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Episode 89 – GM Financial Results Grim, Is Chrysler Doomed?, Toyota Slashes Production

February 26th, 2009 at 12:00pm

Runtime 5:37

General Motors announced its financial results today and the numbers are worse than expected. An analyst predicts Chrysler won’t make it through the year. Toyota slashes its production by more than a quarter. All that and more, plus a look at the all-new 2010 Toyota Prius.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. GM’s losses are worse than expected. An analyst predicts Chrysler will go out of business. And Toyota slashes production.

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

This is Autoline Daily for Thursday, February 26, 2009. And now, the news.

General Motors announced its financial results today and the numbers are worse than expected. Revenue fell by $31 billion, and the company lost $31 billion. In the fourth quarter revenue fell by $16 billion and it lost nearly $10 billion. Most worrying, GM lost money everywhere in the world, including Asia and Latin America, which had been making money. And it burned through more than $5 billion in cash in the last three months of the year. Grim news indeed.

And it just gets grimmer. Industry analyst Laurie Harbour-Felax predicts that Chrysler is doomed (subscription required). WardsAuto.com reports that she says the company won’t make it through the year, but she forecasts that some of its products will stick around, probably minivans, Ram pickups and Jeeps. She says Chrysler’s financial problems and the fact that Cerberus is dying to get out of the auto business sets the stage for something bad to happen. Let’s just hope she’s wrong.

We’ve been warning for months now that suppliers are teetering on the brink. The Wall Street Journal says that Visteon, which used to be part of Ford, is inching closer to bankruptcy (subscription required) after losing $663 million. And the French government is going to take a stake in Valeo (subscription required), the giant French supplier. But curiously the French government will only buy 19 million euros worth of stock, or a little over $24 million. That doesn’t sound like a lot of money now that we’re all getting used to talking about trillions and trillions these days.

Thousands of workers protested at GM Europe factories today, in the hopes to try and save their jobs. According to the Associated Press, the main rally was staged at Opel’s Rüsselsheim plant in Germany. Rallies and work stoppages were also planned at two other Opel factories, a Saab factory in Sweden and other GM units in Britain, Austria, France, Spain and Hungary.

According to an article from the Detroit Free Press, Toyota is slashing its production this year to only 6.3 million vehicles, a 27 percent drop. That’s down from 8.6 million last year, meaning it will build 2 million fewer vehicles. And that will affect our next report because…

Coming up next we’ll take a look at the all-new Toyota Prius.

The Toyota Prius is perhaps one of the most iconic cars of the past decade, even though sales aren’t great at the moment, it’s still the most popular hybrid around. And now the all-new, third-generation Prius will soon go on sale.

The Prius is built on a new platform and the hybrid system is 90 percent newly developed. Under the hood it’s powered by a 1.8-liter, four-cylinder engine. Toyota estimates the Prius will get 50 miles-per-gallon.

The all-new hybrid is instantly recognizable as a Prius but there are slight differences. The overall height is the same, but the top of the roof is pushed 4 inches to the rear. It has the same wheelbase but the overall length is slightly increased. Also, the cargo area was expanded by using a new and an improved layout of the battery cooling unit.

Weight saving steps were taken in order to help improve fuel economy. Taken together, the inverter, motor and transaxle are smaller and 20 percent lighter. And the use of aluminum in the hood, rear hatch, front suspension axle and brake calipers further reduce weight.

There are three driving modes. EV-Drive Mode allows driving on battery power alone at low speeds for about a mile. There is also a Power Mode, which increases sensitivity to throttle input for a sportier feel, and an Eco Mode, which helps drivers achieve their best mileage.

The Prius is available with many features. A multi-information display that monitors fuel and energy consumption is standard. An available sliding glass moonroof is packaged with solar panels to power a new ventilation system. And amenities like Intelligent Park Assist, and a backup monitor, with voice-activated navigation are available. And it also features Safety Connect, Toyota’s version of OnStar.

Pricing for the 2010 Prius will be announced before it goes on sale this spring. Toyota seems to be waiting for Honda to announce the price of the new Insight, while Honda seems to be waiting for Toyota to announce the price of the Prius. It’s like that old vaudeville routine, “After you my dear Alphonse.” “No, after you my dear Gaston.”

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.com. Thanks for watching, we’ll see you tomorrow.

11 Comments to “Episode 89 – GM Financial Results Grim, Is Chrysler Doomed?, Toyota Slashes Production”

  1. Tom Cain Says:

    Alphonse and Gaston or Terrence and Phillip!

  2. jim Says:

    John, a couple of years ago you had as a guest a man who If I recall correctly, was the top selling GM salesman in the U.S. He was quite critical of the way GM was doing business and predicted gloom if things didn’t change. I’ll bet he’s now sitting back and saying, “I told you so!”

  3. G.A.Branigan Says:

    Is the soap opera about to end?Will GM go under?Will Chrysler cease to be? Will Ford take over Jeep? Will Honda and Toyota miss the next sales year for their EV’s cause they want max bux? I think I’m gittin’ th’ vapors.

  4. Salvador G. Says:

    John,

    If Chrysler goes under, where does that leave FIAT (considering they practically bought Chrysler for next to nothing)…
    so it means they’ll end up with an worthless company!!!
    And who will claim intellectual property for everything Chrysler and the new 200??

  5. Dwight B. Says:

    Folks:

    I just hope I never get stuck behind a new Prius on 696 Expressway with some fool running it in the EcoMode.

  6. pedro Fernandez Says:

    John: I symphatize with the lowly worker in the assembly line that works hard every day and yet sees bad decision making at the top year after year corroding the industry and feeling helpless and frustrated not being able to do anything about it and now the end may be near, though no fault of their own.

  7. R.J. Williams Says:

    The new 35mpg CAFE standard, effectively, is an unfunded government mandate. In my view, the choices are two:
    1.) Rescind the new CAFE standard and allow the oil companies to drill where the oil is (ie.) within the first 50 miles off shore. Who do you want to get the oil, the U.S. with proven drilling techniques that are safe, or the Chinese as they drill off Cuba with techniques, because of their limited experience, may likely be less effective and safe for our shores. The API, the American Petroleum Institute, indicates that there are 16 trillion barrels of oil out there. Well actually about 15, all we’ve done over the past 100 years is consume the easiest to get first trillion. OR
    2.) Keep the new CAFE. With the trillion upon trillions that we are spending on nitwit things certainly we can find a few billion amongst all this money for GM, Chrysler and Ford too if they need a hit.

  8. Nancy Reeves Says:

    Mr. McElroy, you responded to my Letter to the Editor in the Oregonian today. As I indicated in my letter, my Chrysler wheelchair van was in the shop at 29,000 miles. And in actuality, it was again in the shop at 41,300 miles because the power window failed (43,000 miles was my own typo in the letter to the editor). The Chrysler dealer fixed the window, but when they returned it to me the stereo was no longer working. Both the Chrysler dealer & Chrysler Corporation refused to resolve the matter even though the damage to the stereo occurred while in the possession of the Chrysler dealer.
    You posted a comment, defending the quality of the Big 3. Therefore, I must ask you…do you think a Chrysler T&C minivan breaking down multiple times before it even reaches 45,000 is indicative of quality? Do you think that it is quality customer service when both the dealer & Chrysler Corporation refuse to fix the problem without charging me $700? Do you think anyone who has had my experience of having a vehicle that has needed repair after repair after repair, would go back to Chrysler to buy another vehicle? If perhaps you feel this is an isolated incident, then I ask you, don’t I as a consumer count?
    Although I should not have generalized to all American automakers (and I do apologize for that), I stand by my assertion that Chrysler should be left to its own demise to make room for the emergence of new innovative automakers who will produce quality products. I empathize with those lineworkers who may lose their jobs as a result of the poor choices Chrysler management has made, but reiterate that it is not the job of taxpayers to prop up a company that has had years to prove itself to consumers such as myself. And just for the record, I bought a Ford Mustang a few months ago and I am hopeful that the quality of their cars & customer service far surpasses that of Chrysler. If it proves to be so, I will not hesitate to buy another Ford product in the future.

  9. Rick Kop Says:

    Enough already. Honda and Toyota sould quit stalling. Those of us waiting to buy are going to tire of waiting and end up purchasing something else.

  10. Nancy Reeves Says:

    I just previously wrote you thinking you had posted a response to a letter I wrote to the editor of my local newspaper. However, upon further review, it appears that someone simply quoted you. Nevertheless, I would like to comment on the question, is Chrysler Doomed? As a Chrysler owner who has a Chrysler T&C wheelchair minivan that was in the shop at 29,000 miles to repair the airbag system & a faulty rear hatch and then was back in the shop at 41,300 miles to repair a faulty power window motor, and now has a stereo that needs to be repaired because it just coincidently stopped working while it was in the possession of the local Chrysler dealer having the window repaired, I would have to speculate that yes Chrysler is doomed. The company has had years of opportunity to prove itself to consumers such as myself. However, my experience has been that Chrysler produces garbage & isn’t dedicated to ensuring customer satisfaction. The company has made no effort to resolve this situation with the stereo, which will cost $700 to repair. Even without the stereo issue, quality would be still questionable. What consumer wants to deal with repair after repair on a vehicle with less than 45,000 miles? What consumer would want to go out and buy another Chrysler vehicle after an experience such as mine? Given my own experience, I don’t believe taxpayer dollars should be used to prop up Chrysler. Although I feel for those who will lose their jobs because of the faulty decisions of Chrysler management, it is my opinion Chrysler should be left to its own demise. Only then will there be an opportunity for change. Its been said before, “if nothing ever changes, nothing ever changes.” However, if Chrysler should fail, it would leave an opening for a new, innovative automaker to emerge.

  11. Chuck Says:

    I guess the $14.95 coffee cup you are selling on this web site comes with the coffee in it, and with unlimited refills!

    I would suggest you contact Starbucks and wholesale them at 12.95 so they can sell them at $19.95 w/o any coffee being included.

    Times are tough!!