Autoblog

With General Motors dropping its $2.5 billion bomb on Friday, analysts, brokers and the public at large were waiting until today to see where the General's stock price would end up. At the end of the day, it's hovering around $3.36 a share, up from this morning where it hit $3.04, or four pennies away from its lowest rate in over 60 years. The plunge is hardly a surprise as analysts -- and GM -- admit that without a Federally-funded cash injection the automaker would run out of working capital early next year, or worse, before the end of 2008. Throwing salt into the wound is Deutsche Bank, which reduced GM's rating to "sell" with a price target of $0.00.

In addition to the $25 billion in loans that Congress has already approved, Detroit's Big 2.8 have asked for another $25 billion, and House Speaker Nancy Pelosi shot off a letter to Treasury Secretary Henry Paulson trying to get the $700 billion bailout to the financial industry to include the U.S.' ailing automakers. Who knows what kind of stipulations would be attached if such an agreement would take place, but the wholesale removal of GM's board would be a good start.

[Sources: Automotive News – Sub. Req., Detroit News]

Two brothers that own dealerships in Texas peddling the General's wares decided that the best way to combat the inevitable depreciation inflicted on their customers is to give them 50 shares of GM stock.

The promotion involves the first 100 buyers (for GM's 100-year anniversary) and 5,000 shares in GM that the siblings bought at the end of last week. GM stock is floating between $6.00 and $7.00 today, meaning that the lucky 100 will have something in the neighborhood of $300-350... assuming GM's stock hold steady.

It being Friday afternoon and an excruciatingly long week, we'll let you make the jokes in the comments below.

[Source: Automotive News - Sub. Req.]

After Merrill Lynch hinted bankruptcy concerns yesterday, and other Wall Street analysts spread additional gloom, shares of General Motors dropped $1.77 to close at $9.98 -- GM's lowest close in more than 50 years. While GM stock on Tuesday showed a bit of promise on the news that sales only dropped 18.2 percent in June (yes, it was supposed to be worse), nothing could slow the fall on Wednesday. Unfortunately for GM, the light at the end of the tunnel seems a far way off. Sales are plummeting, and those vehicles that do leave the lot are padded with generous financing and rebate offers (experts quickly point out that incentive-laden sales gains are often followed by slowdowns). With eight brands, 13,000 franchises, and a falling market share, many have begun (or continued) to question GM's ability to survive without insolvency.

[Source: Detroit News]

In a move that may undermine Germany's protection of Lower Saxony and its close ties to Volkswagen, the European Commission plans to review the case of Volkswagen Law in the European Union's top court. As you may recall, Porsche has been trying to take majority control of rival Volkswagen. However, the so-called "Volkswagen Law" has protected VW from takeover by allowing the state of Lower Saxony (where thousands of VW jobs are at stake) to retain just enough stock in the company to prevent Porsche from capturing a majority vote. While the upcoming ruling may not only alter the ownership of Volkswagen, it also demonstrates the escalating authority that the European Commission has over once sovereign countries.

[Source: Automotive News Europe, subs. req'd]

After Porsche moved to increase its ownership in Volkswagen to 51 percent last week, an overzealous German magazine took it one step further over the weekend by reporting that Porsche was going for an even larger piece of the pie... a whopping 75 percent. Porsche pulled in the reigns and quickly released a statement today denying the action, pointing out that such a move, "...overlooks the realities in VW's shareholder structure." For now, there is apparently no truth to the published reports that Porsche is going to continue gobbling up Volkswagen.

Maybe so, but analysts have pointed out in the past that the most economically advantageous position for Porsche is if it can get its hands on Volkwagen's multiple sources of income through a so-called "domination and profit transfer" agreement. Such an agreement usually requires owning - what do you know? - a 75 percent stake in a company. Interesting.

The enthusiast-oriented Porsche has said it needed ownership in Volkswagen to prevent the automaker from falling into unfriendly hands (roughly 30% of the parts used in Porsches come from VW, so it's just protecting its component parts sugar daddy). Meanwhile, Lower Saxony, the second biggest shareholder of VW at some 20% with some serious veto power, has the power to block any maneuver that jeopardizes the 82,000 VW jobs in its state. Stay tuned, this isn't the end of it.

[Source: International Herald Tribune]

The supervisory board of Volkswagen Group just gave approval for Porsche AG to take a majority stake in the people's automaker. Porsche currently owns 31% of Volkswagen, and this move will ultimately increase that share to 51%. The increase in ownership is estimated to cost Porsche upwards of $20 billion, although the financial deets have not yet been released. Porsche is saying that owning a majority stake in VW will not result in the two companies combining, creating a German mega-automaker of biblical proportions. Don't expect things to change overnight for either company, as transactions like these generally take months to complete, if not years.

This move wasn't unexpected, either. Porsche has slowly been increasing its interest in VW over the past several years as we reported in June 2006, April 2007 and again in June 2007. Recent announcements that Porsche may use Volkswagen diesel powerplants in its Cayenne SUV now seem even more likely, and exchanges of technology, components and production capacity between the two are likely to increase.

[Source: Detroit News]

When possible, we like to cross-reference stories with other news sources before we report on them, and we've found this to be even more important when the topic at hand is hard data. When we came across a Reuters' story proclaiming that GM CEO Rick Wagoner was taking a 25-percent pay cut beginning in March of this year, a quick search of Google News revealed that, depending on the source, there could be a $370,000 discrepancy – and a possible raise for Wagoner.

[Sources: Bloomberg, Detroit Free Press, Detroit News, GM, Reuters]

Poor Jacques is all washed up. Where this writer was born and raised, JV was a homegrown hero who lived up to his family name by taking the checkered flag at the Indy 500 (and the CART championship) and going on to win the Formula One title only two years later. But when you've reached the top, there's only one way to go. Unfortunately for Canadian race fans, that's the direction Jacques has been going for the last ten years.

After running out of F1 teams that would sign him, Villeneuve tried to salvage his reputation with a move to NASCAR, which both he and fellow grand prix defector, Juan Pablo Montoya, spun as a move sideways, not downwards. JP made a go of it, but JV's fortunes have not been so favorable, and, aside from an upcoming drive for Peugeot at Le Mans, he's had to sit out his first full race season since the start of his career.

When trying to organize a deal to race this season in the second-tier NASCAR Busch Series, the addition of a race in his hometown on the track that bears his father's name only seemed to sweeten the deal. The negotiations broke down, however, leaving Jacques without a ride. But he remains hopeful that he will make his debut in stock cars at the Montreal event this August.

"We are taking our time to do it properly. There is no point in rushing," is what Villeneuve had to say about getting behind the wheel for the Montreal race. Big words for a man who's used to going fast.

Related posts:

• Audi DTM wants Villeneuve and Montoya
• Update: Villeneuve's NASCAR deal
• Anyone got $18 million for Jacques?
• Villeneuve and Montoya close in on closed wheels
• Not coming for you, Ricky Bobby: NASCAR sans Villeneuve in 07
• Villeneuve headed for the Busch leagues
• Reports: Villeneuve signed NASCAR deal with Roush
• Mais, oui! NASCAR developing a French connection?

[Source: Autosport]

NASCAR has a solid reputation as a race series firmly entrenched in the southern United States, but has been fighting hard to defeat that image and branch out of Old Dixie. With races lined up in such northern locations as Michigan, Illinois, Ohio, New Hampshire and Wisconsin, NASCAR has long since established itself with the yanks, but with races planned for Mexico and Montreal, the good ol' boys are looking to expand internationally, as well.

It seems that south and north of the border isn't far enough, however, as NASCAR officials recently made a trip half-way around the world to China in order to look into reaching the biggest potential audience in the world.

NASCAR insists that they're not looking to set up a top-tier Nextel Cup race in China, just some junior series events. You've got to figure they've got their sites set on something more ambitious than that, however. The last venture into the Far East finished in 1998 after NASCAR held three annual exhibition races in Japan.

The international expansion forms part of a bigger campaign NASCAR has been waging to establish itself as a top-tier racing series, and the recent defection of F1 stars like Juan Pablo Montoya and Jacques Villeneuve hasn't hurt any, either. No doubt that NASCAR has also been keeping a close eye on competing race series, including Formula One, which has been setting up more international races each season; ChampCars, which is planning a return to Europe; and most of all the Speedcar Series, which is gearing up for races across Asia in American-built stock cars.

[Source: GrandPrix.com]

Who ever would have thought a Will Ferrell movie would ever be considered "prophetic," even jokingly? The absurd story of a French racing driver switching over from F1 to stock cars as the last remaining challenge is coming to life again and again. But unlike Jacques Villeneuve (or Colombian driver Juan Pablo Montoya), Jean Alesi isn't gunning for NASCAR. The former Formula One star is the first big name to sign on to the Speedcar Series.

The new racing league will pit 24 drivers against each other in identical 600-hp stock cars in 18 races over 9 weekends across Asia. We hope to get a glimpse at the cars in a few days when Alesi hits the Virginia International Raceway for the first test session on March 5-6. What we know now is that the specially-built cars will feature a tubular fiberglass chassis and power from 600-hp engines built in Charlotte, North Carolina.

The inaugural season of the Speedcar Series, which is backed by F1 chief Bernie Ecclestone, kicks off in November and runs through April 2008.

[Source: Speedcar Series via F1-Live]