Episode 17 – Obama Will Help U.S. Automakers, German Autoworkers go on Strike, GMAC Cripples GM

November 5th, 2008 at 12:00pm

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An Obama presidency is going to help U.S. automakers by supporting a bailout. German autoworkers go on strike affecting 500 companies, including Opel and Siemens. GMAC forces GM to double its cash burn due to restricted financing. All that and more, plus John answers viewer questions about Chrysler, Mercury and Pontiac in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. An Obama presidency is going to help U.S. automakers. German autoworkers go on strike. And GMAC forces GM to double its cash burn.

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

This is Autoline Daily for Wednesday, November 5, 2008. And now, the news.

The U.S. auto industry woke up this morning to find it will have a new friend in the White House. President-elect Barack Obama has been far more supportive of providing a bailout to the Detroit three automakers. And union leaders will rejoice because one of the first orders of business next year will be to enact the Employee Free Choice Act that will make it easier to unionize the foreign automakers plants in the United States.

Growth in China’s auto market has slowed (subscription required). The Wall Street Journal reports that analysts are warning growth in China could slow to single digits for the rest of the year. They predict sales could be flat or lower next year. This really could hurt automakers that looked to China to offset big declines in North America and Europe.

But is the U.S. car market starting to stabilize? According to Black Book, over the last three months, big segments of the used car market are not depreciating as fast as they were. In fact, full-size pickups, SUVs, and vans from 2006 depreciated the least. Black Book says that’s thanks to lower gas prices, and a drastic drop in value of those vehicles earlier this year. Amazingly, it is now luxury vehicles and imports brands that are depreciating the fastest.

Last month GMAC cut way back on financing for GM dealers and customers. And last month GM sales fell by nearly 140,000 vehicles. GM says restricted financing caused half of that drop. That means GMAC cost GM 70,000 sales. When you do the math that means GMAC cost GM close to $1.4 billion in badly needed cash flow. And that’s means GM will burn through its cash reserves more quickly than previously expected. We’ll learn more when GM reports third quarter earnings on Friday.

The Wall Street Journal reports that thousands of workers who belong to Germany’s IG Metall trade union have walked off the job (subscription required). In a strike that started Saturday, 500 companies have been hit, including Opel and Siemens. The union wants an eight percent raise, the largest they’ve demanded in 16 years. That takes cojones, to walk out in the greatest financial meltdown in a century and demand a big raise.

Archer Daniels Midland is going to start making ethanol in Brazil (subscription required). ADM will invest $370 million in two ethanol plants. According to the Wall Street Journal this is partly because ethanol production in the U.S. is slowing down. ADM already produces bio-diesel in Brazil using soybeans. The company also has operations in Europe and Asia.

Coming up next, it’s time for “You Said It!”

It’s Wednesday and that means it’s time for “You Said It” where we answer some of the questions we get from you, our viewers.

Matthew Hesketh asks, “If Chrysler is sold to either GM or Nissan. What do you think will happen to Chrysler’s EV’s?”

My guess is IF Chrysler got sold that GEM, the company that makes Neighborhood Electric Vehicles, would get sold. And I think that the whole EV effort at Chrysler called ENVI would get shut down.

Here’s a question from Thomas, a viewer who wants to know about the Mercury brand. He asks, “Do you really think Mercury has a future?”

Good question. A year ago I would have said Mercury was dead. But now, the Ford Motor Company is going to start giving Mercury very distinctive products that were designed in Europe. And that could turn the brand around. Look for them to start showing up in showrooms in another 2 to 3 years.

And Jim Schultz wrote in to ask, “John, I received an email yesterday from Pontiac about the 2009 G8 ST. What a cool looking car. What can you tell us about it?”

That’s easy, Jim. It’s a pickup version of the Pontiac G8. It’s made by Holden in Australia and this is what they call the ute version of the car. It was supposed to be sold in the American market, but with GM’s troubles, I’ve got to believe those plans are now on the back burner.

Remember, we call this segment “You Said It!” So, please leave your questions or comments on autolinedaily.tv, or send an e-mail to viewermail@autolinedetroit.tv.

But what we’d really like to see, is YOU. Simply post your video question or comment to YouTube and send the link to viewermail@autolinedetroit.tv. Make sure to include “Video Comment” in the subject line so we don’t miss it. Please, send us your videos! We’d love to SEE you on the next installment of “You Said It!”

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

9 Comments to “Episode 17 – Obama Will Help U.S. Automakers, German Autoworkers go on Strike, GMAC Cripples GM”

  1. Susan Kishner Says:

    I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.

  2. Craig Says:

    John. Whats is happening with Delph? They went into chapter 11 some time ago, but very little has been said. Are they still producing products at the rate they did before chapter 11?

  3. Fernando B Menendez Says:

    If GM owns 50% OF gmac WHY CAN THEY FORCE

  4. Rick Sutherland Says:

    My guess is that the foreign auto makers in the U.S. would scale back or even cease production if Obama enacts the employee fair choice act, and VW would probably not come here, what do you say?

  5. Tom Says:

    Because, GM doesnt own 50 percent of GMAC. they own 49 percent. cerebrus owns the remaining. cerebrus is trying to cram chysler down gm’s throat.

  6. Danil Genish Says:

    I don’t know if this question have been asked, but: John, why are you the only web video producer that doesn’t offer a full screen button. Video qualty is good, and it won’t “cost” you in extra bandwidth.

  7. Mesha Smith Says:

    Since Senator Obama has been elected do you believe the merger will still happen? Will there be any plants(engine,assembly,etc.) kept if the merger happens? if so which ones?

  8. Richard Tait Says:

    It seems Ford has been listening to my rants and raves over the past few years! They will FINALLY do with Mercury, what I always hoped they would do. Build/sell the “Europe-only” models in the US. Brilliant. But Ford needs to learn from its Focus experience. Don’t change a single thing that doesn’t need to be changed when those cars are taken across The Pond.

  9. Mike Western Says:

    Mr. Mc Elroy,
    I really appreciate Autoline Daily, which is in addition to your outstandding program Autoline Detroit, that has been on the air for years. Your increased efforts are very much noticed and apprectiated.

    In your last Autoline Detroit, you were talking to your guests about how the terrm “Quality” has changed over the years. It was noted that we have grown accustomed to quality improvements in some respects such that we take them for granted, and now, we are no longer as impressed with them.

    In regard to this, I have noticed some features on my 2008 Impala that you might not notice, but, they convey a sense of quality improvement. First, the rocker panels are color-keyed to rest of the body, and this makes the car look sleeker. Some automakers paint the rocker panels, which are just below the doors, all black no matter what color the rest of the body is and this makes the car look cheap. Second, the antenna mast is gone. The antenna, which is a good one, is in the windshield. This was true years ago as well, but the reception is greatly improved. An antena on the body of the car makes it look old and out of date. Third, the trunck has a more finished apprearance. With the carpeting and trim, the truck looks nice. Even the truck sill, which is the trim piece you see on the edge of the truck when you open it, is smooth. It makes my Chevy look like a more expensive car. Compare this to a Ford Taurus and you will see what I mean.
    Mike Western
    1459 Almond
    Troy, MI 48098