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Episode 9 – Economic 9/11, GM Management Shakeup, Chrysler Stops Production of Hybrids

October 24th, 2008 at 12:00pm

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Automakers face an “economic 9/11″ that could result in 1.4 million job losses. GM could face a management shakeup if it merges with Chrysler. Just as they arrive at dealerships, Chrysler stops production of its hybrids. All that and more, plus a preview of Mel Karmazin’s appearance on this week’s Autoline.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Automakers face an “economic 9/11.” GM could face a management shakeup. Chrysler stops production of its hybrids.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Friday, October 24, 2008. And now, the news.

The chief economist at the Center for Automotive Research says the auto industry is facing an economic 9/11. Sean McAlinden says the industry hasn’t seen anything like the current business climate since 1933. The Detroit Free Press reports that GM will run out of cash in 12 months, and Ford will run out in 18 months, and says McAlinden is calling for a $15 billion cash bailout. Otherwise he says, the industry will collapse, taking out 1.4 million jobs within a year. And since this will cause suppliers to collapse, it will hurt Toyota, Honda and Nissan, as well.

The continuing saga of the possible GM-Chrysler merger . . . continues. The Wall Street Journal reports that Cerberus would want fresh management at the top of the new company. The Journal also says Fritz Henderson, GM’s Chief Operating Officer, is the deal maker in this venture. It should also be pointed out that Cerberus appointed Bob Nardelli to run Chrysler, so presumably they’d want him in the new company, too. If this report is accurate where does that leave GM’s CEO and chairman Rick Wagoner? Yeah, where does that leave him?

Speaking of Chrysler, it announced its Newark, Delaware plant will close 12 months earlier than announced. The plant manufactures the Dodge Durango and Chrysler Aspen including the hybrid versions. According to Ward’s, this means production of the hybrids will end just as they were just arriving at dealerships. It also means Chrysler won’t have another hybrid in its lineup until the 2010 Ram.

Volkswagen is not revising its outlook for 2008 despite the industry slump due to the global financial crisis. CEO Martin Winterkorn said some production cuts are being made but no drastic cuts are planned. Even though VW is on target this year, Winterkorn admits next year could be very difficult for the industry.

Ford is coming out with its version of GM’s OnStar (subscription required). It’s called 911 Assist, and Ward’s reports it will debut this year on 12 different Ford, Lincoln and Mercury vehicles. It’ll even be available as a dealer-installed software upgrade for older cars equipped with SYNC. 911 Assist is designed to contact emergency services if a car’s airbags deploy. Unlike OnStar though, 911 assist is free.

LED headlamps are probably going to become standard equipment in the next decade. Right now they’re only available on two cars, the Audi R8, and now the Cadillac Escalade Platinum. LED’s use far less power, produce brighter light and they’re designed to last the life of the vehicle. And this makes them particularly attractive for electric cars, when they come out.

Coming up next, a preview my interview with Mel Karmazin the CEO of Sirius XM Radio. We’ll be back, right after this.

Mel Karmazin used to run CBS, then he ran Viacom, and now he’s running the merged company that put XM and Sirius radio together. He’s my guest this week on Autoline Detroit, which is available right now at AutolineDetroit.tv. I asked him what becomes of satellite radio now that BMW and Chrysler are offering an internet connection in the car, which means you will soon be able to hear any radio station over the internet. Here’s what he had to say.

If you want to hear the whole interview with Mel Karmazin, jump over to www.autolinedetroit.tv.

And that’s it for today’s top news in the global automotive industry, but don’t forget you can get podcasts, transcripts and a whole lot more on our website, AutolineDaily.TV. Thanks for watching, we’ll see you next week.

7 Comments to “Episode 9 – Economic 9/11, GM Management Shakeup, Chrysler Stops Production of Hybrids”

  1. Larry Skellion Says:

    Great Addition to Autoline Detroit!! I love the new show THANX!!
    Larry

  2. willy j Says:

    It never seems too fail!.

    Build an industry [any] .
    Saturate the market [with product] .
    Enhance and improve upon it [product] .
    Then Get educated. {anything other than what makes you your paycheck}.
    Go into the money and finance end [of business].
    Let it fail [or] self Destruct ( auto ).

    Run to the government about job loss.
    Saying what ever they need to!, Only to pay themselves, and never replace any JOBS.

    The way Business has been conducted in North America.
    It is par for the course.

    General Motors, FORD, CHRYSLER; All FAILING and Closing there DOORS.
    This is best viewed; as the best damn thing that can happen.

    Bury all of the remaining big three [gm ford chrysler].
    Let American rebuild [whatever gets built].
    Than we can get on with our lives.
    From the looks of things Once a company [any ], gets the Finance and Money {itch / bug / scratch}.
    They are no longer concerned about what it was [is] they had manufactured.

    SO!: those that made there money in this industry [auto] let them get on to, something else.
    Spare [us] and every one else from, there lies [ false accounting method et. al.] about what they are going to do;
    and accomplish with something or anything [automotive].
    Thusly an attempt to turn all industry in North American into: some window dressing [eye candy / whitewashing methods]
    For the grand, great status Quo attitude, just so the can keep up some Lazy; Lame Appearances. [strange days indeed]

    They made their money!: now get out of the way, for those that want to make theirs: [ earn a ] Living!! .

  3. Salvador G. Says:

    I have to say this is really getting ridiculous GM and Chrysler, I think they want to go under just to get the bailout money and then merge… The automotive industry is NOT going away no matter how bad the economic becomes, and if the so called big 3 dont step up I guarantee you, Toyota and Honda Will.

  4. Jim Miller Says:

    Love the new show!! As far as the above comments,yes the big three have made mistakes. However, remember, ford went into england and with a conquest attitude took over the market so all through the 60/70′s ford had the majority of sales. Then when it was cheaper to build elsewhere, they moved most of the production elsewhere. The auto industry in the UK is basically non-existent now. You don’t see the similarities with what toyota ands honda are doing now? You don’t think once they saturate the market and crush the big three they won’t build in china??? All the while sending profit back to japan like ford still does from UK to US???
    Look at the big picture, look at history.

  5. Michael.Wang Says:

    Hi,John

    Thanks for your show and efforts!

    This is Michael from GSK China,the supplier of auto interior parts.The finacial crisis in USA seems to start affecting China as well as the automotive industry.Most of the OEMs in China plan to cut the production and slowdown the recruitments,and even lay off the employees.The expectation of 2009 would be in very low.

    I wish China would have a show like yours.

    Best success!

  6. Todd Jaspers Says:

    Never thought I’d see the day that GM and Chrysler would merge?! Its a very interesting time to be alive… that’s for sure.

    Shoot… I was born in 1978. Wonder if this is what it felt like during the Carter administration, with the folding of AMC, crazy gas prices? Economic downturn..?

  7. Merle Says:

    Hello John,

    I only wish that Chrysler could have listened to their employees and customers about 10 years ago. They were begging for a vehicle that got 30mpg hwy and have the size of 300/Montego. Still can’t figure out why they won’t attempt to put the euro diesel in the Caliber for sale over here. Quality has gotten so much better with the domestics. My ’01 Grand Caravan ES has 245K on it and I went to Maryland back in Feb with it. My ’92 has 341K on it and is very dependable, just rusty underneath. With gas prices coming back down, once people can get caught up on their bills, we can only hope things will pick back up. I’ve read that each plant worker for for an OEM keeps about 9 others outside of the automakers gainfully employed. Here in Michigan, that would mean a catastophe. My next vehicle will have to get a minimum of 30mpg on hwy., regardless of the price of gasoline. With what I’ve spent the last three years, if it drops back to $1.40 a gallon (about what it was in Jan ’01), I’m still two years worth of excess charges in the hole. Build very fuel efficient vehicles, that aren’t cramped inside and offer decent rear seat leg room (Ford Fusion as an example), the sales will be there Big 3)!! I firmly support Big 3 built products, but give me what I want……so that I won’t have to make import comparisons.