Episode 546 – Chrysler Financial Sold, HondaJet Passes First Test, Mercedes B-Class Sleeper

December 22nd, 2010 at 12:00pm

Runtime 9:13

Cerberus is going to recoup close to 90 percent of its investment in Chrysler by selling the automaker’s finance arm. Honda successfully completed the first flight-test of its small business-airplane called the HondaJet. Trainees at the Mercedes-Benz plant in Rastatt, Germany have assembled a one-off B-Class with a 5.5-liter V-8 between the front fenders. All that and more, plus a look at how Lotus is making a comeback.

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This is Autoline Daily for December 22, 2010. And now, the news.

CERBERUS SELLS CHRYSLER FINANCIAL
Cerberus pretty much lost its shirt when its founder, Stephen Feinberg, bought Chrysler from Daimler. But now Bloomberg reports the investment company is going to recoup close to 90 percent of that investment by selling Chrysler’s finance arm. In fact, a lot of analysts said at the time that the finance arm is the real reason why Cerberus bought Chrysler. It paid $7.4 billion for the automaker in 2007. It will sell the finance arm in a deal worth about $7.1 billion. At the time, Feinberg said he was trying to save an American icon and preserve jobs for the working man. But all Cerberus did was slash new-product development, cheapen up the interiors and drive Chrysler into the ground.

BUFFETT REMAINS BULLISH ON BYD
When billionaire investor Warren Buffett bought a chunk of Chinese automaker BYD it made headlines around the world. Buffett paid $84 dollars a share, that’s Hong Kong dollars. But today those shares are down to $42. In other words the $230 million he poured into BYD is now worth $115 million. Yet, Reuters quotes Buffett as saying he’s still confident he’ll ultimately turn a profit because of BYD’s technology in electric cars and busses. Sounds like a variation of an old joke. How do you make a small fortune in the auto industry? Start with a big fortune!

HONDAJET PASSES FIRST TEST
Honda successfully completed the first flight-test of its small business-airplane called the HondaJet. Conducted at North Carolina’s Piedmont Triad International Airport, the HondaJet remained in the air for 51 minutes while its flight characteristics and performance were analyzed and systems were checked. This was the first step for the company to receive certification from the Federal Aviation Administration. Honda must complete more tests before the jet is cleared for take-off and has a total of five planes to get that certification. Honda plans to start building the HondaJet in 2012 at a yet-to-be-finished facility in Greensboro, North Carolina and already has 100 orders for the plane. What’s it cost? Only $4.5 million.

VW EXPANDS IN MALAYSIA
Earlier in the week we reported that Volkswagen wants to be No. 1 in China in electric vehicles in its effort to pass Toyota as the largest automaker in the world. And now the company will expand in Malaysia to help reach its goal. According to Bloomberg, VW will start building Passats in the country next year. Malaysian automaker and distributor DRB-Hicom will assemble the vehicles, which already does assembly for Mercedes-Benz and Honda.

IIHS TOP SAFETY PICKS
There’s some good news to report on the safety front. The number of vehicles awarded top honors by the Insurance Institute for Highway Safety more than doubled for 2011. 66 vehicles have received the “Top Pick” accolade compared to just 27 for the 2010 model year. The list includes 40 cars, 25 SUVs and one minivan. Volkswagen as well as Hyundai/Kia received the most accolades at nine apiece. GM, Ford and Toyota each had eight winners. Of course the safety advocacy group is quick to point out that last year traffic fatalities in the U.S. were the lowest since 1950. All of this is fine and dandy, but it comes at a price. Meeting the new roof-crush standard is making A-pillars – and the blind-spots they cast – HUGE, plus the jaws of life are having trouble cutting through the high-strength steels automakers are using to meet those roof standards.

MERCEDES B-CLASS SLEEPER
It’s good to know hot-rodding is still alive. Trainees at the Mercedes-Benz plant in Rastatt, Germany have assembled a one-off B-Class. This popular European hatchback is usually known as an efficient family car, but apparently there’s enough room under the hood to have some fun. Following an age-old recipe, the trainees dropped a big-honkin’ engine in it, and the “B 55” as it’s called, was born. Amazingly, a 5.5-liter V-8 fit between the front fenders, but the students had to get creative when it came to routing the exhaust and steering systems. Now normally the B-Class is front-wheel drive, but that wasn’t an option here. The engine’s 388 horsepower is routed to the back wheels through an old E-Class rear end. It also received upgraded brakes as part of the transformation. Overall this hi-performance hatchback looks like a regular B-Class, which was the team’s goal from the start. Although no formal tests have been done, it’s estimated that the B 55 can sprint from 0 to 100 kilometers an hour in less than six seconds.

Coming up next, a look at how Lotus is making a comeback, and doing it in a big way.

LOTUS MOUNTS COMEBACK
At the L.A. Auto Show a month back we got a chance to catch up with the folks at Lotus. If you watched or listened to our podcast at the show, you know we interviewed the new CEO of Lotus, Dany Bahar. But correspondent Isaac Bouchard also got a chance to talk to the top technical and design guys at Lotus, and learn how they are coming out with so many new cars at once. Let’s go to that right now.

It is mind blowing that Lotus will come out with five new cars. When I went over to the Lotus display, I ran into Jaguar’s top designer, Ian Callum, who was shaking his head in wonder at five new models. He told me, “I don’t know how they’ll do it.” We’ll know if Lotus can pull it off in the not-too-distant future.

Don’t forget to tune in to Autoline After Hours tomorrow night. We’ll be handing out presents for the best automotive happenings in 2010, and lumps of coal for the worst. Have you got any suggestions?  If so, we’d love to hear about them. Just email them in to viewermail@autolinedetroit.tv

And that brings us to the end of today’s reports on the top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

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38 Comments to “Episode 546 – Chrysler Financial Sold, HondaJet Passes First Test, Mercedes B-Class Sleeper”

  1. Warren Says:

    I think you may want to put out a correction on your BYD story. You need to look at the dates of purchases of BYD by Berkshire vs. its current price. You will be able to clearly see they are in very positive territory and not negative as you alluded.

  2. Frank Nelson Says:

    From what I saw of the five Lotus models, they looked suprisingly alike. As in, there was little variation of them from one another. Not really five distinct models. That would be a tall order to pull off for a tiny company like Lotus.

  3. Zieke Says:

    That Hondajet looks like a rich kids toy. 4 million bucks indeed. I bet they will furnish one one “Price is Right” for 50k.

  4. shan Says:

    My initial impression of the design and technology of the Chevy Volt were very positive. I was amazed that GM could pull it off as they promised. However, according to a recent review from Consumer Reports, the overall range of the Volt is not much better than a Toyota Prius. The 1.4 liter gas engine was only able to get 30 miles a gallon. The Chevy Volt will turn out to be one of GM’s biggest failures.

    So, my lump of coal goes to the Chevy Volt. I just can’t fathom consumers willing to pay the hefty price tag for the Volt, when there are clearly other vehicles that completely avoid all the obstacles of range limits and charging responsibilities and get better miles per gallon that’s cheaper.

  5. pedro fernandez Says:

    The B55 should be called the ultimate FU, eat my dust machine. lump of coal to those who voted for the Ford Transit connect as best new truck last year instead of the wildly successful and superior Chevy Equinox.

  6. tj Martin Says:

    LOTUS

    Got to the Auto Section of the NY Times ( tellingly the same article is in the fashion section ) and read the interview with Dany Bahar .

    Its evident Bahar’s main concern is selling the Lotus Brand , not the cars and is attempting to turn the company into a Fashionista Brand rather than a car for Drivers .

    Another telling aspect of the interview is when they ask him what he drives . Ferrari’s and BMW’s with nary a Lotus in sight

    So how seriously can we take Mr. Bahar’s plans to bring Lotus into the future when the CEO doesn’t own/drive one himself ?

    As well as realistically , who is going to pay $170,000 on up for a Lotus of any kind , especially in these economic times

    I’ll predict ( sadly ) that Lotus will be DOA in the next 5 years assuming Bahar and Proton remain at the helm .

    I really think Bahar and Proton fit into the category of Over Ambitious , Over Reaching and Pretentious Auto Manufactures that John labeled a few weeks ago .

  7. Dwight B Says:

    Does anyone else think that the new “Bob” is the old “Nick” who was the old “Thor” who was………… just askin’.
    Read his comments from yesterday.

  8. tj Martin Says:

    My Lump of Coal for 2010 . The VOLT first and foremost . A very close tie for second would be TESLA and FISKER for A) Wasting tax payers $ B) Not living up to their promises of an Affordable E/V ( not even a working prototype ) And C) For A + B proving they’re both the two biggest shams in the current Automotive Industry .

  9. Ralph Kercheval Says:

    Presents to
    1. Ford 2. VW (keep the diesels coming)

    Lumps of Coal to
    1. US Government for cramming EV’s and Corn Based Ethanol down our throats. 2. Toyota for the recall fiascos. 3. GM for the VOLT

  10. dman Says:

    John usually gets it right on the auto industry and specifically with regard to Chrysler, but I must “refine” his comment about Cerberus cheapening Chrysler interiors, sadly, that work had already been done by Damiler over the course of several years. Cerberus did little to correct that course and did slash product development to keep the company afloat while the industry fell into the deepest ressession since the 1930′s. In fact, many decisions that led to the current enhancements on the 2011 Grand Cherokee and 2010 Ram were made by Nardelli during Cerberus’s reign. (including the interiors). The Daimler acquisition will go down in history as one of the worst take overs. They never shared their technology or shared platforms which would have realized the savings needed. Fiat and Marchionne have done well break neck speed to bring back Chrysler to their former glory and should be commended. John has taken note of this, and is a fair car journalist, but I want to point out the decisions to badge engineer and cheapen interiors was an honor souly reserved for Zetsche, Bernhard, and the Daimler team.

  11. Phil in Burlington Says:

    Hi John,

    You didn’t mention who Chrysler Financial’s new owners are? Isn’t this an important part of the story?

    Thanks,

    Phil

  12. Tony Gray Says:

    I agree with Frank @1..they do look remarkably alike, perhaps taking a common face too far.

    They should have put a 5.2 litre engine in that MB, if only for the marketing cache of a B52.

    Presents? Ford obviously. Seamus for his improving reports. And Hyundai for their continued successful marketing campaign.

    Coal? Government at all levels for interference in the free market through restrictions, controls, tariffs and subsidies that go beyond good policy and enter into over regulation. And Mercury, for the loss of Jill Wagner commercials… :(

  13. tj Martin Says:

    Forgot my Presents for the Year in the midst of my complaining .

    To Morgan , for re-introducing the ThreeWheeler in a 21st Century guise while remaining true to the original

    Assuming of course they bring the little beast here to the US .

    As well as to Ford for being the only US carmaker to stand on its own two feet as well as re-introducing the BOSS 302 .

  14. G.A.Branigan Says:

    Presents for Ford.4 new engines for the F150 is wayy cool,and of course the Boss 302.I personally never liked the Shelby GT 500′s (old or new),the early (65-66-67) Shelby GT 350′s were awesome.

    Coal dust for VW trying to pull a toyota,toyota for trying to skate by on recalls,and a big bag of coal dust to sergio macaroni for coming out with cartoon wranglers with the same sick (and tired)engine auto trans junk.

  15. Chuck Grenci Says:

    The Hondajet is heading into some already stiff competition in the business class jet category; they better be bringing something special to the table or so goes another Honda venture.

    I don’t think we need a 400hp B segment automobile (no matter who the manufacturer) however I believe Cadillac has one in the works as well with the upcoming ATS-V. Double-fail?, maybe.

  16. Alex Carazan Says:

    John…your criticism of larger stronger A-pillars is absurd. You fail to note any positives in terms of safety in the cases of roll-over. How many deaths and injuries will stronger A-pillars prevents? Blind spots exists on all vehicles…a larger one is not positive but blind spot systems are now becoming more common. A good question is how many new crashes will a larger blind spot create? How often will the jaws of life be needed now on these stronger vehicles? If they need to be stronger…then let’s make stronger ones to cut through the larger A-pillars.

  17. tj Martin Says:

    @dman

    “… they ( Daimler Benz) never shared their technology or shared platforms ”

    I’m afraid its you thats got it wrong on this statement , as well as being surprised no one else here caught you on this flagrant error .

    Witness the 300C Platform ( Dodge Charger/ Challenger as well ) the Dodge/ Chrysler ” Hemi ” and I use that term loosely as its a Penta chambered M-B engine , the Chrysler CrossFire ( SLK platform ) etc. etc.

    Chrysler had plenty of opportunities to bring their cars to the forefront of technology and quality with Daimler Benz as their minders , but like so many other things Chrysler has done wrong over the last 40 years they threw it all away , choosing to follow their own mandates and directions irregardless of what the Market or its customers wanted .

    As well as choosing to maintain a very poor standard of construction and assembly which of course led to lousy reliability ratings across the line up .

    Daimler might of done better , but not with the folks who were at the helm on Chrysler at the time .

    And I’m betting they’ll ( Chrysler ) do even worse under FIATs hand .

    @ Chuck Grenci – Do we need a 400hp B Segment M-B ? No ! Do we want one ? Well why the heck not i say ! Just for laughs and a bit of fun mind you

  18. Alex Kovnat Says:

    >Meeting the new roof-crush standard
    >is making A-pillars – and the blind-
    >spots they cast – HUGE, plus the
    >jaws of life are having trouble cutting
    >through the high-strength steels
    >automakers are using to meet those
    >roof standards

    What can you expect, when auto engineers are compelled by force of law to design cars to meet the ego needs of intellectuals, instead of the practical needs of those of us who actually buy and have to live with cars so designed?

    Sooner or later we’re going to have to ask ourselves, why should we have to put up with huge blind spots (which increases the possibility of an accident to begin with), and possibly be in a situation where we can’t be rescued by the Jaws of Life, just to gratify someone else’s purely emotional and ego needs?

  19. tj Martin Says:

    @Alex Kovnat — Agreed whole heartedly ! Blind Spots should not be acceptable in any car other than an Exotic Limited Production Mid Engined SuperCars where its all but unavoidable .

    On anything else , its just lazy designers and their Egos that are making Blind Spots so prevalent these days .

  20. HyundaiSmoke Says:

    V8 B Class= Small Car Sacrilege!!!

    Ridiculous.

    They could get that kind of beef from a Twin Turbo 1.6 with DI, but what does Old School Luxury company Mercedes Benz do?

    Go over the top.

    HyundaiSmoke President and CEO

    Accent Planet “The Premium Korean Small Car Magazine.”

  21. HyundaiSmoke Says:

    V8 B Class= Small Car Sacrilege!!!

    Ridiculous.

    They could get that kind of beef and more from a Twin Turbo 1.6 with DI, but what does Old School Luxury company Mercedes Benz do?

    Go over the top.

    HyundaiSmoke President and CEO

    Accent Planet “The Premium Korean Small Car Magazine.”

  22. HyundaiSmoke Says:

    The extra weight of a V8 will make it perform like a Midsized Granny Sedan-Like a C-Class.

    Hey, C-Classes are driven by 55-60 year old Grannies.

  23. cwolf Says:

    For a couple of you who have visited Europe:
    I keep hearing about all the neat cars they have and wishes many were imported here,but I have trouble convincing myself Europeans could even afford these cars. My conceptions are that most folks drive smaller cars with tiny engines which get good fuel economy. If their small,simple,yet very costly homes with little yards is a reflection of what can be afforded for transportation,I can only invission moped type cars.
    Can someone simply put what is a common driver over the pond,avg. speed limits? Do they enter hwys at an adequate speed or are they pokey?
    I just can’t see BMW’s and Merc. dominating the roads here or there!

  24. dcars Says:

    I agree with Dman, he’s dead on. Cerbus had little chance of doing anything with Chrysler, yet under Daimler control Chrysler’s vehicle reliability went down, along with ruining fleet fuel economy. M&B canceled the Neon the Caliber, a bigger uglier car. The Sebring went from bad to worse. The PT cruiser was a hold over from the originally company and stayed a strong seller. The vans stayed about the same and Jeep did nothing during M&B’s their entire ownership period. M&B’s ownership was a complete failure. I never thought I would think that Fiat was a blessing for Chrysler.

  25. TomL Says:

    John: Is it true that the more vertical an A pillar is.
    The stronger it is

  26. Kit Gerhart Says:

    Cwolf,
    I’ve been to Europe a few times, and I’d generalize European compared to North American cars as follows:
    1) Much smaller cars, probably a Golf being about “average” size.
    2) The cars are slower, on average than US. The last I heard,about 40% of new were diesels, many of them being about 1.6 liter.
    3) The slow cars are slower than
    the slowest sold here, but most are “fast enough” for normal driving.
    4) Speed limits vary by country, but are fairly comparable to here.
    To me, the biggest difference between driving in Europe and America is that in Europe, people understand the concept of “keep right except to pass,” or, in the UK, it is “keep left.”

  27. Kit Gerhart Says:

    Dwight B,
    I think it’s safe to assume that “Bob” was previously Nick Stvens, Jim Somethingorother with an “S”, and Thor.

  28. C-tech Says:

    TD bank (Canada) bought Chrysler Financial. Most of the bad assets were / are owned by the U.S. governments TARP program. This is what made the deal possible according to Bloomberg Fin. So we the taxpayers are holding the bag and Cerebus get most of its money back now, plus they still own a small interest in Chrysler financial which allow them to fully regain their investment in the future.

  29. C-tech Says:

    I enjoy repairing cars, but I should have studied finance, so I could afford the cars I fix.

  30. Bob Says:

    The biggest lump of coal for 2010 should go to the NISSAN LEAF, since, as a called very appropriately suggested, that’s 51% of what the stupid thing will burn, Coal (and in CHina, it will be over 80% of what the Leaf will burn!), the DIRTIEST of all fuels, by a wide margin!

    So every time some energy illiterate fanatic greenie tells you that pure EVs are allegedly “Zero emissions” vehicles, they are NOTHING BUT.

  31. Bob Says:

    (That was “as a caller (in AAH last THu) suggested).

    I agree with the comments about the silly Lotuses. Fifth Gear, a very Brit SHow, once tried to develop a 200 MPH supercar on the cheap, and had the terrible idea to start with a used (VERY used) Lotus V8 for about $30k. No matter what thousands and thousands of repairs and improvements they made on it, it kept breaking down all the time.

    But credit Lotus buyers at least for not being utter, total fools, now they demand that Lotus make its own engines and stop using the 1.8 toyota engine. The MR2 is a great little car, but why have to pay triple the price when you drop its engine in a Lotus?

  32. Bob Says:

    Cwolf:

    Besides “Kit”‘s comments on European cars, I add that they are very fuel efficient ( due to their small size AND the oustanding 50+ mpg diesels where they are allowed-smoggy cities forbid them),

    but I think the speed limits are higher than in the US (after all in Germany there are thousands of miles of no speed limit autobahns!)

    and it IS true that people understand that the left lane is for passing only, and in Germany you may even get a ticket if you do not observe that rule.

  33. Bob Says:

    I am quite curious to see the tech details of both the larger prius MPV AND the prius plug-in.

    The Plug-in may have a smaller range than the Volt on all electric, but I bet it will be priced for much less, assuming it is eligible for the $7,500 taxpayer robbery as well.

    The MPV may open a whole new market for the Prius. Especially if its MPG comes close to the Priuses AMAZING, unequalled (by any 5 passenger hybrid) 50++ real MPG.

  34. Bob Says:

    ALso, CWolf:

    In the average Euro town, you see a ton of VWs, Fiats, even the French cars, and a few BMWs and MErcs, as well as some Toyotas and Nissans but not a lot of Hondas. In a more affluent neighborhood, in fact, the 3 series may outnumber the Hondas by a wide margin (such as my small resort town)

  35. Kit Gerhart Says:

    In addition to the usefulness (or not) of the electric only range, the plug in Prius can take advantage of its larger battery in having more capacity to store energy during long downhill runs. I had to use the “B” mode once on my recent trip from IN to FL when the battery got “full” on a long downhill in Tennesee.

  36. GPL Says:

    @Chuck and Smoke, re: B55

    You do realize that this was a technical exercise for some trainees, not an actual production vehicle, right?

  37. shan Says:

    GM would have been better off making the Volt all electric and making it available to the masses with a better price point. Now, it’s just a lame competitor to the weak hybrid market.

  38. HyundaiSmoke Says:

    Yeah, GPL. Why a V8?

    Merc has some tech work to do. Especially since they are going to use a Nissan/Renault Powertrain with questionable reliability.

    They really need to work on that souped up 4 Banger they are going to put in this thing. The Merc owner expects reliability to come with the cards.