What Would Slandy Do?  I’ve been asked many times recently - what is the answer?  Surely, the government shouldn’t just throw money at the D3.  They need to reform, etc, etc.  At the risk of being presumptuous, here’s what I would do, if I were emperor for a day (just for the auto situation - I have a whole separate list for other topics :^) ).

First, I would allow ALL of the protections of chapter 11 bankruptcy without the actual filing.  The “B” word would be death to the car makers.  Nobody is going to buy a car from a bankrupt automaker.  This would allow them the breathing room to make the changes they need, including rewriting the UAW contract.  I’ve written that the UAW has already given, which is true, but other areas need to be addressed.  The top of that list is work rules.  It is true that the cost of a UAW worker is about the same as a “transplant” worker, but the onerous UAW work rules force the D3 to have too many workers and pay all of the workers the same, regardless of their actual job.  This results in the guy who cuts the grass to be paid the same as the workers in the plant who actually make the cars.

This would also include a provision that supersedes the state franchise laws.  One of the biggest problems is the number of dealers.  The D3 (or any other maker) is severely restricted from rationalizing the number of dealers by state franchise laws.  The D3 have way too many dealers, primarily in urban areas, but would have to pay billions to reduce the number.  Meanwhile, the dealers can’t make any money because there aren’t enough sales to go around.  The D3 need to have the power, with some restrictions/oversight to reduce their dealer count without using all of their cash.

Next, I have suggestions for each of the D3.  First, Chrysler.  Chrysler is in a unique situation, having ownership that is a private equity firm (Cerberus) that obviously doesn’t want to be in the car business.  Cerberus obviously bought their 80.1% stake in Chrysler cheap (or so they thought) and hoped to make a quick buck.  Oops.  Some think the government should just let Chrysler die, because Cerberus doesn’t deserve the help.  Maybe, but what about the workers and management that had nothing to do with all of the ownership changes?  Why should they suffer?  To address this, Emperor Slandy will give the loan to Chrysler in exchange for 100% ownership of Chrysler, including the 19.9% Daimler stake.  Next, I GIVE (or sell for a nominal amount) Chrysler to Nissan-Renault or Volkswagen or another OEM whose product lineup would be complemented by Chrysler’s.  In return for this gift, they would have to agree to keep a certain number of employees and plants open and working.  They would get the benefit of the Chapter 11-like protections to restructure Chrysler’s business.  Cerberus should be happy with that, as they can just walk away without any further losses.  Same for Daimler.  Chrysler employees should be happy too, especially considering the alternatives.  And we, the taxpayers should be happy as well.  We’ve saved jobs with potentially no cost, assuming that the loan is paid back.

General Motors needs the loan, and the fake bankruptcy will give them the room to restructure into a leaner, meaner, more competitive enterprise.  One cost savings that GM should have put in place years ago is their company car program, otherwise known as PEP (Product Evaluation Program).  In its present form, PEP car drivers get a new (usually fully-loaded) vehicle to drive every 4 months.  For this, they are charged a nominal fee ($150/month), which includes EVERYTHING (gas, insurance, maintenance and repairs, unlimited miles).  GM justifies this program by saying it puts the products in the hands of the employees so they can be more familiar with the products and can therefore make suggestions for improvement.  Possibly, but this program, with the structural costs that go with it, is a huge expense that GM cannot afford, even in good times.  The dealers would certainly appreciate the increase in business that would follow (see comment above).  GM could adopt Ford’s company-car program.  See below.

Ford is in the best shape, and doesn’t need any loans…for now.  Ford’s company-car program could use some changes as well.  Management-level employees at Ford get to lease 1 or 2 (depending upon the level) vehicles per year which include everything the GM program does except gas.  The difference is that Ford employees pay much more and the amount depends on how expensive the car is, so Ford makes money on its program.  The suggested change is to eliminate the company-car garages and infrastructure that support the program in and around Dearborn.  Give the dealers the business; they will appreciate the increased business as much as GM’s will, and Ford saves millions.

I also think that all remaining employees, from the top down, should take a pay cut of 5%.  The sacrifices should be spread out among everybody.

The government needs to do its part as well.  We need health care reform (as the countries of the foreign competitors do), trade reform (previously discussed), a coherent energy policy that would include a significantly increased carbon/gas tax and better monetary policy that would address currency manipulation practiced by our friends in other countries.  With all of these in place, the playing field will be more level, allowing our home teams to really show that they can be competitive when the deck is not stacked against them.

If this makes sense to you, you need to do 2 things.  First, write your congressional representatives.  Second, vote Slandy for Emperor!  If you don’t agree, post a comment below with a better idea.  I am always willing to listen to the people.

I sent this letter to President Bush today.

Dear President Bush,

It is hard to believe that it has even come to this, but PLEASE support the loan package for the auto industry.

Forcing GM and Chrysler into Chapter 11 bankruptcy would not only devastate an already weak economy, but also signal the end of American manufacturing prowess to the rest of the world.  Because of the overlapping supply base, the collapse of any of the 3 US automakers would take down its suppliers, which would not only take down Ford, which is not in imminent danger, but also the foreign manufacturers operating in the US.  A general manufacturing collapse would follow, taking out basic industries in all sectors of the economy.

What the “Big 3″ are requesting is a loan, as you know.  They fully intend to use the money to maintain liquidity to get them through the worst economic and credit crisis in 75 years.  Without credit, dealers cannot stock cars and consumers cannot buy them.  Foreign automakers have been requesting help from their home governments as well - so this is clearly not simply a case of mismanagement by the US automakers.

Comparing the situation against the foreign automakers is also not a fair one.  While I fully support free trade, it also must be FAIR trade.  We welcome products from around the world to be sold here, but the rest of the world is not so accommodating to our products.  They protect and nourish their home-grown industries, while we scorn and punish ours.  They give particular attention and help to their auto industries, because they know that auto manufacturing brings with it vital ancillary industries - basic research and development, plastics, steel, rubber and semiconductors, to name a few.  Why do our policies not place such value on our manufacturing industries?  We have already lost many industries, including steel, televisions and computers to foreign countries which support their own.  How many more can we stand to lose before we are relegated to 3rd world status??  We can’t all work at WalMart or Starbucks!  Senate Republicans that voted against this bill last night know this too, as their state governments have spent billions to lure foreign auto plants and suppliers to their states.

Unlike Wall Street, with its $700 billion giveaway, none of the Big 3 has engaged in questionable business practices that have put this economy in such danger.  They have made mistakes, which they freely admit, but all of them were well on their way to righting their respective ships when this crisis hit and pushed them over the edge.  They have already done what the so-called experts have told them they must do:  Ford and Chrysler have brought in respected managers from outside the industry, all 3 negotiated major concessions from the UAW last year.

President Bush, this is perhaps your last chance to leave behind a legacy as the person who saved millions of jobs and perhaps the very future of our economy.  Please do the right thing for all of us, including those who don’t know it yet.

Thanks for your consideration,

Slandy
Publisher, The Slandy Report
http://slandyreport.com/




Well, it looks like the D3 will get their bail…er, loan after all.  As of this writing, reports out of Washington say that GM and Chrysler may get up to $15 billion in short-term loans to carry them over until approximately March.  The lame duck Congress and administration are punting this issue to their successors next year.

Congress has been throwing around many ideas to “help” make the D3 more efficient and more profitable, all under the guise of protecting the taxpayers’ money.  Among the ideas:

• a shotgun wedding of GM and Chrysler
• limits on the companies’ lobbying - specifically against states’ efforts to regulate greenhouse gas emissions (Democrats want this)
• appointment of a “car czar” to oversee the restructuring of the industry, including the power to rewrite contracts with lenders, suppliers, dealers and unions
• force bankruptcy if certain conditions and deadlines are not met
• cut the union wages and eliminate the so-called “jobs bank” (Republicans)
• compel bondholders to accept a debt for equity swap
• forcing the ouster of 1 or more of the CEOs of the D3 and limitations of executive pay and/or bonuses

Depending on the exact final wording of the bill, this could be a disaster for the D3.  Many cliches come to mind, specifically that the “medicine might be worse than the disease.”

I have addressed the GM-Chrysler merger in a previous article, so you can read my thoughts there.

The separate greenhouse emissions regulations by state is beyond ridiculous.  Briefly, you have a group of companies that might not make the payroll this month, and DC wants to saddle them (as well as their competitors) with a ragtag set of regulations that will drive up the complexity of their products many times.  This will further undermine their ability to recover from their current situation.  For those that don’t understand this issue, California and 15 other states have already passed regulations that limit greenhouse gas (carbon dioxide) emissions from tailpipes.  Present federal law prohibits states from setting fuel economy standards.  There is one set of standards and the feds have that right exclusively.  So what’s the problem - fuel economy standards aren’t the same as emissions, right?  Wrong.  Gasoline (as well as Diesel fuel) is a hydrocarbon, meaning that it is made up of hydrogen and carbon.  When a hydrocarbon fuel burns completely, the oxygen in the air combines with the hydrogen to form water (H₂O) and with the carbon to form carbon dioxide (CO₂).  If the burning is not complete, then some of the carbon atoms only combine with one oxygen atom rather than two, to form carbon monoxide (CO), a highly poisonous gas.  Phrased differently, carbon dioxide is formed from burning gasoline or Diesel.  It’s the chemistry that determines that, so the 16 (and counting) states saying that they are only trying to clean up their air is just a smokescreen (pun intended) for going around federal law to set fuel economy standards.  Why is this bad?  Because all of the automakers spend many millions of dollars every year to navigate the extremely complex fuel economy rules.  Believe me, it is way more complex than anybody who has never worked in government could ever imagine.  Now multiply that by perhaps 50.

I want to know the criteria for the selection of the car czar.  Since many in Congress admitted in the hearings that they know nothing about running a car company, what makes them think they know how to pick somebody to oversee the auto industry?  What are the qualifications?  I think they would want somebody with non-automotive manufacturing experience, perhaps a turn-around specialist.  I’ve heard the name Jack Welch thrown around.  Jack would likely be a good choice, but DC doesn’t work that way.  Likely, it will be a politician owed a favor or perhaps a politician out of favor, considering how DC views Detroit.  Detroit is the USA’s Siberia, after all.  But can Sarah Palin see Detroit from her house?  Personally, I’d like to nominate John Engler, former Michigan governor, for the post.  Engler is the President & CEO of the National Association of Manufacturers, so he knows all about the issues facing the manufacturers in this country.  He is also a politician, so he knows how get things done in the political world.  He has all of the skills and experience that will be needed in this job, assuming it will exist in the final version of the loan legislation.

If the feds force bankruptcy, they better understand that Chapter 11 (reorganization with court supervision) really means Chapter 7 (liquidation) in this case.  Consumer research has already shown that D3 sales have been hurt by the mere talk of bankruptcy.  Bankruptcy generally works to help a company restructure in a safe environment.  Cars are different.  Besides your home, you will likely never make a bigger purchase than a car.  People keep cars for at least 2 years, sometime much longer.  Be honest - would you make that kind of financial commitment to a company that you’re not sure will be around to honor the warranty?  Make no mistake about this - bankruptcy in this case means the companies go out of business.  What would be better is for Congress to allow all of the bankruptcy rules and protections to apply without a formal declaration and filing of bankruptcy.

The UAW last year negotiated lower wages for all new employees (½ of the prevailing rate), and agreed to buyouts of many existing, higher wage employees.  They also agreed to help take many of the obligations for benefits off the D3 books, and last week agreed to a longer time frame to fund those obligations, saving the D3 precious cash.  Experts agree that when those changes are fully implemented, D3 wages & benefits will be roughly the same as the transplants.  The UAW has also agreed to suspend the jobs bank immediately.  The UAW has come to the table and has given much more than most people realize.  The only part left is in the area of work rules.  The UAW contract contains many different job classifications that are simply out of date.  Supervisors need to have the flexibility to assign workers wherever they are needed, but they don’t presently have that ability.  So while the cost of the workers is now competitive, the D3 are forced to have too many workers.  This should be addressed and fixed.

I have also addressed the situation of the CEOs of the D3 previously, and you can read my thoughts on that as well.  I think that limitations on pay and bonuses are perfectly fair, if the taxpayers’ money goes to help these companies.

The D3 need the taxpayers’ help, and they are going to have to live with whatever restrictions Congress dreams up if they want to survive.  Congress needs to be careful and understand what they’re doing, because they are hardly the example of fiscal expertise.  The D3 might be guilty of mismanagement, but DC certainly is.

Today, Alan Mulally, CEO of Ford, made the following statement to the Senate Committee on Banking, Housing and Urban Affairs:

Mr. Chairman, Senator Shelby and members of the Committee. Thank you for the opportunity to share Ford’s plan. We appreciate the valid concerns raised by Congress about the future viability of the industry. We hope that our submission and today’s testimony will help instill confidence in Ford’s commitment to change, including our accountability and shared sacrifice during this difficult economic period.

On Tuesday, Ford Motor Company submitted to your Committee our comprehensive business plan, which details the company’s path to profitability through an acceleration of our aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles – including a broader range of hybrid-electric vehicles and the introduction of advanced plug-in hybrids and full electric vehicles.

In addition to our plan, we are also here today to request support for the industry. In the near-term, Ford does not require access to a government bridge loan. However, we request a credit line of $9 billion as a critical backstop or safeguard against worsening conditions as we drive transformational change in our company.

One Plan: Beginning earlier this decade, we recognized the challenges the domestic auto industry faced and began implementing a disciplined global business plan to completely transform Ford, to improve our efficiency, cut costs and champion innovation. Our plan builds on the success we have seen in the past two years by accelerating the development of our new products that customers want and value. Our plan is anchored by four key priorities:

• Aggressively restructure to operate profitably at the current demand and changing model mix;
• Accelerate development of new products our customers want and value;
• Finance our plan and improve our balance sheet; and
• Work together effectively as one team, leveraging our global assets.

One Goal: Our team and plan is dedicated and focused on delivering profitable growth for all. While market, economic and business conditions recently have deteriorated worldwide at a rate never before seen, we have made substantial progress since we launched our plan in late 2006:

• We obtained financing by going to the markets in December 2006 to raise $23.5 billion in liquidity, consisting of $18.5 billion of senior secured debt and credit facilities, substantially secured by all of our domestic assets, and $5 billion of unsecured convertible debt.

• We have implemented our strategy to simplify our brand structure. As a result, we sold Aston Martin, Jaguar, Land Rover and the majority of our ownership of Mazda, and we’re considering our options for Volvo. We have divested other non-core assets. These sales have also helped our overall liquidity and generated $3.7 billion in additional capital to re-invest in the business.

• To achieve maximum efficiency, we will have reduced our North American operating costs by more than $5 billion between year end 2005 and 2008.

• We have taken painful downsizing actions to match capacity and market share in North America, including closing 17 plants and downsizing by 12,000 salaried employees and 44,000 hourly employees.

Ford is committed to building a sustainable future for the benefit of all Americans, and we believe Ford is on the right path to achieve this vision. I know the Members of the Committee have had an opportunity to review our plans over the last two days, so I will highlight new details about Ford’s future plans and forecasts:

• Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.

• Based on current business planning assumptions – including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively – Ford expects both our overall and our North American automotive business pre-tax results to be breakeven or profitable in 2011.

• As part of a continuing focus on building the Ford brand, we are exploring strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker. The strategic review is in line with a broad range of actions we are taking to focus on the Ford brand and ensure we have the resources to fund our plan. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.

• Half of the Ford, Lincoln and Mercury light-duty nameplates by 2010 will qualify as “Advanced Technology Vehicles” under the U.S. Energy Independence and Security Act – increasing to 75 percent in 2011 and more than 90 percent in 2014. We have included these projects in our application to the Department of Energy for loans under that Act and we hope to receive $5 billion in direct loans by 2011 to support Ford’s investment in advanced technologies and products.

• From our largest light duty trucks to our smallest cars, Ford will improve the fuel economy of our fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models – compared with the fuel economy of its 2005 fleet. Overall, we expect to achieve cumulative gasoline fuel savings from advanced technology vehicles of 16 billion gallons from 2005 to 2015.

• Next month at the North American International Auto Show in Detroit, we will discuss in detail Ford’s accelerated vehicle electrification plan, which includes bringing a family of hybrids, plug-in hybrids and battery electric vehicles to market by 2012. The work will include partnering with battery and powertrain systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011. We will develop these vehicles in a manner that enables it to reduce costs and ultimately make BEVs more affordable for consumers.

• The 2007 UAW-Ford labor agreement resulted in significant progress being made in reducing the company’s total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, we are presently engaged in discussions with the UAW with the objective to further reduce our cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.

• As previously announced, Ford plans two additional plant closures this quarter and four additional plant closures between 2009 and 2011. We have announced our intent to close or sell what will be four remaining ACH plants. And we will continue to aggressively match manufacturing capacity to real demand.

• Ford will continue to work to reduce its dealer and supplier base to increase efficiency and promote mutual profitability. By year end, we estimate we will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets. In addition, Ford has been able to reduce the number of production suppliers eligible for major sourcing from 3,400 in 2004 to approximately 1,600 today, a reduction of 53 percent. We eventually plan to further reduce the number of suppliers eligible for major sourcing to 750.

• After reducing our workforce by 50 percent in just three years, we are also canceling all bonuses and merit increases for North America salaried employees – including top management – in 2009. And should Ford need to access funds from a potential government bridge loan, I will work for a salary of $1 a year – as a sign of my confidence in the company’s transformation plan and future.

• We are moving ahead with plans we announced this summer to leverage the company’s global product strengths and bring more small, fuel-efficient vehicles to the U.S. The plan includes delivering best-in-class or among the best fuel economy with every new vehicle introduced. We are also introducing industry-leading, fuel-saving EcoBoost engines and doubling the number and volume of hybrid vehicles.

• This product acceleration will result in a balanced product portfolio with a complete family of small, medium and large cars, utilities and trucks. And we are increasing our investment in cars and crossovers from approximately 60 percent in 2007 to 80 percent of our total product investment in 2010.

Our plan is working, but there is clearly more to do – something that is increasingly difficult in this tough economic climate. That is why we are seeking access to a $9 billion bridge loan, even though we hope to complete our transformation without accessing any of these funds.

Despite the serious global economic downturn, Ford does not anticipate a liquidity crisis in 2009 – barring a bankruptcy by one of our domestic competitors or a more severe economic downturn that would further cripple automotive sales and create additional cash challenges.

In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises.

The impact of a bankruptcy also reaches beyond Ford and the U.S. auto industry. It would cause further stress to our domestic banking industry and private retirement systems. Goldman Sachs estimates the impact at up to $1 trillion.

We also believe effective restructuring involves a broader dialogue with all our stakeholders. President-elect Obama has indicated an interest in such a discussion. There are a number of complicated questions that will need to be considered, for example:

• How do we create a dealer body that meets market demand and is profitable for all?
• How do we develop a healthy and viable supplier base?
• How do we work with the UAW to ensure that our cost structure is competitive with the foreign transplants?
• How do we address the significant debt obligation of the domestic industry?

We are prepared to work together with this Committee and all of the parties to address these critical issues as part of our plan.

Ford has a comprehensive transformation plan that will ensure our future viability – as evidenced by our profitability in the first quarter of 2008. While we clearly still have much more to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth.

Thank you.

Well, the Detroit 3 have turned in their homework on time.  That used to count for something, but I’m not sure it does any longer.  Congress, specifically the Republicans, seems to have decided that they should make an example of of the D3.  They are obviously a bunch of mismanaged dinosaurs run by a group of idiots.  If you subscribe to this line of “reasoning”, ask yourself this, “How likely is it that all 3 of these extremely large publicly held (except for Chrysler only recently) companies, would all make the same mistakes and never be able to make good, sound business decisions for the last 30+ years?”  I’m no mathematician, but the odds against that seem very long.  I addressed some of the reasons for this situation last week, but they include 1. our nation’s lack of coherent trade, energy and health care policy, 2. uncompetitive union contracts and 3. yes, management mistakes.  Any one or even two of these would have put the D3 in a bad, but not deadly, position.  All 3, combined with the current credit crisis, has pushed an industry that was turning away from the abyss over the cliff.  The latter 2 of the 3 reasons above were addressed before this crisis hit (Ford turned a profit in the 1st quarter this year, in fact).  All of the D3 negotiated “breakthrough” contracts with the UAW in 2007, making a big difference to their bottom lines, mostly by moving the burden of health care to the UAW itself.  Ford and Chrysler also brought in new management from the outside.  Alan Mulally of Ford, in particular, has made all of the right moves since he came on board 2 years ago.  He and Bob Nardelli of Chrysler are exactly what the so-called experts have been saying in the media for the last few weeks.  They’ve said, “Go outside your inbred company and hire some proven managers that are not beholden to the old ways of doing things.  Maybe you could learn a thing or 2 from the Japanese companies as well”  Alan Mulally left a 30+ year career at Boeing to take over as CEO of Ford 2 years ago.  He is credited for turning Boeing around from his position in charge of the commercial aircraft division - the largest part of Boeing.  He understands manufacturing and unions in a large corporation.  Bob Nardelli spent almost 30 years at General Electric and was 1 of 3 “finalists” to succeed Jack Welch when Jack retired in 2000.  He left GE and became CEO of Home Depot.  Under his watch, Home Depot doubled sales and profits in 5 years.  By the way, both Ford and Chrysler also have recruited highly visible and successful executives from the darling of the media, Toyota.  Jim Farley is presently VP of Marketing at Ford, while Jim Press is co-president of Chrysler.

I’ve been told by some (see comments on the previous article), including a certain lawyer that I know, that if a company is losing money, and it is unable to cut its costs to make money - it should just go out of business.  That’s what happens to other businesses, right?  The lawyer pointed to their law firm, which had to close its doors recently.  This example is both right and wrong.  It’s right for the obvious reasons.  Capitalism works.  Free markets work.  The strong survive.  Economic Darwinism weeds out the weak, so the strong remain, etc, etc.  The example is also wrong because the US auto market is far from pure capitalism.  In what other industry are the companies told what they can sell, what features they will offer, where they can sell and whom they will hire?  None that I know of.  State and federal laws govern their relationships with dealers and the unions, so they have limited ability to change this situation without negotiating and paying a LOT of money.

Toyota and the other foreign makers live within these same regulations, so why aren’t they asking for a loan to save them?  Partly because they ARE foreign.  Their home markets have high fuel prices and are crowded - conditions which make the sale of small cars easy and profitable.  The US is just the opposite: cheap gas and wide open spaces.  Think it’s a coincidence that our home market automakers make the large vehicles?  Also, the home markets of the foreign automakers actively support them by supporting R&D and in other ways.

The UAW is blamed for a big part of Detroit’s problems, but is that really true?  For a long time, the UAW has burdened the D3 with high wages, high benefits, restrictive work rules and strikes to get what they want.  Federal law prohibits the companies from “busting” the union, so the D3 have to deal with them.  They can’t simply fire workers who strike or, in some cases, don’t even show up for work.  Recently, however, the UAW has agreed to lower wages and benefits so that when they take full effect, the UAW costs will be only slightly higher than the “transplants.”  The main source of labor disadvantage, however, is the work rules.  While the cost of a UAW employee now approaches those of the transplants, the remaining issue is that the work rules force the D3 to have too many employees.  This is the last source of disadvantage that must be addressed.  The UAW, to its credit, announced today that it will reopen negotiations with the D3.  The jobs bank and the work rules should be the 1st items on the agenda.

Will the D3 get their loans?  Should they?  As I sit in my kitchen typing this, CNN is saying that there doesn’t appear to be enough votes in Congress.  They also say that 61% of the public don’t support the loans.  The lack of information in both the public and in Congress is astounding.  I worry for our future as an industrial power.  The ramifications are truly frightening.

It’s really turning into the pickup season.  Ford just introduced a new version of the F-150, the best-selling vehicle in the US for a million years; Chevrolet just announced pricing for the Silverado Hybrid; and Dodge just introduced the new Ram pickup.  It’s like Christmas for truck buyers.

The 2009 Dodge Ram came out first, sporting a new, more sophisticated look and a host of new features.  The new look that hits you first (maybe literally, but I hope not) is the grille.  It has a forward-leaning top edge, similar to the Dodge Charger.  Other exterior changes are even more subtle, but give the big pickup a more aggressive and larger appearance.  If you’re not into studying the details, you will not even notice the difference.  The Ram also (finally!) has a true crew cab configuration.  They’ve been getting by for a few years with a crew cab wanna-be called the quad cab.  It has 4 front-hinged doors, but the rear doors are smaller than a true crew cab’s, so the addition of the crew cab will certainly be welcomed by dealers and customers.  The most interesting and innovative, though, is the RamBox cargo management system (available on the crew cab) includes weatherproof, lockable, illuminated and drainable storage bins built into bed rails.  RamBox bins hold up to 10 cases of 12-ounce “beverages”.

The interior sports significantly ugraded look and materials.  The most obvious change is the new floor console with the shifter moved from the steering column.  Other interior changes are “store in the floor” storage bins with removable liners, large enough for ten 12-ounce beverages and ice, heated and ventilated front seats (heated rear seats also available), heated steering wheel, live SIRIUS Backseat TV™ and surround-sound audio system.

Under the hood, the new Ram has improved, but carryover engines, including the 3.7L V6, 4.7L V8 and 5.7L Hemi V8.  Both V8s have increased power, torque and fuel economy.

Also just introduced is the new 2009 Chevy Silverado Hybrid pickup.  The starting price is $38,995, including destination charges, but not including the $2200 federal tax credit.  Production will begin in December, arriving in dealerships in “early 2009″, according to Chevrolet.  The Silverado uses GM’s two-mode hybrid system, and delivers 21 mpg in the city, 22 on the highway for the 2WD models.  4WD models get 20 city and highway.  These numbers are 40% better in the city and 25% overall.  The hybrid can still tow up to 6100 lbs and can drive in electric-only mode up to 30mph.  It’s available as a crew cab only.

The 2009 Ford F-150 is all-new as well.  The new styling mimics the F-150’s big brother, the Super Duty, with the 3 bar chrome grille and headlamps.  It also has the tailgate step bar from the Super Duty.  With 3 cab styles, 4 box options and 7 unique trim levels, the F-150 comes in 35 different configurations.  The new top trim level, the Platinum, was created when the Lincoln Mark LT was cancelled late in the program.  They had already engineered the luxury truck, so why not use it?  Ford claims it maintains its lead as the most capable pickup on the market, delivering towing capability of 11,300 pounds across all cab configurations and payload of 3,030 pounds.  The SuperCrew model has increased interior space due to a 6″ stretch over last year’s model.  The F-150 also benefits from a better sound management package, making it much quieter inside.  Under the hood, the F-150 no longer offers a V6 entry-level engine; the 4.6L 2V V8 is the base engine - but it offers better power for the same fuel economy as the 2008 V6 (14/19).  The next step up is a 3V version of the 4.6L V8, giving more power and better fuel economy than the 2V (15/20).  The top engine is the 5.4L V8, which has more power and torque, with 12% better fuel economy than 2008.  The F-150 also comes with a full complement of safety equipment, including AdvanceTrac® with RSC®; ABS;

Safety Canopy® side curtain air bags with roll-fold technology for enhanced head protection in rollovers and side impacts; front seat-mounted side air bags; Personal Safety System®; and new seats and restraints.  The F-150 includes many other new features including the box side step, EasyFuel Capless Fuel-Filler System, Advance Trac with Roll Stability Control, trailer sway control, integrated trailer brake control, reverse camera and Ford’s SYNC system.

With all of these new choices, and gas prices down so significantly, maybe these new trucks will be successful for their makers.  With all of the bad news coming out of Detroit and Washington, some good news would be a welcome change.  So drive on down to your local truck dealer - and don’t forget your belt buckle.

The North American International Auto Show (NAIAS), held each January in Detroit, has experienced growing pains over the years.  The constant complaint from the manufacturers has been that Cobo Hall is too small, that they need more space to show their cars and trucks, etc.  Government officials from all levels of government in Michigan have weighed in, from the Detroit City Council to the various mayors in and around Detroit, to county executives, to the state legislature and the governor have tried to come up with a plan to address this.  Should be relatively simple you think?  Wrong.  Michigan politics is a unique beast - one not easily tamed.  The City of Detroit owns Cobo Center, so they should be the ones to pay for an expansion? Detroit has no money, though.  Maybe Wayne County or the state?  Maybe surrounding counties, as they will surely benefit from the high-profile conventions that a new Cobo could attract?  They all have a stake in the success of NAIAS and the Detroit, but they are unwilling to help pay for more than what they deem as their fair share.  Stalemate for years has ensued.  Proposals have come and gone, but nothing has been done.

Now a short-term solution has come out of nowhere, from the same place as our new-found cheap gas.  The economic slowdown gripping the nation has made gas prices fall - and the debate over Cobo’s expansion moot.  Just announced today - Nissan will join the growing list of automakers that will not be showing their wares at NAIAS this January.  That list includes Porsche, Rolls Royce, Land Rover, Ferrari, Suzuki, Mitsubishi and now Nissan and Infiniti.  The last 3 are the ones that really start to hurt NAIAS.  They are the biggest of the dropouts, in floor space terms - especially Nissan.  Nissan also announced it will not participate in the Chicago Auto Show in February either.  Their statement said it has nothing to do with the shows themselves, but with a need to save cash.  They also stated that they showed all they needed in the LA show, which opened on November 21.  See the LA Auto Show story elsewhere on The Slandy Report.

So the silver lining inthe dark cloud of NAIAS dropouts is that it should put to bed, at least for a short time, the Panic in Detroit over Cobo’s floor space.

Well, the LA Auto Show has begun, or as we like to call it in Detroit - that auto show that got scared of Detroit and moved to November.  There are lots of goodies to see at LAAS, including concept cars and world debuts.  Here’s a brief look at what’s what:

2010 Ford Fusion & Mercury Milan Hybrid - Ford, which is in trouble along with the rest of the domestic auto industry, has taken the wraps off the substantially revised 2010 models, along with new hybrid versions.  The hybrids will get up to 39 MPG in the city - 6 more than the Camry hybrid - and will be capable of up to 47 MPH in electric-only mode.  Production is to begin next month, with sales beginning in the spring.  No word yet on pricing.  The “regular” Fusion and Milan models get a larger, more powerful I4 base engine, a more powerful V6 that also gets better fuel economy, and a new option - the same 3.5L V6 from the Edge, Flex, etc.  It will power the new Fusion Sport with 263 horsepower and 249 pound-feet of torque.  Ford insiders have told me that the V6 models will still not have a manual.  Darn.

2010 Ford Mustang - the iconic pony car sports a revised, more sculpted look at the front and rear, but the casual observer might not notice the difference.  Gear heads and other auto enthusiasts will.  The Mustang also has a revised interior, the most obvious of which is the center stack area, which now accommodates a navigation screen and Microsoft’s Sync system, now in its 2nd generation.  Under the hood, both the V6 and V8 engines will have better power and fuel economy, though final numbers are not available yet.

2010 Lincoln MKZ - revised exterior to look more like the stunning MKS flagship and an updated interior as well.  The MKZ also gets the 3.5L with 263 horsepower, like its Fusion and Milan cousins.

2010 Mazda3 - the wonderful Mazda3 gets a new look, which is both aggressive and odd.  The revised front end looks like the car has a big, silly grin on its face.  Like it’s up to something.  It will be powered by either a 2.0L I4 (140hp) or a 2.5L I4 (170hp).  New features include Bluetooth, navigation and steering-adjusted xenon headlamps.

Chrysler is showing a trio of electric vehicles that they introduced a few weeks ago.  They include an electric Town & Country minivan, a Dodge EV sports car and the Dodge ZEO that was first shown at the Detroit show early this year.  The idea that Chrysler will be able to introduce these cars in the timeframe announced seems folly, as GM has a significant head start in developing this new type of propulsion, and they are still 2 years away from production.

MINI E - MINI will introduce a full electric car and deploy a fleet of 500 units for consumers to use in daily driving.  This makes MINI the 1st automaker to develop an electric since GM’s EV1.  The MINI E will have a range of 156 miles (250 km) and a top speed of 95 mph (152 kph).  It will be available in California, New York and New Jersey only.

Infiniti G37 Convertible - the Infiniti G gets a convertible for the first time, a 3-piece hardtop.  It will have the 3.7L V6 already in the coupe, making 328 hp.

2009 Nissan Cube - Nissan will bring the Cube to the US, as expected.  Nissan calls its look a “bulldog with sunglasses”, but you can think of it as a Scion xB.  Nissan has long marketed the Cube in other markets, but will now sell it in the US as well.

2010 Porsche Boxster/Cayman - even though Porsche insists these are 2 separate cars, we all really know better.  The 2 cars presently have the same engines, but those will diverge slightly when the 2010 models debut.  The base engines will increase in size from 2.7L to 2.9L, and will have increased power, however the increase will be greater in the Cayman.  Both receive a power increase in the “S” models as well, but, again, the Cayman’s increase is more.

BMW 7-Series - the big BMW gets a freshened look for its 5th generation.  It goes on sale this spring.  It sports a new 4.4-liter, twin-turbo V-8 that delivers 400 hp and 450lb-ft of torque.  The technology on this car could take up a whole book - active cruise control, lane departure warning, active blind spot detection, head-up display, high-beam assistant, night vision with pedestrian detection, sideview and backup cameras, and integral active steering (rear-wheel steering assist).  Wow, that’s a mouthful.

2010 Lexus RX 350/RX 450h - the original luxury crossover gets a revised look for the 2010 model year.  Both the gas version and the hybrid receive a shot of more power.  Both use the 3.5L V6 now (the hybrid was still using the 3.3L V6), so the hybrid’s increase is greater than the gas engine.  The gas engine also gets a 6-speed transmission, up from 5, while the hybrid continues with a CVT.  The wheelbase is longer, but the overall length is shorter, which should improve stability.  The RX 350 goes on sale in February, while the hybrid waits until spring.

Lexus IS Convertible - Lexus introduced this new hardtop convertible at the Paris Auto Show in October.  Designated IS 250C and IS 350C, the new convertible is a 3-piece unit that opens in 21 seconds.  The sound system has an equalizer-tuning feature that provides consistent audio whether the top is up or down, and it also automatically adapts to the natural loss of bass when the top is down.  To address the natural difficulty of getting in and out of the backseat, Lexus increased the length of the doors 11.8″ over the sedan and added a new one-touch automatic mechanism that provides a quick-acting, front-seat fold-and-slide activation.

2010 Kia Soul - this is a tough one to categorize.  It’s a bit like a small crossover, a bit like the Nissan Cube/Scion xB, and a whole lot of fugly.  My son thinks it’s pretty cool, though.  So maybe I just don’t get it.  Michael Sprague, VP of marketing for Kia says, ““The Soul is for those who love individuality but don’t like to be categorized by finding the next best thing…for those looking for something with a little more personality than other vehicles on the market today.”  It will be available is 4 trim levels: Soul, Soul+, Soul! and Soul sport.  Available engines are a 1.6L or a 2.0L 4 cylinder.

Honda Insight - the Insight was the first hybrid available in the US market.  It was a very small 2-seater that got great fuel economy, but had too many compromises to be successful in the US.  Now comes a new version that will seat 5, have reasonable power, be less expensive and get better fuel economy than the Toyota Prius.  It also look a lot like a Prius.  The car shown in LA is considered a concept, but look for the real one to be very much the same.  The real one goes on sale Spring, 2009.

VW Touareg - VW is showing its new Touareg V6 TDI, with a 50-state compliant DIesel engine.  It is powered by a 3.0L, turbocharged six cylinder engine producing 221 horsepower and 407 lb-ft. of torque.

Audi A6 - not much new here, except a new supercharged V6 engine, making 286 horsepower.  It also has some subtle styling changes.

2009 Ferrari California - despite sharing the name with a Ferrari from the 60’s, this is an all-new Ferrari model.  It sports a direct-injection V8 mounted in the front of the car (a first for Ferrari) that produces 460 horsepower, propelling the car from 0-60 mph in less than 4 seconds.  Can you buy one?  If you’re getting some of the $700 billion, and $250K is burning a hole in your wallet - you’ll still have to wait, as the 2010 model year is sold out.  2011 isn’t very long to wait, is it?

If any of you LA readers would like to share your comments on the show, please click on Comments, below.  Thanks for sharing your views with other readers of The Slandy Report.

Senator Carl Levin, D-MI, testified this morning on the dire need for the bridge LOANS (not bailout) that the D3 need.  Here are some comments from the senator.  Note that he corroborates the point I made regarding the unlevel playing field with respect to foreign governments aiding their domestic manufacturing, especially automakers.  The rest of this article is a quote from Senator Levin’s office:

Immediate support is needed to shore up our automotive manufacturing sector and to preserve the more than 2.5 million jobs directly and indirectly linked to the U.S. auto industry. This morning, I testified in front of the House Financial Services Committee to emphasize the need for Congress to take swift action on behalf of our nation’s automakers. Standing idly by as the financial crisis decimates our domestic manufacturing capabilities and pulls our fragile economy further into recession is unacceptable.

Throughout the world, the dire financial crisis continues to spur governments to provide assistance to their manufacturing industries, which are not able to obtain the credit they so vitally need to continue operations. Both Germany and the European Union are studying the possibility of providing support for their automotive industries. Australia has provided more than $4 billion in funding for its vehicle manufacturers.  Automotive manufacturers in China are already voicing their expectation of financial assistance from their government as well. “The Chinese government will undoubtedly support us,” says She Cairong, general manager of JAC
Motors, a Chinese automobile manufacturer. This quote appeared in a New York Times article this morning, highlighting China’s consideration of a plan to provide assistance to its domestic automobile companies.

The spotlight is now focused on Congress, which is considering the possibility of rescuing the industry from an economic downturn not of its own making. President-elect Obama has called the U.S. auto industry “the
backbone of American manufacturing” and said that the failure of our domestic automakers would be “a disaster” for our economy. President Bush, Speaker Pelosi, and both the Majority and Minority Leaders of the Senate agree that bridge loans for our domestic automakers are necessary at this time. I will continue to work with my colleagues in the Senate and the Congressional Leadership to come up with a plan that would provide auto manufacturers with the bridge loans they need to weather this financial storm.

You can read the transcript of my testimony before the House Financial Services Committee by clicking on the following link: [http://levin.senate.gov/newsroom/release.cfm?id=305099]. During these difficult times, I am doing everything within my power to convince the Congress to provide the bridge loans for the domestic auto industry that the President, the President-elect and the leaders from both houses of Congress support.
Sincerely,
Carl Levin

Ford and GM separately announced today that they have sold stakes in Mazda and Suzuki, respectively.

Ford said it plans to sell over 60% of its holding in Mazda, reducing its ownership from 33.4% to just over 13%.  Ford has held an interest in Mazda for almost 30 years.  Both companies said that their relationship will not change, and that they plan to continue all of their joint projects and sharing of platforms and powertrains.  Ford will sell the shares back to Mazda and to a group of Mazda’s business partners.  The partners were not named.  Ford expects to net $540 million from the sale.  Ford has long held slightly more than one-third of Mazda, which defines a controlling interest under Japanese law (I guess unless somebody else has a stake even bigger).  For many years, Ford has given its managers international experience by rotating them through positions at Mazda, including present Ford Executive VPs Mark Fields and Lewis Booth.  They have gained valuable experience there.  One wonders if that type of experience will still be available to Ford’s managers in the future.

GM will sell all of its 3% stake in Suzuki, but also says that its relationship will not change.  GM will sell the shares on the open market, and expects to receive $230 million.  GM’s announcement also states that the parties agreed that GM will be able to repurchase its stake in the future if it chooses.  Here, I wonder what GM would use to buy shares in anything.  It doesn’t have any money!

Obviously, GM and Ford are making these moves in an effort to raise as much cash as they can to help fund their operations.  Today’s hearings on the hill did not go well for the automakers, and the gods of the Potomac do not seem inclined to bestow upon their automotive subjects any favors.  I sure hope that they can find some other way to stay afloat until the economy recovers, or we’ll all be in trouble.  Yes, that includes you.

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