By Brendan Moore

04.24.2009

In an interesting twist, it appears the Treasury Department has made plans for Chrysler to file bankruptcy as early as next week, before the government-mandated deadline for restructuring. Restructuring, from the government’s point of view, is Chrysler consummating a merger with Fiat. Anything else, while not inconsequential, is not anywhere good enough to satisfy the Treasury’s conditions for viability.

Bankruptcy will undoubtedly make Cerberus, which gained control of Chrysler in 2007, go away. Bankruptcy will also make the minor shareholders disappear as their equity will be wiped out.

Bankruptcy also gives Chrysler tremendous latitude in terms of what assets (brands, physical plants, etc.) it wants to keep, and it voids labor union agreements, contractual agreements with suppliers, dealer franchise agreements, etc.

It should be noted, however, that Treasury now has an agreement with the UAW, which would wipe out an extremely contentious issue in any Chrysler bankruptcy or restructuring. Regardless of what happens, Chrysler will need workers to build vehicles if they stay in business as a viable entity.

Bankruptcy also relieves Chrysler of its debt obligations, but there is going to be a problem with the large lenders (mostly banks and some hedge funds) that hold most of Chrysler’s debt. The problem (for Chrysler, that is) is that most of that debt is asset-based loans. Chrysler promised physical assets as collateral for those loans, tangible assets like production plants, brands, etc. So, the creditors will press their claims in any bankruptcy process, and try to claim those assets so they can then sell them on the open market and redeem that sale price against the total debt. As an example, if Chrysler owes a bank $1 billion dollars USD, and the bank has two production plants as collateral, the banks would try to claim those assets as the bankruptcy moves through court so that they could then subsequently sell the two production plants. If they were to able to sell those two plants for $500 million, then they would get 50 cents on the dollar regarding the defaulted loan. Continue Reading

By Chris Haak

04.23.2009

Today, I’m happy to announce that we are teaming up with the folks at BBC Video who are brought Top Gear Season 10 to DVD earlier this week for Autosavant’s Dream Garage Contest.  First prize (OK, the only prize) is a copy of Top Gear Season 10 on DVD, delivered to your door.  We at Autosavant are big fans of the pre-eminent motoring show.  I’ve already exposed my three year old son to the famous Toyota Hi Lux abuse episode, and he was quite amused by the whole thing.  Season 10 has some wacky moments, like a race between a Bugatti Veyron (definitely Dream Garage material, by the way!) and a Eurofighter Typhoon, driving full speed through the Kalahari Desert in 20 year old junkers, or crossing the English Channel in amphibious cars.  In case you don’t win this contest, you can purchase the video for $29.98 here.

Here’s how the contest will work.  Send an e-mail to contest@autosavant.com with a list of the 10 vehicles that we’d find in your dream garage.  Include your name, shipping address (just in case!) and a phone number in the message.  They can be common or exotic, expensive or inexpensive – just as long as they have wheels and are legal for highway use (sorry, no bicycles, boats, or F1 race cars, although motorcycles, three wheelers, and amphibious vehicles would be OK).  Entries must be received by 11:59 EST on Friday, May 8, 2009.  Autosavant’s writers and editors will then choose the best entrants from among those submitted, and we’ll put up another post the week after the entry deadline, and all readers can vote for their favorite Dream Garage list in the comments for that post.  Although you don’t need to justify or explain your list as our writers have done in the past, you may choose to do so in order to improve the chances that other readers will like your choices/logic and vote for your selections.  A few rules:  No more than three entries per person.  Autosavant reserves the right to disqualify any votes that are suspicious or duplicate in nature.  One vote per person in the comments!  If you have any questions about the contest, feel free to comment below, and I’ll respond in public. Continue Reading

By Kevin Miller

04.23.2009

Mitsubishi has been trotting their iMiEV (Mitsubishi Innovative Electric Vehicle) to various locations across the US in the name of green partnerships, and they celebrated Earth Day under cloudy skies in Portland, Oregon, showing off the electric transportaion pod to the state’s governor, Ted Kulongoski. The visit was made to highlight a new ZEV (Zero Emission Vehicle) partnership between Mitsubishi, the State of Oregon, and electric utility Portland General Electric (PGE).

While I spent Earth Day roaring around Portland in Autosavant’s 5.7-liter Hemi V8-powered 2009 Dodge Ram 1500 Lariat, Gov. Kulongoski took his first test drive of the all-electric vehicle from PGE’s headquarters at Portland’s World Trade Center.

PGE continues to partner with Oregon businesses and governments to roll out its network of charging stations to support these next-generation electric vehicles and plug-in electric vehicles. During my drive around the Portland metro area, I drive past two municipal EV charging stations, so the partnership is bearing visible fruit.

Mitsubishi plans to deliver its i MiEV to Oregon for fleet testing in late this year. Powered by an advanced lithium-ion battery, the Mitsubishi i MiEV will be one of the first of the new generation of lithium-ion-powered electric vehicles to be developed by a major automobile manufacturer that will be available to the public. Continue Reading

By Chris Haak

04.22.2009

GM’s Chief Financial Officer, Ray Young, told reporters at a Chinese auto summit in Detroit (how appropriate!) today that GM would not be making a $1 billion debt payment that is due on June 1.  Instead, he said that GM would either have completed a debt-for-equity exchange or would be in Chapter 11 bankruptcy protection by then.

So this is it.  GM’s end game.  Feel free to insert any necessary sports analogy that you see fit here, but the fact remains that GM doesn’t expect the government to give it any more money after the end of May (when its 60-day lifeline expires) and that its survival will take one of two paths:  either Chapter 11 bankruptcy or strong-arming the bondholders into accepting pennies on the dollar for the debt that GM owes to them, plus equity that is already nearly worthless (and would be completely worthless in Chapter 11).

The “B word” – bankruptcy – has gone from being flatly denied at GM as impossible, unlikely, and a death blow if you look back just three years ago to something that now both the CEO and CFO have said is “probable.”  At least they’re being honest about the company’s prospects.  The debt-for-equity swap isn’t likely to get much traction, either – the company has been trying for a long time to get bondholders (namely large Wall Street firms, but also thousands of individual, small-potatoes investors) to accept its proposal to give them nearly-worthless GM shares and a small amount of cash in return for forgiving the debt.  Chrysler had a similar problem earlier this week, when the US government tried to get Chrysler’s debt holders to reduce the company’s $7 billion debt to $1 billion.  The lenders’ counteroffer was to reduce it to $4.5 billion, and give them a third of the company’s equity as well. Continue Reading

By Brendan Moore

04.21.2009

The clock is ticking down to April 30, the government’s deadline for Chrysler to craft some sort of partnership with Fiat, and no one can say that Fiat isn’t doing it’s best to get the deal done. Of course, they want the deal on their terms, but they are trying to get it all wrapped up before the government’s drop-dead date.

Sergio Marchionne, the CEO of Fiat, is in the US again, with visits scheduled to Detroit and Washington, D.C.

There are, however, problems.

The autoworkers unions in the both the US and Canada are resisting making any more concessions, concessions that Fiat says it needs for any merger with Chrysler to work.

Chrysler’s creditors are balking at the haircut Chrysler, Fiat and the federal government wants them to take and have instead proposed their own more creditor-friendly terms which are very different than the ones initially proposed.

These are not minor problems, and either one of them could easily derail any deal. On the other side of the ocean, though, everyone seems pretty happy. From Europe’s point of view, the Fiat-Chrysler seems to be a foregone conclusion, and Fiat’s stock has climbed upward as a result. The unconfirmed report in Automotive News last week that Fiat would also do a deal with GM’s Latin American and European arms also pushed the stock up. Italian politicians have lined up behind the deal, and so have the Italian unions, since they believe access to the American market will result in more Fiat Group cars being sold, which in turn means the Italians have to build more cars.

Prime Minister Silvio Berlusconi has publicly stated that he is in favor of the deal and Miniister of Industry, Claudio Scajola, stated at a press conference last week that a Fiat-Chrysler deal “would benefit the entire Italian industrial system.”

All is not rosy in Italy, though, as Fiat is expected to post poor first-quarter trading results, with a loss of approximately $142 million USD. The company has been profitable every quarter since 2005. Fiat’s first-quarter performance is not expected to affect the proposed deal for Chrysler in any way.

COPYRIGHT Autosavant – All Rights Reserved

By Chris Haak

04.21.2009

Today, Toyota released pricing information on its forthcoming 2010 Prius, which hits Toyota dealers nationwide in late May.  It’s great news for those in the market for a new car, because pricing starts at just $21,000 for the entry-level model.  A more popularly-equipped trim level – with $2,000 in additional standard features - will go for $22,000, which is the starting price of the 2009 base model.  The new 2010 base model will remove some equipment to get to the lower price point for “value conscious” customers, but will not be available at launch.

While the Prius will still be more expensive than its former and future arch-rival, the Honda Insight (which is priced at $19,800 plus $670 in destination charges, for a total of $20,470).  Although Toyota’s press release didn’t get into details such as what the 2010 Prius’ destination charge will be, assuming that it’s the same as the $750 charge of the current model, that puts the entry-level Prius at $21,750 against the Insight’s $20,470.

However, for the extra $1,280 (or 6.3%), the Prius gives significantly better fuel economy (50 mpg combined for the Prius; 41 mpg combined for the Insight, or 22.0% better) and higher levels of standard equipment.  The Prius is more powerful, more spacious, and better looking (at least in my opinion). Continue Reading

By Roger Boylan

04.20.2009

Thanks to an invitation from GM communications, I found myself at 7:15 a.m. on the rainy morning of Saturday, April 18th, in the Austin Convention Center, admiring a trio of 2010 Chevrolet Camaros: a yellow LT, a red SS, and a silver LS.

It was a mini-press day organized by GM’s Camaro brigade for the unveiling of their new darling. On the podium was John Fitzpatrick, GM’s marketing manager for the much-touted new Chevy. The crowd he was addressing included members of the fourth estate, curiosity seekers, old Camaro nostalgics, car bloggers, and the usual nut cases dying to swap 0-60 times. Apart from them, the vast Convention Center was empty, except for a few ghostly detailers in the display areas of the competition, applying last-minute buff jobs to their Mustangs and Challengers and shooting nervous glances at the raucous throng in the Chevy zone.

The mere fact of such a crowd having roused itself on a wet weekend morning spoke volumes about the general level of enthusiasm for the car they came to see. Mr. Fitzpatrick acknowledged as much; there would be no new Camaro, he averred, without the enthusiasts. “Build this car,” they said to him; and lo, it was built, and the people came. Over 10,000 advance orders, according to GM, had been placed by the end of 2008. Actual sales began just last week, and the public response has so far been nothing less than phenomenal, especially in light of the parlous economic times. The crowd cheered. Mr.Fitzpatrick applauded them, all those true-blue Camaro devotees. The crowd applauded him back. Good feelings bubbled all around. Coffee and pastries were served. Flashbulbs went off. Then access was allowed to the three show cars, and grown men and women (but mostly men) elbowed one another in their eagerness to get inside one. It was polite elbowing, of course; these were connoisseurs, many of whom had been present at the creation and had owned (and one or two still owned) original ’67-’69 Camaros. Continue Reading

… And Show That Child Safety is Done a Bit Differently Outside of North America

By Kevin Miller

04.20.2009

Last week Volvo introduced three new child restraints; an infant carrier with handle, a convertible car seat, and a booster. The restraints, not tested to Federal Motor Vehicle Safety Standards, will be offered for sale only in Europe and Asia. While the text of the press release discusses the size of child intended to use each seat, and the fact that children are recommended to travel rear-facing until the age of four (really!?), the most telling information comes in the form of the photos Volvo published with their press release. You’ll notice that the rear-facing infant and the rear-facing toddler both have their child restraints installed in the front seat of the Volvo. Here in the US, that is not allowed in vehicles with front airbags. While newer cars are equipped with an occupant sensor which can de-activate the passenger airbag, there are still warnings not to put a rear-facing child seat in the front seat of a vehicle equipped with an airbag.

As a father of two and the driver of a Volvo V70, it is understandable why Volvo would show their child seats installed up front. The V70’s backseat (and the shape of the front seats and headrests) doesn’t allow sufficient room to install a rear-facing convertible car seat in any position except the center. Installing it behind the passenger seat would mean positioning the passenger seat so far forward that nobody could sit there. Continue Reading

By Chris Haak

04.20.2009

Front wheel drive, midsize coupes are a nearly dying breed.  Among domestic brands, only the Pontiac G6 coupe still plies its wares in the segment.  The days of two-door Pontiac Grand Prix and 6000, Oldsmobile Cutlass Ciera and Cutlass Supreme, Buick Regal and Century, Chevrolet Lumina, Monte Carlo, and Celebrity have come and gone.  The story is a little different for Japan, Inc., however -  Honda sells an Accord Coupe and Nissan now sells an Altima Coupe.  Toyota’s aging Camry Solara is still listed on their website, but is no longer in production.

Just as the volume-selling sedan versions of these cars go head-to-head and toe-to-toe in the marketplace and on the spec sheet, the coupe versions seem to add style and performance while subtracting a good deal of practicality.  So was the Altima Coupe just another pretty face, or is there a good car somewhere in there?

Nissan actually had to perform pretty extensive surgery to create a coupe from the Altima sedan (I’m sure that coupe development occurred concurrently).  The wheelbase was trimmed by four inches compared to the sedan (105.3 inches rather than 109.3 inches) and the car’s overall length was trimmed 7.3 inches (189.8 inches rather than 182.5 inches).  The coupe is also a few inches shorter than the sedan, at 55.3 inches rather than the sedan’s 57.9 inches.  The result is a car that looks like it was designed as a coupe, rather than a sedan with two doors removed and the other two lengthened.  That’s still not to say it’s a great-looking coupe; something about its proportions bother me.  I can’t quite put my finger on it, but I believe it’s a combination of the shorter wheelbase, fairly long front and rear overhangs, and small rear side window.  When looking at profile photos of the Accord Coupe and Altima Coupe side-by-side, the Accord actually appears to be better-proportioned, which is surprising, since I feel that the Altima Sedan has a better design than does the Accord Sedan.  The Altima Coupe’s design shares some cues with the Infiniti G37 and Nissan 370Z, but doesn’t manage to pull of the overall design as successfully as those two cars do. Continue Reading

By Chris Haak

04.17.2009

Chrysler CEO Robert Nardelli released a letter to all Chrysler employees that outlined the company’s progress in its rush to complete its merger with Fiat by April 30 and prove its viability to the Federal government by that point.  Most of the letter’s contents are pretty unremarkable, but he does shed some light into what will happen in the board room should the Fiat alliance come to fruition (and if it doesn’t, there will be some very different, yet dramatic, boardroom discussions).

To: Chrysler Employees and Contractors
Subject: A Message from Bob Nardelli To All Chrysler Employees

I’d like to give you an update as to where we stand in our restructuring process, since we expect the next two weeks to be very busy as we move toward our April 30 deadline. As you know, significant concessions from all Chrysler constituents are a requirement of our government loans and a condition of our alliance with Fiat. President Obama himself acknowledged this in his March 30 address on the auto industry: Continue Reading