Autoblog

Let's Make a Deal: Automakers reportedly reach agreement with lawmakers on carbon cap legislation

Jeremy Korzeniewski — Thu, 14 May 2009 15:58:00 EST

Now that the U.S. has officially concluded that greenhouse gasses are harmful to human health, it's time to do something about them. One major hurdle standing in the way of the U.S. implementing carbon cap and trade legislation appears to have been cleared as both the domestic automakers and Michigan's legislature have lifted their opposition and now support for the bill. Why? The Detroit News reports that an agreement has been reached that could see up to $15 billion paid out to the Detroit-based automakers starting in 2012. Yeah, that would do it.

In a so-called cap and trade plan, the federal government would set a limit on the total amount of carbon emissions the U.S. as a whole can produce. The government would then divvy up that figure by issuing permits to various industries. A company that wants or needs to emit more carbon dioxide can either purchase credits at auction or pay fines for surpassing its assigned limit. Under the proposed deal, automakers will receive 3 percent of the revenue generated from both auctions for carbon emissions permits and fines paid by corporations for violating carbon limits. That revenue would drop to 1 percent in 2017.

John Dingell (D-MI) had this to say in a written statement:

"This is a significant achievement for the automotive industry and its workers, as the bill will help fund research, development, implementation and deployment of new, low-carbon technologies and upgrading manufacturing facilities to provide the next generation of green vehicles right here in the United States."

The deal with automakers is just one of several agreements that House Democrats are making to appease various key state representatives and industry heads that may have otherwise opposed the bill. In its latest form, the bill would cap greenhouse gas emissions in 2020 at 17 percent below 2005 levels.

[Source: Detroit News | Image: Clinton Steeds]

Let's Make a Deal: Automakers reportedly reach agreement with lawmakers on carbon cap legislation originally appeared on Autoblog on Thu, 14 May 2009 15:58:00 EST. Please see our terms for use of feeds.

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Survey: Ford's image gets a boost by nixing federal aid

Alex Nunez — Fri, 01 May 2009 19:02:00 EST

Filed under: Government/Legal, Ford

In what has to be one of the least surprising developments related to the auto industry, a newly-released survey finds that Americans' favorable view of Ford Motor Company has increased substantially since it became the sole member of the Detroit Three to abstain from taking federal funds.

Before the Capitol Hill Bailout Bonanza got going in earnest late last year, just 41% of Americans held the Blue Oval in a positive light. Now, after billions of taxpayer dollars have been spent keeping now-bankrupt Chrysler and soon-to-be (in all likelihood) bankrupt General Motors in business, FoMoCo's positive number has jumped up to 63%, according to a survey conducted by the Aloft Group last week.

However, that's not to say that those surveyed believe Ford's out of the woods: a mere 24 percent of the respondents think Ford doesn't need Uncle Sam to come to the rescue. Still, Ford's decision to mortgage everything on its own in a bid to stay alive has been a big PR success, and you can bet that Alan Mulally will instruct staffers to burn all the office furniture in Dearborn this winter before he looks to Capitol Hill for a penny in bailout dollars. In Detroit right now, the Scarlet Letter is "B."

[Source: The Detroit News]

Survey: Ford's image gets a boost by nixing federal aid originally appeared on Autoblog on Fri, 01 May 2009 19:02:00 EST. Please see our terms for use of feeds.

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REPORT: Unsigned waivers to blame for Chrysler Financial rejection of gov't cash

Frank Filipponio — Tue, 21 Apr 2009 11:40:00 EST

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

Over the past two days, we've told you what we've heard about the latest short-term federal aid coming to Chrysler and GM. According to the latest reports, it will be $5B to the latter and $500M to the former. We also mentioned it had been reported that Chrysler Financial had inexplicably turned down an additional $750M in government aid during this most recent round of handouts. It had been speculated that it was because of a refusal by CF execs to sign off on executive compensation limits in the terms of the government agreement.

Although CF denied it, the fact that they appeared to be going elsewhere for additional loan money seemed to confirm that they might not have been entirely happy with the terms of the government handout. Well, The Detroit Free Press is now reporting that a recently released report by the special inspector general's office confirms that unsigned waivers were the real reason behind the rejection. The Freep is reporting that at least some of the top 25 executives at CF "refused to sign waivers releasing the Treasury Department and the company from legal responsibility for placing strict limits on executive compensation."

Even without the three-quarter-billion-dollar handout to CF, a total of $13.4B has been given to GM and Chrysler out off the $17.4B in loans President George W. Bush authorized back in December. Meanwhile, President Obama has continued to add restrictions to these handouts, rejecting the initial restructuring plans from both companies, essentially firing Rick Wagoner and telling Chrysler to make a deal with Fiat. While Chrysler has until next Wednesday to finish that deal, CF has apparently turned down the funding over the waiver issue, which had been added early this month.

[Source: Detroit Free Press]

REPORT: Unsigned waivers to blame for Chrysler Financial rejection of gov't cash originally appeared on Autoblog on Tue, 21 Apr 2009 11:40:00 EST. Please see our terms for use of feeds.

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REPORT: GM to get $5B, Chrysler $500M from gov't

Frank Filipponio — Tue, 21 Apr 2009 09:59:00 EST

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

Is General Motors about to get an additional $5 billlion from the Feds? Will Chrysler be getting another $500 million? The Detroit News seems to think so. Citing Obama Administration sources and a leaked 250-page government report, they say that those figures are accurate. The money will reportedly come in the form of short-term aid via the $700B Troubled Asset Relief Program (TARP). One group we know won't be taking any additional TARP money is Chrysler Financial, allegedly refusing an additional $750M over restrictions on executive compensation included in the agreement.

Reading through the report a bit, The Detroit News also discovered some additional figures. The report says that the Treasury Department has already spent $24.8B on the automotive portion of their program (out of $25B allotted). Of that amount, $13.4B has gone to GM, $4B to Chrysler, almost $6B to GMAC and $1.5B to Chrysler Financial. An additional $1.25B will be used to pay for that warranty guarantee program designed to back the warranties of GM and Chrysler vehicles should either company go under.

There has been no confirmation from Washington yet, but you can bet we'll report it when it becomes official.

[Source: The Detroit News]

REPORT: GM to get $5B, Chrysler $500M from gov't originally appeared on Autoblog on Tue, 21 Apr 2009 09:59:00 EST. Please see our terms for use of feeds.

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REPORT: German automakers could join others in skipping Tokyo Motor Show

Chris Paukert — Mon, 23 Mar 2009 12:58:00 EST

Filed under: Trends, Japan, Marketing/Advertising, Tokyo Motor Show, BMW, Mercedes-Benz, Volkswagen, Volvo, Earnings/Financials

Although Volvo has already said that it would not participate in this October's Tokyo Motor Show, the Swedish automaker's German contemporaries are reportedly dragging their feet on similar public announcements in an effort to not be the first from their country to do so. According to a brief Automotive News item, BMW and Mercedes-Benz are "unlikely to participate" as part of an effort to limit expenditures, and Volkswagen AG and supplier Bosch are among those said to be on the fence.

Speaking about the pullout possibilities, an unnamed Automobilwoche (AN's Germanic sister publication) source has said that "No one wants to be in the unpopular position of being the first to announce their exit." Perhaps, but that didn't stop Volvo from letting some air out of Tokyo's balloons, nor did it keep the Detroit 3 from doing the same before them.

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

REPORT: German automakers could join others in skipping Tokyo Motor Show originally appeared on Autoblog on Mon, 23 Mar 2009 12:58:00 EST. Please see our terms for use of feeds.

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Autoline on Autoblog with John McElroy

John McElroy — Fri, 13 Mar 2009 17:29:00 EST

Filed under: Autoline on Autoblog

BIG THREE SITTING ON $10 BILLION GOLDMINE

There's no question that the Detroit-based auto industry needs a lot of help. There's a 100-year history of how it got into the problems it's in, and some of those problems are beyond management's control.

But there is one area where General Motors, Ford and Chrysler have total, complete control, and that's in how they deal with their suppliers. While progress has been made in some areas, most supplier CEOs who I know are still frustrated with how the "Big 3" treat them. They tell me there is at least $10 billion in waste that could be eliminated every year if they worked together as true partners instead of at loggerheads.

Remember, more than 70% of the value of a car today is actually designed, developed and manufactured by suppliers, not the car companies. GM purchases roughly $97 billion of materials, components and services from suppliers. Ford buys $90 billion, Chrysler $40 billion. We're talking about a massive amount of money, which potentially means a massive amounts of savings.

Here's how suppliers say the "Big Three" could slash costs and put some of that money back in their pockets.

John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.

Continue reading Autoline on Autoblog with John McElroy

Autoline on Autoblog with John McElroy originally appeared on Autoblog on Fri, 13 Mar 2009 17:29:00 EST. Please see our terms for use of feeds.

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Who is on the Presidential Task Force on the Auto Industry... and what do they drive?

Damon Lavrinc — Mon, 23 Feb 2009 15:36:00 EST

Filed under: Etc.

Between the flow of bailout bucks and the economic turmoil threatening to topple the Detroit 3, you'd figure the investigative efforts of the Detroit News would be better spent digging through the viability plans of Chrysler and General Motors, delving into the minutia that could make or break the domestic automobile industry. Apparently not.

Although the Detroit News has given us a few stories about the people behind the Obama administration's Presidential Task Force on the Auto Industry, this piece focuses almost entirely on each member's (and their aides') chosen chariots rather than detailing how their experiences will help the industry. So it may or may not come as a surprise that the panel's personal rides are primarily comprised of foreign marques, ranging from an Acura TSX to a MINI Cooper S. While some of the public records show that a few members of the committee have driven domestics in the past (including a 1996 Taurus GL and a Jeep Grand Cherokee), the bulk have made the switch to foreign brands. In total, only three members of ten-member panel drive vehicles built by the Detroit 3, while another three don't own a vehicle at all.

While its clear that product is one of the many issues ailing the domestics (particularly Chrysler), we'd be far more interested in how the Task Force plans to address the issues of over-capacity, the UAW, corporate in-fighting and possibly even branding - or lack thereof. We'll leave the name-naming to the Detroit News, and suggest that both GM and Chrysler take a fleet of their best products to D.C. to give the Obama team an in-depth look at what's currently coming out of Detroit.

[Source: Detroit News]

Who is on the Presidential Task Force on the Auto Industry... and what do they drive? originally appeared on Autoblog on Mon, 23 Feb 2009 15:36:00 EST. Please see our terms for use of feeds.

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Automakers limiting options to reduce costs

Frank Filipponio — Mon, 16 Feb 2009 18:34:00 EST

Filed under: Car Buying, Trends, Earnings/Financials

With sales at a 26-year low, the Detroit 3 are trying almost anything to reduce costs and make more money from the cars they are selling. One of the biggest changes coming apes what some of the more successful Japanese makers have done all along: offering fewer configurations of their models. If you want leather, you option up for the higher-spec model and get the sunroof, two-zone climate control, larger wheels, and steering-wheel-controlled MP3 stereo system too. Soon, you'll see a similarly simplified menu in domestic showrooms.

According to the Detroit Free Press, offering fewer combinations allows automakers to cut engineering, design and marketing costs, which are frequently larger than even the manufacturing costs for a vehicle. One example is the 2010 Ford Fusion. The 2008 Fusion offered no fewer than 2,600 combinations between the different trim levels, option packages and stand-alone options. That number will be slashed to just 104 for someone shopping the 2010 model. To put that in perspective, someone looking at a 2009 Honda Accord can pick from about 20 versions. It's basically coupe or sedan, automatic or stick, LX or EX trim levels, with the EX available with leather and/or navigation, and either the four-cylinder or the 3.5L V6. That's it. Compared to a typical Chrysler, which might have had as many as 10,000 combinations in the past, the new system will keep things simple in an attempt to streamline the domestics' offerings.

[Source: The Detroit News]

Automakers limiting options to reduce costs originally appeared on Autoblog on Mon, 16 Feb 2009 18:34:00 EST. Please see our terms for use of feeds.

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REPORT: Obama dropping "car czar" in favor of task force

Chris Paukert — Mon, 16 Feb 2009 07:58:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials, UAW/Unions

While there have been rumors and suggested candidates floated for the so-called federal "car czar" post, it now no longer looks like that position will be filled. That's because President Barack Obama has apparently gone cold on the idea. Instead, new reports suggest that he will look to a select group of senior economic advisers for guidance.

In lieu of appointing a single authority to help guide the restructuring of the Detroit Three, a senior adviser is suggesting that Obama instead plans to look to Treasury Secretary, Timothy F. Geithner; National Economic Council chairman Lawrence H. Summers, and Ron Bloom, a labor union and corporate restructuring expert. The three men will work with a presidential auto industry oversight panel, with Obama "reserving for himself any decision on the viability of GM and Chrysler."

The aforementioned panel will be known as the Presidential Task Force on Autos, and will incorporate officials from various government agencies, including commerce, energy, labor, transportation, and Treasury. A number of panel members are already embedded in the project, helping to develop viability plan proposals with the automakers themselves,

Both General Motors and Chrysler are scheduled to file restructuring plans with the Treasury in time to meet a Tuesday deadline, at which point Obama and his newly-assembled team are expected to review the plans for one-to-two weeks before issuing a public statement. More details at the link below. Thanks for the tip, Mike!

[Source: The New York Times | Image: AFP/Getty]

REPORT: Obama dropping "car czar" in favor of task force originally appeared on Autoblog on Mon, 16 Feb 2009 07:58:00 EST. Please see our terms for use of feeds.

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REPORT: Dealers say bailout hasn't made for more GMAC loans

Frank Filipponio — Tue, 20 Jan 2009 07:28:00 EST

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

Show me the money. With apologies to Cuba Gooding Jr., that is exactly what many General Motors dealers are saying to GMAC Financial Services.

Despite being given $5 billion from the U.S. Government last month, GMAC apparently hasn't loosened its purse strings enough for dealers' likings. Some, in fact, are reporting that GMAC keeps rejecting their credit applications. This is somewhat surprising because GMAC previously agreed to lower the necessary minimum credit score ratings from 700 to 621 for new vehicle loans, so presumably more requests should be going through. Dealers are frustrated and although some preferred dealers have seen loan rate reductions, others are saying that GMAC is still as much as 1.5 percent higher than the competition.

In response to this problem, dealers have come up with a wish list of sorts. They are asking that GMAC return to leasing, approve some sub-prime loans and cut interest rates for loans to dealers to help finance their inventory. Also of concern is the fact that customers are increasingly upside down on their trade-ins. As a direct result, these consumers are having trouble getting approved because GMAC requires bigger down payments than it once did.

[Source: Automotive News, sub. req.]

REPORT: Dealers say bailout hasn't made for more GMAC loans originally appeared on Autoblog on Tue, 20 Jan 2009 07:28:00 EST. Please see our terms for use of feeds.

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Volvo joins Detroit 3, skips out of Tokyo Motor Show

Chris Shunk — Sat, 17 Jan 2009 17:32:00 EST

Filed under: Tokyo Motor Show, Toyota

The 2009 Tokyo Motor Show is going to have to make do without another automaker, as Volvo has decided to save money by skipping the exhibition. Volvo's move comes after all three Detroit automakers decided to skip the event, which is held every other year. Volvo, like the Detroit automakers, doesn't have a major presence in the land of the rising sun, making the decision not to head for Tokyo easier. With the precipitous state of the global economy, the prospect of saving money doesn't suck, either. Floor space, displays, plus travel and accommodations for employees can cost quite a bit. GM spent $2 million at Tokyo in 2007, and though Volvo's display wouldn't cost that much, the tab for Tokyo time would still be steep.

No Japanese automakers have dropped out yet, but the lack of foreign automaker involvement could mean postponement until 2011. Automotive News is reporting that Tokyo Motor Show officials will make a decision on what to do by early next month.

[Source: Automotive News subs req'd]

Volvo joins Detroit 3, skips out of Tokyo Motor Show originally appeared on Autoblog on Sat, 17 Jan 2009 17:32:00 EST. Please see our terms for use of feeds.

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Dave Barry sums up 2008, Detroit 3 included

Alex Nunez — Sun, 28 Dec 2008 16:33:00 EST

Filed under: Etc., Humor

2008 is at an end, and while the editorial pages of some newspapers spend the final days of December focusing on ways to further burden taxpayers and foment interstate hostility, the Washington Post Magazine has, thankfully, handed several pages over to Dave Barry who, as usual, makes the events of the past year actually seem funny. This includes car-related stuff like the farcical Detroit bailout proceedings, which often bordered on satire. Fortunately, Barry knows exactly how to handle that sort of thing, and does so much in the same way David Ortiz handles a hanging curveball with runners in scoring position. Hilarity ensues on many fronts, except maybe inside the executive boardrooms of GM and Chrysler, the latter of which earns mention in Dave's June summary with, "In economic news, Chrysler announces a plan to lay off workers who have not been born yet." This year-end recap is best appreciated as a whole, however, so if you're in a mood to lighten things up this afternoon, head over to the WaPo and just read the whole thing.

[Source: The Washington Post]

Dave Barry sums up 2008, Detroit 3 included originally appeared on Autoblog on Sun, 28 Dec 2008 16:33:00 EST. Please see our terms for use of feeds.

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BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package

Chris Paukert — Fri, 19 Dec 2008 09:32:00 EST

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

President George W. Bush will doubtlessly be remembered for many things things, but his parting legacy may yet be his eleventh-hour pledge of $17.4 billion in low-interest loans to General Motors and Chrysler (Ford Motor Company has said it does not require relief at this time).

The funding will reportedly come from the Troubled Asset Relief Program (TARP), the financial industry bailout package signed off on this fall. Up front, the White House will earmark $17.4 billion in short-term financing for December and January, and in February, another $4 billion will be disbursed, provided it can draw the funds from the second half of TARP's $700 billion.

More details are doubtlessly coming, but the bridge loans appear to hinge largely on whether General Motors and Chrysler are deemed "viable" enterprises by the government. In the terms of the agreement, that means that the automakers must prove whether they have a "positive net present value, taking into account all current and future costs, and can fully repay the government loan." There's no word yet on how they will prove said viability, but we expect to learn more soon. In the meantime, expect for both General Motors and Chrysler to stick to their previous production suspension announcements.

Politico has more specifics on the bailout here.

UPDATE: Press releases from General Motors, Ford and Chrysler have been added after the jump.

[Sources: ABC NEWS, Politico, Photo by Brendan Hoffman/Getty]

Continue reading BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package

BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package originally appeared on Autoblog on Fri, 19 Dec 2008 09:32:00 EST. Please see our terms for use of feeds.

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Oil may hit $35/barrel in wake of auto bailout bust

Frank Filipponio — Fri, 12 Dec 2008 18:58:00 EST

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

With the U.S. Senate denying the Detroit 3 relief plan, it looks like oil prices might continue to tumble. Our sibling site BloggingStocks is predicting barrel prices might drop as low as $35 as a result. This comes on the heels of predictions of higher prices in the near future.

It had been thought that OPEC and possibly Russia would be curtailing production, which might have led to higher prices, but if the U.S. auto industry collapses, demand for oil could plummet. That would result in even lower oil and gas prices.

In fact, oil prices started dropping Thursday night as soon as traders heard that Senate Republicans had blocked the bill, with barrel prices checking in at $44.76 as of Friday morning. We just saw regular unleaded for $1.59/gal at a station down the street this morning and thought we had woken up in 2000. Can sub-$1 gas be far away?

[Source: BloggingStocks]

Oil may hit $35/barrel in wake of auto bailout bust originally appeared on Autoblog on Fri, 12 Dec 2008 18:58:00 EST. Please see our terms for use of feeds.

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Autoline on Autoblog with John McElroy

John Neff — Fri, 12 Dec 2008 15:00:00 EST

Filed under: Plants/Manufacturing, Autoline on Autoblog

DETROIT AND OUR NATIONAL DEFENSE

In all this debate about whether we should provide the Big Three with a bridge loan, not enough attention has been devoted to their impact on our national defense. I'd hate to see this country ever get involved in a total global war again, but I especially shudder to think it might happen without the manufacturing capability that General Motors, Ford and Chrysler provide to the United States.

Some people say the Detroit 3 no longer play much of a role in making armaments for the American military. And that's true. But then again, except in time of war, they never have.

Prior to World War I, American automakers were way more interested in making cars for a booming market than they were in diverting resources to military matters. But after the United States entered the war they became intricately involved in the effort.

John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.

Continue reading Autoline on Autoblog with John McElroy

Autoline on Autoblog with John McElroy originally appeared on Autoblog on Fri, 12 Dec 2008 15:00:00 EST. Please see our terms for use of feeds.

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GM has spent $750 million developing the Volt

Frank Filipponio — Wed, 10 Dec 2008 17:58:00 EST

Filed under: Hybrid, Etc., Green, Technology, Chevrolet, GM, Earnings/Financials

Click above for high-res gallery of the 2010 Chevy Volt

Although they're a big part of the Congressional pitch to get some federal funds, green cars aren't going to make the Detroit 3 profitable on their own any time soon. Take the Chevrolet Volt for example. When GM CEO Rick Wagoner testified that the Volt is being pushed into production for 2011, he added that, "It will not be at that point fully cost competitive." That statement might seem like the understatement of the century to some.

According to this CNN Money piece, GM has actually spent about $750 million to develop the Volt, much of that in battery research. Apparently GM recognizes the need to stay ahead of (or at least alongside) the competition in developing new technology and is willing to take the risk of spending that kind of money even in desperate times. Of course, some of that money will eventually be spread across the range when the Volt's powertrain and battery advances get shared with other GM models. Still, it's unlikely the Volt will add to rather than bring down the bottom line until a second generation model is introduced, which may not be until 2014-2016.

Gallery: 2011 Chevy Volt - Live Reveal

[Source: CNN Money]

GM has spent $750 million developing the Volt originally appeared on Autoblog on Wed, 10 Dec 2008 17:58:00 EST. Please see our terms for use of feeds.

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Detroit 3 seeking $6.8 billion from Canadian government

Frank Filipponio — Mon, 08 Dec 2008 12:59:00 EST

Filed under: Government/Legal, Chrysler, Ford, GM, Earnings/Financials, Canada

What to do when you wanted $34 billion and Congress only gave you $15 billion? Try again, but this time go North young man. The Detroit 3 are now making a pitch to the Canadian legislature seeking an additional $6.8 billion from Canada where nearly 100,000 workers are employed in factories and dealerships bearing the Chrysler, General Motors or Ford name.

General Motors of Canada has asked for $2.4 billion in loans, Chrysler Canada Inc. is looking for $1.6 billion and Ford wants a $2 billion line of credit on "stand-by" to be used "only if the current economic crisis worsens." GM is also seeking an immediate $800 million to make it through the end of the year. The Detroit automakers are quick to point out that these amounts are proportional to the U.S. bailout requests and that they are asking for loans, not handouts.

Federal Industry Minister Tony Clement was in Washington during the recent hearings and says the Canadian government will have to review the requests before pledging any funds. He had previously confirmed that funds were set aside to help automakers in the most recent budget. Premier Dalton McGuinty also pointed out the need to balance the public's needs with the carmakers' requests: "We want to move as quickly as we can, but we don't want to move so quickly that we end up with a response that is irresponsible given the legitimate demands of taxpayers." Thanks for the tip, Xeyad!

[Source: The Hamilton Spectator via MotorGears.com}

Detroit 3 seeking $6.8 billion from Canadian government originally appeared on Autoblog on Mon, 08 Dec 2008 12:59:00 EST. Please see our terms for use of feeds.

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One down, one to go: Detroit 3 CEOs begin House testimony

John Neff — Fri, 05 Dec 2008 10:49:00 EST

Filed under: Government/Legal, Chrysler, Ford, GM

Having watched each of the Detroit 3 CEOs take tough questions from the Senate Banking Committee for six hours yesterday, we've returned to the couch today to watch General Motors CEO Rick Wagoner, Ford CEO Alan Mulally, Chrysler CEO Bob Nardelli and Ron Gettelfinger, President of the United Auto Workers union, visit House members of the Financial Services Committee led by Rep. Barney Frank (D-Massachusetts).

We were actually surprised at how well yesterday's hearings went for the Detroit 3. There was far less grand standing by politicians this time around, due largely in part to the lesson learned by each CEO after that whole private jet fiasco. A couple of yesterday's creative solutions for the mess in Motown included a "pre-packaged bankruptcy" in which financing for restructuring would be secured beforehand, as well as a renewed interest in seeing GM and Chrysler follow through on their erstwhile attempt to merge a few months ago. Since Ford's position is more secure than that of GM and Chrysler, Alan Mulally looked bored most of the day, while his colleague Bob Nardelli got the grilling of a lifetime. Senators seemed particularly interested in why Chrysler's owner, the private equity firm Cerberus, couldn't just infuse the Auburn Hills-based automaker with more money.

While senators yesterday seemed to take the situation much more seriously this time around, we've just finished watching opening statements made by members of the House of Representatives in the Financial Services Committee and were less than impressed. It appears the soap boxes are out and spot lights are on.

[Photo by Chip Somodevilla/Getty]

One down, one to go: Detroit 3 CEOs begin House testimony originally appeared on Autoblog on Fri, 05 Dec 2008 10:49:00 EST. Please see our terms for use of feeds.

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OPINION: Stop arm-chair quarterbacking the auto industry

John Neff — Tue, 02 Dec 2008 15:30:00 EST

Filed under: Opinion/Editorial

We'll be hearing more about the Detroit 3 in the mainstream media this week as their homework entitled "What I Would Do With My Share of $25 Billion in Government Loans" gets turned in to Congress. While Detroit deserves much of the ribbing that's on the way, it irks our ears every time we read an op-ed piece from folks who flat-out do not know what the Hell they're talking about. Take Karen Wagner, whose opinion letter was published by the Chicago Tribune in which she claims that Ford should cancel launching the 2010 Mustang in order to receive federal loans. There are not enough appendages on the human body to count the reasons why that is a stupid idea, let alone an entirely unrealistic one. In her reasoning, she seems to believe that selling fuel efficient vehicles would equal a healthy, profitable automaker and therefore save millions of jobs, while not realizing that the Mustang has done infinitely more to help Ford's bottom line than the Escape Hybrid.

Then there's entrepreneur extraordinaire Michael Arrington, co-editor of Tech Crunch, who claims in a recent op-ed piece that what works for the tech industry will work for autos, too. His idea is that auto companies should outsource all production of their vehicles to third-party companies just like Apple does with the iPod. He also criticizes the auto industry for its business model of vertical integration, questioning why there isn't an Intel of engine manufacturers that sells to all the automakers. Well, guess what Mike, the Apple model doesn't work for everybody (it didn't work for Apple in the early '90s) and there are a tens of thousands more parts in a car than an iPod that might make outsourcing their production to the lowest bidder a logistical nightmare.

While it's easy to dog on the domestics for the sorry shape in which they find themselves, don't listen to every Karen and Michael out there who voice their ill-informed opinions on how things ought to be. There are such a myriad of factors that have contributed to the current state of the Detroit 3, some of which is their fault and some (like bad mortgages ruining the credit market) which aren't, that there just is no silver bullet fix beyond continuing to lower costs and building better products.

[Source: Chicago Tribune, Tech Crunch]

OPINION: Stop arm-chair quarterbacking the auto industry originally appeared on Autoblog on Tue, 02 Dec 2008 15:30:00 EST. Please see our terms for use of feeds.

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Mulally driving to Washington, but what car should he drive?

Jeremy Korzeniewski — Mon, 01 Dec 2008 19:27:00 EST

Filed under: Government/Legal, Ford

It seems the entire world is still debating whether or not Rick Wagoner, Alan Mulally and Bob Nardelli should have carpooled, walked or taken the bus for their last trip to the Capitol, but that's all behind us now. The good news for those who like to play expert on the internet is that Detroit's got another date with Congress this week. Ford CEO Alan Mulally is the first of the three CEOs to announce that he'll be driving, though we expect the others to follow suit shortly.

There's no doubt that Mulally will be driving a car from Ford's latest crop of vehicles (rather than his own Lexus), but which one would make the best impression? No matter which he chooses to drive, you can count on the fact that the choice will be dissected, so this seemingly insignificant decision could have major future ramifications. So, we ask you, dear Autoblog readers: What should Mulally drive to Washington... Mustang? Hybrid? Voting polls are now open.

View Poll

[Source: Detroit News, Photo by Mark Wilson/Getty]

Mulally driving to Washington, but what car should he drive? originally appeared on Autoblog on Mon, 01 Dec 2008 19:27:00 EST. Please see our terms for use of feeds.

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