December 17th, 2008 at 12:00pm
The Bush Administration says it hasn’t made up its mind on what to do about financial aid for GM and Chrysler. Two polls show customers are open to buying cars from a bankrupt automaker. Hertz will compete with Zipcar by renting cars out by the hour rather than daily or weekly. All that and more, plus John answers questions about the bailout in the “You Said It!” segment.
Transcript and Story Links after the jump . . .
Here are today’s top headlines. Still no bailout from the White House. Maybe customers will buy cars from a bankrupt automaker. And Hertz will compete with Zip Car.
Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Wednesday, December 17, 2008. And now, the news.
Another day and still no bailout. The Bush Administration says it’s exploring all options and hasn’t made up its mind on what to do about financial aid to GM and Chrysler. Now the word is that it will come on Friday. But meanwhile the stress is killing domestic automakers and their suppliers….and the rest of us who follow this so closely.
Uh-oh. More bad news for the Big Three. The Wall Street Journal cites two polls that contradict what the Big Three say about going into bankruptcy…..that no one would buy their cars. A survey by Merrill Lynch says 90 percent of car buyers would buy a car from a bankrupt company if it was backed up with government help. CNW Research says 48 percent would. So why is that bad news for the car companies? Here’s a rhetorical question: would GM chairman Rick Wagoner be able to retain that position if he took the company into bankruptcy? I’m sure he doesn’t want to test that issue.
In a sign of desperation Chrysler Financial says it may stop loaning money to dealers for wholesale financing. Chrysler Financial is running out of cash to provide those loans, but of course, it gets cash when dealers sell cars. So if they can’t get financing to sell cars, Chrysler financial can’t make money off them. Talk a bout a Catch 22 situation.
Dacia is introducing two Light Commercial Vehicle versions of the low cost Logan. Pricing for the van starts at 6,500 Euros and for our American audience that’s just over $9,000. And the pick-up starts just below 7,000 Euros. Dacia is the low cost brand for Renault and they are obviously expanding the line-up for the Logan.
The World Trade Organization denied China’s appeal of a ruling that said the country broke agreements imposing tariffs on foreign automotive parts (subscription required). WardsAuto.com says the tariffs are levied on foreign-owned assembly plants that don’t use enough parts manufactured in China. The WTO says if China doesn’t stop this, the affected nations can levy duties against Chinese goods.
Last night Detroit got hit by the first big snow storm of the season. We got about four inches of powder. The roads were a mess this morning and I was stuck driving a Mitsubishi EVO from the press fleet. Even with all-wheel-drive I was sliding everywhere because of the summer tires. But there’s one product that could have really helped me out.
Autosocks slip over your car’s drive wheels and supposedly provide better traction in snow and ice. They were designed in Norway and are made out of a special synthetic fiber. Unlike tire chains, Autosocks are easy to install, won’t tear up the roads and fit in your trunk for easy storage. They’re available online and cost between $80 and $100. Boy, I wish I had these things this morning.
The Wall Street Journal reports that Hertz will compete against Zip Car. Connect by Hertz rents cars out by the hour rather than daily or weekly. Users pay a $50-per-year membership fee and can rent cars for about $10 per hour, including fuel. Connect by Hertz should be available in about two dozen locations around the world.
Coming up next, it’s time for You Said It!
And now it’s time for some of your feedback.
This is “You Said It!” Every day we get dozens of comments and questions from you, our viewers. “You Said It!” gives me a chance to respond.
Pedro Fernandez writes in to ask “John, in all this bailout talk, all I hear is UAW givebacks and sacrifices, but what of the honchos on top, why aren’t they offering to cut their huge salaries and bonuses?”
Pedro, actually they are going to sacrifice. Each of the Big Three CEOs indicated they’ll work for a $1 a year as long as they’re operating with taxpayer money. GM’s board of directors would also work for a buck a year. Bob Lutz, Fritz Henderson, Tom Stephens and Ray Young, all executive vice presidents at GM would see all their cash compensation cut by 50 percent. On top of that Henderson would cut his salary by 30 percent and the other three by 20 percent. So the union people are not the only ones making sacrifices. But you raise a good issue. In times of crisis it’s critical for leaders to show equality of sacrifice. That’s why there was such a stink raised over the CEOs flying to Washington in their corporate jets. But they obviously learned their lesson and are going to be smarter about this going forward.
And Ed Kemmerer writes in to ask, what about the rest of the white-collar salaried workers. I know that they pay next to nothing for their health care coverage.
Ed, that used to be true, but their co-pays are a lot higher these days. Also, the salaried workforce makes roughly the same as their counterparts at the transplants, which is not the case for the union workers and top management.
Thanks for your letters and don’t forget that all this week you can win cool Autoline gear by answering our trivia question. All you have to do is sign-up for our free e-mail newsletter to receive the trivia question. I’ll be picking the winner Friday on “Autoline Daily” so sign-up today!
And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.