When Autoblog was invited to one of those hurried and harried press conferences at the Shanghai Auto Show, and asked GM China president Bob Socia about car exports from China to America, they were told:

“It could very well happen. It could very well happen. You know, I’m not sharing any plans with you, but we try to keep open as to what makes sense … We’re open to be doing that. There’s no reason why we can’t be exporting to the States.”

We gave the matter short shrift. We know China-made Honda Fits are in Canada and elsewhere without giving people fits. Also, we have been following GM China’s export activities for many years. GM started exporting the Sail from China in 2010, making it “the first time a world-class automaker will export from China a model it developed in the country,” as the Nikkei said. Actually, it was GM that got China’s heretofore sputtering auto export machine going.

For some folks, like Chris Butler at the Franklin Center’s Watchdog site for Tennessee, GM’s exports from China were new. Butler called GM and asked whether China will become an export base for the General: He reached spokesman Greg Martin, who said:

“There will be no exports of these cars built in China. Cars that are built in China are sold in China.”

When asked about Ed Niedermeyer’s Wall Street Journal op-ed that said that “GM is targeting 100,000-plus exports of Chinese-made cars this year” Martin backpedaled, saying:

“Well, some of those vehicles may go to Indonesia, Taiwan or Korea. I don’t know if it’s 100,000 plus, but those places I just cited are also bases for smaller Asian markets over there for us.”

The spokesman did not know what he was talking about. He was wrong about 1) no exports of cars built in China, and 2) the Chinese exports only going to Asian markets. As a matter of fact, GM has been exporting from China for a decade:

2002: Shanghai GM to Export Engines to Canada:”The export of engines to North America represents a milestone for China’s most advanced automaking facility.”

2006: GM Bets China Will Become Crucial Export Base: “GM sends engines made by one of its joint ventures with state-controlled Shanghai Automotive Industry Corp. to its plants in Canada and the U.S. The partners have also exported small numbers of Chevrolets, designed by a GM affiliate in South Korea, from China to Russia and Chile.”

2010: Shanghai-GM: Chevrolet Sails to Chile and Libya: “The passenger car joint venture of SAIC and General Motors said that it has received initial order for close to 10,000 Chevy Sails from countries outside China, mainly Chile and Libya.”

2012 (GM Annual Report): “Export sales from China reached 76,000 units in 2012 and are expected to reach 100,000 units in 2013”

2013: General Motors accelerates China push: …”[Bob Socia, who runs GM of China] said …GM plans to boost its exports from China to 300,000 by 2015. This year the company expects to export between 100,000 to 130,000 vehicles.”

2013: “Through its China-based business, GM exports vehicles such as the Chevrolet Sail to other markets, including South America and the Middle East.”

2013: “Shanghai GM doubles exports of Chevy New Sail … Its main export markets include Chile, Peru, Algeria, Ecuador, Colombia and India.”

GM has been exporting from China for more than 10 years. It is shipping cars from China not just to smaller countries in China’s periphery, as Martin said. The cars go to South America, Africa and the Middle East. Cars that go there from China don’t go there from America. GM wasn’t bailed out to create jobs in China. It was bailed out to create jobs in America. It wasn’t bailed out so that its spokesmen can lie to the taxpayers that were forced to fund the bailout.

Prepare for a low intensity price war over electric vehicles. GM announced that its all-electric  Chevrolet Spark, going on sale next month in California and Oregon, will sell for as low as $19,995 after the full federal tax credit of $7,500.  According to the calculations of Reuters, that’s “as much as 38 percent less than what it takes to buy its larger sibling, the hybrid Volt.”

The larger Volt sells for about $32,500 after the tax credit. MSRP of the base Spark will be $27,495, undercutting the Mitsubishi i-MiEV ($29,975) and the Nissan Leaf ($29,650). It is expected that there will be a reaction.

The car can be leased for as low as $199 a month for 36 months with $999 due at signing. California EV owners may also qualify for other state and local tax credits and incentives of up to $2,500, reducing the price to $17,495. EV owners in California are also eligible for carpool lane access with only a solitary driver in the car.

Detroit area teens looking for a summer job can now get a paid internship with GM, and will recieve education, training and service projects to carry out over the summer. Sure beats my prior summer jobs as a carnival barker (I’m not kidding).

According to the Wall Street Journal

The students will develop and implement service projects in the Detroit area under the guidance of 60 GM retirees and other volunteer employees. 

Potential service projects range from painting and cleanups at local parks, planting and tending a community garden, setting up food banks or meal programs. Students will also be taught such “life skills” career development, banking and finance, and health and safety.

Not to take away from what GM is doing (hey, maybe what’s good for GM is good for America after all) but I can’t help but think that this sort of program should be implemented in schools as well as by private corporations. A personal finance course on its own would be a tremendous benefit for young people.

It was decided that something had to be done. Special committees were formed and within a matter of weeks, the belching black smoke that came out of the roof of GM headquarters via a Chevrolet Chevette diesel signified a new initiative for the company.

A human sized cat with the “head of a Datsun”, as lineworker Ben Hamper put it, was given a plastic cape and marching orders to change GM quality by any means necessary.

This meant walking around factories and waving. No, that last sentence is not a joke. GM hired the then un-named Quality Cat to walk around and wave to all the assembly line workers while they were busy installing rivets on trucks whose designs dated to the Nixon era.

It worked in much the same way as putting various small flags on Oldsmobiles made them more competitive with imports. The line workers cheered on their new savior for all things quality, and were even given the rare privilege of naming the human sized, cape wearing mascot.

“Management announced that they would reward the most creative of these entries with a week’s use of a company truck. Hot damn! The eventual winner of the contest was a worker who stumbled upon the inspired moniker Howie Makem. Sadly, my intriguing entry, Wanda Kwit, finished way the hell down the list somewhere right between Roger’s Pussy and Tuna Meowt.” (click here for the full story)

A star had been born. At least for a short while. Rumor has it that Howie Makem’s popularity was soon a liability in the insular GM universe that was the 14th floor, and a long line of enemies soon emerged.

GM unfortunately had three other feline Howies vying for CEO Roger Smith’s attention at the time. Howie Rakem, assistant to GM’s Chief Financial Officer. Howie Fakem, lead engineer for the Cadillac Cimarron, and Howie Takem, chief architect for the Hamtramck plant which required the condemnation and eviction of over a thousand Poletown residents.

The three Howies considered the idea of a quality cat to be about as welcome as a stupid dog, and quietly gave Howie his walking papers.

Since then Howie Makem is rumored to have moved to Reno where he has decided to reach out to the greater GM community along with fans the world over. So please. say a happy birthday to Howie today, and perhaps offer him a little kibble for all the good work he did back in the day.

Following in the footsteps of Spanish bank Santander, GM Financial announced that it would enter the prime lending market in 2014.

SNL Financial, a subscription-only financial news service, reports that

General Motors Financial Co Inc officials said on a May 2 conference call that the company plans to launch a prime retail product in North America on a limited basis with an initial focus on General Motors dealers with which the captive finance company maintains a commercial lending relationship.

GM Financial, formerly AmeriCredit, was acquired by GM in 2010 to provide leasing and subprime financing options, alongside Ally Financial, which absorbed the former GMAC. While GM Financial claims that they don’t want to become the ”predominant” prime lender for GM dealers or “supplant the banks and other providers in this market,” CEO Daniel Berce said the move would help achieve “strong growth in our earning asset base over time.”

Given GM Financial’s portfolio, it’s not hard to see why Berce is eager to transition to prime lending and see some growth in its earning asset base. In 2012, 85 percent of GM Financial’s portfolio was subprime, while delinquencies grew by $200 million, to $933 million according to its latest SEC filing. Meanwhile, GM Financial’s prime customers are said to have default rates in line with the industry average. Small wonder that the firm is looking to capture more of these lenders and eliminate some risk from its subprime-heavy portfolio.

Subprime aside, the move into prime lending will help GM Financial transition into a full-fledged captive financing arm. In addition to offering lending services to consumers, GM Financial also offers commercial lending products for its dealers. SNL reports significant expansion in these areas for GM Financial

GM Financial’s lease originations for GM vehicles of $620 million in the first quarter marked a sharp increase from $384 million in the year-ago period; the captive is a full-spectrum lease provider for its parent company. GM Financial also reported $882.7 million of commercial finance receivables as of March 31, up from $560 million on Dec. 31, 2012. The company rolled out the commercial loan products in mid-April 2012.

With Chrysler forming their own captive arm with Santander and GM Financial’s expansion, Ally stands to be the biggest loser. According to SNL, their commercial floorplan financing business saw a 3 percent decline in Q1 2013 versus the same period last year, and both Santander and GM Financial will undoubtedly take a good bite out of Ally’s consumer lending business, which previously targeted Chrysler and GM buyers. Ally’s President, William Muir, was rather blunt in his assessment of the Chrysler situation, stating ”pure subvented business from Chrysler should go to zero pretty quick”.

Now that Opel workers in Bochum refused a plan to keep the factory open, now that an intervention by UAW’s Bob King went exactly nowhere, the question is where to move production of the Opel Zafira when Bochum closes its doors by end of 2014.

In the running: Rüsselsheim, Germany, and Ellesmere Port, UK.

Both locations are top options on the lists of GM and Opel managers, Automobilwoche [sub] says.  Opel’s board of management will make a decision by June, which the supervisory board will have to approve.  A member of the supervisory board told Automobilwoche that  “business aspects” speak for Ellesmere Port, however, he hopes  that the Zafira will remain in Germany.  The union has half the seats of Opel’s supervisory board, and we know what the unions hope.

Forward contracts on popcorn skyrocketed at the Chicago Mercantile Exchange as former TTAC Chief Editor Ed Niedermeyer drew massive fire for his recent op-ed  in the Wall Street Journal.  On Sunday, GM’s PR Chief Selim Bingo blasted Niedermeyer for “stepping through the looking glass” and for “carelessly comparing GM’s spending in China to that in the U.S.”

A day later, Bob Lutz joined the fray.

The former marine jet attack pilot and Korean war veteran Lutz (never mind that the aging alpha male loves to be depicted with an un-American French/German Alpha Jet) did not use sissy Alice in Wonderland imagery, but overwhelming firepower. He calls Ed’s articles “rants” and accuses him of swapping “truth” for “cheap political pandering.” He blames Ed of the written equivalent of showing his genitals in Central Park, saying Ed “exposes his naiveté by not knowing (or acknowledging) the rules a foreign automaker must follow to participate and profit in China.”

Indicative for the massive pain Ed is causing GM, Lutz sees it necessary to dig into Ed’s meager finances. Lutz (or whoever did the digging) did not find much:  Ed “was paid $27,000 by a Tea Party organization in the last election,” says the article. If Niedermeyer would have remained with TTAC, he could have made more. Not much, but more.  Lutz quickly says that there is “nothing wrong” with it – but then why mention it at all?

Once through with invectives and digging into personal finances,  Lutz ploughs the furrow laid down by Bingol the day before, namely that no American money ever went to China, instead, it went the other way. Lutz catches Ed making a “most egregious error:” Ed said that GM invested only $8.5 billion in its U.S. operations since the bankruptcy. Wrong, wrong WRONG, shouts Lutz: “Since 2009, GM has invested about $9 billion in plants and people.”  The firefight (I understand Ed is on his way to the armory) is loud and making headlines.

Ed has struck a raw nerve at GM. In the shooting business, they call that reconnaissance by fire. If a hail of bullets answers, there  usually is something worth defending.

I have my own beef with Ed: Instead of giving the impression that GM is sending money to China (he never said it, but he has been readily perceived as such) Ed should look deeper into money GM had received from China. The story of GM having been bailed-out by SAIC and hence the Chinese government in times of severe cash flow problems, the co-signing of loans, the back and forth of the Golden Share, the India business, all of that has never been properly explained. All I can tell you is that one does not want to be the recipient of Chinese generosity in times of need. The interest payments on that typically are very big and very painful. The Chinese won’t do what Washington did. They want their money back, in full, again, and again, and again.

Last month, GM CEO Dan Akerson said that GM might move production away from South Korea if tensions with North Korea escalate. Korea labor unions were not amused, saying that Akerson was using the crisis as a pretext to gain the upper hand in upcoming labor talks.

Last week in Detroit, Akerson told GM’s South Korean union leader that he won’t pull GM out of South Korea. He also said he is unhappy with the Korean union, and that he will bring up the matter this week with South Korea’s President Park Geun-hye, when the “Iron Lady” will visit the U.S. this week.

Now, the union is fuming.

“We are upset by his remarks. We did not go all the way to the U.S. to hear that,” union spokesman Choi Jong-hak told Reuters.

More than four out of 10 Chevrolet vehicles sold globally, are made in South Korea.

In January, rumors about GM  shifting production to underutilized European factories made the union threaten “war” if GM does that. Knowing the militant Korean unions, this is not just a figure of speech.

 The days of Government Motors are slowly coming to an end. “The U.S. Treasury will begin another round of sales for General Motor stock acquired during the government’s bailout of the auto sector,” the Treasury told Reuters.

In December, the Treasury said it would fully exit its GM investments within the following 12 to 15 months, “subject to market conditions.”  Executives want the government to be out ASAP. They are already looking at brochures of executives jets and are making plans on how to spend the big bonuses.

Chevy Cruze in Beijing

While GM’s head-flack Selim Bingol was swearing at Ed Niedermeyer, and that it’s not true that GM is sending its money to China, GM’s Chinese operation again outsold America. GM China sold 261,870 units in April, up 15.3%. In the U.S., GM sold 237,646 in April. In the first four months of the year, GM sold 821,707 vehicles stateside. Meanwhile in China, it sold 1,078,243.

Shanghai GM, i.e. Buick. Chevrolet and Cadillac are up a very solid 29.2 percent in April and gained 16.8 percent in the first four months. In April, Cadillac nearly doubled its formerly lackluster Chinese sales, boosted by 2,006 units of the locally assembled XTS. Chevrolet’s China sales are powered by 17,277 units of the  Cruze compact and 15,409 units of the Sail supermini.

The small commercial sector that helped GM goose its numbers in the past is still down. Sales of the Wuling brand rose only 5.7 percent, sales of GM’s joint venture with FAW are down a bit.

GM’s strong showing, especially at its core sector, bodes very well for the Chinese auto industry.

A terrorist, about to enter the RenCen

Even after Ed Niedermeyer put on coat and tie as proper attire for our Via Dolorosa to  GM’s towers, GM’s Über-PR Chief Selim Bingol did not like him. “We don’t negotiate with terrorists,” said Bingol, frustrating my naive attempts at fence-mending. Instead of being sent to Gitmo,  one of the terrorists writes frequent op-ed pieces at the Wall Street Journal, causing Bingol to go on the counter-attack.

“Edward Niedermeyer’s suggestion that China is the ultimate beneficiary of the U.S. auto rescue doesn’t stand up to basic fact-checking” writes Bingol in a letter to the Journal today. This in response to an op-ed piece penned by Niedermeyer in the Journal last week where Niedermeyer writes that China ” is disproportionately benefiting from the bailout of America’s erstwhile automotive icon.” Which is slightly different than “ultimate beneficiary,” but Bingol is paid to spin, and he is doing his job.

Wisely, Bingol side-steps the fact that GM will be creating 6,000 new jobs in China, while “since 2005 the number of workers it employs in North America has fallen by 76,000,” as Niedermeyer wrote.

Instead, Bingol focuses on what is more important than jobs at GM, money: “The $11 billion in capital that will be spent in China by 2016 is coming out of our joint ventures rather than Detroit and is far less than the approximately $16 billion in capital GM will invest in the U.S. over that time.” Commenters at the WSJ are not buying it, arguing that instead of spending the money in China, one could spend it here.

Bingol also says that Niedermeyer’s “speculation over the possible loss of GM jobs or technology to China is simple fear mongering, offered without evidence because it doesn’t exist.”

Michigan Senator Debbie Stabenow and her colleague Carl Levin will be relieved to hear that from the horse’s mouth, so to speak. Debbie and Carl missed no opportunity to complain about jobs and technology making off to China. They should (but probably won’t) be glad to hear that it is not true.

Porsche is looking to fill 1,400 jobs in for its expanded factory  in Leipzig, where the new Macan SUVlet will be built by the end of the year. A lot of these jobs will go to current Opel workers, says Germany’s Focus.

According to the report, Porsche received  32,000 applications for the 1,400 jobs, “most of them by Opel workers in Bochum, where the plant will be closed by the end of 2014.”  Porsche is looking for 1,000 workers and 400 engineers. Already, a complete Opel team changed sides to work in the new paint shop in Leipzig.

Changing jobs is more attractive to younger workers. Workers who have been at Opel for decades will make more money by waiting to get fired before the plant closes and to collect very generous severance payments of between $200,000 and $300,000.

Our beloved Ed Niedermeyer is back in the Wall Street Journal with another op-ed, entitled “Welcome To General Tso’s Motors”. I’m sure you can all figure out the gist of it. Check it out here. Anti-GM-bias police, grab your defibrillators.

We don’t get enough good questions from the readers, and it’s a damn shame. Reader Steve Hofer sent us a great one via email; what if Elon Musk was running General Motors?

I was thinking about how Steve Jobs came from what was essentially a failed company with NeXT, to raise Apple from the dead. I imagined the possibility that GM would take over Tesla. Thinking of the Apple precedent, I imagined what if Elon Musk pulled a Steve Jobs and leveraged a board seat into effective control of the company. Assuming Elon became GM’s CEO, does he have what it takes to do a good job? Perhaps he does. I have some reasons.

(1) Elon is smarter than anyone at GM.

(2) He understands how to put together a critical path to implement very complex tasks, whether building an electric car or a private space program.

(3) He is not risk adverse.

(4) He is not tied to 19th or 20th century ideas.

(5) More traditional choices failed and will likely fail again.

Personally, I am not willing to take the Thomas Friedman-esque leap of logic that posits that a successful tech entrpeneur should be put in charge of America’s auto industry. Tesla and GM are as different as two car companies could possibly be, and who is to say that there isn’t somebody at GM that has an equally formidable intellect as Musk does. We don’t know for sure one way or another. In any case, there are plenty of commenters who have actually spent time working with (or for) GM who have a much better insight than I do. Have at it.

GM’s pickup truck changeover has received all the attention of TTAC’s commentariat, but GM knows it needs more than new trucks to make up for decades of deteriorating market share. All hopes are on a wave of new showroom offerings. “Seventy percent of the automaker’s U.S. portfolio will be refreshed between the start of 2012 and the end of 2013, and 89 percent will be refreshed by 2016,” writes the Detroit News.

According to the Detroit paper, GM “says its barrage of new products should help increase its market share over the next few years.”
Michelle Krebs of Edmunds.com is not so sure, saying that GM announced an impending turn-around of its market share since the 1980s, only to lose share ever year. Krebs points to the poorly received Malibu and the stiff competition from Ford and the Japanese automakers.
Alan Batey, GM’s vice president of U.S. sales and service, promised “a gradual increase.”
Morgan Stanley analyst Adam Jonas says to keep an eye on Japanese makers who could invest savings from a weakening yen into incentives, or better equipped cars.

Bob King’s attempts to ingratiate himself with German unions, and to make Opel’s Bochum workers reconsider their decision to turn down Opel’s restructuring plan, are being ignored. Actually, it appears as if they had the opposite effect. Days after King’s comment, Bochum plant manager Manfred Gellrich rejected new discussions, saying Opel does not want to “waste precious time,” Reuters says. Over the weekend, Opel dropped another bomb: Bochum will be closed completely. A parts depot that was supposed to stay open, will also close its doors.

With the shuttered logistics center, another 420 jobs will be lost, raising the number of redundancies to 3,700, says Der Spiegel. “It does not make sense to leave the distribution center in Bochum,” once manufacture of cars stops, an Opel spokesman told the magazine. Bochum’s works council had not put much faith in the plan in the first place – one of its reasons for rejecting the plan. Opel has another parts center in Rüsselsheim.

The Bochum plant is scheduled to close by the end of next year. Opel will move the production of its Zafira MPVs elsewhere, two years before a planned model changeover.

Companies – or so they say – pay their executives the big bucks to keep them from leaving, or, in corporate-speak to “retain” them. In the case of GM CEO Dan Akerson, they pay him more because he will leave. Nasty people will say “to make him leave.”

Claiming that its 64-year-old CEO may retire soon, GM changed Akerson’s package for 2012. Instead of a mix of “Restricted Stock Units,” (which Akerson would have to keep in the kitty for three years) and “Salary Stock Units” (which he can trade in immediately), Akerson received everything in immediately trade-inable stock, “in acknowledgement of the possibility of his retirement before the completion of the three-year vesting period for RSUs,” a filing with the SEC shows. It’s good to know that Akerson won’t have to worry about his retirement (like some Delphi managers, for instance.)

It is not immediately clear how much money Akerson really made.

One table makes us believe he made $9.1 million in 2012.

Another table says Akerson made $11.1 million.

Bloomberg, which is better at deciphering these filings, is convinced that “Akerson’s compensation, which is subject to government review because of GM’s 2009 U.S. bailout, increased 44 percent to $11.1 million last year.”

At the RenCen, people claim ignorance when it comes to Akerson’s retirement plans. “We certainly wouldn’t speculate on what he will actually do — that’s up to him,” spokesman Tom Henderson told Bloomberg.

And who will be the man or woman after Akerson? According to Bloomberg, the folks in the running are Steve Girsky, Mary Barra, and TTAC commenter NADude, also known as Mark Reuss.

News of GM potentially exporting cars from China to the United States in the near future has some wondering if the General will be the first OEM to sell Chinese made cars in the United States. One can have a diverse array of opinions on the political, social and economic impact of such a move, but from a product standpoint, it may not be such a bad thing.

Talk of GM exports comes from this Autoblog article, where GM China President Bob Socia was asked about new plants providing exports to America.

“It could very well happen. It could very well happen. You know, I’m not sharing any plans with you, but we try to keep open as to what makes sense. And Tim [Lee – GM's president of international operations] is the right guy to talk about your manufacturing footprint. If it make sense to tool up a vehicle in one location as opposed to two, from an economic perspective, Tim will say that’s what we should be doing. We’re open to be doing that. There’s no reason why we can’t be exporting to the States, and obviously the States are exporting here.”

GM’s ventures in China have yielded some good fruit. The current generation Buick Lacrosse was largely developed by SAIC for world markets and has been a success for Buick. The GM-SAIC venture itself is regarded as perhaps the best JV in China, thanks largely to GM’s expertise and willingness to share technology and resources.

TTAC has also sampled the Chinese made Honda Fit, currently sold in Canada, and there was no appreciable difference in quality between it and other Japanese-made Fits that we’ve sampled. GM’s biggest hurdle may involve the optics of imported Chinese cars, rather than any major gaps in quality.

UAW boss Bob King told Opel’s Bochum workers to vote again, and to this time accept a deal that had been worked out between the German metal worker union IG Metall and GM.

According to Reuters, “UAW President Bob King, who is a member of Opel’s supervisory board, said on Tuesday that workers at GM’s Opel plant in Bochum, Germany should ask to vote again on the restructuring deal they rejected last month that would have kept the plant open through the end of 2016 and retained 1,200 of the more than 3,000 employees.”

The plan had been overwhelmingly rejected by Bochum’s workers. The plant is now scheduled to close by the end of 2014.

King, who oddly sits on Opel’s Supervisory Board as a representative of the union despite being the chief of one of GM’s biggest shareholders, said he “would really hate to see that plant closed when so much effort was put in by IG Metall and the works council to save it.”

The plan is likely to fall on deaf ears. “We gave the employee a clear choice,” spokesman Harald Hamprecht told Reuters. “We respect the outcome. The Opel supervisory board acted accordingly and we are moving on.”

Bochum’s workers have not been heard of, but it is unlikely that they are sympathetic to the plan. They had accused their unions of throwing them under the bus, and they probably won’t listen to a major shareholder of GM.

King is trying to curry favors with IG Metall, and to enlist its help for the UAW’s efforts to organize the U.S. plants of German transplants.

Toyota released global production numbers for the first quarter of 2013 today, which gives us a chance to officially initiate our 2013 tracking of the World’s Largest Automakers, based on hard data. Having made 2.5 million units in the first three months, Toyota maintains its lead over runner-up GM and third-place Volkswagen, however, the field is tight.

In the first quarter, Toyota is 154,000 units ahead of GM, only 91,000 units behind GM follows Volkswagen. Toyota had planned for a flat 2013 to digest the large increases in the prior year. Asked why his company is down by seven percent in the first quarter, Tokyo-based Toyota spokesman Dion Corbett said that this is largely a mathematical phenomenon: “In the first quarter of 2012, we were still in the catch-up phase and worked overtime after the natural disasters of 2011.” Indeed, Toyota’s worldwide output in the first quarter of 2012 had jumped 66 percent over the first quarter of 2011, which had only be down 14 percent compared to the prior year. The full impact of the disasters was felt only in the months later.

The on-going troubles of Japanese brands in China affected the Q1 results, but only marginally. Toyota’s first quarter production in China stood at 176,000 units, Corbett says. That is down 17.2 percent. In a tight race like this year’s however, every unit counts.

Overall, Toyota is well positioned to maintain its lead throughout the year, and to end the year as the first automaker to pass the 10 million unit mark. A lot can and does happen throughout the year, and the race is still winnable by all three, with varying degrees of difficulty. Volkswagen is held back by a dismal Europe, however, via Opel, GM has to contend with the same problem, albeit to a lesser numerical degree. Toyota’s exposure in Europe is minor. GM and Volkswagen are neck-on-neck in China, where Toyota will continue to suffer. All three are well established to profit from a growing U.S. market, GM and Toyota more so than VW. Slightly off most RADARs, Toyota will gain most from a surging Southeast Asian market. 2012 total sales in the region (including India) exceeded 9 million, with most indicators pointing up. Toyota’s sales in the region were around 1.5 million. “That’s roughly double of what we sell in China, and in China, we have to share,” quipped a Toyota executive a while ago.

Now that Chevrolet has revised their EPA mileage estimate for the Chevrolet Cruze Diesel, from 42 mpg to 46 mpg, we need to revise our own estimates.

Initially, we called for a break-even period of 115 years, based on TrueCar’s formula for calculating the break-even period on fuel economy packages. For argument’s sake, we used TrueCar’s formula of driving 15,000 miles per year, though we used Chicago, IL as our sample for gas and diesel prices. The lowest prices found on GasBuddy at the time of the original article was $3.50 for regular and $3.80 for diesel respectively. For consistency’s sake, we’ll stick with that, though obviously the break-even point will change along with fuel price fluctuations.

Since city and combined figures haven’t been announced yet for the Cruze diesel, I decided to only use the highway figures for a similarly equipped gasoline 2LT . As the calculations show, the Cruze diesel does use a smaller quantity of fuel annually, but that’s offset by the price premium one is required to pay for diesel. Using the initial 42 mpg highway rating yielded a mere $22 in annual fuel savings and a $2,550 price gap. At that rate, it would take over a century -roughly 115 years – for a potential owner to “break even” on the Cruze diesel. But with the 46 mpg rating, the fuel savings grows to $142 annually. This shortens the break-even time to about 18 years; still fairly long, but much shorter than it would take compared to opting for a Cruze Eco. The reason for this is because at 42 mpg, fuel economy increases roughly 10 percent, while fuel costs rise by about nine percent. It’s a wash. But at 42 mpg, fuel economy improves by nearly 20 percent so you have a fuel-cost adjusted increase that goes from one percent to 11 percent, thus cutting the payback time by a factor of almost ten.

And now, to pre-empt some of the questions/criticisms from last time: yes, this analysis is incomplete due to only having the highway figure. I am aware of that, but I wanted to show that TTAC is not afraid to revise their predictions accordingly, in an open and transparent fashion. When the final numbers are released, we can do a proper comparison with the Jetta TDI (and maybe the Mazda6 diesel as well). I’m also aware that people buy diesels for the driving experience (low-end torque etc), but I’ll leave that one to Alex Dykes or whoever ends up reviewing the car.

Data below, for anyone interested

Opel’s Supervisory Board, with half of its members delegates of the labor union, decided today the first closure of a German car factory in decades. According to Reuters, “Opel will end producing Zafira MPVs at its 50-year old Bochum plant by the end of next year, a move that has triggered a rare and public split within union ranks following months of tough negotiations.”

The closure will lead to the loss of 3,000 jobs in Bochum, as part of Opel’s attempt to put an end to 15 straight years of losses in Europe. It will be a while.

The Bochum plant makes the Zafira, and the current model will be produced through 2016.  Where that will happen after 2014 is anybody’s guess. Opel’s works council in Bochum was betting that GM would not want to shift production before the model change and voted against a compromise deal that would have kept the plant running through the end of the model’s life-cycle. Workers in other Opel plants supported the deal that had been worked out between unions and management.

According to Reuters, “labor leaders in Bochum, a former coal mining town in the economically depressed Ruhr region, believe colleagues at Opel’s other three German plants were all too willing to sacrifice Bochum in order to save their own factories.”

The board decision was pre-ordained. According to German rules, if the board is split, the Chairman can cast a tie-breaker vote. The Chairman of Opel’s Supervisory Board is Steve Girsky. By casting two votes, he sealed the fate of the Bochum factory.

However, Girsky’s tough line will become very costly for GM. Under normal circumstances, closing a European plant even with the cooperation of the unions does not come cheap. As the examples of Antwerp and Genk  show, average severance payments of $200,000 and higher are normal, depending on the age of the workforce. “There won’t be a deal for less than $200,000 per head,” the CEO of a company in the region told Wirtschaftswoche.

In the case of Bochum, the works council opposes the closure, which could mean a drawn-out and costly legal battle and even higher severance payments. Works council chief Walter Einenkel; already threatened “a multi-year, politically and financially expensive affair, which will dominate the public discussion for years to come,” and damage the Opel brand even more.

It will be a very long time until the savings from closing Opel will be realized. Or, as Einenkel predicted, “for Opel the most expensive closure of all times.”

There is one way around it: Bankruptcy. Opel AG is a standalone company that just happens to be majority-owned by GM.  If someone issues a Do Not Resuscitate order and takes Opel off GM’s money drip, bankruptcy would follow in due course.  Word has gotten around in Europe that there is too much capacity, and shedding it via a GM-owned Opel would not be entirely unwelcome. Except among the Opel workers.

GM published global sales numbers for the first quarter of 2013, and media from The Detroit News to Bloomberg considered it headline material that GM edged out Volkswagen – barely. Who would have thought that the scrappy maker of cars that – if the blogs are to be believed – can’t keep their wires from crossing is breathing down the neck of the formerly mighty General?

GM sold 2.36 million units worldwide in the first quarter, the company says. Volkswagen is just 90,000 units behind at 2.27 million sold. GM’s sales grew 3.6 percent in the first quarter while Volkswagen’s grew 5.1 percent – despite a very tough situation at home in Europe.

Toyota will publish its quarterly numbers some time next week, so for the time being we can only extrapolate from the first two months. The picture for the first quarter is what we probably will see for the rest of the year: A very tight race for the top spot that could be won by any of the three once the year is over.

Toyota had planned for a flat 2013 to digest the large increases in the prior year. This was before the island troubles put a crimp in their plans and those of all Japanese automakers in China. Toyota’s worldwide production was down 6.2 percent for the first two months of the year, and we expect this trend to continue.

In the same China, the race for world dominance is decided. Volkswagen sold 769,200 units in China in the first three months, up 21.3 percent from the 633,900 it sold last year. GM kept Volkswagen in check in China by selling 816,373 units, up 9.6 percent. Nevertheless, even there the race is tight, and the two contenders are separated by what counts as rounding errors in China.

Developing cars and pieces thereof is getting increasingly costly, and that’s why even the fiercest rivals band together to share the mounting financial burden. GM and cross-town rival Ford agreed to jointly develop a new line of nine- and ten-speed automatic transmissions, Reuters says.  

GM and Ford will build both FWD and RWD variants. The gaggle of gears is one way to cope with the U.S. government mandate that by 2025, automakers should sport a corporate average fuel economy (CAFE) of 54.5 miles per gallon (23.2 km per liter). According to Reuters, “that translates to about 39 mpg in real world driving, or nearly two thirds higher than the average fuel economy for the 2012 model year vehicles.”

The new transmissions are expected to reach the market beginning in 2016. According to the New York Times, the joint effort can save “hundreds of millions of dollars and considerable development time.” What’s more, “it also saves the cost of licensing the design and production rights from a specialist transmission supplier like ZF of Germany or Aisin of Japan, which can cost up to $100 per unit.” When bought in not insignificant quantities, of course.

8 years to pay off a car? A report by the Wall Street Journal claims that in Q4 of 2012, the average car loan stretched out to 65 months, or just over 5 years. Loan terms were being stretched out over increasingly longer terms too, with credit firm Experian reporting that nearly 1 in 5 car loans had terms between 73 and 84 months long, with some stretching for as long as 97 months.

So why stretch out loans for such a long period of time? Per the WSJ

“[the] 75-month loan illustrates two important trends rippling through the U.S. auto industry. Rising new-car prices and competition among lenders to attract borrowers is pushing loans to lengthier terms. In part, banks see the longer terms as a way to attract buyers, by keeping monthly payments under $500 a month.”

Among the culprits cited by the WSJ are increased credit, low delinquincy rates on car loans and, according to banks, minimal downside as far as auto lending goes.

Melinda Zabritski, director of automotive credit for Experian, said the greater availability of credit is helping the surge in new car sales. The percentage of subprime loans isn’t far below the record level of 2007, and the length of loans is growing, she said…With increased competition between the banks for business, offering loans longer than 72 months, or subprime loans is one way to compete for new borrowers. “Consumers tend to be monthly payment buyers. One way that lenders compete is to offer longer term loans,” Ms. Zabritski said.

Interestingly, Zabritski claims that buyers qualifying for the longer loans tend to be those with good credit scores buying more expensive vehicles. But what nobody answered is “where is all this credit coming from?” As per our last report on auto lending, the appetite for auto back securities is enormous, and Wall Street cannot get enough of them. Sub-prime loans in particular are a favorite. At this point, nobody, not even Zabritski, is denying that the expansion of credit for automobile buyers is driving new car sales. The question is, what happens when the music stops?