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Archive for April, 2009

Chrysler Walks the Plank

April 30th, 2009

President Obama said in his Wednesday press conference that he doesn’t want to be in the car business—to which we can all say Amen. When he announced this noon that Chrysler was going to proceed with Chapter 11, he put forward the hope that it would be quick (maybe 30-60 days), would establish a strong relationship with Fiat, and would represent a new beginning on the road to better cars. Who can argue with that?

The one point that may have gotten lost in the reporting was the President’s remark that this move “will save more than 30,000 jobs.” That to me is the administration’s bottom line, the reason why they worked so hard and to the last minute to avoid bankruptcy. It was the thrust of their “rescue” policy. Dumping those people into the defunct Michigan economy would have been simply unacceptable.

Whether the UAW benefit fund, now Chrysler’s presumed 55-percent shareholder, can run a car company any better than the government remains to be seen. But the U.S. and Canadian governments are still going to contribute billions more when the company emerges and restarts.

The 84-year-old Chrysler firm will remain in business, albeit haltingly, during the process, and CEO Bob Nardelli will step aside after the bankruptcy concludes. Chrysler financing will be available through GMAC, as Chrysler Financial departs. An unknown number of the automaker’s 3,600 dealers will close. Suppliers will generally remain in place.

Here are more details, as of 3:00 pm today. Fiat is to receive a 20 percent stake in the company, which could rise to 35 percent.

The U.S. Treasury Department, meanwhile, will own 8% of Chrysler, and the governments of Canada and Ontario, which will provide $2.4 billion in financing, will hold a combined 2% stake.

The company’s 54,000 employees and its 115,000 retirees, represented by the United Auto Workers’ union, late Wednesday approved their part of the bargain, eliminating a number of benefits.

While the court plan is being worked out, Chrysler said most manufacturing operations will be suspended Monday and will resume once the transaction is completed. Further layoffs aren’t expected at this point, although, once the agreement with Fiat goes through, more cost-cutting measures may be needed.

Chrysler said its operations in Mexico and Canada and other international operations aren’t part of any bankruptcy filing.

As we reported Monday, the sticking point in the restructuring has been a small group of hedge funds that took on the government for more money. In his noon statement, Mr. Obama took a tough stance against these “speculators,” as he called them. In fact, one could conclude these guys forced the bankruptcy—and the same kinds of debtholders may cause even bigger problems for GM when its turn possibly comes next month.

I just heard one of Motor Trend’s top editors (didn’t get his name) put down the just-announced Chrysler bankruptcy deal on CNN. In portentous tones, he proclaimed “big risks ahead” for the company. The problems he stated were “no product ready in the pipeline,” and the long time it will take Fiat to introduce same. Then he took the Obama administration to task for minimizing those risks.

What the world needs now is more naysayers for Chrysler. And let us note: Motor Trend’s comments are particularly ironic since Interlink, its publisher, just filed for Chapter 11. I love it when that happens.

Well, folks, what are the prospects now for a quick Chrysler bankruptcy? And what do you think of their plans for an Italian-American turnaround?

—jgoods

Car Industry News, Car Minded, Car Politics, Domestic Cars, Foreign Cars, General Chat

Do these Hummers really get 100 mpg?

April 30th, 2009

 

h3_02

I suppose this had to happen at some point.

Creating a Hummer that gets 100+ miles per gallon is a huge public relations story for the company that has managed to build one. And bloggers love to jump on the story and say that a Hummer can kick a Prius’ butt

Raser Technologies unveiled their Prius-kicking Hummers (an H3 and H3 SUT) at this year’s SAE World Congress in Detroit last week, and I have to admit at first glance, the technology is impressive.

Raser customized their H3 with a system similar to that in the Chevy Volt, which runs for the first 40 miles on pure electricity, then uses a gas engine to generate electricity for driving up to 400 miles on one tank. Drive 50 miles per day and this H3 will return 185 miles per gallon. Driving 200 miles or more drops the mpg to 33 (still about double the mileage of a gas-powered H3). 

It’s pretty obvious that Raser is proving a point by creating a Hummer, the epitome of gas hogs, that can run virtually gas-free on daily commutes. They might even be hoping to secure a licensing deal by impressing the bigwigs at the Big 3 and proving that the technology for extreme efficiency in trucks and SUVs does exist.

I do have doubts that an electric Hummer can maintain the legendary towing, off-road, and all-weather capability of its gas-powered counterparts.

But…

If electric Hummers were available that had the same capabilities as gas-powered versions, would your opinion about the brand change?

-tgriffith

Car Accessories, Car Industry News, Car Minded, Car Shows, Domestic Cars, Gas for your car..., General Chat, Hybrid Cars, Trucks & SUVs

Hanging By a Thread

April 29th, 2009

iacoccaWith one day to go before it must face bankruptcy, Chrysler has amazed everybody by almost putting together a deal to save itself. That is, Ron Bloom of the government’s auto task force has almost put it together.

First, Bloom cut a deal with the unions to get their wage and benefit demands in line with reality. Then he got the four major banks to agree yesterday to forgive almost $5 billion of the $7 billion they are owed—and pressure the minority lenders into going along, though this is still the sticking point.

The prospective deal would give the UAW a 55 percent stake in Chrysler, with Fiat getting up to 35 percent and the lenders 10 percent. A quick bankruptcy is still very much in the cards if the reluctant lenders don’t settle. That would enable the proposed deal to go forward, but likely harm the company’s reputation and comeback potential.

But don’t forget: Treasury lent the company $4 billion and has promised up to $6 billion more if the Fiat alliance goes through. So we taxpayers aren’t contributing chump change. The Wall Street Journal’s Evan Newmark dissects the deal and is skeptical about its worth to the taxpayer, much less its real potential to enable Chrysler to survive.

I hope he’s wrong, but it could be that the big banks were smart to take their $2 billion and run. Stay tuned tomorrow.

Please give us your educated guess on how this story will end.

—jgoods

Car Industry News, Car Minded, Car Politics, Domestic Cars, General Chat

Is the best car America produces headed for the scrap heap?

April 29th, 2009

Pontiac G8Its interior has been compared to the phenomenal Audi layout. Its driving experience has been likened to BMW.

We’re not talking about anything new from Lincoln, Cadillac, or Buick… the car receiving such accolades is the 2009 Pontiac G8, specifically in its GXP trim. 

The irony runs deep, as anyone who even remotely follows the auto industry knows the Pontiac brand will soon cease to exist. Had that been announced in 2006, the only disappointed folks would be the ones who buy cheap Pontiacs destined for rental fleets. 

Now that GM has created a real contender in the RWD performance sedan market, there’s a lot of people saying, “Whoa… we’ve gotta keep this car around!”

The GXP uses a Corvette 6.2-liter, 402-hp V8 that reaches 60 miles per hour in under 5 seconds. The handling is tight, and the interior is downright comfortable and even…luxurious! The G8 is truly a home run, and GM is going to let it die? Let’s hope not.

Our friends at Jalopnik threw out the idea that the G8 GXP could become a Camaro or Impala SS sedan. Heck yeah it could! 

An Australian Web site said that Holden (GM’s affiliate down under that markets the G8 as the Commodore) is in talks to provide U.S. law enforcement with a Chevy-badged version of the G8 to replace their aging Ford Crown Victoria squad cars. 

As cool as the fantasy world of the G8 living on is, the most likely reality is that it’ll fade into automotive lore as coming too late to turn Pontiac around. 

I’m sensing a future collectible and am half-tempted to go make a deal on one, have some fun with it in the summer months, then store it in my garage until someone makes me an offer on it that I can’t refuse!

Is the G8 GXP the car that could have saved Pontiac had it come sooner?

-tgriffith

Car Industry News, Car Minded, Car Review, Classic & Vintage Cars, Domestic Cars, General Chat

Shanghai Steps Out

April 28th, 2009

shanghai-showFirst, it’s clear that Auto Shanghai 2009 (closing today) was a huge hit. Attended by up to 90,000 people a day, with a record 1,500 carmakers from around the world displaying cars in the space of 30 football fields, Shanghai was larger than life.

Big luxo cars were again prominent, but so were a multitude of small ones – for example, Chery’s IQ, the Panda Cross, and lots more. Edmunds gives a good rundown of these here, and there are more good pix here. Plenty of oddball cars too, like the Rolls Phantom clone Geely GE, shown below, and the electric Nissan NUVU concept.

geely-ge1nissan-concept

The Chinese takeover of the world car market hasn’t happened, of course, but the trend has been clear for a while now. They haven’t got the cash but they’ve got the numbers.

Car sales in China hit a monthly record of over 1 million [units] in March, exceeding the U.S. for the third month in a row. 70 percent of the cars sold in China were affordable models that are 1.6 liters or below. This as most car buyers are paying much attention to their spending habits.

So, the boosters in China are more than happy, particularly about the lowered car purchase taxes (from 10 to 5 percent) that have produced some of the demand. We cheer them on, even in their fractured English:

In any case, a least rousing to observe a present of self-confidence, or a least can observe that the circumstances of Chinese enterprises is not horrid, as fineness, the burden of multiple, just hold back and see!

Regarding the Chinese market, the U.S. will have a lot of catching up to do. How do you think our carmakers can accomplish that?

—jgoods

Car Industry News, Car Minded, Car Shows, Foreign Cars, General Chat

Pontiac: 1926-2010

April 27th, 2009

1926pontiac_six-100General Motors acquired the Oakland Motor Car Company of Pontiac, Michigan, 100 years ago, and introduced the first Pontiac in 1926.

Costing $825, that first Pontiac sold more than 74,000 units in its debut year.

In the years since, Pontiac has provided driving excitement, inspired bouncy pop songs, and, like anything that’s been around for so many years, had its share of disappointments. 

Now that GM has officially announced their intention to kill off Pontiac, it’s time to unleash the Torrent of reactions and get the Vibe of the people who have experienced Pontiac, either through ownership or simple observation.

On this blog alone, we’ve drooled over Pontiacs as TV characters and muscle car icons. We’ve also chastised them as one of the worst cars money can buy, then gushed over the G8 when we were pretty sure Pontiac’s days were numbered. 

On a personal level, I owned a 1992 Grand Am that I still have very mixed feelings about. At first that car was the coolest thing on wheels, because it looked the part. It was white with a red interior, black front-end bra, and shiny three-spoke chrome wheels. I had the impression 1992-pontiac-grand-amthat it was fast simply because it looked like it should be. I lost interest in the car pretty quickly, though, because the 120-hp four-cylinder didn’t exactly deliver the performance I wanted.

Plus, my dad had a 1990 Trans Sport at the time that ended up catching fire. That’s about the time my family moved on to Honda.

In 2007 I rented a Grand Prix for a week hoping to see some major improvement over the last decade, but honestly I was disappointed in how the car handled and in the mysterious shakes and rattles coming from the engine department. 

I know my poor experiences with Pontiac are mostly the result of bad timing. Had I been driving in the late ’60s or had the G8 as my first return-to-Pontiac experience, I’d probably be much more nostalgic about the end of Pontiac. As it is, though, I see this as an end to a brand that just couldn’t live up to its early glories.

Do you have a Pontiac experience? Whether you love ‘em, hate ‘em, or don’t care either way, we want to know what you think about the death of Pontiac.

-tgriffith

Car Industry News, Car Minded, Classic & Vintage Cars, Domestic Cars, General Chat

Pontiac & 21,000 Jobs Will Go; Bondholders Still Blocking GM & Chrysler

April 27th, 2009

The New GM Plan
GM put forth its latest (maybe last) plan for restructuring at Fritz Henderson’s press conference this morning. Both Pontiac and the jobs at 13 factories will be phased out by 2010, he said, and Treasury would own at least 50 percent of the company.

1968 Pontiac GTO

1968 Pontiac GTO

When asked how he felt about this kind of government control, Henderson responded, “I’m a believer in dealing in reality. We’ve gotten great support from the Treasury. It has viewed this matter from day one as a kind of private equity investment. It has pushed us in a lot of ways.”

Throughout, the CEO was forthright and responsive to questions. You can watch the whole thing here:

The big challenge, he acknowledged, was the debtholders, who have so far balked at the settlements offered. GM now wants them to accept a debt-for-equity deal that would give them 225 stock shares for every $1,000 of bondholder debt. In the end, this translates to a 10 percent equity stake (the $27 billion of GM debt exchanged for $24 billon). The U.S. and UAW would divide the remaining 89-90 percent, with probably 39 percent going to the union and its VEBA fund.

Bam: Take that, bondholders, and if you don’t, you will probably do worse in bankruptcy. Fritz indicated that even now he thinks bankruptcy is probable if the bondholders can’t come to terms.

Saturn and Hummer will be out in 2009 (talks with the Saturn dealers are going on, as we reported earlier), 2,600 dealers will go, plus the 21,000 workers by 2011.

There will be cries of anguish, mostly about Pontiac, but it was always a niche brand, and GM never followed through on marketing the few good cars they make.

Chrysler’s Predicament

2010 Dodge Challenger

2010 Dodge Challenger

Now, from Slate’s Matthew DeBord comes an excellent summary of the situation faced by Chrysler’s bankers and the government’s strategy of hardball in the game of “bankruptcy chicken,” as he calls it. He thinks a Chrysler partnership with Fiat looks likely, and the UAW, pending a membership vote, has agreed to cut its benefit trust fund in half (taking half in stock).

This leaves Chrysler’s bankers and their $6.9 billion in secured debt, on which they have been exceptionally reluctant to take a haircut. The government’s proposed terms have been rough: sacrifice $5.4 billion and take a 5 percent ownership stake. The debt holders want much more, but on Friday they signed onto the Fiat deal and abandoned efforts to get the Italian carmaker to kick in money.

As DeBord points out, there is no little irony in Treasury’s strategy. It’s trying to leverage the investment, meager as it was, it already made in Chrysler and the $6 billion the company will get if the reconstruction deal gets done—it’s playing this deal like the investment bankers themselves.

They have three days to do it.

Which company do you think will make it through without bankruptcy—GM or Chrysler? Could it be both?

—jgoods

Car Industry News, Classic & Vintage Cars, Domestic Cars, General Chat

Will this new concept help Aston Martin redeem itself?

April 26th, 2009

one77_01_sized

The day before Aston Martin revealed their highly criticized Lagonda concept at the Geneva Auto Show, they showed the chassis of their upcoming One-77 concept.   

Maybe the Lagonda was just a diversion; a way for Aston Martin to throw our collective attention one direction only to backhand us by revealing something amazing later.

aston-martin-one-77-a-villa-deste_2loThat’s the theory I’m sticking with because new images of the One-77 were taken this week as the remarkable car was unveiled at Italy’s exclusive Lake Como. (In case you’re wondering, the One-77 gets its name because only 77 will be built, by hand, at a cost of $1.4 million each.)

Though very few people had positive things to say about the Lagonda’s design, I’m guessing they’ll sing a different tune about the One-77. Aston Martin has taken some very bold styling moves on the car, including heavily-chiseled sides, over-sized headlights and front air ducts that might look more at home on a fighter jet.  jet-fighter1

When you’re buying the second-most expensive car in the world, though (the Bugatti Veyron barely holds that title still), you don’t want styling that any schmuck in a Jaguar can get. 

Aston Martin CEO Ulrich Bez said of the car:

Quite simply, it had to be the ultimate expression of Aston Martin. As you can now see, we have achieved that goal in magnificent style.

Adding to that magnificent style are 700 ponies unleashed by a 7.3-liter V12 that’ll reach the 60-mph mark in just over 3 seconds. 

But when a car costs over $1 million, I’d expect nothing less. 

Does Aston Martin’s new One-77 look better to you than the Lagonda? What do you think of its aggressive styling cues?

-tgriffith

Car Minded, Exotic Cars, Foreign Cars, General Chat

Tectonic Shifts Around the World in the Car Biz

April 24th, 2009

The twisted Porsche/VW sale

Porsche CEO Wiedeking. Why is his thumb pointed down?

Porsche CEO Wiedeking: note thumb pointing down

A complicated story today got more complicated. It was reported widely yesterday that Porsche Automobil’s main shareholders (the Porsche and Piech families) were going to sell the sports-car business (Porsche AG) to its Volkswagen unit in order to reduce the holding company’s debt.

Today they denied it. Seems the cost of debt is rising along with the bad economy, and the company must look for other assets, which it has, if it wishes to follow through on its announced intent to buy around 75 percent of VW’s stock (it now owns 51 percent). All this sounds crazy but makes some kind of sense, as our friends at autoblog thankfully explained:

Wait, what? Didn’t Porsche just buy Volkswagen? Well yeah, for the most part. The parent company Porsche Automobil Holding SE holds majority interest in the Volkswagen group, and is planning on buying more. But in order to do so, the rumors suggest, the holding company would have to sell its auto manufacturing unit (Porsche AG) to Volkswagen, and then, we’re supposed to understand, turn around [and] buy another quarter of VW’s shares with the cash generated. (With us so far?) The put would undoubtedly drive Volkswagen’s shares up, generating more cash for VW and more debt for a hungry Porsche.

If these Porsche guys are so smart, how come they let the story leak before they had to deny it?

Fiat and Chrysler and Opel are dancing

sergio-marchionne1Another story leaking the rounds this week is Fiat’s possible interest in GM’s Opel. Boss Sergio Marchionne (left) reiterated he would not invest cash in Chrysler and that they were still trying to work a deal.

Yesterday, however, Reuters said Fiat and Opel were in talks: “GM needs to sell a big stake in Opel to get 3.3 billion euros (2.2 billion pounds) in loan guarantees from Germany and other European governments to rescue the troubled unit.” The question is whether Fiat could afford Opel after its recent larger-than-expected first-quarter loss. The company does have cash reserves of $6.6 billion, up $1.5 billion from last year.

It would seem Fiat is in a strong position even if the deal with Chrysler goes down.

Cheers! Ford loses only $1.4 billion last quarter; GM gets another $2B from the Feds

Happy (for now) Ford CEO Mullaly

Happy (for now) Ford CEO Mulally

All the analysts are waving flags that Ford lost less than they predicted it would, and in this kind of upside-down economy, I suppose that’s good news. “Still,” as CNN pointed out, “the latest losses come on top of $30 billion in net losses the company reported from 2006 through 2008.” And the losses will continue “through at least next year.”

This recent news does reinforce Ford’s position as the healthiest of the Big Three, which is to say they only have pneumonia, not lung cancer. The government’s Intensive Care Unit is still operating at full capacity, however. Treasury announced today it had lent $2 billion more in funds to help GM restructure before its June 1 deadline. Chrysler could get up to $6 billion more if it works out the deal with Fiat… by Thursday. What a timeline!

These fiscal moves may not be tectonic shifts, per our headline, but they are surely seismic rumblings of what’s to come.

Which of these stories seems most important in your view? Tell us why, please.

—jgoods

Car Industry News, Car Minded, Car Politics, Domestic Cars, Foreign Cars, General Chat

The Best Movie Car Crashes Ever!

April 24th, 2009

Hollywood car crashes fall into two categories: crashes made for movies, and crashes involving Fabio

While there’s no shortage of the latter, this list is all about some of the best car crashes Hollywood has ever given us on film. It’s nearly impossible to find a movie that doesn’t involve a car crash of some kind anymore, so please let us know what silver screen wreckage you love most!

Final Destination 2

I admit the movie itself was pretty darned lame. As bad as it was, this wreck scene is chock full of nightmare situations. This is one of those scenes that sticks with you, especially when passing a truck hauling a full load of logs.

Terminator 2: Judgment Day

Although released in 1991, the scene where the semi truck chases the motorcycle has remained iconic throughout the years. I still remember the feeling of watching this for the first time, as the truck is essentially ripped apart but still manages to keep going. A classic crash that’ll never be forgotten!

Death Proof

Some people like car crashes for purely gruesome or shocking reasons. For you Quentin Tarantino fans, I include this surprise head-on crash in the list of best movie crashes ever. You gotta admit, it’s cool.

Bad Boys 2

I like Ferraris. I also like massive car wrecks in which Ferraris don’t get wrecked. I like Will Smith, and I like car chases that end with boats exploding on the highway. “Bad Boys 2″ has all those things, plus the added benefit of the wrecks lasting a good 4 minutes! I have to warn you, though, this scene has some language that may not be suitable for all viewers. Heck, watch it with the volume off, and it’s just as good!

Adaptation

The brilliance here is that we, the audience, see this crash about to happen a split second before anyone in the car knows what’s coming. It’s the classic, “Oh, we’re just having a calm conversation, and then *bam* game over” type of crash.

We’ve all seen countless more great car crashes from the big screen – which are some of your favorites?

-tgriffith

Car Minded, Exotic Cars, General Chat