Episode 94 – Auditors Warn About GM, NYSE Delists Visteon, Honda & Mazda Need Government Money

March 5th, 2009 at 12:00pm

Runtime 6:32

GM just took another step towards Chapter 11 because auditors have substantial doubt it can stay in business. Visteon is going to be delisted from the New York Stock Exchange, because the company is expected to file for bankruptcy. Honda and Mazda may ask the Japanese government for loans. All that and more, plus a look at BMW’s redesigned Z4.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. GM takes a big step towards Chapter 11. Visteon is expected to file within weeks. And Honda and Mazda are going to ask the Japanese government for money.

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

This is Autoline Daily for Thursday, March 5, 2009. And now, the news.

Looks like General Motors just took another step towards a Chapter 11 bankruptcy. When the company announced its year end earnings it issued a warning saying it expected its auditors to question whether GM was still a going concern, i.e., questioning whether it could stay in business. And that’s just what happened. GM’s independent auditor, Deloitte Touche, went through the books and said they have substantial doubt GM can continue as a going concern. At the end of the month GM has to present its turnaround plans to Congress showing that it can be a viable company going forward. But after this auditors report, no one in Congress is going to believe GM can make it without a Chapter 11 restructuring.

Speaking of bankruptcy, Visteon is next on the list. The big supplier company that used to be part of Ford is going to be delisted from the New York Stock Exchange tomorrow, because the NYSE expects Visteon to file for bankruptcy in a matter of weeks. Visteon stock traded as high as $5 a share last spring. Today it’s at 7 cents a share. The Detroit Free Press reports that American Axle may be the next supplier to get delisted from the NYSE, and all this may signal the collapse of the supplier industry that we’ve been talking about for months on Autoline Daily.

Tuesday we reported that Toyota had asked the Japanese government for a loan and now Honda and Mazda may do the same. Bloomberg reports that Honda would use the money to lend to U.S. car buyers and Mazda needs the funds mainly for its American and European operations. No word yet on how much money the two companies are seeking.

And speaking of Honda, the company that builds hybrids just introduced a Class-8 semi-truck hybrid diesel into its fleet to deliver parts to parts centers and dealers. The truck is manufactured by Peterbilt Motors and is expected to save 45 tons a year in carbon dioxide emissions compared to its diesel counterpart. The diesel hybrid system was developed by the Eaton Corporation.

Just in case owning Land Rover and Jaguar isn’t enough, Ward’s reports that Tata is thinking about building a luxury car (subscription required) of its own to sell in India. Company honcho Ratan Tata made the announcement in Geneva on the same day the automaker premiered the Euro version of its Nano car. As strange as a Tata luxury car sounds, this story gets even more unbelievable. Pininfarina already is working on the design of the vehicle which is called the Pr1ma. You know, the more I hear about Tata, the more I like it.

Last week we showed you the all-new Mercedes-Benz E-Class. Well, now the company has revealed a coupe version of the car at the Geneva Motor Show. It’ll share the same mechanical parts with its sedan sibling, but it’s wrapped in a design that’s swoopier and more emotional. Adding to the style, all of the windows are fully-retractable and no b-pillars intrude into the daylight opening, which makes the profile look clean and improves visibility for the driver.

Coming up next, a look at BMW’s redesigned Z4, we’ll be back right after this.

For 2009 BMW has redesigned and restyled its Z4 roadster. Like before it promises a great driving experience, but now it’s more comfortable and convenient.

Half the fun of a roadster is having the wind in your hair and the sun in your face. Making that possible is a retractable hardtop, the first time Z4 has had a metal roof. The two-piece unit made out of aluminum can be opened in only 20 seconds.

The biggest news about the Z4 probably is its styling. I was really wowed by the design when I saw it up close at the Detroit Auto Show. The new look is aggressive, but it still has those characteristic roadster features, like a long hood and a low stance. Its taut lines make last year’s Z4 look like a cream puff in comparison.

The body’s angular shapes are carried over to the interior where the dashboard and door panels have similar swoops. Much of the switchgear is brand new and the car has the latest version of iDrive.

BMW is known for its inline-sixes, and the 2009 Z4 offers two different flavors. Both displace 3.0-liters, but one uses twin turbos and direct injection to pump out 300 horsepower. The other is naturally-aspirated with 255 horses.

A six-speed manual transmission is available with either engine while a dual-clutch seven-speed automatic is available with the turbo motor.

There’s no word yet on pricing, but the new car will probably cost slightly more than this year’s model, which starts at about $37,000.

And that’s it for today’s show. But one more thing before I sign off, this week’s trivia question is a real dusey. We challenged you to name the car pictured here. So far not one person has answered it correctly. If you don’t know what kind of car it’s that’s OK, submit a funny or clever answer anyway. If no one gets it right we’ll choose an answer we like. As always, we’ll announce the winner on tomorrow’s Autoline Daily, so good luck.

Anyway, that’s it for today’s show, thanks for watching, we’ll see you tomorrow.

14 Comments to “Episode 94 – Auditors Warn About GM, NYSE Delists Visteon, Honda & Mazda Need Government Money”

  1. Ron Paris Says:

    John:
    While not claiming to have encyclopedic knowledge of BMW engines these days, it struck me as odd that they could only wring 45 more horses out of the high output Z4 3 litre six considering it has twin turbochargers!

  2. G.A.Branigan Says:

    Let GM go BK…they need it.As far as bailouts go,PLEASE help the oem suppliers.Let the aig’s and gm’s and chryslers all go into bk.It would be much cheaper to the tax payers,and when they restructure they will be stronger or gone.Either way is fine by me.Not getting much HP for twin turbos AND direct injection in the BEEMER ;}>

  3. Mouhamad A. Naboulsi Says:

    Baad news keep on coming. I believe that the mortgage crisis is at the heart of the current crisis (not a revelation), but what this crisis revealed is the faults in Forced Globalization.

    Trades and relationships between countries were not allowed to grow naturally over the last 16 years or so. They were pushed on the world economies in the name of FREE Market Forces, but the result was a one sided market force were saving cost was the only driver and everything else was coerced or forced to comply with the outsourcing, Mostly unnecessary talent import and GREED GREED GREED.

    Globalization as it is being presented is an unstable driver and we are looking at the results here. When the big three dumped their parts arms, they did so in order to save cost, but at wat price? Penny wise and Dollar foolish is no way to run a household budget, a company, a country or a world economy.

    Free Market forces develop on their own, not forced by a government decision and driven by narrow temporal greed.

    That’s my Piece/Peace. May God’s Peace be upon all.

  4. Derek Says:

    I can’t resist, are TATAs made from plastic or silicone?
    :-)

  5. G.A.Branigan Says:

    LOL,I don’t blame ya.I was thinking I have never seen a tata prima,but I have seen some premo tata’s.I know….I’m gonna go to hell for that one.

  6. Alex Kajdi Says:

    John,

    Honda and Mazda are doing the right thing. They are asking for these loans as a way to bring liquiditity to the automotive market so that they can sell off inventories and support their dealership network. The US Banks are using the US Government bailout money to maintain margins and prevent their own failures. The Obama Administrations needs to put earmarks especially when handing out Federal Bailout money to banks, i.e. so much has to go to consumer loads for the purchase of automobiles. The Federal Government needs to follow Germany’s lead and remove the sales tax on all vehicle sales at point of purchase / sale. In addition, there should be a $3,000.00 dollar salvage tax credit to US households who trade in their 7+ year old junkers for a New Fuel Efficient, Hybrid or Electric Vehicle.
    I am waitng for my Volt / Ampera to should up at my local dealership!

  7. Alex Kajdi Says:

    John,

    I think it is a good idea for General Motors to go Chapter 11. This would allow them to reorganize their supplier and dealership networks into a single brand store called ” The New General Motors”. Each dealer would be able to sell off all GM brands and models under one roof. This could rapidly reduce inventories and bring in much needed cash for the retooling process. I purchased an Oldsmobile in 2001 after GM anounced the elimination of the brand. The only incentives for me at that time to purchase this vehicle was the discounted purchase price and 5 year / 60,000 mile extended warranty. GM needs to do the same to reduce inventories and improve cash flow.

    The New General Motors would get rid of all those cloned / rebadged models and assign a numbering scheme to their models, i.e the Aveo and G3 would be consolidated into a single model called the “GM100″. The Cobalt and G5 would become cosolidated into the “GM200″ and so on first in the North American Market. This new direction could lead to a real globization of all New GM vehicles in all markets. The GM Brands like Chevrolet, Pontiac, Buick, Saturn, Opel, Hummer, Saab, etc; need to be moth balled so that GM can re-emerge from Chapter 11 as a viable company with a much needed fresh start.

    The Voltec system needs to be expanded because as I believe the price of oil is not going to stay at $2.00 per gallon once the economy starts backup! Nascar should sponsor an Electric Car Racing event along with the Department of Energy to promote electric vehicle technology. This might bring more new ideas and talent into the electrification of the automobile industry.

  8. Alex Kovnat Says:

    I am not enthusiastic about GM filing for bankruptcy.

    If Boeing were to go the Chapter 11 route, it doesn’t mean people will stop flying on the airlines or that airlines won’t order Boeing jetliners. It is likely that if the above were to happen, B. would still be able to launch their exciting new 787 model while reorganizing under Chapter 11 protection.

    But GM? If GM were to go Chapter 11, the New York Times would announce in the biggest, boldest, screamingest headline you can imagine, GM BANKRUPT!!!

    People who would be perfectly willing to come aboard a 777 if Boeing were to go BoingBoing, will not order a Chevy if GM goes BK. In other words, the New York Times announcing the bankruptcy of GM in big bold headlines will have the effect of causing our whole American-flag automotive economy to collapse. Under such circumstances, GM won’t be able to launch the Volt or any of their other new models.

    If GM must file for bankruptcy, the newspapers should inform the public but not in such a bold, screaming manner as to cause panic.

  9. pedro Fernandez Says:

    Now Indian cars, is this the end of western civilization, or just the end of western manufacturing?

  10. pedro Fernandez Says:

    When GM and Chrysler go bankrupt, I guess all the millions given to them would never get paid back and us taxpayers get the shaft as always, right?

  11. JIm Thykeson Says:

    Regarding GM, I have one question to ask. Do you think Germany would let Porsche, Mercedes, and Audi to go into the tank so that the Asian brands could take their place? Not in a million years!! The only country that would replace their own auto-industry with outsiders is this one. Isn’t that a shame…no wonder we have no Dow-Jones Industrials left!

  12. G.A.Branigan Says:

    There’s a difference between going in the tank,and restructuring….right?Tell me why I should,as a taxpayer,be responsable for bailing out a mismanaged company,any company.I did my part,my wife and I bought TWO new vehicles in the last 6 months.Theres my bailout contribution,and both were american.One Ford and one Jeep.I am sick to death of all the whinning about OUR car companies.They were run into the ground…period,and it wasn’t by any of us here.

  13. C-Tech Says:

    Where was all the leadership at GM and Chrysler while they were losing market share? Where is this generation’s Lee Iaccoca, Harley Earl, Ed Cole, even John DeLorean? Who are the faces of these companies? Why would I trust a Cerebus?

  14. Dave Kopitzke Says:

    Chrysler could sure use Iaccoca. Didn’t he buy a private jet company (Gulfstream) immediately after he paid off the government loans?