Toyota projects first operating loss since 1941

From AP via Yahoo:

By Yuri Kageyama, AP Business Writer NAGOYA, Japan (AP) -- Toyota Motor Corp. projected its first-ever operating loss since it began such reports, acknowledging Monday that its nine-year stretch of global vehicle-sales growth had stalled.

Crashing auto demand, especially in its key U.S. market, and the profit erosion from a surging yen proved too much for Japan's top automaker, which had been booming on the success of its fuel-efficient models, incluading the Camry sedan and Prius gas-electric hybrid.

Gloom dominated the annual news conference by Toyota's president, who in recent years had outlined ambitious expansion plans. This year, Toyota President Katsuaki Watanabe even refused to give a worldwide vehicle sales goal for 2009.

"The tough times are hitting us far faster, wider and deeper than expected," he told reporters at Toyota's Nagoya office. "This is an unprecedented crisis requiring urgent action."

Watanabe also blamed the strong yen, which has risen to 13-year highs against the dollar to about 90 yen recently.

Toyota lowered its net profit forecast to just 50 billion yen ($555 million) for the year through March 2009 -- a tiny fraction of the 1.7 trillion yen it earned the previous fiscal year.

Toyota expects to lose money on an operating basis of 150 billion yen ($1.66 billion) for the fiscal year ending March 2009. Toyota has never reported an operating loss since it began giving such figures in 1941. The only such loss it has had is an internal calculation for the year ending March 1938, a year after the company was founded.

Operating income reflects a company's core business performance. Last fiscal year, Toyota had a whopping operating profit of 2.27 trillion yen.

Toyota also lowered the number of vehicles it expects to sell globally this calendar year to 8.96 million, down 4 percent from a year ago. Earlier this year, Toyota had expected to sell 9.5 million vehicles around the world in 2008.

Initially, it had an even more aggressive target of 9.85 million, and expectations had been growing that the tally would reach 10 million in coming years -- allowing Toyota to dethrone General Motors Corp. as the world's top automaker.

Watanabe vowed Toyota would grow so lean it would realize profitability even if its worldwide sales slid to as low as 7 million vehicles -- what he called the basic "bottom line" for Toyota.

"We must change to become more slim, muscular and flexible," he said.

Tsuyoshi Mochimaru, auto analyst for Barclays Capital in Tokyo, warned worse may be ahead. U.S. auto sales won't start recovering until toward the end of 2009, and the dollar may lag further, he added.

"The problem is next year," said Mochimaru. "It's unmistakable that things are extremely tough for Toyota."

Watanabe and other executives said production plans and other investment will be on hold, including a new plant in the southern U.S. state of Mississippi and expansion plans in India.

The automaker will focus on hybrids and small cars, and invest in ecological technology to prepare for long-term growth, they said.

Mitsuo Kinoshita, a Toyota executive, said he hoped the results for the fiscal year through March would mark a bottom, partly with the help of dropping material prices. Soaring prices of steel and oil had hurt automakers, but such costs have fallen back in recent months.

But unfavorable currency shifts will slash 200 billion yen ($2.2 billion) from its results for the fiscal year through March, while marketing activities, including measures to deal with sinking sales, trimmed another 570 billion yen ($6.3 billion), according to Toyota.

While Japan's automakers are in far better financial shape than their cash-strapped American counterparts, the global slowdown is hitting them hard.

At a similar news conference last week, Takeo Fukui, president of No. 2 Japan automaker Honda Motor Co., also lowered profit and sales forecasts and declined to give a vehicle sales goal for 2009.

Toyota said it will reduce temporary workers at its Japan plants to about 3,000 by March from an earlier 6,000. Full-time employees will have job security.

Toyota is a relatively old-style Japanese company that offers lifetime employment, and only in recent years has hired and let go of temporary workers to adjust production. It was reviewing overseas jobs but had not reached a decision, it said.

Monday marks the second time Toyota reduced its forecast. Initially, it had projected 1.25 trillion yen ($13.9 billion) in net profit for the year through March 2009, but last month lowered that to 550 billion yen ($6.1 billion). It lowered its fiscal sales forecast to 21.5 trillion yen ($239 billion), down about 18 percent on year.

Toyota's U.S. vehicles sales plunged by a third on year in November, when overall sales fell to their lowest level in more than 26 years. And there is little hope for a quick fix as consumers hold back big purchases amid a credit crunch, rising unemployment and fears about the future.

"The change that has hit the world economy is of a critical scale that comes once in a hundred years," Watanabe said.

The company's stock fell 5 yen, or 0.17 percent, to 2,895 yen in Tokyo.

GM, Chrysler to get bailout money

From Bloomberg:

General Motors Corp. and Chrysler LLC will get $13.4 billion in government loans to keep operating in exchange for a restructuring under a rescue plan that President George W. Bush will announce this morning.

The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February, according to a statement from the Bush administration. The money would allow GM and Chrysler to keep operating until March.

Under the terms of the plan, if the companies can't demonstrate financial viability by March 31 the loans will be called and the money must be returned, the statement said.

The Year's Best- And Worst-Selling Cars

From: Forbes

Big trucks and small cars see strong sales, but SUVs have been left in the dust.

By Jacqueline Mitchell

2009 Ford Focus

In a year when gas prices topped $4 a gallon and automakers ran to Congress seeking a $25 billion bailout, one would assume that low-margin, fuel-sipping small cars are far outselling big gas-guzzlers. Indeed, seven of the 10 best-selling vehicles so far this year are small cars or sedans that get high gas mileage.

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But when gas prices go up and the economy heads south, "buyers shift ... from what they want to what they need," says Jeff Bartlett, deputy online editor of autos for Consumer Reports. And what many buyers still need are big pickup trucks, such as the Ford F-150 and Chevrolet Silverado--the two best-selling vehicles in America so far this year.

The F-150 attracted 473,933 buyers this year, making it the No. 1-selling vehicle for 2008--it's been the best-selling vehicle in America for 27 years running. Another 431,725 buyers drove off Chevrolet lots in a Silverado.

"The pickups are a solution to a need," says Bartlett, as those who buy the vehicles use them for their towing, off-road and cargo-hauling capabilities.

What Americans don't need, however, are gas-guzzlers that don't serve a purpose. Such is the case for the Nissan Armada, which rolls in at No. 5 among the worst-selling vehicles so far this year. Armada sales are off 49.1% this year compared to last year, with only 14,753 buyers purchasing the big and brawny SUV. It gets a combined 14 mpg.

The pickups don't do much better on fuel economy, but their utility equates to their enduring, strong sales. Buyers who have a choice between an SUV and a smaller car, however, want good fuel economy, according to a survey Consumer Reports conducted in the summer. That's why the Armada, Bartlett says, "is losing consumer appeal."

Behind the Numbers

To generate our lists of the best- and worst-selling cars so far this year, we used automaker-provided sales numbers from January to November. The vehicles with the highest unit sales made the list of best-sellers.

To find the worst-selling cars we looked at the lowest sales figures for the same time period, as well as the percentage decrease in sales from 2007 to exclude high-end luxury and performance cars that are produced only in small numbers each year. The vehicles with the lowest sales made the list.

2009 GMC Envoy

As bad of a year as it's been for sales of the aforementioned Armada, it's not the worst-selling vehicle in 2008. That title goes to Hyundai Entourage minivan, with only 5,405 sold this year. Not far behind, at No. 4, is the Chrysler Pacifica, a cross between an SUV and a minivan that sold only 6,671 units so far this year, a drop of 87% from the same period a year ago. No turnaround is in the works, either--Chrysler announced at the beginning of the year that production has ceased on the Pacifica, Chrysler Crossfire and Dodge Magnum.

The problem with the Pacifica and other crossover vehicles like it is that consumers have not embraced them as the new family car, says David Thomas, senior editor at Cars.com. "Buyers just aren't buying them. None of them have done well."

Joining the Armada, Entourage and Pacifica in the top five worst-selling vehicles are the Mitsubishi Endeavor, with only 5,687 units sold through November, and the Hummer H2, with only 5,721 sold.

No SUV brand is immune from the sales slump. In the second half of the list of the worst-selling cars, all five--the Toyota FJ Cruiser, Jeep Commander, GMC Envoy, Dodge Durango and Hummer H3--are SUVs. Furthermore, all five have seen a staggering percentage drop in sales of around 50% from the same 11-month period in 2007.

The Bright Spots

While consumer interest in most SUVs has waned, many fuel-efficient small cars have seen very strong sales in 2008.

Buyers purchased 352,248 Honda Civics and 184,152 Ford Focus cars this year, ranking sixth and 10th on our list, respectively. The gas-powered Civic gets 29 mpg, but the sales numbers also include the even more efficient hybrid version, which gets a combined fuel economy of 42 mpg.

Joining the two trucks and the Civic in the top five best-selling vehicles so far this year are the Toyota Camry (411,342 sold) and Honda Accord (350,638 sold).

But while gas prices had an impact on the sales of some small cars and hybrid vehicles, they haven't had as big of an effect as the economic crisis and credit crunch, experts say. In other words, their sales should be much higher.

"We have seen the best deals in terms of rebates and incentives in the last four months, but we are not seeing auto sales go up," says Thomas. "The economic crisis is stopping people from buying cars."

Chrysler to Shut Factories for a Month

From: The New York Times

DETROIT — Chrysler said Wednesday that it would close all its factories for at least one month, starting at the end of this week, in response to plunging vehicle sales in the United States.

The company said the plants would resume production no sooner than Jan. 19. Some plants will remain closed for several more weeks. Normally, the Detroit automakers close their factories for about two weeks at the end of the year.

Workers at the plants will be laid off during the down time, but the companies’ jobs bank program ensures that they will continue to receive most of their pay. The United Automobile Workers union agreed this month to suspend the jobs bank to help the companies save money, but it is unclear when that change will take place; after it does, workers whose plants are idled will receive only unemployment benefits.

Meanwhile, worries that Chrysler could be forced to file for bankruptcy have spooked many dealers into borrowing so much money from the automaker’s lending arm that the company said it might need to suspend the loans.

Dealers have been requesting nearly $60 million a day from a fund used to finance vehicle inventories, and a total of $1.5 billion since July, Chrysler Financial’s chief executive, Thomas F. Gilman, told dealers in a letter dated Dec. 12. Mr. Gilman called the requests “troubling” and urged dealers not to borrow more than “what’s absolutely necessary for the operation of your business.”

The announcements come with vehicle sales in the United States at the lowest level in 26 years. Chrysler’s sales were down 47 percent in November, compared to a 37 percent decline for the industry over all.

Chrysler’s chief executive, Robert L. Nardelli, told Congress this month that the company needed an immediate loan of $7 billion to help it survive into the new year. Senate Republicans blocked legislation to aid Chrysler and the other Detroit automakers last week, but the Bush administration is expected to step in with some form of assistance.

G.M., which has said it needs $4 billion this month to stay afloat and another $14 billion after that, said last week that it would shut 20 plants in North America for at least part of the first quarter. Ford has also announced significant production cuts but says that it is healthier than the other two companies and does not need any loans immediately.

“People just don’t want to buy cars,” Anthony Viviano, the chairman of Sterling Heights Dodge and Meadowbrook Dodge near Detroit, said. “Hopefully, by Friday the president O.K.’s this thing. We just have to calm everybody down.”

Mr. Gilman’s letter, first reported Wednesday by Bloomberg News, showed that dealers were feeling jittery along with their would-be customers.

“They don’t know what to do. They’re just running wild,” Mr. Viviano said. “They’re getting scared.”

Money that car dealers borrow to cover the cost of vehicles on their lots is known as floor-plan financing. At Chrysler Financial, early loan payoffs go into a “cash management account,” which the dealers can then borrow from as needed. The dealers get 2 percent bonuses on money they keep in the account for a certain period of time.

Without access to floor-plan financing, few dealers would be able to order new vehicles.

“Chrysler Financial finances 75 percent of all vehicles shipped to U.S. dealers, and we continue to support our dealer body with uninterrupted wholesale financing,” a Chrysler Financial spokeswoman, Amber Gowen, said.

Chrysler said its dealers, during a recent meeting at the company’s headquarters in Auburn Hills, Mich., told executives that they had lost 20 percent to 25 percent of their volume because consumers were unable to obtain loans.

“They have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing,” Chrysler said.

In addition to idling their plants, automakers have been trying to save money by shrinking the size of their work force.

In November, Chrysler cut about 5,000 salaried jobs through a buyout and early retirement program. By the end of this month, it is expected to have eliminated more than 1,800 hourly positions.

Foreign automakers have been reacting to the sales slowdown, too. Toyota said this week that it would delay work on a new factory in Mississippi that is scheduled to build the Prius hybrid sedan, and Honda said it was reducing first-quarter production by 119,000 vehicles.

What makes a car American?

From CNN:

By Ashley Fantz

With the top U.S. automakers in economic survival mode, "Buy American" is a frequent cry among those trying to save jobs at home.

Georgia trucker Douglas Sullivan says he's concerned more about quality than the origin of a vehicle's parts.

But buying a car to benefit the U.S. economy has become an ambiguous, complicated challenge.

"How you define an American car is one of the great conundrums of this world," said Dutch Mandel, the editor and associate publisher of AutoWeek.

Fewer than half of the parts on some Big Three vehicles are made in the U.S.

Looking at a Ford Fusion? It is assembled in Mexico. The Chrysler 300C is assembled in Canada, but its transmission is from Indiana; the brand's V-8 engine is made in Mexico. Engines in the Chevrolet Equinox sport utility vehicle are from China.

On the other hand, Toyota's Camry is comprised 80 percent of parts made in the United States, and 56 percent of Toyota's vehicles sold in the U.S. also are made here, according to Toyota spokeswoman Sona Iliffe-Moon.

The Toyota Sienna and Tundra also have 80 percent of their parts manufactured in the U.S.

"When you have manufacturers from around the world building cars in the U.S. with 85 percent domestic content -- engine, transmission, assembly -- is that an American car?" Mandel asked. Or, he asks, is it considered foreign because the profits go back to a foreign country?

"It's truly a global industry," said Thomas Klier, a Chicago, Illinois, economist who co-authored "Who Really Made Your Car?" an encyclopedic analysis of the auto industry melting pot. "When you think of buying American, you should focus on three points -- its engine, transmission and where it was assembled," Klier said.

To get that information, read a vehicle's window sticker. U.S. automakers are legally required to detail the origin of a car's parts and its final assembly point.

"Unfortunately, there are few people who know about the sticker or even bother to look at it," said Bernard Swiecki, a senior project manager at the nonprofit Center for Automotive Research in Michigan, which follows trends in the industry.

The sticker's details were news to Douglas Sullivan, 43, a truck driver from Snellville, Georgia. Though he prefers foreign brands, believing them to be of higher quality, he said he used to favor U.S. brands because he wanted to support American workers.

"I wanted to keep the jobs right here," Sullivan said.

Swiecki said many people think about image of a brand, rather than the way that brand has evolved over decades as the market has grown more diverse and competitive.

"They will think, 'I'm buying a GM, I'm getting an American car,' " Swiecki said.

Foreign car manufacturers generate billions of dollars in jobs and community infrastructure in the U.S., but there is a difference between Detroit's economic footprint and that of its foreign rivals.

The Center for Automotive Research says Detroit's Big Three employed almost 240,000 people in the U.S. at the end of 2007. Foreign makers had about 113,00 U.S. employees at the time.

The key difference in how the Big Three and foreign brands support jobs in the U.S. comes outside the factories, according to a 2006 study by the Level Field Institute, a group formed by Big Three retirees in Washington.

"What's driving the difference in jobs ... is investment in research, design, engineering and management," Level Field President Jim Doyle said in a statement on the 2006 study.

The Center for Automotive Research said the Big Three had 24,000 engineers on U.S. payrolls in 2007. The Japan Automobile Manufacturers Association said its member companies had 3,500 U.S. research and development employees in 2007.

Level Field found that every 1,000 vehicles sold by Detroit's Big Three in the U.S. support more than twice as many jobs as 1,000 vehicles sold by foreign nameplates.

Most Americans consumers understand that the industry is global, Swiecki said, and they are more savvy than ever in purchasing vehicles.

"For the most part, gone are the days of people going to a car lot and paying a buck to take a swing of a hammer at a foreign-made car," Swiecki said.

But there are exceptions.

A Savannah, Georgia, Ford dealer sold 15 cars last weekend after he ran a radio ad blaming Japan for Detroit's financial funk.

While 15 was substantially better than weekends before the ad, dealer O.C. Welch said, it was still about half of the business he did a year ago.

"All you people that buy all your Toyotas and send that money to Japan, you know, when you don't have a job to make your Toyota car payment, don't come crying to me," Welch says in the ad. "All those cars are rice ready. They're not road ready."

Sullivan, who was at an Atlanta, Georgia, dealership Thursday to pick up his American brand minivan from the service department, said he has had a different experience.

He said the vehicle has given him trouble, and whenever he replaces it, he'll probably go with a foreign brand, regardless of whether any of the parts were made in the United States.

"What I look for is good gas mileage, and when I pay it off in four or five years, it's still running," said Sullivan, who has owned several American and foreign brands. "It seems I get better quality with a foreign car."

Gimme A Car That's Cheap, Sporty And 'Green'

From NPR:

By Tanya Ballard Brown

Troy Witcher/Lindsay Mangum

After being denied the role of Wonder Woman, the author is now lamenting the lack of affordable energy-efficient sports car options.

Enlarge

Kristie Bull

Actor Daniel Craig took the Aston Martin DBS through its paces during the opening scenes of the latest James Bond movie. AP Photo/Graylock.com

Enlarge

Remy de la Mauviniere

The Tesla Roadster can accelerate to 60 mph in 3.9 seconds. The car is priced at $110,000. AP Photo

Enlarge

Kiichiro Sato

The Fisker Karma is a luxury plug-in car priced at about $87,000. Fisker is taking pre-orders for late 2010 delivery. AP Photo

December 10, 2008

This week congressional Democrats and the White House are finalizing a $15 billion emergency loan package to help prevent the collapse of General Motors Corp. and Chrysler LLC.

Maybe they wouldn't need these loans if they just made an affordable "green" sports car.

I love sports cars.

Cars with manual shift transmissions. Cars with engines that rumble and roar when you turn the ignition. Cars with sleek, aerodynamic bodies that sit low to the ground, grip the road, hug curves and limit the number of passengers.

While other people might have drooled over actor Daniel Craig in the latest Bond flick, Quantum of Solace, I couldn't tear my eyes away from the Aston Martin DBS he drove during the opening scene car chase. At one point I turned to my husband and whispered, "I WANT THAT CAR!"

So recently when a local TV station did a spot on the latest trends in hybrid and electric cars, I wondered for the 8,000th time, "Why are all of these cars ugly?"

My love of sports cars is an old one, born when my uncle bought his Datsun 280ZX in 1978. I practically worshipped that car and begged him to give me rides all of the time so I could watch him changing gears and pushing the clutch.

For years I would play games with my cousin, where I pretended to be racing down highways in the Z darting in and out of lanes, dodging traffic and the police and and ... well, let's just say, I get Danica Patrick.

When I turned 16 and got my driver's license my uncle tossed me the keys to the Z and told me to ride out. I rolled down hills, stalled at stop signs and held up traffic at several intersections while I figured out what a friction point was and how to control it.

I love sports cars.

I also understand the need to save the environment. I saw An Inconvenient Truth. I read the recent stories about acorns disappearing. And admittedly, I likely will end up putting about town in a Smart Car when it's all said and done.

But what I don't understand is why car manufacturers can't create a reasonably priced, energy-efficient vehicle that looks like a Porsche. OK, maybe that's revving it up too much, but surely there is some aesthetic middle ground between that flashy eyecatcher and the Smart Car.

At some point more of the Tesla roadsters will hit the road, but if the manufacturer sticks to the $110,000 per car pricing plan, I won't be driving it. And some of the other options coming to the market — the Venturi Fetish, Lightning GT and the Fisker Karma — are also priced for people who likely have more disposable cash than the average two-income family. Sigh.

But if the goal is to get more people driving cars that cause less damage to the environment, it would seem a no-brainer that car manufacturers would start designing jazzier-looking, reasonably priced cars. Those cars would appeal to people who care about the environment, but also get excited about the driving experience and crave a car that looks and performs like the Aston Martin DBS.

Hopefully one day soon I'll be able to say "I love hybrid sports cars."

Tanya Ballard Brown is an editor for NPR.org.

Administration may aid automakers

From N.Y. Times:

By STEPHEN LABATON and DAVID M. HERSZENHORN

Published: December 12, 2008

WASHINGTON — The Bush administration said on Friday that it was prepared to intervene to prevent the collapse of General Motors and Chrysler after Republican senators blocked a compromise proposal to rescue the automakers.

The decision came after a tense standoff this week in which senior White House officials pleaded with Senate Republicans not to block the measure, including a warning by Vice President Dick Cheney that they would be remembered for decades as the party of Herbert Hoover if the industry collapsed.

But while Senate Republicans stood their ground — in open revolt against President Bush — it was the White House that gave in.

Shortly before the American markets opened on Friday morning, White House and Treasury Department officials, concerned that steep declines in overseas stock markets could provoke a new round of market panic in the United States, said the administration would consider providing temporary relief.

After refusing for weeks to tap the $700 billion financial rescue fund, the administration suggested it would dip into the fund to at least permit the companies to continue their operations until the new Congress and new administration arrive next month.

“Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry,” said Brookly McLaughlin, a Treasury spokeswoman.

Administration officials said they had not decided how much to loan the auto companies or on what terms, and were spending Friday examining their books and cash-flow projections.

The government officials said they expected the companies and the unions would be asked to make significant concessions. They also did not rule out the prospect of a bankruptcy for one or more of the companies, but vowed that it would not be “uncontrolled,” meaning that enough financing would be provided to enable a reorganization.

Senior administration officials spent part of the day talking to auto executives and their lobbyists. People briefed about the discussions said that Chrysler had asked for financing to make it to February or March and the company was hoping that the administration would decide to lend it and General Motors about $11 billion. G.M. has said it needs $4.4 billion this month and another $4.4 billion next month

Administration officials said they feared a collapse of one or more of the car companies could have broader implications for the economy.

Some 3,000 suppliers, for example, are owed about $13 billion by the auto companies, according to Neil De Koker, chief executive of the Original Equipment Suppliers Association in Troy, Mich., a trade group that represents auto suppliers. Most suppliers sell parts to all three companies, as well as to Japanese auto makers. The fear is that if one of the Big Three fail, it would take down important suppliers who would then be unable to send parts to the others.

The flat financial markets on Friday appeared to give some breathing room to the administration as it worked to hammer out a plan. Officials cautioned that this rescue plan might not resemble either the House bill or the alternative put forward by Senate Republicans.

The White House had initially expressed reluctance to intervene in the auto crisis, and instead supported redirecting $14 billion that Congress had allocated to help the automakers retool to make more fuel-efficient cars. All but $15 billion of the first $350 billion of the financial rescue fund has been committed by the administration to banks and other financial institutions, and Treasury officials had been saying before Friday that they did not know whether they would seek permission from Congress to use any of the other $350 billion. But Congressional leaders have said that the lawmakers have no intention of returning to Washington until the new session begins next month.

Labor leaders in Detroit hailed the announcement by the administration.

“I think it’s great news, the responses we’ve been getting out of the White House and the Treasury,” said Ron Gettelfinger, the president of the United Automobile Workers union. “It’s important for the White House to exert their influence to release this money as quickly as possible. We cannot afford a run on the banks.”

Both G.M. and Chrysler have said they are in desperate need of cash by the end of December to pay suppliers that have already delivered parts, as well as to make employee payrolls.

The two automakers have both hired bankruptcy counsel, but have repeatedly said that a Chapter 11 filing is a bad option because of the difficulty in getting financing while reorganizing.

The companies are also cutting costs deeply to preserve their dwindling cash hoards. Chrysler just cut another 5,000 salaried jobs through buyouts and early retirements at the end of November. G.M. said Friday that it would drastically reduce vehicle production in the first quarter of 2009 by 250,000 units.

Agreement reached on $15 billion plan to rescue GM, Chrysler

From Reuters via Automotive News:

WASHINGTON -- The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers and forcing them to restructure or fail, officials said.A Bush administration official and a Democratic leadership aide said the outline covered key points but final issues needed to be resolved and put in writing.Democrats have arranged to have the House of Representatives vote on a bill as early as Wednesday and send it to the Senate for consideration.President George W. Bush and President-elect Barack Obama were both urged by a key lawmaker to help rally support by Democrats and Republicans for the pending measure."Bipartisan hard work has paid off," said Democratic Sen. Carl Levin of Michigan whose home state headquarters General Motors, Ford Motor Co. and Chrysler LLC."I understand an agreement has been reached," Levin said in a statement.The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co. is not requesting immediate help but would like a $9 billion line of credit in case its finances worsen.The parties that negotiated the tentative deal agreed last week that the money would come from an Energy Department fund established in September to help Detroit make more fuel-efficient cars.

Congress sends White House auto aid proposal

From Associated Press:
WASHINGTON – Congressional Democrats on Monday sent the White House a draft of a roughly $15 billion auto bailout they aim to bring to a vote this week, but White House officials gave a cool initial response.
The measure would rush bridge loans to Detroit's struggling Big Three but would also demand that the auto industry restructure itself in order to survive and would put an overseer chosen by President George W. Bush in charge of monitoring that effort, according to a draft obtained by The Associated Press.
The White House had just begun evaluating the Democratic language, according to officials who would comment on the continuing negotiations only on condition of anonymity. But they said the draft didn't appear consistent with the principles behind a broad agreement to give long-term financing only to viable companies. They said it was hard to tell definitively whether their doubts were warranted and they would continue talking to Capitol Hill representatives.
At the Capitol, Senate Majority Leader Harry Reid, D-Nev., said, "While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done." He added, "This is no blank check or blind hope."
Earlier Monday, the White House and a top Democratic lawmaker said they were likely to strike a deal quickly on the multibillion-dollar bailout, which places strict restrictions on the automakers while they're receiving the loans and mandates that the government overseer keep close tabs on their efforts to restructure.
The emergency loans would be drawn from an existing program meant to help the automakers build fuel-efficient vehicles.
Among the requirements included the draft proposal is one that the carmakers getting federal help get rid of their corporate jets — which became a potent symbol of the industry's ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government aid.
The White House said the fundamental approach in the language does not appear to meet Bush's main test: that long-term financing with taxpayer dollars only be made available to companies with a viable future in the marketplace. Bush officials believed congressional negotiators were on board with this idea as well.
The proposal also gives the overseer — a kind of "car czar" — say-so over any major business decisions by the automakers while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more and any "material change" in their financial condition.
Under the plan, the carmakers' could get emergency loans right away. Then the overseer would write guidelines, due on the first of the year, for restructuring the companies that received them.
In testimony before Congress last week, General Motors Corp. and Chrysler LLC, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009. Ford Motor Co. has said it has enough money to stay afloat unless one of the other Big Three goes under or the economy deteriorates more sharply.
While the measure would put an administration official selected by Bush in charge of setting terms for restructuring, the decision about whether the terms were being met would not be made until President-elect Barack Obama had been sworn in. Congressional Democrats and the White House were working to find a broadly supported candidate who could span the two administrations.
Congressional officials said Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims' compensation fund, was under consideration for the position.
Asked if a deal could be struck for a vote as early as Monday, White House spokeswoman Perino said, "I think it's very likely." That was before the Democrats sent their draft.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said that he, too, expected a deal by the end of the day and enactment by week's end.

GM says it "disappointed" and "betrayed" consumers

From Reuters:

DETROIT – General Motors Corp on Monday unveiled an unusually frank advertisement acknowledging it had "disappointed" and sometimes even "betrayed" American consumers as it lobbies to clinch the federal aid it needs to stay afloat into next month.
The print advertisement marked a sharp break from GM's public stance of just several weeks ago when it sought to justify its bid for a U.S. government on the grounds that the credit crisis had undermined its business in ways executives could never have foreseen.
It also came as Chief Executive Rick Wagoner, who has led the automaker since 2000, faces new pressure to step aside as GM seeks up to $18 billion in federal funding.
"While we're still the U.S. sales leader, we acknowledge we have disappointed you," the ad said. "At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster."
The unsigned open letter, entitled "GM's Commitment to the American People" ran in the trade journal Automotive News, which is widely read by industry executives, lobbyists and other insiders.
In the ad, GM admits to other strategic missteps analysts and critics have said hastened its recent decline.
"We have proliferated our brands and dealer network to the point where we lost adequate focus on the core U.S. market," the ad said. "We also biased our product mix toward pick-up trucks and SUVs."
But GM also says in the ad that it was hit by forces beyond its control as it tried to complete a restructuring earlier this year.
"Despite moving quickly to reduce our planned spending by over $20 billion, GM finds itself precariously and frighteningly close to running out of cash," the ad says.
A failure of GM would deepen the current recession and put "millions of job at risk," according to the ad, which also highlights the automaker's pledged restructuring and intention to begin repaying taxpayers in 2011.
GM spokesman Greg Martin said the ad was an attempt by the automaker to present "a pledge directly to the public."
"We believe we need to deliver this commitment unfiltered since quite a bit of media commentary has not kept pace with our actual progress to transform the company," Martin said.
Senate Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut who is central to the effort to craft an auto bailout bill, on Sunday said GM should replace Wagoner.
GM says Wagoner has the support of the company's board.
(Reporting by Kevin Krolicki, editing by Dave Zimmerman)

UAW agrees to suspend Jobs Bank, Gettelfinger says

From Automotive News:
By David Barkholz
The UAW has agreed to suspend the Jobs Bank program and allow the Detroit 3 to delay making payments to a retiree health care trust in 2010 to help the automakers through their cash crisis, UAW President Ron Gettelfinger said.Gettelfinger spoke after summoning the presidents and chairmen from Detroit 3 locals for an emergency meeting in Detroit today.The union is willing to make modifications to the 2007 contracts reached with General Motors, Ford Motor Co. and Chrysler LLC, said Jeff Everett, a local Chrysler president who attended the meeting. He said concessions on wages and benefits for active workers weren't discussed. "Times are tough, and we are going to do what we have to do,'' said Everett, president of UAW Local 1166 in Kokomo, Ind., in an interview. Under the so-called Jobs Bank program, laid-off factory workers can receive as much as 95 percent of their regular pay.Gettelfinger and the automakers' CEOs are scheduled to appear before the Senate Banking Committee tomorrow and the House Financial Services Committee on Friday.

America's most- and least-stolen cars

From Forbes.com:

Big trucks and SUVs are among the most appealing to car thieves.

By Jacqueline Mitchell

2007 Dodge Charger

Big trucks and SUVs are among the most appealing to car thieves. In the past few years, big, bold SUVs have become almost synonymous with the success of entertainment and sports stars. You make it big, you buy an Escalade. Or a Hummer.

Hopefully, there's money left over to hire a full-time driver who can watch over the car, because these two vehicles are among the most likely to be stolen.

The 2007 Cadillac Escalade ESV, a full-size luxury SUV, has the highest theft-claim frequency of any vehicle by a long shot. It's 15 times more likely to end up in the hands of thieves than the least-stolen car, the luxurious Mercedes E Class sedan, according to the theft-claim frequency report for 2005-07 model year cars, SUVs and light trucks, produced by the Highway Loss Data Institute (an affiliate of the Insurance Institute for Highway Safety). The E Class, Buick Rainer and Subaru Forester have the lowest theft-claim frequency reports.

"The Escalade has been the star of the show with car thieves for the better part of the decade," says Russ Rader, an IIHS spokesperson. "It has pop-culture appeal, and thieves are attracted to it."

While the Escalade is the most coveted among thieves, the Hummer H2 and the Hummer H2 SUT (a sport utility truck with a small pickup bed in the rear compartment), are also highly desirable--and among the top 10 vehicles with the highest theft claim frequencies. Given a choice between a Hummer and a small car like the Ford Focus or a wagon like the Volvo V70, a thief is eight times more likely to go for the SUV.

To generate lists of the most- and least-stolen cars, the IIHS annually reviews insurance-claim reports to determine theft-frequency rates based on the number of claims filed for every 1,000 vehicles insured each year. The 2008 report, released in October, only includes 2005, 2006 and 2007 model-year cars, light trucks and SUVs, with the exception of the Cadillac Escalades (only the 2007 model is included because it was redesigned for that model year) and the Dodge Charger (only the 2006 and 2007 models are included since it was not available in the 2005 model year). Based on the claims filed, the IIHS also calculates the average loss payment--the amount paid to the consumer by the insurance company--made for each claim filed. Although there are plenty of sedans and smaller models that are attractive to thieves, most of the vehicles comprising the list of the top 10 most-stolen cars are big trucks and SUVs.

There are many reasons why thieves choose popular, large vehicles over everyday family cars, but one is accessibility, says Rader. "If you've got a typical family sedan ... it is most likely spending the night in a suburban garage."

Desirability, however, is a big factor. The Escalade (11.3 claims per 1,000) and its slightly larger sibling, the Escalade ESV, are likely popular among thieves, says Rader, for the cars' expensive parts and accessories. Escalade owners are known to add premium audio equipment, flashy rims, extra chrome and interior accessories as well. That might explain why the average claim loss paid for a stolen Escalade is $14,657 and $13,060 for the ESV. The average loss payment, across all vehicles, is only $9,396.

Thieves are also attracted to a vehicle's cargo. The Ford F-250 and F-350 SuperCrew pickups have open beds that may include expensive equipment or tools that are just as appealing to thieves as the truck itself. The average loss payment claim for these vehicles are among the highest ($19,250 and $20,138, respectively), which may also include claims for whatever equipment or cargo these trucks may have been holding at the time they were stolen.

Cadillac recognizes that the appeal to thieves "is an unfortunate side effect of the desirability" of the Escalade, but says it is doing its part to make the vehicle harder to steal, according to a Cadillac spokesperson. For the 2009 model year, Cadillac added a theft-deterrent feature through General Motors' General Motors OnStar communication system. When an Escalade or Hummer is reported stolen, OnStar will remotely shut off the vehicle's power, making it virtually impossible for anyone to drive it.

2007 Mercedes Benz E-Class

But reporting a vehicle stolen needs to happen quickly, since a thief wants to offload it quickly--either whole or as parts. The Insurance Information Institute, a nonprofit organization, estimates a car is stolen every 24 minutes.

The best deterrent of all, however, is buying the kind of car that thieves tend not to steal, especially something like the Volvo V70 (the claim frequency is only 0.8 out of 1,000 per insured vehicle year). Nevertheless, if the V70 or any other car suddenly were to become attractive to thieves, auto experts say there is relatively little that a car owner can do to stop them. If professional thieves want a certain kind of car badly enough, they'll go to just about any lengths to get it.

"If a thief wants your car, they will load it on a flatbed," says Rader. They will either strip it for parts or head for coastal borders "where it will end up on a boat and be exported overseas."

Ford says it might sell Volvo

From Automotive News:
By Amy Wilson

DETROIT -- Ford Motor Co. said today it will consider the sale of Volvo Car Corp. as it explores "strategic options" for the Swedish brand. Ford said it would review its options for Volvo because of the significant decline in the global auto market and severe worldwide economic instability. The company expects the review to take several months to complete.A possible sale of Volvo would help Ford strengthen its balance sheet, officials said. It is part of Ford's efforts to make sure it has enough resources to introduce an array of new products intended to turn around the automaker's financial fortunes."Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo," said Ford CEO Alan Mulally.