Autoblog

Much ado was made about the Big 3 CEOs choice of travel to Washington D.C. this week. Each one flew to our nation's capital in separate private jets, a fact that was mentioned by many politicians during two days of testimony before Congress. While it's this blogger's personal opinion that politicians took the opportunity to grandstand a bit too far on this point, nevertheless, it was a boneheaded move by the Big 3 that they should've seen coming. We've learned today that fewer employees will get to fly the friendly skies in one of General Motors' corporate jets, as the automaker has announced it will be ridding itself of two. That will cut down the current corporate fleet of leased jets from five to three, and an additional two were gotten rid of last September. In addition to dumping the G5s, GM is also cutting half its air travel staff and restricting all forms of employee travel to slow the rate of cash its burning through each month, which in the third quarter reached $6.9 billion/month. Thanks for the tip, Aaron!

[Source: CNNMoney.com, Photo by Chip Somodevilla/Getty]

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?

[Source: Bloomberg]

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.

[Source: The Detroit Free Press]

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.


[Source: Detroit News]

Less than 2 months ago the headline here was GM ramps up Cobalt production to meet demand. It's amazing how quickly things change in this crazy environment. Just months after adding a third shift at the Lordstown, OH assembly plant where the Chevy Cobalt and Pontiac G5 are built, on Friday GM gave 1,100 employees at the facility layoff notices. The company isn't getting rid of the third shift but, it is slowing the build rate in line with current sales demand. Earlier this summer, GM was selling Cobalts as fast as they could build them and now all of a sudden, those sales have dried up. The spike was triggered by $4 gasoline, and even though gas prices have dropped to half that level, you might not expect sales to fall so fast. The real problem is the lack of available credit for financing. Most of the inherent customer base for cars like the Cobalt simply can't afford to pay cash for a new car. With credit increasingly hard to get, car sales have crashed almost across the board in October. Even the Honda Civic that sold 53,000 copies in May got just under 19,800 in October. Expect to hear more about slowdowns at other carmakers, including mighty Toyota and Honda, very soon.

[Source: Vindy.com]

On the same day that General Motors announced it would be discontinuing talks with Cerberus over a possible purchase of Chrysler, news hits by way of Reuters that a replacement suitor has sprung up. Wow, that didn't take long. The latest partner is none other than Hyundai, Korea's largest automaker. Not surprisingly, it's the Jeep brand that is again taking center stage according to these initial rumors. Everybody wants Jeep, it seems. If true, the possibility of breaking Chrysler's automotive operations into bits and pieces once again seems like a distinct possibility. What's more, after acknowledging that GM is abandoning talks of a "strategic acquisition," Chrysler's Bob Nardelli may now be back on the phone with Carlos Ghosn, head of the Nissan/Renault juggernaut, along with, presumably, anybody else who is willing to listen and has a pulse.

[Source: Reuters]

While everyone's favorite whipping boy goes around gallivanting with hookers dressed up like Nazis, the sanctioning body responsible for most of the top-level motor racing around the world has nominated an American with a solid reputation as its Deputy President.

Nick Craw has unimpeachable credentials both in motorsports and in governance of international organizations. After graduating from Princeton with an MBA from Harvard, Craw was a budding racecar driver in the 1960's and 70's, competing in Indy's feeder Formula Atlantic series and BMW touring cars before starting his own Scorpio Racing Enterprises. He left racing in the 70's to head up the Peace Corps, then returned to assume the presidency of the Sports Car Club of America for 17 years. From that position Craw ascended up the international racing governance ladder before leaving to head up the U.S. Sailing team, then returning to the fold as head of the Automobile Competition Committee for the United States (ACCUS) with a seat on the FIA's World Motorsport Council. Craw's nomination for the deputy position is expected to be ratified by the body's General Assembly later this week. Just don't expect to catch the subsequent celebrations in the British tabloids.

[Source: GrandPrix.com]

Due to deteriorating market conditions and a dire cash crunch, General Motors CEO Rick Wagoner will be announcing "important changes" during his company's 3rd quarter earnings report on Friday at 11AM EST The Detroit News obtained an executive level email that foretells the bad news ahead but doesn't go into specifics regarding what actions the General will take. Wagoner did, however, send out an earlier email that stated cuts were necessary. Some cutbacks on the table include both voluntary and involuntary salary layoffs and the loss of certain benefits like 401k matching. GM spokesman Tom Wilkinson verified that change was coming by saying that the struggling automaker would need to make "additional adjustments."

The Friday announcement will likely include a hefty financial loss, too, as evidenced by an earlier announced loss of $2.5 billion by GMAC financial. Seems the General will use the public stage this Friday to announce additional production cuts or plant closings or delays to future products or... all of the above and more. We'll be listening and will let you know.

[Source: The Detroit News, Photo by Bill Pugliano/Getty]

Now that the 2008 Formula One championship is decided, teams will begin moving on confirming their drivers for next season. And while several already have, one major question mark has just been resolved as Renault has confirmed the extension of Fernando Alonso's contract. And not just for next season, but through 2010. Along with it, they've confirmed his team-mate's contract through next season as well, giving the team continuity for its upcoming assault on the title.

Renault managed a notable recovery in the latter part of this season that saw Alonso win two races back to back. And while that may be a far cry from the two titles he won with the team a couple of years back, it's a start. That no doubt had a positive impact on Fernando's decision to stay with the team, but insiders were surprised to see him sign for two more years instead of one. Meanwhile, though Nelson Piquet Jr. had a rough start to the season, he managed to pull off some noteworthy performances when the team found its form again, earning him a renewal as well.

The hirings should allow the rest of F1's teams, now relieved of the suspense, to confirm their drivers for next season. So far, Ferrari, McLaren, BMW Sauber, Williams and now Renault have announced they're sticking with the same pairings, and Red Bull has confirmed Sebastian Vettel is moving up to take Coulthard's seat alongside Mark Webber, leaving Toro Rosso, Toyota, Honda and Force India to announce their drivers for the upcoming season. Stay tuned.

[Source: Renault F1]

Nearly 4,000 employees of the Mercedes-Benz assembly plant in Vance, Alabama, are being offered buyouts in advance of another expected round of production cuts at the facility in January. The Vance plant produces the M-Class sport utility, R-Class crossover and GL-Class full-sized sport utility for the Mercedes-Benz lineup. In July, Mercedes slowed production for the first time in more than a decade of U.S. production as rising gas prices in June drastically cut sales. Although the buyout packages are being offered to all employees, Mercedes spokespersons are quick to point out that these are not to be considered layoffs. In fact, the automaker will only hand out an undisclosed limited number of buyout packages as it makes changes to the plant to bring production back in line with demand.

Alabama has been hard hit this year by the global auto industry slump. The state's automotive industry is 134,000 workers strong, and the sobering news from Mercedes-Benz only adds to earlier production cuts from Honda and slowdowns from Hyundai, two other automakers with assembly plants in the Heart of Dixie.

[Source: AL.com]