Episode 266 – Europe Upset At GM, Toyota Posts Profit, Tata May Outsource Nano

November 6th, 2009 at 12:00pm

Runtime 6:56

Germany is in an uproar over GM’s decision to keep Opel, however Spain and the UK are more optimistic. Yesterday Toyota posted a surprise profit of $240 million for the quarter. Tata may allow local automakers to assemble the Nano and sell them under their own brands. All that and more, plus a preview of this week’s Autoline Detroit where John talks to three analysts about Chrysler’s 5-year plan and whether the company can really turn around.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Europe is in an uproar over GM keeping Opel. Toyota posts a profit. And Tata may let other car companies build the Nano.

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

This is Autoline Daily for Friday, November 6, 2009. And now, the news.

Germany is in an uproar over GM’s decision to keep Opel. Union leaders are promising trouble. German chancellor Angela Merkel called US President Barack Obama to complain, according to Reuters, but he told her he had nothing to do with the decision. The AFP says Russian Prime Minister Vladimir Putin called the decision disdainful. And now, Carl Peter-Forster, the head of Opel has quit in disgust over GM’s decision. However, unions in Spain are said to be optimistic about the deal, and unions in the UK are said to be delighted.

Bloomberg reports that it was GM’s new Wall Street board members who played hardball on the deal. It points out three of those board members, Steve Girsky, David Bonderman, and Daniel Akerson, all have private equity experience, and really know how to do deals. They felt Magna was paying too little to buy Opel, and that a resurgent GM could restructure Opel on its own.

Yesterday Toyota posted a surprise profit for the quarter. According to the AP, the company made over $240 million. Because of the gain Toyota cut its predicted losses for the year in half from $5 billion to $2.2 billion. Government stimulus programs and strong demand in growing markets like China helped improve results.

The Obama Administration is negotiating with South Korea to remove tariffs on U.S. automakers. According to Bloomberg, the top negotiator in the deal says South Korea should level the playing field since there are no restrictions for Korean automakers in the U.S. The two countries are working on a free trade agreement but it’s getting held up by South Korea’s reluctance to agree to lift barriers to American automakers. Last year U.S. automakers sold fewer than 7,000 vehicles in South Korea while Hyundai and Kia sold over 500,000 Korean-made vehicles in the U.S.

Reuters reports that Tata may allow local automakers to assemble the Nano and sell them under their own brands. The company’s Vice Chairman, Ravi Kant, said these micro manufacturers can even name the car whatever they want. Since the Nano launched in July, Tata has only sold about 7,500 units. It’s waiting to complete a dedicated assembly plant which should have an annual capacity of 250,000 units. Interesting trivia tidbit here. Tata’s chairman Ratan Tata is also on Fiat’s board of directors.

Suzuki just announced pricing on its brand-new Kizashi sedan and it claims the bargain-basement model starts at “less than $19,000.” It comes standard with power windows, locks and mirrors, a nine-speaker sound system and all the safety features you’d expect, but not so fast. Like other automakers the company is trying to pull a fast one. It’s not including the destination and shipping charge in the MSRP, which adds another $735 onto the price tag! For me, automakers that do not include the destination charge when they announce the price of a vehicle are being deceptive. It borders on fraud. It’s a cheap trick to try and make it look like a car costs less than it really does.

Coming up next, I ask three analysts to analyze Chrysler’s five-year plan and tell me whether the company can really turn around.

On this week’s Autoline Detroit I sit down with three analysts, Erich Merkle of Autoconomy, Aaron Bragman of IHS Global Insight, and Michael Robinet of CSM Worldwide to talk about Chrysler’s five-year plan. In the following clip they call into question Chrysler’s projections of the kind of market share it expects to get.

You can find that entire interview later today on our website at AutolineDetroit.tv. If you really want to learn a lot about Chrysler’s five-year plan, there’s a lot of info in that show.

Ok, it’s the end of the week and that means it’s time to announce the winner of our trivia contest. We asked you to tell us what Saab stands for. As most of you correctly responded it’s Swedish Aircraft AB or Svenska Aeroplan AB. And today’s lucky winner is Ron Epple of Owensboro, Kentucky. Congratulations Ron, you’ve just won a Honda baseball hat.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you next week.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog, The Auto Channel, vLane, WardsAuto.com and WWJ Newsradio 950

37 Comments to “Episode 266 – Europe Upset At GM, Toyota Posts Profit, Tata May Outsource Nano”

  1. Pedro Fernandez Says:

    What ever happened to globalization of the auto industry? It appears more everyday like it’s us against them. They should allow buyers to pick up their cars at either the assembly plant or the point of entry to avoid those transportation charges. I know MB had similar plan where your would travel to Germany to take delivery of your Benz.

  2. Jim Sachetti Says:

    AAH last night sure did not give the thumbs up to the Fiat-Chrysler deal. DeLorenzo sure blasted the thing, and especially Sergio’s marathon presentation.. twice as long than the average Fidel Castro speech!

  3. Jim Sachetti Says:

    “They should allow buyers to pick up their cars at either the assembly plant or the point of entry to avoid those transportation charges.”

    Why not avoid the dealer altogether,and allow those who want to or/ and live nearby can buy the cars at almost wholesale from the Makers!

  4. Tony Gray Says:

    Does Ron Epple have to pay the destination charge for that Honda Baseball Cap?

    Seriously, I like it when John gets feisty. His blast over the Suzuki pricing policy is spot on. Same kind of crap with cell phones, cable bills etc.

    Pedro, BMW has the same factory delivery option too. I may consider it next time, but I feel kinda obligated to go with a domestic car this time around…stinking patriotic voice in my head and all.

  5. Pedro Fernandez Says:

    Jim: I was waiting for your reaction to the Sergio Castro speech yesterday, so I figured you were still analyzing it, as far as eliminating dealers and just dealing directly with the manufacturer, I brought that up one time here and they almost ripped me a new one for even suggesting that.

  6. Salvador G. Says:

    What I would like to know is when this Opel story is going to die already??

    And I don’t think what Suzuki is doing is so bad, consider all other companies that have hidden charges on their product and services… sometimes I look at my cable bill and it went from 29.99 to 40 plus in a couple of months and I’m not mentioning, HMO’s, auto insurance companies, phone companies, etc, etc, etc…
    -In fact one time payment of 735 dollars sounds kind of cheap.


  7. Jim Sachetti Says:

    “# Pedro Fernandez Says:
    November 6th, 2009 at 12:33 pm

    Jim: I was waiting for your reaction to the Sergio Castro (took me a few seconds to get this one! LOL) speech yesterday, so I figured you were still analyzing it,”

    Pedro, I was too busy to have time to see or listen to the whole speech, I only read a summary of its proposals.

    ” as far as eliminating dealers and just dealing directly with the manufacturer, I brought that up one time here and they almost ripped me a new one for even suggesting that.”

    I had the same experience when I brought it up before, probably here or at another auto site.

  8. Jim Sachetti Says:

    “Salvador G. Says:
    November 6th, 2009 at 12:47 pm

    What I would like to know is when this Opel story is going to die already??”

    I think it is over, unless there are serious legal challenges to GM’s decision to keep Opel (I agree with that).

    “And I don’t think what Suzuki is doing is so bad, consider all other companies that have hidden charges on their product and services…”

    They should not.

    ” sometimes I look at my cable bill and it went from 29.99 to 40 plus in a couple of months ”

    My ATT Phone bills are the worst, and we barely use that stupid phone, so we pay $37 each month for nothing. all kinds of fees etc.

    But my experience with Comcast my cable provider has been much better. I pay $16 a month and get a basic service that others pay $51 to get (go figure). Moreover, one of our TVs is a 1984 (!) 19-in Mitsu-MGA, and when it acted up (no sound, and then static),Comcast sent a crew twice and they did not fix it, did not know how, but instead made it worse, and told me it is the TV’s fault. A month later the bill arrives and it has a $25 labor charge for the first visit. Well, after I talked to a rep on the phone, they deleted the $25, they even deleted the measly $16 for the month I had poor reception, and they sent a crew that knew what they were doing and they fixed everything in 2 minutes, and as I suspected there was nothing wrong with the old TV!

  9. tito Says:

    i think its funny that some european, groups, gvt. etc. are upset cuz the owner, in this case “GM” decided to keep Opel? lol. that makes laugh, completely, isnt it GM, who has final say so on what they build, sell, or do with their own company? cracks me up. Those europeans, they are funny folk. :)

  10. Pedro Fernandez Says:

    Europe is mostly socialist and they want to impose their socialist ways on us and now with an ally on their side they’re showing us who they really are. ps. unemployment up again, and they expect to sell so many cars at their inflated prices? Balooney

  11. Nick Stevens Says:

    It is rumored that Sergio Marchionne Castro will appoint his brother Raoul to be the permanent boss of the Fiat-Chrysler North American and Carribean operations

  12. Salvador G. Says:

    Ok- Pedro what so Socialist about Europe???…,
    -You Think Ferrari would exist in a socialist Europe, Mercedez Benz, Bugatti, VW (who owns like 20 other companies), ETC, ETC…

    -Some countries still have monarchies, Marijuana and prostitution in some countries is allow, And freedom of speech and religion.

    -The former president of the FIA had dungeon orgy and the only thing that people were mad about was whether it was a nazi dungeon orgy, and so did the prime-minister of Italy.

    -And because some countries in Europe have universal healthcare and others treat private HMO’s as public-utility companies– You called Europeans “Socialist” DAMN MAN

  13. Pedro Fernandez Says:

    Too much government interference in how businesses are run, socialized medicine, govt meddling and partnering with businesses like it’s happening here with GM and Chrysler, ex France invested in Renault and many other examples of this. Look at the German prime minister getting involved in the Opel/ GM negotiations, govt needs to keep out of PRIVATE enterprises, not be a partner. Socialism and Communist dictatorships are not the same thing. China , Cuba, Vietnam are communist Denmark and a bunch of European countries ARE SOCIALIST or have many socialist institutions

  14. Kit Gerhart Says:

    …and some socialist institutions are good. The “socialist” health care systems in Europe produce better results by nearly every measure than the American non-system, and the Europeans spend far less per capita on health care than we do.

    OK, sorry about the off-topic post.

  15. Alex Kajdi Says:

    In response to Kit Gerhart:

    The European’s are healthier than American’s because their governments strickly regulate food producers. No harmful hormones and pesticide’s in their foods. Also, If I was able to take a nap in the middle of the day I would be less stressed and able to purchase non-tained food products maybe more Americans would be less prone to cancer and heart attacks!

    Big Business and Corporate Greed is what is making us sicker!!!

  16. Chuck Grenci Says:

    So Germany is upset about the Opel deal. I didn’t see them ‘take the high ground’ when they got exclusion from the CAFE requirements. With all this and the other about free trade; seems free only works one-way (when it is to the benefit of the foreign entitiy).

  17. Jim Says:

    Is it me or does the new Suzuki sorta look like a massaged VW Jetta?

  18. Dr. Michael Merenstein Says:

    I have first hand experience as I bought my daughter a Suzuki SX4 last year. The website did not show a shipping charge on the Monroney. And when I arrived at the dealer and looked at the car the MSRP was in LARGE PRINT at the top of the Monroney, shipping and the final price were in small print at the bottom of the sticker. Also the sales manager wasn’t willing to deal much saying it’s not like buying an American car. I almost walked out!

  19. Salvador G. Says:

    - Pedro, we can call that A-FORM of Protectionism… countries like France and Germany (or for that matter the rest of Europe) don’t want hundreds of thousands of THEIR National workers go out of work.

    People in Germany want to protect all those German jobs at Opel, which is the reason the German goverment interfere and because the goverment interfere countries like Spain and England are mad at the German goverment for trying to protect only German jobs and didn’t care if Magna got rid off of all other European plans of Opel. And that’s why I say -It’s a Form of Protectionism.

    As for Socialism:

    1. political system of communal ownership: a political theory or system in which the means of production and distribution are controlled by the people and operated according to equity and fairness rather than market principles

    2. movement based on socialism: a political movement based on principles of socialism, typically advocating an end to private property and to the exploitation of workers

  20. Pedro Fernandez Says:

    Then the problem is that while Japan, Korea, and even Europe protect their industries from foreign goods, we here in the US do not, our doors are wide open for anyone to sell their stuff, even dangerous Chinese products, and if anybody complains, then they scream out PROTECTIONISM, which is exactly what they practice over there. today John reported about the negotiations between US and Korea so they open their doors to American vehicles, yet Hyundai and Kia have been selling here with no restrictions or controls since the beginning when they were NOT assembled here.

  21. Salvador G. Says:

    -But Pedro the USA does practice a Form of Protectionism… This country protects WallStreet, American Banks, Wallmart, Industrial Farm companies and other monopolies like companies like G.E.

    The difference on American protectionism and foreign protectionism is that here the goverment protects CEO’s (which is why they can export American Jobs to freedom loving countries like China) and in Europe they protect their national workers.

  22. Andrew Charles Says:

    Merkle and the German government has no grounds for complaint. GM may cite improving business conditions and better than expected performance, but the No.1 reason they dropped the Magna deal is that the EU told them Germany could not force them to sell to Magna as a condition for aid (as they were clearly doing) and that they should reconsider if that was the case. Merkle is mad not because GM has been capricious, but because their decision embarrasses the German government in the wider European community. Obama should have ringing Merle to complain about the way the German Government was behaving (preferring Canadian/Russian owners over American for political reasons), but apparently he was either too pre-occupied to notice or was too much of a wuss.

  23. Andrew Charles Says:

    In full SAAB stands for Svenska Aeroplan Aktiebolaget. The latter is usually translated as “Corporation”, but that’s a rather loose description of what it is, not what it means. Aktie is the standard Scandinavian term for a “share” of stock, the implication being that the liability of the members of an “Aktie”-bolaget is limited to full payment for their shares. Bolag/bolaget is often translated as “company” but is more precisely “asset partnership” (‘bo’—property, fortune, assets; + ‘lag’—group of people working together, a team or league—the original sense was ‘laying’ i.e. ‘being in bed together’, ‘marriage’, and by extension ‘partnership’). “Bolag” is thus a modern Swedish development of the Norse “felag” (monetary partnership, from which we get “fellow”, a member of a “felag”), in which the members contribute “assets” rather than “fees” (money).

  24. Nick Stevens Says:

    Protectionism is a recipe for disaster, and those who use it seem to have learned nothing or know nothing of recent Econ History, the last time most nations went for protectionism in their 1930s panic, and with good intentions, but econ illiterate. They tried to protect their own workers, but econ theory proved right, their clueless actions not only exacerbated and prolonged the great Depression, they may well have caused WW II.

    Socialism and Europe: To see the extent of the blindness, stupidity and historical illiteracy of the EuroParliament, you only need to see a year or two ago, when a declaration was voted on, to condemn the crimes of both the nazis, the fascists and the communists in the 20th century. Everybody was fine condemning the first two, but very few agreed to also condemn the crimes of the commies! The Eastern European nations, whose populations suffered A lot under Sovier rule, were very bitter about this.

    Some clueless Western European nations’ entire delegations, from the extreme left to the so-called “right wing” parties they had, voted unanimously (!!) to NOT include the crimes of the Soviets!

    Now these are the people in the Western Democracies that Lenin famously referred to as “Useful idiots”. Useful to his criminal regime!

  25. Jim Sachetti Says:

    I still have not seen the full 335 slide presentation of the Sergio Castro five-yearplan, but I am just finishing listening to the video of this weekend’s “Autoline Detroit”, where both John and his guests are very, very skeptical and raise many valid doubts about it. It will be easy for Chrysler to be better than past Chryslers, but this is irrelevant, as what it needs is to compete against Hyundai and Kia, (as well as Ford and GM) who are far better than that.

  26. Kit Gerhart Says:

    Maybe Chrysler needs to NOT compete with Hyundai/Kia. They how have reasonably good cars in what has become a “niche” market, biggish rear drive cars. A redesign is forthcoming which should keep Charger/300 going a few more years. Also, they have the Jeep Wrangler which has no direct competition. Fiat can provide some good, small diesels to compete with VW. Even the mediocre Caliber could develop a following with a diesel similar to what VW is putting in Jettas. Before you laugh too much about the Caliber, you should actually drive one. If you get past the ugliness, it’s not that bad. I have two friends who have them, and like them. I’ve driven them, and they drive fine, and the seats are quite comfortable for me. The interior is crude, but functional, and the hatchback body is a huge advantage over most of the competition. Put a good 40-50 mpg diesel in in, and you have a good “niche” car that should do well when fuel prices go up substantially, which they inevitably will.

  27. Nick Stevens Says:

    “Kit Gerhart Says:
    November 7th, 2009 at 9:35 pm

    Maybe Chrysler needs to NOT compete with Hyundai/Kia.”

    Yes it does. It absolutely does. And it is immaterial if it does or not, KIA AND HUYNDAI are already competing with every one of the detroit 3 and eating their lunch. And they offer a TON of different designs, so they even cover most “niches” for low-volume vehicles as well.

    It is not realistic to believe, even for a minute, that any company in the very competitive North American market, where prices are MUCH lower than in Europe, for the same or even larger car or truck,

    “They how have reasonably good cars”

    They most certainly do NOT! “Now”??

    ” in what has become a “niche” market, biggish rear drive cars.”

    That is a tiny fraction of all Chrysler sales, aqnd it will be even tinier when Sergio Castro-Marchionne is done with them. he will be far worse than Daimler, and when he is done, Chrysler will be utterly worthless.

    What amazes me is that ANYBODY gave Fiat the time of day, let alone gift it Chrysler, after Fiat’s god-awful behavior in its GM alliance, which cost GM $4 BILLION.

  28. Nick Stevens Says:

    It is not realistic to believe, even for a minute, that any company in the very competitive North American market, where prices are MUCH lower than in Europe, for the same or even larger car or truck, (forgot to finish the sentence above),

    will be protected from competition.

  29. Jim Sachetti Says:

    Re the Honda Crosstour, I think we were wrong to say it competes with the BMW X6 (or it is the poor man’s X6). Actually, it competes and looks much more like the 5 GT 5-door hatch, which, like the Crosstour, has ample room in the back seat, while the X6 does not.

  30. Pedro Fernandez Says:

    This Sergio dude spoke like if Fiat/Chrysler has no competition here, for goodness’ sake even stalwarts Honda and Toyota are getting grief from Kia/Hyundai, by undercutting their price and providing near quality, besides the Chrysler quality has a looong way to go to catch up to the leading carmakers, just today there as a report on the most polluting new vehicles and Chrysler had 4 or them in the worst 10 list.

  31. G.A.Branigan Says:

    Sergio Macaroni has done some good for me at any rate:I will finally get my diesel wrangler JK next year.They will sell a ton of those too.They are also bringing over the diesel 4×4 pickup,the “Massif”.That again will fill a huge void in the american market.I choose to be optimistic.The american auto makers are going to do better building,ie:quality vs price vs foreign makers.I for one am proud to own several american vehicles.

  32. Pedro Fernandez Says:

    G A: have you taken the Focus on a long trip? I gotta rent a car for a 600mile trip coming up and I can choose between a Focus and a Cobalt.

  33. G.A.Branigan Says:

    G’mornin’ Pedro.We have taken the focus on a 400+mile trip earlier this year and it was very comfortable for the two of us.The trip was from our house to the coast,then on up to Bandon Or.It is all twisty turny every bit of the way with speeds down to 20 mph thru parts of the Smith River Canyon,and the PCH is all curves etc.My back did fine the whole way,and for me that was important due to past injuries.The mpg was 35+.We do much better in mpg when out on I-5.We have the PZEV engine and it has plenty of power IMHO.I don’t know a thing about the Cobalt.Hope this helps.We have the SEL so the trim level is the highest for the Focus.

  34. Pedro Fernandez Says:

    Thanks of the info G A, I can now feel sure to take the Focus, I was going to get a Fusion but it had a 6 cyl. and I dont need the HP I do need the MPG though. Although it is gonna be all interstate at 65 no hills, no curves, just flat Florida terrain.

  35. Pedro Fernandez Says:

    meant to say thanks FOR the info

  36. HyundaiSmoke Says:

    Pedro, are you crazy man? Hyundai, near Toyota quality?

    Have you been living under a rock or havent you noticed that Hyundai has been beating both Honda and Toyota in quality reports for 3-4 years now? KIA still had a little ways to go, but in the last survey KIA was in 9th place out of 34 makes in quality.

    The Only Toyota brand that’s more reliable than Hyundai is Lexus, and that wont last too much longer.

    Top 5 quality list:


    The rest of the top 11

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