Global Investing

German, Swiss governments kinder than U.S. to GM execs

This post was written by colleague Christiaan Hetzner.

Listening to GM Europe CEO Carl-Peter Forster (right), there is a big side benefit of having the thankless job of running a business in danger of being dragged under by its foundering parent
For one, you are not publicly humiliated by lawmakers with an ax to grind the next time you try and hit them up for aid.
Whereas U.S. congressmen eager to score points with taxpayers were just itching to take turns tag-teaming his boss Rick Wagoner, Forster said he is treated with far more respect and understanding by the German and Swedish governments when he participates in discussions over receiving billions in state loan guarantees. GM is looking to sell its Saab brand in Sweden.
Asked at the Detroit auto show whether the talks were considered in Europe to be as controversial as those in Washington, Forster replied: “Interestingly enough, the Europeans take a very, very different approach. Much less hostile, virtually not hostile at all, seeing the automotive industry as a very important industry.”
GM Europe has a funding requirement peaking this year, in part due to this year’s roll-out of the new Opel Astra and Saab 9-5 cars, key models for both brands.
 ”They (state officials) understand the extraordinary circumstances in Europe — by the way, the circumstances in the U.S. are even more extraordinary than in Europe. They know how important the industry is for the European economy and particularly for certain member states like Germany, France, Italy, the UK and so on. Absolutely no hostility, very open, understand the situation and try to come up with a solution.”
Perhaps lawmakers in the more socialist governments across the Atlantic better realize what would happen if Opel or Saab cannot get the loan guarantees needed to access to the European Investment Bank’s 16 billion-euro fund for the European auto industry, which is only open to companies with an investment grade rating. 

Autoweek names Audi, Cadillac concepts best in Detroit show

Volkswagen, General Motors and Ford walked away with “best in show” recognition from Autoweek magazine for their cars at the Detroit auto show.

Autoweek cited VW’s Audi Sportback concept (right) as “best in show,” with editor Dutch Mandel citing the car’s “stylish looks.” He predicted a production version would hit showrooms by the end of next year for the unanimous decision.

The “best concept” was GM’s Cadillac Converj, a luxury concept version of the Chevrolet Volt all-electric concept introduced two years ago. GM plans to begin selling the Volt by the end of next year. Ford’s 2010 Taurus car was voted “most significant,” while the U.S. automaker’s 2010 Mustang Shelby GT 500 was named “most fun.”

Recession or depression?… “I’d rather not”

Here’s a blog post by my colleague Nick Carey.

This year’s roundtable event for the Society of Automotive Analysts (SAA) — held on the sidelines of the Detroit auto show — was always likely to be a somber affair, what with the U.S. economy in recession and auto sales falling off a cliff.
But even though the outlook for the sector this year is grim, analysts and other attendees in the half-empty room managed a few gallows-humor laughs.
“I see we have a few empty pews here,” Finbarr O’Neill, president of automotive forecasting firm J.D. Power and Associates (left), said to a few chuckles.
Many analysts have moved on since last year’s show, either because the firms or banks they worked for have gone belly up, or because their employers no longer feel the need to cover the U.S. automakers when their stocks have performed so poorly.
Even though the SAA rented a much smaller conference room at the Renaissance Center in downtown Detroit — also home to the headquarters of General Motors — than for last year’s event, there were nonetheless quite a few vacant chairs.
O’Neill proceeded to tell a joke about an Irish bank robbery — prefaced with the fact that he is himself of Irish heritage — and explained to the audience that the reason he was telling it was that they would need to keep laughing despite the awful auto sales outlook that he delivered. J.D. Power expects that U.S. auto sales in 2009 will be the worst since 1982.
“Let’s maintain our sense of humor folks. We’re going to need it.”   
But much of the laughter was at unintentional gaffes.
In the introduction for Paul Taylor, chief economist at the National Automobile Dealers Association (NADA), one of the hosts said the NADA had 2,200 members before correcting that figure to 22,000. Chuckles greeted the mistake, because the NADA is losing members at quite a pace.
The NADA says there were 700 fewer U.S. car dealers at the end of 2008 than at the beginning and expects there to be 900 fewer dealers still by the end of 2009.
But one of the biggest laughs was reserved for a comment from Ford’s senior economist Emily Kolinski Morris (right) in a Q&A session after she and Taylor spoke.
A member of the audience asked whether Kolinski Morris and Taylor would described the current U.S. downturn as a recession or a depression.
Kolinski Morris paused, for just a moment.
“I’d rather not,” she said, to widespread laughter from the audience. 

(Photos/J.D. Power and Ford)

Top quotes from the Detroit auto show

Top automotive industry executives gathered at the media preview for the Detroit auto show. Following are some of the notable quotes:

“I have seen a better mood at funerals,” he told Reuters TV.

“Last summer’s $4-a-gallon gasoline was no anomaly. It was a brief glimpse of our future.”
BOB NARDELLI, CEO, CHRYSLER (left) sizes up Big 3 at Detroit auto show

Reuters interviewed Peter DeLorenzo, publisher of website during the Detroit auto show. Highlights follow:

Q: What kind of shape do you see the U.S. automakers in?

– Ford

“Ford is clearly distancing themselves from what I now refer to as the old Detroit two.”
– GM
“There’s kind of a Jekyll-and-Hyde thing going on with General Motors.”

“I call it the dead car company walking. There are too many serious problems hovering over Chrysler right now.”
“The suppliers are starting to make contingency plans for a world that doesn’t have Chrysler in it.”
“I just don’t see them surviving the year.”
“If the economy doesn’t start to show signs of life, I don’t think Chrysler can keep the whole thing afloat.”
Q: Are electric cars finally going to be a reality given the time lines announced at the show?
“Will electric vehicles be a part of this nation’s fleet in the future? Absolutely, but I don’t think they will ever be more than 25 percent. Hybrids will be a strong player going forward.”
Q: Will those time lines put the U.S. automakers under greater pressure, however?
“Being put under the microscope in Washington just opened a Pandora’s box of attention on the Detroit automakers.”
Q: Will luxury auto market suffer even more than the overall market in the recession?
“I don’t think there’s any question that the availability of incentivized leasing programs allowed people to get into vehicles they couldn’t normally afford.”
“A shakeout is coming. It’s probably going to hit import manufacturers really hard.”
“It (the luxury segment) will still exist, but I think it will be at a reduced level and stay there for a while.” 

Cars the stars at Detroit show, not lavish displays

Reeling from crisis and in hock to the federal government for $13.4 billion, General Motors spent only about half of what it normally spends on its display at the Detroit auto show this year. There were no pyrotechnics, no marching bands, no celebrities, no models.

But GM Vice Chairman Bob Lutz surveyed the stripped-down display and found plenty to like in the new austerity.

“When you are really under severe financial stress and you have loans that you know that you are going to repay you start looking at what’s really important,” Lutz said.

40-plus MPG possible for next generation Ford Focus

Ford’s next generation Focus, due to land in the U.S. next year, could get 43 miles per gallon on the highway, more than 20 percent better than the current version.

Ford tipped that potential mileage at the Detroit auto show with its introduction of a Lincoln concept car (left). The concept is built on the same platform as the next generation Focus and equipped with a four-cylinder EcoBoost engine the automaker plans to offer on some versions of the Focus.

“We haven’t announced the powertrains yet on the next generation Focus, but it certainly gives you an indication of what the powertrain might be and what the fuel economy might be,” Ford product development chief Derrick Kuzak told Reuters.

Chinese automakers not so lost in translation anymore

Competitors in the U.S. auto sector the last few years have had reasons to snicker at Chinese automakers when they appear at the Detroit auto show, thanks to horrible translations in advertising handouts that might lead, for example, consumers to believe a Chinese car could catch fire in cold weather.

Those days are fading, however, as this year’s brochures were light years better than years past.

Brilliance Auto had only one glaring error, referring to its luxury sedan as emanating “Oriental mystic” instead of “mystique.” Of course, someone needs to tell the translators about political correctness as “Oriental” is not a word that is commonly accepted in America anymore for reference to Asia.

GM offers high-end possibility for electric car

Don’t put any money down for a high-end electric car just yet. 
General Motors has no current plans to make the Cadillac Converj (right), a luxury concept of the Chevrolet Volt plug-in electric car that was introduced at the Detroit auto show, said Mark McNabb, North American vice president of Cadillac/Premium Brands. 
GM Vice Chairman Bob Lutz said during the show the Volt remains on track to launch by the end of 2010. Showing off the Converj, Lutz said GM is confident enough about the Volt technology that the company can start looking at Volt derivatives. 
The Volt, which is being designed to run for 40 miles on battery power alone, will not be profitable until battery costs drop and one way to do that is to increase volume on the model. Offering the Converj would help, while also attracting higher profit margins. 
However, if the U.S. automaker decides to move ahead on the well-received Converj, a production version could look close to the concept, McNabb said. 
“It was done more to measure a little bit how the luxury market would assess ‘green.’ It is what it is. It’s just really an exploration into green versus luxury - can it be done and all that.” 
McNabb pointed out the Converj is based on existing technology. 
“It’s not like a pie-in-the-sky concept where you can’t build it or it’s years and years before you could. It’s more a concept of ‘let’s measure how luxury will accept this type of vehicle.’” 

Take a ‘green’ drive in the basement

Reuters correspondent Nick Carey visited the lower level of the Detroit auto show, where smaller carmakers used to set up shop but there is something new for the automotive media this year:


The basement of the Cobo Center has been reserved for Chinese automakers in recent years, but thanks to the state of the U.S. economy and slumping auto sales, cancellations by other automakers for the 2009 auto show have left a fair amount of space to be filled.


The Michigan Economic Development Corporation (MEDC) came up with a novel idea to fill the room – creating a park (pictured above) to test drive ‘green’ hybrid vehicles.