Mitsubishi Opts Out of Detroit Auto Show

Mitsubishi Opts Out of Detroit Auto Show

By Brendan Moore


Mitsubishi says its going to take a pass on the Detroit Auto Show this year, joining Land Rover, Suzuki, Ferrari, Porsche and Rolls-Royce as auto manufacturers that won’t have a stand in Detroit this year. Mitsubishi cited the company’s push to save money wherever possible in the current economy. The Detroit Auto Show opens in early January.

Exhibition space is always at a premium in Detroit during the show, which is the largest in the world, and even with the aforementioned manufacturers absent, the show organizers expect that there won’t be enough space available to fill exhibitors’ requests.

Still, it is a troubling sign. The Los Angeles Auto Show, another one of the major shows in the world, and going on as I type this, was hit by several cancellations of new model launches and concept reveals by manufacturers this year. The culprit was the same; that is, the economy. Just as importantly, several senior auto executives canceled their travel plans for Los Angeles, which certainly didn’t help the show’s intent to maintain the perception that their event is an absolute requirement for any car company that wants to see and be seen in the automotive media.

The recent SEMA show also experienced some defections among previously reliable exhibitors, and again, financial concerns were the reason.

None of these shows are in danger of losing their positions on top of the international auto show circuit, but the current cutbacks are a sobering reminder of just how tight budgets are in the auto industry these days.

It should be noted that non-attendance at any show this year does not preclude attendance by a manufacturer next year, should they decide that it makes better economic sense 12 months from now. Of course, absence this year could translate into continued absences in subsequent years if the manufacturer decides that there just isn’t enough payoff for the money spent. This is exactly what has happened with Porsche. They stopped attending the Detroit Auto Show after 2006 (a boom year) and have not returned yet. It is precisely this type of scenario that worries auto show executives.

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The Game Is GM’s Future, What’s the Ante?

The Game Is GM’s Future, What’s the Ante?

By Brendan Moore


I have arrived at the conclusion that GM will probably not survive the next year in its current form; and in fact, may not survive until the end of 2008.

Bankruptcy has now become a practical option.

Previous to this new conclusion, I was on board with the whole premise that GM could not declare bankruptcy because somewhere between 70% to 90% of their customers would disappear, and so, then, what would be the point? They would win the battle of reducing costs, reducing their dealer population, reducing their healthcare and pension liabilities, etc. and that’s all great, but they would lose the war because somewhere around 80% of their sales volume would go away. They would then be small, weak, and unable to effectively compete.

But, if GM goes under, then they lose 100% of their business. That scenario considerably changes the calculus of how appealing a bankruptcy might be.

You might now say, but, what about the bailout? Ahh, the bailout. I think there will be some money coming to GM, but given the current state of the economy, and the current political climate, I don’t think there will be enough money (and it will take a tremendous amount) for GM to stay its current size. Don’t get me wrong, I think it’s entirely possible that GM could stay the same size it is AND pull out of its tailspin if it could get enough money to get to the middle of 2010. That’s when they start realizing savings from cost-cutting measures negotiated with the union. What I’m saying is that I don’t think there is going to be enough money made available for them to do that. I think it will be a much smaller amount than they really need, that they’ll take it, and try to make do, and end up going under anyway.

Whereas if they go BK (declare bankruptcy), reduce their costs by anywhere from 30% to 50% (don’t let anyone tell you they knew the exact percentage at this moment), lose 80% of their business, and get the same amount of money loaned to them from the federal government, they can be somebody again. I think the odds are very good that GM will be a great company again, an auto manufacturer that is respected, well-run, and finally and most importantly, is profitable.

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Like US, Europe Sees Big Sales Drop In October

Yes, things are tough all over…

By Brendan Moore


All the Sturm und Drang in the US market has monopolized the media coverage of the auto industry in the US, but Europe is having its own problems in terms of sales declines.

New-car registrations across Europe showed the second-biggest fall of the year last month in October. They were down 14.5 percent last month compared with October 2007, as the same things crushing sales in America, scarcity of credit and the overall economic malaise, put consumers off from all large financial commitments. Now, that’s nowhere close to the 32% decline the US market saw in October, but its still a nasty drop in sales volume. Registrations across Europe totaled 1,134,031 units in October.

“New car registrations have now decreased for six consecutive months, most notably since the summer,” said the ACEA, the association that represents carmakers in Europe.

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The Cost of GM’s Death

The Cost of GM’s Death

We are posting this editorial from Automotive News, an auto industry publication, with their full consent and permission. This content is protected by the full force of copyright law and Automotive News retains all rights to the reproduction of their content.

As the editorial speaks for itself, we will offer no commentary on it.



The cost of GM’s death

Automotive News | November 14, 2008 – 12:28 pm EST

If Congress thinks a bailout of General Motors is expensive, it should consider the cost of a GM failure.

Let’s be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success.

No, even if GM could get debtor-in-possession financing to keep the lights on (which it can’t), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.

GM’s 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM’s 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.

The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.

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If Chrysler Is Sold Off In Pieces

If Chrysler Is Sold Off In Pieces

Foreign buyers may be the future owners of Chrysler’s brands

By Brendan Moore


Unless some bailout for the Detroit Three can be fashioned out of whole cloth soon, it looks like Chrysler may be sold piecemeal. Cerberus, the owner of Chrysler LLC, would much prefer to sell Chrysler whole, but with GM bowing out as a possible buyer because they can’t get federal aid to fund the deal, that doesn’t look very likely at this point.

And Cerberus wants to wake up from the bad dream that has been Chrysler these last six months – they want Chrysler to go away and get back to making money on something.

How might a break-up of Chrysler and subsequent sell-off of assets shake out?

Renault-Nissan is interested in the Dodge truck line. As usual, Mahindra and Mahindra of India is also mentioned as a possible buyer as well.

A Chinese company is rumored to be interested in the minivan line, but VW might be a safer bet as a buyer.

Hyundai is interested in the crown jewel of the Chrysler family, the Jeep line, and may also be interested in some other assets (i.e., production facilities) outside of what it takes to make Jeeps.

There are no interested buyers known at this time for the car line, although it’s quite possible a buyer may raise their hand for one or two of the car models.

Although Chrysler is privately owned and therefore does not report full financials, it is believed that they will run out of money before mid-year 2009 at their current rates of sales and operating costs. Chrysler’s sales have dropped 26% in 2008, and they now have only an 11% market share in the US. Their sales numbers continue to deteriorate each successive month. Since the forecast for all auto sales in 2009 is even worse than 2008, the chances that Chrysler’s situation will improve is extremely low.

Each day that passes, therefore, increases the chance that Chrysler will pull the trigger on a sale, no matter if the sale is for all of Chrysler or a single large piece. Chrysler has taken the required steps to be able to sell their lines individually, and I cannot see them delaying the inevitable for very much longer.

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