Tuesday, April 13, 2010
Auto Bailouts: Where Did We Go Wrong?
Tuesday, October 6, 2009
Chrysler Going Down the Tubes: More Bailout Needed?
Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat.
Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.
Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact.
.... The daily management of Chrysler is controlled by Fiat which owns 20% of the U.S. company with options which could take that amount to 35%. Fiat has not put any money into Chrysler, so if the American firm becomes a significant operational or management burden there are very few reason for the Italian company, which has sales troubles of its own in Europe, to stay long term. Fiat lost $254 million in the second quarter, so its board may eventually believe that Chrysler is a distraction and one without a future.
.... At this point, the Chrysler product line is still dominated by mid-sized sedans, SUVs from Jeep, minivans, and pick-ups like the Dodge Ram. The company has no real product in the alterative (sic) energy/hybrid segment. Chrysler’s domestic market share in September 2008 was 11.1%, according to Edmunds. Based on sales figures released by the industry today, that share is now closer to 7.5%.
.... Chrysler sales are now running at the rate of 750,000 a year, which includes sales of cars, trucks and vans from all its divisions; Chrysler, Dodge and Jeep. (By contrast, Ford sold over 600,000 F-150 pickup trucks last year). It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official.
Thank goodness, our federal government spent billions, so far, to bail them out, only to fail later on.
Tuesday, August 25, 2009
Cash For Clunkers Has Clunker Website
Auto dealers the nation over are praising the cash-for-clunkers program for filling their showrooms with folks ready to buy. According to most estimates, somewhere between 700,000 and 800,000 units moved in connection to the program. How many of them would have moved anyway absent government incentives which allowed dealers to make more money per car? Er, not clear. What will the effect of the $3 billion in tax dollars being sucked out of one end of the economy and thrown into the backseat of a new Prius? Also not clear (though shouldn't all cash for clunk receipients be forced to give rides to anyone who asks for as long as they own the car?). Exactly when and how the trade-ins will be destroyed? Also not clear (though would make great video, for sure, especially if Transportation Secretary Ray LaHood personally destroys all vehicles).
This much, however, is clear: The government's website that was supposed to handle all dealer claims sucks worse than your grandpa's Pinto:
"We continue to address technical problems with the CARS Web site, and have determined that the Web site will not be fully functional before [this] morning," the Transportation Department said in a statement sent to dealers late Monday evening. "Dealers should be assured that they will be provided time to submit pending deals equivalent to the time that was lost this afternoon while the system was down."
The feds have made various noises about not reimbursing dealers who are either late with paperwork or can't access the broken site in a timely enough fashion. Expect the followup on this "successful" stimulus program to be about as dogged and high-profile as news from the war in Afghanistan. Here's a Dallas dealer's lament from yesterday, the last day of the program:
"Any deal you do today, there's certainly a high risk of not getting paid," he said. "Unfortunately, there will be some dealers who will be hurt financially by this program. There are probably some nervous lending institutions, too."
Dallas-area sales are down 37.5 percent from last year, btw.
Tuesday, August 4, 2009
Obama Pushes for Fast Vote on Cash for Clunkers; Withholds Data on Program's Success or Failure
From Fox News:
The Obama administration is refusing to quickly release government records on its "cash-for-clunkers" rebate program that would substantiate -- or undercut -- White House claims of the program's success, even as the president presses the Senate for a quick vote for $2 billion to boost car sales.
The Transportation Department said it will provide the data as soon as possible but did not specify a time frame or promise release of the data before the Senate votes whether to spend $2 billion more on the program.
Transportation Secretary Ray LaHood said Sunday the government would release electronic records about the program, and President Barack Obama has pledged greater transparency for his administration. But the Transportation Department, which has collected details on about 157,000 rebate requests, won't release sales data that dealers provided showing how much U.S. car manufacturers are benefiting from the $1 billion initially pumped into the program.
The Associated Press has sought release of the data since last week. Rae Tyson, spokesman for the National Highway Traffic Safety Administration, said the agency will provide the data requested as soon as possible.
DOT officials already have received electronic details from car dealers of each trade-in transaction. The agency receives regular analyses of the sales data, producing helpful talking points for LaHood, White House spokesman Robert Gibbs and other officials to use when urging more funding.
LaHood said in an interview Sunday he would make the electronic records available. "I can't think of any reason why we wouldn't do it," he said.
LaHood, the program's chief salesman, has pitched the rebates as good for America, good for car buyers, good for the environment, good for the economy. But it's difficult to determine whether the administration is overselling the claim without seeing what's being sold, what's being traded in and where the cars are being sold.
LaHood, for example, promotes the fact that the Ford Focus so far is at the top of the list of new cars purchased under the program. But the limited information released so far shows most buyers are not picking Ford, Chrysler or General Motors vehicles, and six of the top 10 vehicles purchased are Honda, Toyota and Hyundai.
LaHood has called the popular rebates to car buyers "the lifeline that will bring back the automobile industry in America." He and other advocates are citing program data to promote passage of another $2 billion for the incentives -- claiming dealers sold cars that are 61 percent more fuel efficient than trade-ins.
LaHood also said this week that even if buyers aren't choosing cars made by U.S. automobile manufacturers, many of the Honda, Toyota and Hyundai cars sold were made in those companies' American plants.
But there's no way to verify his claims without access to DOT's data.
Senate GOP leader Mitch McConnell of Kentucky has argued against quick approval of $2 billion for the program because little is known about the first round of $3,500 and $4,500 rebates.
"We don't have the results of the first $1 billion," McConnell spokesman Don Stewart said. "You don't have them. We don't have them. DOT doesn't have all of it. We'd hate to make a mistake on something like that."
Cash For Clunkers: Did the program do anything?
Tuesday, June 9, 2009
Illegal Takeover? They Don't Report; You Decide
The Obama administration’s arguably unconstitutional and potentially illegal makeover/takeover of General Motors and Chrysler hit a legal road block on June 8, when Supreme Court justice Ruth Bader Ginsburg issued a stay preventing Team Obama’s plan to sell Chrysler to the Italian automaker Fiat. This speed bump was a great opportunity for the media to pay attention to objections to the White House’s reckless executive-branch manipulation of the auto business.
Or not.
President Bush and his team were regularly savaged by the media elite if they so much as sniffed a hint of evasion over the rule of law and the bounds of constitutional authority in fighting terrorism. So why is President Obama’s unprecedented intervention in the auto industry, including a TARP-fund bailout expressly ruled out by Congress, all but ignored?
Even with the Supreme Court order, the nightly news shows of CBS and NBC gave the decision just a few seconds of air time, the equivalent of a stifled yawn, and never went anywhere near describing the strange bankruptcy proceedings the Obama administration has cooked up to manipulate the industry to its liking.

