Autoblog

GM offers up to $200 million to end American Axle strike

Jeremy Korzeniewski — 2008-05-09T07:55:00+00:00

Filed under: Plants/Manufacturing, GM, Earnings/Financials, UAW/Unions

General Motors has been hit so hard by the ongoing American Axle strikes that it's stopped production of the GMC Yukon, Denali, Sierra heavy-duty regular and extended cab, its commercial-duty pickup and variants of Chevrolet trucks and Tahoes. All the while, the General is still negotiating with the UAW over local contracts at some of its most important plants. To ease some of its supply problems, General Motors has reportedly offered as much as $200 million to American Axle for the funding of employee buyouts, early retirements and for the support of wage buy downs. The offer, however, is conditional on a quick resolution between American Axle and the UAW.

Spokesman Dan Flores says that GM hopes "the offer will help bridge the gap between American Axle and the UAW and that they will be able to reach a mutually satisfactory agreement in the near future." Both the UAW and American Axle sound supportive of the investment; Bill Alford Jr., vice president and incoming president at UAW Local 235 says, "We're happy that General Motors is finally coming to the table and realizing that they have a stake in American Axle's future." For GM's sake and that of the striking workers, we hope the feuding companies find an amicable solution soon, though it seems unfortunate that GM, which is not exactly posting record profits itself, should need to cough up funding to make it happen.

[Source: The Detroit Free Press]

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Toyota expecting profit drop in 2008

Jeremy Korzeniewski — 2008-05-08T17:29:00+00:00

Filed under: Sedans/Saloons, SUVs, Trucks/Pickups, Toyota, Earnings/Financials

The current economic environment in the United States is hurting all auto makers these days, even mighty Toyota, which was once considered immune to so-called market realities. Though its overall performance last year would be considered a stellar achievement for any other automaker, Toyota's 28% profit plunge in the fourth quarter of 2007 points to an expected 27% drop in annual profits in 2008. If Toyota's revised forecast proves accurate, 2008 would break a nine-year stretch of profit growth. In addition to the slowing U.S. market, Toyota also cites high material prices, the worldwide credit crunch and a strong yen as contributing factors in its mild downturn.

Toyota's expected profit drop is certainly newsworthy, but we just have to wonder how the money-losing American car companies will cope in the U.S. market with the same issues. While sales of cars are gaining strength, the SUV and truck markets are sinking with what could be Titanic-like implications for the truck-heavy lines from Ford, Chrysler and GM.

[Source: Toyota]

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Fiat buys Zastava to build new Topolino microcar

Noah Joseph — 2008-05-02T08:02:00+00:00

Filed under: Euro, Government/Legal, Plants/Manufacturing, Earnings/Financials, FIAT

If you told us a year ago that Fiat was going to sign a deal with the government of Serbia, we'd have laughed. But that was before the country announced that it was accepting tenders for investment in the state-owned automaker Zastava, makers of the famous Yugo (aka Skala 55). The process started back in December when the Serbian government made the announcement, sparking interest from various automakers. But even as recent as last week, the Fiat stance was that it was still considering the proposition. Well, it appears the Italian auto giant has done thinking, and has signed a memorandum of understanding with Serbia to establish a joint venture that involves Fiat investing a staggering 700 million euros (!) into Zastava's manufacturing facilities in exchange for a majority stake in the company, known in full as Zavodi Crvena Zastava. The Serbian government, meanwhile, will contribute some 200 million euros through tax incentives and similar measures.

Fiat has revealed that it will use the Zastava plant to produce the upcoming Topolino microcar. The vehicle will be based on the same platform as the 500 and Panda, but even smaller and positioned below either model, and share the same name as the concept car that previewed the new 500 and originally used on the 1936 runabout pictured above. According to reports, the new Topolino will be a compact two-seater measuring just 3150mm (124 inches) in length, slightly longer than the Smart ForTwo at 2692mm (106 inches). A four-seater version is expected to follow, in addition to an upscale version for the Lancia division.

[Source: Automotive News Europe - sub. req'd]

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Pininfarina confirms Ferrari, Brembo and Sabelt as new shareholders

Noah Joseph — 2008-05-02T07:28:00+00:00

Filed under: Euro, Earnings/Financials, Ferrari

Click for more images of the Pininfarina Sintesi

Pininfarina has confirmed the three new shareholders who will take stake in the company as part of its 100 million euro capital increase. As we reported previously, Piero Ferrari, son of the late Enzo Ferrari and vice-chairman of the eponymous Maranello sportscar firm, and Alberto Bombassei, chairman of the Brembo brakes company, will take shares, in addition to the Marsiaj family at the helm of Italian seatbelt manufacturer Sabelt.

The increased capital will finance the development and production of the upscale electric minicar Pininfarina will produce together with French industrial group Bollore and Indian automaker Tata. The car is expected to begin production in 2010 with 2000 units, ramping up to a full capacity of 15,000 units by 2012 with sales in the United States, Europe and Japan. Although the size of each new shareholder's stake has yet to be confirmed, the shares will come out of the Pininfarina family's 55% ownership.

[Source: Automotive News Europe - Sub. Req.]

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GM discusses brand strategy, opens bag, releases cats

Jonathon Ramsey — 2008-05-01T16:33:00+00:00

Filed under: GM, Earnings/Financials

GM President Frtiz Henderson came squeaky clean about the state of GM's brand portfolio, hurdles and losses. On the issue of too many brands, he admitted that the reason GM still has so many is that it is simply too expensive to kill any one of them. GM spent almost a billion large putting Oldsmobile to sleep, and with The General coming off a $3.25 billion Q1 loss, every half penny counts. In the mean time, GM will have to make do with its four new brand czars.

Henderson and CFO Rick Young also admitted that sales projections could be described as "rosy," the word "Delphi" is beginning to rhyme with "albatross," and that the intergalactic rise in gas prices has changed consumer buying habits "faster than we thought."

Fritz summarized the situation with: "We have to adjust. We have to learn how to make more money in cars and crossovers and tighten our belts with regard to cost expenditures." That's not the writing on the wall, that is the wall itself. Thanks for the tip, throwback!

[Source: CNN Money]

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Daimler reduces book value of Chrysler stake by two-thirds

Chris Shunk — 2008-05-01T11:34:00+00:00

Filed under: Chrysler, DaimlerChrysler, Mercedes Benz, Earnings/Financials

Daimler may have divested 80.1% of its ownership in Chrysler, but the German automaker is still feeling pain from the Pentastar. The value of Daimler's portion of Chrysler has dropped from $2.18 billion to $852 million not even a year after the two parted ways. The loss of nearly $1.4 billion in value is a fair chunk of change, even for the mighty Daimler, but the news is not all bad for company shareholders. If Daimler hadn't sold Chrysler to the private equity firm Cerberus as fast as it did, the automaker's stock would likely be in much worse shape.

Since the privately owned Chrysler, LLC doesn't have to report earnings, it claims that its fiscal standing is all peaches and cream. According to Chrysler, the company has had positive earnings since it was bought out by Cerberus last year. The official line that explains the discrepancy with Daimler's reporting is that U.S. accounting rules are much more favorable than those overseas. Damn accountants.

[Source: Automotive News - subs. req'd]

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GM posts $3.25 billion loss in Q1

John Neff — 2008-04-30T10:29:00+00:00

Filed under: GM, Earnings/Financials

General Motors announced today that it recorded a net loss of $3.25 billion during the first quarter of 2008, but it looks worse than it is thanks to a $1.45 billion hit from its 49% stake in floundering GMAC. The two-month long American Axle strike also cost GM about $800 million, while further support of bankrupt supplier Delphi's restructuring took $731 million from the corporate coffers. These "headline numbers" don't look good, but GM's performance in the area of actually selling cars wasn't as bad as analysts expected, and the automaker's stock actually rose after these earnings were announced.

GM continued to do well in the business of selling cars in regions like Europe, Asia and Latin America, but the North American market continued to underperform. In North America, GM lost $812 million on revenue from sales of $24.5 billion, compared to a loss of $208 million last year on $28.1 billion of revenue. Aside from selling fewer vehicles, GM also lost 100,000 units of production thanks to the American Axle strike, which helped its market share slip from 22.5% last year to 21.7% in Q1 2008. Clearly the news isn't as good as it was, say, for Ford, but GM is virtually the only automaker being affected by the American Axle strike, and has a number of labor- and supplier-related issues to sort out before it can begin building a steady stream of its most popular models in North America.

[Source: GM, Automotive News - sub. req'd]

Continue reading GM posts $3.25 billion loss in Q1

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Brembo considers Pininfarina stake

Noah Joseph — 2008-04-30T07:29:00+00:00

Filed under: Euro, Earnings/Financials

There's breaking news and then there's braking news. In a development of the latter, Brembo is considering investing in Pininfarina. The news is part of a larger development that has Indian automaker Tata and sportscar scion Piero Ferrari taking stake in the design house, and could involve several other investors including Vincent Bollore to raise 100 million euros in capital for an electric car venture between the French investor and the Italian styling firm.

Currently, the Pininfarina family holds 55-percent of the eponymous company, but is willing to share its shares with additional investors in order to keep the company in the black and moving forward.

[Source: Automotive News Europe - Sub. Req.]

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Kirk Kerkorian to up ownership in Ford to 5.6 percent

John Neff — 2008-04-28T10:29:00+00:00

Filed under: Ford, Earnings/Financials

The auto industry's old friend Kirk Kerkorian is back on the scene, and this time he has his sights set on Ford. In a press release issued today, Kerkorian's company Tracinda Corp. announced that it intends to buy 20 million shares of FoMoCo at $8.50 per share, which is a 13% premium over the $7.50/share at which Ford's stock closed on Friday. This would up Tracinda's ownership of Ford from 100 million shares at 4.7% to 120 million at 5.6%. In its press release, Tracinda expressed confidence in Ford's performance going forward under the leadership of Alan Mulally, and revealed that the investment firm has been watching the automaker since it surprised the industry with its Q4 2007 earnings. Last week's announcement of a better-than-expected Q1 2008 for Ford apparently sealed the deal for Kerkorian.

Kerkorian has had a tumultuous past with Ford's crosstown rivals, General Motors and Chrysler. At one time he owned nearly 10% of GM and tried to broker a deal between the world's largest automaker and Nissan-Renault that ultimately fell through, after which Kerkorian sold all of his stock in the General. He also sued DaimlerChrysler for its allegedly deceptive "merger of equals" statement back in 1998, then tried to buy Chrysler from Daimler after it was all over.

Ford has released a statement by Bill Ford, Jr. and Alan Mulally that can be read after the jump, but it basically says that the company's stock is able to be purchased by anyone, even Kirk Kerkorian. As for what the 90-year-old is up to with his bid to buy more Blue Oval stock, time will tell.

[Source: Bloggingstocks, Photo by William Thomas Cain/Getty]

Continue reading Kirk Kerkorian to up ownership in Ford to 5.6 percent

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Ferrari and Maserati report record quarter

Chris Shunk — 2008-04-25T18:02:00+00:00

Filed under: Supercars, Maserati, Earnings/Financials, Ferrari

The auto industry may be mired in tough times at the moment, but the sales downturn here in the States doesn't seem to be bothering Ferrari and Maserati. Ferrari sales were up 4% year over year to 1,654 units, due in part to outstanding sales of its 612 Scaglietti and 599 GTB Fiorano. Brisk sales of the hot Italian supercars led to a 20% increase in revenue over last year's record numbers, to 456 million euro. It never hurts when you have an 18-month backlog of buyers that are waiting patiently for their Italian Stallion, and new models are on the way to potentially boost sales further.

Maserati has also seen a resurgence in sales, with a 21% improvement in year over year sales to 2,234 units for the quarter. While Maserati made a profit of 10 million euro for the quarter, which sounds lousy until you consider the famed Italian automaker was in the red for 17 straight years until 2007. While the Italian automaker has a checkered past with regards to sales and earnings performance, the gorgeous GranTurismo and a steady backlog of customers translates into good times for quite a while at Maserati.

[Source: Automotive News - Sub. Req.]

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Ford surprises with $100 million net income in Q1

John Neff — 2008-04-24T12:34:00+00:00

Filed under: Ford, Earnings/Financials

Ford Motor Company had a first quarter that was much better than analysts expected. It recorded in its ledger a net income of $100 million, which compares favorably to the $282 million it lost during the same quarter last year. Revenue fell 8% to $39.4 billion, but that doesn't include the sale of Jaguar / Land Rover. Of course, market's outside the U.S. are what helped Ford the most, with South America, Ford Europe and the Asia Pacific Africa regions all contributing to the cause. But Ford's home market in North America didn't do as much damage to the bottom line as analysts thought it would. Here in the U.S., Ford reported a pre-tax loss of $45 million, which is a major improvement over the $613 million lost last year. Most of that improvement is due to cost-cutting measures that saved the automaker $1.2 billion and includes not only reducing the volume of cars produced, but also reducing the workforce. Ford has already offered buyouts to 54,000 UAW workers, and going forward plans to offer targeted buyouts to specific plants and workers building specific vehicles. Ford also shaved 20,000 vehicles off of the total number of vehicles it plans to build in Q2 2008, bringing the number down to 710,000 or 101,000 fewer cars than Q2 2007.

Ford is clearly prepared to shrink its way to profitability, and that's fine as long as the fewer vehicles it does build connect with consumers. Just like GM's strategy is to dig itself out of a fiscal hole on the popularity of new products, so must Ford wow us with some incredible cars. The Flex, 2010 Mustang, Fiesta, next-gen Focus, redesigned Taurus... you're on.

[Source: Reuters]

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Toyota outsells GM globally in Q1

John Neff — 2008-04-23T11:28:00+00:00

Filed under: GM, Toyota, Earnings/Financials

Both General Motors and Toyota have released their global sales figures for the first quarter of 2008, and for those who like to keep tabs on which automaker is the biggest in the world when it comes to sales, we have new news. The last time we convened for this discussion, both GM and Toyota were in a dead heat for the title of World's Best-Selling Automaker in 2007, though GM was eventually found to have sold more by the slimmest of margins. It seems that this time Toyota has firmly taken the lead in Q1 2008, selling 2.41 million vehicles worldwide to GM's 2.25 million. The Detroit News notes that Toyota also outsold GM in Q1 2007 before GM went on to win the year outright, which just goes to show that things can change over the next nine months. GM is actually enjoying record sales outside of the U.S. in the Asia Pacific region, Europe and Latin American, Africa and the Middle East. Its own domestic market is what continues to drag down GM's numbers, with sales off 10% in the U.S. through March. Sales in the U.S. for Toyota through March were also down, but only by 4.4%. We reiterate like we always do when talk of this global sales crown comes up - it means very little in the grand scheme of things who sells more cars globally. But titles like this can be used to good effect in marketing and for bolstering an automaker's internal morale, so don't expect either one to admit they don't want the mantle of World's Best-Selling Automaker.

[Source: The Detroit News]

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GM slips to number four on the Fortune 500

Jeremy Korzeniewski — 2008-04-22T17:58:00+00:00

Filed under: Ford, GM, Earnings/Financials

General Motors has fallen once again on the Fortune 500 list of America's top-grossers. The General had once stood strong atop the rankings, having fallen from the top spot in 2001 at which time Wal-Mart took over. For the last few years, Exxon-Mobil and the big box retailer have battled for the first two positions on the list with GM claiming third place. This year, soaring demands for energy have allowed Chevron to nudge past GM on its way to a third place finish. General Motors, at number four on the list, is bracketed by another energy company, ConocoPhillips, at number five. Ford finds itself sitting at number seven, the same as last year.

Fortune's 500 list is based on company revenue, not profit. If profit were the main criteria, GM and Ford wouldn't be making any appearances on the list at all. Exxon Mobil would easily claim the top spot as the most profitable company around with GM posting nearly as much in losses over the same period of time.

[Source: Fortune]

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Chrysler won't turn a profit in 2008, but still on track to achieve goals

Jeremy Korzeniewski — 2008-04-21T07:34:00+00:00

Filed under: Chrysler, Earnings/Financials

Despite the fact that the beleaguered automaker has not yet turned a profit since its unceremonious departure from Daimler to Cerberus, Chrysler CEO Bob Nardelli says that the company is still on track. "Through the first quarter we are still on plan relative to the pro forma and the targets we established for 2008, in spite of some of the economic winds that are hitting us," he says. In order to turn last year's $1.6 billion loss into positive cash flow, Chrysler will be relying heavily on joint-partnerships like the one it just announced with Nissan (but probably not Fiat) as well as with new and advanced engineering. Nardelli highlights interiors, upcoming technology integration and alternative powertrains as potential new incoming-generating features for their line of vehicles.

[Sources: Automotive News / The Detroit News]

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It has a nice personality: Ford boosts Focus production by 30% to meet demand

John Neff — 2008-04-15T14:02:00+00:00

Filed under: Car Buying, Economy, Plants/Manufacturing, Ford, Earnings/Financials

Click above for high-res gallery of the 2008 Ford Focus SES Coupe

We'll admit it. We didn't think sales of the 2008 Ford Focus would take off like they have, even after we had a 2008 Focus SES Coupe in the Autoblog Garage and for the most part liked it. The redesign for 2008 just left a bad taste in our mouths, and we didn't think anyone would fall for those garish fender vents. For whatever reason, be it the car's smooth ride, competitive pricing or exclusive availability of the SYNC system, the 2008 Focus is selling like crazy. Ford says that it sold 49,070 Focuses this year through March alone, which is up 23 percent compared to last year. More importantly, all of those additional Focus sales were to retail customers, not fleets. Last year the Blue Oval built 191,000 Focuses, but today it has announced that production will be ramped up at its Wayne Stamping and Assembly Plant so that 245,000 units can be built in 2008.

For comparison's sake, Toyota sold 371,390 Corollas in 2007, while Honda sold 331,095 Civics and Chevy sold 200,620 Cobalts. The Corolla and Civic are both handily outselling their domestic competition so far this year, but the Focus is now slightly ahead of the Cobalt, which sold 48,024 units through March.

Gallery: 2008 Ford Focus SES Coupe

[Source: Ford]

Continue reading It has a nice personality: Ford boosts Focus production by 30% to meet demand

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State gov't holds on as Porsche aims to strip its power

Noah Joseph — 2008-04-10T07:58:00+00:00

Filed under: Government/Legal, Porsche, Volkswagen, Earnings/Financials

Porsche is embarking on a collision course with the government of Lower Saxony. The German state in which Wolfsburg, where VW is based, holds a 20.1% interest in the Volkswagen Group. But Porsche, which currently holds 31% of the company and is aiming to acquire majority interest, is on a campaign to reduce the influence of the state government on the auto giant's governance.

While most decisions at most companies require a 50% plus one majority, or possible a two-thirds majority for major issues, Volkswagen's regulations stipulate that "significant decisions" need to be approved by an overwhelming 80% +1 in order to pass, essentially giving the state government a veto over any major decisions to be undertaken by the company's shareholders. While a ruling handed down by the European Court of Justice mandated that certain laws put in place to protect Volkswagen from a hostile take-over were illegal, the governor of Lower Saxony insists that its 20% +1 blocking power was perfectly legal and that his government would oppose Porsche's proposal to amend the regulations.

[Source: Detroit News]

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Mullaly and other Ford execs made many millions in 2007

John Neff — 2008-04-04T17:26:00+00:00

Filed under: Ford, Earnings/Financials

Ford revealed today that its CEO Alan Mullaly was compensated with a package worth $21.7 million last year. His base pay was $2 million and he received incentive bonuses totaling $7 million. The rest of his money pile comes from stock options and the like. All told, Ford's top five highest paid execs accounted for some $60 million of the Blue Oval's total bill in 2007. Mulally actually made $28.2 million in 2006, but $11 million of that was what it cost Ford to buy out his contract with Boeing.

$60 million is a lot of money to pay five people in one year, which strikes at the heart of an age old question in modern American business: how much should executives get paid? If they're doing their job and the company is profitable, no one seems to quibble over a million here and a million there, but instead credits the CEO for his or her expert leadership. When a company is losing money like Ford, however, those big bucks suddenly seem like funds that could have been used to develop new products, pay lower-tiered workers better or pad the company's cash reserves just in case.

Bill Ford Jr., Ford's last CEO who has turned down a salary until Ford turns a profit, hired Mulally to do what he couldn't: make Ford profitable again. But hiring a guy like Mulally costs money, which is what we're seeing here. It is too early to determine if Mulally is earning his wage, so the impatient see his compensation package as completely unwarranted. We're willing to wait a few years, and if Ford is back in the black by then, we know the cost of doing business with Mulally was worth it for the guys and gals from Dearborn.

[Source: Automotive News, sub. req'd, Photo by GEOFF ROBINS/AFP/Getty]

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Delphi investor backs out, bankruptcy exit delayed

John Neff — 2008-04-04T17:00:00+00:00

Filed under: Government/Legal, GM, Earnings/Financials

Bankrupt supplier Delphi was expected to finalize a financing package this morning that would finally allow the company to emerge from the red, but in the 11th hour one of its investors backed out leaving the supplier, its largest customer General Motors and the company's shareholders in the lurch. Appaloosa Management LP had lead a $2.55 billion equity plan that was a large part of Delphi's financing package, and without which, the supplier will have to remain in its technically bankrupt state until other arrangements can be made. Appaloosa expressed that it would be willing to consider alternative arrangements, while Delphi has suggested it may take the investment firm to court. For its part, GM, which also pledged up to $2.8 billion in loans for Delphi, expressed its regret over this morning's turn of events in a press released pasted after the jump.

[Source: Automotive News, sub. req'd]

Continue reading Delphi investor backs out, bankruptcy exit delayed

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Potential buyers line up for Bertone

Noah Joseph — 2008-04-02T18:59:00+00:00

Filed under: Euro, Government/Legal, Plants/Manufacturing, Earnings/Financials

After going into bankruptcy protection, Bertone may very well be in the worst shape it's ever been in its 96-year history. But that doesn't mean there aren't enough companies out there interested in acquiring the famous carrozzeria's assets, including its venerated name.

Although the process undertaken by the court-appointed commissioners remains secretive, reports suggest that several companies have contacted the administrators putting forth bids on Bertone. Among them are Chinese automaker FAW, Indian carmaker Mahindra, Italian contract manufacturer DR Motor, German engineering firm PCL Group and, perhaps most intriguingly, Giorgetto Giugiaro's rival atelier Italdesign. The reported list of the bidders may very well change as the courts seek a suitable buyer for Bertone, but the prospects are looking good for the famous design studio and its anxious 1,300-strong workforce.

[Source: Automotive News Europe - sub. req'd]

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April Foolery: Coulthard buys Toro Rosso

Noah Joseph — 2008-04-02T02:58:00+00:00

Filed under: Motorsports, Earnings/Financials

David Coulthard is getting older, but his driving doesn't seem to be getting any better. The Scottish driver does, however, have an innate ability for survival, remaining the oldest driver on the F1 grid after having just celebrated his 37th birthday days ago.

It was Coulthard who pitched the failing Jaguar Racing team to Dietrich Mateschitz, convincing the Red Bull chief to become a team owner. Now that Mateschitz has announced his intention to sell his 50% stake in the Italian team, a report has surfaced indicating that Coulthard is going to buy out his current boss and switch over to the new team starting in 2010. According to the unsubstantiated report, the deal would secure Coulthard a race seat for many, many years to come, while fellow F1 driving veteran Gerhard Berger would retain his half and stay on as team principal. Coulthard also indicated that the team could switch from Ferrari to Mercedes power and be renamed Coulthard Power Racing (CPR), which raises the distinct possibility that, it being April 1st, this entire story could be hoax. Sigh... is this day over yet?

[Source: F1-Live, Photo by Lars Baron/Bongarts/Getty]

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