Automotive News - September 1, 2008 - (Page 12) 12 • SEPTEMBER 1, 2008 opinion U.S. loans could make sense, but can’t be a bailout Much of the political buzz about the federal government providing as much as $50 billion in low-cost loans to the auto industry can be chalked up to election-year ebullience. That doesn’t mean it won’t happen. But before automakers and suppliers cash any checks, there must be a better understanding of the process and any strings that might be attached. Last December, Congress and the White House authorized as much as $25 billion in loans to companies that will use the money to develop fuel-saving vehicle technologies. But Congress still must determine how to fund the loans. Last week, auto industry lobbyists worked their ticket at the Democratic National Convention in Denver, trying to persuade lawmakers to fund the The loans would be loans quickly. This week, they’ll do the same thing at the Repubof greatest value lican convention in St. Paul, Minn. to GM, Ford It helps that presidential candidates Barack Obama and John and Chrysler. McCain say they support the loans. Industry leaders, heady with the possibility of $25 billion in low-cost loans, now seem to want twice that amount. The loans would be of greatest value to General Motors, Ford and Chrysler. They need access to staggering amounts of capital so they can retool their factories to produce more fuelefficient vehicles. But they have junk-bond credit ratings that make borrowing money in the private sector very costly. Auto executives note that the industry faces a government mandate to improve fuel economy by 40 percent before 2020. They say it’s only fair that the government should help with the ways and means to do that. But that argument has eroded now that consumers are demanding vehicles with fuel economy better than the federal standard. It’s tougher to make the case for government funding to meet marketplace demands. Still a program of low-cost loans to the industry might make sense — if they are loans that will be repaid, if the government doesn’t stipulate particular technologies or vehicles that must be developed, and if the loans are available to all automakers and suppliers that build in this country. It’s hard to imagine that Honda or Toyota would borrow money from the U.S. government. But the funds should be available to them if needed. Otherwise, the loans would be nothing more than a Detroit 3 bailout. That would be a questionable use of tax dollars, even in an election year. I’ve always liked Hummers. They may be a little thirsty, but they’re this century’s answer to the World War II Jeep. And I have a choice of small, medium or large. Or is it extra-large? The perfect stablemate for the Hummer might be a Dodge Viper, a sports car with lots of horsepower. Even though the Viper has a V-10 truck engine instead of a version of the famed Hemi, it has more torque than anyone could ever need. It’s a great icon from Chrysler Corp. Or if I need a sedan to tool around in, perhaps a Volvo might be the perfect balance to a Hummer and a Viper. I missed the opportunity to get my own Range Rover or Jaguar. But we don’t have to settle for just buying a car. We can buy the whole business. Those are great cars and great brands. General Motors added Hummer models, DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Wanna buy a car? Wanna buy a brand? but sadly, they all have the image of big gas-guzzlers. It’s appropriate that a company in the Middle East might be interested in buying Hummer. GM might have better luck selling the brand where gasoline is a buck a gallon. It was inevitable that since Cerberus can’t sell Chrysler lock, stock and barrel, it might need to portion it out. It’s interesting to wonder what a brand like Jeep might be worth on the open market. Viper is worth something, but probably not enough to get Cerberus excited. When you can’t mortgage any more assets, you start selling off parts of your business to eliminate losses or raise cash or both. It seems as though Cerberus and GM each want to raise cash that way. GM probably has six more quarters of cash before it must get rid of more assets. Later on, they might sell more valuable assets, depending on their need for cash. With losses at Chrysler and a half interest in GMAC, which also is losing money, Cerberus must have losses of an epic proportion. That’s something the investors probably didn’t consider when they decided to get into the car business. When business is good, you can make a lot of money. But when it turns south, you need billions. GM probably has six more quarters of cash before it must get rid of more assets. Cerberus probably has a lot less cash on hand. It was tough out there before the current slump. Now it’s downright brutal. This is no game for the faint of heart. Editor grows up; import vet pleased To the Editor: I’m happy to see that Executive Editor Edward Lapham’s attitudes are catching up with those on our Left Coast (“Is animosity toward foreign cars finally a thing of the past?” Comment, Aug. 11). Out here, “foreign” cars were no longer foreign by 1960. We called them “imported.” By the 1970s, we started dividing cars into “normal” and “abnormal.” Unfortunately, most of the latter originated in Michigan. By the early 1980s, when the prices of the normal cars we sold escalated rapidly because of currency realignments, we joked that soon the people who couldn’t afford Toyotas would have to settle for Cadillacs. We never dreamed that would occur, but look at a Cadillac CTS price vs. that of a Lexus 460! MARTIN SWIG San Francisco The writer is a retired import-car dealer. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Field reps blamed for GM’s problems To the Editor: In response to the letter from dealer Thomas A. Wills of Wills Chevrolet (“Why won’t consumers buy Detroit cars?” Letters, Aug. 4): I have been in a new-car dealership for more than 20 years (10 in sales and 10-plus in service). As to why consumers are not buying our new GM products, I feel the level of support from our field representatives in our market area is a direct cause. We have lost the ability to help customers and make calls that kept our good people coming back through excellent times and some that were not so excellent. Our field reps have told us they were put in a room in Las Vegas (a spring 2008 meeting) and told: “If you guys want to keep your jobs, get out there and collect some money.” This year has seen support from the Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. General drop to an all-time low; our new area service manager has never mentioned CSI to me in eight months. When asked why, there was only silence. If customers cannot rely on their dealer to help them solve issues, our mission is lost, and the General’s slow slide downward will be deserved and snickered at by foreign competitors and former dealership employees alike. I can’t recall our new service team helping with one tough customer issue this year. Charge back, charge back and charge back more to keep their jobs. Good job, General! Pay for those field trips off the backs of your dwindling customer base and dealership employees, and the only thing left to write about will be bankruptcy. JACK JACKSON Service Manager Aurora Motors Inc. (Buick-Pontiac-GMC) Fairbanks, Alaska Toyota goofed on Scion; is Prius next? To the Editor: I can’t agree more with reader Ronald J. Pasquale regarding Scion’s downfall (“Saturn, Scion lost that special feeling,” Letters, Aug. 18). Instead of keeping the cars fun, exciting, affordable and special for the young, Toyota made the second generation heavy, bloated and run-ofthe-mill-looking. Better cars, yes — but the fun and sales are gone. You’d think Toyota would learn from it. No. The next-generation Prius will be heavier, longer, wider, beefier than the current, wildly successful model. The initial idea of a car with reasonable proportion and good maneuverability for the city and easily recognizable-as-ahybrid styling will be gone. A better car? Yes, but will it suffer from see LETTERS, Page 14 http://www.autonews.com/signup http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - September 1, 2008 Automotive News - September 1, 2008 'Mr. Big Volume' hit again Auto ad spending plummets American Axle to grow outside U.S. Nissan, Renault aim to share more parts Steven Ribet joins Automotive News in Shanghai Salaried workers face the ax Asbury to challenge verdict Lutz wants loan guarantees VW passes Ford as No. 3 global seller in 1st half Suzuki in disguise Dodge hopes smooth ride of coil springs will distinguish Ram Candidates split on union organizing bill Check in the mail? Toyota, Ford can tell 10 CTS stays true to concept GM shifts some vehicle design work to U.S. Infiniti may add cars, big and small BMW slashes production of big engines Toyota cuts sales forecast Chrysler: Viper lures suitors Honda hybrid plan bets big on small cars Ford starts L-M consolidation meetings Obama renews aid offer — industry wants it now Honda taps rainwater to create wetlands U.S. loans could make sense, but can't be a bailout Wanna buy a car? Wanna buy a brand? PPG story recalls Exner's Imperial Toyota goofed on Scion; is Prius next? Editor grows up; import vet pleased Field reps blamed for GM's problems Honda Insight engine isn't noiseless Trucks, Vette fine; rest of GM, blah Reynolds to dealers: Replace aging servers by year end Saddle up! Dem delegates honor slain Arkansas dealer Kia makes a mark of its own Koreans step up; Indians step cautiously; Chinese step back The next batch of new Hyundais: Smaller, more fuel efficient To give fuel economy a boost, Hyundai spends big on r&d U.S. plans fizzle for most Chinese vehicles Mahindra delays U.S. retail launch until 4th quarter of '09 Dealers Personnel Despite tough times, Galpin profits by pimping rides Web service leads grow Uh, I didn't mean to say you should retire Remembering Phil Hill, racing's modest giant Mulally to speak at gadget show GM picks Volt battery supplier Split verdict in fraud case July auto output was up in Japan Bob Fisher Dems reopen the CAFE Hummer, king of the desert? MG remains a no-show in North America Mustang silly Protests could bring ta-ta from Tata The politicians (and I) need a new road map Welburn's design journey began in Philly Automotive News - September 1, 2008 Automotive News - September 1, 2008 - (Page Intro) Automotive News - September 1, 2008 - American Axle to grow outside U.S. (Page 1) Automotive News - September 1, 2008 - American Axle to grow outside U.S. (Page 2) Automotive News - September 1, 2008 - Suzuki in disguise (Page 3) Automotive News - September 1, 2008 - 10 CTS stays true to concept (Page 4) Automotive News - September 1, 2008 - 10 CTS stays true to concept (Page 5) Automotive News - September 1, 2008 - Chrysler: Viper lures suitors (Page 6) Automotive News - September 1, 2008 - Chrysler: Viper lures suitors (Page 7) Automotive News - September 1, 2008 - Obama renews aid offer — industry wants it now (Page 8) Automotive News - September 1, 2008 - Obama renews aid offer — industry wants it now (Page 9) Automotive News - September 1, 2008 - Honda taps rainwater to create wetlands (Page 10) Automotive News - September 1, 2008 - Honda taps rainwater to create wetlands (Page 11) Automotive News - September 1, 2008 - Field reps blamed for GM's problems (Page 12) Automotive News - September 1, 2008 - Field reps blamed for GM's problems (Page 13) Automotive News - September 1, 2008 - Trucks, Vette fine; rest of GM, blah (Page 14) Automotive News - September 1, 2008 - Saddle up! (Page 15) Automotive News - September 1, 2008 - Dem delegates honor slain Arkansas dealer (Page 16) Automotive News - September 1, 2008 - Koreans step up; Indians step cautiously; Chinese step back (Page 17) Automotive News - September 1, 2008 - To give fuel economy a boost, Hyundai spends big on r&d (Page 18) Automotive News - September 1, 2008 - Mahindra delays U.S. retail launch until 4th quarter of '09 (Page 19) Automotive News - September 1, 2008 - Personnel (Page 20) Automotive News - September 1, 2008 - Web service leads grow (Page 21) Automotive News - September 1, 2008 - Web service leads grow (Page 22) Automotive News - September 1, 2008 - Web service leads grow (Page 23) Automotive News - September 1, 2008 - Web service leads grow (Page 24) Automotive News - September 1, 2008 - Uh, I didn't mean to say you should retire (Page 25) Automotive News - September 1, 2008 - Uh, I didn't mean to say you should retire (Page 26) Automotive News - September 1, 2008 - July auto output was up in Japan (Page 27) Automotive News - September 1, 2008 - Bob Fisher (Page 28) Automotive News - September 1, 2008 - Bob Fisher (Page 29) Automotive News - September 1, 2008 - Welburn's design journey began in Philly (Page 30) Automotive News - September 1, 2008 - Welburn's design journey began in Philly (Page 31) Automotive News - September 1, 2008 - Welburn's design journey began in Philly (Page 32)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.