GMAC a community bank?

GMAC – and ergo General Motors – just got another Christmas present: the Federal Reserve has granted GMAC bank holding status. GMAC has billions of dollars of bonds coming due over the next 12 months, but doesn't have the liquidity to cover the obligations. As of last week, the financing company was in the midst of a bond buyback effortin order to raise enough money to qualify for bank holding status. Now that it's been granted, GMAC can tap the Troubled Asset Relief Fund intended for financial institutions, pay its debts and (probably) avoid bankruptcy. 

It isn't clear, however, whether or not GMAC actually raised enough money through the bond buyback. The Fed said "emergency conditions" justified its actions, which makes us think the Fed just said "Here, take it." Looked at from a dealer perspective, it makes sense: if GMAC had gone under, one dealer estimated that it would have taken 30-40% of GM dealers down with it, and that could imperil GM itself. It wouldn't make much sense to let that happen when the government just loaned GM a bunch of money to stay in business.

And while GM is still a long, long way from getting the kind of money that any number of banks have, it's still beginning to add up. As a result of the new status, both GM and Cerberus are required to lower their stakes in GMAC. Cerberus has been told to lower its share to 33%, down from 51%; GM has said it will go below 10%. As for Cerberus' other headache, Chrysler Financial, it has said that if dealers don't stop making a run on its funds, it will cease financing for dealer inventories.

Good things are happing at the Blue Oval

Though Ford has yet to admit it, all of us know what is coming to Detroit. The 2010 Ford Taurus that's been spied and rendered is on its way, and although Ford's design director, J Mays, won't go on the record as saying that the new Taurus will be unveiled in Motor City, he did say the automaker will show off the next iteration of its global styling theme this January. As of now Ford uses two very different design themes, one in Europe one here. The style used in North and South America is called "Bold", basically it is boxy with straight lines and a three bar grill of some form. In Europe and Asia the use what is called "Kinetic" this is more sharp edged sweeping lines and large mouth grills. Ford is now beginning to combined the as they move to one philosophy. Enter the new Taurus.

Death To Hybrid's "UPDATE"

Am I nut's? Well maybe a little but I hope after reading this you might understand why. A lot of people I know ask me why I dislike the Prius so much. The Toyota Prius which has become the flagship car for our entire generation, those in our society so environmentally conscious that they are willing to spend a premium to show the world how much they care. Unfortunately for them, their ultimate ‘green car’ is the source of some of the worst evnvironmental pollution in the world, it takes more total energy to produce each Prius than to produce than a Ford Expedition. Before I delve into the seedy underworld of hybrids, I must must add that one of the things that get overlooked in the war on CO2 is the fact that emissions are far more important than whether your car is hybrid or not. Now you must first understand how a hybrid works. For this, I will use the most popular hybrid on the market, the Toyota Prius. The Prius is powered by not one, but two engines: a standard 76 horsepower, 1.5-liter gas engine found in most cars today and a battery- powered engine that deals out 67 horsepower and a whooping 295ft/lbs of torque, below 2000 revolutions per minute. Essentially, the Toyota Synergy Drive system, as it is so called, propels the car from a dead stop to up to 30mph. This is where the largest percent of gas is consumed. As any physics major can tell you, it takes more energy to get an object moving than to keep it moving. The battery is recharged through the braking system, as well as when the gasoline engine takes over anywhere north of 30mph. It seems like a great energy efficient and environmentally sound car, right? You would be right if you went by the old government EPA estimates, which netted the Prius an incredible 60 miles per gallon in the city and 51 miles per gallon on the highway. Unfortunately for Toyota, the government realized how unrealistic their EPA tests were, which consisted of highway speeds limited to 55mph and acceleration of only 3.3 mph per second. The new tests which affect all 2008 models give a much more realistic rating with highway speeds of 80mph and acceleration of 8mph per second. This has dropped the Prius’s EPA down by 25 percent to an average of 45mpg. This now puts the Toyota within spitting distance of cars like the Ford Focus, which costs less then half what the Prius costs. However, if that was the only issue with the Prius, I wouldn’t be writing this article. It gets much worse. Building a Toyota Prius causes more environmental damage than an Expedition that is on the road for three times longer than a Prius. As already noted, the Prius is partly driven by a battery which contains nickel. The nickel is mined and smelted at a plant in Sudbury, Ontario. This plant has caused so much environmental damage to the surrounding environment that NASA has used the ‘dead zone’ around the plant to test moon rovers. The area around the plant is devoid of any life for miles.The plant is the source of all the nickel found in a Prius’ battery and Toyota purchases 1,000 tons annually. Dubbed the Superstack, the plague-factory has spread sulfur dioxide across northern Ontario, becoming every environmentalist’s nightmare.“The acid rain around Sudbury was so bad it destroyed all the plants and the soil slid down off the hillside,” said Canadian Greenpeace energy-coordinator David Martin during an interview with Mail, a British-based newspaper. All of this would be bad enough in and of itself; however, the journey to make a hybrid doesn’t end there. The nickel produced by this disastrous plant is shipped via massive container ship to the largest nickel refinery in Europe. From there, the nickel hops over to China to produce ‘nickel foam.’ From there, it goes to Japan. Finally, the completed batteries are shipped to the United States, finalizing the around-the-world trip required to produce a single Prius battery. Are these not sounding less and less like environmentally sound cars and more like a farce? Wait, I haven’t even got to the best part yet.When you pool together all the combined energy it takes to drive and build a Toyota Prius, the flagship car of energy fanatics, it takes almost 50 percent more energy than a Expedition - the Prius’s arch nemesis.Through a study by CNW Marketing called “Dust to Dust,” the total combined energy is taken from all the electrical, fuel, transportation, materials (metal, plastic, etc) and hundreds of other factors over the expected lifetime of a vehicle. The Prius costs an average of $3.25 per mile driven over a lifetime of 100,000 miles - the expected lifespan of the Hybrid. The Expedition, on the other hand, costs a more fiscal $1.95 per mile to put on the road over an expected lifetime of 300,000 miles. That means that an Expedition will last three times longer than a Prius and use less combined energy doing it. So, if you are really an environmentalist - ditch the Prius. There are also several cars from both Ford and GM available now with comparable fuel economy. I like the idea that some people have that fuel efficiency is important, to keep us from buying more oil from country's THAT HATE US! Dont get me wrong I like Hybrids beacuse they are more fuel efficent. However if you buy one to be enviromently responsibe you are causing more problems then you solve. But for now I believe that these are the best solutions, untill further research is done on the alternative fuels front. Drilling off our coast seems like the best solution, until we can come up with a Hydrogen car that works (GM and Ford already have them) and the government gets a hydrogen network in this country, that is the best solution.

Ford Kills Mercury Sable, Ford Taurus X

In what could be the first indication that the Mercury brand is about disappear, Ford has confirmed that the Sable and Taurus X will axed this spring. As a side the Ford Taurus will be replaced in 2010 buy a nuch more competitive model.
As you know the Sable, like all Mercury models, is merely a clone of some other existing Ford model. Sales are down 21 percent this year, which is the reason for its dismissal, so says a Ford spokesman. However I have heard that Ford has a plan for Mercury that is similer to what GM has done with Saturn. What I mean is this, that Ford will use there euro influenced design called kietic.

Time For Reflection

It's less than half of what Detroit was asking for, and the details are still being worked out. However in the late hours, it appears that congress is coming around. Congress is proposing 15 billion is emergency bailout to get the auto's (Chrysler, GM) through the next 5 month's.
Now I believe that this forces them to finaly eliminate brands, not just models, then this could be a good thing. I believe that GM and Ford should have no more than two car lines, much like what the major Japanese automakers offer: a mainstream brand and a premium brand.
GM should consist of just Cadillac and Chevrolet. GMC, Saturn and Pontiac should be dropped; maybe keep Buick as a Asia-only brand, and sell Saab and Hummer. Also the possibilty of merging Sabb and Volvo.
As to Ford, we all know Mercury needs to go. Their customer base may be even older than that of Buick. As to Lincoln or Volvo? My heart says keep Lincoln, and sell Volvo. My head says keep Volvo and ditch Lincoln.
I think Chrysler can remain with three brands. Jeep is unique, and I think that as a "niche" brand, it can survive in the long term (unlike Pontiac).
UPDATE
As usale congress comes up limp. The bailout package failed, however it looks like Presedent Bush will get togeather with the tresury to provide something in the way of a loan to get them to atleast the Obama administration.

Is this the end of Wagner? Aid Comming for Detroit

A key lawmaker who backs the emergency loans for the Detroit big 3 said today that the resignation of Rick Wagoner as General Motors CEO may be a condition for Congress to provide the company with financal aid.
"I think he has to move on," Senate Banking Committee Chairman Christopher Dodd said. The Connecticut Democrat appeared on the CBS program "Face the Nation."

This type of request was discusted previously, that call was for all 3 CEO's to steep down, however since the hearing's began on tuesday the request hadent come up. Untill now! Also this morning Sen. Dodd added that the Senate and The White House are close to an agreement that would provide 15 billion to GM and Chrysler LLC to prvent them from collapseing whithin weeks. This would suposidly tide the two companys over untill march when the commitee will reconvine and discuss aditonal steps. Ford is also seeking money, but is'nt in need of any mony yet.

However Dodd did also note that it would still have to be passed buy the senate, as of now he said "I'm not sure we have the vote's". The senate will require 60 of 100 vote infavor to pass the aid.

Wagoner, who has led GM since 2000 and hasn't posted an annual profit since 2004, repeatedly has said GM has the management team it needs and he does not intend to step aside. A breakthrough came late Friday when House Speaker Nancy Pelosi, D-Calif., dropped her resistance to temporarily reprogramming part of $25 billion previously approved for factory retooling to produce more fuel-efficient vehicles. Until then, Democratic leaders had insisted that emergency loans come from $700 billion set aside for financial institutions. The Bush administration refused.

Pricing announced for 2010 Mustang, Camaro, Challenger

The more things change, the more they stay the same. That old saying once again proves true as some early pricing information for the new 2010 Ford Mustang has leaked out, with the latest 'Stang continuing its tradition of offering an excellent value proposition when compared to its new peers. Base price for a standard V6-powered 2010 Mustang is reportedly $21,845, including delivery charge. For comparison, its biggest competitor will surely be the Camaro, which starts at $22,995. The other revived pony car is the Dodge Challenger, which in base SE trim begins with a MSRP of $22,545. Each of these entry-level models comes equipped with a standard V6 engine, though the Challenger comes only with a four-speed automatic while its competitors offer a stick. Anyone wanting a convertible has no choice but to opt for the Ford, as the Blue Oval's offering is the only modern musclecar with an optional drop-top. Stepping up to a V8-powered Mustang will run you $27,995 – quite a bit cheaper than the V8-powered Camaro's $30,995 sticker. However the Camero only offers the 8 in the SS trim. Dodge's entry runs $30,545 for the R/T trim and with its new HEMI V8 up to 372hp and 400lb tq. It's not exactly an apples-to-apples comparison, of course, as the Mustang GT is down a bit on horsepower compared to its rivals, but we think the GT's cut-rate pricing should be more than enough to keep Ford's pony at the top of the sales charts. It's this fun!

GM, Ford, Chrysler, Honda, Toyota all down over 30%

While the Detroit 3 have their hands out in front of Congress, the entire U.S. auto industry turned in a report of dismal November sales report. Every major automaker saw its sales crash and crash hard last month, and the only brand to gain ground was MINI, which saw sales jump 43% on account of last year's numbers being artificially low because production of the then-new Coopers couldn't meet demand.Credit, we suppose, should also be given to Lincoln and Subaru, each of which posted only a single-digit percentage loss of sales last month. Clearly what's effecting the Detroit 3 automakers is effecting the entire industry, which sort of blows a hole in the argument that people aren't buying from GM, Ford and Chrysler right now because of their inferior product. Toyota and Honda were both down over 30% last month and Nissan fell 42.2%, which means that Americans just aren't buying as many cars in general as they were last year. GM seems to be in the biggest hole, it appears that nobody wants to deal with a company anywhere near a "bankruptcy". To bad to because as I said before these cars are cheap, to buy, and the product quality is one of the best in the world.. again.

Breaking News!

It's taken two rounds of Congressional hearings, some major pride swallowing and three detailed business plans, but it looks as if the Detroit 3 will be getting the federal loans they need, though not as much they asked for. A deal has been reached between Democratic leaders and the White House, that will supply around $15 billion in federal loans ( from the U.S. Tresury i.e. your tax dollars )to help the struggling U.S. auto industry. While General Motors, Ford and Chrysler asked for a combined maximum of $34 billion, the $15 billion is designed to ensure they stay alive until March when the issue will be readdressed by the new Obama administration. GM and Chrysler reportedly need around $11 billion to survive the new year, while Ford has said it would only need government aid if one of the other two went under. No word on whether Ford will be getting any of the money. We will have to wait and see. We're hearing that a deal was reached between Democrats and the Bush administration late Friday after top Dem. Nancy Pelosi gave in to the White House and its position that the money should come from $25 billion in loans previously approved to help the automakers retool for energy fuel efficient vehicles, rather than drawing the aid from the $700 billion Troubled Asset Relief Fund for struggling financial institutions. In return, Pelosi is seeking a guarantee that the money would be replenished in "a matter of weeks." Both the Senate and House have confirmed they will be meeting on Tuesday to vote on the deal, and it's expected that strong oversight of how the loans are used, whether in the form of an individual car czar or committee, will be part of the final package.

More Bailout Talk's

This week, as many of you know, Congress held hearings on whether or not to LEND Detroit's auto makers money. This is not a bailout, this is a loan that must be repaid. Ford, GM and Chrysler are all asking for money to stabilize there institutions. Ford, while asking for a loan, is only asking for money in the event that one or both, of the others fail. Presumably to prop up its suppler network witch will be hampered to some extent. According to Barney Frank, head of the house finance committee, 80% of all suppliers service more than one of Detroit's three. So we will have to see if Congress can get there heads around the idea the this loan money is essential to more then just the three from Detroit.