ON THE TABLE #466

October 8, 2008

GM. Publisher's Note: Once upon a time, GM's world headquarters was in the beautiful General Motors Building, located in Midtown Detroit. Designed by noted architect Albert Kahn, the GM Building was completed in 1923, coinciding with the beginning of the Alfred P. Sloan Jr. era at the corporation. It was a magnificent structure, befitting the company's stature as the world's most dominant corporate enterprise, and it suited the company perfectly during its heyday in the 50s, 60s and 70s. Though the GM Building was designated a National Historic Landmark in 1985, GM had outgrown the building and was looking to build a new headquarters on property it owned in Warren, MI, right across from its famous Technical Center. That is until the Renaissance Center office building complex became available in 1996. The focal point of the Detroit skyline, the Renaissance Center's multiple silo design was not only a logistical nightmare, it had fallen on hard times and was in desperate need of a complete overhaul. Sensing it would be a Good Thing for the community (not to mention a great deal), GM bought the property for approximately $70 million and relocated its headquarters there (in the early days of AE we dubbed GM's new RenCen-based headquarters as "The Tubes" - as in going down the...). Over the ensuing decade, GM poured $600 million into the RenCen on much-needed improvements and myriad enhancements, and even though the facility still has some glaring deficiencies, it's the city's most prominent building and the polished corporate face of GM. But now, things are so bad for the company that it is looking to get a mortgage on the property, or perhaps even sell it outright. Difficult times indeed.

Detroit Three Auto Dealers. It has been known for years that the Detroit Three was carrying way too many dealers for their rapidly eroding market share. Some estimates put the total number of dealers representing Chrysler, Ford and GM as being as much as 50 percent more than what is actually needed. Well, that may not be the case for long. The credit crunch is decimating dealers to the point that as many as 1,000 dealers will have to cease operations by the end of the year due to the untenable business conditions (one figure was given at around 700 dealers, but we're sticking to the higher number - ed.). When you can't get customers financed, and you can't afford the skyrocketing floor plan rates, the options available quickly come down to slim - and none.

GMAC Lease Customers. You better enjoy that sub-vented lease payment as long as you possibly can, folks, because GMAC has suspended leasing for the time being. And no one knows for how long either.

GM, Ford. The stock market tumble has decimated GM and Ford stock prices. GM shares lost 92 cents, or 10-percent, ending Tuesday's trading session at $7.56, its lowest closing level since February of 1954. Ford shares fell 77 cents, or 20-percent at Tuesday's close, to $2.92 per share, the lowest price since 1985. Ouch.

BMW. Another entry from the "Not Good" File comes word that BMW worldwide sales in September were down almost 15 percent as the global financial crisis spreads.

Toyota. No company is immune from the auto industry carnage, it seems. According to a Reuters story, the Nikkei business journal is reporting that Toyota will post a 40 percent slide in annual profit, mssing its profit estimates on weak sales in North America and slower growth in China.

Stefan Jacoby, VW. We see that Delusional German Car Executive Disease (DGCED) is trickling down from VW Group's megalomaniacal Ferdinand Piech (aka "The Colonel") to his underlings. Stefan Jacoby, the president of VW in the U.S., is making noises yet again about how VW is going to have it goin' on here and that "it won't be long now!" before VW is a big-time player again. We see a few problems with Mr. Jacoby's optimism. 1. No matter how special VW execs say their future product lineup will be in the U.S. they invariably deliver vehicles to this market that are overpriced, no matter what the segment. 2. Once they do deliver these new "world beater" products here, which inevitably fail to inspire U.S. consumers (see Point No. 1), they then spend the rest of the model year making excuses to the media, back-pedaling from their sales projections and even blaming the "weird" American consumer for not understanding the superior goodness of their products. And 3. After sorting out the latest mess that they've created for themselves in the U.S. market, they start the whole process over again by sounding off to the media that "it won't be long now!" before they have it goin' on again. Just once we would like to hear the leader of VW in America give a realistic assessment to the media, and it would sound something like this: "We have been a niche player in this country for years, and our woeful cost structure and relentless product feature overkill - not to mention our unbridled arrogance - have cost us dearly at every turn. Instead of getting up here and saying how good we're going to be and how competitive our new stuff is gonna be, we're going to shut up, pick and choose our battles - and segments - carefully, and we hope to deliver noteworthy products in whichever segment we feel we can be competitive. Please let us know when you feel we've done that. Over and out."

Hyundai. Advertising Age reports that Hyundai Motor America has purchased all of the spots released by GM in next February's Academy Awards telecast. Hyundai's six-unit Oscar buy will most likely feature the new Genesis sedan and coupe.

Honda. The Japanese automaker is buying all online and mobile advertising space sold by Sony Picture Television for a week starting Wednesday to promote the new Honda Fit, according to a report in the Wall Street Journal. The half-million dollar deal is unprecedented. The old advertising media term for a "road block" buy has now been officially replaced with Honda's move. The new term?  Road grade.

Mini. The four-seat Mini Crossover Concept at the Paris Auto Show, how shall we put it - sucked. Memo to High-Flying Mini Executives: Stop reading your press clippings and get a grip. Everything you come up with is not brilliant and/or great. Shut the lights off on the room where that Mini Crossover Concept came from, turn, and then walk slowly away. Please.

Honda. It's one thing to do a competitor for the Toyota Prius, but did you have to sell your soul to the Prius Design Devil too? The Honda Insight displayed at the Paris Auto Show might be The Answer for Honda dealers in the U.S., and it might do its hybrid thing better than the vaunted Prius, but the derivative, milquetoast design of the car is a major letdown. Two questions for Honda: Why? And WTF were you thinking?

Lamborghini. Right about now we're quite sure you're reading a report from the Paris Auto Show on some fan-boy auto website that positively gushes about how sensational the four-door Lamborghini Estoque is. Don't be fooled. The Estoque is this year's hands-down winner of AE's Answer to the Question that Absolutely No One Was Asking. The thing is an absolute abomination from every angle. Just remember one thing, while you're trying to rationalize that "for a four-door Lamborghini, the Estoque doesn't look half-bad," repeat the words four-door Lamborghini to yourself, and hopefully, you'll come to your senses. If that doesn't work, pay the high school kid next door $50 bucks to hit you across the forehead with a 2x4, because your sorry ass deserves it.

Fiat. The Fiat 500 should be for sale in North America now, because it would give Mini a real run for its money right out of the box. It looked great on the streets of Paris, and the Fiat 500 Abarth displayed at the show? Fantastic.

The Paris Auto Show. The Parisians put on a great show. Beautifully art directed displays - especially by Citroen, Peugeot, Fiat, Renault, Alfa Romeo and Nissan - and an overall feeling of taste and sensibility that just can't be found in the U.S. And it's about those high-fashion babes. No dour, politically correct, "product specialists" in Paris. Non. Instead, there were sensational beauties everywhere, especially at the Citroen, Alfa Romeo, Fiat, Nissan, Ferrari and Maserati displays. And their only role was to look good standing next to a car. What a concept. And guess what? It worked. Magnifique! 

Hemi Fans. A first-class coffee table book has just been released for enthusiasts of the mighty Chrysler Hemi entitled Hemi Muscle Cars, by Darwin Holmstrom. The massive (10.5" x 12"), 336 page hardcover book features 300 color and 50 black & white photos and the work of photographer David Newhardt. Holmstrom is the author of Camaro Forty Years and co-author of Muscle: America's Legendary Performance Cars. Holstrom has also written several best-selling books on motorcycling. For fans of the Hemi it doesn't get any better than this, because this book must now be considered the definitive work on the subject. For more information go to www.motorbooks.com.