A rough road ahead for Chrysler's union with Fiat

Moments ago, President Obama announced that Chrysler will file for bankruptcy today in a New York federal court, then move toward a speedy union with Fiat. But in the rush for a shotgun marriage, there are plenty of hurdles Chrysler has to clear.

Ford, UAW cut deal on retiree health benefits

Ford has hit a home run in negotiations with the UAW, setting a precedent for GM and Chrysler and freeing up the cash it needs to stay out of the government bailout cookie jar.

Swedish customs halts Saab production, citing unpaid taxes

Reuters is reporting that the Swedish customs authority has effectively shut down Saab's Trollhättan factory, citing a "considerable" sum of import duties that have been left unpaid.

Saab set to sink as GM steps aside

"Nej tack nu går bort!" (No thanks, now go away!)

Such was the response from the Swedish Industry Ministry, when approached by the General to purchase a majority stake in the ailing automaker.

Now, Saab is mounting its last stand against mounting debts and a critical lack of suitors interested in the struggling automaker.

GM seeks $16 billion; dire future looms for Saturn, Saab

Today was the due date for GM and Chrysler to turn in their homework -- a plan defining each automaker's long-term viability. And in defining the way forward, General Motors has put the hangman's noose around Saab and Saturn.

And that's just the start.

GM to Washington: Loan $25B now or lose $150B later

If General Motors fails, nearly three million jobs could be lost in 2009 as part of a cascading collapse of suppliers, shipping companies and ultimately dealers. So argues General Motors in a video released as the embattled automaker campaigns for immediate federal aid in the wake of a cash-flow crisis.



Released on Sunday, GM's four-minute video highlights the fact that American auto industry is one of the largest economic multipliers in the U.S. economy. GM employs more than 1.7 million people, either directly or through parts suppliers, subcontractors and dealers.

The key argument is that if either GM, Ford or Chrysler fails, the industry would be faced with an imminent collapse due to the impact on suppliers and the cascading effects of production lines being halted and workers laid off at every level of production.

All told, as many as three million jobs could be lost if one or more the Big Three automakers fail. GM argues that in such a scenario, with no cars being made or sold, as much as $156 billion in tax revenue would be lost between 2009 and 2011.

And the economic catastrophe wouldn't stop there.

Add in the cost of supporting 775,000 retirees currently drawing a GM pension. And the health care costs of 2 million people who would find themselves uninsured if GM were to fail.

A collapse of the U.S. auto industry would reduce personal incomes by $150.7 billion, the automaker warns. Over three years, the cost could grow to $398 billion in unemployment assistance, as people struggle to find new work.

By every measure, the damage from a collapsing US auto industry will reach far beyond the industry itself.

The nation's auto industry is a major contributor to our gross domestic product -- nearly four percent in total. According to the Center for Automotive Research, our current recession was fueled by three-tenths of a percent decline in GDP. If GM alone is left to fail, a sudden one percent loss in GDP could easily trigger panic, turning a recession into a depression.

[GM]

GM posts $4.2 billion Q3 loss; exits Chrysler merger talks

Over the last three months ending Sept 30, General Motors has lost $46 million each day.

Announcing its third quarter earnings today, General Motors posted a $4.2 billion dollar loss, its fifth straight losing quarter and in an amount far greater than analysts had expected. In response, GM shares fell 13 percent to close today at $4.16m amidst doubts about the company's cash reserves.

“The third quarter was especially challenging for the auto industry. Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales,” said Rick Wagoner, GM Chairman and Chief Executive Officer in a statement.

Tight credit, rising unemployment, declining income, falling stock markets, and continuing deterioration in the housing market have all contributed to an abrupt halt in consumer spending. Many customers who still intended to buy or lease a car this summer were denied financing, or found the cost of financing prohibitive.

In response to today's earning report, the beleaguered automaker said it would cut white-collar jobs and slash next year's capital spending budget by $2.5 billion in attempt to cope with the troubled economy. Including job cuts made in July, more than 7,000 salaried and contract positions are being eliminated, trimming spending on salaries by $500 million.

This afternoon, Wagoner renewed his pleas for low-interest loans from the U.S. Treasury. “The U.S. government’s actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy’s and the auto industry’s recovery, but further strong action is required.”

The biggest problem confronting GM is a lack of cash to pay it's suppliers and operating costs. Most of the company's funds are tied up in factories or tooling; without an injection of capital, analysts predict that GM will run out of cash by the second quarter of 2009.

Finding new lenders will not be easy, either. In response to the $46 million per day cash burn, Standard & Poor's lowered GM's debt rating further into junk status, from B- down to CCC+. "We now believe GM will use much more cash this year than our previous estimate of as much as $16 billion in its global automotive operations," said Standard & Poor's credit analyst Robert Schulz in a statement.

The 'will-they, wont-they' romance is over: GM kills Chrysler merger talks
Without mentioning Chrysler verbatim, Wagoner confirmed the end of negotiations with Chrysler to Automotive News.

"We have recently explored the possibility of such an acquisition based on the analysis that it would strengthen our industry position in the long term," Wagoner said. "we are better off to put 100 percent of our efforts on the liquidity side. We've set aside such (acquisition) actions as a near term priority."

Chrysler issued its own statement separately, saying the company would continue to work on returning to profitability. "As an independent company we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid our return to profitability."

Majority shareholder, Cerberus Capital Management declined to comment.

So what's next for GM?
In short, a fire sale.

The automaker has already killed the next generation of its full-size sport-utes and is ramping up efforts to sell the ailing HUMMER brand. Today, GM said it would put its ACDelco aftermarket parts business up for sale, a move the company expects will raise another $2-$4 billion.

Wagoner reiterated today that bankruptcy is not an option and that the company "will take whatever actions we can to avoid it."

But Wagoner's pledge will be hard to uphold given the state of the economy. Ford Motor Co. posted a $3 billion after-tax operating loss for the third quarter today, and said it too would cut costs further to preserve cash.

Both automakers said that U.S. sales will worsen next year. GM forecast its 2009 U.S. sales at 11.7 million units; if true, next year will be the company's slowest since 1982. In 2010, GM predicts US sales will rise to 12.7 million unit -- over 4 million less than the automaker's 10-year average ending last year.

[GM,AN]

World's largest Lamborghini dealer shuts its doors

Last night — without explanation from either the dealer's owner or parent company Volkswagen — Lamborghini of Orange County, the world's largest Lamborghini dealer, abruptly closed its doors.

Across the nation, dealers have closed on account of slow sales or the inability to extend credit lines. But last year, the Southern California dealer sold ten percent of all Lamborghinis world wide. Furthermore, most of the Italian automaker's production is custom-ordered and paid for in advance.

All of which makes the sudden closing rather puzzling.

The dealer's website is still up at this hour, but phone calls go unanswered. There are no directions for those who have made appointments for service or have a car on order through the Orange County dealer.

The Orange County Business Journal reported tonight that Lamborghini SpA is attempting to help the dealership reopen.

While the automaker declined to comment on specifics, Pietro Friegerio, chief operating officer for Lamborghini SpA told the Journal that the sudden closure was their first priority.

Vik, Nora, Sossi and Astrid Keuylian own and run Lamborghini Orange County.

Friegerio said the management at Lamborghini Orange County made a few "unfortunate business decisions, independent of the automaker, which have caused the current issues that they are trying to resolve now.”

For now, owners will have to turn to Lamborghini Beverly Hills or Lamborghini San Diego for service or repairs.

[OCBJ]

GM, Chrysler lead horrific month as October sales plunge

Falling gas prices and rising inventories weren't enough to offset a tight credit market, leading to another awful month of sales for all automakers.

On average, October sales were down 32 percent from a year ago, with General Motors hit the hardest. Not only did GM's HUMMER brand lead the industry with sales off by 64 percent, but the rest of the GM portfolio followed closely behind.

Cadillac and Saturn sales fell about 55 percent, GMC trucks were down 52 percent, followed by Pontiac, Buick and Chevrolet, which were all down by at least 40 percent.

The decline is largely due to tighter lending policies adopted by GMAC Auto Finance. With GM's in-house lending unit refusing loans to buyers with credit scores below 700, a large percentage of prospective customers were unable to qualify for a loan.

Possibly the worst month since World War II
"If you adjust for population growth, this is probably the worst industry sales month in the post-WWII era," said Mark LaNeve, GM's vice president for sales and marketing, speaking with Automotive News. "Until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer."

To spur sales, GM said today it will start its annual Red Tag Sale early this year. The event - which normally runs from Thanksgiving weekend to January 5, will instead start tomorrow, with some GM vehicles carrying up to $7,250 in cash incentives.

Chrysler sales fell 50 percent, trailed by Jeep and Dodge, down 32 and 27 percent respectively. Ford sales were off 28 percent from a year ago.

So far only two automakers have reported monthly sales increases this year: Toyota in April and GM in January. This month, Toyota's decline was lead by its Lexus unit, down 35 percent. The Toyota brand retained its position as the nation's best-selling brand, ahead of Ford and Chevrolet.

MINI posts gain, Audi bucks the downward spiral
Among the few to post gains were BMW's MINI brand, up 56 percent. Audi, whose sales were up by less than one percent were weighed by parent company Volkswagen AG, whose sales fell by nearly 8 percent.

"This is the toughest economy we've seen in a long time," Mark Barnes, COO of VW Group of America, said in a statement.
[AN]

[Photo: Flickr.com; Original by Broken Wing Productions. Post-processing by David Moll.]

Treasury says no cash for GM, Chrysler merger talks stalled, Renault hookup rumors persist

The tumultuous storyline of the GM - Chrysler merger reads like a script fit for Hollywood. Both need each other to survive.
Neither can make it alone.

But parties on both sides have a lot to lose.

And with today's news from the Treasury, the White House — and even Renault — the story gets messier by the minute.

Will they? Won't they?
Read on..



Yesterday, it seemed a forgone conclusion that General Motors and Chrysler LLC would merge within the next month, despite the consequences for nearly all Chrysler's models.

Now, the US Treasury and the Bush administration are adamant, saying they will not broker a merger deal or heed GM CEO Rick Wagoner's request for more money. Speaking with Reuters, a Bush administration official said that the "Treasury is not negotiating with the automakers, the administration is working to get the $25 billion Congress already authorized to the industry."

Instead, the Bush administration and the Treasury will speed the distribution of $25 billion in federally-backed, low-interest loans, drawn from an aid package approved by Congress last month.

Automotive News reports that both GMAC and Chrysler Financial - finance agencies owned jointly by GM and Chrysler's owner, Cerberus Capital Management — would qualify to sell their distressed assets to the Treasury under the $700 billion Troubled Asset Relief Program.

"An unmanageable disaster" for Rust Belt states
While the sale of troubled debt will help GM's overall cashflow, it doesn't help the underlying problem that drove GM to seek Chrysler in the first place: a lack of financing. Without new borrowing or asset sales, GM is in danger of running dangerously low on cash in 2009, analysts have said.

Hoping to draw attention to the dire need for capital, the governors of Michigan, New York, Ohio, Kentucky, Delaware and South Dakota wrote the Bush administration in a plea for further assistance. Facing pressure from a surge of unemployment claims and a decline in state tax revenue, the "economic crisis" facing automakers "threatens to create an unmanageable disaster at the state level," the letter said.

Michigan's congressional delegation — lead by Energy and Commerce Committee chair John Dingell — has also lobbied the Bush administration to free up funds for the Big Three.

Ford joins the bailout fray, seeking "degree of parity"
And just when this couldn't get more complicated, here comes Ford. Reuters reports that FoMoCo has been angling for their own piece of the financial aid pie. If the government provides a direct injection of capital into either GM or Chrysler, Ford want their fair share as well.

Speaking with reporters, Mark Fields, Ford's president of the Americas said the company wants to "make sure that whatever happens, there is a degree of parity."

But for now, any aid — or merger negotiations — will be delayed until after Election Day.

So what happens now?
With the GM-Chrysler talks stalled, Renault pops back into the picture. As NMM reported two weeks ago, French automaker Renault has expressed interest in buying Chrysler's Jeep division outright from Cerberus.

Recently, Renault has backed away from the table, playing down rumors of a three-way partnership between Chrysler, Renault and it's Japanese partner Nissan Motor Corporation.

Nonetheless, the lack of progress with General Motors opens the door to new talks between Cerberus and Renault. Sources close to the early discussion said that Cerberus has considered a deal with Renault and Nissan as a favorable alternative to a full buyout of Chrysler by GM.

The sources declined to be named as they were not authorized to discuss the private talks. General Motors and Cerberus both declined to comment.

[RTS, AN]

Report: GM-Chrysler merger likely to decimate Chrysler lineup, trigger more layoffs

The fallout from a merger between General Motors and Chrysler LLC will lead to the closure of many as half of Chrysler's factories and the elimination of nearly all Chrysler models, according to a report released by consulting firm Grant Thornton LLP.

The report comes a day after General Motors canceled a $2 billion program to replace its trio of aging full-size SUVs and Chrysler culled its two full-size hybrid SUVs after only three months of production.

Merger and more layoffs seem inevitable
Despite the gloomy forecast, a GM / Chrysler merger seems highly likely at this point. Reuters reports that GM and Chrysler have resolved the major issues in a merger agreement and that the final form of a deal will depend on financing and federal support.

The New York Times reports that the Department of Energy was working to release $5 billion in government-backed low-interest loans to GM so it could complete a deal with Cerberus Capital Management, the majority shareholder of Chrysler LLC. The $5 billion in loans would come directly from a $25 billion pool of funds approved last month by Congress in an effort help Detroit retool as a maker of more fuel-efficient cars.

And while a merger may save the two embattled automakers, it most certainly will not save all their employees.

Speaking with Automotive News, Kimberly Rodriguez, principal of Grant Thornton's automotive practice said that a deal also could result in a loss of 100,000 to 200,000 jobs at the two automakers, their suppliers and other industry shareholders.

According to the report, the majority of job cuts would come as most of Chrysler model lineup is phased out. Chrysler's sedans have failed to outsell their domestic competitors and both the Dodge and Jeep division are heavily invested in SUVs and light trucks.

Massive consolidation of models, factories
Currently, Chrysler operates 14 factories, with two of them scheduled to close at year's end. During the summer, Chrysler has offered its Viper model lineup for sale, along with the Detroit plant where they are made.

In the report, Grant Thornton says that four more factories could close in the aftermath of a merger with GM. Those on the hit list produce the Chrysler Sebring and the Dodge Avenger in Michigan, the Jeep Liberty and Dodge Nitro in Toledo, Ohio, the Dodge Ram in St.Louis, Mo. and Dodge's heavy-duty truck plant in Saltillo, Mexico.

As production of these models wound down, a second wave of layoffs would then hit the third-party suppliers that provide transmissions, windows, dashboard assemblies — all of the primary components unique to each Chrysler, Dodge and Jeep model.

All told, the lost work to these suppliers would put hundreds of companies at risk. Up to 50,000 additional non-Chrysler jobs could be lost if Chrysler were to close the plants Grant Thornton expects.

Timing is critical; contraction is inevitable
If a GM-Chrysler merger is completed, it may take years to phase out all of the models listed in the Grant Thornton report. Some platforms may be eliminated through attrition; left in production until they cease to turn a profit. Some plants could be closed as early as the holiday shutdown and others could take years to close, said Rodriguez.

It is, in your humble author's opinion, a "damned if you do, if you don't" scenario.

Neither GM or Chrysler can survive alone in this market. While Chrysler has more cash on its books, they are in the worst position to capitalize on high gas prices. Worse yet, they lack the resources to improve their CAFE rating without aid. And while GM has a more fuel-efficient lineup, they are burning through their cash on hand at an alarming rate.

If either fails, far more jobs could be lost than those through the merger of these two former titans.

For more punditry on this unholy mess:
NYT: Views on a GM-Chrysler merger

[AN]

As a merger draws near, GM and Chrysler cull the SUV herd

In cattle ranching parlance, culling the herd is a process of selective slaughter. It is a metered and carefully planned elimination of the weak and unfit, done to protect the rest of the herd either from disease or in hard times, from starvation.

General Motors and Chrysler both sharpened their fiscal axes today and took drastic steps to ensure their continued survival. Upon unanimous approval by the board of directors, GM announced it has cancelled Project CXX, a $2 billion program to replace the aging Cadillac Escalade, GMC Yukon and Chevrolet Suburban sport-utility vehicles.

“It would have been very difficult in today’s environment to spend a couple of billion dollars to do a replacement,” said Bob Lutz, GM’s vice chairman and head of product development in a statement.

All three full-size sport utes — which a decade ago were icons of a resurgent GM — are now living on borrowed time. With the recent truck plant closures in Ohio and Wisconsin, the current generation of sport-utes will only be built for as long as sales volume remains self-sustaining.

Sales of sport-utility vehicles have steadily waned since 2004. As the highly profitable market shrank, losses continued to mount at all of the Big Three. And after posting a $18.8 billion loss in the second quarter of 2008, GM is reported to be in the final stages of a merger with embattled Chrysler LLC. While 2008 hasn't been kind to any domestic automaker, GM will likely suffer the worst in the coming months; its passenger cars were often sold as loss-makers and the company staked it's continued success on its line of sport-utes.

Layoffs at GM plants are set to continue, with Janesville, the firm's oldest and most reliant on sport-ute production, set to close by Christmas. If the Chrysler merger goes through, further layoffs are expected.

Chrysler pulls plug on Aspen & Durango hybrids
Earlier this week, Chrysler announced it would close its Newark, Del. plant nearly a year ahead of schedule. As a result, the Dodge Durango and Chrysler Aspen Hybrid sport-utes will be culled before they complete their first full model year.

Production of the two full-size hybrid sport-utes began two months ago, just in time to be scorched in September, the worst month of U.S. auto sales in 15 years.

Speaking with Automotive News, Chrysler spokesman Todd Goyer said the company had no plans to move the Aspen and Durango hybrids elsewhere. "Keeping the plant open for the hybrid versions isn't a sound business decision," he said.

1,000 Chrysler employees will be laid off when the final shift is completed on Dec. 31, 2008.

The Detroit News reports there are no signs that Chrysler will commit to another body-on-frame full-size sport-ute. Ford has already committed to a unibody layout for the next Ford Explorer, following the lead established by Honda with their Pilot sport-ute and Ridgeline pickup truck.

Unibody layouts used stamped steel sections that are welded together to form the structure of an automobile. Commonly used to build passenger cars, unibody designs are typically 10 to 20 percent lighter — and hence, can be more fuel-efficient — than a similarly sized body-on-frame vehicle.

[ NYT, AN, DTN]

Friday, Bloody Friday: Chrysler to cut 25 percent of salaried workforce

Not to oversell the situation, but we may very well be witnessing the end times for Chrysler as an automaker.

One in four salaried workers at Chrysler will be out of a job by year's end, according to a statement released by Chrysler this morning.

The statement did not identify how many jobs the automaker will eliminate but spokesman Michael Palese said the cuts will total 25 percent of the company's salaried workforce.

According its own figures, Chrysler employs nearly 17,300 salaried workers. So today's cuts may total more than 4,300 jobs.
The first round of job cuts will come with voluntary retirement and employee buyout offers, according to the statement. Even still, layoffs are expected to come before the end of the year.

Discretionary spending and operating overhead will also be cut to the bone as Chrysler's owner, Cerberus Capital Management negotiates for a potential sale to General Motors. As reported earlier, Cerberus is also courting Renault for a potential sale of the Jeep division.

A hailstorm of pink slips
Today's news comes a month after Chrysler cut 1,000 salaried jobs and a day after the announcement that it would close its plant in Newark, Del., and cut a full shift from the Toledo, Ohio Jeep plant, trimming 1,825 more jobs in the process.

Since February 2007, Chrysler has eliminated 35,000 jobs. GM is also rumored to announce another round of salaried job cuts by the end of the year.

Speaking with Bloomberg, Dennis Virag, president of Michigan-based Automotive Consulting Group said Chrysler and General Motors have to do all they can to stem the outflow of cash from the organization.

Chrysler CEO Bob Nardelli released a statement attributing the latest job cuts to the fastest contraction ever in auto industry sales. "These are truly unimaginable times for our industry," said Nardelli in the statement. "We continue to be in the most difficult economic period most of us can remember."

Doubts emerge over Renault deal
Meanwhile, Reuters has reported that Renault is downplaying rumors of a potential partnership between Chrysler, Renault and its Japanese partner Nissan. Renault had recently expressed interest in purchasing Chrysler's Jeep division; the reaction by Renault may be a sign that the French automaker is no longer interested in the Jeep lineup.

Speaking with Reuters, UBS analyst Tatsuo Yoshida said Nissan and Renault have little incentive to spend the human and fiscal resources needed to aid the ailing American automaker.

[Chrysler, AN]

Amidst dealer protests, GMAC seeks quiet retreat from lending business

In a move that has angered dealers and strained relations with General Motors, GMAC Financial Services has begun its retreat from the business of financing automobiles.

The first step came on Monday, when GMAC announced it would only offer financing to customers with FICO credit scores of 700 or higher.

Cerberus Capital Management, who owns a controlling 51 percent stake in GMAC, has tightened lending terms as the global credit market has ground to a halt. General Motors owns 49 percent of GMAC. Throughout history, GMAC has been the financier of most General Motors' retail sales.

California dealer group irate over new GMAC policies
The unilateral move to distance GMAC from risky auto loans has strained dealer relations so sharply that the California New Car Dealers Association put their objections in writing to GMAC Financial Services CEO Alvaro de Molina.

On its website, CNCDA says it represents over 1,350 franchised new car and truck dealers. The Sacramento Bee reports that among them, CNCDA represents 400 GM dealerships, located throughout California.

In their letter to GMAC, CNCDA President Peter Welch wrote that "Unless immediately stopped, GMAC's actions will directly lead to the insolvency of a number of our GM dealer members and will significantly erode GM's California market share." Welch said that 40 percent of California vehicle buyers will be cut off from GMAC financing under the new lending restrictions.

Compounding the problem, GMAC is now giving dealers less time to pay off their inventories.

Dealers often take out revolving lines of credit to replenish their lots with new vehicles. Depending on the terms of the credit line, dealers usually have from 90 to 120 days to pay the invoice price for the vehicles they order. But as new car sales have tanked this fall, inventories have languished with hardly any buyers in sight.

For dealers who finance their operations through GMAC, they now have fewer customers to sell to, since only those with above-average credit will qualify for an in-house loan from GMAC.

Financing that Fits... from someone else
And while dealers are being squeezed, General Motors has launched a new marketing campaign to reassure buyers that financing is available -- from someone else.

Called "Financing that Fits", the campaign will promotes the ease with which buyers will find financing at their local GM dealer, as well as large cash incentives on remaining 2008 models.

Speaking with Automotive News, Jim Campbell, GM's director of marketing and incentives said the ad campaign is aimed at potential buyers who are put off by news that financing isn't easy to come by. To aid the process of securing a loan, GM dealers will have access to Route One, a new web-based system that connects dealerships with a network of outside lenders. The new ad campaigns won't mention Route One specifically.

And as the ads hit the airwaves, GMAC is desperately seeking ways to cut its exposure to high-risk loans. So much so that minority stakeholder GM will quietly off incentives to dealers to arrange loans with outside lenders.

Automotive News reports that the program will pay up to $250 in incentives for every non-GMAC loan. Salespersons will get $100, sales managers will receive another $100 and dealers can designate an employee of choice to receive another $50. The length of the incentive program isn't clear.

According to the memo, all 2008 and 2009 Chevrolet, Pontiac, Buick, GMC, Hummer, Cadillac and Saturn vehicles will qualify.

[AN:1, 2, 3, SacBee.com, Edmunds.com]

Dodge, Ford to offer deep discounts on newest trucks

If you are waiting to replace your 1978 Ford pickup and you've got the cash or credit to close the deal, there are big bargains to be found in big trucks.

It's no secret that pickup trucks have been Detroit's financial bedrock for decades. Even through the 1973 OPEC embargo, the Big Three have relied on the steady cadence of truck sales to keep the coffers full. In an effort to reverse the paralyzing decline in sales last month, both Ford and Chrysler announced new discounts this fall on their newest trucks.

Chrysler LLC will offer a $2000 cash discount on the all-new 2009 Dodge Ram. The incentives seem to be working; the Ram's market share increased last month to nearly 16 percent from a low of 8.6 percent in May. Discounts vary by trim level and market; in Southern California, Dodge currently offers a $5000 incentive on the base model Ram 1500.

According to the Financial Times, Ford will offer a $2,500 incentive for every trade in for a 2009 F-150 pickup.

The new discounts come as a result of launching the two all-new trucks in a very difficult market. The downturn in home construction has pulled the rug out from underneath many contractors and builders, both of whom are core customers for large pickups. Discounts are usually a tool of last resort, used most often to clear dealer lots of outgoing models.

Since it's introduction in 1948, the Ford F-series pickup has become a sales legend. For 31 years, the F-series was Ford's best-selling vehicle; in 2007, sales of the F-series made up 27 percent of the automaker's annual sales volume. But as high oil prices sapped demand during the spring and worried lenders and faltering finances curtailed loans this summer, sales of the F-series have fallen sharply. Sales of the F-series were down 39 percent in September compared to a year ago.

Sales of the Dodge Ram were off by 28 percent for the same period, according to the Financial Times.

CSM Worldwide, a Michigan consultant firm, expects the US truck market to shrink next year and in 2010, bringing annual sales down to about 1.3 million units, about half of 2001’s peak.

Bond, Ollila step down from FoMoCo board
In other Ford news, the Financial Times reports that Sir John Bond and Jorma Ollila have stepped down from Ford Motor Company's board of directors. In a statement, Ford said that Bond, who had previously been head of HSBC, and Ollila, chairman of Nokia and Royal Dutch Shell, “believe they could not devote the additional time and international travel that would be required of them as the company responds to the unprecedented external environment and rapidly changing auto industry”.

Shares of Ford traded lower, down 4.12 percent to close at $2.33 per share.
Dodge is not publicly traded. Dodge is a subsidiary of Chrysler LLC, a privately held company controlled by equity management firm Cerberus Capital Management. The firm maintains a controlling stake in Chrysler's three brands: Chrysler, Jeep and Dodge.

Cerberus courting all bidders, may break up Chrysler, Jeep divisions

Just weeks after Chrysler's EV dog and pony show, majority stakeholder Cerberus Capital Management is courting a deal an effort to sell their stake in Chrysler LLC to General Motors, according to the Wall Street Journal and Reuters.

According to the Wall Street Journal, GM execs are receptive to the notion of a buyout and want to close the deal by the end of the month. Meanwhile, Reuters is reporting that French automaker Renault S.A is pursuing their own deal to purchase Chrysler's Jeep division, widely regarded as the single most valuable asset in Chrysler's portfolio.

Both Reuters and the Wall Street Journal report bankers are encouraging a GM-Chrysler deal. J.P. Morgan is the largest holder of Chrysler debt and is also a major banker for GM.

But here's where things get complicated.

Cerberus is not interested in exiting the auto business. Cerberus wants to continue to own a stake in a future Chrysler - GM conglomerate. This has become a point of contention for some board members at GM who have as yet gone unnamed.

Plan B? Sell Chrysler a la carte
Reuters has reported that if a full buyout cannot be agreed upon, GM may instead choose to pick at the bones of the Chrysler portfolio. GM has expressed interest in buying Chrysler's minivan line — a niche Chrysler pioneered some 25 years ago and one where GM has had trouble competing ever since.

GM may also buy Chrysler's truck manufacturing plant in Coahuila, Mexico – a purchase that seems at odds with the GM's decision in July to idle the Oshawa, Ontario truck plant.

Other potential sales and mergers include spinning off Chrysler Financial to merge with GMAC, General Motor's captive finance unit. Cerberus currently owns a controlling 51 percent stake. Alternatively, Cerberus may buy out GM's remaining 49 percent share to sweeten a struggling buyout deal.

Chrysler's MOPAR parts division is rumored to be for sale. So too is Chrysler's engineering division, which recently unveiled a plug-and-play electric-gasoline drivetrain the company says will be on the road by 2010.

All of these deals — and the future of Chrysler as an automaker — hinge on whether Cerberus decides to sell the company off piecemeal and whether GM, Renault and other bidders can secure financing to complete their acquisitions.

Shortly after this blog was launched, I expressed my doubts that Cerberus would treat Chrysler as a long-term investment and whether Chrysler itself could survive. That was before the near total seizure of inter-bank lending and the worst month of retail car sales in 15 years.

While the ink has yet to dry on any of these deals, the decision by Cerberus to start shopping now speaks volumes. If Chrysler has any future at all, it will likely be one far removed from it's Hemi-powered days of glory. Which — to nostalgic old salts like me — is an awful thought to consider.

[RTS,WSJ]

September sales hit 15-year low as credit crunch hits car dealers

When it comes to our nation's economic future, I am reticent to join the chorus of hyperventilating worrywarts wringing their hands at the approach of fiscal Armageddon. But one thing is clear -- the impact of a shell-shocked credit market hit car dealerships in full force this September with predictably grim results.

On average, sales for September were off by over 27 percent from a year prior. Overall sales volume for September totaled 965,160 units - the first month in 15 years to sell fewer than one million units industry-wide.

Ford Motor Company posted their 10th straight month of declining sales as its three domestic divisions dropped 34 percent. Chrysler LLC sales fell 33 percent and General Motors was down 16 percent.

European and Asian automakers also suffered. Porsche sales were off by nearly 45 percent from a year ago. BMW Group sales fell nearly 26 percent. Suzuki and Mitsubishi sales fell 47 and 39 percent respectively, trailed closely by Mazda, Nissan and Toyota.

No automaker posted an increase. Only German automakers Volkswagen AG and Daimler AG were able to limit their declines to less than 10 percent.

Sales results were released today as the Senate prepared to vote tonight on a revise $700 billion bailout plan to rejuvenate lending by purchasing the toxic mortgage-related securities left behind by the collapse of the sub-prime mortgage industry.

Credit crunch hampers dealer financing
As the drama on Capitol Hill and Wall Street has played out, buyers have postponed big purchases. And dealers say buyers with good credit ratings are being denied loans more often.

"In the past, we were accustomed to financing 70 to 80 percent of our cars sold," Jim Weisbecker, general manager for Belle Glade Chevrolet in Florida, told Automotive News on Tuesday, Sept. 30. "Now we finance about 20 percent, if that. It has been a drastic turnaround."

Jim Fosche, sales manager at Buddy Foster Chevrolet in Zephyrhills, Fla., said volume at his store plunged 50 percent last month. He blamed the credit crunch and job worries.

Future remains grim as Big Three attempt to restructure
For the faltering domestic automakers, weak sales and tight credit couldn't come a worse time.

Combined, the Big Three have cut tens of thousands of jobs since 2006. Many GM and Chrysler plants have been idled for weeks at a time this year to slow production of slow-selling pickup trucks and sport utility vehicles.

Compounding the problem, billions of dollars in cash reserves are being spent to finance new products as well. General Motors lost $15.5 billion in the second quarter of 2008; Ford lost $7.8 billion.

[AN]
[Photo: Flickr.com; Original by Broken Wing Productions. Post-processing by David Moll.]

Fisker Automotive secures $65 million from US, Qatar investors

Fisker Automotive of Los Angeles, Calif. announced its latest investment deal today, through which the startup automaker will receive $65 million in new capital.

The deal was lead by an affiliate of Qatar Investment Authority, along with representatives from Palo Alto Investors and Kleiner Perkins Caufield & Byers.

"We are extremely pleased to have closed our financing round at this time, particularly in light of the current market conditions," CEO Henrik Fisker said in a statement. "This shows that Fisker Automotive has a solid business plan and a globally experienced automotive team with very strong investors behind the company."

The proceeds from today's deal will go toward continued development of the Fisker Karma.

In addition to being the company's first automobile to be based on a custom built chassis, the Fisker Karma will be the company's first hybrid vehicle. Featuring plug-in hybrid technology the electric powertrain will allow drivers to drive emission-free for 50 miles a day, provided that the car is recharged every night.

In 2003, former Aston Martin design chief Henrik Fisker founded Fisker Coachbuild LLC.

Fisker launched the firm with the Tramonto and Latigo sports cars, both custom designs penned by Fisker and based off the BMW 6-series coupe and Mercedes-Benz SL-series convertible.

Shortly after the Fisker Karma concept (pictured at right) was unveiled in 2007, Fisker Automotive was founded by Fisker Coachbuild LLC and engineering partner Quantum Fuel Systems Technologies, which will design and build the Karma's hybrid drivetrain.

Fisker Automotive has received more than 500 orders since the Karma's unveiling, delivery of the first customer vehicles are expected to start by the end of 2009.

[AN]

Requiem for the H3: one of the nation's largest Hummer dealer will close tonight

With sales run aground by soaring gas prices, General Motors is scrambling to sell the ailing Hummer division before year's end. Yet the process of courting buyers is bound to get worse with today's news.

The Wall Street Journal reports that Towbin Hummer of Las Vegas, Nevada - the nation's largest Hummer dealer — will shut its doors for good tonight.

Some may remember the Towbin name from short-lived reality show "King of Cars" on A&E.

By staking his claim as the biggest and best dealer in town, dealer and brand aficionado Dan Towbin capitalized on the Sin City market to become one of the nation's largest Hummer dealers. During the dealer's best year, Towbin Hummer sold five percent of all Hummers in the nation.

But now, Sin City has shunned the rolling testament to excess, leaving Towbin to stop selling the lumbering 12-mpg leviathans and start selling diminutive Smart ForTwos.

While Towbin isn't the first dealer to close, it is by far the largest — and thus, the most problematic for GM. Now that the capital of conspicuous consumption has passed on the Hummer for smaller fare, it is clear that twilight draws near for the brand.

Listen to the bell, HUMMER... it tolls for thee.

[WSJ.com]

Porsche offers virtual test drive with new 911 configurator

Edelsteinrot or Arktis-Silber?
Nordichgelb or Mittenachtblau?

For a decade or so, we car junkies of high hopes and meager means have often retreated to the joy of building our future dream cars online.

But despite many advancements in web technology, little has changed when it comes to building our automotive flights of fancy.

We pick our options, then wonder which hypothetical color would look best in our yet-to-be paved driveway and that's about it.

Today, Porsche introduced their new game-changer. Now, once you've picked your color and options, you can embark on a virtual test drive of your future 911 rennwagen.

"Our goal was to go beyond simply picking the colors and options on a new 911; the goal is to make it possible to have an engaging experience with the car that hints at what it's like to get behind the wheel," said David Pryor, Porsche North America's vice president of marketing.

The new online program was developed by Porsche with assistance from ad agency Cramer-Krasselt, who designed the new interface. Buyers and daydreamers alike can now draw out a virtual road to drive their new virtual 911.

"This is followed by a video of the fully rendered, computer-generated 911 driving the course," said Josh Cherfoli, Porsche North America's online and relationship communications manager. "We use videos and computer animations to go beyond simple words to explain and demonstrate a feature. The type and format of the information we provide is what an Internet-savvy user expects from a cutting-edge company like Porsche."

Gentlemen, start your drooling.

Update: In my haste, I'd forgotten to post a link to this new marketing marvel.

First, download the ViewPoint Media Player here:
http://www.viewpoint.com/technologies/viewpoint-media-player.shtml

Then choose "Build Your Porsche from the US homepage.

[Source: Porsche NA via AN]