By Chris Haak
With word that the US House of Representatives has passed an auto industry rescue bill last night, the next step, of course, is to have the same bill passed by the Senate. As Kevin alluded to at the end of his earlier article, unlike in the House, where a simple majority is all that is required to pass a vote, things are more complicated in the Senate, where the body has a tradition of allowing unlimited debate until 60 senators vote to end that debate. If the debate goes on in perpetuity, that’s called a filibuster, and either the threat of a filibuster – or an actual filibuster – could kill this legislation.
Democrats, along with the Bush White House, were largely behind the passage of the House bill, but the Democrats have a larger majority in the House than they do in the Senate, not to mention the whole filibuster factor. And the senator who’s probably most likely to filibuster is Richard Shelby (R) of Alabama, who has consistently been a vocal critic of the idea of any kind of rescue plan, loan, or bailout for the auto industry. Most recently, he said, “I’m going to oppose the package because I think this is just the down payment on billions and billions to come. These are failed or failing companies.”
Can we take Senator Shelby at his word – that his opposition is purely on ideological grounds – or is there something more than meets the eye here? Let’s take a look.
By Kevin Miller
Last night, the US House of Representatives passed H.R. 7321, Auto Industry Financing and Restructuring Act, the anticipated legislation to provide a loan package to US automakers. Democrats in the house worked with members of the Bush administration to negotiate the auto industry aid. The bill passed by a margin of 237 to 170.
Prior to voting in the House, White House spokeswoman Dana Perino issued a comment in support of the legislation, stating “We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs.”
The same tone was echoed in the House, with House Speaker Nancy Pelosi stating “This legislation is about offering Detroit and America a chance to get back on track,” in a speech made prior to voting. Under the terms of the plan, the government will grant direct bridge loans to automakers, using money that was previously earmarked for promoting more efficient vehicles by funding plant retooling. In return, the government gets an equity stake in the automaker totaling twenty percent of the amount borrowed.
This $14B rescue package, which is less than half of the amount requested by the automakers’ corporate executives during hearings earlier this month, is intended to carry the automakers through the end of March. By that time, the automakers must convincingly restructure their businesses in order to be eligible for more aid under an Obama administration.
By Brendan Moore
The Red Flag, a Chinese car produced for state officials from the 1950’s until the 1970’s, was unveiled yesterday at the Blackhawk Auto Museum in California. The car was obtained by Blackhawk as a result of an unprecedented trade of classic cars between China and the United States. It marks the first time that this type of cultural exchange has occurred between the two countries.
Don Williams, Blackhawk Museum President and owner of the prestigious Blackhawk Collection stated, “This exchange represents cultural and automotive history as a collector car has never left China before, nor has China been able to purchase collector cars from outside the country”.
So, this is kind of a big deal in the collector car community.
The subject of the unveiling, the Red Flag, is a big deal, too. In fact, it’s a massive car. The photos do not do its sheer size justice – think a late Fifties Cadillac Sixty Series parade car, and you’ll get the general idea of the length and girth of the car, although if I had to sum up the looks of the car, I would say it’s a pastiche of the largest Ford and Chrysler cars of its era. The might of the Chinese people was truly represented by the Red Flag.
By Andy Bannister
The on-again, off-again prospect of a major expansion in Lancia sales, with a return to selling cars in right-hand-drive markets, has been postponed indefinitely due to the current economic gloom.
Earlier this year, Fiat was bullish about plans to grow sales of its premium luxury band, which has for far too long been in the shadow of its sportier brother, Alfa Romeo. There was brave talk of 300,000 Lancia sales globally by 2010.
Unfortunately, Lancia only shifted 110,000 cars last year and is currently unhealthily dependent on its Italian home market, which accounts for a whopping 80% of sales. With Italy’s new car market shrinking fast in the last few months, that spells very bad news.
The return of Lancia to some of its abandoned markets was meant to be a new start which would lay once and for all the ghost of a terrible rust scandal that blighted the marque in the late 1970s. With its stylish Beta family, Lancia in the UK up until that time was – amazingly, in retrospect – selling as many cars as German rival BMW.
By Brendan Moore
House Democrats and the Bush Administration have reached agreement in principle on emergency loans in the short-term for the Detroit automakers, it was announced late Tuesday night.
The agreement would quickly provide billions in rescue money to the battered Detroit auto manufacturers, but not with out a heavy cost to pay in terms of government-dictated terms, government ownership in the companies themselves and federal oversight of the car companies in the near future. The potential degree of corporate control and oversight of the auto companies by the federal government being currently advocated by some members of Congress would even surpass the level of control exercised by governments in countries where auto manufacturers were nationalized in the past, i.e., France and the vehicle manufacturer Renault.
Although the magnitude of financial assistance to the American auto industry is completely dwarfed by the recent cash infusions to the financial services industry, the auto companies will be put on a very short leash in terms of the many conditions they will face in how they get the money and what they can use it for going forward. Compare this to the bailout of the large financial institutions, which were more or less given carte blanche in what they did after disbursement of the funds.
By Kevin Miller
I’m a smart guy, but I can’t remember everything. The past week presented two prime examples of that fact. The first was that upon the birth of our second daughter, I didn’t remember just how little sleep I’d be getting with a newborn in the house. When she arrived on Monday morning, it quickly became evident that I will spend the next several months being severely sleep-deprived. How could I have forgotten that?
The second example that I can’t remember everything has to do with gas prices. When I filled my Volvo with premium unleaded for $2.01 earlier this week, I was shocked. I couldn’t remember the last time I’d paid so little for premium fuel. And I couldn’t even remember how much I had recently been paying. Was it really over $4.00/gallon just a few months ago? Or was it merely approaching $4.00?
A little research shows that yes, as recently as September, gas prices were at their highest, and in Washington State I paid just over $4.50/gallon for premium unleaded. So now, just three months later, I’m filling up for less than half of the price I had been paying. Digging a little deeper, I found that the last time fuel prices were this low was briefly in the first quarter of 2005; it was the first half of 2004 when they were regularly that low.
By Andy Bannister
Now that GM is in dire straits, naturally its small Swedish subsidiary could be an early victim of a wider cull promising very bad news for jobs and the industrial base of Sweden. The Scandinavian state’s other long-standing marque, Volvo, is also looking for a new owner after less than a decade in the stewardship of Ford.
With the turmoil in the world auto industry putting off many potential rival companies, who until recently might have snapped up the two marques, one possible (if unlikely-sounding) solution being touted is the nationalisation of both Saab and Volvo by the Swedish state.
The long-standing rivalry between the two companies made one previous attempt at a merger, way back in the 1970s, fall flat. Now, however, Saab looks very much the junior partner compared to the more modern and diversified Volvo line-up, with four times more Volvos sold than Saabs each year.
If Volvo and Saab were forced together, Saab would seem to offer very little in its current line-up to justify its continued existence except the powerful sentimental attachment to a badge which still proudly stands as a Swedish symbol.
A note to our readers:
We at Techshake have reviewed many, many new cars over the past few years. Sometimes, you may not even know that we’ve even covered a particular model, so you wouldn’t know to search for it.
To this end, we have created an archive page listing all of the new cars and trucks that we have reviewed. The model years generally span between 2007 and 2009. You will find the list sorted alphabetically by manufacturer, with newer model year vehicles on top.
We hope that you enjoy our extensive review archive – please comment within the reviews to let us know. You can find the reviews page at the link below, or by going to the “Techshake New Car Reviews” link on the bottom of any page within the site.
-Chris Haak, Editor-in-Chief