Episode 144 – More GM Bankruptcy Signals, UAW Agrees Not To Strike, Ford Fiesta Out On Tour

May 14th, 2009 at 12:59pm

Runtime 7:18

GM moved up some of its supplier payments that analysts see as a sign the company is heading toward bankruptcy. The UAW has pledged not to strike Chrysler anytime before the fall of 2015. To help promote the launch of the Fiesta, Ford will start showing European spec versions of the car across the United States. All that and more, plus a review of 2010 Ford Mustang convertible.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. More signs GM is heading toward bankruptcy. The UAW accepts a no-strike agreement. And Ford takes the Fiesta out on tour.

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

This is Autoline Daily for Thursday, May 14, 2009. I’m Mark Phelan, auto critic at the Detroit Free Press filling-in for John. And now the news.

Just a day after its stock price dropped to levels not seen since 1933 and its bonds tumbled to record lows as well, we may have our clearest sign so far that General Motors is inching closer to bankruptcy. Today in the Free Press we’re reporting that the company has moved up some of its supplier payments from the first week of June to the end of May, just days before the government-imposed deadline. Now that may be great news for the balance sheets of the Tier Ones on that list, but auto analysts see this as just short of absolute proof that GM will file Chapter 11 in just a little over two weeks.

Meanwhile, speaking of automakers in bankruptcy, we’ve got an update on the UAW no-strike promise to Chrysler. As we reported back on April 30th and as confirmed this week by U.S. Bankruptcy Court documents, the union has pledged not to strike the company anytime before the fall of 2015. This extends the original no-strike agreement the union worked out with the administration when Chrysler received its first TARP loan a few months ago, and is just one of a long list of UAW concessions that the auto industry task force asked for, so Chrysler would qualify for the more than $10 billion in government support during restructuring.

And one of the results of that restructuring, if Fiat gets its way, could be a global alliance between itself, Opel, Chrysler and GM. Bloomberg News is reporting that if Fiat becomes GM’s partner running Opel, it plans to create a new company that would share future designs and technology between the four divisions. How this alliance would work isn’t quite clear yet but we do know that GM has said all along that it wanted to retain some sort of link with Opel and this may be the best way to achieve that. By the way, European Union officials are already prepping for a fight by speculating that such an alliance would eliminate up to 18,000 jobs in Europe.

Back in Washington, the U.S. House of Representatives reached a deal that could provide billions to the auto industry as part of a proposed plan to limit carbon emissions. According to the Detroit News, automakers would receive 3 percent of the government’s revenue from carbon emissions permits starting in 2012 to use toward building “green” cars. Analysts say the deal could be worth up to $15 billion a year over the first six years of the program. It’s still unclear how the money would be divided among automakers.

Meanwhile over in John Mellencamp country, Honda began production of the Civic GX, its natural gas powered vehicle, at its new plant in Indiana yesterday. The vehicle was produced at its East Liberty, Ohio plant prior to moving one state west. It’s the only natural gas powered passenger car sold in the US. The vehicle has a range over 220 miles, or 350 kilometers, and Honda claims it’s 90 percent cleaner than the average gas powered car on the road today.

And finally, to help promote the launch of the Fiesta, Ford will start showing European spec versions of the car across the United States. The company is aiming to get 100,000 test drives by the time it launches the North American version. Production starts next year at Ford’s plant in Mexico. To find out if the tour will be stopping near you check out www.FiestaMovement.com.

Coming up next, I’ll have a review of 2010 Ford Mustang convertible, we’ll be back right after this.

The classic American pony car gets a new body, appealing new features and improved fuel economy this year.

The 2010 Ford Mustang hits the road just in time for summer fun, and I recently tested a V8-powered Mustang GT convertible on my annual trip to the New Orleans Jazz and Heritage Festival.

The Mustang’s looks and handling had me before I turned the key, but I was pleasantly surprised by how comfortable and fuel-efficient the car was on a long drive.

The 315-horsepower V8 has a satisfying engine note and ample power off the line. The car I tested topped the EPA’s projected fuel economy, averaging over 24 miles per gallon on the highway.

The interior is all new. In addition to good looks and upgraded materials, this is the first Mustang to get Sync, the system Ford and Microsoft developed for hands-free control of mobile phones, iPods and other features.

The front seats are amazingly comfortable on long drives, but rear legroom is minimal. The Mustang’s solid rear axle makes for a harsh ride over bumps. Detroit’s other reincarnated sport coupes, the Dodge Challenger and Chevrolet Camaro, both have independent rear suspensions. That gives them an advantage in comfort and roadholding.

I’d also like to see Ford swap the Mustang’s five-speed manual transmission for a six-speed. The five-speed is set up for optimum fuel economy. That will save you money, but it means there’s not much get-up-and-go when you nail the accelerator in fourth or fifth gear.

With prices starting at just under 21-thousand, and a V8 convertible available for about 33, the 2010 Mustang is a bargain, and a beauty. For my full review of the car, pick up today’s Detroit Free press or go to www.freep.com.

And, that’s it for today’s show. But don’t forget to check out Autoline After Hours, tonight at 7:00 p.m. Eastern time, or 23:00 GMT. John won’t be here, so Peter De Lorenzo will be in the driver’s seat. Joining him and Jason Vines in the studio is David Welch of BusinessWeek while Eddie Alterman, the new editor-in-chief of Car and Driver magazine joins via Skype.

Anyway, that’s it for today’s top news in the global automotive industry. Again, I’m Mark Phelan, auto critic for the Detroit Free Press. Thanks for watching, we’ll see you tomorrow.

20 Comments to “Episode 144 – More GM Bankruptcy Signals, UAW Agrees Not To Strike, Ford Fiesta Out On Tour”

  1. Dave E. Says:

    They should not be allowed to ever strike again, maybe the only way to insure that they suck the company dry is to make them a stake holder. In other words they shouldn’t be allowed to sell their stock in the company. VERBA should not get cash payments but stock in Chyrsler! Nice job Mark!

  2. Dave E. Says:

    Opps!
    They should not be allowed to ever strike again, maybe the only way to insure that they WON’T suck the company dry, is to make them a stake holder.

  3. Alex Kovnat Says:

    We note that Honda is manufacturing a compressed natural gas powered sedan in Indiana.

    All well and good, but I think the best short-term market for NG vehicles would be pickup trucks, school buses, limousines, taxicabs, et cetera.

    Here’s where Ford, Chevrolet and Dodge (I hear the RAM is a darn good truck) might do a little market research. If NG-vehicles have redeeming social value in terms of reduced CO2, oxides of nitrogen and carbon monoxide, perhaps Honda and other manufacturers should ask for more NG refueling stations to assure a market for such vehicles, especially vehicles operated by businesses and government agencies.

  4. Thor Says:

    I am a big Honda fan and owner, but the Civic GX makes no sense. No economic sense and no practicaL sense.

    1. It is VERY expensive for a small upscale econobox. Few, if any, will recover the price because of cheaper fuel. Do the math.

    2. Its Range is unacceptable at only 200 miles, most Hondas can go 500+ miles on one tank, civics or accords.

    3. The stupid nat gas cylinder takes up half the trunk space.

    4. it really should NOT be a Sedan but a wagon, so you could have an extra cylinder, a 400 mile range, AND a minimum of cargo room.

    5. NAt gas is sure better for CITY FLEETS and large trucks than for econoboxes and privately owned cars that need both space and RANGE.

  5. Thor Says:

    PS Phelan was far, far better than McElroy, and I agree he is even better than Scott. I wish he could do this every day and John can go do his many other activities.

    Another thing that really bugs me about John is when he makes this big effing deal about hi scheapskate so-called “prizes” every week, These very inexpensive silly things are usually FREE SAMPLES John got and would otherwise give to the grandkids.

    Don’t be SUCH a cheapskate, John! You make plenty of $ with all these sponsors and PBS programs you got!

    Go out and buy a DECENT prize, don’t raffle samples!

  6. Paul Stewart Says:

    Thor was Mark better than Scott B. from the past few days ??? O’ and by the way the stuff he auctions off most likely would go in the garbage. John’s program is on P.B.S. NOT Cable or NBC etc.etc. Give the John a brake Thor.

  7. Thor Says:

    “Paul Stewart Says:
    May 14th, 2009 at 2:39 pm

    Thor was Mark better than Scott B. from the past few days ??? ”

    Can’t you READ? See my post, which was posted BEFORE yours:

    “…PS Phelan was far, far better than McElroy, and I agree he is even better than Scott. I wish he could do this every day and John can go do his many other activities.”

    Phelan’s voice is just as, or more, pleasant to the ear as Scott’s, and overall he seems far more comfortable before the camera. I assume the resident Cosmetologist’s assistants (or are they just jealous chrome domes? LOL!) will also approve of his hair, unlike the harsh criticism they had for Scott’s.

    But as far as John’s Prizes, your comment only reinforces mine. If these were to be discarded anyway, this is one more reason John should NOT insult our intelligence and make a big effing deal of them!

  8. Tom Martin Says:

    Where’s the Ford EcoBoost engines? I thought we would see some by now.

    Would love to see the Mustang replace the 4.0 with a 2.5 ecoboost, and the 4.6 with a 3.5 ecoboost.

    Both should improve performance and mileage.

  9. Salvador G. Says:

    Ok, I agree with Thor… Thor??? I wonder!!!

    Anywho, I agree; it just doesn’t work for a gas power car, hopefully Honda will see the light and make it part of its trucks line up.

    I’m just glad too see the Ford Fiesta finally here, its about time. :O :)
    FIESTA… FIESTA… VAMOS A LA FIESTA.

    And can the People here, stop – stop the abusing the announcers, Jeess…
    be greatefull people, at least there are professionals that take time of their lives to provide us with our daily doze of car news.
    Heaven knows where that PUMA lover of McElroy is.

    I wonder… What do you guys think?
    Do you think John McElroy is probably reading some of our comments and probably possing as one of us under a different nickname????

    >:(

  10. Craig A. Cole Says:

    @ Tom Martin

    We should have a report on Ford’s EcoBoost engines and a road test of the new Lincoln MKT next week. The company hosted a ride-and-drive event at its Romeo Michigan Proving Grounds today and I was lucky enough to be able to attend. I was VERY impressed with the new twin-turbo V6 and blown away by the MKT. For more details I’m afraid you’ll just have to tune in. :)

    – Craig

  11. C-Tech Says:

    Hello. Thor if you do not like John’s show then get your own and you can hire anyone you like. The trivia game is just that, a “Trivia” game. If you want big prizes go play the lotto. John keep doing what you do, the way you like. I hope your show can somehow re-join the SPEEDTV line up. SPEEDTV has gotten dumber lately. Will anyone miss the 789 Chrysler-Dodge-Jeep dealers closing?

  12. David B. Fishburn Says:

    Good job, Mark! If Ford is goning to offer the Fiesta here in the U.S., the least they can do is to build them HERE instead of Mexico. No disrespect intended to the mexican people, but when our economy is going down the drain, we need to help our people and country first. If Ford does not have a factory to use, why not hire Chrysler or GM to build it? that would put U.S. citizens back to work and would help stimulate the economy. As far as Mac is concerned, maybe he needs a break every once in a while, just like everybody else. i agree with a comment posted before mine, be grateful that there are professionals who would take time out of their busy schedules to host the show, othrewise, we would’nt even see the show.

  13. Paul Stewart Says:

    Thor, at least I can write my name when I leave a comment AND don’t forget you brought up John’s voice before I or anyone brought up Scott’s hair issues. Please remember it’s John’s show not someone called Thor or Paul Stewarts.

  14. Dave S. Says:

    Dave E….Why so much hate for the UAW? Did they design the Compass, Sebring, Aztec, Windstar or other poorly designed vehicles that totally missed the market? Chrysler, for one, was the darling of the industry in the 90′s when they were producing the right vehicles for the marketplace.
    As for needing a financial incentive, (VEBA), to not “suck the company dry”, they already have an incentive, their futures.
    I’m not pro or anti-union, but I am weary of people laying the problems at their feet. The legacy costs are what’s hurting these companies. Would you have the union ditch the retirees?
    The fact of the matter is that these companies failed to hit the sweet spot of the market. They were too slow to respond to the changes in the marketplace, they put all their eggs in one basket, trucks and suv’s. Quite simply, they failed to cover their asses, hedge their bets, diversify their portfolios, if you will. When gas hit $4 and the economy tanked, they were caught flat-footed. For the sake of everyone, let’s pray they make it thru this.

  15. Richard S Says:

    Love the program. Appreciate John and all his creative genius in getting this program up and running. Glad to have Mark and Scott fill in while John is away. A big thank you to John, Scott and Mark for keeping us up to the minute with news from a great industry!

  16. David B. Fishburn Says:

    Richard S.; Let’s not forget Murray Feldman, who also has filled in for Mac. A BIG thank you to all of these guys!

  17. pedro Fernandez Says:

    One question baffles me: is it better for the US economy to buy a foreign make built here or a domestic brand built in Mexico or Korea or China? I’d rather buy a transplant-built car made in Calif or Tenn or Kentucky, at least I know I’m allowing an American the opportunity to work. Why couldn’t Ford get the UAW to match the wages that they would pay a worker in Mexico to build the Fiesta. I just don’t feel right buying it, even though it looks great and its supposed to drive real nice too!

  18. Thor Says:

    I have much better things to do than have a little auto news show that repeats, almost to the word, what I already know from the web 4 hours ago.

    It is not that I dislike John’s show or John personally (of course not), I just can’t stand his voice.

    But there is a very easy way out of this, there is a full transcript, if I did not already know all these “news” for 4 hours, I can always read the transcript.

  19. Thor Says:

    PS: We are already paying for both AUTOLINE and that other show MOTORWEEK on PBS, so I am 100% entitled to criticize either show for their shortcomings, since I have ALREADY paid for them and there is no way I can refuse to pay for them even when I strongly object to some of their aspects.

    They are different shows.

    WHen John has really good guests, Autoline is a very good show. John needs to be a bit more critical and challenge his guests, though, challenge everything they say, because, like the crazy Buick guy this weekend, some don’t have a clue what they are talking about, or just do a snow job on the Audience.

    Motorweek is equally soft and uncritical, they love ALL the new cars they test (even the Pontiac Aztec, probably), and seldom criticize their poor quality and reliability.

    The guy John Davis on Motorweek is different than John, but also has some problems with his delivery, he is souting like a TOwn Crier in MEdieval times. Is this a show for the hard of hearing? And some of his female show members are (or seem to be, judging from the topics they cover and how they cover them), automotively illiterate, and sure NOT auto enthusiasts.

  20. Dave E. Says:

    To Dave S. – Their needs to be a balance. The Unions have made themselves overly expensive by pay, benefits and work rules. They’ve put they companies at risk and become a burden to the tax payers. The obvious cost imbalance has caused Engineering, materials and the overall quality of the American cars to suffer. Their workers should focus on company profitability and share in the wealth through stock ownership.