Automotive News - March 9, 2009 - (Page 46) 46 • MARCH 9, 2009 final assembly comment BAILOUTS >> Get complete coverage of the global auto industry bailout at autonews.com/bailout. GM pilots, peddles Opel on a wing and a prayer Opel isn’t one of General Motors’ recent whims, like Hummer, Saab or Subaru. GM’s German subsidiary has been part of the company since 1929 — a relationship that has survived the Great Depression and World War II. So it’s a jolt to see GM spinning off Opel, even if GM says it intends to keep control. It is unnerving that GM, the quintessential practitioner of exhaustively studied incremental change, appears DAVE GUILFORD to be making up IS NEWS EDITOR the Opel spinoff OF AUTOMOTIVE NEWS. as it goes along. Winging it, in other words. GM suddenly must have realized that the German government wasn’t going to pour money into the financially integrated subsidiary of a U.S. company and hastily announced a spinoff, with details to follow. That unsettling tone continued in Geneva last week. Consider: GM’s unflappable COO, Fritz Henderson, said several times that GM is open to any option, which means there’s no real plan. Henderson said GM might retain only a minority stake in Opel, contradicting earlier talk that GM would retain a majority of shares. It came out that GM is not talking with any private investors about Opel. This is not entirely surprising, considering that on Feb. 17, GM CEO Rick Wagoner said he wasn’t aware of any interested buyers. Meanwhile, GM is negotiating for money from Germany and several other European nations. Those nations could get shares in Opel. That means a majority could be owned by various European governments. Perhaps the headquarters will move to Brussels? To persuade other European governments to invest in a German-based company, GM is quickly moving to re-create Opel as a pan-European company. And oh, yes, absent a bailout, Opel will run out of cash early in the second quarter, which starts in about three weeks. Henderson is making a career out of being GM’s man on the high wire — so who knows, this may all work out. GM may eventually be the partial owner of a healthy Opel, and the two companies may work together harmoniously. But for now, GM’s tightrope act is truly disconcerting. You may e-mail Dave Guilford at dguilford@crain.com Cerberus defends not pumping more funds into Chrysler C hrysler wants taxpayers to double-down their bet that the carmaker will be able to pay off its federal loans as it seeks an additional $5 billion beyond the $4 billion it has received. But if Chrysler’s majority owner, Cerberus Capital Management, were to put more money into the automaker, that would amount to the sort of “excessive risktaking” that contributed to Wall Street’s collapse, Cerberus COO Mark Neporent said last week in a letter to The New York Times. He was responding to a Times editorial that questioned why Cerberus, which owns 80.1 percent of Chrysler, is not pumping more money into the automaker, as “private equity funds like Cerberus are supposed to do.” In his letter, Neporent said Cerberus protects its investors through rules that limit how much capital it can commit to an individual company. “Why should these retirees, universities and charities, simply because they are represented by a private investment manager, be required to take additional risks or make additional investments, when GM or Ford shareholders are not?” he wrote. He repeated Cerberus’ willingness to surrender its equity stake in Chrysler, convert debt to equity and put $2 billion in other Chrysler interests on a lower priority behind the government’s loans. The Times editorial had suggested the government had good reasons to say no to Chrysler’s request for more loans. “It seems the secretive private equity fund is willing to gamble on Chrysler’s survival with the taxpayer’s dime, but not its own,” the editorial said. “Saying no might even make Cerberus reconsider and put up some cash of its own.” HANS GREIMEL For GM in Japan, a Schwinn-win G PHILIP MEECH ■ Duster redux The Duster is back! But with Plymouth buried under a rock, the new Duster is no retro version of the 1970s fastback. The Dacia Duster is a two-door crossover concept from Renault’s Romanian subsidiary. What’s next: the Renault Roadrunner? Volvo Valiant? Fiat Fury? BMW Belvedere? eneral Motors’ vehicle sales are growing in the tough-tocrack Japanese market, thanks to a fresh lineup of environmentally friendly small models that maneuver easily on Japan’s crowded streets. High-tech 18-speed mountain bicycles emblazoned with the logos of Chevrolet, GMC, Cadillac and Hummer are popping up at department stores across Japan. Itochu Fashion Systems, which markets the made-in-China bikes under license from America’s biggest carmaker, declined to say how many GM two-wheelers it sells. Prices range between $300 and $500. Itochu collaborates with GM on styling each model. Slogans such as “Heartbeat of America” adorn their steel frames. “They are quite popular and selling well,” a spokeswoman says. “The image of the cars is wellreflected in the design of the bikes.” No. 1 retail Ford dealer? It’s up for grabs W hat is the nation’s largest retail Ford dealership? Lately, it varies by month. Galpin Ford, of North Hills, Calif., near Los Angeles, has held the title for 19 straight years. But with the recession hitting California particularly hard, Galpin’s lead narrowed significantly in 2008. It finished the year with retail sales of 4,497 vehicles, owner Bert Boeckmann told Automotive News, just 402 units ahead of the No. 2 dealership. That No. 2? Woodhouse Ford — the behemoth retailer in tiny Blair, Neb., and Ford’s top seller of F-series pickups for several years running. Known for its Truck Mountain, a terraced landscape of F-series pickups surrounding the dealership, Woodhouse even topped Galpin for the final quarter of 2008. Galpin regained the top spot in January, then slipped to third in February, behind Bill Brown Ford in suburban Detroit and Woodhouse. But Galpin is not conceding. Says Boeckmann: “We’re going to be battling every month.” Toyota seeks Japanese loan, but don’t draw parallels T CHRIS MACHIAN Truck Mountain, a terraced landscape of F-series pickups, surrounds Woodhouse Ford. oyota applied for a loan backed by the Japanese government, a company official said last week. Honda, Nissan and Mazda may ask for loans, too. A Japanese parallel to the government loans to General Motors and Chrysler? Nope. GM and Chrysler have begged the U.S. government for loans. But the Japanese government may have asked Toyota to take the money. The Tokyo government has been known to urge sound companies to take public money so shaky companies won’t lose as much face when they tap the government trough. Japan’s NHK TV reported that Toyota was seeking a loan of about ¥200 billion, or about $2.02 billion at current exchange rates. Toyota is predicting a net loss of $3.56 billion for the fiscal year that ends March 31. But that doesn’t put it in the lifeboat with GM. Toyota will end March with $20.07 billion in cash, estimates J.P. Morgan auto analyst Takaki Nakanishi. At the end of December, GM’s cash reserves of $14 billion were close to the minimum amount the automaker says its needs to operate. “Toyota is not in danger. It’s out to get the lowest price for funding that the strength of its credit can get,” Yasuaki Iwamoto, an analyst at Okasan Securities, told Reuters. “On the balance sheet, it doesn’t matter if the funds are private or public.” http://www.autonews.com/bailout
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