloosa Capital, having bailed, Delphi needs to raise $3.75b in order to emerge from bankruptcy. But that number doesn’t reflect the fact that the new plan calls for GM to make a $10.6b investment in its parts maker, including taking over $3.4b worth of pension obligations. In other words, GM must sink more money into Delphi than the part supplier is worth or risk a supply shortfall since other firms won’t touch Delphi’s GM contract pricing. And it’s not like GM has tons of cash just sitting in the bank to bailout its spinoff. This is where GM’s cash burn and supplier cost-shuffling come together to put the General between a rock and a hard place. There’s no word on if, when, or how GM is going back its struggling supplier, but a hearing is planned for October 23 and a final ruling should arrive by December 17. GM needs $10.6b by then to prevent its entire business from crumbling. Otherwise, Delphi goes to Chapter 7 while GM begins a bankruptcy court adventure of its own.
Posted in High Finance | Industry | News Blog | Suppliers | 4 comments
Twenty-Five Billion Dollars In Bad Auto Loans
By Edward NiedermeyerOctober 6, 2008 - 636 views
A study by Experion Automotive reported in Automotive News (sub) shows that nearly $25b in US auto loans are currently delinquent. In the second quarter of 2008, some 2.48 percent of all auto loans were 30 days past due according to the study, and .75 percent are 60 days past due. Both number are up noticeably compared to last year. All in all, there’s little in the way of encouraging news in the Experion report. Only the percentage of delinquent loans made to those with good credit scores (680+ on the 300-800 scales) is actually down, dipping to 56.5 percent compared to 61.1 percent last year. Well, that explains why auto loans are now considered “distressed assets.”
Posted in High Finance | Industry | News Blog | 4 comments
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