TTAC Got It Wrong: GM Suppliers Wait 90 Days Plus for Payment
By Robert FaragoOctober 11, 2008 - 854 views
After our story on GM’s letter to its non-core suppliers changing payment terms to 60 days, I received a flurry of emails that asked, in effect, are you out of your fucking mind? For example, “I do not know of anyone in the Supplier, Engineering, Consultancy or Technical world who has EVER been paid by GM in anything less than 90 days.” And “a friend that owns a Tier Two company has to be a real pain in the ass to GM Purchasing to get paid anywhere near 90 days. They told him once on the phone ‘We pay everybody 180 days payable…that’s our policy, what makes you so special that you think you should be paid in less than 90 days?’” (Interestingly, when he stopped shipping Just-in-Time parts to GM, they overnighted him a check.) In general, we’ve learned that The General’s suppliers generally get paid in 60 to 90 days. And “Even 60 days is not so bad from an OEM.” TTAC apologizes for any misconception created by our earier report.
Posted in Chapter 11 | High Finance | News Blog | 9 comments 
Bailout Watch 114: GM to Ask Fed for $5b+ Loan
By Robert FaragoOctober 11, 2008 - 548 views
I know I said I’d be starting a Bailout Watch 2 series on Monday, but events have once again overtaken us. And to avoid confusion, I’ve decided to simply continue the orginal Bailout Watch series, as it’s all pretty much of a muchness: your tax money for GM, Ford and/or Chrysler. This morning, Barrons reports the inevitable: The General is looking to hit-up the U.S. Federal Reserve for a little walking around money. “How much the car producer would seek is unknown,” Barrons says. “but it needs $5 billion to meet its goal of completing a $15 billion liquidity program, much of which actually is coming from cost cuts.” So, can they do that? Of course they can! “Under the law, GM would pay a rate of interest that is higher than the top one charged to banks for cash advances. The Fed can lend to GM without demanding collateral if it gets the votes of five of its board members.” Check this from the Fed’s Discount Window Website: “In unusual and exigent circumstances, the Board of Governors may authorize a Reserve Bank to provide emergency credit to individuals, partnerships, and corporations that are not depository institutions.” Strangely, both this story and the GMÂ Chrysler merger non-deal rely on “two persons with first-hand knowledge of the situation.” Same two? Never mind. This one we believe.
Posted in Bailout Watch | News Blog | 17 comments
GM - Chrysler “Merger:” A Little Background
By Robert FaragoOctober 11, 2008 - 1,220 views
The Wall Street Journal had a look at the idea of a GM - Chrysler merger. They say “Central to the plan is private-equity firm Cerberus, which owns 80.1% of Chrysler and 51% of GMAC, an 89-year-old auto lender that has been seriously weakened by its moves into mortgage banking. Cerberus proposed a swap in which GM would acquire Chrysler’s automotive operations, and in turn give Cerberus its remaining 49% stake in GMAC, these people said.” This is true. BUT it occurred well over a year ago, when Cerberus was hot to merge Chrysler Finco with GMAC. (In fact, when Cerberus bought Chrysler, TTAC suggested that this play was the reason for the purchase.) GM said no. We can now reveal that later, when excrement and air movement device collided, Cerberus proposed the exact opposite deal: selling their share of GMAC back to GM. That also went nowhere. Today, both Chrysler and GM– and Chrysler Finance and GMAC– are dead companies walking. So deal or no deal? No deal.
Posted in Chapter 11 | News Blog | 9 comments
Chrysler vs. GM (and Ford)
By Robert FaragoOctober 11, 2008 - 980 views
Posted in Chapter 11 | Marketing | News Blog | Safety | 15 comments
Wild Ass Rumor of the Night: GM and Chrysler Merger
By Robert FaragoOctober 10, 2008 - 1,669 views
This is one of those “news” alerts where I check to see if it’s April 1. Not so Ray Wert. Jalopnik’s main man is happy to hook, line and sinker the The New York Times‘ story that “General Motors is in preliminary talks about a possible merger with Chrysler, a deal that could drastically remake the landscape of the auto industry by reducing the Big Three of Detroit automakers to the Big Two.” There are three reasons why this story means WAR for TTAC. First, NYT scribe Bill Vlasic is a longstanding Detroit cheerleader. Second, the story backpedals in the second paragraph: “The talks between G.M. and Cerberus Capital Management… began more than a month ago, and the negotiations are not certain to produce a deal. Two people close to the process said the chances of a merger were ‘50-50′ as of Friday and would most likely still take weeks to work out.” And this: why? What possible benefit would this deal be to anyone– save the consultants who’ve been paid millions to try to answer that question without laughing. The Times’ theory? “Given that both G.M. and Chrysler are struggling, the two sides may determine a merger may not be in their best interests.” Oops! Let’s try that again. “While G.M. and Chrysler may be hamstrung by labor contracts from cutting jobs, the two companies could combine dealers, product lines and advanced vehicle technology.” About a week ago, we heard that GM was considering buying Jeep to combine it with HUMMER. We didn’t repeat that absurdity (until now). But then, we’re not the New York Times. Or Jalopnik.
Posted in Chapter 11 | News Blog | 35 comments
Question of the Day: Will Cheap Gas Resurrect Gas-Guzzlers?
By Robert FaragoOctober 10, 2008 - 1,483 views
As the U.S. economy craters, the price of gas is about to fall below $3 a gallon. Most experts believe that lower fuel costs will not lead American consumers into gas-guzzling SUVs anytime soon. If at all. Given the sudden arrival and frentic pace of the last gas price spike, even an extended period of low, stable fuel prices wouldn’t convince American consumer to “trust” lower pump prices. In other words, an entire generation of drivers may have suffered “pump trauma.” And until somebody buys the damn things, and lots of ‘em, SUV and pickup truck residual values will remain low enough to make an ant’s ankles look like Godzilla’s eyeballs (or something like that). But hey, that’s the 411 from “experts,” not TTAC’s Best and Brightest. So I turn to you for a more thoughtful analysis. Will Americans “forgive” their gas guzzlers and “forget” their pain at the pump, plumping for ye olde guzzlers when the economic crisis passes? If so, how long would it take? What effect would cheap gas have on eco-oriented whips like the Chevy Volt and Toyota Prius?
Posted in News Blog | Question of the Day | 62 comments
2010 Mazda3 Interior Spied
By Justin BerkowitzOctober 10, 2008 - 2,976 views
I dig it. I reckon some folks won’t like the Civic-style dual cowl, but I appreciate the return of driver-oriented dashboards.
Picture is courtesy Speigel.de.
Posted in Future Vehicles | News Blog | 28 comments
Bruce Willis Muscle Cars For Sale
By Robert FaragoOctober 10, 2008 - 1,492 views
Interesting photo. Either Bruce is majorly pissed about something the photographer said or did (see: Winston Churchill Karsh), or he’s finally perfected the art of looking like a something other than an endlessly pampered, egomaniacal movie star. Anyway, his timing for this sale sucks. Anyone who clings to the belief that prices for vintage muscle cars will defy the gravity of the stock market is seriously deluded. By the time this deal goes down– Saturday, October 25 at Bonham’s in LA– the muscle car market will have tanked. Are there enough “crotch sniffers” (nice one Stephan) who’d pay a premium to own a muscle car owned by a man famous for saying “Yippie ki-yay, motherfucker”? I doubt it. It’s one thing to own an example of the breed purchased by Steve McQueen (or similar) back in the day. It’s another to own a muscle car bought by a celebrity who uses it to pose like a tough guy, even though the toughest thing about him is his agent.
Bonhams (all images courtesy Octane magazine) »
Posted in Hammer Time | New Cars | News Blog | 9 comments
VW Is Hurting Too: Spanish Subsidiary Seat Imploding
By Justin BerkowitzOctober 10, 2008 - 871 views
Most Americans don’t know this, but Volkswagen has too many brands. Volkswagen, Audi, Seat, Skoda, Bugatti, Bentley, and Lamborghini. Bugatti, Bentley, and Lamborghini are in their own category. In the mainstream though, VW has four brands competing with each other throughout the European markets. They subsist somehow for three reasons. (1) While the bulk of Audi’s sales come from 4-cylinder A3s and A4s, they are a player in the luxury market. (2) Because of regional favoritism (i.e. the Spanish buy Seats because it was once a Spanish company). (3) Pricing and brand stigma. VWs are more expensive, but a respectable car brand. Seats are unusual outside of Spain and Italy, are priced cheaper than VWs, and tend toward weak interiors. Skodas are still the butt of jokes from when the company cranked out stereotypical Eastern European cars. All good? No. The model isn’t working. Spain’s economy, which has been seriously hurting ever since 1588 they went on the Euro, is getting slammed even worse right now. Sales across Europe are down, and Spain is taking it very hard. “I don’t think the Spanish market will recover, given everything that’s happening,” Seat President Erich Schmitt told Spain’s Expansion newspaper. While Automotive News Europe says VW has no plans to close or sell Seat - down 22% this year - that’s what they always say. Until they close or sell it. TTAC won’t be chronicling this story in close detail, but Seat is on European deathwatch.
Automotive News Europe (sub) »
Posted in Europe | News Blog | Sales | 20 comments
Daily Podcast: What Do You Think of the New Design?
By Robert FaragoOctober 10, 2008 - 373 views
As they used to say in England, TISWAS (Today Is Saturday, Watch And Smile). Oh wait, it’s Friday. MAN, what a week. The news cycle has been nothing short of ferocious, what with the financial meltdown setting a blowtorch to GM, Ford and (latterly) Chrysler’s assertions that they’re going to get the Titanic to New York if it kills you (i.e. taxpayers). Yes, there is that. We’re going to start our Bailout Watch 2 series next week, as it’s only a matter of time– and not much of it– before the whole “Too Big To Fail” shtick pops its head above the proverbial parapet. Meanwhile, we’ve been grappling with the new site design. As expected, the new format killed a LOT of page views; visitors no longer have to click to individual news stories via the home page. We played with the idea of splitting the news posts up, “click through for the payoff” Jalop and Autoblog style, but discarded the idea (any such bisection would be more about us than you.) The good news: the galleries created a net page view gain. When the feature went live, we saw a net gain of 40k page views– in the first day. Fair enough. But that’s from our perspective. What’s your take on the new design? And while you’re thinking about that, Justin and I devote the entire cast to the pall cast over Detroit by, well, lots of stuff.
Posted in Daily | Daily Podcast | News Blog | Podcasts | 15 comments
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