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Ken Elias

By on February 18, 2009

The viability plans presented by Chrysler and GM to the U.S. Treasury and the public yesterday signaled the end game. The plans amount to nothing more than begging for enough cash to stay afloat until the market turns upwards. Not only are the automakers’ arguments based on flawed assumptions about the U.S. car market, but they singularly fail to address the fundamental problems that brought Chrysler and GM to their knees. The fact that anyone would take these pleas seriously indicates the simple triumph of fear and over common sense. You’d have to be willfully ignorant not to see these plans as the worst kind of cheap fiction. Well, maybe not so cheap…

By on February 16, 2009

Ever heard a movie hero say, “It sounds simple, but it just might work!” Humans have a natural tendency to over-complicate problems and, thus, devise inherently delicate solutions. Have a look at Operation Eagle Claw, the 1980 Iranian hostage rescue attempt. Or consider the upcoming Presidential Task Force on Autos. The PTFA will waste countless hours with Chrysler and GM auto execs, union reps, dealer council chiefs, supplier supremos, investment bankers, outside analysts and not a single average car buyer. They will devise a clever plan that will please no one and fix nothing. What a waste. In this case, all the Obama administration need do is nothing whatsoever.

By on February 5, 2009

Bloomberg reports that the U.S. government has retained white-shoe NYC law firm Cadwalader, Wickersham & Taft to advise the taxpayers’ reps on GM’s restructuring and possible debtor-in-possession financing. The Dickensian-sounding law firm joins Chicago’s Sonnenschein, Nath & Rosenthal (with newly acquired structure finance experts Thacher, Proffitt & Wood) and investment bankers Rothschild (which advised Delphi and gives Buickman conspiracy conniptions) in taxpayer-financed retainer heaven. The troika’s job: get Uncle Sam’s arms around the mess President Bush created by lending money to these failing, futile companies. And here’s the [overused metaphor alert] kicker: the U.S. government failed to get an inter-creditor agreement with the existing lenders done prior to the funding. So, when it all blows up, taxpayers’ claims on Chrysler and GM’s collateral are open to “debate.”

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By on February 4, 2009

In fourteen days, GM and Chrysler will submit realistic plans for viability to Congress. See what I did there? With January’s sales slaughter revealed, it’s obvious neither automaker can survive without a huge and ongoing injection of working capital from the nation’s working capitol. Even if Uncle Sam provides this staggering amount of money– more than enough to start a car company from scratch– GM and Chrysler wouldn’t make enough profit to pay the interest and the principal during the loan’s term. The plans the automakers are about to present to your elected representatives are a fictional moon shot– with a make-believe launch vehicle that couldn’t propel a chimpanzee ten feet.

By on January 31, 2009

Ford sits on the “Edge” of disaster. Despite the assurances from its CEO and chief cheerleader to the contrary, Alan Mulally knows that the day of reckoning could soon appear at his doorstep. Without an increase in sales volume, and soon, there will be no way to stop the cash burn. We’re not going to malign anything Mr. Mulally has done so far. In fact, he’s done more right than any other head honcho from Detroit in decades. But it’s time to pull out all the stops and break with tradition of never wishing ill on a competitor. It’s time for Chrysler to die.

By on January 28, 2009

President Barack Obama has announced that the EPA should go ahead and review California’s request to set national fuel economy standards. As reported here, California’s waiver would allow the state to legislate CO2 emissions, which would create a de facto fuel economy standard under the guise of keeping the planet cool. While environmentalists and the Pelosi wing of the Democratic Party view the Golden State hat tip as a seminal victory for Mother Earth, it’s actually a set up. It’s all part of the Obama administration’s plan to clean up the U.S. automobile industry by throwing GM and Chrysler into Chapter 11.

By on January 17, 2009

Last Thursday in Detroit, General Motors presented its rescue case to the Society of Automotive Analysts, a group of Wall Street securities analysts. [pdf here] The story was chock full of “not good.” In fact, the company presented enough information to make the case that bankruptcy is inevitable. But I’m still waiting for a single report from Wall Street telling everyone what we’ve known at TTAC for at least three years. GM is bankrupt and putting another dime of government money into this car wreck is merely good money after bad.

By on January 13, 2009

GM can fix its own problems. Really. They don’t need a miracle cure or a piece of technology fabricated at MIT’s advanced labs. They don’t need a new financing scheme developed by the alchemists on Wall Street. Nor do they need Nancy Pelosi & Co. to fashion tnier future. What they need to survive can be summed-up in two words: truth and honesty. If GM would be honest about its products, finances, dealers, marketing, reliability, (lack of) executive talent, and on and on– it could begin to resurrect itself. Until and unless GM gets glasnost, the automaker will remain forever stuck in the quagmire of its own making, relegated to the support of the taxpayers, always looking for its next fix. To understand the possibilities, compare and contrast GM’s perfidy with “One Ford”….

By on January 8, 2009

First to blink, first to lose. That’s what GM’s creditors know. As does Ron Gettelfinger, the United Auto Workers (UAW) boss. And that’s why there isn’t enough time between now and February 17th– the congressional deadline for the next federal loan installment for GM– for General Motors to craft a workable deal to save this company. No one is going to blink. So no one will cave, and nothing gets done. Then what?

By on December 20, 2008

The President’s non-plan for saving the American auto industry actually works. Believe it or not, it’s a stroke of genius for what it doesn’t do. And that’s not forcing any change on the automakers other than to come up with yet another restructuring plan subject to certain government imposed guidelines. Readers of TTAC know that it’s almost a sure bet that this next round of restructuring will fail. And that’s why it’s such a smart plan. Bravo to Bush!

By on December 18, 2008

I am going to go out on a limb…sort of…and state the following: GM will go into bankruptcy within the next 60 days, and Chrysler will be liquidated. Dollars to donuts that will be the President’s plan… although in a highly disguised form. The public may see it as a rescue, but it’s really just the beginning of a long and painful readjustment coming for Detroit. So how did I reach this conclusion? Follow the breadcrumbs. Given the time necessary to craft the President’s bailout plan – likely to be presented by this Friday – this tells me that it’s going to be much more than just a loan with a few strings. Methinks it will have three key points:

By on December 15, 2008

It’s that time of the year when industry pundits [usually] run out of news. Normally, this leads to retrospective reflection and informed speculation. The autoblogosphere has been pretty bad at this, of late. They missed carmageddon more or less completely, treating Detroit’s BS like the Lord’s own gospel. That said, TTAC has offered its share of botched timelines and devil-may-care details. One nice, unforeseen twist: Ford. CEO Alan Mulally flew in from Seattle and kicked some Blue Oval butt. As a result, I give FoMoCo a chance of making it– albeit a shot rather than a dead cert. Ford must withstand the fallout to come, as GM and Chrysler head for bankruptcy. Now that’s for sure– regardless of the automakers’ progress on Capitol Hill of Pennsylvania Avenue. While I’m at it, I’ll go out on a limb and make some more predictions for 2009.

By on December 13, 2008

Earlier this month, in their search for bailout bucks for Detroit, Congress caved to the President’s insistence that legislators leave the $700b Troubled Asset Relief Program (TARP) alone. Last week, Congress failed to activate Plan B: hijacking the $25b funds they’d already allocated to the Department of Energy for “retooling” loans. At the eleventh hour, President Bush said, “Oh, alright then. Let’s talk TARP.” And so Plan C: the President of The United State will outline his plan to put up to $15b in play from the TARP monies. It’s a stunning about-face, whose details will be revealed on Monday. Those are the broad strokes. Before suggesting the presidential approach to Detroit’s debacle, let’s zoom in…

By on December 10, 2008

There’s still time left for the Senate Republicans to stop the insanity. The Detroit bailout plan is a hastily written piece of legislation that gives an open-ended commitment to government support of the domestic auto industry. One that makes a single individual responsible for “determin(ing) appropriate measures for assessing the progress of each eligible automobile manufacturer in transforming the plan submitted by such manufacturer to the Congress on December 2, 2008, into the long-term restructuring plan to be submitted.” And that same individual also will help negotiate a restructuring program “between the interested parties” and will then determine within a date certain whether the plans themselves lead to the expected outcome of financial viability. If not, this same individual can pull the plug by calling the loans and forcing a bankruptcy. If he or she does that, I hope they get Secret Service protection. And a Medal of Honor…

By on December 9, 2008

The last hope. We’re making a final appeal. Senate Republicans, led by Jim Shelby (R-AL) and Bob Corker (R-TN), need to send the proposed loan program to Detroit into the dustbin of history. As constructed, the legislation represents a waste of taxpayer money. It’s a pretend piece: A bridge to nowhere. The bill’s based on the false hopes of a new car czar, entrusted to negotiate a restructuring outside of court for General Motors and Chrysler. That won’t happen-– and shouldn’t happen. Only the party of Lincoln can stop this foolishness now.

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