From a German standpoint: If a German company owns a subsidiary say in the US, the subsidiary can make all the profits they want. They will be taxed in the US, that’s it. As long as they stay there. However, if they profits are being brought home to the Fatherland, it becomes a taxable event in Germany.

In fact, I looked things over and ironically, it’d be easier to hive off Pontiac than Saturn. Dealers could still retain Buick-GMC franchises, assuming GM doesn’t totally die, of course. Clearly, the Pontiac purchase would need to be done within 3 weeks from RIGHT NOW.

Here’s why Pontiac not Saturn: the Pontiac Vibe is manufactured in Canada on contract by Toyota, and the Pontiac Torrent is manufactured in Canada on contract by Suzuki (along with the Chevrolet Equinox) and the drivetrains for these SUVs come from the PRC, not from GMNA (GM North America).

Here’s a scenario that I put together in less than 1/2 hour.

SAIC (50%), Suzuki (35%) and US and Canadian Pontiac dealers (15%) purchase the Pontiac brand from GM, and form Pontiac Automotive Sales LLC, a Nevada company. Hell, I even found an HQ building and warehouse for sale for a song in Dayton, NV. The plan would be to take over the distribution of vehicles in North America, but not by purchasing any vehicles from GM. SAIC and Suzuki jointly own (with GM) GMDaewoo.

The initial (February 2009) line-up could be:

Wave G3 (South Korea)
Vibe (Canada)
Bonneville (USA)*
Torrent (Canada)

* The “new” badge engineered Bonneville would be contract manufactured, rebadged Mitsubishi Galant cars, from Normal, Illinois.

By the 2010 model year (determined by how long it would take to have the added vehicles pass the required US certifications), the line up would add:

LeMans (South Korea) (Badged Daewoo Cruze)

Catalina (South Korea) (Badged Daewoo Evanda with 2.5 litre six cylinder engine, priced/slotted below the Bonneville)

That’d be half a dozen car lines covering the more popular price ranges in the US / Canada, made up of a mediocre car but one with a very low price point (Wave), reasonably competitive car / better than prior Pontiac G6 (Bonneville), one of the better / more reliable small cars (Vibe), and a reasonably executed SUV to keep the hand in that market (Torrent), as well as the latest “try” by GM, Daewoo, SAIC and Suzuki (LeMans).

By the 2011 model year, the Bonneville would be four cylinder only (sourced from CMC in Taiwan) while a new V6 Parisienne line could be added (based on the upcoming Suzuki Kizashi, sourced from Japan, yet disguised / reskinned / facelifted sufficiently to differentiate it from its sibling). This would make for three selections of varying price-point in the ever popular mid-sized sedan market (necessary since Pontiac would not have its own manufacturing facilities and just in case sales started to pick back up, they would need a good number of cars).

See? GM’s wrong. Even the unwashed, supposedly ready to be given up on Pontiac line could be salvaged with a caring owner (which would include part ownership of the real customers in this case; the dealers).

If you think this is totally nuts, pull up a photo of a Mitsubishi Galant, squint and imagine a red arrow pointing down in the middle of the grill (which initially would be the only change seen). Yeah, it fits. Pontiac’s supposed performance image also fits the hot 3.8 V6 available in the Galant. (Except, of course, it’s “wrong way drive” for so much power).

Hell, I bet Mitsubishi would fall over themselves and offer Pontiac a rebadged Eclipse coupe and convertible as a “Pontiac Trans Am”, for that matter.

Any sale where you make a profit is a good sale in this environment.

The other little interesting tid-bit is that SAIC owns the MG brand and has several ex-MG-Rover car lines in production and being exported right now as MG’s.

The ex-Daewoo dealer network which GM yanked the rug from under in 2002 is still extant, though dormant…. no doubt it could be bought for a song….

See? Some of GM could be hived off and survive. There are a LOT of Pontiac dealers still hanging on by their fingernails; in fact, by this time, only the better dealers are probably still in business. Several thousand dealers putting in a small investment towards actually owning part of an independent Pontiac, might, might, might – just work.

I’d personally give it a better chance than GM surviving, anyway… Obviously under this scenario, if GM totally went Chapter 7, South Korean car production would not have to “end” since SAIC and Suzuki own a portion of GMDaewoo.

Not that I have any special place in my heart for Pontiac. I’ve had two; one was pretty poor, the other was okay, and my youngest son’s first car was a Pontiac and was utter crap (late 1980’s GM).

I am definitely in the wrong business

Uh-oh. Japan to repatriate foreign investments, tax free: The Liberal Democratic Party’s tax panel decided Friday that dividends received by Japanese companies from overseas subsidiaries should be exempt from corporate taxes, “in a bid to encourage Japanese firms to repatriate more capital,” says the Nikkei (sub) this morning. It’s one of those things we usually won’t notice, but we do now.

This is something that most countries, including most European countries, do already, since they have “territorial” taxes that only tax what goes on in their locales, rather than taxing the foreign operations of companies based in their countries. The US is fairly unique in trying to tax overseas subsidiaries when capital is repatriated normally– though a law passed in 2004 created a brief tax-holiday allowing companies to repatriate capital during 2005 and pay only 5.25% on it. An enormous amount of capital was brought back to the US (and tax paid on it) that otherwise would have stayed elsewhere, much greater than predicted. (See here, for example.)

Now, the President-Elect ran on taxing overseas subsidiaries even before the capital is repatriated, encouraging US companies to divest foreign holdings and stay small. (Well, he didn’t put it that way; he said something about tax avoidance and about not creating jobs overseas instead of at home.) It’s not clear that he’s actually going to do anything now that he’s elected, though.

Bunter

GM’s brands are interwoven, in that they are all based on the same platforms, and that they can probably only be rationally manufactured at volume.

But Lutz has a big climbdown to perform, in the dark, in the cold, in a blizzard, without ropes or gloves — and he’s just holding on for dear life now.

I think that the first part actually IS the reason for car brands entering F1. I think that having a presence in motorsports and even better, winning in motorsports, is very important for a car brand to be able to sell products at a premium price.

I think Honda can afford to not be in F1 for some time, but what would happen if say, Hyundai/KIA entered F1 now and, in about 5 years, started winning races, while Honda is sitting on the side-lines?

As for training young engineers…Probably before they’d enter F1 you would hope they would have already been quite trained, so yeah, that will only happen in a very limited number of cases.

Also you could argue that Mad Max Mosley and the little big man are basically trying to shutter technological development in F1, especially on engine development, which is a crying shame and must have been tough on Honda, because that was/would have been their strong suit.

Yes, one billion certainly is a lot of money when you are spending your own. On the other hand, 34 billion (this month) is a mere pittance to demand from the American taxpayer.