Mitsubishi - UAW Contract Signed
By Edward NiedermeyerOctober 7, 2008 - 451 views
Mitsubishi’s Normal, Il factory is the nation’s most under-utilized auto plant. Facing declining American sales, its operators have cut costs to survive. But unlike other transplants, Mitsubishi employs UAW workers, so it can’t just kill its workforce and feed them to Japanese-made robots, right? Well, Mitsubishi has actually surpassed the realm of mere xenophobic science fiction and has managed to wrangle concessions from the United Auto Workers. Bloomberg reports that 1,260 members of UAW Local 2488 approved pay cuts of nearly five dollars per hour and higher benefit costs in a new four-year contract with Mitsubishi. So much for the long-running Detroit narrative of the UAW being blind to the struggles of automakers and squeezing the life from domestic manufacturing. Sales and production have been cut in half at Mitsubishi’s American operations since 2002, and apparently the union get it. It’s not exactly a happy story for anyone, but the bottom line is that jobs are being kept in this country. Incidentally, this story explains with the utmost clarity why Detroit and the UAW joined forces to make a run on the federal piggybank. Otherwise they would have had to face the music and make an unpleasant but ultimately sustainable compromise like this one.
Posted in High Finance | Industry | News Blog | Union News | 8 comments 
Mercedes, BMW United By The Fours
By Edward NiedermeyerOctober 7, 2008 - 659 views
CAR Magazine has been covering the ongoing collaboration negotiations between BMW and Mercedes for some time. As usual, nothing unites like a common enemy, and the longtime rivals have been brought together by the looming leviathan that is the new Porsche-VW alliance. But partnership does not come easily after decades of fierce competition. CAR speculates on the possible causes of ongoing difficulties thusly: “Maybe it’s a mutual case of ‘not invented here’. Maybe it’s what decades of ingrained rivalry does to you. Or a mix of shortsightedness, ignorance and stubborness. Perhaps a combination of the above.” Whatever the cause, BMW and Mercedes have yet to finalize any plans to share M-B’s new M295 all-aluminium V12. Is BMW, like McLaren, suffering from a restrictive Daimler contract with Aston-Martin? We’ll may never know. What is clear is that Mercedes needs a new corporate four-banger for its burgeoning small-car portfolio. The current C-class four is “too big, too heavy and too expensive” say CAR, and a new, shared four-cylinder could be jointly developed for Benz’s A-, B-, C-, E- and GLK-classes, and BMW’s 1-, X1, 3, X3, and MINI models. If no German alliance forms, PSA and Fiat are waiting in the wings, hoping to snag a technical partner for their own next-gen four-bangers. Meanwhile, “other collaboration opportunities between Munich and Stuttgart include more pace-setting hybrid modules, more efficient dual-clutch and automatic transmissions, advanced driver assistance systems and a highly flexible small car concept.” No mention yet of the Sudetenland.
Posted in Europe | Future Vehicles | High Finance | Industry | News Blog | 6 comments
Delphi Re-Ups The Re-Org
By Edward NiedermeyerOctober 6, 2008 - 481 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 - 755 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 | 6 comments
Russia’s Deripaska Bails On Magna
By Edward NiedermeyerOctober 6, 2008 - 567 views
State Department “undesirable” and reportedly mobbed-up Russian oligarch Oleg Deripaska has given up his 20 percent share in contract manufacturer and supplier Magna International. Marketwatch reports that Deripaska had bought into Magna in order to reap expertise in developing his own Russian-based automotive empire, but the credit crunch has him backing out. In fact, Deripaska had laid his 20m Class-A Magna shares as collateral for their purchase, and thanks to major retreats in the Russian stock market, Deripaska is simply walking away from his $1.54b investment. Magna stock has dropped 45 percent since Deripaska bought in, further exasperating his position and forcing his Basic Elements holding group to repritoritize. Meanwhile, Magna is happy to have had the opportunity to gain access to Russia’s auto manufacturing market, through the Deripaska-owned GAZ Group. Though Deripaska’s stake in Magna will be sold off by an unnamed creditor, collaboration could continue between the two firms. “We believe that the Russian market still holds significant opportunities for us and intend to continue to pursue joint opportunities with Russian Machines and GAZ, as well as other opportunities to advance our position in Russia,” says Magna co-CEO Siegfried Wolf.
Posted in Canada | High Finance | Industry | News Blog | Suppliers | 3 comments
Renault Hasn’t Learned to Surrender, “Itching” to Return to U.S.
By Justin BerkowitzOctober 6, 2008 - 719 views
In uncharacteristic style for anything French, Renault wants to expand into new territory. Still. They are “itching to get back into the U.S.,” according to a Wall Street Journal report. Despite a 55 percent drop in stock value this year and rumblings about Carlos Ghosn possibly stepping down from his dual-CEO post, someone at Renault thinks it might be a nice idea to return to the U.S. market. And it might be nice for Scarlett Johansson to tell me the next time she’s going to elope with someone better looking, funnier, taller and richer than I am. But as the philosopher Jagger said, you can’t always get what you want (credit to David Shore for that line). Nissan’s already slumping in The Land of the Free. Renault’s current lineup can’t meet U.S. EPA and crash standards which are different (though not necessarily better) than the Euro NCAP variety. Renault’s diesels wouldn’t have a prayer here without expensive testing or licensing the Bluetec system from Mercedes. And there’s the dealer/distribution problem, which can’t be magically solved by a hypothetical perfect Chrysler tie-up. And then there’s the whole “Americans don’t buy French” thing. And it’s all too bad, because I would love a Renault. But with even Renault saying that they would need to develop three new models specifically for the American market, you’ve got to wonder why the hell they’d bother.
Posted in Europe | Future Vehicles | Industry | News Blog | 11 comments
Bailout Watch 110: You Get What You Give
By Edward NiedermeyerOctober 3, 2008 - 752 views
Though we can’t do anything now to prevent the passage of the $25b industry loan package, there’s still plenty of scope for measuring results and demanding accountability. After all, as Danny Howes of the Detroit News puts it “Implicit in the federal loan package, it seems to me, is a message from Congress and their constituents: Get it right this time because there may not be a next time.” In his latest editorial, Howes qualifies his earlier bailout support with a call on the Detroit to get back to the business of being in business. Recent hybrid and electric hype coming out of Detroit “has the eerie feeling of a cranky heart patient running on a treadmill because he has to, not because he wants to,” reckons Howes. And when there’s a shortage of heart attack medication, such calls to action should be even more closely heeded. An S&P press release published in Automotive News (sub) claims that receiving $25b in low-interest loans has done nothing to boost the credit ratings of Detroit automakers. A full FAQ is published at S&P’s subscriber-only ratingsdirect.com website, but the argument’s broad strokes are that nobody knows how or when Detroit will actually get the federal loans. Until such time as the loans are approved and the checks clear, S&P sees no reason to elevate the credit ratings of domestic automakers, currently standing at (B-/Negative/–) for GM, (B-/Negative/–) for Ford Motor Co., and (CCC+/Negative/–) for Chrysler LLC.
Posted in Bailout Watch | High Finance | Industry | News Blog | 3 comments
Nissan - Porsche Cat Fight Continues: “GT-R Ring Time Discrepancy Down to Driver”
By Robert FaragoOctober 3, 2008 - 1,141 views
Oh man, this is getting ugly. After Porsche’s Turbo and GT2 lost their fastest ’round the ‘Ring record to the Nissan GT-R, the German automaker was… skeptical. So they bought a GT-R in the U.S. and ran the Nürburgring to verify their Japanese rival’s claim. And so they didn’t, failing to get within 25 seconds of GT-R’s ‘Ring highly hyped lap time. Porsche attributed the GT-R’s triumph to non-standard tires, which would nullify the Nissan’s “fastest production car” lap record. Cornered at the Paris Auto Show, Nissan’s European spokesman Neil Reeve said “Quite simply we’re not going to get into a war of words with Porsche.” And then did exactly that. “The final word from us is that it was done on absolutely standard tyres which are available to customers in the showroom. They’re not trick tyres – absolutely standard tyres, normal road tyres. The GT-R comes with Bridgestone and Goodyear (Dunlop). One tyre gives slightly better times around the ‘Ring. We did it on Dunlop. They’re available with the car.” When car.com.au’s Andrew Heasley pushed him for an explanation, well, read between the lines. “We absolutely maintain (that) Tochio Suzuki - the chief test driver on the GT-R program pounded thousands of laps - he got to know every inch of Nurburgring (circuit) and how the car performs on the Nurburgring and hence set that fabulous lap. More than that, I can’t speculate. I can’t explain why they couldn’t match the time.”
Posted in Industry | Law and Order | News Blog | Overseas | Paris Auto Show | 20 comments
GM Bans GM Stock Purchases by Employee 401(k) Plans
By John HornerOctober 1, 2008 - 1,113 views
The Associated Press report brings us the stunning news that GM’s employees have loaded up their 401K plans with so much company stock that the cupboards ran dry. Back in January, Financial Weekly published one of the many articles about the risk of loading-up on company stock. “After thousands of employees at now-defunct corporations such as Enron and WorldCom saw their retirement savings wiped out early in this decade, things were going to be different.” In case anyone has been under a rock for the past ten years, you don’t want your salary and your pension and your retirement investments all riding on the fortunes of one company. The big reason GM ran through its authorized number of shares for the 401K plan was the price plunge. GM stock is off 75 percent from its recent highs; it now takes four shares to stock to soak-up the cash which previously would have only bought one share. Between now and sometime in November when GM puts through the paperwork to print more shares, employee contributions will go into other investments. How long will it be before GM employees follow their Enron soul-mates into court over bombed-out 401K plans? Actually, it’s already happened. Workforce Management reported the January 18, 2008 settlement of a class action suit brought against GM in 2005 over the plunging value of employee 401K purchases of GM stock. Will they never learn?
Associated Press (via Yahoo) »
Posted in High Finance | Industry | News Blog | Union News | 10 comments
Quote of the Day: “The case of Bill Heard Enterprises Inc. shows that General Motors’ customer-satisfaction ratings are a sham”
By Robert FaragoOctober 1, 2008 - 1,406 views
TTAC called this one a while back, when we asked why GM was willing to supply “Mr. Volume” with cars when it was clear to anyone who ever had any dealings with his auto group that Bill Heard was the head of a vast criminal enterprise. Now that Big Bill has been knocked down to size, a bit, formerly silent observers are coming out from behind cover to give GM a right royal pasting. Writing in Automotive News [AN, sub], industry editor James B. Treece is [now] happy to point the fickle finger of blame. “What we do know is that GM was happy to cozy up to Bill Heard when the metal was moving. In 2004, GM gave Heard a Dealer of the Year award and the Jack Smith Leadership Award. The Smith award recognizes dealers who have attained the highest levels of sales and customer satisfaction in their region. Today, though, GM is singing a different tune.” Talk about sour notes… “It’s just individual people owning individual businesses, and it’s separate from the General Motors name,” GM spokeswoman Susan Garontakos told AN. “What happens at what dealership never reflects on the entire network.” You’re shitting me right? Treece goes in for the kill. “If that’s true, then why does GM bother tracking CSI scores, and supposedly rewarding dealers with the better scores? If a bad dealer doesn’t reflect on the network, then neither does a good one. It doesn’t matter.” Indeed it doesn’t.
Posted in Industry | News Blog | Sales | 14 comments
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