ON THE TABLE #443

April 30, 2008 

GM. The car company that is well on its way to getting its product house in order and the one that's allegedly the best-positioned of all the domestic automakers to emerge from The Darkness, and the company that is thriving everywhere around the world except right here in its home country, hung a net loss of $3.25 billion on the board during the first quarter. Even though the majority of the loss was due to one-time charges relating to its share in the souring GMAC investment (just under $300 million), the American Axle strike ($800 million), and its ongoing problems with Delphi ($731 million), the results stink. Beyond the various charges, the company lost $42 million during the first quarter on total revenue of $42.7 billion. It did deliver a $1 billion dollar gain before taxes in operations around the world, but most disturbing is the fact that GM lost $812 million (before taxes) on revenue of $24.5 billion in its North American vehicle operations. GM can spin this all they want, but it's a heaping, steaming giant bowl of Not Good.

GM. Publisher's Note: This company continues to dance around the fact that its North American vehicle operations are simply out of touch with the reality of what's going on in this market. With too many models, too many divisions and too many dealers, GM will continue to lose money hand over fist in North America, and it's simply unacceptable at this point. Where is the leadership? Where is the vision? Where is the outrage? When is somebody down at the RenCen going to stand up and say "This ain't working!" What the hell is the so-called board of directors doing and why do they continue to rubber stamp what's going on in GM's North American operations, quarter after quarter after quarter? It's one thing to keep re-aligning GM's divisions here in an attempt to streamline the operating structure because that all sounds good on paper, but unless and until they start cutting divisions, cutting the model overlaps among the divisions and cutting their dealers dramatically, this company will continue to do piss-poorly in the U.S. market. GM resolutely believes that things are going to get better in North America, and that's fine, a little optimism never hurt anyone. But this is ridiculous. Nothing fundamentally has changed that will eventually improve this situation. And I mean n-o-t-h-i-n-g. Dealers are still clamoring for more products so that they can do what, sell against other GM divisions in their local markets? Frickin' brilliant. All the great products in the world aren't going to matter one bit if GM can't do what needs to be done in their home market. At this point what's going on in the North American market lands squarely in the lap of Rick Wagoner. Fix it, Rick, because this situation is getting flat-out embarrassing. If not, then a regime change will be in the offing long before you're ready to retire. - PMD

Buzz Hargrove, The CAW. The new labor contract that the Canadian Auto Workers union and Ford have agreed to - which doesn't include the two-tier wage package agreed to by the UAW in the U.S. - is short-sighted and will accelerate the reduction in significance of Canadian manufacturing plants for the Detroit Three. Buzz Hargrove, the beyond-tedious CAW president who is headed for retirement, is hell-bent on burnishing his reputation on the way out as the guy who wouldn't give in to the big, bad auto companies. But with the Detroit Three's U.S. auto plants gaining a distinct cost advantage over their Canadian plants after this agreement, we will more likely look back on Hargrove as the guy who just didn't get it and the guy responsible for the eventual demise of auto manufacturing in Canada altogether.

Bob Lutz. He shows up in the May 5 issue of Newsweek to talk about "The Road Ahead for Cars" in the "My Turn" column. He reiterates what he's been saying to the automotive media for months, only this time it's to a wider audience. Check out the background in his photo (as art directed by Newsweek) - with the yellow sun hovering in an azure sky over his right shoulder - with green mountains visible to boot. Is Lutz Detroit's new "Sun King" or "Mr. Blue Skies???

U.S. Rep Joe Knollenberg. Knollenberg (R-Bloomfield Township, MI) proposed a $1.2 billion aid package (over five years) and annual tax rebates worth as much as $3.2 billion for the U.S. automakers yesterday in order to assist them in meeting the new EPA mileage targets. He unveiled his "Bridging Industry and Government Through Hi-Tech Research on Energy Efficiency Act" (the BIG THREE Act, get it?) to focus attention on the plight of what's left of the not-so-big-three and to help one of the country's most economically devastated industries (and regions). It's a nice thought and all, but since the current presidential candidates have demonstrated little or no interest in facing the fact that this country's manufacturing base is eroding at a rapid rate, the likelihood that anyone in Washington would get behind something like this is somewhere between slim, none and notgonnahappen.com.

Carlos Ghosn. He's hinting that a deal between Nissan-Renault SA and Chrysler is unlikely. Don't believe it for a second.

Mary Peters. The U.S. Transportation Secretary is launching a website to communicate in a "...twenty-first century way!" as she put it. One problem? The site's web address is www.fastlane.dot.gov, which is close to GM's www.fastlane.gmblogs.com. Come on, Mary, you and your staff couldn't come up with anything besides "fast lane" in the title? Geeez.

Porsche. The new EPA CAFE rules hammer the German automaker because the company's sports cars have short wheelbases and consequently small footprints. That means higher fuel economy targets under the new regulations. According to Automotive News, if the industry builds the mix of vehicle sizes that NHTSA projects, Porsche cars would have to average 41.3 mpg in 2015, ­ about 7 mpg better than Toyota, Lexus and Scion cars collectively. Will Porsche fold up its tent and abandon its most lucrative market? No. But it and other high-performance and luxury-performance automakers under the same fuel economy pressure will most certainly "bake-in" the fines that are sure to be handed out for not meeting the new standards. The only question remaining is what those fines will be, as NHTSA is contemplating either keeping them the same as they are now, or raising them. We can easily envision enthusiast consumers paying a $15,000 - $20,000 premium per car just to cover the fines the manufacturer will have to pay if this should go the wrong way.

Pontiac G8. Publisher's Note: We've been driving the new Pontiac G8 GT for a few days and it has to be the performance bargain of the year. $31,845 for a big, powerful, quick, V-8-powered rear-wheel-drive sedan that's light on its feet and fun to drive? What's not to like? No, the mileage isn't great if you drive around with your foot in it all the time, and the exterior design is only marginally acceptable, but the car is definitely worth serious consideration if you want real performance for under $32,000. Does it change the fact that Pontiac is definitely on the "bubble" in the GM divisional hierarchy? No, but it's a very desirable car nonetheless. If it was Pontiac back in the division's heyday, the print ad for the G8 GT would probably carry this headline: Grrrrrrr8! - PMD

GM Powertrain, Chevrolet Corvette. In case you missed it last week, here's a video of the Corvette Development Engineering team verifying the top speed - 205 mph! - of the supercharged, 638 horsepower (476 kW) and 604 lb.-ft. of torque (819 Nm) Corvette ZR1 at a test track in Papenburg, Germany. Watch it by clicking here. The sound of the monster LS9 V8 is simply incredible. The limited production ZR1 will be available beginning this summer.

Dave Barnas. As first reported by the Detroit News, Dave Barnas, who was basically the last PR guy standing at Chrysler, has left the company to join the Saginaw, Mich.-based Steering Group, a spin-off of Delphi Corp. A good move. After all, when the company you're working for never believed in the crucial importance of PR in this day and age to begin with, and the head of the company thought he could do just fine without it, why bother?

The Onion. The publication strikes again with this hilarious article about a new NHTSA program to address rising pedestrian deaths in the U.S. called the 'Get the Fuck Outta The Road' program. The Onion says, "Included in the pamphlets are tips on how every responsible pedestrian can learn to 'Get The Fuck Outta The Road,' including 'Move your ass!' and 'Look where you're fucking going for once!' as well as an instructive diagram for removing one's head from one's ass prior to stepping into the crosswalk." Go to it here. Priceless.