Organizers, fans and media alike were shocked when the news broke that Formula One Management and the FIA had canceled the perennial Canadian Grand Prix, but the prospect remained open for local officials to renegotiate the contract. We're disappointed to report, however, that those prospects have now all but completely dissipated, as negotiations between the sport's commercial rights-holder Bernie Ecclestone and representatives from the Canadian federal, Quebec provincial and Montreal municipal governments have broken down. And everyone's fingers are pointing at Bernie.
According to Montreal mayor Gerald Tremblay, Ecclestone put forward an outrageous proposal extorting exorbitant multi-million-dollar fees from the race organizers, who receive backing from the three levels of government. The Canadian representatives then began considering levying a new tax over local hotels to cover the cost and planning to establish a non-profit organization to come up with a fiscally sound counter-offer, but even those prospects were completely shut down when Ecclestone stated his refusal to budge from his terms whatsoever. And so, with the US Grand Prix still out of the running – for the time being, at least – the top level of motor racing has completely abandoned North America altogether.
"Thick and fast." That's the phrase that describes the opinions, pleas, advice, denunciations, and WTF? going on around the U.S. auto industry right now. Enter Congress, which is trying to figure out how to give Detroit automakers the $25 billion they were promised a few months ago. Congressmen are sounding off almost daily on what kinds of stipulations they want to attach to the loan/bailout/whatever you want to call it -- and that's just the ones who would vote for it at all.
Next up is Senator Bill Nelson, a Florida democrat, who wants U.S. automakers to achieve a fleet average of 50 mpg by 2020. Right now, the CAFE target is 35 mpg by 2020 -- a goal agreed upon only after a huge amount of jockeying in and out of Congress. Nelson asked, "Why should we be pouring taxpayer money into an automobile industry that has continued to resist higher miles per gallon, which has led us in part to the problems we're in?"
While that might sound like a great idea to some, it would cost a terrific sum of money to achieve. The Detroit Three need the money they're asking for just to get to Q2 of 2009, not to create a range of cars that would represent magnificent advances -- based on where we are right now -- in 11 years. There's a good chance nothing will be decided until the president-elect takes office, and by then, who knows what other requests Congress will have.
From November 28 to December 11, GM is holding back incentive payments to dealers, including dealer cash and customer cash. Why? in the words of Mark LaNeve, GM's VP of North American sales, because "Anytime you can delay any kind of a payment, it helps cash flow" And cash is probably the most important four-letter word in any GM dictionary.
The withheld payments don't cover all the monies that GM sends to dealers, just various incentives. According to Automotive News' numbers, the two weeks of extra cash could let GM hold on to an extra $300 million. If GM needs $14 billion per month to operate, $300 million would extend the lifeline by... almost another day. Payments after December 11 would resume on a weekly basis, but with the new two-week delay, something like an employee paycheck. GM discussed the plan with the National Dealer Council beforehand and, unsurprisingly, the council understood. Follow the jump to read LaNeve's letter to dealers.
General Motors CEO Rick Wagoner mentioned last week that, in addition to selling the HUMMER brand, other assets were being evaluated for sale, as well. While no other brands are likely to be sold off besides HUMMER, GM did announce this morning that it's selling all of its remaining stock in Suzuki. GM owns 16,413,000 Suzuki shares, which is about 3% of the Japanese automaker's traded stock. The value of the sale is estimated at $230 million, all of which should help keep the lights on at GM for an extra day or two if some form of government aid isn't approved this week by Congress.
Despite selling off its remaining interest in Suzuki, GM is still very much interested in continuing the two automakers' working relationship and may end up repurchasing a stake in the future. The giant American carmaker's interest in its Japanese competitor has fluctuated over the years, peaking in 2001 when it held over 20% of Suzuki's outstanding shares. In 2006, however, it sold 17.4% before today's unloading of the remaining 3%.
Employee pricing, that tricky sales tactic that helped GM post better sales figures than its competitors back in August and September, are about to work their magic for the Blue Oval. According to reports, Ford is planning to launch an employee pricing promotion on November 19 and is expected to keep it active until January 5th. Throughout that period, General Motors will be running its annual year-end Red Tag Sales Event, so the two biggest domestic automakers will be battling it out for lowest profits sales supremacy. In addition to paying the same as a Ford worker, buyers may also get an extra dollop of cash on some models to help move the last of the '08s, though the brand-new 2009 F-150 pickup truck will not be part of the promotion. Now, go find yourself a deal.
General Motors' CEO, Rick Wagoner, who's been manning the helm for the last eight years and a part of its staff since 1977, has taken some heat for asking the Feds for a bailout. A possible condition for those funds may be the symbolic sacrificial death of its current leader, according to a slew of analysts polled by Bloomberg. Whether true of false, there seems to be a sense that the CEOs of U.S. automakers are some of "the dumbest people in the world," according to ex-Chrysler prez. Thomas Stallkamp. Ouch. Ford has stated that it doesn't need a bailout and Chrysler is actively looking for partners to keep itself alive.
In the last few months, when the government has bailed out institutions such as AIG, Fannie Mae and Freddie Mac, one stipulation was that its top management be replaced, and that sentiment may stick around if the Detroit 3 receive packages of their own. Although Wagoner isn't likely to step down willingly, he may not be given the choice if some legislators get their way. Here's an unanswered question, though... who would be the best man to replace him?
In recent weeks, the idea that one or all three of Detroit's automakers could end up filing for chapter 11 bankruptcy protection in the coming weeks or months has gained a lot of momentum. In theory, the advantage of chapter 11 is that it provides protection from creditors while the company is reorganized in a way that it can survive. The company is allowed to continue operating in this mode, thus avoiding a complete shutdown. A number of major airlines have done this and managed to keep operating, although some have ultimately failed anyway. There is a big difference between a plane ticket and a car. With an airline, you buy your ticket, take your flight and then (hopefully) walk away. After the flight, there is no expectation of ongoing service and support. A car is a much larger purchase and expected to operate for 10-15 years. Warranty service is demanded during that time, and spare parts need to be available on an ongoing basis. Given the long-term requirements of a car, a chapter 11 filing could be a death sentence for a manufacturer as customers look elsewhere. So the question we ask you is, "Would you buy a car from a company in bankruptcy?"
Executive bonuses are a hot-button issue in these difficult economic times, and for good reason. As companies in every industry teeter on the brink of bankruptcy, paying out millions in bonuses to execs is a breach of trust to those white- and blue-collar workers in the cheap seats who are being asked to sacrifice benefits, retirement security and even their jobs to keep a company solvent. The Detroit Free Press recently discovered that Chrysler LLC has an executive bonus plan in place that will cost the automaker about $30 million at the same time it's asking Congress for federal aid money to keep the lights on. Chrysler's executive vice president for human resources, Nancy Rae, who herself is on the receiving end of $1.6 million in bonus money, tells the Freep these bonuses were designed to keep executives in place after the automaker was sold by Daimler to private equity firm Cerberus. She goes on to say the bonus plan was established by Daimler, not Chrysler, to ease a potential buyer's fear that execs would flee after the sale.
Be that as it may, considering how far Chrysler is from profitability at the moment, perhaps retaining these executives is the last thing it needs. Cutting loose the suits who are partially responsible for this mess and saving millions in the process seems like a more responsible move to us than begging Uncle Sam for bailout money.
Click above for a high-res gallery of the 2009 Ford Fiesta
With all the news surrounding General Motors and Chrysler's slicing and dicing to profitability, it's a breath of fresh air to hear that Ford is taking a different tack. The Blue Oval is betting the farm on new models that will lure consumers into showrooms rather than reworking existing models and cutting back development spending.
Speaking with the Detroit News, Ford CEO Alan Mulally said, "We're only going to be in business if we create products that people really do want and value. This is the essence of creating a viable Ford."
Part of the automaker's plan is to invest in the development of small cars in the U.S. and to make those models as profitable as their European counterparts. The recently renegotiated contracts with the UAW should help, but offering the features U.S. consumers crave in a small, inexpensive packages could prove difficult. And new products are only part of the solution.
Ford plans to cut back on advertising spending, reduce salaried payroll by 10% and cut executive bonuses to net between $8-9 billion. All that, along with asset sales and working with Ford Credit, could bring things back into the black (hopefully) and more compelling products have to be part of the plan.
Some U.S. policymakers believe that the domestic auto industry needs a multi-billion $hot in the arm, but the sticking point seems to be where to find the funds. Rep. Barney Frank (D-Mass.) is calling for a portion of the financial sector's $700 billion TARP buyout to be apportioned to Detroit, but Treasury Secretary Henry Paulson doesn't like the sound of that at all. Instead, Paulson would like to see the automakers get the $25 billion they've already been promised, and suggests that it be made available as soon as possible. Of course, that money was supposed to go towards retooling the industry to make more fuel efficient cars, not necessarily as a cash-infusion to keep the Detroit 2.8 running. In any case, Frank has called for a meeting with the heads of each automaker in Washington next Wednesday to discuss whether a new loan for Detroit should be sectioned off from the TARP fund. This could get interesting.
Organizers, fans and media alike were shocked when the news broke that Formula One Management and the FIA had canceled the perennial Canadian Grand Prix, but the prospect remained open for local officials to renegotiate the contract. We're disappointed to report, however, that those prospects have now all but completely dissipated, as negotiations between the sport's commercial rights-holder Bernie Ecclestone and representatives from the Canadian federal, Quebec provincial and Montreal municipal governments have broken down. And everyone's fingers are pointing at Bernie.
In recent weeks, the idea that one or all three of Detroit's automakers could end up filing for chapter 11 bankruptcy protection in the coming weeks or months has gained a lot of momentum. In theory, the advantage of chapter 11 is that it provides protection from creditors while the company is reorganized in a way that it can survive. The company is allowed to continue operating in this mode, thus avoiding a complete shutdown. A number of major airlines have done this and managed to keep operating, although some have ultimately failed anyway. There is a big difference between a plane ticket and a car. With an airline, you buy your ticket, take your flight and then (hopefully) walk away. After the flight, there is no expectation of ongoing service and support. A car is a much larger purchase and expected to operate for 10-15 years. Warranty service is demanded during that time, and spare parts need to be available on an ongoing basis. Given the long-term requirements of a car, a chapter 11 filing could be a death sentence for a manufacturer as customers look elsewhere. So the question we ask you is, "Would you buy a car from a company in bankruptcy?"
Officially Official: 2010 Ford Mustang!
2010 Ford Mustang revealed early on Ford's own website!
2009 Nissan 370Z rolls out early in So. Cal
VIDEO: 2009 Nissan 370Z revealed early in So. Cal.
BRABUS begins business of tuning the Tesla Roadster
In the Autoblog Garage: 2009 Mercedes Benz C63 AMG
In the Autoblog Garage: 2009 Hyundai Genesis
In the Autoblog Garage: 2009 Chevrolet Traverse LT
Knight Rider: The Liveblog -- Season 1, Episode 7
