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Toyota’s Bad Day

By Ken Elias
June 1, 2009

It might be a bad day for GM but it’s a much worse one for Toyota. Really. The days (decades, really) of weak domestic manufacturers shooting themselves in the foot with bad design, poor assembly, and non-existent customer satisfaction in passenger cars are coming to an end. Toyota didn’t have to outrun the bear, it just had to stay ahead of GM, Ford, and Chrysler. Years of producing huge profits in North America hit the wall for Toyota in 2009, and they’re likely not to return. Ever. The game has now changed—and it’s not good for Toyota.

Thanks to US and Canadian taxpayer support, GM and Chrysler are about to get a new start. They’ll enjoy fresh balance sheets, with minimized legacy liabilities and serious money earmarked for new products. (The taxpayers are paying for Fiat to develop cars for North America; you didn’t really think that the Italians would take this risk on their own did you?) Ford, by dint of luck or smart management, borrowed what it needed years ago to make the transformation outside of court oversight.

By the end of this year, all three Detroit automakers will be restructured, resized to match production with demand, and re-energized. They will reenter the market as the lowest cost producers inside the U.S. market, with slimmer, trimmer product lines. These automakers are getting ever-closer to 100 percent capacity utilization.

Looking at product, Ford’s passenger car line up just keeps getting better. The 2010 Taurus looks hot, the Fiesta test drive campaign is generating good press with the Twitter/Facebook crowd, and a new Euro Focus will be here in a two years. Slowly but surely, more Americans are considering a Ford passenger vehicle. Its trucks still lead the category and will continue to do so. Better products, increasing quality, and slowly increasing market share is building FoMoCo momentum.

GM’s go forward brands—Chevrolet, Buick, GMC, and Cadillac—still have some vehicles that don’t cut the mustard with consumers. But the balance is starting to tip back towards the positive. The Malibu and Camaro represent some better efforts. The gorgeous new Buick Lacrosse might give the new Taurus a run for the money. Cadillac will extend the CTS line and bring a new SRX to the market shortly. The Corvette still leads the pack in dollar performance value. And maybe, just maybe, the Cruze and Viva will live up to GM hype machine.

GM’s perhaps two to three years behind Ford with its product development cycle. But it can now concentrate on fewer models. Recent successful launches suggest that GM just needs time to plug the holes for the weak sisters. It now has the money to do so and you can bet (if you’re taxpayer, you already have) that the efforts on fuel efficient passenger cars will receive the bulk of the dollar spend. GM won’t abandon trucks (no matter what Nancy Pelosi thinks) and volume wise, GM leads.

Chrysler can’t do anything under their new pasta-fed management until the re-tooled imports arrive here for production two years hence. Its cars still (mostly) suck, except for the higher-performance versions of its LX cars. But it isn’t going away and will still find some buyers for its products at the pace of the recent past. So this company will just hang on . . . and on . . . and on.

Now, stop and think about this. What has Toyota done for you lately? Is there one single passenger car from Toyota that excites you?

Let’s keep the new Prius out of this discussion for the moment; it’s not a car for drivers but techno-geeks and greens mostly with excitement provided by the fuel gauge, not vehicle dynamics. The Camry might lead the C/D class in sales for now, but will this continue? What happens when Americans actually consider a Malibu or Fusion-based product instead? In terms of design appeal, the Camry looks dowdy or boring (take your pick) and its reliability isn’t any better than the Fusion. Put a four-cylinder EcoBoost engine in that Fusion and Ford wins.

Go through the rest of Toyota’s passenger car line up and compare each vehicle to the current and near future offerings from GM and Ford. The question is: will Toyota customers do the same?

Toyota (or Honda) products have been the default choice. That “Easy Button” is starting to get harder to press for buyers. Yep, Americans will begin to come back to consider Detroit products (at least GM and Ford), and that’s not good for Toyota. And we’ve really never left Detroit for our big pickups and SUVs, whle the Japanese are still mostly playing catch up.

Yep, it’s a bad day for Toyota and a great day for America. You can look forward to a new Detroit that will be competitive, if not lead, in cars and trucks for mass market Americans. Count on it.

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The Fix Is In! Rep. Barney Frank Delays Local GM Plant Closure



By Robert Farago
June 4, 2009

You, TTAC’s Best and Brightest, knew it was going to happen: that unfortunate intersection of business and politics, where the taxpayer-supported GM would be forced by its new masters to place the latter ahead of the former. In other words, brain dead zombies are easily led. The Hill reports that Massachusetts Congressional Representative Barney Frank has “convinced” GM to keep a parts operation in his district open for business. “Frank’s staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass., plant open for at least 14 months.”

“I greatly appreciate General Motors’ willingness to take into consideration the wider needs of the company and especially the community,” Frank said in a statement. “Keeping the facility open for this extra time gives workers a chance to look at other opportunities, while at the same time continuing to provide for their families.”

Need we (and the Hill) point out that Barney is chairman of the House Financial Services Committee? You know, the pols that oversee the government’s bailout program, under which GM has received $50 billion? No, I didn’t think so. [Thanks to lw for the link.]

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53 percent describe the bailout as a “bad idea”



By Edward Niedermeyer
June 5, 2009

According to a recent Rasmussen poll, 26 percent of those surveyed support the GM bailout. Yes, but 53 percent describe the bailout as a “bad idea,” and of that majority of respondents, 30 percent of those support a boycott. The idea of boycotting a government-owned GM was most popular among men and middle-income respondents. Also, 51 percent responded that they are “more likely” to purchase a Ford because the automaker has not received government funding. If popular sentiment is so set against GM and the bailout now, imagine what it will be like after a few years of government ownership. Especially if this anti-bailout attitude is affecting sales along the way. Fills one with hope, doesn’t it?

http://www.rasmussenreports.com/publ..._favor_boycott

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Michigan Pols Look for GM Plant Closing Reprieve



By Robert Farago
June 5, 2009

Not much info here, but the story’s major thread is clear enough. After discovering that Massachusetts Congressional Representative Barney Frank won a reprieve for a local GM operation, Michigan Reps are looking for some of the same non-action for their constituents. The Detroit Free Press is uncharacteristically tight-lipped (uninformed?) about the who, when and where—although we know the what and why (staying elected). “Michigan members of Congress summoned the chief executive of General Motors Corp. to a meeting next week after the company bowed to pressure from U.S. Rep. Barney Frank and delayed the closing of a parts warehouse in his district.” The Detroit News is more forthcoming, indicating that it’s the entire Michigan congressional delegation asking for various stays. This after Dingell’s open letter to Fritz on the first . . .

Dingell throws everything against the wall.

As a Congressman who has fought hard to preserve and promote American manufacturing, with particular regard for the domestic automakers General Motors (GM), Ford, and Chrysler, I am troubled to learn that GM plans to close its Willow Run Transmission Plant in Ypsilanti Township, Michigan.

As you well know, this plant was once known as the “Arsenal of Democracy” for having built the famous B-24 bomber that helped the U.S. and its allies win the Second World War. More recently, the support of the Michigan Economic Development Corporation, tax abatements by Ypsilanti Township, and an investment of $557 million by GM itself have allowed the Willow Run facility to remain an international leader in the efficient assembly of quality six-speed transmissions. When measured against GM’s internal quality scorecard, the Willow Run team assembles GM’s highest-rated transmission.

The bottom line: the people in charge of federal funds are ignoring federally-funded GM’s bottom line, dooming the zombie automaker to extinction. Well duh.

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Feds to Crack Down On ChryCo, GM Exec Pay

By Robert Farago
June 8, 2009

Don’t worry Detroit: you’re not being singled out for “special” federal supervision (perish the thought). The New York Times reports that Congress is taking control of the pay and compensation for all beneficiaries of federal largesse who’ve double-dipped into the taxpayer’s purse. “The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor compensation, according to two government officials.” A Pay Czar! Heads-up, bosses, meet the new boss of bosses: Kenneth Feinberg. You may remember Mr. Feinberg as the 9/11 victims’ compensating lawyer originally tipped to be Obama’s Car Czar—a job so big the Prez eventually gave it to Wall Street insider Steve Rattner and 24 of his closest friends. Anyway, there’s an important (if not exactly auto-oriented) dynamic in play here . . .

Goldman Sachs, JPMorgan Chase and a handful of others have worked to rid themselves of their ties to the government in order to shed restrictions on pay that they say put them at a competitive disadvantage.

But under the administration’s new plans, even companies that repay the taxpayer money will not escape some form of oversight on their compensation structure.

Tin hat time. Is that why Uncle Sam was so reluctant to take back the bailout bucks? OK, this is scary.

Treasury Secretary Timothy F. Geithner plans to testify on compensation on June 18, and that may be when he outlines the principles for the entire industry. Those principles will be permanent: when bailed-out companies return the government money, they will still have to follow those principles.

The days of Chrysler and GM executive tough-snuffling are over. Or are they? Chrysler has already figured out a way to pay its suits as Fiat employees. And if GM can’t find a loophole somewhere, well, they wouldn’t be GM would they?

http://www.nytimes.com/2009/06/08/bu..._r=1&th&emc=th

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Dealer or No Dealer?



By Robert Farago
June 8, 2009

General Motors is at war with itself. Thanks to a staggering, though not unexpected, lack of decisiveness, GM’s management has managed to completely alienate its major, public-facing “stakeholder”: GM dealers. Without the guys on the sharp end moving the metal, General Motors might as well declare bankruptcy and surrender the keys to the executive washroom to a 25-member federal quango led by Washington insiders with no manufacturing experience whatsoever. Oh, wait. In fact, GM needs its dealers even more now that it’s a zombie than before, when it was also a zombie (but didn’t know it). And of all the items of GM CEO Fritz Henderson “to do” list, not throwing GM’s entire US dealer network into chaos should have been somewhere near the top. I want to say something about a “race to the bottom,” but I’ll let you connect those dots.

Last week, GM CEO Fritz Henderson faced a Spanish Inquisition from the company’s paymasters. Senator Rockefeller wanted GM’s former CFO to explain his rationale for cutting over 2000 dealers from the roster. Fair enough, right? If you’re going to unleash a political shitstorm by ****-canning a large, politically-connected, highly litigious, battle-tested, lyin’, cheatin’, boozing, whoring, testosterone-fueled group of GM “customers” (the dealers are the ones who actually buy the cars from GM), then you want to make sure you have your proverbial ducks in a row.

Oops! Fritz forgot his Ross Perot-ian “We’re In Deep **** for Dummies” charts back at Days Inn. Or did he leave them on the plane? Rick friggin’ Wagoner just HAD to fly to D.C. in the Gulfstream to beg for bailout bucks, the bastard. Senator Rockefeller also wanted an actual list of dealers culled. Damn! I must be wearing a different jacket! Anyone remember the scene in Raiders of the Lost Ark, where Indy casually shoots the scimitar flailing baddie? GM’s the dope with the flashing steel.

THIS is how the new, “smarter” GM rolls? It gets worse. On the same day that Henderson failed to defend the company’s decision to downsize its dealer network, Fritz granted eleven axed dealers a reprieve—without revealing the exact methodology used to separate the wheat from the chaff. Yeah, that’s a good idea: play favorites. That’ll REALLY **** off the disappeared. And if that didn’t do it–which it did—GM’s crafted a new state-trumping franchise agreement for their remaining dealers that makes slavery seem like an oral contract.

According to Automotive News, New GM’s New Deal with its new dealers puts the “con” into “draconian.” To remain a part of “the family,” all GM stores must agree—in writing—to increase sales by 10 percent (maybe twenty), carry larger inventories, eliminate non-GM brands from their showrooms, upgrade dealerships, maintain high customer satisfaction scores and STFU if a new GM store locates more than six miles away from their dealership.

In other words, GM’s new contract includes a “just shoot me now” tick box at the bottom.

Sell more vehicles? The fact that GM’s market share has been on a downwards trajectory since the last century (news flash: the company is now bankrupt) should tell the corporate mothership a little something about how easy it is to sell GM vehicles these days. Hang on; shouldn’t GM make better products before they “force” dealers to sell more cars?

By the same token, what’s with the dealership upgrades? GM stores are hurting for cash. Wait, let me guess. The feds are going to provide loans (or loan guarantees) so that GM dealers can put Ford, Toyota, Honda, Hyundai, etc. dealerships to shame. Because Uncle Sam believes that rewarding losers is really just “leveling the playing field,” and when it comes to debt, more is always better. Meanwhile, pay no attention to that $1 million per dealer HUMMER upgrade fiasco. That was then. This is crazy.

As for the mandate to “maintain” consumer satisfaction scores (a.k.a. CSI), it’s Big Mac time. They CANNOT be serious. GM’s CSI scores have been a complete sham since they were first foisted upon their retail operations. I’ve got two words for anyone who thinks otherwise: Bill Heard. And another two: blind eye.

If GM was actively trying to screw-up its future, they couldn’t do it more effectively than they are right now. Saying that, I have every confidence that GM will somehow find a way. Let Barney Frank **** with your plant closing plans? Sure! **** away resources on a new green car that can’t compete with Toyota’s last generation hybrid? To paraphrase Albert Einstein, “employing the same people to do different things is the definition of eternal insolvency.”

Meanwhile, remember Fritz Henderson’s pledge to We The People promising transparency as it “reinvents” itself to repay our hard-earned tax money? How’s this for opaque: dealers are prohibited from discussing the agreement with anyone other than employees or business partners without GM’s expressed written consent.

Dead automaker walking.

TriShield

Meet the New Boss



By Edward Niedermeyer
June 10, 2009

“I don’t know anything about cars. A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same.”

http://www.bloomberg.com/apps/news?p...d=aQ._YJhEj_Jo

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Feds’ Surprise GM C11 Exit Strategy: There Isn’t One!



By Robert Farago
June 11, 2009

What do you make of this, then: ”We do not have a specific target in terms of years, The mere issuance of that blueprint, we believe, would be market disruptive.” So sayeth Ron Bloom, leader of the Presidential Task Force on Automobiles and architect of Uncle Sam’s $100 billion plus GM/Chrysler bailout. Ron was testifying to the Senate Banking Committee re: the Obama administration’s timetable to extricate the government from the domestic automotive industry. But wait! That’s all! The government will divest itself of its 60 percent stake in GM “as soon as is practicable,” Bloom said, but “I certainly by no means would say that I am confident that will occur.” What? EVER?

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In Defense of the Chrysler and GM Bailout



By Rich Truesdell
June 11, 2009

Over the last year, as this unparalleled automotive sales depression has picked up steam, I have observed unprecedented vitriol directed at both Chrysler and General Motors. Here on TTAC; on Autoblog, Jalopnik, CarDomain, et al.; and in the mainstream press, the companies receiving federal aid have been criticized. I just couldn’t understand it. It’s as if the only vehicles these companies ever built were the Jeep Compass and Pontiac Aztek. Critics seem to have completely forgotten all the great cars both companies are building right now and have built over the years. At the same time, they’ve overlooked Chrysler and GM’s importance to their employees, suppliers and countless communities from coast-to-coast. “Stakeholders” who have a direct impact on as many as one-in-ten domestic jobs.

Then came the contentious debate about bailing out Chrysler and General Motors which culminated in President Obama’s address on March 30. Obama gave Chrysler thirty days fix its balance sheet and close its alliance with Fiat—or face liquidation. GM was given an additional thirty days to restructure itself or face bankruptcy. While Chrysler came within days of escaping bankruptcy, a few of its dissident bondholders balked and Chrysler was thrown into a Chapter 11 filing that many pundits felt it would it would ultimately result in liquidation. While many observers rooted for it to failure, Chrysler has emerged from bankruptcy with unprecedented speed. Congratulations.

Back in early November, in what seems like a lifetime ago, the talk in the automotive world was of a possible “merger” between GM and Chrysler. I thought that this was a bad idea and would quickly lead to the dismantling of the Auburn Hills automaker and the loss of at least 30,000 US jobs. I came out and said that there was a far better partner for Chrysler who needed small car technology that they couldn’t afford to develop on their own. That partner was Fiat, which had the obvious and complementary need to sell vehicles in the United States in its quest to become a truly global automaker.

On January 20, Chrysler announced it was in serious partnership talks with Fiat to merge their operations; a move that would help both cope with and survive in the deepening worldwide automotive sales depression. This sales implosion was not only was impacting weak regional automakers but successful global ones like BMW, Honda, and even Toyota. All were seeing sales volumes declining by 40% or more as the virus was spreading around the globe.

Then, as now, I believed that an alliance with Fiat was Chrysler’s best and probably last hope for survival and was pleased to see yesterday’s deal between Chrysler and Fiat concluded. I truly believe that it will have a positive impact on both companies and will give us, as car enthusiasts, additional choices. After all, what can possibly be bad about Alfa Romeos returning to our shores?

Meanwhile, it should be said that other nations have taken extraordinary steps to protect their home-based industries. Why shouldn’t we do the same, especially since we have provided completely open access to our market allowing them to build their export industries? For example, I have absolutely nothing against Hyundai and Kia. But what’s fair about the fact that South Korean manufacturers can sell more than 600,000 vehicles a year here in the United States, yet our manufacturers sell fewer than 10,000 units annually south of the 38th parallel?

Last year, when driving to cover the Los Angeles Auto Show, I was forced to take a detour off the freeway. I stopped at a Starbucks in the Asian enclave of Alhambra off I-10 to get my e-mail. As I pulled into the parking lot, I noticed something strange: there wasn’t a single American brand car in the lot. While there were a few BMWs and Mercedes, every single car in the lot was of Asian origin. I walked into the Starbucks thinking to myself that Asian buyers, consciously or unconsciously, appear to buy homogeneously, supporting their nation’s car builders. Why don’t Americans? It’s because our market is so open that we can. In retrospect, maybe this explains why the American public—and our politicians—gives our own companies such a cold shoulder.

I hope the restructuring of General Motors is ultimately successful. The fact that some are calling for a boycott of “Government Motors” strikes me as absurd. Collectively, we as Americans will soon own 60 percent of New GM. Why would we not buy vehicles from a company we own?

[Read more of Rich Truesdell's work at automotivetraveler.com]

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Washington Can't Be 'Hands-Off' With GM

The political interference has already started.

By ROBERT FARAGO

Last week, Rep. Barney Frank (D., Mass.) contacted General Motors CEO Fritz Henderson. He wasn't happy with GM's decision to close a distribution center in his district. He asked Mr. Henderson to reconsider.

Mr. Frank controls the funds upon which GM's survival depends. His request was immediately approved, and the facility will stay open for at least another 14 months.

When Michigan's congressional delegation learned of the stay, they called Mr. Henderson and asked for a meeting. They are equally determined to strong-arm GM into arranging a similar stay of execution for GM facilities in their districts.

Less than two weeks after President Barack Obama promised a hands-off approach to the bankrupt car maker's day-to-day operations, politicians are busy interfering with the car maker's day-to-day operations. Even Sen. Bob Corker (R., Tenn.), who upbraided the Big Three CEOs at hearings last November, is now working to save GM's Spring Hill plant from permanent closure.

On the day of GM's bankruptcy filing, Mr. Obama declared that "[a]s a common shareholder, the government will only vote on core governance issues." Such issues, he said, include "the selection of a company's board of directors and major corporate events or transactions."

It must be asked: What else is there? For someone who can't stop proclaiming that he doesn't want to be the company's CEO, Mr. Obama already sounds -- and acts -- a lot like GM's top suit.

When Mr. Obama's Presidential Task Force on Automobiles defenestrated GM CEO Rick Wagoner back in March, it removed any doubt regarding the ultimate source of the company's command and control. While Mr. Wagoner fully deserved his dismissal, at that moment General Motors became Government Motors.

Many commentators worry that this new, nationalized GM will answer to politicians rather than profit and loss. They fear that this could lead to a $100 billion quagmire. Their fears are not without reason.

GM's post Chapter 11 decision to continue developing the Chevrolet Volt, its technologically dubious plug-in hybrid, is Exhibit A. The Volt is the same experimental vehicle that the president's automotive task force excoriated in its analysis of GM's federally mandated turnaround plan. The hybrid's survival shows that the company's new political taskmasters are ready, willing and (now) able to put green dreams ahead of commercial reality.

But there's a far greater danger to taxpayer interests than a plethora of unloved, environmentally-friendly cars: GM itself.

GM's management caused its failure. Its corporate culture lacks anything even remotely resembling accountability. Many of the same people who drove the company into the dirt are running the company now on the federal government's dime, continuing their failed death-by-downsizing turnaround plan.

Moving forward, the auto task force will either leave GM's sclerotic corporate culture intact -- as it is currently doing by allowing Mr. Wagoner's hand-picked successor, Fritz Henderson, to run the show -- or it won't.

If the Obama administration continues to maintain GM as is, the American auto maker is doomed. Alternatively, if the task force tries to destroy GM's dysfunctional corporate culture by replacing Mr. Henderson with a genuine reformer, there's an excellent chance that it won't make any difference. The new management team will be undermined by the fact that the company must answer to the task force and its boss, Mr. Obama.

It's naïve to believe that the president will take a backseat to the company's management. The commander in chief mortgaged no small amount of his political capital by defying public sentiment and doubling down on GM's resurrection. If it fails, he fails.

The question is no longer whether GM will be a viable car maker. The question is whether the federal government has a viable exit strategy to remove itself from the debacle ahead. If not, I've got one: Cut and run.

Mr. Farago is the editor and publisher of the Web site The Truth About Cars.

http://online.wsj.com/article/SB1244...Tabs%3Darticle

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A House Divided

By Robert Farago
June 12, 2009

Matthew 6:24: “No man can serve two masters; for either he will hate the one and love the other, or he will be devoted to one and despise the other.” Applying this biblical admonition to General Motors, it’s clear that the federal bailout will accelerate rather than retard its ultimate demise. The automaker’s corporate culture was dysfunctional before the feds took the reigns back when its over-compensated suits made sure that failure was impossible (and not in a good way). Now that GM employees must answer (at least in the theoretical sense) to both management and politicians, it’s twice as screwed-up. As I indicated in this morning’s Wall Street Journal Op-Ed, the political interference with the company’s operations is already underway. Well of course it is. And it will continue. As will GM’s descent into oblivion. Simply put, there’s no way GM can get its house in order when Uncle Sam is the landlord. SNAFU × 2.

Today, GM CEO Fritz Henderson reported for work. In and of itself, that’s about as bad a sign of GM’s ongoing failure as you could get. Lest we forget, Henderson is old-school GM: the former CFO who watched the company’s balance sheet go **** up. Henderson is also guilty by association: the hand-picked successor to GM’s phenomenally failed CEO (also former CFO) Rick Wagoner.

The fact that Henderson made it to the top of GM diseased corporate caste system is all you need to know about his suitability as a turnaround artist. Inmates. Asylum. Administration. That sort of thing.

This stout defender of GM’s status quo emerged from yesterday’s meeting with The Presidential Task Force on Automobiles (PTFOA) proclaiming that his job was safe. Ish. While Fritz expects to remain large and in charge of the small and getting smaller automaker as it exits bankruptcy, “nothing’s guaranteed.” How . . . reassuring.

In a familiar sort of way, it’s the same set of weasel words PTFOA jefe Ron Bloom used to hedge his promise not to keep plowing taxpayer money into the quagmire increasingly (and accurately) known as Government Motors. Am I the only one bothered by the fact that, despite having not one but two masters, GM’s strategy is still in flux?

I reckon two things are certain: GM’s death and your taxes. GM and its new presidential overlord are doing all they can to counteract that politically unpalatable reality, trying to make it seem as if there’s hope for change. Their latest attempt to give wing to these (recurring) delusional flights of fancy: the new Chairman of GM’s Board. GM supporters seized on former telecoms magnate Edward Whitacre’s appointment as a sign of “fresh” thinking.

Back on planet Earth, why the Hell interim BOD director and PTFOA lackey Kent Kresa picked a man without any automotive or manufacturing background is an interesting question. As in “clueless old white guys that not-so-interim GM CEO Fritz Henderson can con with a spreadsheet for $50,000, Alex.”

“He was someone who [PTOFA chief] Steve Rattner knew, or knew of,” Mr. Kresa told the New York Times, by way of explanation. And now Kresa says he’s searching for other board candidates “who have been involved in companies where there has been a dramatic change in the marketplace.” Oh, I know! What about the guy who put Kodak in the *******?

No, wait; he was on the last GM BOD. And I guess Kresa’s looking for candidates who saw a dramatic change in the marketplace and reinvented a chronically unsuccessful company with a huge, bumbling bureaucracy into a leaner, greener, faster, smarter and enormously profitable participant in same. (Experience working for politicians a plus.) He just forgot that last bit.

Not that it really matters. A board chairman is, at best, a watchdog. (You might say Whitacre is a lapdog, but I couldn’t possibly comment.) Even if Eddy W. understands that culture eats strategy for lunch and caps Fritz’ ***, it must be remembered that GM’s Board of Directors is merely a front for the Powers That Be.

The PTFOA is the real BOD. They are the masters to whom the bankrupt automaker’s employees—which includes Whitacre—must answer.

So, ultimately, it must be asked: what the **** do THEY know about the car business? I know: it’s not a new query. But it’s one that remains unanswered, even as GM continues to suck-up taxpayer billions and realign itself for the future.

By thy deeds thy shall be known. Only one problem: the deed required is a complete rehabilitation of a car company that’s screwed its customers for decades. Even if GM built a Camry and Lexus-killer, it would take them another decade and at least another $100 billion to recover their missing marketplace mojo.

Given the “dramatically changed” US auto scene, no one but the feds would sink that kind of cash into a GM-shaped money pit. And neither should we. That’s not a politically palatable conclusion, but it’s the God’s honest truth.

TriShield

Which Congressional Delegation Will Build the New GM Compact?



By Edward Niedermeyer
June 12, 2009

GM has bowed to political pressure, deciding that it won’t use taxpayer money to import compact vehicles from China. Instead, Aveo II (a.k.a. the Chevy Viva) will be built at one of three existing GM plants. (Hello, DOE retooling loans!) Up for the contract are Michigan’s Orion Township, Tennessee’s Spring Hill and Wisconsin’s Janesville assembly plants, and GM’s Troy Clarke is meeting with workers and unions from the three locales in order to determine the best site for Viva production. Oh, did I say workers and unions? I meant congressional delegations. Because, in the post Barney Frank-gate environment, “(GM’s choice is) going to be based on pure business decision,” according to Rep. Gary Peters (D-MI). Would Rep. Sander Levin (D-MI) like to clarify? “We’ve been in the front line of pain and we very much believe that one of the factors that should be taken into account is the impact of other decisions,” Levin tells the DetN. Gosh, that sounds almost . . . political. Hit the jump to find out which congressional delegation is most likely to build the new generation of GM compacts.

Orion Township—The Michigan Congressional Delegation (3-1)

Similar to “real business,” the political economy rewards those who buy in early. And the Michigan congressional delegation was shuffling political rewards to its home-district auto industry when much of the congress was still funneling student body government contracts towards political contributers. And they’ve got the approach down pat. Rep. Gary Peters (quoted above) indicates that local tax breaks will help GM justify a decision as a “pure business decision,” while Rep. Sander Levin provides the touchy-feely, “feel our pain” rationale. Plus, the Orion Township plant doesn’t shut down production until the Fall. And let’s not forget that the Levin twins are renowned for their spot-welding skills. Orion is by far the front-runner.

Janesville, Wisconsin—The Wisconsin Congressional Delegation (5-1)

Wisconsin Senators Herb Kohl and Russ Feingold and Reps. Tammy Baldwin and Paul Ryan do not have the long record of experience reflexively supporting the auto industry that Michigan’s corps does. On the other hand, Janesville’s plant has 90 years of history, meaning there will be plenty of material for a heart string-tugging PowerPoint presentation. Which makes a difference with these things. Also, as a former truck plant, Janesville could get mucho green kudos for performing the whole truck-to-compact transformation. And we hear that Russ Feingold runs a mean paint shop.

Spring HIll, Tenessee—The Tennessee Congressional Delegation (10-1)

Senator Bob Corker has been a huge fly in the bailout ointment, scuttling the first round of congressional bailout beggary. Ever since, his (and fellow TN senator Lamar Alexander’s) rhetorical commitment to free market principles has been an inconvenient presence that draws legitimacy from the effort to pour billions into GM and Chrysler. Expect this principle to be duly rewarded with a real unwillingness to retool the Spring Hill plant. Oh, wait, it already has been. TN Governor Phil Bredesen has already been told that the only way to make up for his recalcitrant Senators is $200 million. “They don’t care about tax credits and those other kinds of things,” Bredesen tells the Tennessean. “It certainly was a new look for me at how they’re approaching this thing, which is absolutely, ‘Tell me how big of a check you’re going to write.’” Don’t bet that Corker’s efficiency on a stamping press is going to make a difference here.

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Analyst: Fiat-Chrysler Alliance Sucks



By Edward Niedermeyer
June 12, 2009

Creative Global Investments analyst Sabine Blümel takes on the Fiat-Chrysler marriage at just-auto.com [sub] and she seems unable to find anything positive to say about the deal. “A three-way alliance, also including GM Europe, and even better, also GM Latin America, would have given [Fiat Group] a full-range product portfolio and an extended and strengthened geographic footprint,” says Blümel. Take GM’s Opel or Latin American ops out of the picture, and you’ve got a nasty case of the not-so-muches on your hands. “We see little potential strategic benefit for the Fiat and our concerns regarding the benefits for Fiat from the alliance have, if anything, increased since the alliance plan was first announced,” is the verdict.

“Fiat has the wrong model portfolio and expertise to succeed in the US. Fiat’s centre of gravity, both in expertise and market positioning is in the A- and B-segment, i.e., the ‘compact basic class’ that currently accounts for less than 4% in the US light vehicle market. Moreover, the alliance does not help Fiat address its own structural problems, including streamlining the production network, extending its geographic foot-print beyond Italy and the Latin markets and extending the product line-up above its mainstay of A-B-segment.”

http://www.just-auto.com/article.aspx?id=99770&lk=dm