Episode 152 – Opel Talks Go Sour, Two Suppliers File Chapter 11, EU Warns About Capacity Cuts

May 28th, 2009 at 12:00pm

Runtime 6:47

German negotiators are angry with their American counterparts over Opel talks. Visteon and Metaldyne, two large automotive suppliers, just filed for Chapter 11 bankruptcy. The EU says the car companies have cut out too much capacity. All that and more, plus a preview of this week’s episode of Autoline Detroit with Mark Fields, Ford’s President of the Americas.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Germany is furious with American negotiators over Opel. Two more big American suppliers file for bankruptcy. And the EU says the car companies have cut out too much capacity.

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

This is Autoline Daily for Thursday, May 28, 2009. And now, the news.

Well, we were supposed to learn yesterday who would end up getting Opel. But talks broke down, and the AFP reports that German negotiators are angry with their American counterparts. Germany’s finance minister Peer Steinbrück said that at the last minute GM and U.S. negotiators demanded another 300 million euros to keep Opel in business before GM presumably files for bankruptcy. Steinbrück said the demand for the extra money was an unpleasant surprise and he characterized it as a scandalous bargaining tactic.

We’ve been saying all along that the supplier community would be the next shoe to fall in this global automotive meltdown. And now it’s starting. Visteon and Metaldyne, two large automotive suppliers, just filed for Chapter 11 bankruptcy. But according to Reuters, this only includes their U.S. operations. And it noted that Ford will provide financing to Visteon to help get it through bankruptcy, and that two private equity firms are interested in buying some of Metaldyne’s assets.

Since the global economy tanked, automakers around the world have been cutting their manufacturing capacity to keep in step with lower demand for new vehicles. Now Ward’s reports that the EUROPEAN ECONOMIC AND SOCIAL COMMITTEE is warning car companies not to cut volumes too much. The EU is concerned that when the economy stabilizes there could be an under-capacity situation which could lead to an increase in new vehicle imports.

UK car magazine Auto Express is reporting that rumors of Lexus canceling its LF-A supercar have been exaggerated. Apparently the car was not canned, instead, engineers weren’t happy with its 199 mile-an-hour top speed and needed more time to tweak the aerodynamics and engine. Now, it reportedly tops a truly super 218 miles per hour. The magazine also claims the LF-A will look “very different” from the prototypes seen testing on the Nürburgring. The car features a 4.8-liter V10 that’s good for 550-plus horsepower. Look for it to debut in October at the Tokyo Motor show.

Former GM Vice President Mark McNabb will take over as president and CEO of Maserati’s North American operations. According to the Detroit News, McNabb resigned last week from his position as Vice President of the Hummer, Saab and Cadillac brands to spend time with his family in New Jersey, which also happens to be the location of Maserati’s North American headquarters.

To help curb its reliance on imported oil, China is drafting fuel economy standards tougher than those enacted by the Obama administration last week. According to the New York Times, China plans to boost fuel economy for passenger vehicles 18 percent by 2015. China estimates that its passenger cars now average 35.8 MPG or 6.6 l/100km using U.S. standards and with the new rule that would bump up to 42.2 MPG or 5.6 l/100km. Mid-size and compacts vehicles face the highest increases while subcompacts face the lowest increases.

Coming up next, a preview of this week’s episode of Autoline Detroit.

My guest on this week’s edition of Autoline is Mark Fields, Ford’s President of the Americas. Also joining me in the studio is Jean Jennings, editor-in-chief of Automobile Magazine, and Bryce Hoffman of the Detroit News. In the following preview Mark talks about some of the benefits of the rumored U.S. cash-for-clunkers program.

We just have to wait and see whether or not the government enacts this program, and if they do, what effects it will have on new-car sales.

Also, don’t forget to check out Autoline After Hours tonight starting at 7:00 p.m. Eastern time. Joining me in the studio will be Peter De Lorenzo and Csaba Csere, the former head-honcho of Car and Driver Magazine. Jason is up at Mackinac Policy Conference but he’ll be joining us via Skype. We’ll be talking about the root causes of what brought the U.S. auto industry to its knees.

And that’s it for this news cast. Thanks for watching, we’ll see you tomorrow.

6 Comments to “Episode 152 – Opel Talks Go Sour, Two Suppliers File Chapter 11, EU Warns About Capacity Cuts”

  1. Thor Says:

    THis evening’s show will be far better than the regular Sunday show, because of who is in them.

    I never cared for Ford’s Mark Fields, and I am dissapointed that he still has his job after Mullaly turned the co around.

    He is wrong as usual, increasing auto sales is not a matter of confidence. Consumers do not care for the current crop of tired old underperforming models, and educated consumers know that both Ford and GM are late in bringing to the US excellent small, high MPG cars they are already selling overseas (the Fiesta and the Cruze, respectively) and do not care for the current, excremental, previous-gen Focus they still have to buy in the US, when Europe has the far better new Focus for more than a year.

    Get your act together, Ford and GM! Do NOT treat the US market as a wastebasket for last decade’s poor models, bring in the NEW, Far better models and consumers will buy them!

  2. Mike Dale Says:

    It has been hard watching the supply base shrivel and shrink. it was the family owned businesses first and now the big ones like Visteon-Delphi and the others to come. I’ve never understood the logic of borrowing money at 15% when the profit margins “allowed” by the OEM’s is 5 or 6%. The supplier business model needs to make much more sense come the other side of bankruptcy.

  3. Alex Kovnat Says:

    About China’s planned increases in required fuel economy: Are they also squeezing cars harder and harder on safety too?

  4. Ed K. Says:


    Everybody talks about bankruptcy as the cure- all for the auto industry but no one talks about the downside other than the fact that consumers will be even more reluctant to buy from a company in Chapter 11. What are the legal and financial ramifications for a company that files for Chapter 11? Thanks.


  5. Thor Says:

    This is not an ordinary bankruptcy (for Chrysler and esp. GM). The suppliers that go broke will probably get little help from the Taxpayer,

    but GM will get an extra 50 billion $ to ensure it will keep going. This is not a guess, it was in the news!

    Hope it will not become a gigantic version of Amtrak and the Post Office…

  6. Thor Says:

    Make sure you all listen to last night’s “Autoline After Hours.” on this website

    Outstanding Show, perhaps the best of all AAH shows to date.

    Keep on bringing great guests with multiple points of view!