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Episode 221 – Big Oil Finds Big Oil, Gaddafi Designs Sports Car, Meet GM’s CFO: Ray Young

September 3rd, 2009 at 12:08pm

Runtime 8:40

BP says it made a massive oil find in the Gulf of Mexico. Libyan dictator Muammar Gaddafi designs a sports car. All that and more, plus John sits down with GM’s chief financial officer to find out if they can ever make a small car profitably in the U.S.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. BP says it made a massive oil find in the Gulf of Mexico. Muammar Gaddafi designs a sports car, yeah, that Gaddafi. And GM’s CFO says no more cheap interiors in its cars.

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

This is Autoline Daily for Thursday, September 3, 2009. And now, the news.

Drill, baby drill. The New York Times reports that BP made a MASSIVE discovery in the Gulf of Mexico. Located about 250 miles off the coast of Texas, the Tiber Oilfield could contain 3 billion barrels of crude oil and natural gas. Some say 6 billion. BP has to drill down almost seven miles to get it, making this one of the deepest wells ever. BP already produces 400,000 barrels a day in the Gulf. Now it could go to 650,000. But to put it in perspective, the U.S. uses 20 million barrels a day.

And now we turn to the story that just keeps on going. I’m talking about General Motors and Opel. The Wall Street Journal reports that it looks like GM is going to get a billion euros in aid for Opel from Britain, Spain and Poland, countries which all have Opel plants. This has GM thinking that now that it’s out of bankruptcy and can get its hands on money, maybe it should kick in cash of its own and not sell Opel. Meanwhile, RHJ, the investment firm that wants to buy part of Opel just offered more money for it. But the German government says no, it wants Magna to get it. And now it looks like any decision will be pushed back until after elections in Germany.

The Financial Times reports that Mini is going to boost production by adding two new models to its assembly plant near Oxford, England. It will build the Mini coupe that we showed you last week, and another unnamed concept vehicle, which we’re thinking might be the crossover vehicle which the company showed off last year. The boost in production should bring back about 800 workers to the plant.

Supplier company Continental just showed us its active safety technology, which it sees as a growing market. Critics argue it’s technological overkill, but Continental counters that there are more and more vehicles out on the road creating more congestion and distractions. Plus the population is aging and most accidents are caused by driver error. Continental justifies the cost of active safety equipment because you won’t need the money to fix your car if they help you avoid an accident.

Chinese auto company Chery will begin selling a plug-in electric car next year in China. According to Bloomberg, the car, called the S18, can travel up to 93 miles, or 150 kilometers, on a single charge and will cost up to $19,000. Chery expects to sell 30,000 S18s within three to four years.

Libyan dictator and reformed terrorist Muammar Gaddafi may have found his true calling in life. Autoblog reports that the Colonel has tried his hand at car design! Surprisingly, the Libyan Rocket as it’s called isn’t half-bad looking. Staying true to its name, the front and back ends of this five-seat sedan are sharply pointed … like a rocket. So why did he do it, if he was the one who really did it? Safety. Gaddafi wanted to design “the safest car produced anywhere.” That’s right, I said PRODUCED. It will be made in Tripoli where a factory is set to be built next month.

Coming up next, I sit down with GM’s chief financial officer to find out if they can ever make a small car profitably in America.

To understand what this auto industry is all about, you have to know the companies involved, and you have to know the people who run them. Ray Young is the chief financial officer of General Motors. Born in Canada to Chinese parents, he’s worked for GM in North America, Europe, South America, and Japan. I recently had the chance to chat with him, and here’s a quick interview that covers a lot of topics, starting out with me asking him when GM will start selling stock in the company again.

I then asked him if, now that GM got rid of most of its legacy costs, will it put more money into developing new cars and stop putting in such cheap interiors?

I also wanted to know if GM is now efficient enough that it can make small cars in the United States and make a profit on them?

Ok, if GM is so efficient, can it break even in the American market when car sales have dropped to their worst levels in decades?

Finally, if and when the car market comes back, is there any hope of GM reopening some of the plants that it’s closed?

Again, that was Ray Young, GM’s chief financial officer, one of the top leaders at the company.

Hey, don’t forget to tune in for Autoline After Hours tonight, live at 7 p.m. Eastern. Joining us in the studio will be David E. Davis, Jr., for what ought to be an entertaining evening.

And that’s it for today’s top auto news. Thanks for watching, we’ll see you tomorrow.

45 Comments to “Episode 221 – Big Oil Finds Big Oil, Gaddafi Designs Sports Car, Meet GM’s CFO: Ray Young”

  1. Don MacConnel Says:

    I can see Gadaffi riding on the back of an AV8b like the one in the Schwarzenegger “True Lies” flick.

  2. Jonathan Says:

    If Muammar Gaddafi wants to build the “the safest car produced anywhere”, is he planning on it to be resisitant to land mines and sniper fire.

  3. Tony Gray Says:

    GREAT quickie interview with Mr. Young. He seems to have a great grasp of more than just beans and bullets, unlike a lot of CFOs. Very refreshing as to how he was able to talk about interiors (design) and plants (manufacturing) as well as monetary issues.

    Seems to be one to watch.

  4. Nick Stevens Says:

    In other news, Sept. 3, 2012: Paranoid Libyan Dictator and mass murderer of US civilians

    (pan AM Flight. or do you really think that this poor guy that was released and who is now dying of cancer did it all on his own? LOL)

    Muammar Qaddafi and his retinue fell of a cliff today, as their fleet of “safest in the world” Qaddafi cars veered off the road in Tripoli Suburb..

  5. Nick Stevens Says:

    PS John: US oil demand was, not is, 20 million barrels a day. (20.867 if I remember well) a few years ago, but many say that was the peak of US oil demand. IN 2008, it fell 6.4%, and in 2009 it fell even more.

    I would estimate the demand today at 18.5 million barrels a day. And it will not go over the 20 anytime soon. Maybe in 20 years, with a larger population and way more efficient cars.

    But depending on progress on plug-ins, electrics, and nat gas vehicles, there is a good chance it will never, ever go up to 20 mill again in the USA.

  6. G.A.Branigan Says:

    It’s about time time GM started to improve the quality of their interiors.Now they need to improve the ecotech 4 and 5 cyl.engines.

  7. dave Says:

    Thats nice start improving the interiors AFTER the cheapo plastic interior in the the new GM flagship…Camaro

  8. G.A.Branigan Says:

    I hope people don’t go back to to buying gas guzzlers because of the big find by BP.

  9. Alex Kovnat Says:

    >Drill, baby drill. The New York Times
    >reports that BP made a MASSIVE discovery
    >in the Gulf of Mexico.

    I wish BP or somebody, would make a massive discovery of lithium, or neodymium and other rare earth metals, as there have been reports that production of hybrid electric vehicles may be limited by shortages of these materials.

  10. pedro Fernandez Says:

    BP is the one that made the deal that got that bomber released from Scotland, BOYCOTT BP AND CITGO GAS. buy only Valero and from your local independent no- brand dealer, thank you for your cooperation. in other news: Cuban dictator Castro designed a car also, it’s built from 10,000 different parts from pre-1959 American cars.

  11. G.A.Branigan Says:

    As John reported the other day,most of those rare earth metals are in China……..not good for us.

  12. John V Says:

    I wonder if any US based company will be able to profitably manufacture cars (not just small) in large numbers in the long run. With the Chinese and Indians on the horizon, we are either going to need some serious import taxes or our manufacturers are going to need to get so good at what they do that price will not be an issue.
    GM, Ford, and Chrysler will need to create a real identity for their brands and back it up with great products that meet or exceed expectations – just like that marketing discussion in Autoline After Hours last week. When I ask myself, “What do GM, Ford, and Chrysler have or do so well that I want to pay as much as or more than I would for a competitor?” For myself, I have only a few answers: Corvette (actually cheaper than most contenders), Cadillac CTS, Challenger SRT-8, Charger SRT-8, Mustang, full size trucks/SUVs, and Chrysler minivans. The minivans are due to utility (saved by Stow ‘n Go), without it, the competition (Honda Odyssey) is better. Otherwise price would decide. The “Detroit 3″ all have a lot more to do.

  13. Nick Stevens Says:

    “Cuban dictator Castro designed a car also, it’s built from 10,000 different parts from pre-1959 American cars.”

    Are all car imports banned in Cuba? Even from other nations than the USA?

    Castro himself, however, was not driven in one of the above recycled 59s. I’ve seen a video where that retard Oliver Stone and other Holywood clueless Castro Fans went to Cuba, and Castro drove them around in a Mercedes S-class stretch limo, the pre-1991 model. The glass was a couple inches thick, as one would expect, Fidel was not very confident of the love of his people… LOL.

  14. Nick Stevens Says:

    “G.A.Branigan Says:
    September 3rd, 2009 at 1:43 pm

    I hope people don’t go back to to buying gas guzzlers because of the big find by BP”

    It may be a good size find, but even in the best case, 6 billion barrels, it would produce much less than 1 million barrels a day and then would end production in a couple decades. Also, BP is not an American but a multinational co, and anyway all major oil cos sell to the world, not just the US, market.

    And compared to world reserves, 1.2-1.5 trillion proven reserves and as much as 7 trillion proven and probable reserves and unconventional oils, 6 billion is laughably small.

  15. Nick Stevens Says:

    PS if GM interiors are bad, wait till you see some Chrysler interiors I saw as recently as 2 yeara ago. The Avenger interior was simply awful. God-awful. And its ergonomics terrible, and due to the weird exterior design visibility was zero in some directions.

  16. Pedro Fernandez Says:

    Nick, the problem with Castro is that they don’t pay for what they buy, so no one sells them anything. They’ve yipped just about anyone, only govt. big shots and tourists get to drive anything built in the last 10 years, the regulat population has to make do with pre-59 American metal which they manage to keep rolling year after year with home made parts salvaged from other vehicles, Cuban mechanics are very ingenious.

  17. Nick Stevens Says:

    Pedro, I’m sure they are very ingenious, I’ve seen them convert an old 50s GM wagon into a boat with which they tried to escape (possibly succesfully)

  18. Pedro Fernandez Says:

    I just went back and read Automobile Mag’s review of the ’06 Chrysler Sebring, which they called a “nice car”. Nice compared to what? a Chinese rickshaw, a Yugo, a Pinto? That’s why most folks don’t believe these car mags anymore, with all due respect to Mr Davis.

  19. Nick Stevens Says:

    Clarkson, the host of Top Gear, called the sebring specifically the worst car in the world. and in a world that includes the Romanian $5k logan car, that is no small damnation.

  20. dcars Says:

    Opel the saga continues, wouldn’t it be great if GM kept it and moved the head quarters and most of the manufacturing to a friendlier country like Belgium! Thanks for the updates on this soap opera.

  21. G.A.Branigan Says:

    I would say that the big 3 have a ton of world competition to build up to.That is a tall order.They have to make their products to compete dollar for dollar in all aspects.If they don’t achieve this soon,all three will be a memory.

    Ford has done good so far as improving quality.They have some excellent vehicles in europe that they need to bring in….yesterday.

    Gm…….well,GM is a joke anyway you look at them.I really believe they will go under for the count.The Buick/Pontiac thing is totally wrong thinking and it will come bite them in the ass……and soon.

    I’m hoping that Fiat really can turn around Chrysler.If not,and they don’t really have that much time,they will be history.Our car world has changed.Many quality players,which is good for us consumers,bad for detroit.

  22. hermann the german Says:

    Two points geeks 1 Ray Young only said GM could make money on an ebitda basis.Take out the tax and interest payments and the answer is NO. When can I have some of that GM stock, Daddy?

    2 It doesn’t matter if BP finds 60Billion barrels if it costs more to extract it than they can sell it for in the market. It’s going to take technical advances aplenty to make that goo come out.

  23. Nick Stevens Says:

    “# hermann the german Says:
    September 3rd, 2009 at 3:06 pm

    2 It doesn’t matter if BP finds 60Billion barrels if it costs more to extract it than they can sell it for in the market. It’s going to take technical advances aplenty to make that goo come out.”

    Hermann: You are about 10 years out of date. Deepwater Offshore has made huge strides both on the TECH side AND on the Cost side. BP are no fools, they have been drilling deepwater offshore well before oil went up, back when it was $30 and $40!!! And they can make a handsome profit even at today’s $60-70.

    Their problem, all the cos that drilled deepwater in the Gulf, is that previously they had too many dry holes and too few finds, let alone a big find like this one.

  24. Nick Stevens Says:

    G.A.

    GM’s fall from the mightiest position in the auto industry 40 years ago is utterly inexcusable. Ford succeeded to avoid becoming Washington DC’s b-tch (like GM and Chrysler) only because they were wise enough to hire an OUTSIDER in Mullaly.

    Fiat’s Marchionne seems conscientious, he made all the right moves, even bought as condo in the Detroit area (!) while that clown NArdelli with all his 100s of millions refused to buy any residence when he headed Chrysler (what a cheapskate!!)

    But FIAT (it’s initials, really) took advantage of GM in their alliance a few years ago, cost GM $4 billion just to get rid of it (half of which was penalty)

    So any logical Wash DC “Czar” (an oxymoron really) should not have trusted those guys and never sold Chrysler to them.

  25. Pedro Fernandez Says:

    Nick: in all fairness, Mr Clarkson appears to have a bias against American cars, I enjoy watching Top Gear every week and they’re always putting down American cars without ever mentioning the bad reputation for quality most British cars have always had. Hey don’t need to look too far, our own John Mc. sang the praises of either the Sebring or the Avenger when he tested one of them last year.

  26. Nick Stevens Says:

    Pedro, I agree that Clarkson is biased, both against US cars and greatly in favor of Brit Cars, some of which are even worse POS than some US cars, but he is not 100% wrong on the sebring, where there is smoke, there is fire, and anyway, I heard nobody claiming it’s the best car in the world, so you could take the average and say the car is OK. It is not.

    Reviews I read in US car enthusiast mags, which are not 100% unbiased either, and COnsumer Reports, which is as unbiased as can be, all were not favorable for the Sebring, the Avenger and all these other similar Chryslers and Dodges.

    John M. lives and works too close to the Detroit 3 and also cannot possibly be biased, and the way he presented the Aug 09 Detroit 3 debacle reminds me those who blissfully played tunes on the deck of the Titanic as it was sinking…

  27. Nick Stevens Says:

    When do you get to watch Top Gear in the USA, which channel and time is it on? I only saw it overseas and in the US some years ago (I got only basic cable)

  28. G.A.Branigan Says:

    Top Gear is on BBC America.I get it on Dish.I watched it once and that was enough for me.It was the one hour show on their roadtrip thru Vietnam.I took offense to the anti american remarks those three limeys did all thru the show.I will never watch it again….who needs em?

  29. Pedro Fernandez Says:

    I watch it on directv channel 264. I find it entertaining but I don’t appreciate the constant criticism of American cars, they did however like the CTS, Corvette and the Camaro, I believe. But everything else to them is just crap.

  30. paulstewart Says:

    I don’t know what to do ??? Where’s Thor ??? I’ve lost my train of thought, heck I can’t even think normally. Come back t h or aka larsweenie. Sorry I mispelled the god of blunder’s name He who hath been to China & drives his bimmer all over his small mental world. He who maketh no mistakes come back. Sorry guy’s I just had to. I did at least say “sorry” t or never says that. I know the day was going so well too. Why did I bring it up. It just wouldn’t be a day on autoline with out his presence now would it. Would have been nice ‘eh !

  31. Max Christensen Says:

    I’ve not ever seen Top Gear, and from the discussions in here I don’t think I feel the need. Obviously this Clarkson guy is a moron to call the Chrysler Sebring the worst car in the world. I’ve driven both a Sebring and an Avenger, and they are really pretty nice cars – not the best in the world, but a hell of a long ways from being the worst. And for a car that size to get a consistent 31 mpg is pretty damn good and much better than many imports.

    @ Nick

    Not sure where you are from, but you obviously are not the sharpest pencil in the box either. For one thing, Consumer Reports is the biggest piece of crap publication out there and isn’t even fit to use in the bottom of a bird cage. And for you to say the Avenger has a “weird exterior design” – you are the first person I’ve ever heard say that! The Avenger has gotten kicked around alot in the media, but even the rags doing the kicking have commented favorably about the exterior styling. In some circles they are referred to as the “mini Charger” due to the beautiful lines and nice styling.

  32. Pedro Fernandez Says:

    In case you guys are not aware of this fact: both Sebring/Avenger are built from an extended Caliber platform. Right there it puts it at a disadvantage when you compare it to its competitors. I can think of the Cimarron and Seville both derived from smaller, cheaper platforms which gave them a big disadvantage. Sincerely the Chryslers are not that bad, but when you compare them to the competition, they fall short.

  33. Pedro Fernandez Says:

    Ps. With all the crappy Chinese, Russian and even some European cars around, to call the Sebring the “worst” car made is just BS.

  34. Kit Gerhart Says:

    Avenger and Sebring aren’t that bad. They certainly aren’t best-in-class, but they are still OK cars. Even IF they are WORST IN CLASS, they are still OK cars. What that tells us is that things have come a long way over the past 20 or 30 years. There are no really bad cars any more, at least not in the US market.

    Moving on to Consumer Reports and car buff magazines’ MOST HATED cars, a couple friends of mine have an Aveo and a Caliber. My friends are happy with their cars, regardless of what the magazines say. The Caliber gets decent gas mileage and being a hatchback makes it convenient to carry things. The Aveo was cheap, and serves its owner’s purposes as a commuter car just fine. Both cars have been reliable.

  35. G.A.Branigan Says:

    My nephew has a Caliber and it has not given him one single problem,and gets excellent mpg.True the interior is on the cheap side,but overall not bad for the money.Our family tries to keep our car buys american.Flame away….

  36. Wolfman Says:

    Kudos to G.A.Branigan he gets it! Buying the Caliber was truly a patriotic purchase. If only more Americans would realize why the country is in the shape were in and how it affects tham in the long run. There’s more involved to buying a car than the latest bells and whistles. Support the middle class buy an American car!

  37. Don B. Says:

    If GM/Opel is not going to sell to Penski, what is going to happen to the Opel line in the states? The more GM claims they are a Global Company the more they do to disprove it.
    Maybe Opel will be back at Buick dealers like in the late ’60′s Buick, Opel, GMC.

  38. Kit Gerhart Says:

    Huh? There is no Opel line in the states, except for the not-too-serious attempt to sell Astra as a Saturn.

  39. Nick Stevens Says:

    Obviously the best policy is to utterly ignore the vulgar and uninformed and utterly unprovoked attacks on me by this “Max Christensen” character. I do not remember calling HIM an idiot, even though it is obvious that he is a USDA-choice, 100% pure specimen. And he has ZERO clue on anything.

    I would advice him to watch TOP GEAR himself and form his own opinion, instead of relying on a few sentences in these forums, that cannot possibly explain its HUGE success (Clarkson must be a multi-millionaire by now), but given his obvious mental limitations, I’d not)

    Top Gear has NOT become this huge success BECAUSE it happens to make fun of US made cars once in a while. Their success is mostly due to the imaginative and unconventional “comparison tests” they come up with, and of course the personalities and their interactions.

    I enjoy reading everything about the Auto iundustry AND the autos themselves, the whole range, FROM the Enthusiast mags that do mostly performance tests of new cars,

    and “long term” tests that are anything but, essentially driving a brand new car for a year and putting $40k on it (andf most cars will do this with no problems; putting 200k miles over 15 years is a proper Long term test, but who can wait?)

    TO consumer Reports, which is 100% UNbiased AND Uncompromised, since it buys its OWN cars with its OWN money, and NEVER accepts ads.

    (David E Davies admitted last night on Autoline After hours, in response to Pedro’s q, that he always had pressure not from the automakers but from his own AD managers in his mags, to write glowing reviews.

  40. Nick Stevens Says:

    “G.A.Branigan Says:
    September 3rd, 2009 at 5:35 pm

    My nephew has a Caliber and it has not given him one single problem,and gets excellent mpg.True the interior is on the cheap side,but overall not bad for the money.Our family tries to keep our car buys american.Flame away”

    Having bought both new cars (incl. a US car and A Honda) and used cars (a VW, a Honda and a German Luxury-performance car), I really think that, no matter what your budget is, it pays to buy used.

    Depreciation is just too much, and the more pricey the car is, the more it depreciates, one can find Mercedes S-class V12s that sold for $135k a decade ago for a mere $15k or less today! And not that high miles either.

    The market is generally efficient, you get what you pay for. WHen I bought a new US car almost 25 years ago, I paid $2k less than if I bought a new Accord or Civic of corresponding size and HP. In retrospect, I should have bought that Accord or Civic, and not only I would have had a far more satisfying experience owning the car, it would also make econ sense at the end.

    I am for free markets and free trade. If UAW wants me to buy American, I would agree, Only if these UAW members also buy american on their non-auto purchases (50 inch plasma screens and sneakers and all kinds of other stuff!)

  41. Jim Sachetti Says:

    Is Buick fast becoming another failed “chick division” like Mecury was for decades at Ford? They sure hate the best enthusiast cars.

    “Susan Docherty, General Manager of Buick and GMC, recently made some time available for a General Motors Fastlane blog webchat to discuss the futures of her brands. .. Chat participants lobbed questions about what’s coming, and the answers reveal a hopeful, and hopefully well-executed, future.

    Firstly, as great a car as it is, the Pontiac G8 is not going to slide over to Buick as a Grand National or something else. ..”

  42. Jim Sachetti Says:

    “G.A.Branigan Says:
    September 3rd, 2009 at 5:35 pm

    My nephew has a Caliber and it has not given him one single problem,and gets excellent mpg..”

    The Caliber is a fairly new model, there are no Calibers older than 2-3 years, so we still do not know how durable and reliable they will prove.

    Also, despite its cute exterior styling, it is basically an econobox, for which “excellent MPG” should be close to 40 Highway and 32 city. I doubt the Caliber achieves these, even in the summer. It is quite high (about 60 inches) and this should produce a lot of drag at 75-85 mph.

  43. dcars Says:

    Is the current line of Chrysler’s really US cars? Aren’t all these cars German approved, engineered and designed? It has been noted that the quality and reliability of the Chrysler brand went down after the Germans took complete control.

  44. Nick Stevens Says:

    Dcars:

    You are partly right, but the changes would improve, not worsen, Chrysler quality and even reliability (even tho Mercedes are not as reliable as they should be, they are better than chryslers).

    Some Chrysler vehicles were very similar to M-B vehicles, for example the pacifica and the R class. And if the 300 got the M-B engine and suspension, it would be a huge bargain at $10-20k less than the E class.

  45. Kit Gerhart Says:

    Nick Stevens wrote:
    “I am for free markets and free trade. If UAW wants me to buy American, I would agree, Only if these UAW members also buy american on their non-auto purchases (50 inch plasma screens and sneakers and all kinds of other stuff!”

    The trouble is, cars are about the only manufactured product where you even have a CHOICE of buying American. Are there any 50 inch TV’s or sneakers even made in America? I don’t think so, at least not in the U.S. of America.