Was it luck? Was it hard work? A mixture of both? After escaping a near collision with fate in Iwaki, and not even getting its feet wet in Thailand, Nissan emerges as the most successful after the trials brought on by the unholy triad of tsunami, flood and yen. We said this a while ago when we compared 2011 production numbers of Japan’s majors.

Today, we go to Yokohama to check the balance sheets.

In the most unceremonious way, Japan’s second largest automaker Nissan today stands out as the country’s most profitable. On the 8^th floor of Nissan’s glitzy building by the Yokohama waterfront, there is no arm-waving Carlos Ghosn today who fills the room with French-accented quotables. In his stead, Nissan fields a nondescript Nissan’s Corporate Vice President, Joji Tagawa, to present thgwe quarterly results.

The bespectacled  VP with chin fuzz and spiky hair rattles off words and numbers as if his life would depend on the speed of their delivery. It does not matter: The numbers could have been delivered by a silent nun, they still would have conveyed their punch:

Both in the October-December quarter, and also in its guidance for the results of the fiscal year which ends on March 31^st, Nissan trounced Honda and Toyota. October-December, Nissan’s  operating profit was 118.1 billion yen ($1.54 billion). Net profit amounted to 82.67 billion yen ($1.07 billion.)  Even better, Nissan sticks with its profit forecast for the fiscal that calls for a net profit of 290 billion yen ($3.8 billion).

Post water torture, Nissan appears to be in the best shape of all.

While Toyota and Honda had to scrounge for cars and parts, and still are supply constrained to some extent, Nissan rebounded quickly and gained market share around the world. Toyota lost 240,000 cars to the Thai flood, Honda’s plant in Thailand was submerged for months and is a near total write-off. And Nissan? Only 33,000 units went down the drain.

Now, let’s see whether they can keep it up.

Today, Toyota announced its October-December 2011 results to reporters packed into its basement meeting room in Koraku-en, Tokyo. Like most Japanese companies, Toyota is on a fiscal year that spans from April to March the following year. The reporting quarter was the third of the 2012 fiscal. It was surprisingly good. From October to December, TMC had an operating profit of 149.7 billion yen ($1.95 billion,) up 51 percent to from a year earlier. It gets better …

First, the room has to endure a speech that must have been written in Excel, rattled off by Toyota’s Senior Managing Officer Takahiko Ijichi (right.)

His Managing Officer Shigeru Hayakawa must have read the speech before. He uses the time to nod off concentrate intently. High suspense: We hear complaints that the government had taken a bigger bite of that profit due to “tax reform,” slashing the net profit to 80.9 billion yen.

Hayakawa-san continues to listen intently. We hear that when the fiscal ends on March 31, TMC will likely have an operating profit of 270 billion yen ($3.5 billion), and a net profit of 200 billion yen ($2.6 billion.) “The other guys are doing much worse,” whispers a reporter next to me. Indeed, today the Nikkei dips on announcements that other Japanese companies will report rotten numbers three months from now.  Less than a year ago, large parts of the country were smashed to bits, what do you expect? I definitely expected losses.

What really puts a fire under the room`s imagination is when Ijichi talks about how resolutely Toyota has been and is digging itself out if the triple whammy caused by the Tohoku tsunami, the Thai flood, and the towering yen.

Suddenly, what had sounded like an ambitious plan, namely that Toyota wants to raise its 2012 global sales by a whopping 21 percent to 9.6 million, begins to sound believable.

For 2012, Ijichi cites projections of the Japanese Auto Manufacturers Association JAMA that put the total Japanese market at 5 million this year. He thinks that it is not unreasonable when “we expect our market to be 1.63 million units including minivehicles.” For the Toyota/Lexus brand alone.

In the U.S., Toyota conservatively projects the total market to be 13.6 million, and, says Ijichi, considering that “we are going to introduce 19 models this year, we are planning to sell 1.9 million units in the North American market.”

Intentional slip of the tongue to hedge his bets? Toyota sold 1.64 million cars in the U.S. alone in 2011, after 1.76 million the year before. Together with Canada and Mexico, Toyota was pretty close to 1.9 million units last year in North America.

Europe is difficult to forecast, says Ijichi. But he aims to lift China from 880,000 units last year “to at least one million units … or more than that.”

Edmunds noted yesterday that “Toyota is still faced with supply issues; it averaged 33 days to turn in the last quarter, which is about half of the industry ideal of 60 days to turn.” Contacts at Toyota confirm this and say it will last through this quarter. After March, all dealers are expected to be fully stocked.

Hayakawa-san is wide awake when the usually dry and buttoned-up Ijichi takes a deep breath and declares in closing:

“In the past several years, our marketing people and our production people had encountered many hardships. They could not produce as they wanted and they could not sell as they wanted. Next year, finally we can exercise our capabilities in earnest.”

Mind, you, in Toyota’s calendar, “next year” begins this April.

Today, Chrysler reported its first yearly profit since 1997. It was $183 million net profit on $55 billion net revenue. Not earth shattering as car companies go, but a start: Chrysler wants to turn this into $1.5 billion of net profit in 2012 and $65 billion of revenue. At the same time, Fiat-Chrysler cut its 2012 revenue target to 75 billion, due to a slowing demand for cars in a weakening European economy. Fiat will not pay a dividend for ordinary shares in 2011.

According to Reuters, “Chrysler’s strength offset Fiat Group Automobiles (the grouping of Fiat, Lancia and Alfa Romeo brands) weakness.”

Says Michelle Krebs of Edmunds:

“Chrysler is the surprising comeback kid — again. When Chrysler emerged from bankruptcy, there were plenty of skeptics, but the automaker has proven them wrong.  Since detailing its plan for the future in November 2009, Chrysler has done everything it said it would, creating an impressive recent track record and providing confidence that it will meet its 2012 goals.”

Krebs explains the math behind Chrysler’s good numbers:

“Chrysler’s incentives spend was among the lowest in the fourth quarter of any time in the past two years, and its average transaction price was the highest in at least two years (maybe ever) at $30,603. All of this as vehicle sales soared 35 percent from the 2010 fourth quarter.“

Everybody is talking about how much the Euro is losing against the dollar. At closer look, it is not alarming. Even during normal times I have seen lower Euro rates than the current $1.27. But wait until you look at the Euro from a Japanese perspective. (Like the one I have at the moment, sitting in a pittoresk cabin half way up Mount Fuji that could use better heat.) The anemic euro might discourage people like me from coming to Japan. What it really does is discourage Japanese automakers from exporting to Europe. A lot has been said about the strength of the Yen against the dollar. It’s nothing compared to the Euro. Against the Euro, the yen turned into Godzilla. This has Japanese automakers extremely worried. They don’t really know what to do about it.

The Nikkei [sub] made a table of manufacturers’ assumed exchange rates, i.e. the exchange rate that is in the budget, and of the drop in operating profit for each yen below that rate. The table is in yen. The dollar fetches around 77 yen ( it has fetched less) at the moment. If there is 1,000 in the right column, then think there are $13 million.

On Monday, the Euro momentarily dropped to 97 yen in Tokyo, its lowest level in about 11 years. Let’s run the numbers for Toyota. Assume the Euro stays there, that would cost Toyota $779 million in operating profit – in Europe alone. Ouch!

The pain is even greater for small Mazda. Says The Nikkei:

“Among automakers, Mazda Motor Corp. is most seriously affected by the euro’s deprecation because it has no plants in Europe. It exported some 200,000 Mazda 3s and Mazda 2s to Europe, including Russia, in 2010. But because exports are unprofitable at the euro’s current exchange rate, Mazda will try to make due for now with cost cuts.”

Mazda is aiming for a 25 percent cut in procurement and production costs, but that may not be enough. Even for automakers with local production in Europe, the euro is falling faster than they can adjust production.

The low Euro of course is a boon for European automakers, especially for the export-heavy Germans. I would love to see a table that discloses how much more money they make for every cent the Euro sinks, but I have never seen such a table.

If you look closely, and with an open mind, you see something else that is highly alarming: The dollar/euro rate is masking the fact that both are dropping rapidly. Euro and dollar fall, the euro just falls a little faster than the greenback It is like two people who just fell out of another airplane. One watching the other guy, the drop might look benign. Viewed from the bottom (and this is where Japan should be,) it looks like a ….. get out of the way!!!!

Lotus is one of those brands that every auto enthusiast loved to lionize, despite (or possibly because of) the fact that it hasn’t made a profit for its owner, Proton, in 15 years. But now things are changing. Lotus itself is in the midst of a makeover, seeking to transition from niche sports- and track-car company to a Ferrari and Porsche-rivaling aspirational brand. Meanwhile, back in Malaysia, its owner, Proton, is undergoing a few changes itself. Having been founded as a state-backed business, Proton may soon be privatized, reports Bloomberg. And as a result, Protons private investors could push for a quick divestment of the firm’s Lotus holdings. One such investor, Gan Eng Peng of HwangDBS Investment Management, tells Bloomberg

It will make sense for them to sell it. Proton and Lotus are not a good fit. They are in different market segments, both in terms of geography and product.

Chinese automaker SAIC and Genii Capital have been rumored as possible buyers, although Proton denies all rumors that Lotus is for sale. The problem is that Lotus won’t be worth much until 2014, the brand’s earliest projected break-even date. And even then, Bloomberg’s analysis shows that Lotus’s highest possible value then still wouldn’t be enough to return Proton to profitability, in light of increased competition in its home market of Malaysia. But in the meantime, Proton has no (useful) synergies with Lotus, and as the automaker emerges from the warm embrace of government ownership into the harsh light of the global market, it seems that selling off Lotus may be unavoidable.

Which leads to an interesting question: which automaker seems most likely to buy up Lotus? My money is on VW, who might buy the brand for no other reason than to kill off Alfa, after Fiat refused to sell. Of course, then it might create branding challenges with Porsche, but Alfa would have done so anyway. Another possible buyer: Toyota, which supplied Lotus with engines for years. In any case, we can probably count GM out of the picture, after their abortive relationship with the British brand.

Germany’s luxobarge makers aren’t just happy selling their luxobarges to China. Now they want Chinese money straight up. Daimler is flirting with the Chinese sovereign wealth fund China Investment Corporation (CIC), which may want to buy 5 or 10 percent of Daimler.

Sovereign wealth funds invest their money in stocks, where it supposedly yields more than buying T-bills denominated in a devaluing dollar.

According to Germany’s manager magazin, China had shown interest in a piece of Daimler for years, but always had been outbid and outbought by rich sheikhs. In 2009 for instance, the Abu Dhabi sovereign wealth fund Aabar was faster than the Chinese.

Now, Daimler hired an investment bank with the declared goal to get the Chinese on board. Daimler sees bunches of positive aspects to a Chinese engagement. If the Chinese government has money riding on Daimler, it might buy more Benz and less Audi.

Daimler is also interested in intensifying its joint venture with Beijing’s BAIC, and could plow the money right back into that. The Chinese should like that.

Finally, having about 30 percent of the stock in the hands of „friendly“ shareholders would be good insurance against a hostile takeover, the magazine heard in Stuttgart.

Ever since Steve Girsky an his “merry band of hatchet men” touched down in Rüsselsheim, Bertel has been warning that GM’s European division was about to embark on a serious cutting binge. But our worst fears, namely that Opel could go away entirely, have yet to be realized. Instead it seems that self-destructive mutilation will be attempted first, in order to stem the gushing red ink at Opel where at least €1b in losses are expected next year. Automotive News Europe [sub] reports that the first round of cuts will hit Opel’s Internationalen Technischen Entwicklungszentrum (ITEZ, “International Technical Development Center), as an IG Metall union document foresees some 1,420 product development position cuts (from a staff of some 6,000).

Opel’s spokesfolks insist that the union’s numbers are “factually wrong and excessively high,” but only, in the words of ANE, because they “include people who are not on Opel’s payroll – like employees of service providers and supplier employees.” Furthermore, the automaker has not offered an alternative number for the expected cuts, and given the close cooperation between unions and OEMs in Germany, not to mention the detail of the IG Metall leak (200 employees will be offered severance payments when 550 positions are transferred to the manufacturing engineering department from product engineering), it’s tough not to conclude that the number is fairly close to GM’s actual plans.

And the cuts aren’t limited to workers: a battery-powered version of Opel’s forthcoming “Junior”/”Allegra” city car, as well as a long-rumored Insignia-based Coupe are said to be on the chopping block as well… so let go of any plans to wait for a reborn Buick Riviera. Oh, and don’t hold out any hope for the “production potential” Opel recently touted for its strange, low-cost RAK e Concept. Meanwhile, here are the other measures that Opel admits are coming down the pike:

• Stronger concentration on the carmaker’s core development mission and a reduction in project coordination tasks

• Increased use of modules and construction kits. “For example, we still have too many steering and seating systems. We have to improve significantly here,” the spokesman said.

• Deeper and earlier integration of suppliers. “There are no plans to put a stranglehold on our suppliers — we need to increasingly rely on suppliers’ innovative strengths,” the spokesman said.

In short, it seems that in order to save Opel, GM has to kill off much of what made Opel so valuable to it, namely its ability to develop premium global vehicles for the parent company. Instead it seems Opel will be forced to concentrate on selling into a brutal European market that seems set to contract as the Euro crisis drags on. Perhaps there is some truth to the rumors that Chevrolet will slowly replace Opel after all.

After all, cutting engineer positions is certainly the low-hanging fruit in Opel’s restructuring, but GM will likely have to go after assembly capacity (likely at Bochum and Port Ellesmere) in order to address the overcapacity issues that are at the heart of its (and many European automakers’) woes. That could create problems though, as this latest union leak confirms that Opel’s labor councils are prepared to fight. Opel’s outgoing union leader Klaus Franz has gone so far as to ask GM to sell Opel to its Chinese partner SAIC, a move widely considered a sign that Franz was trying to move back in touch with an increasingly militant union rank-and-file in the face of his own legal problems. While Franz portrays himself as the victim of a media smear campaign and threatens legal action against the Frankfurter Allgemeine Zeitung, his union appears prepared to fight the seemingly inevitable production cuts. And all this as Opel celebrates its 150th birthday.

After enduring a rocky relationship with Saab’s management, Guy Lofalk is officially out as court-appointed administrator for the ailing Swedish brand. But although Saab boss Victor Muller had long hoped for Lofalk’s ouster, the news wasn’t all good for his slow-motion “rescue,” as Lofalk’s first replacement had to step down before he even began his duties. Reuters calls the abortive administratorship of Lars-Henrik Andersson  Saab’s “latest embarrassment,”  but TTELA reports that Andersson’s “defection [was] not based on a pessimistic assessment of Saab.” On the other hand, at least one of Andersson’s colleagues thinks he dropped out because Saab is “screwed.”

In any case Soderqvist seems to be the last remaining Saabtimist in Sweden, insisting he believes in the new plan to save the zombie brand, and he will serve as long as he continues to have faith… so what’s the new plan anyway?

JustAuto reports that

European supplier body CLEPA estimates up to EUR700m (US$910m) could be made available for beleaguered Saab to restart production, if plans by Chinese manufacturer Youngman and an unnamed Chinese investor bear fruit.

“That means [they - Youngman] will provide EUR200m and a financial investor will provide EUR500m – that will be enough to restart and give Saab a chance,” said [CLEPA CEO Lars] Holmqvist. “Youngman has already spent a lot of money, if nothing else to protect the investment they have already made.”

And where, pray tell, does this faith come from, that a Chinese bus manufacturer and an unnamed “financial investor” is ready to drop nearly a billion dollars on the auto industry’s most notoriously undead brand?

The CLEPA boss also revealed this week’s mood had swung from one of gloom to hope following his receipt of a bank statement indicating Chinese manufacturer Youngman had paid Saab EUR3.4m, believed to have covered overdue Swedish government taxes.

The supplier chief also detailed how Muller had been urged to declare bankruptcy in a bid to avoid any personal liabilities, but had resisted, a move Holmqvist endorsed.

“We have been up and down listening to Victor Muller,” he said. “On Friday I was quite pessimistic and on Friday night he [Muller] sent a copy of the statement slip that the money had been sent by Youngman.

“Then, on Monday, he was pressed by people around him to file for bankruptcy. They were afraid they would be personally responsible for debts. But he refused and he was right because the money arrived and he got a respite again. Another rabbit hopped up from the hat – I knew what was going on, but I did not think it was going to be in time.”

Where to start with this? How about the fact that €3.4m is hardly an indication that almost a billion bucks is forthcoming.. especially given the difficulties of transfering money from China? Or what about the fact that the transfer in question was for a transaction that Lofalk considered “a new obligation” (forbidden during reorganization), an accusation that was met with a claim that it was part of an earlier deal and intended for salaries, not taxes? The unknown identity of the “investors” willing to drop €500m on Saab? The fact that these investors, not Youngman, will control the brand (in order to keep GM happy)? The fact that US dealerships aren’t selling the cars they have, making a production restart largely pointless? In any case Holmqvist admits that his group stands to lose “a lot of money” if Saab goes bankrupt and is willing to back any plan (reality, it seems, notwithstanding).

The 16th was supposed to be the day that decided Saab’s fate, but the brand has been given another weekend to get the mysterious Chinese money into its accounts. A hearing is now scheduled for Monday, at which point cash (likely upwards of $60m) must be on-hand. An optimistic new administrator, and desperately credulous suppliers mean nothing if November and December salaries aren’t paid by then and the tax man is left wanting. Muller and his rotating cast of supporting characters are good at buying a week here and a weekend there, but that can’t go on forever. And the real tragedy is that all these delays have only made it more likely that Saab will die on the week before Christmas.

For no immediately obvious reason, Germany’s Frankfurter Allgemeine Zeitung has a long article today, which says that GM is running out of patience fast with its money-hemorrhaging Opel unit. The paper predicts new negotiations (read firings and plant closures) with the unions – “or worse.” (Read good riddance Opel.) The sound of rattling sabers is all over the article.

Departing union boss, works council chief and deputy chairman of the Opel supervisory board Klaus Franz insists that there is a contract between GM and the IG Metall union. In return for foregoing raises of €264 million annually, and approving the drawdown of thousands of jobs, the union had received assurances that there will be no more firings or plant closures through 2014.

However, the paper found (probably not without a guiding hand) an escape clause in the contract:

“In the event of material changes to the general economic conditions (significant rise of inflation rate, breakdown of demand in the automotive market) or to the assumptions which build the basis of this agreement, both parties will, in friendly consultations, find solutions for additional measures.”

The paper declares that “there is no doubt that all these events have already been triggered, and that there is “legal basis for GM to put all agreements under review.”

Letting more people go will not translate into immediate savings. As mentioned here repeatedly, a reduction in force costs a lot of money in Germany. FAZ says that “the reduction of 8,000 of the 48,000 jobs at Opel did cost GM nearly a billion Euro.”

That, dear reader, is $168,000 per chopped head.

You can let people go without payment if the company goes bankrupt. This option has been specifically left open. In an SEC filing, GM had warned that a failed restructuring of Opel could prompt a local bankruptcy.

Selling Opel is another option, but to whom? And what would be sold? More than 5,000 engineers develop technology in Rüsselsheim, but the licenses are banked somewhere in Delaware. Basically, the buyer would get a huge Saab, with GM holding the technology reins.

All in all, the article in the usually well-informed FAZ looks like a warning shot, aimed at the unions to cow them into submission.

On the day Stephen Girsky was named Chairman of Opel’s supervisory board, Girsky’s former employer Morgan Stanley issued a scathing research note. The bank figures that Opel is worth “minus $7.6 billion,” and that getting rid of it one way or the other would cost between $5 and 6 billion, a solution the bank recommends.

The analysts figure that selling Chevrolets in Europe would yield a profitable share of 3 percent of the European market, much better than an 8 percent share that only makes losses.

“Japanese automakers trailed German, U.S. and South Korean rivals in net profit for the July-September quarter, highlighting Japanese carmakers’ struggles.”

Q3 Net Profits Of Major Automakers

Japanese carmakers were hit by a double whammy: The March 11 tsunami destroyed large parts of auto production, not just in Japan, but worldwide. The soaring yen makes exports unprofitable and makes foreign profits look smaller once they hit the books in Japan.

The whole year will be a dark year for Japanese automakers. However, not making a loss under these circumstances can be something to be grateful for.

Rumors that the Bank of China would be taking a role in the “rescue” of Saab turn out to have been something of a miscommunication. Saab explains the situation as it currently exists.

Swedish Automobile N.V. (Swan) announces it is in discussion with Zhejiang Youngman Lotus Automobile Co. Ltd. (Youngman) and a bank in China about an equity interest in Swan. The discussions include a short term solution to enable Saab Automobile to pay the November wages and continue reorganization. The outcome of the discussions is still uncertain. Any possible transaction would be subject to the approval of the relevant stakeholders. [emphasis added]

As always, you can read about the proposed new structure (which has PangDa out of the picture) and why it will solve all of Saab’s problems over at Saabsunited.com. But far more interesting is the English-language interview with Victor Muller, found here (skip ahead to the 38:40 mark), in which Muller explains that GM can block any deal in which an automaker takes a 20% or larger stake in Saab, and that he is essentially Vladimir Antonov’s front man. After all, trying to understand Muller is far more compelling than this latest deal, which can be approved by GM (because it keeps automakers below 20% ownership), but won’t actually solve Saab’s basic problems (for precisely the same reason).

For quite some time, Carlos Ghosn had been the booh-leader against the strong Japanese yen. At the sidelines of the Tokyo Motor Show, he launched into his so far strongest worded tirade against the “abnormal” yen. He told the Japanese government to learn from the Swiss, and to basically peg the yen to another currency.

Currently, about half of the Japanese auto production is exported. At a loss or at the very least at no profit. No sane business person will invest into a country with no return, says Ghosn. Investments and jobs will go elsewhere:

“The main problem we are facing today is the uncompetitive value of the yen. The yen is not so much a problem for the Japanese carmakers. The yen is a problem for Japan. Japanese makers are moving production little by little outside of Japan.  The car industry employs between four and five million people in Japan, and more than half of the industry works for export. If the car industry goes, a substantial part of employment is going to go with it.”

What the strong yen does is strengthen the industries  of Thailand, China, Mexico, or other emerging export bases. Ghosn had said this for quite some time. The answer was that the Japanese government is helpless, that no amount of quantitative easing seems to be able to stem the strengthening of the yen. This time, Ghosn says what should be done:

“People say there is no solution.  Wrong! Wrong! Look what the Swiss have done. Switzerland is a great benchmark of how a small country has drawn a line in the sand. They said: Enough is enough, we will not allow the Swiss Franc to rise above a certain level against the Euro. Everybody laughed, but they stuck with it. What we are encouraging is that the government of Japan takes the same stance. If Japan draws a line in the sand, the market will listen.”

If the Japanese government will not listen to the plight of its carmakers, carmakers won’t suffer, Japan will:

“Japanese car makers will survive this. They already are global. What we are saying is this: If there is nothing that is done, don’t blame us for the consequences.”

In other words: Follow the example of Switzerland, which had a similar problem with its rising currency, until it was effectively pegged against the Euro. Or watch the Japanese industry collapse to  Swiss size.

A TTAC tipster sent us a Teknikens Värld  interview with Saab’s long-suffering would-be rescuer, Victor Muller, in which the eternal Saabtimist seems ready to admit defeat. In essence, he admits that GM is unlikely to ever approve a plan involving Chinese firms, that the Chinese firms are throwing “money into a black hole” and that all the previous plans are off the table. Of course, Muller does seem to think that some kind of rescue may yet be possible, but he admits

If I doze off Saab would disappear in an instant

If Muller is losing faith, and doesn’t even have a hairbrained scenario to hype, it seems that the end may well be near. But then, the whole rescue of Saab is beginning to be eclipsed by questions about Muller’s erstwhile partner, Vladimir Antonov, who was recently bailed out of British jail, where he was being held on charges of embezzlement and document forgery. But first, to the Muller interview…

The following is an interview titled “Muller Does Not Believe In Th Chinese”:

Victor Muller doubts that GM will ever accept a Chinese Saab business. According to him, Youngman, Pang Da and Guy Lofalk sabotaged the whole business when they went from the original plan. It says Muller in an exclusive interview with the Teknikens Värld.

On the way home from Britain hits Teknikens Värld Erik Gustafsson, an unusually outspoken Victor Muller. The gate at Heathrow Airport, the plane to Stockholm, he says frank about Saab’s situation.

- This is how it goes when you put his partner in the back, says Muller continues:

- The deal was long time and the arrangement with a Chinese shareholding of 54 per cent was approved. Then began administrator Guy Lofalk run government affairs, to persuade the Chinese to a 100-percent ownership stake and GM slammed on the brakes.

Late yesterday evening, Swedish time, had GM in Detroit, a further meeting on Saab’s future, but Victor Muller strongly doubt one acceptance.

- I understand GM fully, it is clear that they do not want to jeopardize its market in China. But right now I understand the other side is not why the Chinese continue to pump money into the company. As the situation is, it just means to put money into a black hole, without getting anything back. The relationship with GM is so damaged that they (Youngman and Pang Da) can not even go back to the original plan.

While he acknowledges that the situation is tough, he means that there is a solution. He can not tell you how it looks, but he promises to fight till the end.

- If I doze off Saab would disappear in an instant

Muller may still be fighting for Saab’s future, but as prosecutors unwind the Vladimir Antonov situation, Muller could soon be forced out of the process. After all, Muller is said to have a personal debt to Antonov of upwards of €100m, and it seems highly likely that Antonov was using Muller to launder funds embezzled from his Baltic banks. Antonov ‘s sports business has been placed into bankruptcy, and he has stepped down as Chairman of the British soccer team Portsmouth, reports ESPN. And Latvian officials seem to be clear on the Saab connection as well, as the Moscow Times reports

Latvian officials on Wednesday said about 100 million lats ($200 million) was stripped out of Latvyas Kraybank to fund Antonov’s investment projects, including the ill-fated Saab bid.

And the investigation is ongoing, as BBC reports that

[Lithuanian prosecutors] said they were investigating everything that might have links to criminal offences.

They added they would be taking “all the necessary steps” to freeze assets belonging to Mr Antonov and Mr Baranauskas.

It seems inevitable that this investigation will eventually catch up to Muller, at which point he’ll have to plead ignorance of Antonov’s alleged crimes. And even if Muller does escape prosecution, his ability to organize a deal to save Saab will be fundamentally compromised by his association with Antonov. And as Muller himself says,

If I doze off Saab would disappear in an instant

The countdown continues…

What matters in the world of cars? It’s a question we’re always asking here at TTAC, and depending on your perspective, the answer could be almost anything. But for all of their cultural significance, cars are ultimately a business, and if you had to boil down the value of a vehicle to one single attribute, it would have to be profitability. But that’s a tough measure to make, considering automakers don’t typically break out profits by vehicle, let alone by model line. Which is why I was so excited to see a list of the 12 most profitable vehicles since 1990 compiled by Max Warburton of Bernstein Research, and published in Automotive News Europe [sub]. So, what’s the most profitable vehicle in modern automotive history? The answer can be found just after the jump…

1. Ford F series
2. GM full-sized pickups
3. Dodge Ram
4. Mercedes S class
5. BMW 5 series
6. BMW 3 series
7. Mercedes E class
8. Lexus RX SUV
9. Jeep Grand Cherokee
10. Honda Accord
11. Porsche 911
12. Toyota Camry

Perhaps not the most surprising list imaginable, although the obscene profitability of pickups may just take your breath away. According to Warburton’s research, the “big three” American pickup models created $108 billion in pre-tax earnings since 1990, about the same amount as the rest of this list combined. As Warburton explains

The sweet spot for the industry is high prices and decent volumes (BMW 5 series, Mercedes E Class) and medium-sized price points and massive volumes (Ford F-series pickups, SUVs)

But, according to the respected analyst, that may be changing. Not only are pickup profits going to face pressure from emissions regulations, but there’s another dynamic worth noting:

Average volumes per product and body style are falling because the market is fractured into smaller and smaller sub-segments.

In short, per-model profitability may already have peaked for the industry. Which is why per-platform profitability is taking center stage. Hopefully we’ll soon see some new analysis in this regard…

a pre-trial investigation into an alleged fraud and money laundering case that is threatening to destroy two Baltic banks.

Bertel noted earlier that Snoras, one of Antonov’s banks, had been forced to halt operations, but the issuing of a Europe-wide arrest warrant for Antonov is an even bigger black mark on the Russian financier. And it adds to an already-impressive family resume: Antonov’s father Alexander was shot seven times in a 2009 assassination attempt that has been connected to a Chechen blood feud, and the family has been accused of ties to organized crime by the FBI and Swedish authorities.

All of which puts an intriguing spin on the Saab drama: Snoras lost track of hundreds of millions of dollars, at a time when Antonov was loaning at least $116m to Victor Muller for the Saab rescue. Though it could take years to get to the bottom of the story here, the short-term effect of this scandal is that it gives GM all the incentive in the world to continue dragging its heels. Now that Saab’s “rescue” appears to be less heroic and more of a way to hide allegedly embezzled funds, Saab now has the stink of scandal about it to go with the stink of failure. And it’s sounding like GM is ready to let its former brand simply disappear.

GM’s James Cain tells di.se

We can continue as a supplier to Saab under the right conditions and circumstances but we are not prepared to continue to deliver the 9-4X and we are not prepared to continue to provide licenses to our technology if control of the company is changing… Let me be clear: Saab and Youngman can do whatever they deem best for the company. But if there is one hundred percent takeover of Saab, they will do it without the vehicles we supply, 9-4X, and without GM’s technology

Moreover GM won’t even negotiate with PangDa and Youngman, saying they only talk to Saab. And if the Chinese firms take over Saab, GM will cut the cord. Which leaves Victor Muller with a mess on his lap and (probably) some very curious policemen taking a sudden interest in his finances and the entire Saab deal. Though Saab itself may be approaching its final hour, the Saab story seems to have legs, and investigations could be reavealing new details for years to come.

Also, the Saabinistas that continue  to spam GM’s Facebook page with their pitiful “Let Saab go” campaign  could possibly soon rally behind another cause: “Free Antonov!”

The last attempt at saving Saab failed when GM said it would not supply or license technology to Saab if it were 100% owned by PangDa and Youngman, scuttling the Chinese firms’ bid for outright control of the company. Now the two firms have sent a revised proposal to The General in hopes that they can provide safeguards for intellectual property, allowing them to purchase Saab without losing the link to GM. After all, both the 9-3 and 9-5 rely on GM technology and parts, while the 9-4X is wholly supplied by GM. Rachel Pang of PangDa tells TTELA.se

We have not discussed any changes with regard to ownership structure. We are concentrated on the GM issue… It’s about more commercial terms.  We want to meet them and have asked for a meeting. First we must give them time to review our proposal. We are waiting for GM’s response and then we will of course respect it.

Of course, our understanding is that “the GM issue” is the same as the ownership structure issue… and keep in mind, PangDa and Youngman are looking for a meeting, not an agreement from GM. Which means this could drag on a while… and wouldn’t you know it, it’s time for Saab to pay salaries again.

Victor Muller, who TTELA says “has increasingly fallen into the background” of negotiations, agrees that it could be a while, noting

GM will first need to digest the information gained from Saab. It is up to Youngman and Pang Da which they want to conduct the negotiations with GM

And while PangDa/Youngman are waiting to hear back from the RenCen, they’ve got to keep the cash flowing. Apparently Youngman injected some $3m into Saab this week, and PangDa could help out with wages, which must be paid at the end of this week. Which raises an interesting question: why are PangDa and Youngman continuing to inject cash into a company they may never be able to own? Surely not because GM has sent promising signals, as its last message was

We have not changed our point of view. We are not negotiating with the Chinese since our contracts are with Saab

When asked about this puzzling state of affairs, Rachel Pang gave an answer that definitely gains something in  the Google Translation

TT: Why do you continue to invest in Saab when you do not know if you can buy the company?

- A good question. I do not know what I should be on it at the moment, says Rachel Pang. (Original: En bra fråga. Jag vet inte vad jag ska vara på den i nuläget, säger Rachel Pang.)

I’m sure Ms Pang’s answer must have been more reasonable than this appears, but then, every time I dig back into the Saab story, I tend to not know what I should be on at that moment. A stiff drink? Painkillers? Some kind of exotic hallucinogen, synthesized from the pancreas of Amazonian salamanders? What could possibly make me understand the point of all this burning capital? At this point, I’m almost considering tucking into the barbiturate overdose-in-applesauce that Guy Lofalk is keeping warm for Saab.  This story is a killer.

As the world struggles to come to grips with economic uncertainty, Bertel has been reporting that Japanese automakers are abandoning their homeland for lower-cost production centers overseas. Now, with economic turmoil shifting to Europe, it seems that Fiat could possibly be preparing for a pullback from Italy. Two basic factors are driving Fiat towards reconsidering its global manufacturing footprint: first, its struggles in the European market where margins are slim and dropping, second, its battles with Italian unions. Though Marchionne’s latest comments are ambiguous at best, some see these factors pushing the Italian automaker away from the market that gave it birth.

Bloomberg reports that Marchionne is calling Fiat’s 2012 profitability “uncertain,” as the CEO clarifies

More than volumes, the question is whether we can extract the same levels of margins. We are to some degree cautious on what is possible from Europe next year

Chrysler already contributes some 65% percent of Fiat’s overall profit. If the European market weakens, the Italian automaker could become even more dependent upon its American cousin. And if Europe’s economic uncertainty bleeds into the US market, Fiat could be in trouble. Credit Suisse analyst Erich Hauser notes that Fiat’s exposure to a weakened Europe could be a real cause for concern

The real concern is not so much the margin level in Europe next year, but the extent to which Fiat will consume cash in a downturn. If volumes fall further, then Fiat’s liquidity position could become an issue.

Marchionne’s response?

Globally we’ll be fine

And though that may be the case (depending on the US market’s performance), the problems inside Europe are mounting. And because Europe’s sovereign debt crisis is now centered on Italy, Marchionne’s scope for political maneuvering in that market may be compromised. That’s key because Fiat has been in a long confrontation with Italy’s labor unions. That conflict colored Marchionne’s recent optimism about Italy’s political future, as he noted recently on the departure of President Silvio Berlusconi:

Italy has a once-in-a lifetime opportunity to abandon the notion of an entitlement society. I think Italy is on the mend.

And Marchionne, a globally-known battler of union-led “entitlement societies,” is taking his fight to the Italian unions, as the WSJ [sub] reports that Fiat has canceled all of its agreements with Italy’s labor unions. According to the report

The latest decision amplifies special labor concessions made at some factories and applies them to all the productive plants in the country. It also comes as the new government vows to loosen Italy’s traditionally rigid employment laws.

And that move is stirring up political turmoil in the already-tumultuous Italian political system, prompting Antonio Di Pietro of the IDV to complain to AGI

By cancelling all trade-union agreements, FIAT is closing a circle, effectively announcing that the company is leaving Italy, using workers as the scapegoat. Employees are accused of being incapable of manufacturing innovative cars with a high added value and of selling them on the market

Legitimate fear or politically-motivated fearmongering? Only the future will tell whether Fiat can stick it out in Europe. But with its best production taking places in locations like Poland and Brazil, it’s going to be tough for Fiat to hack it out in Italy.

That interview with Volkswagen CEO Martin Winterkorn is a treasure-trove of information. It also gives an insight into Volkswagen’s strategy with rambunctious Suzuki: It will be a Sitzkrieg.  Volkswagen seems to be intent on waiting things out until Osamu Suzuki passes away.

Winterkorn will be at the Tokyo Motor Show. Someone with a perverse bent made Volkswagen (booths EP06 through EP10) close neighbors of Suzuki (EP12). Only Mitsubishi (EP11) keeps the brawling couple at distance. But Winterkorn doesn’t have Osamu Suzuki on his dance card:

“A meeting is not planned. Should we run into each other, then we can talk about everything. There is one exception: Our 19.9 percent share is not for sale.”

Asked how Winterkorn intends to settle the matter, he answers:

“We have a lot of patience. Our targets are long-term. If the current management team at Suzuki doesn’t want to work with us, then maybe the next generation may want to.”

We had picked-up rumors long ago that Volkswagen may be counting on the – as the saying goes in Wolfsburg –  “biological solution”.  Suzuki’s Chairman Osamu Suzuki is 81, a full seven years older than Ferdinand Piech.

That’s a risky bet. Japanese tend to live a long life. And in any case, the instigator behind the row is said to be Suzuki Executive Vice President Yasuhito Harayama. At age 55,  Harayama doesn’t look like an immediate candidate for the biological solution. The 64 year old Winterkorn should know that.

The old Volkswagen law is making headlines again. After three years of silence, the European Commission could drag Germany again in front of the European Court of Justice, Der Spiegel reports. A decision to sue could be made by Wednesday, sources of the German magazine say.

The Volkswagen law was inherited from the days Volkswagen was privatized in 1960. According to the law, no shareholder of Volkswagen could vote more than 20 percent, even if more shares were owned. This was primarily a defense against takeovers. Voting plans are a classical poison pill. Volkswagen’s home state Lower Saxony holds 20.2 percent and can effectively veto any untoward advances.

Brussels took issue with the peculiar “VW law”, and dragged Germany into the EU court. In 2007, the court ruled that the law was in breach of the EU’s principle of free movement of capital. Germany reworked the law in 2008 – in a way:

The illegal cap on 20 percent of the votes was scuppered, but then there was a new clause that requires an 80 percent majority for important decisions. With Lower Saxony holding 20.2 percent, the status quo was preserved: Nothing goes without the Lower Saxony vote. Brussels immediately saw the spirit of the EU court decision violated, and repeatedly threatened to sue. Now, Brussels seems to be ready to pull the trigger.

“Don’t you have more pressing problems?” (or words to that effect) said Lower Saxony’s premier David McAllister, and sent an angry letter to the commission. Reuters obtained a copy:

“People in Germany will not understand why they should provide billions in aid to Greece and other EU member states while the commission pillories VW without sufficient justification.”

“In the current crisis, more than ever, it has become evident how important it is that a company like VW is headquartered in Europe.”

Currently, nobody appears to be lining up for a hostile takeover of Volkswagen, which is firmly in the hands of the Piech clan, with support from the home state government. But you never know. There have been times in the past when the VW share was so cheap that only the poison pill could ward off boarders.

According to Der Spiegel, the EU Commission already has an elegant way to extricate everybody from the imbroglio: If the shareholders agree to the veto right, or to an 80 percent or higher majority, and amend the shareholder agreement as such, then all is kosher, and no court will be needed.

Investors in Redflex Traffic Systems were resigned toward the photo enforcement vendor’s declining US performance at Wednesday’s annual shareholder meeting in Melbourne, Australia. The company has lost significant US market share and profit as more cities reject automated ticketing machines. Nonetheless, large executive compensation packages were approved without the dissent found in past meetings.

Shareholders signed off on a $324,926 salary for chief executive Graham Davie, plus $194,956 in stock for a total of $519,882 — a raise of 3.6 percent. Board member Karen Finley’s salary increased 3 percent to $318,270 plus $196,060 in stock for a total of $514,330. Finley is in charge of US operations which saw a drop in profit from the first and second half of the year of 7.4 percent.
Redflex has also lost its position as the dominant player in the automated ticketing market to American Traffic Solutions which has used funds invested by Goldman Sachs to buy out smaller competitors and take on their municipal contracts. ATS now boasts the greatest number of cameras deployed.

Those numbers are at risk to voter revolt, however. On November 8, two-thirds of voters in Monroe, Washington moved to send Redflex packing and 55 percent did so in South Euclid, Ohio. So far, twenty-one cities have held ballot initiatives to force the elimination of red light cameras and speed cameras. Other city councils have seen the results and canceled expected programs.

In her annual meeting presentation, Finley promised her company would “avoid ballot initiatives” by blocking voter access to the ballot and “create positive environment for renewals and expansion” by increasing the use of front groups to support automated ticketing machines.

The company is also looking to expand operations by turning school buses into photo ticketing vehicles and bringing more red light cameras to Alabama, Florida and Canada. It has also followed the lead of ATS and filed a lawsuit against its customer, Farragut, Tennessee, because a state law prohibiting photo tickets for right hand turns on red is costing the company significant revenue.

Redflex stock currently trades at $1.70 on the Australian Securities Exchange, down 34 percent since May.

[Courtesy: Thenewspaper.com]

Both Akio Toyoda and Carlos Ghosn are in the U.S. and what are they doing here? They complain loudly about the high yen.  Akio Toyoda uses an interesting reasoning. It may make Americans wish for an even higher yen. Toyota may shift a “significant” amount of production to the U.S., if the yen stays high, and if demand in Japan will fail to consume Toyota’s vast capacity there. If the majority of Toyota’s output is shipped overseas, then factories will follow.

“If demand in Japan recovers, we will continue and work to maintain production of 3 million units” in Japan, Akio Toyoda said to Bloomberg. “If most of it becomes exports, shifting a significant amount of production to the U.S. may be considered.”

“If the yen continues to stay strong, Toyota will collapse,” Toyoda said at an opening event for a factory in Blue Springs, Mississippi. He reiterated comments he had made recently at a JAMA press conference in Tokyo, where Toyoda said that Japan’s automobile industry may no just hollow out, but “collapse” unless the yen goes back to more palatable levels. Toyoda usually is not prone to grandiose rhetoric, and when he says „collapse“, then he means it.

At the same time, Nissan & Renault co-CEO Carlos Ghosn said yesterday at the sidelines of an event of the Japan Society in New York City: “What’s taking place now is many projects are now basing their manufacturing outside of Japan because they just cannot survive with this 77 yen to the dollar.” Says The Nikkei [sub]:

“Ghosn called the rate of 77 yen per dollar “unbearable” and said many Japanese companies are shifting their operations overseas because they do not see any clear prospects for an end to their predicament. Ghosn criticized the government for lacking effective measures to fight the yen’s record appreciation at “the worst time for the Japanese economy,” citing the March 11 earthquake and severe floods in Thailand.”

Since 2007, the dollar has fallen more than 35 percent against the yen, a currency which some dimwits who had not updated their dog-eared talking points, steadfastly call overpriced and manipulated by the Japanese government.

Listening to Ghosn’s comments, people may remember that he had mentioned building a new entry-premium Infiniti using a Mercedes platform – somewhere. It could be Europe, China, the U.S. or elsewhere (maybe Mexico), but definitely not Japan. Additionally, Financial Times Germany floated rumors of a joint Daimler/Nissan engine plant in the U.S.  Infiniti will buy two diesel and one V6-gasoline engine from Daimler, beginning in 2013, but Daimler’s European capacities are tapped out.

Bottom line: The high yen will most likely not help the Detroit 3 as much as it will create jobs on U.S. soil. And that’s where a high yen comes in handy: A yen that buys 35 percent more in dollars makes such an investment 35 percent cheaper.

Attempts to ratchet-down the rhetoric in the Suzuki/Volkswagen row have failed. Suzuki launched a heavy missile in the direction of Wolfsburg. Suzuki will take the case to court, The Nikkei [sub] heard before a scheduled press conference in Tokyo. But fear not, Volkswagen gets a whole year to make up its mind.

At the press conference, Suzuki said it wants to buy back the 19.9 percent of its shares which are held by Volkswagen, and it wants to do so in November 2012. If Volkswagen disagrees, then Suzuki will go to arbitration. Volkswagen is unimpressed and said it will keep the shares.

“It remains the same: We are holding on to our shares,” a Volkswagen spokesman told  The Nikkei. According to Reuters, Volkswagen is “extremely disappointed that Suzuki Motor Corp. demanded mediation after rejecting VW’s offers to rescue a floundering alliance.”

“There is no legal foundation whatsoever obliging us to surrender our shares,” Volkswagen said  in a statement.

The court will be the court of arbitration of the International Chamber of Commerce, German media says. Apparently, this is what the contract between Suzuki and Volkswagen specifies.

One of the great mysteries to many inside the auto industry is why is GM’s stock price so low? Though the company had a weak third quarter, its stock price has been stuck well below its IPO price for much of the last year, despite a return to profitability. Though GM faces challenges, few inside the auto industry understand why its stock price remains so low. One theory: the government’s mere continued presence as a major stockholder creates uncertainty around the company. If this is the case, it creates something of a vicious cycle: the lower the stock price, the less likely the government is to sell its  shares, leaving it lingering with no exit strategy, in turn driving the stock lower. Though that’s not likely to be the whole story, one thing is certain: the government has been forced to increase its loss estimate for the GM bailout. The Detroit News reports that the Treasury’s losses on GM are now estimated at $23.6b, up from $14.4b. And with an election looming, it seems likely that the White House will sell within the next six months. But will the government’s desire to protect itself politically trade off with GM’s PR? After all, whatever the Treasury’s final loss is, that number will be pinned to GM as a symbol of what it owes the American people. On the other hand, with most analysts insisting that GM stock is undervalued, another year of government ownership could convince investors to bid up the price, greatly reducing GM’s public debt. Too bad electoral politics will probably prevent that from happening….

Vladimir Antonov, the Russian “financier” who was feted by the acolytes of the zombie Saab as the second (after Victor Muller) coming of the dear Jesus, had his bank taken away from him.

More than $392 million of assets of Antonov-controlled Snoras Bank may be unaccounted for, central bank Governor Vitas Vasiliauskas told Bloomberg. Snoras’s operations were halted, and a state administrator was appointed by the Lithuanian government after the bank ignored recommendations to reduce its credit risk.

As a precautionary measure, government and bank traded accusations of felonious conduct. Reports Reuters:

“The government and central bank said they had found a risk of insolvency and possible criminality. The bank meanwhile has accused the government of ‘robbery’.”

Just to be sure, Swedish Radio mentions that “Antonov lent a large sum to Victor Muller which allowed Spyker to buy Saab.”

For the record, Bloomberg mentions that Antonov was barred from investing in Saab by the European Investment Bank. Bloomberg also finds it necessary to mention that:

“The U.K.’s Financial Services Authority denied Snoras permission to operate in Britain because the bank’s executives withheld information, calling the tactic “an ongoing pattern of behavior by institutions controlled by Mr. Antonov” in a February 2009 statement.”

Speaking of banks and supposed saviors, money in China is getting tight. Taiwan’s  China Times reports  that Volvo buyer Geely has problems servicing the debt incurred during the highly leveraged buyout:

“Geely has reportedly started to contact private domestic and overseas equity funds, such as Carlyle and TPG, for fresh funding, in order to repay Goldman Sachs for high-yield bonds. Most of these private equity funds are cautious about the request, due to their concern over Geely’s ability to repay.”

The sudden tightness of funds does not bode well for a last ditch resuscitation of Saab.

The financial constrictions find Antonov’s former fanzine unimpressed. Here, the arrival of 1:43 Saab scale models makes headlines.  Correction: The Saabinistas woke up to the story, and fondly remember that “SNORAS was a big sponsor for the SaabsUnited Historic Rally Team last year.”

Saab’s Memorandum of Understanding with PangDa and Youngman expired today, returning Saab to what must by now be a rather comforting, familiar state of limbo. Of course, the MoU in question was already dead, as GM had publicly nixed it, saying it wouldn’t supply parts or license technology to a 100% Chinese-owned Saab. But now, without an official agreement to rally around, Swedish Automobile, PangDa and Youngman are desperately pitching new ownership structures to GM in hopes of approval. Swedish Auto’s Victor Muller tells the WSJ [sub]

We are submitting an information package to GM and we will have to await the feedback that GM has on that package and then we’ll know.

Muller says the lesson of the failed MoU is that GM won’t accept Chinese control, and as a result the new proposed ownership structure is “very carefully crafted” so that none of the three partners has complete control. But since the previous deal, in which PangDa and Youngman would split a 54% stake in Saab, is also off the table, it’s tough to say what Muller’s “carefully crafted structure” entails. And while Saab and its Chinese suitors wait for GM approval that may never come (but don’t tell Keith Crain [sub] that!), it seems both time and money are getting tight. Again. Still.

Saab is refusing comment on how much cash it has on hand, but apparently the answer is “not much.” Automotive News [sub] reports that Saab’s payments to its US dealers, which includes money for warranty repairs,  have been delayed. According to a statement by Saab Cars North America,

While it is our intention to provide funding when it becomes available, you should use your judgment on whether to utilize these programs until SCNA is able to confirm funding is in place

But neither Saabs dealers nor its other creditors need wait too much longer for some resolution of this latest state of limbo. Saab has one week to come up with a plan to pay off its debts, or it could finally be pushed into bankruptcy. Failing that, Saab has salaries to pay again three days later (the 25th). If the company is screwing over its dealers and by extension its customers in one of its largest markets, it’s clearly at the “cutting off limbs to stay alive” stage. And that stage never lasts long.