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]

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]

Video: Renault Ondelios Concept merges Gallic style, high tech for ultimate luxury

Crossover, trucklet, compact SUV.

All of these words might spring to mind at the first sight of Renault's latest concept. Yet the Gallic automaker sees the Ondelios as a vision of the future high-end luxury sedan, blending performance and luxury with respect for the environment.

We wrap up this week with a detailed examination of the Renault Ondelios — a machine that challenges traditional design concepts in the interest of advancing the art of the luxury automobile.

"Motion rather than speed"
"Ondelios is inspired by motion rather than speed and is a whole new response to the call of the open road," said Patrick Le Quément, design director for Renault.

Sitting on seven-spoke, 23-inch aluminum alloys, the wheels are at first glance the centerpiece of the Ondelios' design. Their propeller-like hubs draw airflow from the sides of the car to prevent turbulence and cool the brake rotors. Rolling on 255/40 R23 next-generation Michelin Pilot Sport tires, the tread pattern is designed to minimize deformation of the contact patch, reducing rolling resistance and offering responsive handling.

Unified design through advanced materials
In designing the Ondelios, spaciousness, efficiency and avant-garde style were top priorities. Le Quément chose to use broad gullwing doors to span the pillarless opening, allowing easy entry into all three rows of seats. At the push of a button, the second row of seats will automatically slide forward and fold down to facilitate access to the third row.

Outside, the fully glazed roof, broad windscreen and low window sill are all complimented by flush-fitting glass and anthracite blue bodywork, lending the car a windswept and unified look. The steeply raked windscreen, which extends well down the bonnet, further accentuates this ethereal feel.

"We think of it as made from a single material, where the body and glazed areas merge into one. Ondelios is a glimpse of what the automobile might be in the medium term future," said Le Quément.

At the front, the Ondelios' aluminum grille is flanked by highly efficient LED headlamps with sculpted polycarbonate covers featuring integrated lenses. Out back, boomerang-shaped LED tail lights are mounted flush with the bodywork and ringed with air extractors to control the flow of air from the wheel arches. The tailgate's upper section rounds off the car's sleek, aerodynamic lines with a glare shield that slides inwards to air and cool the cabin.

These advanced aerodynamic aids are key to the Ondelios concept's efficiency. Proving that not all hybrids need to be miniaturized, anodyne and awkward, the 5 meter long and 1.6 meter high Ondelios uses a fully enclosed undercarriage to deliver a drag coefficient of 0.26, rivaling the Toyota Prius for wind-cheating efficiency.

To compliment the extensive aerodynamic tuning, the Ondelios is also designed to be highly recyclable. Non-structural body parts are made from a natural flax fiber composite for greater recyclability. Since weight is also a detriment to fuel efficiency, the car's monocoque is made from carbon fiber and the glazed roof from polycarbonate.

Next generation diesel hybrid power
Under the hood, the Renault Ondelios features a diesel-electric drivetrain; a 205-horsepower 2.0 liter turbodiesel four and two 20kW electric motors positioned at the front and rear axles, respectively.

The Ondelios will run on electric power alone using the front electric motor at speeds up to 45 mph. The torque-rich diesel four and the rear electric motor add power during acceleration; regenerative braking is used to charge the on-board battery pack.

When traction is poor, the rear electric motor will activate, providing all-wheel-drive stability without relying on a heavy and drag-laden mechanical driveshaft. Thus, the Ondelios provides all-wheel-drive traction when it is beneficial and front-wheel drive efficiency when it isn't needed.

The Ondelios can hustle from 0 to 60 mph in 7 seconds, while using 4.5 liters of diesel every 100 kilometers. CO2 emissions are also remarkably low; a mere 120 grams per kilometer. An impressive feat for such a large sedan.



The bottom line: Renault has taken the concept of spaciousness and environmentalism and applied cutting- edge design and materials to create a genre-defying expression of a 21st century luxury automobile.

Like most of Renault's show cars, the design is fanciful with heaps of show car tinsel, but the fundamental technology is already here. The future of the automobile is a lot closer than you'd expect; this is Renault's vision.
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[Video: Renault via R2R]
[Pictures: Renault via ABG]