Automotive News - November 24, 2008 - (Page 1) autonews.com ® NOVEMBER 24, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY BAILOUT BATTLE Panic in Detroit It was a week that will live in infamy in the history of the U.S. auto industry — a botched attempt by the Detroit 3 CEOs to win congressional approval for a federal bailout. A rundown of our crisis coverage. Nardelli: Chrysler is running on fumes | PAGE 4 | S&P: GMAC on brink of bankruptcy | PAGE 4 | Off with the CEOs’ heads! (But whose?) | PAGE 4 | Peter Brown: In defense of Detroit. What are the odds that every Detroit 3 exec of the past 35 years has been an idiot? | PAGE 6 | David Sedgwick: The CEOs forgot the first rule of politics — symbolism. | PAGE 6 | Readers weigh in on auto industry woes. | PAGE 14 | The political stalemate on Capitol Hill | PAGE 27 | For up-to-the-minute coverage of the turmoil in the auto industry, go to www.autonews.com. Detroit 3: Bankruptcy = doom David Barkholz dbarkholz@crain.com Could General Motors, Chrysler LLC or Ford Motor Co. survive a bankruptcy filing? Could the domestic industry? The CEOs of the Detroit 3 answered with an emphatic “no” last week when some Washington lawmakers broached bankruptcy — even a quick, prepackaged one — as an alternative to a $25 billion rescue package. Ford CEO Alan Mulally, whose company is the least likely Detroit 3 member to seek bankruptcy protection, said he supports rescue loans lest the bankruptcy of any one of the Detroit 3 causes the collapse of its North American suppliers. In such an event, all the carmakers would be dragged down, he said. GM CEO Rick Wagoner told the lawmakers that people would stop buying vehicles from a bankrupt carmaker, choosing a company more likely to ensure warranties and service. Scare tactics? Opponents of a bailout say the CEOs are exaggerating those threats. Detroit bankruptcy consultant James McTevia says bankruptcy offers the quickest, most-efficient way to close unnecessary factories and restructure labor and legacy costs to put the Detroit 3 on an equal footing with their leaner competitors. “With this economy, they’re not going to survive another two years regardless of a bailout,” McTevia says. The federal government could provide bankruptcy financing — not available in the open market now because of the credit shutdown — to pay suppliers, support warranties and cover other costs of running the company during reorganization, adds McTevia, a bankruptcy trustee see DOOM, Page 26 Former Chrysler boss Lee Iacocca: Everybody must share the pain. Iacocca tip: ‘Equality of sacrifice’ Edward Lapham elapham@crain.com Ch. 11 would hit dealers hard — fast Donna Harris dharris@crain.com @ A bankruptcy filing by a Detroit 3 automaker would kill many of its dealerships quickly even if the company successfully reorganizes, dealers’ lawyers predict. Many dealerships that already are struggling with frozen credit and an economic recession would not survive the instant cash crunch if an automaker decides to seek Chapter 11 bankruptcy protection, the lawyers say. At that point, they say, money due to dealerships from the factory for sales incentives, holdbacks and warranty reimbursements would become unsecured debt. A Bankruptcy Court could allow the automaker to pay dealerships just pennies on the dollar and to delay even those payments. Dealers would “have to get in line with everybody else,” says Ron Coleman, a lawyer in Tacoma, Wash. “Cash flow is a big issue.” As the Detroit 3 pleaded with Congress last week for emergency financial aid, some lawmakers suggested the companies would do better to file for bankruptcy so they could cut their dealer networks and renegotiate labor contracts. In response, General Motors CEO Rick Wagoner cited independent research suggesting 80 percent of consumers who are thinking of buying a new vehicle would not consider a bankrupt automaker. The Detroit 3 note that they already are slashing their retail networks. In see DEALERS, Page 26 After the dismal reception Washington lawmakers gave Detroit 3 CEOs and UAW President Ron Gettelfinger last week, I found myself saying, “This isn’t the way Lee Iacocca did it in 1979.’’ So I called Iacocca and asked him to compare today’s crisis with the time Chrysler Corp. got the feds to co-sign for up to $1.5 billion in loans. Iacocca told me he’d had a lot of calls but wasn’t doing interviews. Then he opened up, as he always has. He agreed the Detroit contingent was treated roughly but said he thinks the Detroit 3 will get some aid. House Speaker Nancy Pelosi, DCalif., has asked the Detroit 3 to submit their restructuring plans to Congress by Dec. 2. Among other things, the companies must ban “excessive” executive see IACOCCA, Page 26 NISSAN CUBE RICK KRANZ Live from L.A. While the drama played out in D.C., it was showtime in L.A. Show highlights Honda’s funky fuel cell sports car. | PAGE 23 | Mini electric: Jolt comes from the sticker. | PAGE 23 | Ford fashions a new Fusion after just 3 years. | PAGE 24 | Mustang: Faster and more refined. | PAGE 24 | The Cube: Nissan’s little boxster. | PAGE 25 | Our offices are closed on Nov. 27-28. Automotive News Today, the daily newscast at autonews.com, will not appear. REUTERS NEWSPAPER http://www.autonews.com http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - November 24, 2008 Iacocca tip: 'Equality of sacrifice' Ch. 11 would hit dealers hard â fast Detroit 3: Bankruptcy = doom Down the road and a continent away Used-vehicle demand shrivels O'Neill will lead Power GM tweaks production plan Mitsubishi: No to Detroit Ford will cut more output Nardelli: Chrysler is running on fumes GMAC on brink of bankruptcy, S&P warns Off with their heads! (But whose?) In defense (kind of) of Detroit Bailout Motors? Britain went down that road CEOs could have pre-empted the grilling Ford: We still want Mazda expertise Imports clog ports as sales plunge Volvo's N.A. boss will resume leases to boost volume Nissan expects Chrysler pickup deal will survive Toyota: Venza is a trendsetter, not a crossover It's time to put partisanship aside; Detroit needs help What GM needs is GMAC.2 'Buy American' talk won't help industry Readers weigh in on auto industy woes No one bailed out Oldsmobile It's time to move to mass transport We still need manufacturing Bankruptcy is a bet Let's get wages under control Will America be better off? First step: Bring the jobs home America owes it to GM to help The answer is simple: Leasing What about dealerships? Detroit 3 CEOs must offer to quit Oct. truck sales fall 17.4% Honda plant adds parts center They're sold on Camaro Drawn to Ferrari Japan poised to control key batteries Europe's worst month hits all automakers Dealers BMW: Diesel 7 series could come to U.S. Honda's FC Sport mixes green and go Infiniti G37's hard top retracts in 30 seconds Redesign of Lexus RX series hard to see Mini electric: Jolt comes from sticker Ford hybrid sedans aim at Camry After only 3 years, Ford revamps Fusion Hyundai plans new crossover, turbo engine Restyled Mustang: More refinement, horsepower Honda: Don't count on CR-Z gasoline variant '09 Nissan Z delivers more of what fans like Mazda3 gets new look, powertrains Nissan Cube joins the box brigade Infiniti upgrades powertrains Lincoln MKZ gets a makeover Porsche won't stall Panamera 2010 GLK priced below rival Bentley's Azure T gets 500 hp Detroit 3 squeezed by credit, cash â politics Waxman could mean trouble for Detroit GM formulates a 'Plan B' if it doesn't get federal loan Infiniti replaces Igo Sharks vs. Jets, D.C.-style What's good for â uh, how'd that go again? Mazda deal imperils Ford training ground More like Toyota, Honda? Careful what you wish for Maybe he's Buck-a-year Bob now Romney: Bankruptcy, not bailout Automotive News - November 24, 2008 Automotive News - November 24, 2008 - (Page Intro) Automotive News - November 24, 2008 - Detroit 3: Bankruptcy = doom (Page 1) Automotive News - November 24, 2008 - Detroit 3: Bankruptcy = doom (Page 2) Automotive News - November 24, 2008 - Ford will cut more output (Page 3) Automotive News - November 24, 2008 - Off with their heads! (But whose?) (Page 4) Automotive News - November 24, 2008 - Off with their heads! (But whose?) (Page 5) Automotive News - November 24, 2008 - CEOs could have pre-empted the grilling (Page 6) Automotive News - November 24, 2008 - CEOs could have pre-empted the grilling (Page 7) Automotive News - November 24, 2008 - Volvo's N.A. boss will resume leases to boost volume (Page 8) Automotive News - November 24, 2008 - Volvo's N.A. boss will resume leases to boost volume (Page 9) Automotive News - November 24, 2008 - Toyota: Venza is a trendsetter, not a crossover (Page 10) Automotive News - November 24, 2008 - Toyota: Venza is a trendsetter, not a crossover (Page 11) Automotive News - November 24, 2008 - 'Buy American' talk won't help industry (Page 12) Automotive News - November 24, 2008 - 'Buy American' talk won't help industry (Page 13) Automotive News - November 24, 2008 - Detroit 3 CEOs must offer to quit (Page 14) Automotive News - November 24, 2008 - Drawn to Ferrari (Page 15) Automotive News - November 24, 2008 - Japan poised to control key batteries (Page 16) Automotive News - November 24, 2008 - Dealers (Page 17) Automotive News - November 24, 2008 - Dealers (Page 18) Automotive News - November 24, 2008 - Dealers (Page 19) Automotive News - November 24, 2008 - Dealers (Page 20) Automotive News - November 24, 2008 - Dealers (Page 21) Automotive News - November 24, 2008 - Dealers (Page 22) Automotive News - November 24, 2008 - Mini electric: Jolt comes from sticker (Page 23) Automotive News - November 24, 2008 - Restyled Mustang: More refinement, horsepower (Page 24) Automotive News - November 24, 2008 - Bentley's Azure T gets 500 hp (Page 25) Automotive News - November 24, 2008 - Bentley's Azure T gets 500 hp (Page 26) Automotive News - November 24, 2008 - GM formulates a 'Plan B' if it doesn't get federal loan (Page 27) Automotive News - November 24, 2008 - Infiniti replaces Igo (Page 28) Automotive News - November 24, 2008 - Infiniti replaces Igo (Page 29) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 30) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 31) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 32)
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