From NPR:
By Joshua Brockman
Best New Car Overall Value
* Toyota Prius Touring
* Mini Cooper
* Volkswagen Rabbit
* Honda Civic EX
* Honda Fit
Top Used Cars
* Small cars: Honda Civic
* Family cars: Honda Accord
* Upscale cars: Lexus ES
* Minivans: Toyota Sienna
* Small SUVs: Toyota RAV4
Source: Consumer Reports' April issue of Best & Worst 2009 cars
NPR.org, February 26, 2009 · The domestic car industry could use its own set of air bags — not to mention some electronic stability control.
General Motors Corp. said on Thursday that it lost $9.6 billion and its car sales dropped by 26 percent for the last quarter of 2008.
Those kinds of numbers make one wonder whether anyone wants to buy a new car. There may be few buyers these days, but Consumer Reports' latest car issue is full of advice for the budget conscious. That includes a new section on the best new-car values and the magazine's largest section ever devoted to used cars.
It's no surprise that the magazine says in its April issue of best and worst 2009 cars that Japanese automakers still remain on top when it comes to manufacturing the best all-around vehicles for the U.S. market.
Honda, Subaru and Toyota received the top scores in the magazine's automaker report card for comfort, fuel economy, performance and reliability. Meanwhile, Ford, GM and Chrysler remain at the bottom of the class.
Ford has been making improvements in its reliability over the past few years (the magazine says some models "now rival the best from Japan"). But Ford's cars lack customer appeal, with styling that is "so-so" and interiors that are "bland," says David Champion, senior director for Consumer Reports' Auto Test Center. "They just need to get some more passionate products that will excite the consumer."
GM has the opposite problem. The company is getting some things right when it comes to overall build quality and fit and finish, but reliability has been "very inconsistent," he says.
Each company has already made some strides with cars like the Ford Flex and the Chevy Malibu, says Rik Paul, automotive editor for the magazine. "If you could merge the two, you'd have one quality company."
Meanwhile, Consumer Reports dropped Chrysler's reliability rating to "below average" this year, and no vehicles from Chrysler, Dodge or Jeep made it onto the magazine's recommended list.
Bang For Your Buck
The magazine has added a best values category to its review of new cars. And the winner isn't necessarily the cheapest car — it's a Toyota Prius Touring, priced at just under $25,000. The determination is based on road test scores, five-year owner cost estimates and predicted reliability ratings. The other top four in this category are the Mini Cooper, Volkswagen Rabbit, Honda Civic EX and Honda Fit.
"These are the cars that give you the most for your money," Paul says. What's at the bottom? GM's Hummer H2, which the magazine says is a "terrible deal."
Used Car Sales
Used cars have always outsold new cars, and with people looking for ways to save money, it's still a sound strategy. The magazine, which devoted 19 of its 100 pages to this category, also used data going back to 1999 to compile its first-ever breakdown of the best used cars in nine categories. These include the best of small cars (Honda Civic), family cars (Honda Accord) and minivans (Toyota Sienna).
"A two-or three-year-old used car is probably one of the best values out there," Champion says. And Paul says visitors to the Consumer Reports Web site have been gravitating toward the used car section.
Just be sure to kick the tires and honk the horn when you get offline.
Thursday, February 26, 2009
GM posts wider loss, burns through $5.2 billion in cash
From Automotive News:
By Jesse Snyder
General Motors, battered by a global economic collapse and buoyed by U.S. rescue loans, posted its sixth straight quarterly loss and burned through $5.2 billion in cash as revenue shrank 34.2 percent.
The net loss of $9.6 billion in the fourth quarter compares with a loss of $1.5 billion a year earlier. The operating loss was $5.9 billion. Revenue fell to $30.8 billion from $46.8 billion.
The loss sealed CEO Rick Wagoner's fourth straight year without a profit and reflect the distress that GM showed last week when it asked the U.S. Treasury for as much as $16.6 billion in additional U.S. aid. GM, which has received $13.4 billion so far, said the request reflected a market that was deteriorating more rapidly than anticipated.
"2008 was an extremely difficult year for the U.S. and global auto markets," Wagoner said in a statement. "We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."
GM ended the quarter with $14 billion in cash. In GM's last quarterly report in early November, GM said it was close to exhausting its cash supply. The automaker then petitioned Congress for help, was rejected by the Senate and bailed out by lame-duck President George W. Bush.
This year, GM has officially yielded the global sales title to Toyota Motor Corp., which itself is about to post its first annual operating loss in 70 years. GM recorded a 49 percent sales decline in January U.S. sales, as demand sank to its lowest mark since 1981.
GM's fate now rests with a task force appointed by President Barack Obama, who told Congress this week that the Detroit 3's ills were largely self-inflicted as he pledged to help create an industry that "can compete and win."
Wagoner was scheduled to meet later today with the task force, headed by U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.
GM, like smaller rival Chrysler LLC, faces pressure to wrap up concession talks with the UAW on how to cut funding promised to a health-care trust fund. Chrysler has received $4 billion in U.S. loans and seeks $5 billion more.
By Jesse Snyder
General Motors, battered by a global economic collapse and buoyed by U.S. rescue loans, posted its sixth straight quarterly loss and burned through $5.2 billion in cash as revenue shrank 34.2 percent.
The net loss of $9.6 billion in the fourth quarter compares with a loss of $1.5 billion a year earlier. The operating loss was $5.9 billion. Revenue fell to $30.8 billion from $46.8 billion.
The loss sealed CEO Rick Wagoner's fourth straight year without a profit and reflect the distress that GM showed last week when it asked the U.S. Treasury for as much as $16.6 billion in additional U.S. aid. GM, which has received $13.4 billion so far, said the request reflected a market that was deteriorating more rapidly than anticipated.
"2008 was an extremely difficult year for the U.S. and global auto markets," Wagoner said in a statement. "We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."
GM ended the quarter with $14 billion in cash. In GM's last quarterly report in early November, GM said it was close to exhausting its cash supply. The automaker then petitioned Congress for help, was rejected by the Senate and bailed out by lame-duck President George W. Bush.
This year, GM has officially yielded the global sales title to Toyota Motor Corp., which itself is about to post its first annual operating loss in 70 years. GM recorded a 49 percent sales decline in January U.S. sales, as demand sank to its lowest mark since 1981.
GM's fate now rests with a task force appointed by President Barack Obama, who told Congress this week that the Detroit 3's ills were largely self-inflicted as he pledged to help create an industry that "can compete and win."
Wagoner was scheduled to meet later today with the task force, headed by U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.
GM, like smaller rival Chrysler LLC, faces pressure to wrap up concession talks with the UAW on how to cut funding promised to a health-care trust fund. Chrysler has received $4 billion in U.S. loans and seeks $5 billion more.
Friday, February 20, 2009
Saab files for reorganization, seeks $1billion to survive
From Automotive News:
Saab is seeking $1 billion (793 million euros) to be self-financing, the company said today after it filed for reorganization under a self-managed Swedish court process.
The General Motors-owned Swedish brand said it will work "to create an independent business entity" and will concentrate production, design and engineering in Sweden.
Saab said it would continue to operate as normal during the reorganization process, with GM and the Swedish government providing some support.
Saab Managing Director Jan Ake Jonsson said: "We explored and will continue to explore all available options for funding and/or selling Saab. It was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment."
Saab's application for reorganization was filed with the Swedish district court in Vanersborg. Under the procedures, the court appoints an administrator to review Saab and its business plans.
If the court approves the reorganization, the process will run for three months. A proposal for Saab's future will be presented to creditors within three weeks, Saab said in a statement.
Saab estimates that it made a loss of around 3 billion crowns ($340 million) last year and would run a similar loss this year, the carmaker said in documents submitted to the Swedish court today.
Saab is seeking $1 billion (793 million euros) to be self-financing, the company said today after it filed for reorganization under a self-managed Swedish court process.
The General Motors-owned Swedish brand said it will work "to create an independent business entity" and will concentrate production, design and engineering in Sweden.
Saab said it would continue to operate as normal during the reorganization process, with GM and the Swedish government providing some support.
Saab Managing Director Jan Ake Jonsson said: "We explored and will continue to explore all available options for funding and/or selling Saab. It was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment."
Saab's application for reorganization was filed with the Swedish district court in Vanersborg. Under the procedures, the court appoints an administrator to review Saab and its business plans.
If the court approves the reorganization, the process will run for three months. A proposal for Saab's future will be presented to creditors within three weeks, Saab said in a statement.
Saab estimates that it made a loss of around 3 billion crowns ($340 million) last year and would run a similar loss this year, the carmaker said in documents submitted to the Swedish court today.
Thursday, February 19, 2009
Saturn alerts customers it is considering a spinoff
From Automotive News:
THE AUTO INDUSTRY BAILOUT
DETROIT -- Saturn has begun alerting customers that it may be spun off by General Motors as an independent marketing and distribution company.
In a letter sent to about 1.5 million Saturn owners last night, Saturn said it would have to line up products to sell -- either from other manufacturers or from GM in the role of a vendor -- after GM's current commitment to build Saturn products ends after the 2012 model year.
"The Saturn Distribution Corporation already exists as an indirect subsidiary of GM," wrote Jill Lajdziak, general manager of Saturn, in the letter. "It's the entity with which our retailers have their franchise agreement.
"An independent Saturn would still have its great retailers, and it would continue to source current products from GM through 2011. If successful, SDC at that point would source products from other manufacturers."
A Saturn spokesman confirmed the letter and its contents. The purpose of the letter is to reassure current and potential Saturn owners that Saturn is a viable brand and that GM will back its warranties and product quality, says spokesman Steve Janisse.
The goal of a spinoff would be to find future vehicles "that match the Saturn Brand: fuel-efficient, safe, reliable and affordable," Lajdziak said. "From a retailing perspective, we would build on our core strength of unmatched customer service."
THE AUTO INDUSTRY BAILOUT
DETROIT -- Saturn has begun alerting customers that it may be spun off by General Motors as an independent marketing and distribution company.
In a letter sent to about 1.5 million Saturn owners last night, Saturn said it would have to line up products to sell -- either from other manufacturers or from GM in the role of a vendor -- after GM's current commitment to build Saturn products ends after the 2012 model year.
"The Saturn Distribution Corporation already exists as an indirect subsidiary of GM," wrote Jill Lajdziak, general manager of Saturn, in the letter. "It's the entity with which our retailers have their franchise agreement.
"An independent Saturn would still have its great retailers, and it would continue to source current products from GM through 2011. If successful, SDC at that point would source products from other manufacturers."
A Saturn spokesman confirmed the letter and its contents. The purpose of the letter is to reassure current and potential Saturn owners that Saturn is a viable brand and that GM will back its warranties and product quality, says spokesman Steve Janisse.
The goal of a spinoff would be to find future vehicles "that match the Saturn Brand: fuel-efficient, safe, reliable and affordable," Lajdziak said. "From a retailing perspective, we would build on our core strength of unmatched customer service."
Brands: What Stays, What Goes
From CNN Money
As Chrysler and GM work through their viability plans, they're looking to unload some of their models.
By Peter Valdes-Dapena, CNNMoney.com senior writer
PT Cruiser – Gone
In the "viability plan" that Chrysler submitted to the Treasury department the carmaker laid out some more changes to its product line-up.
Some of those changes had already been announced shortly after Chrysler's new owners, Cerberus Capital Management, took over in 2007. The new management team quickly announced that the Chrysler Pacifica crossover, Dodge Magnum wagon and PT Cruiser convertible would be dropped.
As part of its latest announcement, Chrysler co-president Jim Press told reporters that the hard-top PT Cruiser, shown here, and two of Chrysler's SUVs, are being dropped from the line-up as well.
Chrysler also said that new versions of two of Chrysler's popular sedans would be coming soon, as well as a new Jeep. Chrysler also has vague plans to bring an electric car to market next year.
Dodge Durango - Gone
Chrysler shut down the factory that made the Durango and the closely related Chrysler Aspen late last year. High gas prices combined with the economic downturn forced the plant's early closure.
The plant shut down only a couple of months after production had started on hybrid versions of the two large three-row SUVs.
But the Durango may rise from the dead. Chrysler hopes to bring it back around in 2011. Next time, it may be a car-based crossover, according to several published reports. An image in Chrysler's viability report shows a much sleeker, more aerodynamic vehicle.
Hummer – Gone
General Motors will make a financial decision about Hummer soon. Either way, it seems it won't be a GM brand anymore. It will be sold, or it will be phased out.
Hummer had the worst sales fall-off of any brand in America last year, dropping by half to 27,485 vehicles.
High gas prices pushed customers away from truck-based SUVs, which are all Hummer sells. And as a love-it-or-loath-it niche product, the brand has always been highly dependent on new model introductions that sell hot for a while before they fizzle.
When sales of the original H1 started to fade, the smaller H2 came in to pick up the slack. Then, as the H2's welcome wore thin, in rode the smaller-yet H3. There will be nothing more beyond that.
No More Saturn
The Saturn brand has been amazingly resistant to success. After years of hard work, GM has finally admitted the car line has been "disappointing" and it is in discussion with its dealers about what's next.
For now, GM isn't planning to do anything with Saturn beyond the life-cycles of its current models. If no one steps forward wanting to take Saturn over when the models are done in 2011, the brand is done too.
Over the last few years, Saturn has had a complete makeover of its once drab line-up. The new cars are flashy-looking and mostly well-received by critics.
The Saturn Aura was even voted car-of-the-year by auto critics at the 2007 Detroit Auto Show. When its close relative, the Chevrolet Malibu, received the same honor in 2008, its sales took off. But the Aura's sales never took off and fell even lower last year.
Part of the problem has to do with Saturn's "No haggle" pricing policy. In exchange for agreeing not to finagle on deals, Saturn dealers got big exclusive territories with many miles between them. But that means it's much harder to find a Saturn dealer than one who sells Chevrolets or Pontiacs.
Jeep Grand Cherokee Gets a Redesign
If all goes well with Chrysler's latest funding request, an all-new version of the Jeep Grand Cherokee will hit the market in the next year as a 2011 model-year vehicle.
Chrysler promises fuel economy of between 21 and 25 miles per gallon on the highway compared with 20 for the current version.
New from Chrysler: The 200C Concept
At this year's Detroit Auto Show, Chrysler showed off a concept car called the Chrysler 200C. It was slightly larger than the current mid-size Sebring sedan but smaller than the full-size 300.
Chrysler's lead designer, Ralph Gilles said that a car looking very much like the 200C is intended for near-future production. The look is much sleeker and cleaner than current Chrysler designs. The car displayed at the show was an electric-powered vehicle to boot, Chrysler said.
Chrysler has said its plan is to make vehicles like the 200C available in both gasoline- and electric-powered versions. A plug-in of some type is planed for next year, but Chrysler still isn't saying what it will be, only that more are supposed to follow.
Chevy Volt: Look for More
It's well known, by now, that GM intends to produce an extended range electric vehicle called the Chevrolet Volt beginning late next year. In its restructuring plan, GM revealed that two more vehicles using the same technology are planned for 2012.
GM isn't saying, yet, what those vehicles will be. One possibility is represented by the Cadillac Converj, a concept vehicle unveiled at this year's Detroit Auto Show.The Converj is, essentially, a luxury version of the Volt.
Chrysler, Meet Fiat
Chrysler has entered into a tentative deal with Fiat that would allow the Italian automaker to take a 35% equity stake in the American automaker. In exchange, Chrysler would get access to Fiat engineering, and possibly some whole vehicles. Fiat would also be able to sell some of its products in the Unite States and use some of Chrysler's factories here, as well.
In all, Chrysler will get seven new small vehicles out of the deal, the carmaker said in its restructuring plan. It will also get six new engines and transmissions.
Chrysler says it still has an agreement with Nissan under which Chrysler will produce a version of the large Dodge Ram truck for the Japanese automaker, and Nissan will produce a small car for Chrysler. But that agreement is reportedly on hold while the two companies work out financial details.
Saab – Gone
One GM brand has had even lower market share than Hummer, and that's Saab. And now it finds itself in the same position - under "strategic review." If no buyer is found, Sweden-based Saab will likely fade away.
Even including Europe, Saab sales are small for a parent company the size of GM. Its best year worldwide was 2006 when about 130,000 sold in the U.S. and Europe, a Saab spokesman said. By contrast, GM sold more than 300,000 Buicks in the U.S. alone that year.
GM is asking the Swedish government for financial help as it tries to find a buyer for Saab.
As Chrysler and GM work through their viability plans, they're looking to unload some of their models.
By Peter Valdes-Dapena, CNNMoney.com senior writer
PT Cruiser – Gone
In the "viability plan" that Chrysler submitted to the Treasury department the carmaker laid out some more changes to its product line-up.
Some of those changes had already been announced shortly after Chrysler's new owners, Cerberus Capital Management, took over in 2007. The new management team quickly announced that the Chrysler Pacifica crossover, Dodge Magnum wagon and PT Cruiser convertible would be dropped.
As part of its latest announcement, Chrysler co-president Jim Press told reporters that the hard-top PT Cruiser, shown here, and two of Chrysler's SUVs, are being dropped from the line-up as well.
Chrysler also said that new versions of two of Chrysler's popular sedans would be coming soon, as well as a new Jeep. Chrysler also has vague plans to bring an electric car to market next year.
Dodge Durango - Gone
Chrysler shut down the factory that made the Durango and the closely related Chrysler Aspen late last year. High gas prices combined with the economic downturn forced the plant's early closure.
The plant shut down only a couple of months after production had started on hybrid versions of the two large three-row SUVs.
But the Durango may rise from the dead. Chrysler hopes to bring it back around in 2011. Next time, it may be a car-based crossover, according to several published reports. An image in Chrysler's viability report shows a much sleeker, more aerodynamic vehicle.
Hummer – Gone
General Motors will make a financial decision about Hummer soon. Either way, it seems it won't be a GM brand anymore. It will be sold, or it will be phased out.
Hummer had the worst sales fall-off of any brand in America last year, dropping by half to 27,485 vehicles.
High gas prices pushed customers away from truck-based SUVs, which are all Hummer sells. And as a love-it-or-loath-it niche product, the brand has always been highly dependent on new model introductions that sell hot for a while before they fizzle.
When sales of the original H1 started to fade, the smaller H2 came in to pick up the slack. Then, as the H2's welcome wore thin, in rode the smaller-yet H3. There will be nothing more beyond that.
No More Saturn
The Saturn brand has been amazingly resistant to success. After years of hard work, GM has finally admitted the car line has been "disappointing" and it is in discussion with its dealers about what's next.
For now, GM isn't planning to do anything with Saturn beyond the life-cycles of its current models. If no one steps forward wanting to take Saturn over when the models are done in 2011, the brand is done too.
Over the last few years, Saturn has had a complete makeover of its once drab line-up. The new cars are flashy-looking and mostly well-received by critics.
The Saturn Aura was even voted car-of-the-year by auto critics at the 2007 Detroit Auto Show. When its close relative, the Chevrolet Malibu, received the same honor in 2008, its sales took off. But the Aura's sales never took off and fell even lower last year.
Part of the problem has to do with Saturn's "No haggle" pricing policy. In exchange for agreeing not to finagle on deals, Saturn dealers got big exclusive territories with many miles between them. But that means it's much harder to find a Saturn dealer than one who sells Chevrolets or Pontiacs.
Jeep Grand Cherokee Gets a Redesign
If all goes well with Chrysler's latest funding request, an all-new version of the Jeep Grand Cherokee will hit the market in the next year as a 2011 model-year vehicle.
Chrysler promises fuel economy of between 21 and 25 miles per gallon on the highway compared with 20 for the current version.
New from Chrysler: The 200C Concept
At this year's Detroit Auto Show, Chrysler showed off a concept car called the Chrysler 200C. It was slightly larger than the current mid-size Sebring sedan but smaller than the full-size 300.
Chrysler's lead designer, Ralph Gilles said that a car looking very much like the 200C is intended for near-future production. The look is much sleeker and cleaner than current Chrysler designs. The car displayed at the show was an electric-powered vehicle to boot, Chrysler said.
Chrysler has said its plan is to make vehicles like the 200C available in both gasoline- and electric-powered versions. A plug-in of some type is planed for next year, but Chrysler still isn't saying what it will be, only that more are supposed to follow.
Chevy Volt: Look for More
It's well known, by now, that GM intends to produce an extended range electric vehicle called the Chevrolet Volt beginning late next year. In its restructuring plan, GM revealed that two more vehicles using the same technology are planned for 2012.
GM isn't saying, yet, what those vehicles will be. One possibility is represented by the Cadillac Converj, a concept vehicle unveiled at this year's Detroit Auto Show.The Converj is, essentially, a luxury version of the Volt.
Chrysler, Meet Fiat
Chrysler has entered into a tentative deal with Fiat that would allow the Italian automaker to take a 35% equity stake in the American automaker. In exchange, Chrysler would get access to Fiat engineering, and possibly some whole vehicles. Fiat would also be able to sell some of its products in the Unite States and use some of Chrysler's factories here, as well.
In all, Chrysler will get seven new small vehicles out of the deal, the carmaker said in its restructuring plan. It will also get six new engines and transmissions.
Chrysler says it still has an agreement with Nissan under which Chrysler will produce a version of the large Dodge Ram truck for the Japanese automaker, and Nissan will produce a small car for Chrysler. But that agreement is reportedly on hold while the two companies work out financial details.
Saab – Gone
One GM brand has had even lower market share than Hummer, and that's Saab. And now it finds itself in the same position - under "strategic review." If no buyer is found, Sweden-based Saab will likely fade away.
Even including Europe, Saab sales are small for a parent company the size of GM. Its best year worldwide was 2006 when about 130,000 sold in the U.S. and Europe, a Saab spokesman said. By contrast, GM sold more than 300,000 Buicks in the U.S. alone that year.
GM is asking the Swedish government for financial help as it tries to find a buyer for Saab.
Wednesday, February 18, 2009
They're not just cars
From The New York Times
February 17, 2009, 6:40 pm
They’re Not Just Cars
By The Editors
As part of its restructuring plan to make a case for more loans from the federal government, General Motors will cut its work force further, shutter more plants in North America and reduce its lineup of eight brands to four by phasing out Saturn entirely, ending Pontiac as a full division, and selling off Saab and Hummer.
While many industry experts have long felt that the Detroit automakers were saddled with too many brands and too many models, lots of consumers have felt differently. Pontiac and Saturn have their loyalists. Why do brands still matter to consumers?
Diana LaSalle, marketing consultant
Colin Comer, muscle car expert
Peter M. De Lorenzo, publisher of AutoExtremist.com
Bob Merlis, car collector
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All Driving Is Personal
Diana LaSalle is the co-author of “Priceless: Turning Ordinary Products into Extraordinary Experiences” and a marketing consultant.
The news that G.M. is axing or contracting four brands may make sense financially, but for a lot of consumers, it will just seem wrong. For many, a car isn’t just transportation, it’s part of one’s self-image. Where car companies have blundered is not so much in having too many brands, but in losing the essence of the brands.
Coca-Cola almost made a similar misstep in the early 80’s when it announced the withdrawal of its original Coke to make way for New Coke. To millions of people, memories, relationships, very identities were wrapped up in that little red can.
When a brand is shuttered, consumers are apt to feel that their loyalty was misplaced — or worse, that the company doesn’t know what it’s doing.
Pontiac loyalists are likely to suffer the same sense of loss. This brand represented the “cool generation” in its heyday. The 82-year-old brand was parent to performance cars like the Firebird Trans Am, Grand Prix and GTO, considered by many to be the greatest muscle car of all times. The brand is part of Americana and is connected to the youth of a large Boomer market who loved the cool factor along with hot performance. The question for G.M. is why did it allow the brand to lose its “cool” and is it possible to get it back?
Saturn had a different appeal. It was the brand for the “smart generation.” Billed as a different kind of car company, the values it promoted were intelligent choices and straight talk with consumers.
It did a good job of promoting these values, but when you say you’re going to be different, you have to deliver the experience.
The intention was there, but the innovation wasn’t. People wanted a different kind of experience more than they wanted a different kind of car — one that put their needs ahead of the company’s. Saturn’s demise will make it more difficult to convince consumers that different is possible.
Hummer and Saab owners will feel a similar let-down. G.M. is likely find out that these moves will have more than financial ramifications. When a brand is shuttered, consumers are apt to feel that their loyalty was misplaced — or worse, that the company doesn’t know what it’s doing. If G.M. wants to regain its footing, it will have to convince consumers that the company hasn’t deserted them along with the brand.
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I Want My GTO
Colin Comer is a noted muscle car authority and the author of “Million-Dollar Muscle Cars” and the forthcoming “Complete Book of Shelby.” A self-proclaimed Pontiac guy, he has “somewhere around 15” original Pontiac GTO’s in his extensive muscle car collection.
Our beloved American auto industry is in big trouble. Sure, they did it to themselves, but the fact remains that Detroit is a national treasure and on the brink of being gone forever. Our once-proud General Motors, the former “Standard of the World,” is perhaps now nothing more than the standard to which all terminally ill corporations will be judged. I can hear it already, “Yeah, we’re in trouble but we are no G.M.!”
I, for one, am in favor of anything that can be done to save Detroit. But it is with a heavy heart that I report the news that G.M. is essentially going to kill off my favorite division, Pontiac. Yes, it was sad to see the Oldsmobile carried off in a pine box, but Pontiac?
Of all the G.M. divisions, Pontiac has one of the most loyal followings. As a young boy, I lusted after those GTO’s. I wanted to be like Burt Reynolds in “Smokey and the Bandit” with that incredibly cool Trans Am.
So where did Pontiac go wrong? I don’t know, somewhere between the T1000 and the Aztek, I assume. The new-generation 2004-2006 GTO, which was little more than a gussied-up Holden Monaro, didn’t help either.
But recently Pontiac guys like me have had hope. The new G8, and the promised G8 GXP, got us excited. Pontiac seemed to be learning from its mistakes and was getting back to cars with real performance. Cars that would sell. It may be awfully late in coming, but Pontiac was making a come back.
There’s no doubt, G.M. has some fat to cut. Heck, lose Saab, Hummer, even the environmentally conscious Saturn division. I won’t shed a tear. But Pontiac, that’s another story. It could regain its loyal following. Hopefully G.M. will give the legendary brand a chance to prove it.
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Brand Loyalty Only Lasts So Long
Peter M. De Lorenzo is publisher of AutoExtremist, an auto industry blog, and the author of “The United States of Toyota.”
In past decades, brand loyalty was paramount and a very real and powerful aspect of the auto business. In Detroit’s heyday it was common to hear people say things like, “I’m a Ford man” or, “We’re a Chevy family” or, “I’ve always been a Chrysler girl.”
Those days went away long ago. When Detroit began its 20-year slide into oblivion (around the late ‘70s) the concept of traditional brand loyalty eroded along with Detroit’s dwindling market share.
Sometimes a brand can’t be revived even if it the product is good.
But does that mean that brands like Pontiac are totally dispensable? No. Which is why G.M. is very likely going to retain at least two, if not three Pontiac models going forward (and probably sell them through G.M.C. dealerships).
Pontiac was once a glorious American nameplate known for its “march to a different drummer” cars that oozed attitude and swagger, and there are still a lot of people who really have a strong connection with the brand. Are there enough customers out there to support a whole divisional array of models? No. But there are probably enough people who would keep the Pontiac brand in existence as a niche performance vehicle within the abbreviated G.M. product portfolio.
Saturn’s fate teaches a different lesson about branding. It was very successful when it was launched by G.M., and enjoyed tremendous brand loyalty. But G.M. failed to nurture Saturn with new models, right when its core group of initial buyers were needing larger and more versatile vehicles. The result was that many of those Saturn loyalists moved on to other brands. Now, even excellent Saturn vehicles (the Aura and the Outlook) can’t gain any traction in the market, proving that sometimes a brand can’t be revived even if it the product is good.
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Hail to the Chief
Bob Merlis is a contributor to Automobile Magazine and a car collector whose fleet currently includes three Studebakers, an Alfa Romeo, a 1967 Fiat 500 Giardinera (station wagon) and a 1963 Lincoln Continental convertible.
As a guy who earns some of his living writing about cars, friends often ask my advice about potential purchases. A while back, a woman I know told me what she was looking for in terms of utility and size and described the Toyota Matrix/Pontiac Vibe twins. Both are made in the same plant using the same mechanical components, the lone example of a cooperative venture between General Motors and Toyota that springs to mind.
I told her that the Pontiac version retails for quite a good deal less than its Toyota equivalent and was really worth looking into. Her response?
“I’m not going to drive a Pontiac!” Clearly, the image of that brand, which soared to great heights during my childhood and adolescence, was damaged.
Fireball Roberts famously piloted a “Poncho” during the early Nascar days and “Little GTO,” this “modified Pon-Pon” equipped with “three deuces and a four-speed and a 389” was Ronnie and the Daytonas first and only hit record. “We build excitement” was Pontiac’s slogan but, ultimately, there just wasn’t any. It devolved into an anonymous brand, interchangeable with Buicks and Oldsmobiles built on the same platforms, using the same running gear. Consumers ceased to care because G.M. management seemed to be asleep at the switch in terms of responsible stewardship of the marque. Still, it’s sad to contemplate what is essentially the departure of Pontiac, more because of what it was than what it now is.
There was a wing nut in my old neighborhood who drove around in a ‘55 Pontiac Star Chief that sported a light-up hood ornament (Chief Pontiac rendered in streamlined amber plastic). I’ll always think of the chief pointing the way; too bad G.M. didn’t follow their forward-thinking symbol.
February 17, 2009, 6:40 pm
They’re Not Just Cars
By The Editors
As part of its restructuring plan to make a case for more loans from the federal government, General Motors will cut its work force further, shutter more plants in North America and reduce its lineup of eight brands to four by phasing out Saturn entirely, ending Pontiac as a full division, and selling off Saab and Hummer.
While many industry experts have long felt that the Detroit automakers were saddled with too many brands and too many models, lots of consumers have felt differently. Pontiac and Saturn have their loyalists. Why do brands still matter to consumers?
Diana LaSalle, marketing consultant
Colin Comer, muscle car expert
Peter M. De Lorenzo, publisher of AutoExtremist.com
Bob Merlis, car collector
--------------------------------------------------------------------------------
All Driving Is Personal
Diana LaSalle is the co-author of “Priceless: Turning Ordinary Products into Extraordinary Experiences” and a marketing consultant.
The news that G.M. is axing or contracting four brands may make sense financially, but for a lot of consumers, it will just seem wrong. For many, a car isn’t just transportation, it’s part of one’s self-image. Where car companies have blundered is not so much in having too many brands, but in losing the essence of the brands.
Coca-Cola almost made a similar misstep in the early 80’s when it announced the withdrawal of its original Coke to make way for New Coke. To millions of people, memories, relationships, very identities were wrapped up in that little red can.
When a brand is shuttered, consumers are apt to feel that their loyalty was misplaced — or worse, that the company doesn’t know what it’s doing.
Pontiac loyalists are likely to suffer the same sense of loss. This brand represented the “cool generation” in its heyday. The 82-year-old brand was parent to performance cars like the Firebird Trans Am, Grand Prix and GTO, considered by many to be the greatest muscle car of all times. The brand is part of Americana and is connected to the youth of a large Boomer market who loved the cool factor along with hot performance. The question for G.M. is why did it allow the brand to lose its “cool” and is it possible to get it back?
Saturn had a different appeal. It was the brand for the “smart generation.” Billed as a different kind of car company, the values it promoted were intelligent choices and straight talk with consumers.
It did a good job of promoting these values, but when you say you’re going to be different, you have to deliver the experience.
The intention was there, but the innovation wasn’t. People wanted a different kind of experience more than they wanted a different kind of car — one that put their needs ahead of the company’s. Saturn’s demise will make it more difficult to convince consumers that different is possible.
Hummer and Saab owners will feel a similar let-down. G.M. is likely find out that these moves will have more than financial ramifications. When a brand is shuttered, consumers are apt to feel that their loyalty was misplaced — or worse, that the company doesn’t know what it’s doing. If G.M. wants to regain its footing, it will have to convince consumers that the company hasn’t deserted them along with the brand.
--------------------------------------------------------------------------------
I Want My GTO
Colin Comer is a noted muscle car authority and the author of “Million-Dollar Muscle Cars” and the forthcoming “Complete Book of Shelby.” A self-proclaimed Pontiac guy, he has “somewhere around 15” original Pontiac GTO’s in his extensive muscle car collection.
Our beloved American auto industry is in big trouble. Sure, they did it to themselves, but the fact remains that Detroit is a national treasure and on the brink of being gone forever. Our once-proud General Motors, the former “Standard of the World,” is perhaps now nothing more than the standard to which all terminally ill corporations will be judged. I can hear it already, “Yeah, we’re in trouble but we are no G.M.!”
I, for one, am in favor of anything that can be done to save Detroit. But it is with a heavy heart that I report the news that G.M. is essentially going to kill off my favorite division, Pontiac. Yes, it was sad to see the Oldsmobile carried off in a pine box, but Pontiac?
Of all the G.M. divisions, Pontiac has one of the most loyal followings. As a young boy, I lusted after those GTO’s. I wanted to be like Burt Reynolds in “Smokey and the Bandit” with that incredibly cool Trans Am.
So where did Pontiac go wrong? I don’t know, somewhere between the T1000 and the Aztek, I assume. The new-generation 2004-2006 GTO, which was little more than a gussied-up Holden Monaro, didn’t help either.
But recently Pontiac guys like me have had hope. The new G8, and the promised G8 GXP, got us excited. Pontiac seemed to be learning from its mistakes and was getting back to cars with real performance. Cars that would sell. It may be awfully late in coming, but Pontiac was making a come back.
There’s no doubt, G.M. has some fat to cut. Heck, lose Saab, Hummer, even the environmentally conscious Saturn division. I won’t shed a tear. But Pontiac, that’s another story. It could regain its loyal following. Hopefully G.M. will give the legendary brand a chance to prove it.
--------------------------------------------------------------------------------
Brand Loyalty Only Lasts So Long
Peter M. De Lorenzo is publisher of AutoExtremist, an auto industry blog, and the author of “The United States of Toyota.”
In past decades, brand loyalty was paramount and a very real and powerful aspect of the auto business. In Detroit’s heyday it was common to hear people say things like, “I’m a Ford man” or, “We’re a Chevy family” or, “I’ve always been a Chrysler girl.”
Those days went away long ago. When Detroit began its 20-year slide into oblivion (around the late ‘70s) the concept of traditional brand loyalty eroded along with Detroit’s dwindling market share.
Sometimes a brand can’t be revived even if it the product is good.
But does that mean that brands like Pontiac are totally dispensable? No. Which is why G.M. is very likely going to retain at least two, if not three Pontiac models going forward (and probably sell them through G.M.C. dealerships).
Pontiac was once a glorious American nameplate known for its “march to a different drummer” cars that oozed attitude and swagger, and there are still a lot of people who really have a strong connection with the brand. Are there enough customers out there to support a whole divisional array of models? No. But there are probably enough people who would keep the Pontiac brand in existence as a niche performance vehicle within the abbreviated G.M. product portfolio.
Saturn’s fate teaches a different lesson about branding. It was very successful when it was launched by G.M., and enjoyed tremendous brand loyalty. But G.M. failed to nurture Saturn with new models, right when its core group of initial buyers were needing larger and more versatile vehicles. The result was that many of those Saturn loyalists moved on to other brands. Now, even excellent Saturn vehicles (the Aura and the Outlook) can’t gain any traction in the market, proving that sometimes a brand can’t be revived even if it the product is good.
--------------------------------------------------------------------------------
Hail to the Chief
Bob Merlis is a contributor to Automobile Magazine and a car collector whose fleet currently includes three Studebakers, an Alfa Romeo, a 1967 Fiat 500 Giardinera (station wagon) and a 1963 Lincoln Continental convertible.
As a guy who earns some of his living writing about cars, friends often ask my advice about potential purchases. A while back, a woman I know told me what she was looking for in terms of utility and size and described the Toyota Matrix/Pontiac Vibe twins. Both are made in the same plant using the same mechanical components, the lone example of a cooperative venture between General Motors and Toyota that springs to mind.
I told her that the Pontiac version retails for quite a good deal less than its Toyota equivalent and was really worth looking into. Her response?
“I’m not going to drive a Pontiac!” Clearly, the image of that brand, which soared to great heights during my childhood and adolescence, was damaged.
Fireball Roberts famously piloted a “Poncho” during the early Nascar days and “Little GTO,” this “modified Pon-Pon” equipped with “three deuces and a four-speed and a 389” was Ronnie and the Daytonas first and only hit record. “We build excitement” was Pontiac’s slogan but, ultimately, there just wasn’t any. It devolved into an anonymous brand, interchangeable with Buicks and Oldsmobiles built on the same platforms, using the same running gear. Consumers ceased to care because G.M. management seemed to be asleep at the switch in terms of responsible stewardship of the marque. Still, it’s sad to contemplate what is essentially the departure of Pontiac, more because of what it was than what it now is.
There was a wing nut in my old neighborhood who drove around in a ‘55 Pontiac Star Chief that sported a light-up hood ornament (Chief Pontiac rendered in streamlined amber plastic). I’ll always think of the chief pointing the way; too bad G.M. didn’t follow their forward-thinking symbol.
From The New York Times:
A Painful Departure for G.M. Brands
By MICHELINE MAYNARD
Published: February 17, 2009
DETROIT — The brand that was once hailed as an important part of the future of General Motors now will be part of its past.
G.M. said Tuesday that it would phase out its Saturn brand by 2012. It does not plan to develop any more new vehicles for Saturn, which began 19 years ago as an effort to attract owners of small Japanese cars.
G.M. also said it was considering its options for the Pontiac division. The Pontiac name, part of the car business since 1932, could remain on some models, but may no longer be a separate division. G.M. said Pontiac would be a “focused brand” with fewer models.
The disclosures by G.M., contained in a viability plan submitted to the government, means that G.M. plans to cut its brands in half, to four: Chevrolet, Cadillac, Buick and GMC.
It said last fall that it would try to find buyers for Hummer and Saab. On Tuesday, it said it would decide on Hummer’s fate by March 31.
But is four the right number?
After all, most of its big competitors, including Toyota, Honda and Chrysler, build their businesses around three brands or fewer in the United States. Ford is moving to shed its foreign brands and plans to focus primarily on three — Ford, Lincoln and Mercury.
“A volume brand and a premium brand can get the job done. Toyota has proven that,” said Karl Brauer, editor in chief of Edmunds.com, a Web site that offers car-buying advice. “Cadillac, Chevy, done.”
The more brands a carmaker has, the more it must spread money around to develop vehicles and market them.
As a result, “every brand suffers,” said A. Andrew Shapiro, a managing partner with the Casesa Shapiro Group. “No particular brand or brands can achieve the share of voice that they need.”
Its extensive brand lineup has long been G.M.’s primary weapon. Founded in 1908 by William C. Durant, who brought together a collection of car companies, G.M. made the concept of “a car for every purse and purpose” its strategy during the 1920s for retaining buyers from their first car to their last.
Brands were a crucial element in G.M.’s effort to thwart Ford, then the country’s biggest car company, whose founder joked that buyers could have any color they wanted, as long as it was black.
G.M.’s strategy paid off during its best years, when it controlled more than half the American car market. But it held only 22 percent of United States auto sales last year, with more than half of its share coming from a single division, Chevrolet.
G.M. found out last decade just how expensive it could be to unwind a brand. It spent more than $1 billion to buy out dealers at Oldsmobile, which built its last cars in 2004.
Rick Wagoner, G.M.’s chief executive, said the automaker had set aside money to buy out dealers, but declined to specify a figure. “We have reserves in our plan to facilitate that,” he said.
He cited the economic downturn as the reason G.M. was phasing out Saturn. “Frankly, the opportunity for any brand, and for our volume as a whole, just looks radically different,” he said. “It is unfortunate and it seems like a cruel twist of fate at a time when Saturn is loaded up with a fantastic product portfolio.”
In a letter sent Tuesday to Saturn dealers, G.M. said it would entertain a plan from Saturn dealers or other investors for a spinoff of the division to keep it operating. It said it would provide information to potential investors.
But it warned a spinoff would be “a difficult and complex task, and some of the issues that must be resolved include product sourcing, capitalization and financing issues,” G.M. said in the letter signed by Mark LeNeve, a G.M. vice president for North American sales, and Jill Lajdziak, the general manager of Saturn.
When Saturn was started in 1990, as a “different kind of car, a different kind of car company” aimed at owners of small Hondas and Toyotas, its small cars were immediate hits. But G.M. executives decided in the mid-1990s that they needed to support G.M.’s other brands over Saturn, which by then had cost $5 billion.
G.M. did not add any new vehicles to the Saturn lineup for five years, despite pleas from dealers for bigger vehicles. Earlier this decade, G.M. decided to start selling vehicles from its Opel division, with some design changes, as Saturns in the United States.
Saturn sold 188,004 vehicles in 2008, down 21.7 percent from the previous year. Its best-selling vehicle was the Saturn Vue, a small sport utility vehicle.
Strict franchise laws protect dealers across the country from seeing their operations shut down without advance notice.
G.M. dealers said they were led to believe that the company was committed to the division.
“G.M. is picking on Saturn,” said Sherrill Freeborough, who owns Saturn dealerships in Grand Ledge and Okemos, Mich. “I want G.M. to be successful but I don’t think that always happens the other way around.”
In 1992, when G.M. began discussing the end of Oldsmobile, the division sold 412,000 vehicles. Except for Chevrolet, none of G.M.’s current brands sold that many vehicles last year.
Mr. Shapiro, the analyst, said G.M. should have rethought its divisions in the 1980s, when a number of new brands appeared in the United States, including Acura, Lexus and Infiniti, the Japanese luxury brands, and the Korean makers Hyundai and Kia.
“There were always good short-term reasons for not doing something,” Mr. Shapiro said.
Ed Dena, a Pontiac dealer in Dinuba, Calif., said he would eventually have to focus on his other G.M. brands, including Chevrolet, Buick and GMC. “Of course we’re sad because Pontiac is an icon,” he said. “But right now, in this industry, nothing is a shock anymore.”
Mary M. Chapman contributed reporting.
A Painful Departure for G.M. Brands
By MICHELINE MAYNARD
Published: February 17, 2009
DETROIT — The brand that was once hailed as an important part of the future of General Motors now will be part of its past.
G.M. said Tuesday that it would phase out its Saturn brand by 2012. It does not plan to develop any more new vehicles for Saturn, which began 19 years ago as an effort to attract owners of small Japanese cars.
G.M. also said it was considering its options for the Pontiac division. The Pontiac name, part of the car business since 1932, could remain on some models, but may no longer be a separate division. G.M. said Pontiac would be a “focused brand” with fewer models.
The disclosures by G.M., contained in a viability plan submitted to the government, means that G.M. plans to cut its brands in half, to four: Chevrolet, Cadillac, Buick and GMC.
It said last fall that it would try to find buyers for Hummer and Saab. On Tuesday, it said it would decide on Hummer’s fate by March 31.
But is four the right number?
After all, most of its big competitors, including Toyota, Honda and Chrysler, build their businesses around three brands or fewer in the United States. Ford is moving to shed its foreign brands and plans to focus primarily on three — Ford, Lincoln and Mercury.
“A volume brand and a premium brand can get the job done. Toyota has proven that,” said Karl Brauer, editor in chief of Edmunds.com, a Web site that offers car-buying advice. “Cadillac, Chevy, done.”
The more brands a carmaker has, the more it must spread money around to develop vehicles and market them.
As a result, “every brand suffers,” said A. Andrew Shapiro, a managing partner with the Casesa Shapiro Group. “No particular brand or brands can achieve the share of voice that they need.”
Its extensive brand lineup has long been G.M.’s primary weapon. Founded in 1908 by William C. Durant, who brought together a collection of car companies, G.M. made the concept of “a car for every purse and purpose” its strategy during the 1920s for retaining buyers from their first car to their last.
Brands were a crucial element in G.M.’s effort to thwart Ford, then the country’s biggest car company, whose founder joked that buyers could have any color they wanted, as long as it was black.
G.M.’s strategy paid off during its best years, when it controlled more than half the American car market. But it held only 22 percent of United States auto sales last year, with more than half of its share coming from a single division, Chevrolet.
G.M. found out last decade just how expensive it could be to unwind a brand. It spent more than $1 billion to buy out dealers at Oldsmobile, which built its last cars in 2004.
Rick Wagoner, G.M.’s chief executive, said the automaker had set aside money to buy out dealers, but declined to specify a figure. “We have reserves in our plan to facilitate that,” he said.
He cited the economic downturn as the reason G.M. was phasing out Saturn. “Frankly, the opportunity for any brand, and for our volume as a whole, just looks radically different,” he said. “It is unfortunate and it seems like a cruel twist of fate at a time when Saturn is loaded up with a fantastic product portfolio.”
In a letter sent Tuesday to Saturn dealers, G.M. said it would entertain a plan from Saturn dealers or other investors for a spinoff of the division to keep it operating. It said it would provide information to potential investors.
But it warned a spinoff would be “a difficult and complex task, and some of the issues that must be resolved include product sourcing, capitalization and financing issues,” G.M. said in the letter signed by Mark LeNeve, a G.M. vice president for North American sales, and Jill Lajdziak, the general manager of Saturn.
When Saturn was started in 1990, as a “different kind of car, a different kind of car company” aimed at owners of small Hondas and Toyotas, its small cars were immediate hits. But G.M. executives decided in the mid-1990s that they needed to support G.M.’s other brands over Saturn, which by then had cost $5 billion.
G.M. did not add any new vehicles to the Saturn lineup for five years, despite pleas from dealers for bigger vehicles. Earlier this decade, G.M. decided to start selling vehicles from its Opel division, with some design changes, as Saturns in the United States.
Saturn sold 188,004 vehicles in 2008, down 21.7 percent from the previous year. Its best-selling vehicle was the Saturn Vue, a small sport utility vehicle.
Strict franchise laws protect dealers across the country from seeing their operations shut down without advance notice.
G.M. dealers said they were led to believe that the company was committed to the division.
“G.M. is picking on Saturn,” said Sherrill Freeborough, who owns Saturn dealerships in Grand Ledge and Okemos, Mich. “I want G.M. to be successful but I don’t think that always happens the other way around.”
In 1992, when G.M. began discussing the end of Oldsmobile, the division sold 412,000 vehicles. Except for Chevrolet, none of G.M.’s current brands sold that many vehicles last year.
Mr. Shapiro, the analyst, said G.M. should have rethought its divisions in the 1980s, when a number of new brands appeared in the United States, including Acura, Lexus and Infiniti, the Japanese luxury brands, and the Korean makers Hyundai and Kia.
“There were always good short-term reasons for not doing something,” Mr. Shapiro said.
Ed Dena, a Pontiac dealer in Dinuba, Calif., said he would eventually have to focus on his other G.M. brands, including Chevrolet, Buick and GMC. “Of course we’re sad because Pontiac is an icon,” he said. “But right now, in this industry, nothing is a shock anymore.”
Mary M. Chapman contributed reporting.
Tuesday, February 17, 2009
From Automotive News:
THE AUTO INDUSTRY BAILOUT
UAW reaches new agreements with Detroit 3
Debt-for-equity negotiations continue
By David Barkholz
DETROIT -- The UAW today reached tentative agreements with the Detroit 3 on concessions to help the automakers weather the recession.
But the thorny issue of swapping debt owed to retiree health-care funds for company stock remains unresolved.
General Motors and Chrysler LLC were seeking concessions as part of their viability plans for federal bailout money. Ford Motor Co. is not seeking bailout money but wanted parity with Chrysler and GM.
A source familiar with the talks said the concessions involve overtime, bonuses and limits on unemployment benefits.
But the UAW had not reached agreement on a proposed debt-for-equity swap with Chrysler and GM, a condition of federal aid to the automakers. The Bush administration, which loaned money to GM and Chrysler in December, wanted the UAW to take half of the remaining money owed to its Voluntary Employees' Beneficiary Associations in company stock.
THE AUTO INDUSTRY BAILOUT
UAW reaches new agreements with Detroit 3
Debt-for-equity negotiations continue
By David Barkholz
DETROIT -- The UAW today reached tentative agreements with the Detroit 3 on concessions to help the automakers weather the recession.
But the thorny issue of swapping debt owed to retiree health-care funds for company stock remains unresolved.
General Motors and Chrysler LLC were seeking concessions as part of their viability plans for federal bailout money. Ford Motor Co. is not seeking bailout money but wanted parity with Chrysler and GM.
A source familiar with the talks said the concessions involve overtime, bonuses and limits on unemployment benefits.
But the UAW had not reached agreement on a proposed debt-for-equity swap with Chrysler and GM, a condition of federal aid to the automakers. The Bush administration, which loaned money to GM and Chrysler in December, wanted the UAW to take half of the remaining money owed to its Voluntary Employees' Beneficiary Associations in company stock.
Saturday, February 14, 2009
From Reuters:
GM considering Chapter 11 filing, new company: report
CHICAGO (Reuters) – General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.
"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."
Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.
GM declined to comment, the story said.
General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.
Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.
GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said.
GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the UAW.
In addition, it is trying to sell its Hummer SUV and Swedish Saab brands and is reviewing the status of its Saturn brand.
GM considering Chapter 11 filing, new company: report
CHICAGO (Reuters) – General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.
"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."
Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.
GM declined to comment, the story said.
General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.
Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.
GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said.
GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the UAW.
In addition, it is trying to sell its Hummer SUV and Swedish Saab brands and is reviewing the status of its Saturn brand.
Friday, February 13, 2009
From Automotive News:
Toyota moves deeper into U.S. work cuts
Lindsay Chappell
NASHVILLE -- Still refraining from laying off any North American workers, Toyota Motor Co. said Thursday night that it is adopting wage freezes, reduced hours and a voluntary exit program for workers.
The new measures, which Toyota dubbed a "shared sacrifice" philosophy, come as Toyota faces its first financial losses since 1950 and the unfamiliar specter of idle auto factory lines.
Toyota has gone out of its way to keep its mostly non-union U.S. and Canadian production workers on the clock, even as it has shut down assembly lines.
But a statement released Thursday night by Toyota Motor Engineering & Manufacturing North America Inc., the company's U.S. manufacturing headquarters, said there is now a "strong possibility" that it will reduce work and pay at some plants.
Toyota is considering a schedule in which some workers would work 72 hours in a typical 80-hour, two-week period.
Toyota moves deeper into U.S. work cuts
Lindsay Chappell
NASHVILLE -- Still refraining from laying off any North American workers, Toyota Motor Co. said Thursday night that it is adopting wage freezes, reduced hours and a voluntary exit program for workers.
The new measures, which Toyota dubbed a "shared sacrifice" philosophy, come as Toyota faces its first financial losses since 1950 and the unfamiliar specter of idle auto factory lines.
Toyota has gone out of its way to keep its mostly non-union U.S. and Canadian production workers on the clock, even as it has shut down assembly lines.
But a statement released Thursday night by Toyota Motor Engineering & Manufacturing North America Inc., the company's U.S. manufacturing headquarters, said there is now a "strong possibility" that it will reduce work and pay at some plants.
Toyota is considering a schedule in which some workers would work 72 hours in a typical 80-hour, two-week period.
Thursday, February 12, 2009
From Automotive News:
THE AUTO INDUSTRY BAILOUT
Congress scales back tax break for car buyers
Harry Stoffer
WASHINGTON -- A proposed tax break for new-vehicle buyers is dramatically scaled back in the final version of the economic stimulus bill.
Auto dealers and their allies had sought to make interest on auto loans and the sales and excise taxes on new-vehicle purchases deductible from federal taxes. Proponents say those measures are needed to boost showroom traffic and sales.
But the final stimulus bill -- a compromise between House and Senate negotiators -- makes only sales and excise taxes deductible. The loan interest provision was dropped, a spokeswoman for Sen. Barbara Mikulski confirmed today.
Sources said the trim in the tax break for new-vehicle purchases reduced its cost from about $11 billion to about $2 billion. Congressional negotiators sought to limit the cost of the stimulus bill to pacify lawmakers worried about spending.
Mikulski, D-Md., sponsored the original provision on vehicle purchases at the request of dealers. The spokeswoman said Mikulski considers the deduction for sales and excise taxes an important victory.
THE AUTO INDUSTRY BAILOUT
Congress scales back tax break for car buyers
Harry Stoffer
WASHINGTON -- A proposed tax break for new-vehicle buyers is dramatically scaled back in the final version of the economic stimulus bill.
Auto dealers and their allies had sought to make interest on auto loans and the sales and excise taxes on new-vehicle purchases deductible from federal taxes. Proponents say those measures are needed to boost showroom traffic and sales.
But the final stimulus bill -- a compromise between House and Senate negotiators -- makes only sales and excise taxes deductible. The loan interest provision was dropped, a spokeswoman for Sen. Barbara Mikulski confirmed today.
Sources said the trim in the tax break for new-vehicle purchases reduced its cost from about $11 billion to about $2 billion. Congressional negotiators sought to limit the cost of the stimulus bill to pacify lawmakers worried about spending.
Mikulski, D-Md., sponsored the original provision on vehicle purchases at the request of dealers. The spokeswoman said Mikulski considers the deduction for sales and excise taxes an important victory.
Wednesday, February 11, 2009
From Automotive News:
GM's Bob Lutz is retiring at year-end
Jamie LaReau
DETROIT -- General Motors product czar and often colorful spokesman, Bob Lutz, will retire at the end of this year.
Lutz, 76, is currently GM's vice chairman of global product development. In a statement on GM's Website, the company said Lutz will become a vice chairman and senior advisor on April 1.
Lutz will provide "strategic input into GM's global design and key product initiatives until his retirement at the end of 2009." Lutz will continue to report to CEO Rick Wagoner.
Tom Stephens will replace Lutz as vice chairman of global product development. Stephens, 60, will report to COO Fritz Henderson. Stephens is presently executive vice president of Global Powertrain and Global Quality. In this new assignment, Stephens will maintain his responsibility for overseeing GM's global quality activity.
"Bob Lutz was already a legendary automotive product guy when he rejoined GM in 2001," Wagoner said in the statement. "He's added to that by leading the creation of a string of award-winning vehicles for GM during his time here. His 46 years of experience in the global automotive business have been invaluable to us."
GM's Bob Lutz is retiring at year-end
Jamie LaReau
DETROIT -- General Motors product czar and often colorful spokesman, Bob Lutz, will retire at the end of this year.
Lutz, 76, is currently GM's vice chairman of global product development. In a statement on GM's Website, the company said Lutz will become a vice chairman and senior advisor on April 1.
Lutz will provide "strategic input into GM's global design and key product initiatives until his retirement at the end of 2009." Lutz will continue to report to CEO Rick Wagoner.
Tom Stephens will replace Lutz as vice chairman of global product development. Stephens, 60, will report to COO Fritz Henderson. Stephens is presently executive vice president of Global Powertrain and Global Quality. In this new assignment, Stephens will maintain his responsibility for overseeing GM's global quality activity.
"Bob Lutz was already a legendary automotive product guy when he rejoined GM in 2001," Wagoner said in the statement. "He's added to that by leading the creation of a string of award-winning vehicles for GM during his time here. His 46 years of experience in the global automotive business have been invaluable to us."
Tuesday, February 3, 2009
From Automotive News:
JANUARY U.S. AUTO SALES
Ford, GM drop more than 40% as industry nears 27-year low
Chrissie Thompson
Ford Motor Co. and General Motors said sales plunged more than 40 percent in January, putting the industry on pace for its worst month since August 1982.
Ford's 41.6 percent fall and GM's 49 percent drop were steeper than analysts' forecasts. Honda, Nissan and Toyota posted declines ranging from 27.9 percent to 31.7 percent, cementing the industry's fourth straight monthly slide of more than 30 percent.
Ford sales analyst George Pipas projected industrywide sales for the month would fall below 10 million on an annual selling rate basis. That would be below analysts' average projection of a 10.3 million rate and the lowest in almost 27 years.
"The biggest reasons for the decline in the sales rate was the fleet market," Pipas said. "We estimate the industry fleet sales were down 65 or more percent from a year ago."
Ford said its sales to individual customers fell 27 percent, while its fleet sales plunged 65 percent. The fleet figure includes a 90 percent drop in sales to rental companies.
VW down, Subaru up
The Volkswagen brand was down 11.7 percent, while Daimler AG said sales of its Mercedes-Benz and Smart vehicles slipped 35.5 percent. Subaru, the only automaker to post an increase in U.S. sales last year, was up 8 percent.
Ford is trying to continue operations without federal aid, despite burning through $5.5 billion in cash last quarter. Last week the automaker said it finished the year with cash reserves of $13.4 billion and will tap $10.1 billion in credit lines. Ford needs at least $10 billion in cash to operate, analysts say.
GM and Chrysler LLC, which reports sales later today, are preparing viability plans for the U.S. Treasury Department to preserve the $13.4 billion in federal loans they have already received.
Analysts had expected the biggest Japanese automakers to report less severe declines than the Detroit 3 as the industry looks to recover from its worst U.S. sales year since 1992. Last year's light-vehicle sales dropped to 13.2 million, as soaring fuel prices in the first part of the year and a global credit crunch later in the year deepened a national recession. In 2007, 16.1 million light vehicles were sold in the United States.
Most analysts say sales levels will be suppressed through the first half of 2009 at least.
Falling production
Last week, Pipas said January production levels in North America that were two-thirds lower than last year's might trigger an industrywide 60 percent decline in fleet sales compared with January 2008. The retail rate for January would be in line with recent months, Pipas and GM both predicted -- about 8.3 million units.
January fleet sales fell partly because of U.S. automakers' extended plant shutdowns after the year-end holidays, analysts say. In addition, some corporations took advantage of GM's December fleet incentives. December fleet deals helped GM unload about 300,000 more vehicles than Deutsche Bank's Rod Lache expected, the analyst said in a note to investors.
The industry started 2009 with a 94-day supply of vehicles, more than 50 percent above the level recommended by analysts.
JANUARY U.S. AUTO SALES
Ford, GM drop more than 40% as industry nears 27-year low
Chrissie Thompson
Ford Motor Co. and General Motors said sales plunged more than 40 percent in January, putting the industry on pace for its worst month since August 1982.
Ford's 41.6 percent fall and GM's 49 percent drop were steeper than analysts' forecasts. Honda, Nissan and Toyota posted declines ranging from 27.9 percent to 31.7 percent, cementing the industry's fourth straight monthly slide of more than 30 percent.
Ford sales analyst George Pipas projected industrywide sales for the month would fall below 10 million on an annual selling rate basis. That would be below analysts' average projection of a 10.3 million rate and the lowest in almost 27 years.
"The biggest reasons for the decline in the sales rate was the fleet market," Pipas said. "We estimate the industry fleet sales were down 65 or more percent from a year ago."
Ford said its sales to individual customers fell 27 percent, while its fleet sales plunged 65 percent. The fleet figure includes a 90 percent drop in sales to rental companies.
VW down, Subaru up
The Volkswagen brand was down 11.7 percent, while Daimler AG said sales of its Mercedes-Benz and Smart vehicles slipped 35.5 percent. Subaru, the only automaker to post an increase in U.S. sales last year, was up 8 percent.
Ford is trying to continue operations without federal aid, despite burning through $5.5 billion in cash last quarter. Last week the automaker said it finished the year with cash reserves of $13.4 billion and will tap $10.1 billion in credit lines. Ford needs at least $10 billion in cash to operate, analysts say.
GM and Chrysler LLC, which reports sales later today, are preparing viability plans for the U.S. Treasury Department to preserve the $13.4 billion in federal loans they have already received.
Analysts had expected the biggest Japanese automakers to report less severe declines than the Detroit 3 as the industry looks to recover from its worst U.S. sales year since 1992. Last year's light-vehicle sales dropped to 13.2 million, as soaring fuel prices in the first part of the year and a global credit crunch later in the year deepened a national recession. In 2007, 16.1 million light vehicles were sold in the United States.
Most analysts say sales levels will be suppressed through the first half of 2009 at least.
Falling production
Last week, Pipas said January production levels in North America that were two-thirds lower than last year's might trigger an industrywide 60 percent decline in fleet sales compared with January 2008. The retail rate for January would be in line with recent months, Pipas and GM both predicted -- about 8.3 million units.
January fleet sales fell partly because of U.S. automakers' extended plant shutdowns after the year-end holidays, analysts say. In addition, some corporations took advantage of GM's December fleet incentives. December fleet deals helped GM unload about 300,000 more vehicles than Deutsche Bank's Rod Lache expected, the analyst said in a note to investors.
The industry started 2009 with a 94-day supply of vehicles, more than 50 percent above the level recommended by analysts.
From Automotive News:
Senate approves tax break for auto loan interest
Harry Stoffer
WASHINGTON -- The U.S. Senate voted today to make loan interest and sales taxes on vehicle purchases deductible from federal income taxes.
The proposal, championed by the National Automobile Dealers Association, was added to an economic stimulus bill under debate in the Senate. The vote was 71-26.
The provision was not in a House-passed version of the more than $800 billion package of spending increases and tax cuts.
A conference committee will decide whether the provision stays in. The bill is a top priority of President Barack Obama.
If the measure passes, taxes on auto loans will be deductible for the first time since 1986.
The provision on deductibility of loan interest is the first significant measure aimed at getting consumers back into showrooms and buying vehicles to get action from Congress. NADA says the measure will save consumers about $1,500 on a $25,000 vehicle.
Some experts have criticized the provision for not having enough up-front punch. Too many worried would-be buyers aren't thinking ahead to cutting future tax bills, they argue.
But the measure is a significant incentive and NADA had to focus on what could be accomplished politically, an organization spokesman said today.
Senate approves tax break for auto loan interest
Harry Stoffer
WASHINGTON -- The U.S. Senate voted today to make loan interest and sales taxes on vehicle purchases deductible from federal income taxes.
The proposal, championed by the National Automobile Dealers Association, was added to an economic stimulus bill under debate in the Senate. The vote was 71-26.
The provision was not in a House-passed version of the more than $800 billion package of spending increases and tax cuts.
A conference committee will decide whether the provision stays in. The bill is a top priority of President Barack Obama.
If the measure passes, taxes on auto loans will be deductible for the first time since 1986.
The provision on deductibility of loan interest is the first significant measure aimed at getting consumers back into showrooms and buying vehicles to get action from Congress. NADA says the measure will save consumers about $1,500 on a $25,000 vehicle.
Some experts have criticized the provision for not having enough up-front punch. Too many worried would-be buyers aren't thinking ahead to cutting future tax bills, they argue.
But the measure is a significant incentive and NADA had to focus on what could be accomplished politically, an organization spokesman said today.
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