THE AUTOEXTREMIST

March 31, 2010

Unleash the dragon, er, tiger!

By Peter M. De Lorenzo

(Posted 3/28, 5:00PM) Detroit. Part of what makes this business so enjoyable at times is that just when you think you’ve heard absolutely everything there is to hear, and seen everything there is to see, along comes someone like Li Shufu - the founder and chairman of the Zhejiang Geely Holding Group - who signed a deal to buy Volvo from Ford for $1.8 billion this past Sunday after two years of on and off negotiations.

With plans to project Geely as the first great Chinese automobile manufacturer, Li went off the deep end with his giddiness and excitement over the deal, equating Volvo to a tiger that needs to be freed of its shackles and constraints.

“A tiger belongs to the forest. It belongs to the wild world and not confided in a zoo. We need to liberate this tiger,” Li proclaimed at a press conference announcing the deal in Gothenburg, Sweden, the home of Volvo’s headquarters.

Huh? Volvo, a tiger? Oh boy.

What Li was trying to say, of course, is that Volvo will now aggressively expand beyond its European and Swedish production bases by adding a new factory in Beijing that can produce 300,000 vehicles. And by doing that, Li is making it perfectly clear that Volvo will stop relying on North America for the majority of its sales.

As for the hungry tiger analogy, Li is clearly delusional about Volvo’s standing in the automotive world. I get the fact that Volvo is his shiny new toy, but, really?

Volvo, which dined on its “safest car in the world” reputation for years - and then subsequently lost its unique positioning in the market when every automobile maker in the world loaded up their vehicles with every safety device known to man - has been floundering somewhere between near-luxury and semi-luxury for quite some time now, and it hasn’t worked all that well.

Oh, Volvo tried, but as much as it did it was just never going to be considered a real luxury brand. After all, without its safety moniker, what did Volvo stand for? Design? Uh, how about no? Engineering? As compared to whom? Mercedes-Benz? BMW? Porsche? Audi? Hardly.

No, Volvo has perennially operated in a Twilight Zone of the “in-between.” A kinda-sorta netherworld of not beautiful enough, not fast enough, not luxurious enough, and just plain not good enough to be considered one of the elite manufacturers in the world.

Ford’s past management - led by then-CEO Jacques Nasser - was simply deranged when they paid $6.4 billion for Volvo in 1999. And now Ford’s current management - led by Alan Mulally - is utterly relieved that it can get the Volvo albatross off of its books. As for the intellectual property issue - there was much hand-wringing and conjecture going on about letting the Chinese have access to Volvo technology -  the pace of development in this business is such that Ford has zero to worry about, with Volvo teetering near “yester-tech” status with each passing day. As CFO Lewis Booth succinctly put it, “We think it is a fair price for a good business.” In other words, buh-bye now.

As for Li’s wildly optimistic pronouncements, it’s just another incidence of “you just can’t make this shit up” that makes the world go around in this business. And it gave us a good laugh.

And I look forward to more laugh-out-loud moments, as Li releases the Volvo “tiger” from its cage…

That’s the High-Octane Truth for this week.

Editor’s Note: Given Li Shufu’s near-comical pronouncement at the Volvo press conference, we thought we’d take you back one year ago to the day when Peter unleashed his now world famous “Fu-King Motors” April Fool’s column. It caused quite a stir then, and it is still generating guffaws when people read it today. Enjoy! - WG

April 1, 2009

NEW AUTO CONGLOMERATE BASED IN CHINA SET TO REDEFINE THE GLOBAL AUTOMOTIVE INDUSTRY; SECRET NEGOTIATIONS RESULT IN STUNNING DEAL TO BUY BOTH GENERAL MOTORS AND CHRYSLER.

Shanghai. (AP) Capping off a tumultuous week, the global automobile market is set to be turned upside down yet again after a stunning move to consolidate the auto industry has been announced by Endless Green Horizon, a newly-formed global automotive conglomerate based in Shanghai, China. "We are pleased to announce that our initiative into the global automobile market is progressing rapidly and that we're being welcomed with warm greetings,” said Co-chairman James "Jimmy" Fu. "We look forward to redefining the automobile industry and intend on being a significant player for decades to come." Mr. Fu's partner, S.L. "Sonny" King, added, "We live our lives to achieve this goal. This is no pretend moment. Our reality will become the industry's reality shortly."

Initial skepticism followed by a grudging acceptance.

Coming hard on the heels of President Obama's bludgeoning of GM and Chrysler this past Monday, including the forced removal of GM CEO Rick Wagoner, the secret negotiations and subsequent deal were announced abruptly overnight Tuesday, after rumors began to emerge late yesterday in Shanghai.

GM released the following prepared statement this morning: "When first approached by Mr. Fu and Mr. King we weren't able to ascertain the seriousness of their intentions early on, and admittedly, we were dismissive of the overture,” said CEO Fritz Henderson. "But over the last few weeks the complexion of their offer changed, as did the tone from the Obama administration, obviously, and it was clear that this whole thing with Washington was going nowhere good. Given all that has transpired in the last six months culminating in the chaos of the last few days, we feel Endless Green Horizon's offer was in the best interest for GM, its employees and retirees, our dealers, our suppliers, the United Auto Workers union, and all interested stakeholders including our bond holders and most important, the American tax payer."

Jason Vines, the executive vice president and Director of Global Communications for the new automotive endeavor, said in a statement that a special media briefing would be held on Thursday morning, April 2, in Detroit, in the Wintergarden lobby of the RenCen. "As you can imagine, given the global impact of these developments it is imperative that we give everyone enough time to digest what has just happened. The press conference is scheduled for tomorrow morning at 10:00AM, and it will be broadcast live around the world for media sources unable to get here on such short notice."

Steve Harris, GM's PR chief, said there would be no additional comment forthcoming from Mr. Henderson or GM until the joint press conference scheduled for tomorrow morning.

A statement was also released by Robert Nardelli, the CEO of Chrysler LLC this morning: "We were first approached by Mr. Fu and Mr. King a month ago, and we too were unable to muster the energy to take them seriously. That of course changed over the subsequent weeks. After long hours of consideration fraught with soul searching and hand wringing, we believe this is the best deal for Chrysler, its employees and retirees, our suppliers, our dealers, the UAW and for our corporate parent, Cerberus. It is the end of an era for the American automobile business, but the beginning of a new chapter for the global automobile industry."

Mr. Nardelli was approached for a comment as he got into his car at the main entrance to Chrysler's headquarters, but he waved off reporters' questions with a brusque, "I really don't give a shit anymore. Buh-bye." Last seen, his car was seen peeling out of the driveway heading to whereabouts unknown.

Ron Gettelfinger, the head of the UAW, refused to comment after his arrival at Solidarity House this morning, the labor union's headquarters in Detroit. "I can assure you that I'll have plenty to say later tomorrow when we have our own press conference," Mr. Gettelfinger said.

Secret negotiations climax in fifteen minutes that would change the automotive world forever.

Negotiations began in late February, according to sources, the timetable of which was later confirmed by Mr. Vines. "Initial overtures were made to GM and Chrysler in late February by Mr. Fu and Mr. King," Mr. Vines, a long time industry PR veteran with notable stints at Ford and Chrysler, said. "It was made clear from the outset to both automakers that the offer being made by Endless Green Horizon was serious, legitimate and substantially funded,” Vines continued. "After GM and Chrysler leadership demonstrated their initial skepticism, actual common parameters emerged over a very brief period of time. This deal didn't come together until it was made quite clear by President Obama and his administration this past Monday afternoon that these two automakers were just north of being expendable, or as I carefully explained to Mr. Fu and Mr. King, they were toast."

Mr. Henderson made his first appearance in front of the assembled media as GM's CEO yesterday at the company's headquarters in Detroit. He talked about the car business and his plans to reinvent the company, a new customer assurance plan, how much he respected the Obama administration's automotive task force and the President himself, and other topics. There was no indication whatsoever that this deal was in the works. But things would soon change.

The dramatic moment came just after 9:00PM EDT last night (9:00AM this morning in Shanghai), when Fritz Henderson called Mr. Fu at the end of a hastily called emergency board meeting led by newly-minted non-executive chairman of the board Kent Kresa and said, "We're done here. Let's do it." Thus ended 100 years of U.S. industrial history as the American corporate icon finally acquiesced to a complete takeover.

Mr. Henderson then had Mr. Nardelli informed of GM's decision immediately, and Mr. Nardelli called Mr. Fu and accepted the conglomerate's offer fifteen minutes later.

The financial details of this historic agreement were not released, but Mr. Vines made a point to a small group of reporters gathered in front of the GM building at 5:00AM this morning that the debt issues that were strangling both companies had been addressed by the Chinese conglomerate. "Complete financial details will be forthcoming at the press conference tomorrow morning," Mr. Vines said. "But I can safely say to you that the massive debt of these companies, something that's of primary interest to all of the parties involved, has been covered, in cash."

Shadowy backgrounds.

The details of how Mr. Fu, 61, and Mr. King, 59, accumulated their staggering wealth are, as a kilted Angus McPherson, the notably acerbic Scottish journalist stationed in Shanghai put it, "...missing in action, a wee bit sketchy, I would say," as he stuffed his notebook back in his sporran. The two figures have operated in the shadows of the burgeoning Chinese industrial machine for years. Mr. Fu started manufacturing model cars in the late 70s and is now rumored to control every toy making concern in China, though none of this has actually been confirmed after years of investigations. Mr. King became partners with Mr. Fu after initially supplying the elaborate wheels and carefully detailed tires on Mr. Fu's model cars. The two have been partners ever since.

Said to be fond of younger women, fast American muscle cars, Knob Creek Kentucky Straight Bourbon and Gulfstream jets, Mr. Fu and Mr. King nonetheless pride themselves in avoiding the limelight. Both men were married and divorced in their 30s, but little is known about that part of their life stories. It is known now, however, that Mr. Fu is trying to push the career of a budding 26-year-old Chinese pop star, his current girlfriend, while Mr. King seems to be addicted to an endless succession of young female gymnasts nearing the end of their competitive careers.

Mr. Vines provided no details other than to say, "Mr. Fu and Mr. King are reclusive, talented, workaholics who also enjoy life to the fullest. Other than that, I really have no further comment."

Shock in Washington.

President Obama's Press Secretary, Robert Gibbs, clearly caught off guard when asked by reporters of the development early this morning before a press briefing said: "Huh?" to the news. "We know nothing about it, but, uh, er, you're kidding, right?" When assured the news was genuine, he cut off the media briefing and raced out of the press room.

A statement was released by the Obama administration just one hour later. "President Obama has been assured by the new owners of General Motors and Chrysler that all existing pension obligations will be met and that their crushing debt burden has been addressed. He looks forward to meeting with the new owners to hear of their plans to contribute to America's industrial fabric and help lead us to a sustainable, green driving future. The President is also pleased to announce that the additional money discussed for both GM and Chrysler on Monday will no longer be needed, and that the money initially borrowed by the two companies since last December has been paid back in full."

When pestered for more details on what the President knew and when he knew it, Mr. Gibbs said, "I got nothin'."

Mouths agape in Detroit.

The mood in Detroit was one of resignation when the news emerged. "People are walking around in a daze, looking like that '1984' Apple TV commercial," said one high-ranking GM executive. "First there was Monday's shocker and now this."

One administrative assistant who did not want to be identified was found at the Starbucks in the RenCen (GM's headquarters) staring off into space, pouring Kahlua in her Grande Iced Chai Soy Latte Triple Dirty. Asked about the news she shrugged her shoulders and said, "GM, Endless Green Horizon...what's the f---ing difference?"

Another GM employee commented as he was leaving the building, "At this point, I'd prefer a couple of Chinese cowboys owning this place over those numb-nuts in Washington."

A homeless man, queried on the street corner in front of GM headquarters muttered, "Monica Conyers for President" as he walked away.

A UAW member speaking on condition of anonymity added, "That's fine, man, but what's in it for me?"

Stunning choice for CEO.

In another stunning development, Peter M. De Lorenzo, a longtime industry marketing veteran, was named to be the Chairman and CEO of the new company's North American operations - to be renamed Fu-King Motors - which will include the remnants of GM and Chrysler. Mr. De Lorenzo, capping off a controversial ten-year run as the man behind Autoextremist.com - the highly influential industry publication - was a surprise choice by Mr. Fu and Mr. King to lead its new venture.

Mr. De Lorenzo got the call moments after the deal was consummated, according to Vines. "It turns out that Mr. Fu and Mr. King stumbled upon Mr. De Lorenzo's website when they first became familiar with the Internet. As a matter of fact, both gentlemen learned English by having Mr. De Lorenzo's 'Rants' columns translated for them. They also learned to say some of Mr. De Lorenzo's patented sayings phonetically, like 'notgonnahappen.com,' 'halle-frickin'-luja,' and 'the Answer to the Question that Absolutely No One is Asking.' And when the two gentlemen used some of Mr. De Lorenzo's sayings in the negotiations with GM and Chrysler, the blood drained out of the faces of the Detroit executives, to put it mildly. Mr. Fu and Mr. King have been in contact with Mr. De Lorenzo for six years, after they first approached him at the Los Angeles Auto Show. When they first contacted GM and Chrysler about their interest, Mr. De Lorenzo became part of the behind-the-scenes team orchestrating this deal. Mr. Fu and Mr. King said that Mr. De Lorenzo was their clear choice for CEO from the very beginning."

"Mr. De Lorenzo will bring years of experience leading our company," said Mr. Fu. "He puts pedal down hard, no b.s.," Mr. King added, as they addressed a small group of reporters gathered in Shanghai. "And if he doesn't like something, NOTGONNAHAPPEN.COM!!!" they shouted in unison to the bemused expressions on the reporters' faces, as they clearly had no clue as to what the two men were talking about.

Mr. Vines said that Mr. De Lorenzo would not be available to the media until tomorrow's meeting.

Comments from around the world pour in.

The development was so swift and stunning that comments were just starting to pour in as we were completing this story. Volkswagen released a joint statement from VW's Ferdinand Piech and Porsche's Wendelin Wiedeking moments ago: "We look forward to hearing more details about what appears to be a fanciful quest to re-make the automobile industry. We know who we are and what we do best. We will crush them."

Ratan Tata, CEO of Tata Motors, was equally dismissive, saying, "It won't make a Nano-bit of difference to us."

Sergio Marchionne, the Fiat CEO, was apparently stunned at the news: "I do not understand, this can't be true. I mean, we kinda had a deal." And then he slammed down the phone.

Toyota released the following statement from CEO Katsuaki Watanabe: "We find this to be a perplexing development. We have no idea what this means, or why this is happening. We want the auto world to go back to the way it was, when we dominated everything. And it's not happening. Why?"

When contacted by cell phone for a comment about the choice of De Lorenzo, Robert Lutz, the Vice-Chairman of GM, who was on the roof of the RenCen, said, "Oh, hell yes. That's an inspired choice. He'll shake the rafters, kick ass, and will that company to greatness. I might just re-up to work with him!" Mr. Lutz then got into his helicopter to fly home.

And finally, Keith Crain, the Publisher of Automotive News had this to say: "It's a wonderful time to be in the automobile industry."

By Wang Liu for the Associated Press, with Vikram Bhan in Mumbai, Thurston Chesterton IV in London, Tammi Sue Jenkins in Detroit, Heather Elizabeth Wellesley in New York, and Masami Katsuta in Tokyo.

See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, at 7:00PM EDT at www.autolinedetroit.tv.

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