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Episode 133 – Chrysler May Survive, Opel Needs Cash Now, Consumers Plan to Buy a Car

April 29th, 2009 at 12:27pm

Runtime 6:12

Chrysler reached an agreement with all its big institutional lenders and just might avoid bankruptcy. The head of Opel’s work council says the company only has a matter of weeks before it runs out of cash. 55% of US consumers plan to buy a new vehicle within the next two years. All that and more, plus John answers viewer questions in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Chrysler just might avoid bankruptcy. Opel is weeks away from collapse. And American consumers lie to the pollsters.

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

This is Autoline Daily for Wednesday, April 29, 2009. And now, the news.

The clock is ticking. Tomorrow is the deadline for Chrysler to get a deal together, and you know what? They might just pull this off without going into bankruptcy. Maybe. But the company now has an agreement with all its big institutional lenders. There are some holdouts who could torpedo the deal. But Chrysler is awfully close to pulling this off.

Yesterday we reported that the UAW would end up owning Chrysler with 55% of the company’s stock. But the Detroit News reports that when it comes to voting rights, those shares may not give the UAW control of the company. If that’s so, I wonder what Fiat’s potential 35% stake in the company means. We need to hear more details on this one.

Opel needs to find a new owner within a matter of weeks, says the head of the company’s work council, which represents labor. Bloomberg reports that Klaus Franz, of the work council, says Opel only has a matter of weeks before it runs out of cash. As desperate as he sounds, however, the works council slammed the door in Fiat’s face. They don’t want anything to do with Fiat, and would prefer to see Magna get it instead.

Just a day after GM announced it was cutting 42-percent of its dealer body, the company told the dealers themselves that as many as 1200 underperforming stores will be eliminated. In a “dealer-only” video conference, the Detroit News reports, the company outlined where the cuts will come from. About 525 from Saab, Saturn, Hummer & stand alone Pontiac stores, another 500 or so from consolidating dealerships and finally between four and six-hundred that will voluntarily close. That leaves GM around 1200 short of its announced goal of eliminating 2600 deals.

According to a poll done by R.L. Polk, 55% of US consumers plan to buy a new vehicle within the next two years. Half of those that responded also said they were very or extremely likely to consider buying from Ford, GM, or Chrysler. Who believes this stuff? Half of all consumers are going to buy a new car? What? The market’s going to hit 50 million units next year? You know, people will tell pollsters whatever they think they want to hear.

Holden is considering selling Commodore police cars in the US badged as Chevrolet’s. According to GoAuto, the Australian National Safety Agency has produced a prototype police car based on the Pontiac G8 for the LA police department. GoAuto says this could lead to retail sales of Commodore’s badged as Chevy’s in the US.

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.

Our report on legislation to make hybrid cars noisier so blind people can hear them generated quite a bit of internet chatter with you.

Kit Gerhart wrote in to suggest, “How about an angry dog sound for a hybrid at low speed under electric-only power?”

I don’t know Kit, that sounds a little mean, but then again, I always wanted a car horn that sounded like a car locking up the brakes. That would get people’s attention. So I can’t complain too much about a barking dog.

And @Badnikl Twittered in to us with what he thinks would be the perfect sound effect for hybrids to play as they roll down the street.

Anyone remember where that came from? That’s right, from the Jetsons.

And then, going back to all the big news that we’ve been reporting, Todd Jaspers wrote in to say, “It’s like a huge blur… I can’t believe what I’ve been seeing the past 2 weeks… never thought I’d ever see this day.”

Amen, brother. This auto industry is truly going through historic times. Let’s just hope we see a full recovery in the years ahead.

Don’t forget tomorrow night at 7 pm eastern. It’s Autoline After Hours with Jason Vines, Peter De Lorenzo and our special Skype guest Robert Farago from the Truth About Cars. If you don’t know Robert and TTAC, he’s been lobbing grenades at Detroit for years, so like the song said, this ain’t no party, this ain’t no disco, this ain’t no fooling around. This ain’t gonna be no poetry reading. So tune in tomorrow night.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

34 Comments to “Episode 133 – Chrysler May Survive, Opel Needs Cash Now, Consumers Plan to Buy a Car”

  1. G.A.Branigan Says:

    It ain’t over with Chrysler is it? UAW doesn’t get a vote at 55%,yet MAYBE Fiat does? I have some serious doubts about Fiat even finalizing the deal with Chrysler.I think maybe they are just “talkin’ th’ talk” and will wuss out when it’s time to sign.

  2. Michael Says:

    The level of mismanagement at the big 3 (yes Ford too) over the past two decades is beyond comprehension. All the way back to good old Rog at GM with every model using the same body and engine. What a shame that a once great industry has brought itself to its knees. Lowly old Fiat now has to comes to the rescue. The gentlemen in Detroit should all hang their heads in shame.

  3. Mike Dale Says:

    John,

    I agree the last two weeks, the last year and even the last five years have been awfully tough. But really this process started 15 or 20 years ago. When most favored nation trade status was given (yes NAFTA too) the math that businesses used to use to justify new machinery never worked anymore. It always made sense to send the work where the labor was nearly free, the right to pollute was unlimited, and there was no need to fund health care or pensions. Yes, this mess is shocking to us now, but really, we should have seen this coming. Yes, Congress too. I’ve not seen any of those folks trying to remind anyone lately that they opened the door to this.

  4. pedro Fernandez Says:

    John: I believe I read somewhere that Fiat has one of the worst reliability records in Europe, did I read that right? Can’t seem to find that info anymore.

  5. Salvador G. Says:

    I get the deal now, FIAT will get management control over Chrysler in return from the goverment, well I actually think thats fair; FIAT saves Chrysler from going under, then they promise to bring all that good European technology and in return for accepting 35% they get full management.
    If thats the ways it goes, then I like them apples.

  6. Dave E. Says:

    It is sad to see this happen to the big three, but I think greed entered the picture by both management and labour. When times are good who cares what the issues (executive salaries/wages/work rules/bonuses/Health Care) are but when times are bad, that all changes. It appears that these “issues” were not even close to our nation’s expected norms. Too bad, the US was once the leader in the automotive market.

    I like the Jetsons sound for the Hybrids.

  7. Dan Busch Says:

    I agree that it is doubtful that 55% of US consumers plan to buy a new vehicle within the next two years, but I hope that more than 50% of what ever percentage will consider buying a Ford, GM, or Chrysler.

  8. Dan Clemons Says:

    I tried to make a deal with a local Wheeler Toyota on a new 2010 Prius and was told I would have to pay sticker or go jump in the lake.

    Times must be good at Toyota!

  9. G.A.Branigan Says:

    I don’t believe for one minute what the polls say about americans buying new cars in the next two years unless there are even better incentives.Even then,would they buy american like they said? The recent past incentives where to good to be true and my wife and I took full advantage.Getting loans was just as easy as it always was too.
    Although the hybrids are out there like the Prius,most people will end up buying a good fuel effcient “regular” car,and I don’t see any kind of ruch towards all electric either.
    @ Dan,with things being the way they are,Toyota doesn’t have to “deal” on their hybrids.They don’t seem to have a problem moving them to those that won’t settle for anything else.You would think though,that they would be a bit more consumer friendly,perhaps it’s just that dealer?

  10. pedro Fernandez Says:

    The way this voucher bill is being presented, does not really help the domestics because the biggest rebate of $5k will go to an American build high mileage car. That includes only Cobalt(crap) and Focus. The ones that are coming from Ford will be built in Mexico, which means they’ll qualify for the $4k voucher. More foreign nameplates are built here that qualify for the $5k. Those are Corolla, Civic, Altima,Hyundai. How in the world is that gonna help the domestics?

  11. pedro Fernandez Says:

    Re Dan’s comment, that’s exactly why I don’t shed a tear when I see a dealership going under. Cause they’ve been sticking to the consumers for too long, even now when so many of them are dying. I’ll bet Ford dealers are salivating at the thought of all those would-be Fiesta buyers paying full price plus whatever they want to stick additionally in the price of that much sought after vehicle.

  12. Andy Says:

    No jobs = no buying new cars.
    It’s that simple.

  13. Dan Clemons Says:

    It just goes to show you that dealers care more about what they make on a car than the deal you get on a new car. I would think that dealers would be willing to cut customers a good deal just to get cars off their lot. Toyota is going to lose 5 billion this year and Wheeler Toyota does not want my business. Don’t worry Toyota, I will eventually find a Toyota dealer to that will want to do business with me.

  14. Dan Clemons Says:

    Buying a new car should not be this hard. You should not have to shop five or six dealers to find one that is willing to sell you a car. No wonder car companies are on the brink of going out of business.

  15. john hykawy Says:

    Hey John, I think it is GREAT that GM is thinking of keeping the Holden alive in North America. I work at a GM store and have driven the G8 for some time now and I absolutely love the car, it would be a shame to lose a car of this caliber. The first time I deove it , I was stopped by the local gendarme and he wanted this to become a police car, let’s hope this does happen.
    thanx
    John

  16. G.A.Branigan Says:

    @ Andy,yeah,your right.I had forgotton about that.Oldsheimers I guess ;}>
    @ Dan,is there a way for you to play the toyota vs honda game with the dealers?

  17. Dan Clemons Says:

    GA, I did look at the new Honda Insight and liked if very much. Wheeler Toyota did know that I was looking at both cars. I simply asked what kind of deal could they give me on a new 2010 Prius and was told to pay sticker or go jump in the lake. I would like to support our local Toyota dealer but I guess that is not possible here.

  18. G.A.Branigan Says:

    @ Dan: It’s none of my business,but have you by any chance looked at the 2010 Fusion Hybrid? My wife and I were pleasantly surprised at the quality of her new Focus SEL.The Fusion is even better I’m told.If your a member of DAV,you get to use the Ford X-plan too.

  19. Dan Clemons Says:

    @ GA: I like just about everything Ford is doing including the looks of the new Fusion Hybrid. The problem is my wife has to have a midsized hatchback hybrid. That does not leave me with many choices. That Fusion would really look good as a hatchback. I think Ford is about two years ahead of GM and Chrysler. The Ford Fusion proves that.

  20. Dan Clemons Says:

    Momentum right now is with Ford, Honda, and Toyota. The German automakers are just starting to get with the hybrid program.

  21. G.A.Branigan Says:

    Looks like i was wrong:http://apnews.myway.com//article/20090429/D97SAVQG2.html

  22. G.A.Branigan Says:

    Opps,maybe this will work

    http://apnews.myway.com//article/20090429/D97SAVQG2.html

  23. Dan Clemons Says:

    I just might contact Toyota to see if they connect me up with one of their dealers that would work with me on a fair to all price. I do understand there is no such thing as a complimentary Prius, manufactured by a charitable organization, and sold to the public by a group of volunteers.

  24. pedro Fernandez Says:

    John: This Farago fellow really doesn’t like Detroit very much, among his articles, there’s one about how much better was a 1993 Camry as a rental than a 2008 v6 Charger? OUCH!

  25. Dave E. Says:

    Is the Malibu (31Hwy), Taurus (28Hwy) and Sebring (30Hwy)made in USA, wouldn’t all these cars qualify for the cash for clunkers deal?

  26. John Sahr Says:

    Well you said today that the UAW may not have controlling stake in Chrysler. But if they did who would the fight? If they are running the company and looking out for the workers. On who’s side would they be on? How can a union of the worker be running the company that the workers work for?

  27. Dan Clemons Says:

    John, the question is who are they going to bargin with? Themselves?

  28. Episode 133 - Chrysler May Survive, Opel Needs Cash Now, Consumers Plan to Buy a Car Says:

    [...] Original post by John’s Journal [...]

  29. craigerzgt Says:

    I hope Magna isn’t screwing themselves by setting up to bid on Opel. Since Magna makes a number of different parts for various manufacturers, that could be seen as a competitive advantage despite the laws in place to prevent it.

    It sure would be interesting to watch a California high speed chase on the freeways with a Holden police car. Probably would end up being the shortest police chase ever, what with 400hp or so under the hood.

    And I believe there is no question about it. There should be a law passed through Congress or maybe CARB (LOL) that states that all hybrids should make a Jetson sound on the electric. Think of the marketing potential! Brilliant!

  30. pedro Fernandez Says:

    This cash for clunkers is all flawed, it would allow a $5k voucher if you junk a 34mpg subcompact and get a 29mpg new car. WTF is that all about anyway? is it to help the big 3 or to help the environment, or to cut back on oil use?

  31. Bob Aubertin Says:

    Suggestion to Dan Clemons;buy the Better Built,More Fuel Efficient,Safer,Better Looking & More Comfortable Ford Fusion Hybrid.The money that you will save on the cost per mile will shock you and Mrs.Clemons, plus you will be able to take a Cruise ship vacation with some of the savings and continue to support an American automobile manufacturer who invests their profits back in AMERICA.

    Make The Right Choice!!!

  32. Todd Jaspers Says:

    Woo Hoo! I’m famous. But really, the big three are as old as apple pie in America. What’s transpired feels like a repeat of British Leyland Corporation. I really, really hope our industry recovers…

  33. R.J. Williams Says:

    FIAT virtually rely’s on diesel technology for it’s engines as do the bulk of European manufacturers for cars to be used in Europe. That’s not going to fly here in the U.S.
    Q.) Chrysler’s “World Engine”(1.8, 2.0 & 2.4 liters, virtually emissions-free with excellent mpg’s)could be used in a larger FIAT, badged “Chrysler”, hmmmmmm?

  34. Episode 133 - Chrysler May Survive, Opel Needs Cash Now, Consumers … Says:

    [...] h­ere:  Ep­is­ode 133 – Ch­ry­s­ler M­a­y­ S­urvive, Op­el… Share and [...]