Racing to the Rescue

FRANCE/Who in the world doesn’t believe in supporting the auto business? As the U.S. Treasury contemplates the extent to which it will pump funds into the Detroit Three, European leaders are revving up measures to keep their car companies chugging along.

French President Nicolas Sarkozy said France would consider making consumer auto loans more attractive as a way to help car makers hit by the global credit crunch and slowing economy. As if his country were plagued with a reckless, cut-throat sort of capitalism, the French president declared: “We cannot be the only country in the world that does not support our builders and manufacturers. We have to help industrial infrastructure.” He’s already offered 1,000 euros to every driver who trades in an old vehicle for a less-polluting one, so softening up auto loans would seem to be right up a Parisian alley.

In Italy, Fiat’s admission last week that its car business needs a partner to survive is seen as a way to put pressure on the Italian government for a solution. While media reports cite France’s PSA Peugeot-Citroen and Germany’s BMW as potential partners, industry watchers do not see a deal any time soon. Volkswagen says its finance arm has no capital problems, but is applying for state loan guarantees nonetheless. Sweden and Canada wasted no time pledging support for their auto sectors.

Much like any driver who has found himself staring dumbfounded at a mechanic’s repair bill, governments may be grumpy, but there is no way they won’t pay up.

Deals of the day:

* Suzlon Energy, the world’s fifth-largest wind turbine maker, said it has agreed with Portugal’s Martifer to revise the payment schedule to increase its stake in Germany’s REpower.

Need less, want less

chrysler.jpgFresh from having announced the end of its leasing programs, Chrysler Financial’s credit line is shrinking. The 20 percent cut in its credit facilities to $24 billion makes plenty of sense, given their downsizing, and on Friday it said its lenders were happy with the move to drop leasing. But The Wall Street Journal says Chrysler couldn’t actually get the whole $30 billion. It also says the automaker is paying a far more chunky 1.1 to 2.25 percentage points over Libor on different parts of the funding, from 0.3 to 0.5 percentage point on its borrowings a year ago.

Labor issues are a whole lot more dangerous to a deal in Germany than most other Western economies. So when Volkswagen‘s senior labor leader says talks to agree on workers’ rights in Porsche‘s new holding company are in danger of collapse, it’s probably time to check the engine. Responding to accusations from his Porsche counterpart that VW labor was blocking a deal, Bernd Osterloh said Zuffenhausen-based Porsche aimed to create a two-class system in which 12,000 Porsche employees outranked VW’s massive workforce. “If the 360,000 men and women working in the Volkswagen Group were of the opinion that a labor contract has to be terminated, Porsche representatives in the holding’s works council could then prevent this, according to the plans in Zuffenhausen,” he said in comments sent to Reuters.

Other deals of the day:

* Australia’s biggest port and rail operator, Asciano, rejected an unsolicited private equity bid worth around A$2.9 billion ($2.7 billion), saying the offer undervalued its business.