Autoblog

It's been a crazy few days as news broke that Chrysler and General Motors have been in talks to combine operations. It turns out that there's a pretty significant back-story to these proceedings, and it involves Cerberus Capital Management's possible desire to shed its car-building operations and acquire the rest of GMAC, of which it already holds a controlling stake of 51%, with GM holding holding the other 49%. According to reports, Cerberus would like to combine Chrysler Financial with GMAC, which would allow it to merge the offices of the two financial institutions and reduce costs. All right, that might make some sense, but what about merging the two automakers? That's the part that seems so confusing to analysts and us meager bloggers. Somehow, we feel certain that there's more to this story, which we'll be hearing about for some time.

[Source: The Detroit News]

The financial peril that currently faces the U.S. domestic automakers is no secret, and according to Wall Street Journal report published yesterday, Ford is mulling over the possibility of unloading at least part of its controlling stake in Mazda to raise cash. Japanese media, via the AP, said that Ford would likely keep some interests in the Japanese automaker after such a move -- no surprise when you consider how closely tied Ford and Madza are right now in terms of shared technology. The Oval's third-quarter numbers are expected to be pretty ugly, and the Journal's source said that the potential sale of its Mazda holdings is one of many moves reportedly under consideration as Dearborn looks for ways to add to its cash on hand. For its part, Mazda denies that any decision has been made (a non-denial, really -- no outlets reported that a deal had yet been completed) and Ford weighed in with a to-be-expected "no comment." As they say, to be continued...

[Sources: The Wall Street Journal, AP]

General Motors and Ford just concluded an absolutely brutal business day on Wall Street, which echoed the performance of the markets in general as the Dow Jones Industrial Average slid another 678.91 points to close below 9,000 at 8,579.19 points. GM closed the day at 4.94 after having dipped as low as 4.72 just minutes before the bell rang at 4PM, while Ford ended today at just 2.14. Analysts are noting that GM shares haven't been this cheap since the 1950s and that a single share of Ford stock costs less than a gallon of gas at the moment. We are most certainly not financial analysts, but we do know these companies are heading in the wrong direction fast and that a brighter future is not weeks but months and years away.

[Source: AOL Money and Finance]

The auto market is in the tank right now, with sales dropping to 1991 levels and Detroit automakers in a cash crunch of horrendous proportions. Even Japanese automakers are struggling, and perhaps the biggest sign that something is terribly wrong is that Toyota is even feeling the pain. The Japanese automaker's sales dropped by an incredible 32% last month compared to September 2007, which was preceded by drops of 9.7%, 18% and 11% in prior months. Toyota has already lowered its global sales target for the year to 9.5 million units to reflect the trouble it's experiencing in the U.S. market, but recent news from Europe is that production is being cut there, as well.

The worst news for Toyota would likely be welcome news to the rest of the automotive universe: the Japanese juggernaut will only rake in about $12 billion of profit this year. While that's an absolute treasure trove of cold, hard cash, it's about 40% less than Toyota had earlier forecasted. Toyota's stock has also taken a hit during these challenging times, with its current value down about $23 per share under its 52-week high of $58.76. The worst part about the automotive market is that there appears to be no end in sight, which means there is more bad news to come; even from Toyota.

[Source: Automotive News, sub. req'd]

Light-vehicle sales in the U.S. are expected to continue their decline in 2009. Global Insight, a firm that has been forecasting sales since the 1960s, is predicting sales of 13.4 million units next year. That figure is slightly down from the 13.8 million units automakers are expected to sell in 2008. (For comparison to recent years, 16.1 million vehicles sold in 2007 and 16.5 million units sold in 2006.) Global Insight makes note of the current U.S. credit crisis and the worsening global economy, citing the worldwide financial situation is more detrimental to auto sales than oil at $200-a-barrel. When oil is high, at least the countries benefiting from the oil profits continue to purchase cars – unlike today. While analysts differ on when we may see a turnaround, the firm feels it could take until 2013 for sales to recover to levels seen just a few years ago.

[Source: Automotive News, subs. req'd]

As with this year's American football season, weekly surprises in the car industry are now standard fare. VW recently overtook Ford for the number three spot in global sales, and now the home of the Beetle and the Veyron has overtaken Toyota as the industry's most valuable company based on dollar-converted market capitalization. Just as eyebrow raising is the reason for it: Toyota's stock has dropped 5% to its lowest point in four years due to the usual suspects, while VW's stock has climbed a stratospheric 87% due to the fact that Porsche is busy gobbling up the company. As far as we're concerned, that makes Porsche the real story: one of the industry's smallest players – it sold less than 100,000 cars around the world last year and still set a personal best – is about to be the world's third largest car maker and, for a while at least, its most valuable. What a difference a day a Cayenne makes. Thanks for the tip, bazzz!

[Source: Bloomberg]

On Wednesday, Chrysler told its dealerships that it will be increasing the sticker price of its 2009 models by an average of $500. Shipping costs are also being raised by about $50 per vehicle, which could very well have something to do with the price of fuel. While this may seem like odd timing for a price increase considering the well-covered sales slump from which all auto manufacturers (yes, we truly do mean all auto manufacturers) are suffering, some dealership owners are commending Chrysler for holding the line on pricing for as long as it has. Cross-town rivals General Motors and Ford have already increased their prices, and both of their increases were for higher amounts. Thus, it was only a matter of time before Chrysler followed suit. Still, with the sagging economy and current credit crunch, the news isn't likely to help sales any.

[Source: Automotive News - sub. req'd]

We're not waiting for Suzuki to reveal its September 2008 sales results any longer, as it is highly unlikely that the little Japanese brand will arise as the only brand/automaker to post positive numbers this month. Take a good look below, as it's the first time since we started publishing sales data back in mid-2006 that every single brand and automaker is in the red. It doesn't matter how you slice it, whether you look at the change in volume from Sept. 2007 to Sept. 2008 or if you consider the change in the Daily Sales Rate. Everyone is down.

For the record, we suppose Audi is this month's Biggest Winner with a sales drop of just 5.4%, while HUMMER is again our Biggest Loser with a 54.8% fall in sales. You can peruse the rest of the carnage below for yourself.

BY THE NUMBERS - September 2008
Brand	Vol. % Change	Total Sales 9/08	Total Sales 9/07	DSR % Change	Daily Avg. 9/08	Daily Avg. 9/07
Acura	-30.4%	9,997	14,369	-27.5%	417	515
Audi	-5.4%	7,584	8,020	-1.5%	316	321
BMW	-29.5%	14,744	20,901	-26.5%	614	836
Buick	-20.5%	14,121	17,754	-17.1%	588	710
Cadillac	-39.1%	12,432	20,398	-36.5	518	816
Chevrolet	-11.2%	172,803	194,637	-7.5%	7,200	7,785
Chrysler	-39.6%	23,346	38,668	-37.1%	973	1,547
Dodge	-25.2%	62,572	83,671	-22.1%	2,607	3,347
Ford	-33.8%	102,685	155,037	-31%	4,279	6,201
GMC	-12.8%	39,029	44,754	-9.2%	1,626	1,790
Honda	-23.2%	86,629	112,831	-20%	3,610	4,513
HUMMER	-54.8%	2,298	5,080	-52.9%	96	203
Hyundai	-25.4%	24,765	33,214	-22.3%	1,032	1,329
Infiniti	-24.1%	7,779	10,250	-20.9%	324	410
Jeep	-42.8%	21,431	37,460	-40.4%	893	1,498
Kia	-27.8%	17,383	24,087	-24.8%	724	963
Lexus	-36.1%	16,045	25,113	-33.4	669	1,005
Lincoln	-22.5%	7,571	9,764	-19.2%	315	391
Mazda	-35.6%	16,169	25,098	-32.9%	674	1,004
Mercedes-Benz	-16.4%	18,779	22,459	-12.9%	782	898
Mercury	-43.2%	6,478	11,403	-40.1%	270	456
MINI	-6.7%	3,762	4,031	-2.8%	157	161
Mitsubishi	-39%	7,378	12,102	-36.5%	307	484
Nissan	-38.4%	51,786	84,019	-35.8%	2,158	3,361
Pontiac	-26.7%	23,324	31,817	-23.6%	972	1,273
Porsche	-44.8%	1,458	2,641	-42.5%	61	106
Saab	-27.2%	1,765	2,424	-24.2%	74	97
Saturn	-10.8%	18,528	20,776	-7.1%	772	831
Subaru	-11.9%	14,491	16,457	-8.3%	604	658
Suzuki	N/A
Toyota	-31.8%	128,215	187,929	-28.9%	5,342	7,517
Volkswagen	-9.4%	17,109	18,891	-5.7%	713	756
Volvo	-51.8%	4,054	8,408	-49.8%	169	336
COMPANIES
BMW Group	-25.8%	18,506	24,932	-22.7%	771	997
Chrysler LLC	-32.8%	107,349	159,799	-30%	4,473	6,392
FoMoCo	-34.6%	120,788	184,612	-31.8%	5,033	7,384
General Motors	-15.8%	284,300	337,640	-12.3%	11,846	13,506
Honda America	-24%	96,626	127,200	-20.9%	4,026	5,088
Nissan NA	-36.8%	59,565	94,269	-34.2%	2,482	3,771
Toyota Mo Co	-32.3%	144,260	213,042	-29.5%	6,011	8,522

September 2008 had 24 selling days versus 25 selling days for September 2007

While the U.S. banking industry is still waiting for Congress to give it a $700 billion hand, President Bush signed into law last night the spending bill that gives U.S. automakers $25 billion in loans to get their collective act together.

But unlike when a bank deems you worthy of their money, the Big Three won't be getting any cash for some time. Despite the companys' CEOs saying repeatedly how they were desperate for help and how automotive life as they know it would end if they didn't get financial help, there's at least a 60-day delay until they can cash this check.

Written into the bill is a clause requiring the Energy Department to come up with regulations that will determine who gets what and when. The agency has 60 days to do this, but could take much longer, as much as 18 months according to a department spokesperson.

Desperate or not, looks like GM, Ford and Chrysler are now at the mercy of the Energy Department.

[Source: Wall Street Journal]

Writing about cars for a living is a beautiful thing. Aside from doing what we love, we're able to keep ourselves somewhat insulated from the bigger issues ailing our world, content to avoid those unsavory subjects like a Klingon-filled elevator at a Star Trek convention. But we can't elude reporting on the current economic crisis any more than we can keep our lunch down while watching our meager savings fall through the floor.

The Dow fell 777.68 points today – almost 7% -- to 10,365.34 after the House voted against the $700 billion bailout of the financial industry. The world's biggest automakers were far from immune. General Motors' stock dropped by 12.81%, going for $8.51 a share, while Honda lost almost 10 percent, Ford and Toyota lost over 8% and Tata dropped some 13%. And that's just the tip of this chilly iceberg. Shares of both auto suppliers and massive retailers dropped accordingly, while oil futures tanked by 10%, selling for $96.37 a barrel.

While it's certain that all the government's men and women are going to put this humpty-dumpty bill back together again and attempt to vote on revised terms by the end of the week, the automakers and those of us playing the home game of "Rebuild Your Failing Economy" are forced to wait idly by while our futures shuffle off this mortally-wounded coil. And what are the chances of Detroit's Big 3 getting their $25 billion? Stay tuned sports fans, the best worst is yet to come.

[Sources: NYT, Google, Automotive News | Image: Nicholas Roberts/Getty]