thegriffon

Update from AN: WASHINGTON -- Democratic leaders of Congress today blocked action on legislation that would provide $25 billion in emergency federal loans to the Detroit 3. Instead, the leaders directed General Motors, Ford Motor Co. and Chrysler LLC to submit plans showing how they would use the aid. They scheduled hearings on the plans for the week of Dec. 2, and said Congress would return Dec. 8 to consider aid measures. The announcement upstaged moves by a bipartisan group of senators to get action this week on a compromise that would redirect $25 billion in funds already approved to help automakers build more fuel-efficient vehicles. Instead, they would let the Detroit 3 use the money to bridge their cash crises, but with extensive conditions. Sens. Carl Levin and Debbie Stabenow, both Michigan Democrats, scheduled an afternoon news conference with Republicans from automaking states to discuss the compromise. But before they arrived at a Capitol studio, House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and seven other Democratic leaders entered the room and announced their decision to demand viability plans from the Detroit 3 and hold more hearings. "It's their agreement," Reid said of the compromise's supporters.

He can't answer that question. It all depends on sales, whether the banks start lending etc.. The whole point is that it is not something under their control. If fuel prices drop they can sell more trucks, but can't sell cars, if fuel prices rise, they can sell more cars (perhaps twice as many of some models), but not as many trucks. They certainly could have done better, but this was a setup meant to make these senators look tough at the expense of the Big3 and give them an excuse for letting the economy collapse, not a hearing. The real work was going on elsewhere in Washington behind their backs (perhaps that was the point of the CEOs going to Washington—to keep the opposition like Shelby distracted while a deal was made).

Pennsylvania Lawmaker Says Saving Auto Industry Must Be a Priority WASHINGTON--(BUSINESS WIRE)--Congressman Chaka Fattah (D-PA) releases the following statement on the auto industry: “Collapse of the auto industry will produce an extensive and prolonged impact on America. Millions would lose their jobs and the long term effects on our economy would be devastating. The federal government must step in to assist the car makers with a well crafted and thoughtful plan to bring solvency to the industry. The plan must include fuel efficiency standards that propel the Big 3 to be major contenders in the global market. If government funds are used to help the auto makers, then taxpayers should be the ultimate beneficiaries with better designed and more fuel efficient vehicles.” Don't these people ever learn—if they want fuel efficient vehicles they need to raise fuel taxes, a lot. On global markets GM and Ford already build and sell vehicles as least as fuel-efficient as anyone else. To be global contenders they need money, not higher hurdles.

From ANE: "…Supported by strong brands, the joint ventures of international automakers and major state-owned Chinese auto manufacturers are still profitable, though they are making less money than before. The small automakers at risk include Chery Automobile Co., Geely Automobile Holdings Co., BYD Auto Co., and Great Wall Motor Co. Their vulnerability lies partially in heavy dependence on exports for profits. By selling to emerging markets, they avoid competing head-on with international players in China. Market analysts say Chery, for instance, can make more than 10 times as much money selling a QQ small car in the Middle East as on the domestic market. With the global economy sliding into a deep recession, exports of these companies have slumped. Detailed figures are not available. But at a recent industry conference in Shanghai, Geely's president Li Shufu acknowledged that his exports to some developing countries have dropped more than 60 percent since September. Geely has already cut its export target for this year to 40,000 cars from 60,000. Li estimates the exports of other domestic automakers have also declined sharply. Exports are an even greater share of total sales at Chery and Great Wall. All three companies have been expanding fast and therefore cash is tight. Both Chery and Great Wall sought to raise funds from the domestic stock market earlier this year. But Chery couldn't meet the stock listing requirements while Great Wall's listing application was rejected by market regulators. Slumping sales will put pressure on their already weak liquidity positions.… …Thanks to profits contributed by their joint venture partners, major state-owned automakers, such as China FAW Group and Shanghai Automotive Industry Corp., are still cash rich. As long as major state-owned automakers can stay afloat, the government has little incentive to support the domestic industry. So the small automakers face an increasingly difficult future. I wouldn't be surprised if one or two of them close down or are acquired by a major state-owned automaker." Chery in particular has spent a ton of money paying European companies to engineer dozens of vehicles and engines for them (more new engines than every other automaker combined). They now don't have the money to introduce them as rapidly as planned and need to find OEM customers ASAP. Except no-one is buying. They are now, belatedly looking for JVs to prop up their business. These are companies that make the former Daewoo Motors' rapid expansion plans look careful and conservative, and we know how that ended. The big three (SAIC, FAW and Dongfeng) are cash rich, relatively. But they remain small companies—the largest, SAIC, sold just under 2 million vehicles last year, including Ssangyong in Korea and medium/heavy trucks. and almost half of that revenue was split with GM (a quarter SGMW and a quarter SGM—SVW and Ssangyong make up most of the rest). All Ssangyong's earnings and more is spent on new models for Ssangyong—new unibody vehicles to supplement the fuel-sucking BOF trucks it builds now, sales of which are falling sharply. They are also spending heavily on new vehicles and transmissions for Roewe and MG. None of this though comes anywhere near what they'd need to spend on GM to make any more than a symbolic investment worthwhile, or even to develop new vehicles for Buick in China independently of GMs broader international operations. Neither does Dongfeng have the money to really make use of a Chrysler acquisition. They are already getting vehicles from Nissan they can rebadge as Dongfeng models, and Chrysler can't supply the smaller vehicles they really need. Should they even want the 300, Charger etc. they don't have the sales revenue to fund replacement models, nor the cash to enable Chrysler to do so.

Honey bees are not wildlife—they are domesticated insects. No-one knows what's going on, but I suspect inbreeding.

Congress has been told by a commission they setup that they need to increase taxes on fuel substantially anyway. The highway fund is broke, bridges are falling down everywhere, and they need to spend $60 billion just on intercity rail projects to relieve projected highway and airport congestion.

It has no chance of ever happening. The Chinese are grossly overestimated. Take Chery, widely expexted by many to lead the cha4rge into western markets: "I wouldn't place much hope on it," says a former Chery executive familiar with the Chrysler deal. "Both companies have their own problems to deal with, and both have run out of money." He says the substandard quality of Chery's cars was a major obstacle. "Chery knows there is no way for these cars to meet the safety and emission standards of the U.S. market in the near future." Chrysler and Chery never said when Chery-made cars would arrive in U.S. showrooms. In a May interview with Automotive News, LaSorda's said plans for the U.S. showrooms were encountering difficulties. "We need small cars," LaSorda, now co-president of Chrysler, said. "Chery's cars are still not ready for that exposure into these markets." He said China-built cars probably won't be ready to meet U.S. safety and emissions standards for "three years or more." … …China's slowing auto market is hitting Chery hard, and sources say it is laying off employees and freezing development of some new models. A Chery supplier, who declined to be identified, said Chery is cutting sales targets by at least 50 percent for the second half of this year. Sound familiar? SAIC and Dongfeng are publicly listed companies. You can buy shares. The government is not going to give them heaps of money to buy GM or Chrysler. Neither is large enough nor has enough money to repay debt or fund extensive model development, and unlike some Chinese rivals (e.g. Chery), they know it. SAIC is the largest and wealthiest of the Chinese Big 3, and the number of new cars it has developed? One, and that based on work already begun by MG Rover. No new engines, and not yet any transmissions (which they are working on in a partnership). It has its hands full just with Ssangyong, Roewe and MG. Dongfeng has, well none, just rebadged Nissans produced by the JV half owned by Nissan. The third big Chinese maker, FAW, produces only reworked Mazdas, Toyotas, and ancient Daihatsus and Audis, and only makes money building and selling vehicles under those and other JV import brands.

Gives a new meaning to breaking news—that's not just broken it's pieced back together with the words in the wrong order.

The brown shirts are coming out of the closet this week.

Why not sell part of Opel? GM does just fine with little more than half of GM Daewoo. The main concern is that no-one has any money to buy. In the current climate though they may get a good many nationalistic Germans to front up for an IPO.

Latest reports from Germany: Opel remains in GM's lap Opel chief Hans Demant has issued a clear rejection of the many proposals posted for a separation of the auto maker from the U.S. parent company General Motors (GM). It was soon 80 years part of the group, because structures were grown, Demant said Tuesday on the broadcaster Bayern2. located in Rüsselsheim the second largest development center for GM with world-wide significance. The income from only 1.6 million cars sold in Europe would not be sufficient "to the overall development, we need to make to pay." "That is, it makes no sense to a company our size quite independently to make," summed up Demant. "As part of a large group to act, has a lot of advantages, both for Opel as well as for our employees." The Frankfurter Allgemeine Zeitung reported, relying on bargaining Circles, in the worst case scenario "would even Opel 1.8 billion euros in guarantees need. GM Europe chief Carl-Peter Forster had requested the guarantee volume on Monday evening to "slightly more than one billion Euros". Even Opel works council chief General Klaus Franz holds a secession of the car maker is unrealistic. Although he had some sympathy for this idea. "But we must see the realities in a globalized world. The central point is that General Motors would not let go," said Franz on Tuesday in Rüsselsheim. The Germany-development center have responsibility for more than four million vehicles with a future. "Without this development expertise here at the site would be General Motors for the future much worse positioned."

WTH happened here that you're all making the case against GM now? "Change" is what GM has been doing for the past decade or more. Those with a working knowledge of the industry (not just dealers or line workers) seem to think the hard yards have been made. Anyone would think the Cruze woill be arriving with a 2.4 L 4 and a V6 and get just 26 mpg instead of a 1.4 Turbo and 40+ mpg, that they are working on a big V8 Cadillac to replace the DTS and priced less than high-end CTS instead of Alpha, that there is no new Aveo coming, that the GPix concept presages nothing, that the uopcoming LaCrosse will feature a 3.8 V6 and V8, and that all their cars will still have 4-speed autos instead of 6-speeds. What is up with all this "nothing has changed" talk? Almost everything has changed except public perceptions.

But they are presenting the latter argument, devoting resources to fuel-efficient vehicles, limiting executive compensation etc.. Besides, the plants are already winning awards for productivity and quality, the vehicles are winning car of the year awards, UAW wages will be halved, healthcare will be shifted to the VEBA trusts, inventory has been kept low, daily rental sales cut—everything they should be doing. Now, unless you're of the opinion that no-one should be building cars in the US at all, it's hard to see what else they should be reasonably expected to do.

That's not how I read the reports in Die Welt, but then my German's not that good. There is concern that any money given to Opel will support American rather than German operations, and allegations by the Union that Opel is in trouble because ignorant Americans have been dictating Opel's product strategy, and that German managers would have done better. Just a bit of paranoid xenophobia really. What they really mean is the Chevrolet has been booming while Opel has been struggling for sales. The union is also claiming that GME is paying too large a share of product development for Saabs and Opels sold in the USA, and not getting enough of the profits from selling Chevrolets in Europe.

The main problem is that both GMNA and GME would still require big cash injections—tens of billions of dollars each.

Not soon FOG, GME lost more money than GMNA last quarter. Not gonna happen like that though—GM or shareholders would rightly and justifiably sue, and win, big time if someone just tried to "steal" GM's international operations like that. However, reorganizing GM into a Zurich-based holding company (probably renamed something like GM Corporation S.A.), and a subsidiary holding company (e.g. North American Motors) for the North American assets and liabilities which then files for chapter 11, is possible. The new entity would still have to raise substantial amounts of cash to be injected into North America in exchange for intellectual property (technology, designs, platforms brands) and key facilities. Shareholders, board and top management would remain the same, the listed company would just be incorporated in Zurich instead of Delaware. The remaining North American operations would effectively be spun off to creditors via bankruptcy re-organization, encompassing the assembly plants; probably Pontiac and perhaps GMC and Hummer; all North American distribution and all the franchise agreements. These would be run under contract for a time, possibly with agreements for the new GM to reacquire individual plants and facilities if certain production, efficiency and quality goals can be met. Pontiac, Hummer and other brands left with NA would either be quickly sold, or managed as independent/semi-independent operations until they are either sold, liquidated or reacquired by GM. At first all distribution would be handled by the new NA holding company, but the new GM would gradually establish new franchise agreements with the best dealers for the brands it retains. The current GM Corp. could survive as the North American branch of the new GM (like GM UK Ltd.), but almost all assets would initially be distributed to either GM S.A. or the bankrupt North American Motors. Only as contract plants and facilities are reacquired would it begin the resemble the company you know today. The aim of course would be to maximize shareholder value, and to minimize the stigma of bankruptcy.

More Republican support: http://www.vindy.com/news/2008/nov/16/sena...-big-3-bailout/

Toyota hasn't replaced their 4-speeds, they still use them in many, many models. Honda, on the other hand, has almost no 6-speeds. Toyota's innovation isn't just down to their own investment however, they also rely on many suppliers in which they have some level of equity stake. How do you think Ford managed to turn out the Escape and Mariner Hybrids so quickly? They bought the same hybrid components from the same suppliers who had developed them for Toyota. Those supplie5rs continue to innovate and develop new products with or without Toyota's interest. Aisin AW produces a wide range of 6-speed autos, but most are used by European automakers, and just a few by Toyota.

Just to even things out: THE AUTO INDUSTRY BAILOUT Lawmakers: Detroit 3 must show they got derailed 'Dust off that old Chrysler playbook' To stand a chance at a $25 billion federal rescue, the Detroit 3 CEOs must convince Congress that the companies' restructurings have been derailed by a credit and vehicle sales collapse, says the lone Michigan House member on a key bailout committee. Rep. Thaddeus McCotter, a Republican who sits on the House Financial Services Committee, said he plans to hammer on those themes when the CEOs and UAW President Ron Gettelfinger address the committee Wednesday at a crucial hearing. "There are lots of people in Congress -- lots -- who still think it's 1972 and the auto industry hasn't changed," McCotter said in a phone interview today. "They need reminding of all the plant closings and work force reductions. They need reminding that the UAW has a two-tier wage. And the UAW will soon ...

Well, now, I don't reckon many of 'em ever did, but I also think that's what the Democrats want to you to think. It wouldn't do them much good to put forward a bill the Republicans will actually vote for unless they made you think they didn't want to. Yo have to remember that for every Dingall in Michigan there are 5 Pelosi's in California who don't think the manufacturing industry, and especially the auto industry, should be saved. Democrats who side with Friedman and who think that building cars is a great evil and should be banned altogether. You should all be working for Silicon valley tech companies working on saving the planet, and you can bet that if the economy was in good shape now they wouldn't let Detroit get a red cent, no matter how many jobs it would save. Listen to the commentary, it's there for all to see. So go ahead support Dingall and those Democrats actually putting forward working legislation, but don't make the mistake of thinking the Republicans all think like Shelby. They don't. At least Obama's staff made it clear that the Bush administration's support for a bailout was not conditional on free trade deals. I would not expect more than a handful of Democratic senators or congressmen to be so honest or generous with the enemy. This is still partisan politics, and if they can slander the Republicans they will. The only thing they all understand is that jobs equals votes, so if there is a bill, it will pass. No one will want to be blamed for this mess. Don't blame the Republicans if there isn't one, no matter what the Democrats say. If there isn't a bill, it's because too many Democrats think they can wait until Obama takes office. If it seems the auto industry sides with the Republicans (and they actually spread their financial support equally), when they don't get any support from them, it's only because too many Democrats have made it clear they thought GM and Ford and Chrysler should disappear, even when they were making money. Now they've got their chance, and the beauty is, they can claim credit for restructuring the face of the American economy over the next few years, and let the Republicans take the blame for all the pain. It's just too bad smart democrats like Dingall won't let them.

Benz is German taxis, not third world, although ancient 300s occupy a small nice.

Hey, here's something I don't think anyone has though of: if Detroit falls then the ethanol industry and the drive for cellulosic ethanol fuels is DEAD. No-one but Detroit is capable of fielding any number of E85 vehicles, and the Japanese have none. Zero, zip, none, and no prospect for any in the next 10 years. Even in Brazil where E100 is available everywhere and a popular choice the Japanese offer two engines in two vehicles between them. Renault and Peugeot, who have some capability are not represented in the US, Volvo has little impact and is tied to Ford anyway. Y'all will be forced to use oil if you want a new car, hybrid or not, you'll need oil, and all the alternative fuel programs even the current administration has championed, will be pointless.

Among other things, they have the Association of International Auto Manufacturers represented, claiming that the AIAM supports a bailout for two reasons: the economic impact will effect everybody, and when suppliers go down, it will disrupt production for everyone. An EU member claims they will fight a bailout in the WTO, but then in the next breathe says they're planning something similar for European manufacturers. Clearly, he's just a self-serving idiot politician.

You really ought to watch the latest Autoline Detroit episode, either on the web right now, or on Detroit Public TV on Sunday. Autoline Detroit: Lifeboat

Cool down. All the Administration is asking for is an authorization bill from congress. So what if you think it might fail, it's irresponsible to blame the other side and not even try. If they vote against it, fine, blame them then, but right now all I see are excuses being made by people who aren't all that interested in doing anything to start with. Everything the Republicans demanded before they'd sign the bad loan bill they are being offered by GM—caps on executive compensation (and who said that would never happen or that they haven't offered already), specified spending on green vehicle programs (because they were doing that anyway), a preferred stock option (i.e. the government gets paid back before stockholders get anything) etc.