Episode 161 – Alliance Back On Track, Cash For Clunkers Passes, GM Names A New Leader

June 10th, 2009 at 12:00pm

Runtime 6:37

The U.S. Supreme Court declined to hear a challenge to Chrysler’s bankruptcy filing which clears the way for its alliance with Fiat. The U.S. House of Representatives passed the cash-for-clunkers proposal. General Motors announced that Edward Whitacre, Jr., former chairman and CEO of AT&T, will become chairman of the New GM. All that and more, plus we take a look at the new BMW X6M.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. The Chrysler/Fiat deal has been given the green light. The U.S. House passes cash-for-clunkers legislation. And we take a look at the new BMW X6M. Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, June 10, 2009. I’m Murray Feldman from FOX 2 News in Detroit, filling in for John who is out of town on business, AGAIN. We’re going to have to start calling him “part-time McElroy”. Anyway, here’s today’s news.

It appears that the last roadblock to a Chrysler/Fiat alliance has been cleared. Yesterday the U.S. Supreme Court declined to hear a challenge to the company’s bankruptcy filing from the Indiana State Pension funds. On Monday, Justice Ruth Bader Ginsburg put the brakes on the deal pending further review of the case. The two automakers plan to seal their historic deal sometime today after the government provides the funds to complete the transaction.

In other Chrysler news, the company won the right to terminate 789 dealer franchise agreements as part of its restructuring. Yesterday, U.S. bankruptcy judge Arthur Gonzalez ruled that a quarter of its dealers had to immediately stop selling the automaker’s vehicles. These cuts leave the company with 2,392 dealers, which should save it $1.4 billion in product development costs over the next 4 years and about $180 million per year in marketing and administrative costs.

Yesterday, the U.S. House of Representatives passed a cash-for-clunkers bill. Now, according to the Detroit News, the Senate has to vote on the legislation but it could face opposition from appropriators and a group of senators who say the proposal doesn’t do enough to improve fuel efficiency. Lawmakers hope the bill will boost auto sales by offering vouchers worth $3,500 or $4,500 to new-car buyers, depending on the mileage of their new vehicle. Consumers would have to turn in a vehicle rated at 18 mpg or less for one rated at 22 mpg or greater.

General Motors announced that Edward Whitacre, Jr., former chairman and CEO of AT&T, will become chairman of the New GM when the company emerges from bankruptcy later this summer. The company also announced that it’s in the process of replacing six board members because they’re retiring.

Bentley released a teaser video for a new model called the “Grand Bentley.” It doesn’t show much of the car beyond the bonnet, sorry, hood, but it calls the car the “height of British luxury motoring.” Could it be a replacement for the timeless Arnage? The car will be designed, engineered and built in the company’s facility in Crewe, England. Look for it to formally debut this summer. Also, we’ll have the whole teaser video posted to the John’s Journal page of our website a little later today, so check it out.

Apparently England doesn’t differentiate between diesel and gas pumps too well. According to Autoblog, British police officers over the last 3 years have filled vehicles with the wrong fuel more than 4,700 times which is an average of 4 cars a day. The cost to repair the vehicles, which falls on the taxpayers, averages out to 6,500 pounds a week which is more than $1.6 million the past three years.

Coming up next, a look at BMW’s high-power X6M crossover, we’ll be back after this.

BMW is known for building sporty cars. Whether it’s the ever-poplar 3 Series, or something bigger like the 7, the company always emphasizes driving fun. Beyond its standard models, BMW offers an even sportier lineup for hard-core enthusiasts.

Among other things, M vehicles offer drivers more power and better dynamics, just like their counterparts Mercedes AMG or Audi RS. For 2010, there are two new editions to the high-performance family. M-versions of the X5 and X6 will be offered later in the year. From a mechanical standpoint these two crossovers are essentially the same, so for now we’re going to focus on the X6 M.

Under the hood, it features a powerhouse 4.4-liter V8. With twin-turbochargers it delivers 555 horses, which is enough to rocket the “Sport Activity Coupe” from zero to 100 kilometers an hour in 4.7 seconds. An interesting feature of this engine is the way the turbos are positioned. BMW mounted them in the valley of the “V” for better space efficiency. The engine’s dance partner is a sport-tuned six-speed automatic transmission. Altogether, the powertrain should AVERAGE about 17 mpg or 14 liters/100 km.

The X6 M also features BMW’s xDrive all-wheel-drive system with dynamic performance control. It can shift power front-to-back AND side-to-side on the rear axle for better handling. Working with the all-wheel-drive system is a self-leveling suspension with adjustable dampers.

Inside, things are essentially the same as other X6s, but M-versions gets M-branded trimmings and a stitched-leather instrument panel.

With more than 550 horsepower on tap, the X6M looks like it will be the most fun-driving crossover ever built. As for pricing, there’s no official word yet, but when it comes out later in the year expect it to sticker somewhere around $90,000.

And that’s it for today’s show, but before we go, don’t forget to check Autoline After Hours, broadcasting live every Thursday night on our website. Join McElroy and his colleagues De Lorenzo and Vines for a candid discussion about everything automotive. This week’s special guest is John Mendel, the Vice President of American Honda. The show starts at 7:00 p.m. Eastern time or 23:00 hours GMT. Also, if you can’t get enough Autoline, follow us on Twitter! Just do a search or go to twitter.com/Autoline and follow us today.

Anyway, that’s it for today’s top news in the global automotive industry. Again, I’m Murray Feldman from FOX 2 News in Detroit, thanks for watching, McElroy will be back tomorrow.

22 Comments to “Episode 161 – Alliance Back On Track, Cash For Clunkers Passes, GM Names A New Leader”

  1. Dave E. Says:

    Hi Murray,
    This is pure fun, great job! Good for Chrysler and Fiat now they can get down to business making great cars.

  2. G.A.Branigan Says:

    Finally,Fiat and Chrysler tied the knot.Great,super…….now,how soon do I get my diesel Wrangler??

  3. John V Says:

    Murray, John, and team:
    I quote:
    “These cuts leave the company with 2,392 dealers, which should save it $1.4 billion in product development costs over the next 4 years and about $180 million per year in marketing and administrative costs.”
    How does cutting the number of dealers reduce product development costs?

    John V.

  4. Bill Murdock Says:

    Regarding the new GM chairman: When car companies put non-car guys in charge, they stop making cars and start making four-wheeled appliances. Remember the Roger Smith era at GM? That and the fact that the government wants the car companies to just make decontented Priuses, or maybe even Trabants, has me fearing the worst.

  5. Alex Kovnat Says:

    Re Cash for Clunkers:

    Years ago, I wrote a letter to Automotive News in which I advocated an income tax rebate for those trading in old gas-guzzlers for newer, more fuel efficient models. Now, we see this idea up for consideration in the Senate.

    My problem with the Cash for Clunkers bill as passed by the House of Representatives, is as follows: Its too rigid. Suppose someone wants to trade in a car with an EPA rating of 23 City, 29 Highway for a hybrid-electric car like the Prius or Ford’s hybrid, either of which can attain 40 MPG or so. Since the car being traded in gets over 18 MPG, they wouldn’t be eligible for the Cash for Clunkers deal as it currently stands.

    It seems to me that if reducing CO2 is that important, why not offer either a voucher or income tax rebate proportional to how much CO2 emission is being prevented, so as to encourage people to do the best they can in this regard?

    Finally, I can’t emphasize enough that if global warming is indeed so urgent a matter as to justify the draconian fuel economy requirements that have recently been imposed on the auto industry, its also urgent enough for our nation to offer a voucher or income tax rebate to anyone trading up to a more fuel-economical car, whether their car of choice is built here in the USA or in some other country.

  6. James Coleman Says:

    Murray always does an excellent job! He’s the best stand-in commentator that John has used by far. Keep up the good work, John and crew! Congrats on the Emmy Award as well!

  7. Mouhamad A. Naboulsi Says:

    I disagree with the Cash for Clunkers. What is a clunker anyway, and where are we going to get the money for this?

    I believe the government should start a “HANDS OFF” approach and let the industry recover based on real product instead of a government rebate.

    The automotive industry tried rebates themselves and look what happened!.

    I do not want to imagine what will happen if the government went broke ! . World War III?

  8. pedro Fernandez Says:

    This clunker voucher plan really sucks, let’s say you have a 10 yr old minivan that got 19/20 mpg when new, I can almost guarantee you after so many years and miles, you no longer get that mileage, most likely with wear and tear of the engine you get 15/16, but you have no way of proving it, so you don’t qualify for the voucher, even if you wanted to trade it for a fuel efficient model.

  9. Alex Kovnat Says:

    Here’s another example of how the Cash for Clunkers deal, as it currently stands, is too rigid: Suppose you have a poor person who drives an awful piece of junk that attains only 11 miles per gallon. Now, suppose he or she wants to buy a used car that attains, let’s say, 18 miles per gallon. Now, going from 11 to 18 miles per gallon would be, for that person, a big improvement!

    Yet that individual or family wouldn’t be eligible for the Cash for Clunkers plan that was approved by the House, because the car they propose to buy doesn’t attain 22 or more MPG. Like I said, why not incentivize everyone to do the best they can?

  10. pedro Fernandez Says:

    If the plan was meant to save fuel/environment, then an individual that has a real junker with horrible mileage,could trade for a used one that gets much better mileage and still get some kind of voucher to encourage them to make the change

  11. Salvador G. Says:

    Cash for Clunkers, its official; the goverment really does know how to turn a good idea into a bad policy. This sure Teach me.
    Why couldn’t they copie the European model, I mean raise the price of fuel for once, well; hopefully this would help kill old SUB still on the road.

  12. Salvador G. Says:

    sorry meant SUV’s

  13. David B. Fishburn Says:

    Hey Murray, great job! I’m wondering about the british cops, do they know how to read or are they really that stupid? Let’s see, you’re driving the car, it would be obvious in more than one way what type of engine is in it. Maybe they should out giant stickers on the dash that tells them what fuel to put in it! Also. i don’t understand how an auto company can save product development costs by cutting dealers. That’s a cost borne entirely by the company and not in any way affected by how many dealers there are.

  14. David B. Fishburn Says:

    oops, hit the wrong key by accident, i meant “put”

  15. G.A.Branigan Says:

    GM isn’t out of BK yet,and yet again they just don’t “get it”.Rebadging has proven to be bad enough,and of course they’re doing it again(still?)now they put in a non car guy.A bean counter maybe?? I’ll bet that GM NEVER recovers and ends up in worse shape so that they practicly insure themselves of extinction.Cool.

  16. Tom Says:

    I thing GM will do okay for awhile. I don’t think they will ever really pay all the loans back, I sure hope they survive in some form. (It’s about jobs… for the near future anyway.)

  17. G.A.Branigan Says:

    I hope your right Tom,at the very least for the jobs.The way I see it though,they need to redo their way of thinking and doing business,I’m not confident they will do that.So far when all is said and done,they seem to resort back to the “old way” of doing things…exactly what got them in the pickle their in,in the first place.We’ll see….

  18. Reno Diggs Says:

    It is like most government jobs; you make a mistake, diesel or gas and taxpayers pay for it. Somebody needs to clunker them across the bonnet,’er, thier bloomn’ ‘ead. (The H has been dropped)

  19. R.J. Williams Says:

    This Chrysler/FIAT alliance, to me, really has promise. I have just a few pages left to read in “Taken for a Ride”, fascinating!
    Chrysler will be in very good company rubbing shoulders with Ferrari, Maserati, Lancia, Alfa Romeo, Abarth and of course FIAT to boot. But FIAT cars, as consumed and used in Europe are all diesels. Not likely that many will be imported into the U.S. that way. On the other hand, Chrysler has its, virtual “zero-emissions” “world engine” in 1.8, 2.0 and 2.4 liters of capacity getting 30 to 35 mpg. I see this thing working out quite well, indeed! I look forward to seeing this unfold.

  20. Brentton Says:

    I wish that the X6M engine would be put in the M3. That would really set the M3 in a league of its own.

  21. JIm Thykeson Says:

    Isn’t it great when a state-owned auto giant can take over a giant ‘free-market’ behemoth like Chrysler. Fiat would have died decades ago, but it’s country wouldn’t let it. Thats the difference between these other countries and their auto industries and ours. They refuse to allow other countries the opportunity to buy up their manufacturing base. Oh well…

  22. Olivia Says:

    As with most government programs, the success of the “cash for clunkers” program is not measured in how well the consequences of the program align with the stated goals of its advocates. Nor is it measured by any economic impacts the consequences might cause. Instead, just like the example of the public library in George Dance’s recent article about Booze and books, the success is measured by participation or usage, not by any measure of the value provides or harm it does to our economy. The trick is to define the program specifically so that it has a known demand so the usage is high. Media spin and politics will make sure the right people hear the program was successful and beneficial. I heard a bit on NPR just today about the downstream benefits that recycling all these old cars has. Ridiculous of course, but the perception amongst the voters is far more important than the actual results and consequences. Certainly there will be follow-on programs, cash for major appliances, cash for tools, etc.