UPDATE: GM asks for an additional $12B

No, you’re not missing a period in-between the 1 and the 2. That’s t-w-e-l-v-e billion dollars on top of the $18B they already wanted. If they don’t get it, they’ll run out of cash by March, and might have to consider bankruptcy.

Look, I’m not happy about this at all. GM employs lots of folks who happened to live in this country (and Mexico, Canada, and South Korea). And a bunch will get laid off, and almost all with see a reduction in the health benefits and other perks they were promised. Which totally sucks. You shouldn’t have to shaft the little guy, especially considering the state of healthcare in this country.

I totally blame the UAW. I am usually a pro-labor person, but in my mind the UAW represents everything that is wrong with unionization. Why is that relevant to GM’s woes? I mean, certainly GM has done a lot to dig it’s own grave, with enough brands/models competing with each other, and enough management to make the combined bureaucracy of Europe look streamlined. But the UAW has apparently bludgeoned the industry into accepting insane “legacy costs.” Which is a fancy way of saying, we’ll promise all sorts of benefits, to be paid off in the future, betting on great sales and market dominance. And it’s falling apart like Bernie Madoff’s ponzi scheme (which is exactly how I view the situation).

The taxpayer ends up with a lot of the burden for the mistakes of private enterprise. That makes me really angry. If GM achieved “parity” with the cost and benefits of other sectors in the US (including the domestic workers for foreign automakers), and stood up to the UAW, they’d be in an arguably better position, and you, Joe or Jane America, wouldn’t be worrying how much of your tax dollars are cleaning up the mess.

OK, in case you can’t tell, this turned into a full-blown rant as I actually thought this whole thing through. I actually hope it riles you up too, because it should.

[Source: NYT, pure unadulterated anger]

Slimmin’ Down: Automakers to submit plans to Treasury

In many ways as unsurprising as it is incredible, the details of GM and Chrysler’s plans to redo their business models is going to be submitted to the Treasury Department today (Ford did not take money from the Feds, so they don’t have to submit a restructuring plan). Apparently, GM is going to slim down to just 4 brands, from the 8 they currently sell in the US. The list is:

1. Chevrolet
2. Buick
3. GMC
4. Cadillac

What’s missing from the list? Some of the brands were expected to be cut, notably Saab, Hummer, and Saturn. But Pontiac!!!

Pontiac has been the sporting face of GM for a long time, despite mostly not living up to the image. Other GM brands, with their own management and agendas, produced their own sportscars, reducing Pontiac to sort of a façade. Take the Chevy Corvette and Camaro. Pontiac got a version of the Camaro, the Firebird, for pretty much the entire life of the car. But the Corvette was the halo car for GM, and it was a Chevy, so Pontiac could never meet or exceed the performance of that car.

This is despite the fact that lately, there was some thinking that Pontiac would become a specialty, sportscar-only brand, making cars along the lines of the Solstice, G8, and the GTO exclusively. However, that’s also a little hard to believe when you consider the introduction of this monstrosity, the Pontiac G3, which is a rebadged version of that old GM favorite, the Daewoo Kalos/Chevy Aveo. Talk about mixed messages! What about the Kalos/Aveo is sporty?

So after my initial shock (“no, don’t kill the General’s sportscars!”), I’ve realized that Pontiac is just as warped and off-message as any brand at GM. Like Saturn, the brand-image has been tainted, and maybe it deserves to die to allow GM to start focusing on not competing with itself.

[Source: NYT]

Jing Qi! China passes US in total auto sales

Despite a worldwide recession that is affecting even China (after significantly growing it’s economy for most of 2008), the Chinese bought about 795,000 new vehicles in January of ’09. That compares to approximately 657,000 vehicles sold in the US.

For whatever it’s worth, this is the first time in history that China has surpassed the US in vehicle sales. But don’t expect me to scream “oh no, we’re going to be overrun by crappy Chinese cars!” I feel like the learning curve isn’t going to be too much steeper for China than it was for Korea. It took the Koreans, particularly Kia and Hyundai, only a decade or two from making bad copies of other cars to being serious rivals to Japanese automakers in terms of quality and design. Want proof? Look at the new Hyundai Genesis. Compare that to a Hyundai Excel from 1990 and you’ll understand that motivated companies with advantages in labor costs, and some help from foreign expertise, will catch up really quick. Realistically, I give the Chinese another 10 years, and possibly less, to make very competitive cars. And I don’t expect the Koreans to give their market position up easily, so expect a price, feature, and quality war in the near future. Chinese automakers like BYD (“Build Your Dreams,” actually one of the better manufacturer names) are already very serious about hybrid technology, too.

That will be good for consumers, trust me. You’ll benefit in the long run.

[Source: Freep.com. Bnet Autos]

Hug your sad Salesperson: Sales off sharply for January

Reuters is reporting some bad news. Auto sales are near a 27-year low for the month of January. The numbers (make sure small children or people sensitive to strong images of corporate failure are not looking):

Ford: 40% drop in January domestic sales, capping 10 months of declines of more than 10%

Toyota: 34% drop for US sales

Nissan: 30% for US sales

Shockingly, on the news that rental car agencies were sharply cutting back on purchases, Chrysler expected sales to be off more than 35%. Why did I say “shockingly” (in a sarcastic manner)? Well, that’s to be expected when the only people who buy your cars are rental agencies. I mentioned a while back that the Dodge Avenger and Chrysler Sebring twins are pretty much the archetype of a car so foul that only rental car agencies will buy them. The economy is so bad the agencies are balking.

If any Chrysler execs are reading this (which, trust me, they aren’t for several reasons, one of which is that they are allergic to good advice), you might want to consider making cars that don’t look like rejected props from Mel Brooks’ Spaceballs.

Good News!

OK, I’ve spent a lot of time in the last two days looking for some morsel from the auto world that is not completely depressing. It hasn’t been easy, but hey, I’m working for you, loyal readers, so I don’t mind the drudgery. So here’s what I came up with:

1. The impending failure of the Big 3 in Detroit means our society, our way of life, and all of our cars will be consigned to oblivion in the near future. Prepare to eat a diet of coarsely ground grain, fend off large mammalian predators, and drag a sledge behind you …

… um, er, haha, little joke. Moving right along …

1. (for real this time) if you live in Europe and have a hankering for really big luxury cars that get good economy (who doesn’t?), then you might like the new BMW 730Ld. Kidding aside, this car really points out why diesel engines, in my mind, play a really important niche. The 730Ld (which is a huge car, by the way, at 205” long and weighs close to 6,000 lbs) will get 32 MPG on the European combined cycle test. I don’t think it will break any speed records, but diesels are getting a lot better. And for folks that want their cake and don’t want to have to fill up the tank while they’re eating it, the idea of a huge luxury sedan that gets Toyota Yaris fuel economy might be just what the doctor ordered. [Source: BMW via Autoblog Green]

2. Plus, if you get a 730Ld, in the near future you might be able to fill it up with fuel derived from algae. Seriously. There are still a ton of economic obstacles to making this a really competitive fuel source, but the advantages are numerous: high productivity, noncompetition with human food sources, ability to grow in ponds on unutilized land, etc. As long as it doesn’t spur the rise of a super-advanced sentient algae species that we will have to fight in order to survive, it should work out well. [Source: Nevada News]

3. Finally, Ford, the healthiest of the Detroit 3 automakers, has announced that if you actually want to buy one of their 2010 Fusion hybrids, you’ll get the full $3,400 tax credit. It does get impressive economy, at 41 MPG in the city. The hitch? In April, the credit gets halved, and in October it gets halved again. Nevertheless, if you absolutely crave a midsize hybrid that gets the best fuel economy, the Fusion is the way to go. It’s significantly more efficient than any other hybrid in its class. [Source: Ford]

In the News: Obama, California, tailpipes, and seals

There are a lot of great news articles about this, including the New York Times one - by the way, I’ll admit my bias here and now and say that I get most of my news from the NYT – but I’ll do my super-quick summary for you here.

Basically, California wants to more strictly regulate tailpipe emissions, which is currently the domain of the federal government for all states, unless they have a waiver. The waiver allows the state regulations to be stronger than the federal regulations. California has had a waiver for a long time, but they want to increase their standards again. Of course, this is bringing up a lot of the same, tired, arguments about how this will kill the industry and cause Detroit to explode and set Canada on fire. Or that there will be some sort of evil mutant hodgepodge of state regulations, and the automakers will be really confused. So confused, in fact, that they claim they will explode and set baby seals on fire. And go out of business. But mostly incinerate seals.

This is a pretty stupid argument, in my opinion. Business, as those type-A personalities who become businesspeople will be happy to tell you, is about natural selection. Adapt or die! Corporate raiders! Hostile takeover!!!! It’s a rough business, business. And it has become abundantly clear that the big three need to get their ducks (not the Catera ducks!) in a row and shape up. All of them make small, efficient cars in Europe, and sell them like crazy. Ford is working on turbocharging smaller engines so that power-hungry Americans can still pass big trucks on the freeway while getting ok fuel economy when off-boost. Great! That’s fantastic. It’s been proven that you can make cars that burn less gas and emit less pollutants. Start building them!

In any event, Obama is ordering his minions to make sure they reconsider granting California’s proposed waiver, which is a shift away from the Bush policy. In case you can’t guess, I’m all in favor of it.

President Bush Authorizes Auto Bailout Package!

The New York Times (and other sources) just reported that President Bush just authorized a bailout package for GM and Chrysler to the tune of $17.4 billion. I'm still trying to process the details, but this does NOT look like the "soft-landing bankruptcy" plan that newspapers and blogs were talking about yesterday, which would have basically been government supervision in restructuring the companies. It also looks like all of the government oversight and company requirements have been watered down a bit. I’m afraid this will let the companies muddle along for a while longer without really changing anything much. Basically, GM needs to slim down, and they seem incapable of shedding brands or models. Will this money make them do what they have been unable to since the dawn of time? I sure hope so.