Episode 150 – Chrysler Bankruptcy Hits Snag, CAW Approves Wage Cuts, Toyota Slips in Ranking

May 26th, 2009 at 12:00pm

Runtime 6:12

Chrysler’s bankruptcy hits a potential snag. The Canadian Auto Workers agree to cut wages. Planning Perspectives came out with its annual supplier survey and for the first time since 1990, Toyota is not at the top of the list. All that and more, plus a look at one of the most fun automotive events around.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Chrysler’s bankruptcy hits a potential snag. GM gets CAW concessions. And suppliers don’t like Toyota as much as they used to.

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

This is Autoline Daily for Tuesday, May 26, 2009. And now, the news.

Indiana State Treasurer Richard Mourdock, who oversees pensions for his state’s retirees, is objecting to Chryslers bankruptcy plans, claiming it will hurt pensions. According to Reuters, court papers have been filed that request an examiner be appointed to investigate Chrysler’s business decisions and also appoint an independent trustee to oversee the Chapter 11 filing. Chrysler claimed in a statement that Mourdock is willing to put Chrysler in liquidation over less than 1 percent of the three funds’ assets. And questioned whether his motives are financial or political.

GM has until the end of the week to restructure itself, and the view on Wall Street is that a Chapter 11 filing is inevitable. But GM is making progress. The Canadian Auto Workers voted overwhelmingly to slash labor costs, which clears the way for GM to get $3 billion from the Canadian government. The UAW presents its concessions for the members to vote on today.

Planning Perspectives came out with its annual supplier survey and for the first time since the study started in 1990, Toyota is not at the top of the list. Honda is now ranked by automotive suppliers as the best car company to work with. But Honda’s scores are coming down, too. Ford is making huge improvements, suppliers say, and they like what GM and Nissan are doing as well.

Yesterday Volkswagen and Chinese automaker BYD signed a memorandum of understanding. The German automaker wants access to advanced batteries to help it build green cars. VW already offers a lineup of efficient vehicles equipped with its eco-friendly “BlueMotion Technologies.” Going forward, the company will include hybrids and electric vehicles in its lineup.

Oh how times have changed. In 2007 Porsche earned a $7.7-billion operating profit, but Autoblog reports that the company flirted with bankruptcy for a few days in March. It received a 700 million Euro loan from VW to stay out of trouble. It’s estimated that it will need another 2.5 billion Euros to stay afloat. The reason it’s in such a precarious financial situation is that it spent 9 billion Euros trying to take control of VW. Now, it has 50 percent more debt than Chrysler!

A Greek court has ruled against Daimler in a copycat suit it filed against Chinese company Shuanghuan Auto. According to Gasgoo.com, Daimler sued the company over its Noble model which it claimed to be a knockoff of the smart fortwo. However, the Greek court ruled, that “an informed buyer would not confuse the Noble with the smart fortwo.” The court also said that any exterior design similarities are irrelevant because the technical aspects of the cars are different.

Coming up next, a look at one of the most fun automotive events around, we’ll be back right after this.

The Midwest Automotive Media Association is a professional organization for members of the motor press. Called MAMA for short, it’s headquartered in Chicago, but reaches across America’s heartland.

And being a member has its perks. Like attending its annual Spring Road Rally, a huge event that’s like candy land for car fanatics. For two whole days MAMA takes over one of the best tracks in the country. Road America is located about an hour north of Milwaukee, Wisconsin. It’s a top-notch facility with a very fast, four-mile course.

Automakers bring in a wide variety of products, ranging from the familiar to the fabulous. Every year MAMA manages to snag a few boutique manufactures, giving attendees unprecedented access to high-dollar cars.

Activities on day one included laps on the track and drives on the street. Hyundai even setup a course where journalists could drift the new Genesis Coupe.

Day two features auto crossing and off-roading. An array of vehicles were available to toss around a short course setup in the paddock area. Too bad the weather didn’t cooperate. Cars were sliding all over the wet pavement. Obviously some of them had a little too much power for the conditions.

The other big activity on the second day was off-roading. A variety of four- and all-wheel-drive vehicles were on hand to take through the mud in the woods behind the track. You’d be surprised what today’s vehicles are capable of going through.

Despite the down economy, this year’s event was a great success, and a lot more fun than should be allowed.

Of course, it wouldn’t have been possible without generous sponsorship. A wide-array of companies from BF-Goodrich and Mercedes to Chrysler, Subaru and GM all chipped in to make the Spring Rally one of the highlights of the year.

And that’s it for today’s top news in the global automotive industry. But don’t forget that Autoline After Hours is coming this Thursday night at 7 p.m. Eastern. Joining us this week, Csaba Csere, former editor of Car and Driver magazine. Thanks for watching, we’ll see you tomorrow.

29 Comments to “Episode 150 – Chrysler Bankruptcy Hits Snag, CAW Approves Wage Cuts, Toyota Slips in Ranking”

  1. Pedro Fernandez Says:

    These Chinese companies have no scruples at all, they’ll steal any design the want without fear of retribution. Yeah, let’s keep trading with them and bringing their lousy copycars here, while our workers stand in the unemployment line.

  2. G.A.Branigan Says:

    It’s no surprise that Chrysler ran into a BK problem,or “snag”.That was bound to happen.It will be the same for GM when they finally end up in BK court.At this point,who th’ hell cares…

  3. Daily News About Media : A few links about Media - Tuesday, 26 May 2009 09:09 Says:

    [...] Episode 150 – Chrysler Bankruptcy Hits Snag, CAW Approves Wage Cuts, Toyota Slips in Ranking [...]

  4. Thor Says:

    Good segment! Interesting info. I wonder why would M-B bother to sue them in Greece instead of Germany or someplace else.

    The Chinese are new in automotive, but the Japanese were just as new 50 years ago, and also basically copied (and improved) many german designs. They are well educated and capable technicians and hard workers and will do well. If the Koreans were able to improve so significantly from their dismal 1988 Hyundai Excels, (but still below the Japanese in sophisticatioN), I’m sure the Chinese will be just as successful if they put their mind into it.

    and this week’s “After Hours” promises to be excellent, with Czaba Czere of “Car and Driver” fame and MIT education and IQ. After Hours is good every time, BTW. I just lisetn to the audio while working on other things on my computer.

  5. Pedro Fernandez Says:

    The Chinese are commies, and commies have never been able to make a good car, not even the East Germans before the wall went down their cars were as bad as the rest of them. Remember the Yugo? the yugo was a Fiat design built in formerly commie Yugoslavia and there was another company from Romania that tried to import some SUV type vehicle that was a military vehicle and it couldn’t cut it in this market. I for one would never buy a Chinese car.

  6. Episode 150 - Chrysler Bankruptcy Hits Snag, CAW Approves Wage Cuts, Toyota Slips in Ranking Says:

    [...] Original post by John’s Journal [...]

  7. Pedro Fernandez Says:

    The Chinese are commies and history has shown that commies do not make good cars. Only good military equipment, the Japanese came here to copy the way we built cars but they did not copy our cars cause they were too big for their market. They instead were smaller versions of our cars and they were terrible until they improved to the point that they were better and ours got crappier.

  8. Frank Says:

    Why kind of shape are the rest of the European car companies in? We’ve all heard a lot about GM/Chrysler/Toyota/Honda/Ford, but what about BMW, Mercedes, VW, and Fiat? Are any of them making money, or at least in good financial shape?

  9. DukeT Says:

    John,
    Could you enlighten us as to the “corporate” structure that will be adhered to under the new CAFE regs?

    More specifically, will it be necessary to be under one corporate roof , such as the corporate divisions of GM (Chevy, Cadillac, Buick, GMC – assuming that those are the ones left on the table after Ch 11 – or whatever), or, will it be allowed to be based on ownership of stock as in VW, Audi, Porsche, etc?

    ISTM that we will see a whole lot more of corporate buying up controlling (stock) interest in other companies – if that is the case – which it would seem to me to be a circumvention of the intended purpose of the regs.

    Of course, that would change things who gets “exemption” from the regs due to sales. Which brings up another point that has yet to be properly explained IMO.

    Thanks in advance
    Duke

  10. Thor Says:

    You are living in the 60s, man!

    The Chinese have become CAPITALISTS since the late 70s.

    And in the last 3 months, more cars were sold in China than in the USA or any other nation!

    The Chinese want to make $. Have you ever been in china? I spent a month there teaching a course at the U in Shanghai, and I can assure you that the average Chinese person is far more interested in making $ than any other ideology.

  11. Pedro Fernandez Says:

    This is an automotive forum, not a political one, but remember the Chinese have adopted a capitalist business model to avoid collapsing in much the same way the Soviets did, but their ideology is still Communism and no amount of western influence is gonna change that. They just needed our capital to get ahead, their modern cities make ours look 3rd worldly.

  12. G.A.Branigan Says:

    What th’ hell is up with post #’s 3,and 6?

  13. Alex Kajdi Says:

    John,

    You discussed with your panel on last week’s “Autoline After Hours” about whether the Chevy Volt will make into production for the general public. I am hoping that the Volt will not just make it into the hands of high profile / elite groups of people. This would be the same fiasco as the orignal General Motors EV1. The 40K price tag is high, and the $7500 tax rebate is not enough to make the car competitive in today’s marketplace. The Department of Energy needs to play and more activite roll in EV battery development.

    I would like to suggest a “After Hours” segment on Electric Vehicle Racing as a possible way to give EV technology more exposure. Racing has always been away for OEM’s and Suppliers to test and market new technologies. A Electric Car Race / Ralley would be about to showcase EV technology and bring revenue dollars to Detroit for being the first city to hosting such an event. This racing event could travel the country allowing local inventors to participate in qualifing events and possibly actual races.

    I still think that a Voltec Chevy Cruze is a great idea since it is a lower cost vehicle to product than the Chevy Volt. The automobile Industry is a volumn driven game.

  14. Thor Says:

    # Pedro Fernandez Says:
    May 26th, 2009 at 1:46 pm

    This is an automotive forum, not a political one,

    YOU were the one that mentioned the utterly irrelevant claim that the Chinese are “commies”, which was UTTERLY irrelevant to the discussion, and YOU are STILL the one that keeps babbling about them being communists. But I am sure you are buying a TON of “MADE IN CHINA” products every time you visit a clothes, furniture etc store here in the USA.

    If you are under the impression that the CHinese workers are any less excellent, Motivated for PROFIT and WEALTH than ANY capitalist workers, then you have NO CLUE what you are talking about

    But at this time the chinese have their hands full building cars FOR THEMSELVES in CHina, and importing a ton of them from Germany and Japan as well, and are not very interested in the shrinking US market. And GM will import a laughably low 17,000 (even if it ever goes to 50,000) chinese-made cars a YEAR in the US market, where we sell 15,000,000 a year total. Not even 0.1%!

    And after all, I have LIVED in CHina formore than a full month and worked and was paid by the chinese and I THINK I know them 1,000 TIMES better than you EVER will.

  15. Pedro Fernandez Says:

    I believe that if the Chinese play their cards right, they’ll have an affordable, fairly simple electric car in the US by 2012 or 13. The Volt is just too expensive for untried technology, and GM even admitted they’re having problems getting the motor not to accelerate when the gas engine kicks in. As a matter of fact at this point I don’t even think they have the gas engine that they want for the car. They’re running out of time and resources to get this done.

  16. Pedro Fernandez Says:

    It’s thundering and pouring here in So Fla, I think Thor is pissed. Only HE speaks the truth, and I’m done with this forum. I’ll still listen to John’s reporting.

  17. John McElroy Says:

    @ Duke,

    You’ve got it right. CAFE is calculated by manufacturer, not by brand. Chevy, Cadllac, Buick, GMC are averaged together under GM. VW, Audi, Bentley, Lamborghini are all grouped together under VW. Where will Porsche end up? Probably under VW. In fact, some people felt Porsche first tried to take over VW so it could average its CO2 emissions with vee dub so it could meet European standards.

  18. G.A.Branigan Says:

    @ Pedro:Just ignore him like most everyone else does.He’s just one of those internet bullies.

  19. Dave E. Says:

    I don’t feel bad for Porsche; a year ago they were bragging about how profitable they were.
    When the Japanese and the Koreans first entered the market, they were coping everyone else’s work. I assume the Chinese are taking the same path.

  20. Dave E. Says:

    It’s too easy to be mean on these blogs. We (me included) could all use a little more kindness when responding.

  21. John McElroy Says:

    @ Frank,

    As we’ve been reporting in Autoline Daily, every major automaker lost money in the first quarter of this year. In fact, Toyota lost more money than GM, and Honda lost more money than Ford.

  22. Eric Soto Says:

    GM kisses comies buts with Buick cars in China, then drops the Pontiac brand. Not so patriotic ,dont you think?

  23. Jude Says:

    Eric,

    I’m not sure what your complaint against GM is other than they build and sell cars in China (but only through JVs with existing Chinese automakers). Everyone else is trying to do the same.

    GM hasn’t imported a single Chinese Buick to this country (yet).

    Of course, the G3 comes from Korea and the G8 comes from Australia. So how patriotic was the Pontiac brand anymore? Especially considering that all three currently-made Buicks are built right here in North America.

  24. William R. Walling Says:

    John,
    “Today viewed a panel discussion about ongoing bankruptcy proceedings ‘dismissing’ GLOBAL bondholders concerns.”
    Announced resultant ‘unintended consequences’ for businesses associated with UNIONS.
    Explained reasoning,
    A Bankruptcy Court favourable to America’s UAW concerns at GLOBAL bondholders expense.
    Suggests immanent financial markets retaliation for ALL Unions! (No profits = NO cash!)
    America’s UAW may have saved their ‘bacon’ today only to lose future GLOBAL Union support!
    Nobody KNEW this a likely ramification of ongoing Auto and Truck Industry Bankruptcy Court proceedings?
    Implies – ‘Short term gain for long term loss!’

  25. G.A.Branigan Says:

    “Short term gain for long term loss” that is about as an american business mantra as I’ve ever heard.

  26. Jeff Cunningham Says:

    “G.A.Branigan Says:
    May 26th, 2009 at 3:27 pm

    @ Pedro:Just ignore him like most everyone else does.He’s just one of those internet bullies”

    Nonsense. you, Branigan, are the one that calls people names, as well as Pedro, who still, after 30 years of capitalism, still calls the Chinese “Commies”. I find Thor’s posts always well informed and he is right in his informed comments about China as well.

  27. Jeff Cunningham Says:

    I also recommend that everybody watch, live or even the next day, every Thursday’s “Autoline After Hours”. John has had some excellent guests there, and he will probably do his best one this Thursday with the great Czaba Czere, former Car and Driver Editor, and his regulars.

  28. pedro Fernandez Says:

    Sorry to inform you that the Chinese government is and will always be communist, the fact that they have allowed capitalism to move in there to reap its benefits, does not change the fact that thery are an oppressive society where religion, the right to express yourself, the right to protest are still forbidden. Just ask the family of the guy that got crushed by a tank during a peaceful protest a few years ago. Even now they still support the outlaw No Korea regime. So please dont confuse their capitalist way of doing business with the political reality.

  29. G.A.Branigan Says:

    @ Jeff: I’m not sure what planet your on,the chinese are still very much under communist control.Just because they are easing their way to capitolism doesn’t negate the fact that they are full blown communists.Vietnam is also doing the same thing without the auto manufacturing.

    As far as name calling:I seem to remember me hammering the uaw/caw/and the piss poor leadership of the once big 2.I don’t make it personal unless someone comes after me because they don’t like my opinions,which is cool too.