Automotive News - November 10, 2008 - (Page 1) autonews.com ® NOVEMBER 10, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY The options: Bailout now or collapse Auto bankruptcy would spread pain deep into economy David Sedgwick dsedgwick@crain.com Signs of stress Suppliers suffer big losses | PAGE 8 | GM, Ford low on cash | PAGE 8 | GMAC: GM’s captive no more | PAGE 8 | Obama tough on global warming | PAGE 39 | Without a federal bailout in the next three months or so, General Motors, Ford and Chrysler will face a financial collapse that could drag down suppliers, dealers and even import automakers. To fend off such a collapse, the CEOs of GM, Ford and Chrysler asked Congress last week for $25 billion in emergency “bridge” loans and to ac- For up-tothe-minute coverage of the turmoil in the auto industry, go to www.autonews.com. @ news ANALYSIS celerate a second $25 billion in loans to subsidize development of fuel-efficient vehicles. The view in many Detroit offices: Like falling dominoes, the collapse of GM or Chrysler would force many suppliers out of business. In turn, those bankrupt suppliers would knock out Ford Motor Co.’s production, cripple transplant automakers’ assembly plants and shut down thousands of dealerships. Some political observers suggested that President-elect Barack Obama and his Democratic allies would prefer to let the lame-duck Congress and President Bush take the heat for a controversial bailout. Late Friday, Obama said an economic stimulus bill, which could include aid to the auto industry, should be passed “sooner rather than later.” If Congress does not pass the bill during its lame-duck session, Obama said, it will be the first undertaking of his administration. But the stark truth is this: The auto industry simply can’t afford to delay a bailout until Obama takes office Jan. 20. Consider these signs of crisis: General Motors burned through $7 billion in the third quarter, leaving it with cash reserves of $16 billion. At that rate, GM will run out of cash by midyear. Meanwhile, Ford is burning cash at a rate of $2.6 billion per month. Industry sales of new cars and trucks plunged 31.9 percent in October to an annualized rate of 10.9 million units — the worst monthly result in 25 years. North American light-vehicle production is projected to decline at least 19 percent in the fourth quarter compared with the year-ago period. As production declines, suppliers are see BAILOUT, Page 39 The green scene The green automotive culture of the future won’t come easy and it won’t be cheap. A special section examines the technologies, people and products shaping this monumental transition. | PAGE 17 | GMAC sheds ‘captive’ mentality KEVIN LAMARQUE/REUTERS Talking heads From left, Ford's Alan Mulally, GM's Rick Wagoner, Chrysler's Bob Nardelli and the UAW's Ron Gettelfinger pleaded their case to Congress last week for an emergency federal bailout. From right, Majority leader Steny Hoyer and House Speaker Nancy Pelosi must decide whether to pass a bailout quickly. Not long ago, GMAC’s role was to help GM sell cars and trucks. These days its goal is to make money as a bank — and GM is just a customer. | PAGE 8 | Life at 11 million: Slash, rethink Suppliers, dealers, retail groups must adjust — or crash 18 17 16 15 14 13 12 11 0 2007 Amy Wilson and Pat Scott awilson@crain.com Teahen: October’s disaster ➤ 37 ing rate was the lowest since the dark days of March 1983, when sales were crushed by soaring oil prices. Get used to it. Sales around 11 million “probably is the appropriate base to plan from” maybe for the next six months,” said Ford Motor Co. sales analyst George Pipas. 2008 J F M A M J J A S O N D DETROIT — Auto dealers and suppliers are moving heaven and earth to adjust to an annual auto sales rate not seen in a quarter century: fewer than 11 million units. October sales plunged 31.9 percent to 838,592. The paltry 10.9 million unit seasonally adjusted annual sell- The new realities So what will life be like at 11 million? Suppliers will be saddled with “tremendous excess capacity sitting idle and adding to losses,” said Neil De Koker, CEO of the Original Equipment Suppliers Association. NEWSPAPER “It will be the final straw for suppliers.” Dealerships selling Detroit 3 brands are closing their doors every day, but with an 11 million SAAR they’ll go bust at an even faster rate, say executives and analysts. Suppliers and dealers are combing their operations for savings. Dealers are rethinking comfortable old assumptions about advertising, facilities planning and staffing in a frantic effort to slash costs. “Dealers have to look at everything — people, buildings, service, inventory and advertising,” said Cliff Cummings, owner of Toyota of San Bernardino in California. “Physical see 11 MILLION, Page 37 On the Web This week at www.autonews.com: All week: Updates from Washington on congressional negotiations for the auto industry bailout. Thursday: News from the Automotive News Green Car Conference and Exhibition in suburban Detroit. Friday: Gibbs Technologies opens its suburban Detroit headquarters and offers details about its high-speed amphibious vehicle. http://www.autonews.com http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - November 10, 2008 Life at 11 million: Slash, rethink The options: Bailout or disaster Can Toyota reheat the frozen Tundra? Chrysler dealers cheer halt to merger talk VW will unveil roadster at Detroit auto show BMW boosts dealers' year-end ad money Mercedes' $220 million flagship Mercedes hit hard in Northeast, once a sales stronghold Mercedes will kill CLK, add larger coupe, convertible Mitsubishi reclaims its finance business Toyota's Esmond to speak at congress Loss is more: Europe snatches bigger share of U.S. market Cash burn rates threaten GM, Ford GMAC: We're nobody's captive As losses mount, suppliers risk cash-flow crunch Tata: Yes to Jaguar XF derivative, no to SUV U.S. aid is needed now, but not to help Cerberus They are too big to fail Why should we help GM and Chrysler? First and foremost, you must be flexible U.S. trade policy gives it all away To the Editor: A rough ride is nothing new for autos Dealer's politics were pertinent Chrysler's 1st electric: Probably a cargo van Auto meltdown forces Mercedes to scrap prediction of sales record Boosting mpg will bump up stickers, too Adding up the tab for fuel economy Camaro Black: Eye-catching, affordable and available Honda sees green in Civic HFP's street performance Honda offers peek at future Fit Ford F-150 Raptor flies off-road Souped-up, tricked-out â and headed for the showroom Report: Toyota plans $5,000 car Amid gloom, Mazda chief sees revival in 2009-10 Report: Past-due subprime loans jump Toyota aims to win loyalty with credit card Study: Car buyers turn green for different reasons Thanks, buddy Hyundai helps Dealers Metaldyne offers pennies to bondholders Obituaries Personnel As expected, Oct. sales sank Another Chinese automaker plans Mexico factory Honda backs off U.S. clean diesels Industry pal, foe vie for key post in Congress Industry expects more activism from D.C. N.A. output falls 19.9% Toyota moves in striking distance of GM's U.S. sales crown Going, going . . . An ex-GM exec's view: It's going to get nasty Sex, Nazis, chicken and BMW: A scandal that puts fiction writers to shame Recession rips up roadster market Toyota takes heat for 'the herpes of the advertising world' Want to boost mpg? Turn up the heat on AC Cutting energy loss: A nibble here, a nibble there ... Carbon slashes weight, but it's still too pricey Carmakers shift to gears in search of mpg gains Natural gas draws interest as alternative fuel Friction? Ay, there's the rub Electric for a week Automotive News - November 10, 2008 Automotive News - November 10, 2008 - (Page Intro) Automotive News - November 10, 2008 - (Page Bellyband1) Automotive News - November 10, 2008 - (Page Bellyband2) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 1) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 2) Automotive News - November 10, 2008 - VW will unveil roadster at Detroit auto show (Page 3) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 4) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 5) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 6) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 7) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 8) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 9) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 10) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 11) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 12) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 13) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 14) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 15) Automotive News - November 10, 2008 - Auto meltdown forces Mercedes to scrap prediction of sales record (Page 16) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 17) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 18) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 19) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 20) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 21) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22a) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22b) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22c) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22d) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22e) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22f) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22g) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22h) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22i) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22j) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22k) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22l) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 23) Automotive News - November 10, 2008 - Souped-up, tricked-out â and headed for the showroom (Page 24) Automotive News - November 10, 2008 - Amid gloom, Mazda chief sees revival in 2009-10 (Page 25) Automotive News - November 10, 2008 - Toyota aims to win loyalty with credit card (Page 26) Automotive News - November 10, 2008 - Hyundai helps (Page 27) Automotive News - November 10, 2008 - Dealers (Page 28) Automotive News - November 10, 2008 - Personnel (Page 29) Automotive News - November 10, 2008 - Personnel (Page 30) Automotive News - November 10, 2008 - Personnel (Page 31) Automotive News - November 10, 2008 - Personnel (Page 32) Automotive News - November 10, 2008 - Personnel (Page 33) Automotive News - November 10, 2008 - Personnel (Page 34) Automotive News - November 10, 2008 - Personnel (Page 35) Automotive News - November 10, 2008 - Personnel (Page 36) Automotive News - November 10, 2008 - As expected, Oct. sales sank (Page 37) Automotive News - November 10, 2008 - Honda backs off U.S. clean diesels (Page 38) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 39) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 40) Automotive News - November 10, 2008 - N.A. output falls 19.9% (Page 41) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 42) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 43) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 44)
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