By Brendan Moore

03.31.2009

If you’re on the Chrysler acquisition project team (sorry, “partnership” team) at Fiat, you must be feeling pretty good right about now. Because whatever valuation you arrived at for Chrysler last month just got halved, courtesy of the United States government.

The Obama administration has publicly stated that if Chrysler doesn’t do a deal within 30 days, then they cease to exist. So, if you’re Fiat, you have to figure that Chrysler is going to sell  a big piece of itself for whatever price is acceptable to you, the buyer. It’s not like they have a lot of time to negotiate, and besides, if there is no sale, then they will go away forever. Chrysler is now what is called a motivated seller (partner).

If nothing else, it should cut the time allocated to due diligence and discovery by Fiat down to a very small amount of time.

I’m not saying it’s a done deal – Fiat may decide a big chunk of Chrysler isn’t worth buying even at 50% of the valuation they arrived at a month ago. Frankly, they could reach that same decision at 25% of last month’s valuation, considering all of Chrysler’s debts and liabilities, and, the massive re-jiggering the company will need. Remember, this is a company that Cerberus got for free a couple of years ago, before a deep recession and the recent movement to frugality (read: less Chrysler trucks and SUVs going over the curb) by United States citizens.

It’s quite possible that Fiat may even wait for Chrysler to go into bankruptcy, and then bid on only the assets they want, cafeteria-style. Then they wouldn’t have to do the shut-down of production lines themselves. Of course, they would then run the risk of losing the Jeep brand and the truck line to someone else that was also bidding piecemeal, and, bidding higher.

One thing’s for certain – if Fiat buys a controlling stake in Chrysler, it will be at a price they dictate. Chrysler has no other potential buyers (“partners”) at this point and does not have the option of holding out for a higher price later.

What an ignominious end for what used to be a great company. A long time ago, admittedly, but nonetheless, they used to be somebody.

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By Chris Haak

03.31.2009

Perhaps lost among yesterday’s flurry of GM- and Chrysler-related announcements and news releases from each company, the President’s Task Force on Automobiles, and President Obama himself, Chrysler has had to do some serious backtracking from statements that its PR department released.

As we reported earlier, the government announced on Monday that it considers neither Chrysler nor GM to be viable entities and that it was giving Chrysler 30 days to work out a deal with Italy’s Fiat, which might make the firm a viable going concern.  Mere hours later, Chrysler announced that it had agreed to the terms of a formal alliance with Fiat S.p.A. and its majority owner, Cerberus Capital Management.  Chrysler went on to say that the US Treasury Department supported the agreement.

Just thirty minutes later, Chrysler issued another news release that said that the deal with Fiat was actually just the “framework of an agreement.”  There’s a big difference between a framework agreement – which Chrysler, Cerberus, and Fiat have already had in place for several weeks – and a final agreement, which the parties have 30 days (now 29 days) to come to.  When I first saw the news that an agreement had been reached, I was surprised, because most observers expected it to take possibly more than the allotted 30 days for the parties to come to terms.  Further, the government had changed the terms under which an agreement would be acceptable; specifically, Fiat’s proposed 35% initial stake, and eventually up to 55%, would have to be much lower.  The government would also not allow Fiat to have a majority ownership of the company until the loans had been repaid. Continue Reading

By Brendan Moore

03.30.2009

In a remarkable 24 hours, the Obama administration has forced out Rick Wagoner as CEO of General Motors, and publicly rebuked both Chrysler and GM for the inadequacy of their restructuring plans. They have also put forth their conditions for more federal aid to the two automakers and stated that bankruptcy is still an option for both Chrysler and GM.

Along the way, the Auto Task Force that was recently brought into existence by the Obama administration stated in direct language that Chrysler was absolutely not viable as a stand-along entity and that if they couldn’t get a merger done with Fiat in the next 30 days (with working capital from the US Treasury during those 30 days), that the company would get no more money from the federal government and go under.

The Auto Task Force concluded that General Motors had far more promise as a stand-alone company, but that their restructuring efforts to this point were not anywhere strong enough to get the job done. GM has been given working capital for 60 days to wring out more concessions from the unions and their stakeholders, cut more costs, change production capacity, etc.

President Obama has stated repeatedly that he would not let the United States auto industry just disappear, that he wants the companies to succeed and prosper, but that there is no blank check from the government towards that end. It is obvious that the Obama administration wants to keep the many jobs that the auto industry and it’s supplier base provides, but since they are providing the money to keep the staggering automakers afloat, they want to control the terms and conditions as to how the money is metered out and spent. There is also the issue of growing public resentment towards all bailouts, regardless of the industry.

In addition, the Obama administration today announced many other steps to assist the auto industry, including tax credits, new government task forces, greater availability of consumer credit and other measures.

Continue Reading

By Kevin Miller

03.30.2009

Living in the Pacific Northwest, it seems like every other house has a Subaru Outback or Forester parked outside. Subaru vehicles and my family go way back. More than a decade ago my brother and I drove his AWD Legacy sedan from Seattle to New Jersey over four days between Christmas and New Year’s Eve.  That journey across a frozen part of the continent exposed me to the beauty of Subaru’s symmetrical all-wheel drive system. Since then, my mother-in-law has upgraded her ’82 Subaru  4×4 wagon for a modern Outback, and my mother traded her Saab 900 turbo for a 2002 Outback H6 3.0 L. L.Bean Edition.

With that history, I eagerly anticipated my week in the 2009 Subaru Forster XT. The new-for-2009 Forester has a much more modern shape than the angular vehicle it replaces, and has grown up by gaining more space, becoming more of a crossover than just a tall wagon.

Last summer Autosavant’s Chris Haak had the opportunity to review a 2009 Subaru Forester X Premium equipped with a 170 HP 2.5 liter four-cylinder engine and five-speed manual transmission. He found power to be merely adequate, with a too-soft suspension and handling that wallows. The Forester XT adds a turbocharger to that 2.5 liter four, for a rating of 224 HP and 226 lb-ft torque, and gains a functional hood scoop and dual exhaust. While the extra 54 HP do help to move the Forester off the line more quickly, the engine seems to be better suited to performance off the line than performance when the car is already traveling 50 or 60 MPH. Continue Reading

By Chris Haak

03.30.2009

Although you wouldn’t know it by looking at the sales results, we are really in a golden age of full size pickup trucks.  The full-size trucks sold today by Ford, GM, Dodge, Nissan, and Toyota are the most capable, most comfortable, most powerful, most efficient full-size pickup trucks ever sold.  Until a couple of years ago, pickup trucks were setting sales records too, but then gas prices more than doubled, many casual/personal-use buyers abandoned the market for smaller, more-efficient vehicles, and sales are down significantly from their peak of a few years ago.  That being said, however, full-size pickups are still the best-selling vehicles sold by most automakers who sell them by far.

Although two decades ago, trucks were used mostly as work vehicles and pickups saw new generations extremely infrequently (think of the GM C/K trucks of 1973-1987, with some models continuing to 1991 – that’s 19 model years, or the Ford F-Series of 1980-1996 – that’s 17 model years).  Today, trucks are nearly on the same update schedule as cars are.  The Ford F-150 was most recently all-new for the 2004 model year, which lasted just five years.

Although the truck is touted as “all new,” it doesn’t look entirely different from the 2004-2008 models.  The cab design appears to be more or less carried over intact (with the exception of a six-inch stretch in the SuperCrew’s cab, which is very much like Ford’s approach to the 1987 and 1992 refreshes of the 1980 original.  However, the 2009 model has wholesale changes under the skin.  The new truck has an all-new frame that manages to be both stronger and lighter than the old truck’s frame, new six-speed automatics, an all-new interior with better materials, an improved design, and more storage, and some handy cargo-management features in the bed. Continue Reading

By Brendan Moore

03.29.2009

PSA Peugeot Citroen, the second-largest auto manufacturer in Europe, fired their CEO, Christian Streiff, in a surprise move today.

Streiff was replaced by Philippe Varin, CEO of the Anglo-Dutch steel company Corus. Varin will take over on June 1.

Streiff arrived at Peugeot in 2006 from Airbus, where he had been CEO for only 100 days before his ouster.

Peugeot just notched a $460 million USD loss last month, and at the same time announced that they expect to post further losses until at least 2010.

Chairman Thierry Peugeot, of the Peugeot family (25% ownership of PSA) said in a statement, “The board unanimously judged that the exceptional difficulties faced by the auto industry imposed a change of management. I am convinced that under Philippe Varin’s leadership, the PSA Peugeot Citroen group will be able … to reveal all its potential.”

Streiff was lambasted in the French press for announcing 3000 layoffs right after the French government gave the company three billion euros. He also caught a lot of heat from the government and the media for importing Peugeots manufactured in the Czech Republic for sale in France. Additionally, he was hospitalized from the end of May until July, leading some industry analysts to question the condition of his health.

Nonetheless, Streiff quickly defended his tenure at Peugeot after his firing, saying that policies he had put into place at Peugeot had left the company well-prepared to cope with the economic downturn. He mentioned that under his leadership, Peugeot had introduced popular new models, initiated cost-cutting and effective inventory controls. “The economic and financial community hailed these results. Thus I cannot understand the board’s decision,” he added.

But Streiff’s opinion matters for nothing in this process; instead the important opinion is the one the board holds, and the board lost confidence in him, and just like a lot of other senior auto industry executives, Streiff has lost his job in this unforgiving market environment.

Board member Roland Vardanega will take on the role of interim CEO from now until Varin steps in, a Peugeot spokesman stated.

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By Brendan Moore

03.29.2009

Rick Wagoner, CEO of General Motors, will resign as part of the conditional approval for further federal aid for the struggling company.

Automotive News, Reuters and The Wall Street Journal are all reporting that Wagoner’s departure is imminent and that he was asked to leave as one of the many preconditions Washington wants in order to release more federal funds for GM’s restructuring.

General Motors has asked for approximately $30 billion USD in aid from the government, and has already received $13.4 billion of the total. The remaining $16.4 billion has been requested by GM, and a decision has been promised from the Treasury by March 31. GM almost ran out of money at the end of 2008 before it received the first loan.

Wagoner has been CEO of GM for eight years.

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By Brendan Moore

03.27.2009

After reviving the Rabbit name in North America for the hatchback known in the rest of the world as the Golf in 2006, VW has decided to change the name back to Golf. The Rabbit name was used in North America previously when the Golf was introduced in the US  in 1975, but was dropped in the region with the 1984 model year. In the rest of the world, the Golf name has been used from the beginning of the model’s existence, and has never been changed.

The return to the Golf name in North America will happen with the 2010 production models due in the US in October 2009, and will be shown on pre-production models at the New York Auto Show next month..

The whole idea behind bringing back the Rabbit name in 2006 was that American consumers would really respond to the warm and fuzzy memories of the original Rabbit. It didn’t work out like that; consumers for the most part just yawned when greeted with the retro name.

VW, for its part, says that the underwhelming response to the name change for the Golf has nothing to do with their decision to go back to the Golf name. Rather, it has to do with VW’s decision to use the same name for every one of their models worldwide.

Tom Wegehaupt, spokesman for VW, stated, “A lot of consumers tell us they prefer the name Rabbit, but we are moving to this name strategy. There is so much weight behind Golf — we have sold more than 26 million in 30 years in 120 countries.”

The VW spokesman also commented that VW will add a diesel engine to the Golf this fall. This interesting engine is the same one currently used in the Jetta diesel; a 2 liter inline four-cylinder, 50-state-compliant clean diesel with 140 hp.

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By Chris Haak

03.27.2009

I’ve been on an interesting streak this past week. Literally every day either on my way into the office or on my way home, I have encountered the same white Ford F-250 traveling in the opposite direction. I’m sure that I see dozens of F-250s during my 5-+ miles on the road each day, but this one particular one stands out. And why is that? It looks ridiculous.

The specific truck in question is a white F-250 Super Cab with huge desert-running tires and probably an eight- to ten-inch lift kit installed. The truck is also adorned with any number of accessories, such as an aluminum louver over the back window, 11 lights below the tailgate (I know because I counted them from my blurry camera phone photo), and gigantic twin antennas mounted in each of the front corners of the pickup bed. These antennas are over six feet tall, and the top of them is probably between 12 and 15 feet above the ground.  The front of the truck has a giant grille guard and accessory lighting.

My favorite accessories, however, are the enormous slogans stuck onto both the tailgate and the windshield. The windshield is my favorite – where it says (in fancy script, of course), “HIGH CLASS REDNECK.” Well, he got half of that correct. Continue Reading

By Chris Haak

03.27.2009

Chinese automakers are not known for the originality of their designs or the quality and safety of their vehicles.  Almost two years ago, the Brilliance BS6 sedan had one of the worst showings in the history of the EuroNCAP crash-test regime.  Of the BS6’s crash-test results, I said at the time:

Instead, the poorly-named Brilliance BS6 saw the pedals intrude into the driver’s space by 18 inches, and the dashboard by 7 inches. The driver’s door wouldn’t open without the technicians using a huge crowbar, and the rocker panel bent almost 90 degrees, stopped only when it hit the floor. The base of the windshield moved to the same vertical plane as the top of the windshield was before the crash, and the driver was left sharing space with steering wheels, windshields, and the front end of the car. He or she would have almost certainly been killed instantly.

This time, the same German auto club, ADAC, was conducting the tests, but the EuroNCAP standards have gotten more stringent since 2007 when the BS6 flopped in the tests.  While the BS4 got zero stars in this recent test, identical results would have yielded three stars for the BS4 under the vintage-2007 standards.  The BS6 eventually did get a three-star result under the old EuroNCAP testing regime, but the car required a structural redesign and two attempts to get it.  The video can be found below after the jump (it’s OK if you can’t understand the German interviews). Continue Reading