Episode 82 – Viability Plans Due Tonight, Daimler Reports Loss, Euro Unions Want Spin-Off

February 17th, 2009 at 12:08pm

Runtime 6:12

GM and Chrysler have to turn their viability plans over to the U.S. Treasury by this evening. Daimler posts a substantial 1.5 billion euro 4th quarter loss. European unions want Opel and Saab spun off of General Motors to potentially avoid plant closures and layoffs. All that and more, plus a look at the all-new Mazda3.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. GM’s and Chrysler’s viability plans go to the government this evening. Daimler posts a substantial 4th quarter loss. And European unions want Opel and Saab spun off of General Motors.

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

This is Autoline Daily for Tuesday, February 17, 2009. And now, the news.

The deadline is 5 PM tonight. That’s when GM and Chrysler have to turn their viability plans over to the U.S. Treasury. And we finally have a car czar, though they’re not calling him a car czar. The Wall Street Journal reports the government’s lead person on the bailout effort is Ron Bloom, a 53 year old investment banker who also helped successfully restructure the American steel industry. He will also be joined by Diana Farrell, deputy director of the National Economic Council, Steve Girsky from Centerbridge Capital, and possibly Steve Rattner from Quadrangle. The Journal says, like we reported yesterday, that the car czar job was politically radioactive, so we’re getting a panel of experts instead.

And maybe this will give GM the leverage it needs to get concessions it needs from bondholders and the UAW. As we went to press there was no announcement on agreements between GM and the other parties. But knowing that they now face a panel that has lots of experience with bankruptcies may force them to accept concessions so the General does not have to go into Chapter 11.

Daimler reported this morning that it made 1.4 billion euros last year, but that was down from 4 billion the year before. The drop off was due to a 3.2 billion euro write-down from its holdings in Chrysler and a steep drop in profits at Mercedes-Benz. In the 4th quarter Daimler reported a net loss of 1.5 billion euros, as well as an operating loss of 1.2 billion. Mercedes alone saw a 22% drop in revenue and posted a loss of 360 million euros.

Honda may not be leaving Formula One after all. According to Autoblog, it may be more cost effective if the team stays in F1 a while longer instead of paying out employee severance packages. And there are also reports F1 chief Bernie Eccelstone will help fund the team but it would only be enough to get it through the first four races.

Fiat will premiere the convertible version of the 500 at the Geneva Motor Show in a few weeks. It’s the same size as the base model and is available with the same powertrain options, a diesel and two gas engines. It also features a start/stop system which shuts off the engine when the vehicle comes to a stop and automatically starts back up when put into gear.

GM‘s European union leaders called for a spin-off of the Opel/Vauxhall brand as well as Saab, in order to potentially avoid plant closures and layoffs. According to Reuters the union fears GM’s European operations will take a big hit as the company restructures to prove its viability to the US Congress. The union also says the company is not taking in to consideration the loans guaranteed by European governments and the existing contracts on the European and national level.

Coming up next, a look at the all-new Mazda3. We’ll be back right after this.

The Mazda3 is the most popular model in the company’s line-up, representing a third of Mazda sales worldwide, and now we’re about to see the latest version hit the showrooms.

You can still tell this is a Mazda3, but it’s sleeker and more aggressive looking than before. It shares some design cues from the Mazda6 and RX-8, like the accentuated front fenders and hood. And Mazda used input from its designers in Japan, North America and Europe.

Inside the instrument panel cover is padded and seamless, with a grained surface that sweeps from the center console to both A-pillars. To make the ride more comforting the seats were reshaped and extended for additional thigh, lumbar and shoulder support.

Size wise the Mazda3 is 3 inches longer than the previous model but rides on the same wheelbase and wheel track dimensions. New unibody construction methods helped shave 24 pounds.

As before there are two four-cylinder engines available in 2 and 2.5L versions. You can expect combined fuel economy in the mid-20′s.

The most interesting and unique feature of the Mazda3 is the i-stop system offered with the 2L direct injection engine. Instead of using the electric starter, it restarts the engine by injecting fuel directly into a cylinder near top dead center, and igniting it by firing off the spark plug. The technology helps cut fuel consumption by approximately 12 percent compared to the current European Mazda3. The system will initially appear in Japan and Europe; however, it will be expanded to the entire world market.

Interestingly, Ford says that it developed this stop start technology at its Sci Labs in Dearborn, Michigan and it will start using the system next year on some of its Eco-boost applications.

That’s it for today’s top news in the global automotive industry. But don’t forget, we have a live webcast coming Thursday at noon where I’ll be joined by a panel of experts to talk about the viability plans from GM and Chrysler. Will they be able to stay out of bankruptcy? Will they be able to survive? We’ll take your comments and questions as well. That’s live at noon on Thursday. Thanks for watching, we’ll see you tomorrow.

9 Comments to “Episode 82 – Viability Plans Due Tonight, Daimler Reports Loss, Euro Unions Want Spin-Off”

  1. Matthew Kovac Says:

    I know it’s petty, but I just wanted to repost this comment from the esteemed William R. Walling in regards to the Mazda3 stop/start technology:

    (June 30th, 2008 )
    John,
    “Basic design, a single cylinder ‘detonation start’ within multiple cylinders ICE ware WILL fail associated individual components.”
    Does someone within DETROIT truly believe this has concept not been researched during these past 100+ years?
    The late Rube Goldberg would love today’s novel engineering ‘insights’ abounding daily.
    Should you believe this latest novelty true, I understand there is a bridge in N.Y.C. for sale …

  2. DC Says:

    John, I am just sick and tired of the UAW. They just might be the last iceberg that sinks the big 3. The heads of the UAW need to realize that either they take concessions or their constituents lose their jobs.

    I am not suggesting they give everything up, but drastic situations call for drastic measures.

  3. Dan Clemons Says:

    Non-union steel workers are making half of what they used to based on output. Income goes up and down for almost everyone with the economy. Even government and schools are feeling the pinch. High wages, a Jobs Bank that is no longer needed, and legacy issues are at the heart of Detroits financial problems. GM is at $2.19 a share. One thing for sure, GM shareholders aren’t making any money.

  4. Dave Kopitzke Says:

    Get rid of legacy costs and everything will be rosy. Why can’t these Big 3 CEO’s understand that there is always a simple solution to a complex problem?

  5. Tom Martin Says:

    I like the Maxda3. It’s one of the few small cars that has options for xenon lights, leather, 2.5 engine, larger seats, and non-fixed side mirrors. I also like the ride.

    Still, combined mpg in the mid-20′s seems unacceptable.

  6. Conley Peyton Says:

    What planet are all you people from? The UAW is not the problem, too many brands is not the problem, too many dealers is not the problem, and at the moment too much capacity is a problem for everyone. GM is planning to layoff 47,000 people and permanently close 5 US plants and dropping 4 brands. Giving them 30 billion tax payer dollars to this is stupid. Everyone is demanding they do this as if the problem is any of those things. If GM made the cars we wanted to buy they would need to bring back Oldsmobile. If GM, Ford and Chrysler made a more reliable product they would not need bailout money. Yes, I know the crapt being spewed that they are all equal to the Japanese and Koreans. But they do not. Their cars need service long before most foreign models. The brakes wear a lot quicker. The lights fail, the electrics fail, the transmissions wear and list goes on. It is not the imagination of the public. No amount of bashing the UAW or plant closing is going to fix a poorly engineered and aesthetically designed product. All have some very appealing products but overall they are blah. For GM the Corvette is pretty but troublesome to own, making it a loser. The Chevy branded Aveo is an insult to cars. I would go after Chrysler but beating up the defenseless is no fun. Ford is better than the other two but is still allowing the rest of the world to take its’ lunch money. Folks the US consumer is broke and jobless, taking more jobs and paying them less is not going to allow them to buy anything. Blaming the UAW maybe fashionable but never has been correct. The UAW has problems but is not responsible for the US Auto industries problems. The people making the decisions are!

  7. William R. Walling Says:

    Response to Mat -
    “Esteemed, Only in a BAD dream!” :-)
    Regarding, individual cylinder starting scheme -
    My MIT, SAE engineer associate, who IS esteemed within media these past decades (published monthly), does enjoy this latest round of vendor ‘bluff’!
    As a seasoned gent, he has observed far too many ‘dubious’ engineering and vendor promises over time.
    Regarding MAZDA wares, here’s a question -
    “As both FORD and MAZDA employ the domestic parents new two (2) part exterior painting process why then does MAZDA insist on application of an e-coat (paint preparation) process?”
    Suggestion, buy a genuine MAZDA product over it’s FORD counterpart!
    ‘Little brother IS tougher than it’s noted older sibling!’
    Understand previously mentioned N.Y.C. bridge remains available … :-)

  8. Joe Sears Says:

    John,
    Successful reorganization of the steel industry? Yes, it is still an industry in this country but now the largest company has foreign ownership and a foreign headquarters. Is this what we want for GM?

  9. Richard Tait Says:

    Hey John,

    I have two comments:

    1) I have always been a fan of a car czar (by whatever name or structure) but ONLY if said car czar is a true car guy (…ooops…or girl). Why does this panel have only people who don’t have any experience building, selling, racing, or marketing cars? This is destined to failure. When GM was being run by bean-counters they sold cars that nobody in their right mind wanted and is what lead to their current slump.

    2) The stop/start system in the Mazda3 is brilliant. Will it wear internal pats of the engine? Of course. Every rotation of the internal parts of an engine brings it one micron closer to death. So what is new? Sometimes those people who are “experts” know too much for their own good. This is just one of those things that one wioll view and ask “how come nobody thought of that before?”