There may be a bug in FeedWordPress. Please contact the author and paste the following information into your e-mail:

Triggered at line # 2387 FeedWordPress version: 0.992 WordPress version: 2.3.3 PHP version: 5.2.14 SyndicatedPost (_wp_id problem): object(SyndicatedPost)#85 (9) { ["item"]=> array(8) { ["title"]=> string(61) "GM pays back its loans and Whitacre stirs up some controversy" ["description"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["pubdate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "14" } ["summary"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" } ["link"]=> object(SyndicatedLink)#54 (4) { ["id"]=> string(2) "17" ["link"]=> object(stdClass)#80 (15) { ["link_id"]=> string(2) "17" ["link_url"]=> string(43) "http://www.businessweek.com/autos/autobeat/" ["link_name"]=> string(24) "Auto Beat - BusinessWeek" ["link_image"]=> string(0) "" ["link_target"]=> string(0) "" ["link_category"]=> string(1) "0" ["link_description"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["link_visible"]=> string(1) "Y" ["link_owner"]=> string(1) "1" ["link_rating"]=> string(1) "0" ["link_updated"]=> string(19) "0000-00-00 00:00:00" ["link_rel"]=> string(0) "" ["link_notes"]=> string(2097) "feed/title: Auto Beat - BusinessWeek feed/link: http://www.businessweek.com/autos/autobeat/ feed/language: en feed/copyright: Copyright 2010 feed/lastbuilddate: Thu, 29 Apr 2010 14:14:12 -0500 feed/generator: http://www.movabletype.org/?v=3.16 feed/docs: http://blogs.law.harvard.edu/tech/rss feed/id: http://www.businessweek.com/autos/autobeat/index.rss update/last: 1283863025 update/ttl: 111 update/timed: automatically update/hold: scheduled map authors: name\nauto beat\n1\n\nname\nbusinessweek online -- auto beat\n1\n\nname\ndavid welchdavid kileydavid kileydavid kileydavid kileyian rowleydavid welchdavid welchian rowleydavid welchdavid welchdavid kileydavid welchian rowleydavid kiley\n1\n\nname\ndavid kileydavid welchdavid kileydavid kileydavid kileydavid kileyian rowleydavid welchdavid welchian rowleydavid welchdavid welchdavid kileydavid welchian rowley\n1\n\nname\ndavid kiley\n1\n\nname\ndan beucke\n1\n\nname\ndavid welch\n1\n\nname\nian rowley\n1\n\nname\nira sager\n1\n\nname\ncarol matlack\n1 feed/description: Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends. feed/tagline: Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends. feed/webmaster: bwwebmaster@businessweek.com feed/ttl: 10 feed/author: \n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n\n\t\n\t\n\t\n feed/author_name: David KileyDavid WelchDavid KileyDavid KileyDavid KileyDavid KileyIan RowleyDavid WelchDavid WelchIan RowleyDavid WelchDavid WelchDavid KileyDavid WelchIan Rowley feed/author_email: david_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comian_rowley@businessweek.comian_rowley@businessweek.comdavid_kiley-blogs@businessweek.comian_rowley@businessweek.com " ["link_rss"]=> string(52) "http://www.businessweek.com/autos/autobeat/index.rss" ["recently_updated"]=> string(1) "0" } ["settings"]=> array(23) { ["feed/title"]=> string(24) "Auto Beat - BusinessWeek" ["feed/link"]=> string(43) "http://www.businessweek.com/autos/autobeat/" ["feed/language"]=> string(2) "en" ["feed/copyright"]=> string(14) "Copyright 2010" ["feed/lastbuilddate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["feed/generator"]=> string(34) "http://www.movabletype.org/?v=3.16" ["feed/docs"]=> string(37) "http://blogs.law.harvard.edu/tech/rss" ["feed/id"]=> string(52) "http://www.businessweek.com/autos/autobeat/index.rss" ["update/last"]=> int(1283869761) ["update/ttl"]=> int(33) ["update/timed"]=> string(13) "automatically" ["update/hold"]=> string(9) "scheduled" ["map authors"]=> array(1) { ["name"]=> array(10) { ["auto beat"]=> string(1) "1" ["businessweek online -- auto beat"]=> string(1) "1" ["david welchdavid kileydavid kileydavid kileydavid kileyian rowleydavid welchdavid welchian rowleydavid welchdavid welchdavid kileydavid welchian rowleydavid kiley"]=> string(1) "1" ["david kileydavid welchdavid kileydavid kileydavid kileydavid kileyian rowleydavid welchdavid welchian rowleydavid welchdavid welchdavid kileydavid welchian rowley"]=> string(1) "1" ["david kiley"]=> string(1) "1" ["dan beucke"]=> string(1) "1" ["david welch"]=> int(1) ["ian rowley"]=> string(1) "1" ["ira sager"]=> string(1) "1" ["carol matlack"]=> string(1) "1" } } ["feed/description"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["feed/tagline"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["feed/webmaster"]=> string(28) "bwwebmaster@businessweek.com" ["feed/ttl"]=> string(2) "10" ["feed/author"]=> string(105) " " ["feed/author_name"]=> string(162) "David KileyDavid WelchDavid KileyDavid KileyDavid KileyDavid KileyIan RowleyDavid WelchDavid WelchIan RowleyDavid WelchDavid WelchDavid KileyDavid WelchIan Rowley" ["feed/author_email"]=> string(285) "david_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comian_rowley@businessweek.comian_rowley@businessweek.comdavid_kiley-blogs@businessweek.comian_rowley@businessweek.com" ["link/uri"]=> string(52) "http://www.businessweek.com/autos/autobeat/index.rss" ["link/name"]=> string(24) "Auto Beat - BusinessWeek" ["link/id"]=> string(2) "17" } ["magpie"]=> object(MagpieRSS)#86 (18) { ["parser"]=> resource(64) of type (Unknown) ["current_item"]=> array(0) { } ["items"]=> array(15) { [0]=> array(8) { ["title"]=> string(61) "GM pays back its loans and Whitacre stirs up some controversy" ["description"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["pubdate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "14" } ["summary"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" } [1]=> array(9) { ["title"]=> string(83) "Detroit's opportune moment. American cars are better than Asian cars, Americans say" ["description"]=> string(2595) "<p> Well, I haven’t heard too many people say this since the late ‘70s: American cars are better than Asian cars. No, really. Associated Press and GfK Roper Public Affairs and Media conducted a survey of 1,000 adults in early March. The results showed that 38% of Americans said that they think American cars are the best-made vehicles and 33% said Asian cars are the best. The same survey done in December 2006 showed that 46% of Americans thought that Asian cars were the best and just 29% favored American cars.</p> <p> This is especially good news for Ford and General Motors, both of which are in different stages of a turnaround. Chrysler gets a bit of a boost here, too, though the company’s product line has yet to get the same kind of overhaul as its two larger Detroit rivals have done. Making some hay of this kind of sentiment will be tougher until Chrysler has some new cars to tout. All three can capitalize on this newfound respect if they continue to build better models and if, a big IF in GM’s case, they can market the cars well. They also need to show better business results.</p> <p> There is one big question. How long will this last? The survey was done March 3 though March 8, when Toyota’s recall news hit a fever pitch. Toyota has been the talisman of Japanese industrial superiority. When its brand image takes the kind of body blows Toyota has sustained in recent months, you can bet the others will feel some of the pain. Remember, too, that Ford was also putting out good news. The Dearborn, Mich., automaker is firmly in the black and sales are surging. A lot of the change in consumer attitude comes from reversing fortunes at Toyota and Ford.</p> <p> GM could burnish its image further in mid-May when the company will release its first-quarter earnings. Already riding a high from the fact that it paid off $8.4 billion in government loans about five years early, GM could look sharper still by reporting a tidy profit, which is possible. It may only be an operating profit, with one-time charges and problems in Europe still dragging earnings down. But the company is expected to show a profit.</p> <p> This could be an inflection point for Detroit. After years of losing to Japan, GM, Ford and Chrysler became a symbol of American failure. While Google and Yahoo showed the way to the Internet and Apple has dominated Sony in portable music players, Detroit continued to strike out. If Motown carmakers put out a few more hot cars and keep improving quality, they may be able to finally steal back respect and a lot of customers.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/detroits_opport.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/detroits_opport.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(5) "Autos" ["pubdate"]=> string(31) "Fri, 23 Apr 2010 16:38:35 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "23" } ["summary"]=> string(2595) "<p> Well, I haven’t heard too many people say this since the late ‘70s: American cars are better than Asian cars. No, really. Associated Press and GfK Roper Public Affairs and Media conducted a survey of 1,000 adults in early March. The results showed that 38% of Americans said that they think American cars are the best-made vehicles and 33% said Asian cars are the best. The same survey done in December 2006 showed that 46% of Americans thought that Asian cars were the best and just 29% favored American cars.</p> <p> This is especially good news for Ford and General Motors, both of which are in different stages of a turnaround. Chrysler gets a bit of a boost here, too, though the company’s product line has yet to get the same kind of overhaul as its two larger Detroit rivals have done. Making some hay of this kind of sentiment will be tougher until Chrysler has some new cars to tout. All three can capitalize on this newfound respect if they continue to build better models and if, a big IF in GM’s case, they can market the cars well. They also need to show better business results.</p> <p> There is one big question. How long will this last? The survey was done March 3 though March 8, when Toyota’s recall news hit a fever pitch. Toyota has been the talisman of Japanese industrial superiority. When its brand image takes the kind of body blows Toyota has sustained in recent months, you can bet the others will feel some of the pain. Remember, too, that Ford was also putting out good news. The Dearborn, Mich., automaker is firmly in the black and sales are surging. A lot of the change in consumer attitude comes from reversing fortunes at Toyota and Ford.</p> <p> GM could burnish its image further in mid-May when the company will release its first-quarter earnings. Already riding a high from the fact that it paid off $8.4 billion in government loans about five years early, GM could look sharper still by reporting a tidy profit, which is possible. It may only be an operating profit, with one-time charges and problems in Europe still dragging earnings down. But the company is expected to show a profit.</p> <p> This could be an inflection point for Detroit. After years of losing to Japan, GM, Ford and Chrysler became a symbol of American failure. While Google and Yahoo showed the way to the Internet and Apple has dominated Sony in portable music players, Detroit continued to strike out. If Motown carmakers put out a few more hot cars and keep improving quality, they may be able to finally steal back respect and a lot of customers.<br /> </p>" } [2]=> array(9) { ["title"]=> string(59) "GM to pay off government debt. Will it be Ed's Lido moment?" ["description"]=> string(2560) "<p><img alt="Ed Whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Ed%20Whitacre.jpg" width="432" height="304" /></p> <p><br /> GM CEO Ed Whitacre is scheduled to be at the company’s Fairfax, Kan., plant tomorrow to announce that his company has paid the debt portion of the government’s assistance back early. Sources briefed on his plan say that he will announce that GM has paid the remaining $5.8 billion back to the U.S. Treasury Department and Canada and Ontario governments by the time he addresses the press at the plant. It’s a big step, but don’t expect a Lee Iacocca moment.</p> <p> Back in 1983, Chrysler paid off a $1.5 billion rescue loan—which was backed by the U.S. government—and the company settled the account early. Iacocca made the most of the moment, saying, “We at Chrysler borrow money the old-fashioned way. We pay it back.” That was vintage Lido. He never missed an opportunity to make a sales pitch or take over a room with his personality.</p> <p> GM’s situation is different. Paying off its government debt early is, no doubt, an impressive feat. But GM’s can’t declare a big victory yet. The government invested about $50 billion in GM. The loan portion from the U.S. and Canada was $8.4 billion. The rest of the investment came in equity. That’s why the U.S. owns 61% of GM. The taxpayers will only get all of their money back once GM launches an initial public stock offering and if the Feds can eventually sell the stock at a price fat enough to recoup the rest of the investment. Whether that happens depends on many factors, like GM’s progress in fixing its woeful European business, how fast the economy and car sales improve and—not to be discounted—fuel prices. If gasoline prices soar, sales of profitable SUVs can take a hit. Crude oil prices are up 81% during the past year.</p> <p> There’s another reason this won’t be a Iacocca moment. Whitacre is no Iacocca. He was an unqualified success at AT&T and has gotten traction at GM. He is certainly a CEO with some chops. But he is also a man of few words. Whitacre may have starred in GM’s ads, but he does not ham it up for the cameras the way Iacocca did. Besides Bob Lutz, what car executive really does? A source close to Whitacre says his message will be that the loans are paid back in full, with interest and ahead of schedule. That’s Whitacre’s style. Short, to the point and without a lot of ballyhoo. Besides, he can’t go Lido until delivers big profits and a doll of a stock offering.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_to_pay_off_g.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_to_pay_off_g.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(17) "Cars and Politics" ["pubdate"]=> string(31) "Tue, 20 Apr 2010 15:19:30 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "10" } ["summary"]=> string(2560) "<p><img alt="Ed Whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Ed%20Whitacre.jpg" width="432" height="304" /></p> <p><br /> GM CEO Ed Whitacre is scheduled to be at the company’s Fairfax, Kan., plant tomorrow to announce that his company has paid the debt portion of the government’s assistance back early. Sources briefed on his plan say that he will announce that GM has paid the remaining $5.8 billion back to the U.S. Treasury Department and Canada and Ontario governments by the time he addresses the press at the plant. It’s a big step, but don’t expect a Lee Iacocca moment.</p> <p> Back in 1983, Chrysler paid off a $1.5 billion rescue loan—which was backed by the U.S. government—and the company settled the account early. Iacocca made the most of the moment, saying, “We at Chrysler borrow money the old-fashioned way. We pay it back.” That was vintage Lido. He never missed an opportunity to make a sales pitch or take over a room with his personality.</p> <p> GM’s situation is different. Paying off its government debt early is, no doubt, an impressive feat. But GM’s can’t declare a big victory yet. The government invested about $50 billion in GM. The loan portion from the U.S. and Canada was $8.4 billion. The rest of the investment came in equity. That’s why the U.S. owns 61% of GM. The taxpayers will only get all of their money back once GM launches an initial public stock offering and if the Feds can eventually sell the stock at a price fat enough to recoup the rest of the investment. Whether that happens depends on many factors, like GM’s progress in fixing its woeful European business, how fast the economy and car sales improve and—not to be discounted—fuel prices. If gasoline prices soar, sales of profitable SUVs can take a hit. Crude oil prices are up 81% during the past year.</p> <p> There’s another reason this won’t be a Iacocca moment. Whitacre is no Iacocca. He was an unqualified success at AT&T and has gotten traction at GM. He is certainly a CEO with some chops. But he is also a man of few words. Whitacre may have starred in GM’s ads, but he does not ham it up for the cameras the way Iacocca did. Besides Bob Lutz, what car executive really does? A source close to Whitacre says his message will be that the loans are paid back in full, with interest and ahead of schedule. That’s Whitacre’s style. Short, to the point and without a lot of ballyhoo. Besides, he can’t go Lido until delivers big profits and a doll of a stock offering.</p>" } [3]=> array(9) { ["title"]=> string(49) "Consumer Reports Calls Lexus GX 460 a Safety Risk" ["description"]=> string(2202) "<p> By now, Toyota executives must be afraid to go to their inboxes or turn on the news. These days, doing either is likely to reveal yet another challenge to the company’s safety image. The latest blow comes from Consumer Reports, which has judged the Lexus GX 460 a safety risk. The consumer advocacy magazine then slapped a “Don’t Buy” rating on the GX.</p> <p> What’s worse is that Toyota’s latest public flogging has nothing to do with floor mats, sticky gas pedals or brake systems. CR bought a GX 460 and had four engineers drive the SUV in the magazine’s emergency handling test. They put the SUV through the paces, making tight turns through a serpentine course to see when stability control will kick in. All four drivers found that the rear of the GX slid out further than any other SUV before stability control kicked in. CR called the SUV a rollover risk and won’t lift its “Don’t Buy” rating until Toyota fixes the problem.</p> <p> If that’s not bad enough, Toyota has told its dealers to halt sales of the SUV. That’s the second time this year they have had to stop selling models while engineers try to figure out what’s wrong. The company said on its website that its own engineers conduct similar tests and didn’t get the same result. Toyota is trying to replicate CR’s results and see if a fix is needed. As an aside, CR said it is not aware of any rollover accidents in the Lexus.</p> <p> So what gives? Has Toyota completely forgotten how to make a safe vehicle? This is actually a rarity for Toyota, says Jake Fisher, senior automotive engineer at CR. Toyota was the first company to put stability control on all of its models. The 4Runner SUV, which is built on a similar platform as the GX, does just fine, Fisher says. </p> <p> Still, this is a nasty blow for a company whose safety record and corporate reputation have been under siege for months. If I were in safety and compliance at Toyota, I’d have engineers poring over every vehicle making doubly sure it meets tests run by Consumer Reports, the Insurance Institute for Highway Safety and government tests. This company needs to get its safety record out of the headlines.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/consumer_report.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/consumer_report.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Tue, 13 Apr 2010 18:16:56 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "1" } ["summary"]=> string(2202) "<p> By now, Toyota executives must be afraid to go to their inboxes or turn on the news. These days, doing either is likely to reveal yet another challenge to the company’s safety image. The latest blow comes from Consumer Reports, which has judged the Lexus GX 460 a safety risk. The consumer advocacy magazine then slapped a “Don’t Buy” rating on the GX.</p> <p> What’s worse is that Toyota’s latest public flogging has nothing to do with floor mats, sticky gas pedals or brake systems. CR bought a GX 460 and had four engineers drive the SUV in the magazine’s emergency handling test. They put the SUV through the paces, making tight turns through a serpentine course to see when stability control will kick in. All four drivers found that the rear of the GX slid out further than any other SUV before stability control kicked in. CR called the SUV a rollover risk and won’t lift its “Don’t Buy” rating until Toyota fixes the problem.</p> <p> If that’s not bad enough, Toyota has told its dealers to halt sales of the SUV. That’s the second time this year they have had to stop selling models while engineers try to figure out what’s wrong. The company said on its website that its own engineers conduct similar tests and didn’t get the same result. Toyota is trying to replicate CR’s results and see if a fix is needed. As an aside, CR said it is not aware of any rollover accidents in the Lexus.</p> <p> So what gives? Has Toyota completely forgotten how to make a safe vehicle? This is actually a rarity for Toyota, says Jake Fisher, senior automotive engineer at CR. Toyota was the first company to put stability control on all of its models. The 4Runner SUV, which is built on a similar platform as the GX, does just fine, Fisher says. </p> <p> Still, this is a nasty blow for a company whose safety record and corporate reputation have been under siege for months. If I were in safety and compliance at Toyota, I’d have engineers poring over every vehicle making doubly sure it meets tests run by Consumer Reports, the Insurance Institute for Highway Safety and government tests. This company needs to get its safety record out of the headlines.</p>" } [4]=> array(9) { ["title"]=> string(61) "GM's Whitacre writes to the troops. Profit may not be far off" ["description"]=> string(2198) "<p><img alt="whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/whitacre.jpg" width="100" height="75" /></p> <p> General Motors Chairman and CEO Ed Whitacre has sent out his second memo in two weeks in an effort to make his rank-and-file staffers feel better about working at GM. In his latest note, sent out on April 12, Whitacre wrote to the staff that, “I anticipate solid operating results when we report our financials in May.” This follows a March 31 memo in which the media-shy Texan said that the major executive changes are already done. The current team will take GM forward, he wrote.</p> <p>Whitacre didn’t say exactly what he means by “solid operating results.” Given his impatience for real results, I’d bet that means, at long last, some black ink. Consider a few facts. If you exclude $2.6 billion in costs for a union retiree healthcare fund, $400 million in currency losses and $100 million to wind down Saturn, GM lost just $300 million in the fourth quarter of 2009. During that same quarter, sales were down 24% in the U.S. </p> <p>In the first quarter of this year, GM’s sales are up 18.4%. GM has some red-hot models, such as the Chevrolet Camaro pony car and Chevy Equinox and GMC Terrain SUVs. The company is adding production for all three vehicles. The company is even boosting production for its full-sized Chevy Tahoe and GMC Yukon SUVs built in Arlington, Texas. Hey, I don’t know who wants those guzzlers, knowing that gasoline prices will rise again. But they are selling and GM will make a mint off of them while they are hot.</p> <p>Don’t forget a couple other things. That healthcare trust that GM poured money into took over retiree medical benefits starting on Dec. 31. So you can trim those costs for the first quarter. Going forward, GM will also be able to hire new workers at half the pay of the assembly-line veterans. Throw in rising sales in Asia and South America, and GM might really have something. GM’s troubled European business will be drag on earnings until the company can get it fixed. But elsewhere, we are seeing the seeds of a turnaround. It all starts with a bit of black ink.</p> <p><br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gms_whitacre_wr.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gms_whitacre_wr.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Mon, 12 Apr 2010 23:13:48 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "6" } ["summary"]=> string(2198) "<p><img alt="whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/whitacre.jpg" width="100" height="75" /></p> <p> General Motors Chairman and CEO Ed Whitacre has sent out his second memo in two weeks in an effort to make his rank-and-file staffers feel better about working at GM. In his latest note, sent out on April 12, Whitacre wrote to the staff that, “I anticipate solid operating results when we report our financials in May.” This follows a March 31 memo in which the media-shy Texan said that the major executive changes are already done. The current team will take GM forward, he wrote.</p> <p>Whitacre didn’t say exactly what he means by “solid operating results.” Given his impatience for real results, I’d bet that means, at long last, some black ink. Consider a few facts. If you exclude $2.6 billion in costs for a union retiree healthcare fund, $400 million in currency losses and $100 million to wind down Saturn, GM lost just $300 million in the fourth quarter of 2009. During that same quarter, sales were down 24% in the U.S. </p> <p>In the first quarter of this year, GM’s sales are up 18.4%. GM has some red-hot models, such as the Chevrolet Camaro pony car and Chevy Equinox and GMC Terrain SUVs. The company is adding production for all three vehicles. The company is even boosting production for its full-sized Chevy Tahoe and GMC Yukon SUVs built in Arlington, Texas. Hey, I don’t know who wants those guzzlers, knowing that gasoline prices will rise again. But they are selling and GM will make a mint off of them while they are hot.</p> <p>Don’t forget a couple other things. That healthcare trust that GM poured money into took over retiree medical benefits starting on Dec. 31. So you can trim those costs for the first quarter. Going forward, GM will also be able to hire new workers at half the pay of the assembly-line veterans. Throw in rising sales in Asia and South America, and GM might really have something. GM’s troubled European business will be drag on earnings until the company can get it fixed. But elsewhere, we are seeing the seeds of a turnaround. It all starts with a bit of black ink.</p> <p><br /> </p>" } [5]=> array(9) { ["title"]=> string(56) "Renault-Nissan and Daimler could work. Ghosn will insist" ["description"]=> string(2839) "<p> When Renault-Nissan CEO Carlos Ghosn first formed the Franco-Japanese car alliance, he joked at the 1999 Tokyo Motor Show about serving sushi and Chardonnay. Well, let’s slather some spatzle on the side, shall we? Renault-Nissan and Daimler AG will form a global automotive triumvirate by swapping each other 3.1% stakes in each other. It’s not a merger, mind you, but an alliance strung together with only a small equity stake.</p> <p> If it works, it will be through Ghosn’s force of will. Automotive alliances and mergers have a poor record, to say the least. This is especially true when Daimler is involved. The company’s acquisition of Chrysler ended in failure. Partnerships with Hyundai and Mitsubishi didn’t bear much fruit either. </p> <p> In this case, I’ll give Ghosn his due. The Renault-Nissan alliance is one example of an alliance that has worked. Both companies have shared engines, parts and vehicle platforms to expand their offerings faster and more cheaply than they otherwise might have done. Ghosn had the advantage of running both companies. He won’t get into an alliance without knowing that there are some real projects in the works.</p> <p> On a call today with American journlaists, Daimler CEO Dieter Zetsche, who was CEO of Chrysler during the failed merger, said this deal is different because the three companies have already hammered out specific projects to work on. “In the past,” he said, “we decided on an alliance and then later decided what to work on. We have specific concrete projects we are working on.”</p> <p> By combining car technology and manufacturing capabilities, the two companies will jointly develop future compacts and the Smart and Renault Twingo subcompacts, as well as other small cars. A four-passenger Smart is said to be in the works. The jointly-developed small cars are supposed to be ready for sale by 2013. Daimler’s Mercedes luxury unit can also help Nissan develop luxury cars for Infiniti. On a conference call with journalists, Ghosn said a 4-liter Mercedes engine could find its way into Infiniti cars in the U.S. Zetsche said the two companies will also work to develop electric cars together. The two companies also plan to build cars in each other’s U.S. plants. Nissan has two large factories in Smyrna, Tenn. and Canton, Miss. Mercedes has an assembly plant in Alabama. </p> <p> I’m not a fan of auto alliances and mergers. Even small ventures like Nummi—the soon-to-be-closed plant in Fremont, Calif., that General Motors and Toyota ran for decades gave more benefit to the Japanese giant than it did to GM. In recent years, Toyota used much more of the production. In this case, I think the deal will yield some dividends. Ghosn won’t have it any other way. Just don’t serve any raw bratwurst, please.<br /> </p>" ["link"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/04/renault-nissan.html" ["guid"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/04/renault-nissan.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(5) "Deals" ["pubdate"]=> string(31) "Wed, 07 Apr 2010 09:33:18 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "7" } ["summary"]=> string(2839) "<p> When Renault-Nissan CEO Carlos Ghosn first formed the Franco-Japanese car alliance, he joked at the 1999 Tokyo Motor Show about serving sushi and Chardonnay. Well, let’s slather some spatzle on the side, shall we? Renault-Nissan and Daimler AG will form a global automotive triumvirate by swapping each other 3.1% stakes in each other. It’s not a merger, mind you, but an alliance strung together with only a small equity stake.</p> <p> If it works, it will be through Ghosn’s force of will. Automotive alliances and mergers have a poor record, to say the least. This is especially true when Daimler is involved. The company’s acquisition of Chrysler ended in failure. Partnerships with Hyundai and Mitsubishi didn’t bear much fruit either. </p> <p> In this case, I’ll give Ghosn his due. The Renault-Nissan alliance is one example of an alliance that has worked. Both companies have shared engines, parts and vehicle platforms to expand their offerings faster and more cheaply than they otherwise might have done. Ghosn had the advantage of running both companies. He won’t get into an alliance without knowing that there are some real projects in the works.</p> <p> On a call today with American journlaists, Daimler CEO Dieter Zetsche, who was CEO of Chrysler during the failed merger, said this deal is different because the three companies have already hammered out specific projects to work on. “In the past,” he said, “we decided on an alliance and then later decided what to work on. We have specific concrete projects we are working on.”</p> <p> By combining car technology and manufacturing capabilities, the two companies will jointly develop future compacts and the Smart and Renault Twingo subcompacts, as well as other small cars. A four-passenger Smart is said to be in the works. The jointly-developed small cars are supposed to be ready for sale by 2013. Daimler’s Mercedes luxury unit can also help Nissan develop luxury cars for Infiniti. On a conference call with journalists, Ghosn said a 4-liter Mercedes engine could find its way into Infiniti cars in the U.S. Zetsche said the two companies will also work to develop electric cars together. The two companies also plan to build cars in each other’s U.S. plants. Nissan has two large factories in Smyrna, Tenn. and Canton, Miss. Mercedes has an assembly plant in Alabama. </p> <p> I’m not a fan of auto alliances and mergers. Even small ventures like Nummi—the soon-to-be-closed plant in Fremont, Calif., that General Motors and Toyota ran for decades gave more benefit to the Japanese giant than it did to GM. In recent years, Toyota used much more of the production. In this case, I think the deal will yield some dividends. Ghosn won’t have it any other way. Just don’t serve any raw bratwurst, please.<br /> </p>" } [6]=> array(9) { ["title"]=> string(44) "GM pushes for buzz, but market share fizzles" ["description"]=> string(2629) "<p><img alt="Camaro3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Camaro3.jpg" width="500" height="333" /></p> <p> They came one after the other over the course of about 15 minutes, four press releases teasing us with big sales gains made by General Motors. First, a press release at 9:54 a.m. today saying that Chevrolet sales were up a whopping 41 percent. GM offered no more detail. We’d have to wait until 10:45 to get the goods. Two minutes later, Buick is up 76 percent, said the release. Then it’s GMC up 45% and finally Cadillac up 42 percent. It was a cunning move since GM knows that in news cycles where the delivery of data bits and sound bites is measured in seconds, the wires would simply post those headlines and get the details later. They dutifully did just that.</p> <p> So for about an hour this morning, GM had some juicy headlines out on the news wires boasting whopping sales gains for its four remaining brands. Looks like a good month, right? Well, when the details finally emerged it wasn’t such a great month after all. Remember, this time last year the economy was reeling from the financial crisis. The car market was at historic lows and GM was gliding straight toward bankruptcy court. So March 2009 is an easy comparison for the writers of press releases.</p> <p> Once we could dig into the numbers and ask some questions, GM didn’t exactly hit the cover off the ball. Marketing Vice President Susan Docherty said that sales to corporate and rental fleets were up 64 percent. Fleet sales tend to be less profitable since carmakers often sell those car to rental agencies at a discount. Sales to Pontiac, Hummer, Saab and Saturn, which are all being killed off are sold, plummeted and GM hasn’t been able to recoup all of the buyers. The bottom line is that GM’s market share fell to 17.6 percent, down from 18 percent this time last year and well off the 18.7 percent pace the company has set for this year.</p> <p> The company does have some great new models. The Chevy Equinox, GMC Terrain and Cadillac SRX SUVs are hotter than a two-dollar pistol. So is the Camaro (pictured above) which outsold the rival Ford Mustang 8,900 to 5,900. Even Buick has a hit with its LaCrosse sedan. As fast as those cars are selling, GM needs to get more people to give those four surviving brands a look. Otherwise, Chairman and CEO Ed Whitacre’s unofficial target of 20 percent market share by the end of this year will be a mirage. Today’s play was cunning. But it will take more than PR schemes to convince GM’s skeptics that it has turned things around.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pushes_for_b.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pushes_for_b.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Thu, 01 Apr 2010 18:06:30 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "14" } ["summary"]=> string(2629) "<p><img alt="Camaro3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Camaro3.jpg" width="500" height="333" /></p> <p> They came one after the other over the course of about 15 minutes, four press releases teasing us with big sales gains made by General Motors. First, a press release at 9:54 a.m. today saying that Chevrolet sales were up a whopping 41 percent. GM offered no more detail. We’d have to wait until 10:45 to get the goods. Two minutes later, Buick is up 76 percent, said the release. Then it’s GMC up 45% and finally Cadillac up 42 percent. It was a cunning move since GM knows that in news cycles where the delivery of data bits and sound bites is measured in seconds, the wires would simply post those headlines and get the details later. They dutifully did just that.</p> <p> So for about an hour this morning, GM had some juicy headlines out on the news wires boasting whopping sales gains for its four remaining brands. Looks like a good month, right? Well, when the details finally emerged it wasn’t such a great month after all. Remember, this time last year the economy was reeling from the financial crisis. The car market was at historic lows and GM was gliding straight toward bankruptcy court. So March 2009 is an easy comparison for the writers of press releases.</p> <p> Once we could dig into the numbers and ask some questions, GM didn’t exactly hit the cover off the ball. Marketing Vice President Susan Docherty said that sales to corporate and rental fleets were up 64 percent. Fleet sales tend to be less profitable since carmakers often sell those car to rental agencies at a discount. Sales to Pontiac, Hummer, Saab and Saturn, which are all being killed off are sold, plummeted and GM hasn’t been able to recoup all of the buyers. The bottom line is that GM’s market share fell to 17.6 percent, down from 18 percent this time last year and well off the 18.7 percent pace the company has set for this year.</p> <p> The company does have some great new models. The Chevy Equinox, GMC Terrain and Cadillac SRX SUVs are hotter than a two-dollar pistol. So is the Camaro (pictured above) which outsold the rival Ford Mustang 8,900 to 5,900. Even Buick has a hit with its LaCrosse sedan. As fast as those cars are selling, GM needs to get more people to give those four surviving brands a look. Otherwise, Chairman and CEO Ed Whitacre’s unofficial target of 20 percent market share by the end of this year will be a mirage. Today’s play was cunning. But it will take more than PR schemes to convince GM’s skeptics that it has turned things around.<br /> </p>" } [7]=> array(9) { ["title"]=> string(50) "Geely buys Volvo. Believe it or not, it could work" ["description"]=> string(2968) "<p><img alt="Volvo2.JPG" src="http://www.businessweek.com/autos/autobeat/archives/Volvo2.JPG" width="320" height="302" /></p> <p>Mergers and acquisitions in the car business have a terrible record. DaimlerChrysler stands tall as the worst example of a bad marriage. General Motors made a hash of Saab and Hummer and its tie-ups with Isuzu, Suzuki and Subaru didn’t yield much either. Tata has struggled with Jaguar and Land Rover and now that Ford is sending Volvo off in a boat to China, we have to ask, can Geely make a go of this?</p> <p> It’s going to be a tough job. Geely is paying $1.8 billion for the brand. Volvo sales of 335,000 globally are off 11% this year and 27% off their peak, according to this Bloomberg story. The Swedish carmaker has lost $2.6 billion during the last two years. The brand hasn’t been a real moneymaker for a very long time. Its costs are high and prices are strong, but Volvo doesn’t command luxury premiums for its cars. </p> <p> On paper, at least, this could be a very good deal for Volvo. Be clear about one thing. Zhejiang Geely Holding Co., not the carmaker, is buying Volvo. This is an important distinction, says Jim Hall, principal of 2953 Analytics in Birmingham, Mich. It indicates that Volvo won’t just be folded into Geely and lose the brand’s strong Nordic identity. Geely Chairman Li Shufu said with unintentional humor that, “I see Volvo as a tiger. It belongs to the forest and shouldn’t be contained in the zoo,” Li said in Mandarin. “The heart of the tiger is in Sweden and Belgium.” </p> <p> Volvo will keep its own management team, board of directors and headquarters in Gothenburg, Sweden. That would indicate that Volvo will keep its Swedish heritage and cachet. European and American Volvo loyalists will still be buying cars engineered in Gothenburg and built in Europe. .</p> <p> What that would mean, however, is that Geely is buying Volvo and lingering on with the same money-losing structure. That’s where China comes in. The Chinese luxury market is booming and still has room for some other players to come in and build a brand. Geely will assemble Volvo cars in China using cheaper manufacturing, Hall says. The brand is upscale and Geely ownership might even be seen as preferable by Chinese consumers. So the company car grow sales and get fatter margins in China. That makes the business case work better than it ever did either under Ford or as an independent carmaker. </p> <p> After so many failed auto deals, this one has the makings of a success. Of course, it means Geely can’t manhandle Volvo. They need to rely on Ford and the Swedes for technology that will make the Chinese cars real Volvos. In short, they should manage it as a separate subsidiary the way Volkswagen Group runs Audi AG. Give it autonomy and let the tiger run. Volvo is a niche brand and will never be a cash cow. But it certainly could work if Geely gives it some independence.</p>" ["link"]=> string(82) "http://www.businessweek.com/autos/autobeat/archives/2010/03/geely_buys_volv_1.html" ["guid"]=> string(82) "http://www.businessweek.com/autos/autobeat/archives/2010/03/geely_buys_volv_1.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(5) "Deals" ["pubdate"]=> string(31) "Mon, 29 Mar 2010 16:42:46 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "10" } ["summary"]=> string(2968) "<p><img alt="Volvo2.JPG" src="http://www.businessweek.com/autos/autobeat/archives/Volvo2.JPG" width="320" height="302" /></p> <p>Mergers and acquisitions in the car business have a terrible record. DaimlerChrysler stands tall as the worst example of a bad marriage. General Motors made a hash of Saab and Hummer and its tie-ups with Isuzu, Suzuki and Subaru didn’t yield much either. Tata has struggled with Jaguar and Land Rover and now that Ford is sending Volvo off in a boat to China, we have to ask, can Geely make a go of this?</p> <p> It’s going to be a tough job. Geely is paying $1.8 billion for the brand. Volvo sales of 335,000 globally are off 11% this year and 27% off their peak, according to this Bloomberg story. The Swedish carmaker has lost $2.6 billion during the last two years. The brand hasn’t been a real moneymaker for a very long time. Its costs are high and prices are strong, but Volvo doesn’t command luxury premiums for its cars. </p> <p> On paper, at least, this could be a very good deal for Volvo. Be clear about one thing. Zhejiang Geely Holding Co., not the carmaker, is buying Volvo. This is an important distinction, says Jim Hall, principal of 2953 Analytics in Birmingham, Mich. It indicates that Volvo won’t just be folded into Geely and lose the brand’s strong Nordic identity. Geely Chairman Li Shufu said with unintentional humor that, “I see Volvo as a tiger. It belongs to the forest and shouldn’t be contained in the zoo,” Li said in Mandarin. “The heart of the tiger is in Sweden and Belgium.” </p> <p> Volvo will keep its own management team, board of directors and headquarters in Gothenburg, Sweden. That would indicate that Volvo will keep its Swedish heritage and cachet. European and American Volvo loyalists will still be buying cars engineered in Gothenburg and built in Europe. .</p> <p> What that would mean, however, is that Geely is buying Volvo and lingering on with the same money-losing structure. That’s where China comes in. The Chinese luxury market is booming and still has room for some other players to come in and build a brand. Geely will assemble Volvo cars in China using cheaper manufacturing, Hall says. The brand is upscale and Geely ownership might even be seen as preferable by Chinese consumers. So the company car grow sales and get fatter margins in China. That makes the business case work better than it ever did either under Ford or as an independent carmaker. </p> <p> After so many failed auto deals, this one has the makings of a success. Of course, it means Geely can’t manhandle Volvo. They need to rely on Ford and the Swedes for technology that will make the Chinese cars real Volvos. In short, they should manage it as a separate subsidiary the way Volkswagen Group runs Audi AG. Give it autonomy and let the tiger run. Volvo is a niche brand and will never be a cash cow. But it certainly could work if Geely gives it some independence.</p>" } [8]=> array(9) { ["title"]=> string(67) "Toyota makes deals and drive the market up. Don't expect it to last" ["description"]=> string(1736) "<p> If mid-month sales numbers from Edmunds.com are any indicator, the car market may be finally picking up. The Santa Monica, Calif.-based consumer research site says that through Mar. 18 , car sales were on pace for a 13.5 million annualized adjusted sales rate. That’s a nice clip considering that most analysts think car sales will be in the 11 million or 11.5 million range. But don’t get too excited yet.</p> <p> Edmunds also says that there are a lot of deals in the market right now. Toyota is trying to put a salve on its market woes with zero-percent financing and other deals. Competitors followed suit with big incentives of their own. Toyota’s offers boosted consideration of their cars by 40%, Edmunds said. And that 13.5-million vehicle sales rate says that other car companies are finding takers for these deals, as well. In other words, the auto companies are buying the sales boost</p> <p> Carmakers are loathe to continue such discounting. Look at the trouble General Motors, Ford and Chrysler got in throughout the decade by splashing cash for sales. Chrysler is still doing all it can to keep sales going until new models arrive. But GM and Ford have worked hard to get better pricing on their newest cars. Ford has bragged about fatter prices in recent earnings announcement. GM CEO Ed Whitacre wants sales growth without having to buy it. Even Toyota, battered as the company is by its string of recalls, won’t want to give away its long-held pricing advantage, either. That leads me to believe that the deals won’t last all year. It’s at least a good sign that people are willing to shop at all. Just temper the enthusiasm until consumers go back to showrooms without needing a bribe.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyota_makes_de.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyota_makes_de.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(22) "Markets and Management" ["pubdate"]=> string(31) "Wed, 24 Mar 2010 17:44:34 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "5" } ["summary"]=> string(1736) "<p> If mid-month sales numbers from Edmunds.com are any indicator, the car market may be finally picking up. The Santa Monica, Calif.-based consumer research site says that through Mar. 18 , car sales were on pace for a 13.5 million annualized adjusted sales rate. That’s a nice clip considering that most analysts think car sales will be in the 11 million or 11.5 million range. But don’t get too excited yet.</p> <p> Edmunds also says that there are a lot of deals in the market right now. Toyota is trying to put a salve on its market woes with zero-percent financing and other deals. Competitors followed suit with big incentives of their own. Toyota’s offers boosted consideration of their cars by 40%, Edmunds said. And that 13.5-million vehicle sales rate says that other car companies are finding takers for these deals, as well. In other words, the auto companies are buying the sales boost</p> <p> Carmakers are loathe to continue such discounting. Look at the trouble General Motors, Ford and Chrysler got in throughout the decade by splashing cash for sales. Chrysler is still doing all it can to keep sales going until new models arrive. But GM and Ford have worked hard to get better pricing on their newest cars. Ford has bragged about fatter prices in recent earnings announcement. GM CEO Ed Whitacre wants sales growth without having to buy it. Even Toyota, battered as the company is by its string of recalls, won’t want to give away its long-held pricing advantage, either. That leads me to believe that the deals won’t last all year. It’s at least a good sign that people are willing to shop at all. Just temper the enthusiasm until consumers go back to showrooms without needing a bribe.<br /> </p>" } [9]=> array(9) { ["title"]=> string(51) "Jerry York passes. Farewell to a turnaround maestro" ["description"]=> string(4325) "<p><img alt="York.jpg" src="http://www.businessweek.com/autos/autobeat/archives/York.jpg" width="340" height="273" /></p> <p>I am regrettably late writing about this. As most readers know, former Chrysler Corp. and IBM Corp CFO Jerome York passed away on March 18. York will be most recently remembered for his role as the brain trust behind Kirk Kerkorian’s investment in General Motors in 2006 and their attempt to force the auto giant into a shotgun marriage with Carlos Ghosn’s Renault-Nissan. The attempt was half-baked and destined for failure. </p> <p>York should be remembered for much more. The flinty finance guy was a tough veteran of some big turnaround jobs. He knew how to rescue bad companies. Let’s look at that foray into General Motors. It’s true that York failed to create major change at the troubled automaker. But the U.S. Treasury Department and its auto task force wound up doing many of the things that York said needed to be done. Management wasn’t going to bite the bullet until the company was nearly out of money and facing bankruptcy.</p> <p>A veteran of turnaround jobs at Chrysler and IBM, York had a few key points for any company in trouble. Ditch bad operations and focus on fixing the core business. Simplify the company and its brands. Most of all, create accountability and a sense of crisis. That means firing any executive who couldn’t get the job done.</p> <p>Over dinner one night during the GM saga York told me the company needed to pare its brands down and focus on the core. Saab and Hummer were two that he wanted to put up for sale. Under former CEO Rick Wagoner, that wasn’t going to happen. But once the Treasury Department and its hired advisors came in, they started looking at every brand. They even pressed to find a business case for Buick and GMC, which remain with GM to this day. But the Feds ordered closure or sale of the rest. Pontiac and Saturn are gone. Saab is sold and Hummer will be sold or, more likely, wound down. Bankruptcy helped that happen, of course, but York knew which direction to go. York’s mantra was simple. Sell non-core businesses and focus cash and executive time on the parts that matter.</p> <p> He also wanted to see a restructuring of GM’s massive union obligations. That was much tougher to do back in 2006, when bankruptcy was unthinkable. York wanted to take on the United Auto Workers union to slash retiree benefits and labor costs. Wagoner got some of that done on his own. Ultimately, the government-funded bankruptcy helped get a health-care fund done with less cash than GM initially was going to give it.</p> <p> Sure, York’s Renault-Nissan gambit had no chance of working. Wagoner would never give the deal a real look because he knew it was a means for York and Kerkorian to replace him with Renault-Nissan CEO Carlos Ghosn. It didn’t work, and three years later it was left to the government to fire Wagoner. Auto Task Force leader Steve Rattner said GM was as poorly-managed as any company he had ever seen. York told me on several occasions that Wagoner was the problem. It appears he was ahead of the game on that call. York said the company needed an outsider to come into GM and create a bit of fear. Today, the company has that leader in Ed Whitacre. The AT&T boss may end up being just the outside voice GM needs. Time will tell, but Whitacre is shaking things up.</p> <p> Don’t forget who Jerry York was. He was the CFO at IBM under Louis Gerstner and a major player in saving the company. Spendthrift executives used to quake before going before York. He wanted to create a sense of urgency and it worked. IBM’s turnaround is legendary. </p> <p> Now that York has passed and car guy Bob Lutz is retiring from GM, the industry is losing a couple of the executives who played key roles in some big fix-it jobs. They have been replaced by outsiders like Whitacre, Ford’s Alan Mulally and Fiat-Chrysler’s Sergio Marchionne. Hopefully those men and the young executives coming up will have the kind of business sense to truly compete. They can always take a few cues from York. Stay focused. Cut the weak stuff out. Invest in your core business and make sure the troops know that there are consequences for failing. That is York’s legacy. Farewell, Jerry.</p> <p><br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/jerry_york_pass.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/jerry_york_pass.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(8) "Car Guys" ["pubdate"]=> string(31) "Mon, 22 Mar 2010 18:42:15 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "1" } ["summary"]=> string(4325) "<p><img alt="York.jpg" src="http://www.businessweek.com/autos/autobeat/archives/York.jpg" width="340" height="273" /></p> <p>I am regrettably late writing about this. As most readers know, former Chrysler Corp. and IBM Corp CFO Jerome York passed away on March 18. York will be most recently remembered for his role as the brain trust behind Kirk Kerkorian’s investment in General Motors in 2006 and their attempt to force the auto giant into a shotgun marriage with Carlos Ghosn’s Renault-Nissan. The attempt was half-baked and destined for failure. </p> <p>York should be remembered for much more. The flinty finance guy was a tough veteran of some big turnaround jobs. He knew how to rescue bad companies. Let’s look at that foray into General Motors. It’s true that York failed to create major change at the troubled automaker. But the U.S. Treasury Department and its auto task force wound up doing many of the things that York said needed to be done. Management wasn’t going to bite the bullet until the company was nearly out of money and facing bankruptcy.</p> <p>A veteran of turnaround jobs at Chrysler and IBM, York had a few key points for any company in trouble. Ditch bad operations and focus on fixing the core business. Simplify the company and its brands. Most of all, create accountability and a sense of crisis. That means firing any executive who couldn’t get the job done.</p> <p>Over dinner one night during the GM saga York told me the company needed to pare its brands down and focus on the core. Saab and Hummer were two that he wanted to put up for sale. Under former CEO Rick Wagoner, that wasn’t going to happen. But once the Treasury Department and its hired advisors came in, they started looking at every brand. They even pressed to find a business case for Buick and GMC, which remain with GM to this day. But the Feds ordered closure or sale of the rest. Pontiac and Saturn are gone. Saab is sold and Hummer will be sold or, more likely, wound down. Bankruptcy helped that happen, of course, but York knew which direction to go. York’s mantra was simple. Sell non-core businesses and focus cash and executive time on the parts that matter.</p> <p> He also wanted to see a restructuring of GM’s massive union obligations. That was much tougher to do back in 2006, when bankruptcy was unthinkable. York wanted to take on the United Auto Workers union to slash retiree benefits and labor costs. Wagoner got some of that done on his own. Ultimately, the government-funded bankruptcy helped get a health-care fund done with less cash than GM initially was going to give it.</p> <p> Sure, York’s Renault-Nissan gambit had no chance of working. Wagoner would never give the deal a real look because he knew it was a means for York and Kerkorian to replace him with Renault-Nissan CEO Carlos Ghosn. It didn’t work, and three years later it was left to the government to fire Wagoner. Auto Task Force leader Steve Rattner said GM was as poorly-managed as any company he had ever seen. York told me on several occasions that Wagoner was the problem. It appears he was ahead of the game on that call. York said the company needed an outsider to come into GM and create a bit of fear. Today, the company has that leader in Ed Whitacre. The AT&T boss may end up being just the outside voice GM needs. Time will tell, but Whitacre is shaking things up.</p> <p> Don’t forget who Jerry York was. He was the CFO at IBM under Louis Gerstner and a major player in saving the company. Spendthrift executives used to quake before going before York. He wanted to create a sense of urgency and it worked. IBM’s turnaround is legendary. </p> <p> Now that York has passed and car guy Bob Lutz is retiring from GM, the industry is losing a couple of the executives who played key roles in some big fix-it jobs. They have been replaced by outsiders like Whitacre, Ford’s Alan Mulally and Fiat-Chrysler’s Sergio Marchionne. Hopefully those men and the young executives coming up will have the kind of business sense to truly compete. They can always take a few cues from York. Stay focused. Cut the weak stuff out. Invest in your core business and make sure the troops know that there are consequences for failing. That is York’s legacy. Farewell, Jerry.</p> <p><br /> </p>" } [10]=> array(9) { ["title"]=> string(79) "Toyota's incentive deals drive interest. Can the company drive pricing back up?" ["description"]=> string(2082) "<p> Toyota is looking more like Detroit’s Big Three all the time. First the quality problems and now the company has a big incentive campaign to win back loyalty. Toyota is offering 0% financing for up to five years and some discounted lease deals as a way to get buyers to look at its cars in the wake of its seemingly unending recall problems. The latest problem came in San Diego when a driver of a 2008 Prius claimed he couldn’t stop the car even though he was braking hard.</p> <p> The incentive deal appears to be working, according to Edmunds.com. The company said in <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahOrD5gJcdhg">this </a>Bloomberg story that Toyota may report a 30% boost in sales in March thanks to the offers. That comparison comes off a particularly bad March 2009 when the recession was hammering auto sales. Still, it’s good news if Toyota can gin up more sales interest when the company’s recall drama is a mainstay in the 24-hour news cycle. </p> <p> There is a bigger point here. As I pointed out in <a href="http://www.businessweek.com/magazine/content/10_08/b4167038017102.htm">this </a>Bloomberg BusinessWeek story, Toyota’s troubles will put its brand on a more even playing field with its rivals, creating an opening for Ford, Honda, General Motors, Hyundai-Kia and others to steal buyers. The first casualty of Toyota’s problems may be pricing. Getting fat sticker prices is partly a function of brand strength. Toyota’s brand has taken body blows and the company is discounting to lure shoppers to showrooms. </p> <p> How long will this last? It could be quite a while. GM started 0% financing back in 2001 and never got off the discounting treadmill. To minimize the damage to its pricing, and therefore profits, Toyota will have to find an end to these recalls and tell a credible story that its quality is up to snuff. That means the company has to get a fix that stops these problems with runaway Priuses and other sudden acceleration claims. Only good engineering and time will heal these wounds.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyotas_incenti.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyotas_incenti.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Wed, 10 Mar 2010 11:56:58 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "48" } ["summary"]=> string(2082) "<p> Toyota is looking more like Detroit’s Big Three all the time. First the quality problems and now the company has a big incentive campaign to win back loyalty. Toyota is offering 0% financing for up to five years and some discounted lease deals as a way to get buyers to look at its cars in the wake of its seemingly unending recall problems. The latest problem came in San Diego when a driver of a 2008 Prius claimed he couldn’t stop the car even though he was braking hard.</p> <p> The incentive deal appears to be working, according to Edmunds.com. The company said in <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahOrD5gJcdhg">this </a>Bloomberg story that Toyota may report a 30% boost in sales in March thanks to the offers. That comparison comes off a particularly bad March 2009 when the recession was hammering auto sales. Still, it’s good news if Toyota can gin up more sales interest when the company’s recall drama is a mainstay in the 24-hour news cycle. </p> <p> There is a bigger point here. As I pointed out in <a href="http://www.businessweek.com/magazine/content/10_08/b4167038017102.htm">this </a>Bloomberg BusinessWeek story, Toyota’s troubles will put its brand on a more even playing field with its rivals, creating an opening for Ford, Honda, General Motors, Hyundai-Kia and others to steal buyers. The first casualty of Toyota’s problems may be pricing. Getting fat sticker prices is partly a function of brand strength. Toyota’s brand has taken body blows and the company is discounting to lure shoppers to showrooms. </p> <p> How long will this last? It could be quite a while. GM started 0% financing back in 2001 and never got off the discounting treadmill. To minimize the damage to its pricing, and therefore profits, Toyota will have to find an end to these recalls and tell a credible story that its quality is up to snuff. That means the company has to get a fix that stops these problems with runaway Priuses and other sudden acceleration claims. Only good engineering and time will heal these wounds.</p>" } [11]=> array(9) { ["title"]=> string(49) "Bob Lutz retires from GM. Long live his influence" ["description"]=> string(5757) "<p><img alt="Lutz3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Lutz3.jpg" width="368" height="348" /></p> <p> It truly is the end of an era. Bob Lutz, the cocksure maverick who led a product renaissance at both General Motors and Chrysler, will retire effective May 1. When Lutz goes, the industry will lose one of its best car guys and a strong personality known as much for his gravelly pronouncements at auto shows as he was for the automobiles he helped create.</p> <p> GM will surely miss his direction in the company’s new-car works. When Lutz arrived in September 2001, GM was putting out bland cars and cutting corners on all but its most-profitable pickup trucks and SUVs. Designers also took a back seat when the company set up to develop a new model. The company would engineer the underpinnings of a car, putting all considerations from engineering, manufacturing and marketing first. Then designers would wrap a steel body around it. The results were typically rote and boxy. When GM tried to step out with design, it ended up with cars like the famously garish Pontiac Aztek SUV.</p> <p> Lutz brought design to the forefront. The company started its new cars with the styling concept first and then started to make changes for fuel economy, cabin space or aerodynamics or any other practical attribute. Stylists didn’t win every battle, but clearly design has improved immensely under Lutz’s reign. It took several years for Lutz’s overhaul to take hold. When it did, the results were much better cars that typically sold for thousands of dollars more than the old model they replaced. The current Cadillac CTS and Chevrolet Camaro have been critically praised. The Camaro has consistently outsold the rival Ford Mustang since its launch last year. GM has had to add production for the Chevy Equinox and GMC Terrain SUVs. </p> <p> Under Lutz, GM spent more cash to spruce up GM’s cabins, where the company’s finance-driven management team had often shaved budgets. Eric Noble, president of California auto consulting firm The CarLab, said the Malibu has nicer materials inside than a Toyota Camry. The Saturn Aura and Malibu won North American Car of the Year awards in 2007 and 2008. </p> <p> Lutz also spearheaded the Chevrolet Volt program. The fruits of that work will come this fall when GM starts selling the car, which is engineered to run purely on electric power for 40 miles. Lutz had to make three passes at now-fired GM Chairman and CEO Rick Wagoner to get an electric car approved.</p> <p> Lutz wasn’t Mr. Green. This is a guy who flies his own jet fighter and has a passion for sports cars. He argued against government fuel economy rules and eschewed hybrid-electric cars until he saw the kind of marketing mileage Toyota was getting for its Prius. He famously declared Global Warming “a total crock.” </p> <p> He also had some misreads when it came to the models he put out. The new GTO in 2004 was a cult favorite among gearheads, but the car was based on Australia’s Holden Monaro coupe and its jellybean styling looked dated. GM sold about 1,000 GTOs a month before ending production after three years. Remember the truck-nosed minivans? Lutz put an SUV face on the Chevy Uplander, Saturn Relay, Pontiac Montana and Buick Terrazza in 2005 and they, too, flopped. Lutz said at the time that it was a low-budget program. It was also bad badge engineering.</p> <p> More recently, Lutz was overseeing marketing. He played a big role in the “May the Best Car Win” campaign that compared GM’s models to the best from Japan and Germany. It was audacious and showed that the company had confidence in the new cars Lutz and GM’s team had produced. GM still has a long way to go to convince some consumers to give its cars a look, but the campaign boosted showroom traffic.</p> <p> Things changed in December. Whitacre and the board fired former CEO Fritz Henderson and later made Lutz an advisor. Lutz was dismayed at Henderson’s dismissal. Being an advisor with little authority didn’t suit his style, either. As Henderson told me today, Lutz “wants to be in the game.” At 78, Lutz has had a long run. If he isn’t having a major impact, he may as well kick back.</p> <p> Someone has to pick up where he leaves off. Without Lutz to bring a product focus to GM, the company may surely be lost right now. Tom Stephens, GM’s vice chairman of global product operations, and GM-North America President Mark Reuss are the two men who will have to keep the car culture burning at GM, says Jim Hall. Lutz says he left a system in place to make sure it happens. And the two executives minding the car works have the sense to keep it going. Stephens is a car nut with an impressive collection of muscle cars and deep engineering knowledge. Reuss recently ran GM’s Holden business, where he had a big hand in developing the Camaro and beloved Pontiac G8 sports sedan. He is an engineer by training and has just the kind of expertise GM needs high up in management.</p> <p> There may be tremendous pressure to return to old habits. Chairman and CEO Ed Whitacre is driven to boost sales, turn a profit and take GM public as soon as he can. That way the government can sell its 61% stake and GM can ditch the “Government Motors” moniker. But with that drive could come the pressure to shave costs to show potential investors a better bottom line. That isn’t to say Whitacre doesn’t believe in good products, though he has said little on the subject. But the company will have to resist the urge to pinch pennies. And management will do it without Lutz’s force of will. Hopefully for GM’s sake, the team he leaves behind will be able to do it.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bob_lutz_retire.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bob_lutz_retire.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(8) "Car Guys" ["pubdate"]=> string(31) "Wed, 03 Mar 2010 17:26:49 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "19" } ["summary"]=> string(5757) "<p><img alt="Lutz3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Lutz3.jpg" width="368" height="348" /></p> <p> It truly is the end of an era. Bob Lutz, the cocksure maverick who led a product renaissance at both General Motors and Chrysler, will retire effective May 1. When Lutz goes, the industry will lose one of its best car guys and a strong personality known as much for his gravelly pronouncements at auto shows as he was for the automobiles he helped create.</p> <p> GM will surely miss his direction in the company’s new-car works. When Lutz arrived in September 2001, GM was putting out bland cars and cutting corners on all but its most-profitable pickup trucks and SUVs. Designers also took a back seat when the company set up to develop a new model. The company would engineer the underpinnings of a car, putting all considerations from engineering, manufacturing and marketing first. Then designers would wrap a steel body around it. The results were typically rote and boxy. When GM tried to step out with design, it ended up with cars like the famously garish Pontiac Aztek SUV.</p> <p> Lutz brought design to the forefront. The company started its new cars with the styling concept first and then started to make changes for fuel economy, cabin space or aerodynamics or any other practical attribute. Stylists didn’t win every battle, but clearly design has improved immensely under Lutz’s reign. It took several years for Lutz’s overhaul to take hold. When it did, the results were much better cars that typically sold for thousands of dollars more than the old model they replaced. The current Cadillac CTS and Chevrolet Camaro have been critically praised. The Camaro has consistently outsold the rival Ford Mustang since its launch last year. GM has had to add production for the Chevy Equinox and GMC Terrain SUVs. </p> <p> Under Lutz, GM spent more cash to spruce up GM’s cabins, where the company’s finance-driven management team had often shaved budgets. Eric Noble, president of California auto consulting firm The CarLab, said the Malibu has nicer materials inside than a Toyota Camry. The Saturn Aura and Malibu won North American Car of the Year awards in 2007 and 2008. </p> <p> Lutz also spearheaded the Chevrolet Volt program. The fruits of that work will come this fall when GM starts selling the car, which is engineered to run purely on electric power for 40 miles. Lutz had to make three passes at now-fired GM Chairman and CEO Rick Wagoner to get an electric car approved.</p> <p> Lutz wasn’t Mr. Green. This is a guy who flies his own jet fighter and has a passion for sports cars. He argued against government fuel economy rules and eschewed hybrid-electric cars until he saw the kind of marketing mileage Toyota was getting for its Prius. He famously declared Global Warming “a total crock.” </p> <p> He also had some misreads when it came to the models he put out. The new GTO in 2004 was a cult favorite among gearheads, but the car was based on Australia’s Holden Monaro coupe and its jellybean styling looked dated. GM sold about 1,000 GTOs a month before ending production after three years. Remember the truck-nosed minivans? Lutz put an SUV face on the Chevy Uplander, Saturn Relay, Pontiac Montana and Buick Terrazza in 2005 and they, too, flopped. Lutz said at the time that it was a low-budget program. It was also bad badge engineering.</p> <p> More recently, Lutz was overseeing marketing. He played a big role in the “May the Best Car Win” campaign that compared GM’s models to the best from Japan and Germany. It was audacious and showed that the company had confidence in the new cars Lutz and GM’s team had produced. GM still has a long way to go to convince some consumers to give its cars a look, but the campaign boosted showroom traffic.</p> <p> Things changed in December. Whitacre and the board fired former CEO Fritz Henderson and later made Lutz an advisor. Lutz was dismayed at Henderson’s dismissal. Being an advisor with little authority didn’t suit his style, either. As Henderson told me today, Lutz “wants to be in the game.” At 78, Lutz has had a long run. If he isn’t having a major impact, he may as well kick back.</p> <p> Someone has to pick up where he leaves off. Without Lutz to bring a product focus to GM, the company may surely be lost right now. Tom Stephens, GM’s vice chairman of global product operations, and GM-North America President Mark Reuss are the two men who will have to keep the car culture burning at GM, says Jim Hall. Lutz says he left a system in place to make sure it happens. And the two executives minding the car works have the sense to keep it going. Stephens is a car nut with an impressive collection of muscle cars and deep engineering knowledge. Reuss recently ran GM’s Holden business, where he had a big hand in developing the Camaro and beloved Pontiac G8 sports sedan. He is an engineer by training and has just the kind of expertise GM needs high up in management.</p> <p> There may be tremendous pressure to return to old habits. Chairman and CEO Ed Whitacre is driven to boost sales, turn a profit and take GM public as soon as he can. That way the government can sell its 61% stake and GM can ditch the “Government Motors” moniker. But with that drive could come the pressure to shave costs to show potential investors a better bottom line. That isn’t to say Whitacre doesn’t believe in good products, though he has said little on the subject. But the company will have to resist the urge to pinch pennies. And management will do it without Lutz’s force of will. Hopefully for GM’s sake, the team he leaves behind will be able to do it.<br /> </p>" } [12]=> array(9) { ["title"]=> string(39) "Bad timing: GM recalls 1.3 million cars" ["description"]=> string(1999) "<p><br /> Well, so much for racing through the gap left open by Toyota’s recall saga. General Motors said late Monday that it will recall 1.3 million compact cars to fix a power steering problem. </p> <p>The timing is terrible. GM may have just benefitted from Toyota’s problems as the company’s sales rose 11.5% in February. The more important number is that sales for the four brands it is keeping —Buick, Cadillac, Chevrolet and GMC—rose 32% in the month. That’s a sign that GM found some buyers who might have shopped Toyota otherwise.</p> <p>Keeping that momentum just got a little tougher. GM said that the company will start the recall following 1,100 complaints about the power steering in its small cars. GM is recalling the 2005 through 2010 Chevrolet Cobalt, 2007 through 2010 Pontiac G5, 2005 and 2006 Pontiac Pursuit sold in Canada and the 2005 and 2006 Pontiac G4 sold in Mexico. </p> <p>The company can hope that its big recall will be lost in the shuffle of Toyota’s ongoing recall problems and the related government hearings. Toyota’s problems give all of its rivals a chance to prove that their cars are as good as, or better than Toyota’s models. Honda can make that claim. Its quality scores have been good for years. Hyundai and Ford have been making progress for several years, giving them a credible story. GM has been making headway with quality but still had a lot of work to do to convince consumers that its cars are just as good as those sold by Toyota.<br /> <br /> At a time when recalls are big news, this is a set back. Recalls happen all the time and this one pales next to the 8 million cars Toyota has recalled recently. So, GM may still be able to take advantage of Toyota’s big stumble. At the least, consumers will view Toyota’s quality on a more even field with most other carmakers. But GM just gave the skeptical consumers that the company needs to win over a reason to believe that it hasn’t closed the quality gap. <br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bad_timing_gm_r.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bad_timing_gm_r.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(7) "Quality" ["pubdate"]=> string(31) "Tue, 02 Mar 2010 15:18:23 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "46" } ["summary"]=> string(1999) "<p><br /> Well, so much for racing through the gap left open by Toyota’s recall saga. General Motors said late Monday that it will recall 1.3 million compact cars to fix a power steering problem. </p> <p>The timing is terrible. GM may have just benefitted from Toyota’s problems as the company’s sales rose 11.5% in February. The more important number is that sales for the four brands it is keeping —Buick, Cadillac, Chevrolet and GMC—rose 32% in the month. That’s a sign that GM found some buyers who might have shopped Toyota otherwise.</p> <p>Keeping that momentum just got a little tougher. GM said that the company will start the recall following 1,100 complaints about the power steering in its small cars. GM is recalling the 2005 through 2010 Chevrolet Cobalt, 2007 through 2010 Pontiac G5, 2005 and 2006 Pontiac Pursuit sold in Canada and the 2005 and 2006 Pontiac G4 sold in Mexico. </p> <p>The company can hope that its big recall will be lost in the shuffle of Toyota’s ongoing recall problems and the related government hearings. Toyota’s problems give all of its rivals a chance to prove that their cars are as good as, or better than Toyota’s models. Honda can make that claim. Its quality scores have been good for years. Hyundai and Ford have been making progress for several years, giving them a credible story. GM has been making headway with quality but still had a lot of work to do to convince consumers that its cars are just as good as those sold by Toyota.<br /> <br /> At a time when recalls are big news, this is a set back. Recalls happen all the time and this one pales next to the 8 million cars Toyota has recalled recently. So, GM may still be able to take advantage of Toyota’s big stumble. At the least, consumers will view Toyota’s quality on a more even field with most other carmakers. But GM just gave the skeptical consumers that the company needs to win over a reason to believe that it hasn’t closed the quality gap. <br /> </p>" } [13]=> array(9) { ["title"]=> string(45) "GM is shopping (or is that 'Saab-ing') Hummer" ["description"]=> string(2469) "<p><img alt="10c5-Hummer_HX_Concept.jpg" src="http://www.businessweek.com/autos/autobeat/archives/10c5-Hummer_HX_Concept.jpg" width="500" height="373" /></p> <p><br /> There’s a new verb in the auto vernacular. Saab-ing it. That’s what people inside Hummer and General Motors say they are doing with the menacing-SUV brand now that a tentative deal to sell it to China’s Sichuan Tengzhong Industrial Machinery has fallen through. GM says they will wind Hummer down. Recall over the past several months before closing the sale of Saab to Spyker Cars that GM said a couple of times that a sale was unlikely. They said that they planned to wind it down, thereby putting pressure on any bidder to come up with a cash deal quickly. It worked. So GM is playing a similar game with Hummer. The company says Hummer is in wind down mode, but if a buyer comes along with cash in hand there still could be a sale.</p> <p> Well, I have another definition of Saab-ing it. GM management has already done it with Hummer. They just didn’t know it. To Saab a car brand means to buy it, give it some initial investment money in the early honeymoon years and then starve it of new models and marketing dollars until it has to either be shuttered or sold. GM spent a pittance on Saab and Hummer marketing in recent years. After the H3 was launched, GM didn’t add anything new. They had a great concept called the HX (pictured above) but it was never built. Both Hummer and Saab were limited to just two models to sell for most of their existence under GM ownership. Nothing in equaled nothing out. </p> <p> To be fair, Hummer is a tough sell these days. Americans are in a recession-driven period of austerity. Fuel is cheap, but the prospect of a gasoline price spike sits on the consumer’s shoulder like a fat gargoyle. In an era when conspicuous consumption is scorned and consumer confidence is low, Hummer would be a tough sell. </p> <p> That said, Lamborghini and Ferrari aren’t withering away. A new buyer could take Hummer back to what it was before GM bought it and Saabed it. It could be a niche brand selling expensive, recreational, ultra-rugged suvs that can go anywhere. And by anywhere, I don’t mean the speed bumps in the prep school parking lot. I mean the Dakota Badlands. Remember the H1? Imagine that, only more refined. In other words, it could be to suvs what Ferrari or Lambo are to sports cars, but its new owner can’t Saab it.<br /> </p>" ["link"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/02/gm_is_shopping.html" ["guid"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/02/gm_is_shopping.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(17) "Brands Under Fire" ["pubdate"]=> string(31) "Thu, 25 Feb 2010 16:49:09 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "7" } ["summary"]=> string(2469) "<p><img alt="10c5-Hummer_HX_Concept.jpg" src="http://www.businessweek.com/autos/autobeat/archives/10c5-Hummer_HX_Concept.jpg" width="500" height="373" /></p> <p><br /> There’s a new verb in the auto vernacular. Saab-ing it. That’s what people inside Hummer and General Motors say they are doing with the menacing-SUV brand now that a tentative deal to sell it to China’s Sichuan Tengzhong Industrial Machinery has fallen through. GM says they will wind Hummer down. Recall over the past several months before closing the sale of Saab to Spyker Cars that GM said a couple of times that a sale was unlikely. They said that they planned to wind it down, thereby putting pressure on any bidder to come up with a cash deal quickly. It worked. So GM is playing a similar game with Hummer. The company says Hummer is in wind down mode, but if a buyer comes along with cash in hand there still could be a sale.</p> <p> Well, I have another definition of Saab-ing it. GM management has already done it with Hummer. They just didn’t know it. To Saab a car brand means to buy it, give it some initial investment money in the early honeymoon years and then starve it of new models and marketing dollars until it has to either be shuttered or sold. GM spent a pittance on Saab and Hummer marketing in recent years. After the H3 was launched, GM didn’t add anything new. They had a great concept called the HX (pictured above) but it was never built. Both Hummer and Saab were limited to just two models to sell for most of their existence under GM ownership. Nothing in equaled nothing out. </p> <p> To be fair, Hummer is a tough sell these days. Americans are in a recession-driven period of austerity. Fuel is cheap, but the prospect of a gasoline price spike sits on the consumer’s shoulder like a fat gargoyle. In an era when conspicuous consumption is scorned and consumer confidence is low, Hummer would be a tough sell. </p> <p> That said, Lamborghini and Ferrari aren’t withering away. A new buyer could take Hummer back to what it was before GM bought it and Saabed it. It could be a niche brand selling expensive, recreational, ultra-rugged suvs that can go anywhere. And by anywhere, I don’t mean the speed bumps in the prep school parking lot. I mean the Dakota Badlands. Remember the H1? Imagine that, only more refined. In other words, it could be to suvs what Ferrari or Lambo are to sports cars, but its new owner can’t Saab it.<br /> </p>" } [14]=> array(9) { ["title"]=> string(49) "Degrees of Losing: Toyota's Trouble in Washington" ["description"]=> string(3970) "<p>In the black comedy “The War of the Roses,” the divorce attorney played by Danny DeVito advises his client, played by Michael Douglas, that, “There is no winning! Only degrees of losing!” That brings me to the Congressional hearings over Toyota’s sudden acceleration issues and recalls. </p> <p> Yesterday it was James Lentz, the president and COO of Toyota Motor Sales USA, who took the stand for his grilling from Congress. He certainly affirmed some things that make Toyota look bad. He admitted that the company didn’t do a good job of collecting customer complaints from its various global operations. He said that Toyota’s U.S. executives can’t order a recall without say-so from management in Japan. That slows the process. And he said that, while Toyota doesn’t believe that electronics or software are responsible for the sudden acceleration incidents, he couldn’t say for certain that the fixes to floor mats and accelerator pedals will keep accidents from happening again. </p> <p> None of those admissions are revelations. They have been reported in the past or discussed by the company. But these hearings aren’t about revelations. They are about forcing Toyota to publicly affirm that the company made mistakes. And it’s about members of Congress showing that they side with the little guy, whose votes they covet. To show how silly these hearings can get, at one point a member of Congress asked Lentz which executive oversees Toyota’s Washington office, which handles safety and compliance issues. Turns out it’s not Lentz. He’s a sales guy. It’s Yoshimi Inaba, the president and COO of Toyota Motor North America. The Congresswoman then asked him why he was testifying. He responded simply that he was asked to be there. In other words, Congress invited the wrong guy.</p> <p> But so long as Lentz was there, he got his beating. Rep. Edward Markey (D-Mass.) was particularly tough on him. When Lentz admitted that, “We didn’t do a very good job of sharing information across the globe,” Markey responded saying, “That’s just unacceptable.” He also took Lentz to task on the fact that the company says it has no reason to believe that electronics or software are the problems causing some of Toyota’s cars to suddenly take off. It’s either the floor mat or an accelerator pedal, Toyota believes. But Markey pushed on. He demanded to know why Toyota was installing a software fix that would override the accelerator if both the brakes and accelerator are being pushed. Fair question. But in this arena, it was also a rhetorical one.</p> <p> I’m not letting Toyota off the hook. Far from it. Clearly there are serious problems. Edmunds.com mined the government’s database and found that Toyota has more sudden acceleration complaints than any carmaker. As I pointed out in <a href="http://www.businessweek.com/magazine/content/07_27/b4041060.htm">this </a>story in 2007, the company’s growth has led to many of its problems. Today, Toyota Motor Corp. President Akio Toyoda is expected to say in a prepared statement that, “I would like to point out here that Toyota’s priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before.”</p> <p> That admission may be the most significant thing to come from these hearings. Since Congress will not find the end-all cause for the recall problems, Akio’s statement would declare from the very top that Toyota is just like any car company. It sought growth and profits and lost its focus on quality. If the top executive says that today, as the company says he will, that will be the company’s biggest loss. The grandson of the company’s founder will fuel the new belief that his company is no longer the special one. Even Toyota loyalists will get that message.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/02/degrees_of_losi.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/02/degrees_of_losi.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(17) "Cars and Politics" ["pubdate"]=> string(31) "Wed, 24 Feb 2010 11:31:17 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "27" } ["summary"]=> string(3970) "<p>In the black comedy “The War of the Roses,” the divorce attorney played by Danny DeVito advises his client, played by Michael Douglas, that, “There is no winning! Only degrees of losing!” That brings me to the Congressional hearings over Toyota’s sudden acceleration issues and recalls. </p> <p> Yesterday it was James Lentz, the president and COO of Toyota Motor Sales USA, who took the stand for his grilling from Congress. He certainly affirmed some things that make Toyota look bad. He admitted that the company didn’t do a good job of collecting customer complaints from its various global operations. He said that Toyota’s U.S. executives can’t order a recall without say-so from management in Japan. That slows the process. And he said that, while Toyota doesn’t believe that electronics or software are responsible for the sudden acceleration incidents, he couldn’t say for certain that the fixes to floor mats and accelerator pedals will keep accidents from happening again. </p> <p> None of those admissions are revelations. They have been reported in the past or discussed by the company. But these hearings aren’t about revelations. They are about forcing Toyota to publicly affirm that the company made mistakes. And it’s about members of Congress showing that they side with the little guy, whose votes they covet. To show how silly these hearings can get, at one point a member of Congress asked Lentz which executive oversees Toyota’s Washington office, which handles safety and compliance issues. Turns out it’s not Lentz. He’s a sales guy. It’s Yoshimi Inaba, the president and COO of Toyota Motor North America. The Congresswoman then asked him why he was testifying. He responded simply that he was asked to be there. In other words, Congress invited the wrong guy.</p> <p> But so long as Lentz was there, he got his beating. Rep. Edward Markey (D-Mass.) was particularly tough on him. When Lentz admitted that, “We didn’t do a very good job of sharing information across the globe,” Markey responded saying, “That’s just unacceptable.” He also took Lentz to task on the fact that the company says it has no reason to believe that electronics or software are the problems causing some of Toyota’s cars to suddenly take off. It’s either the floor mat or an accelerator pedal, Toyota believes. But Markey pushed on. He demanded to know why Toyota was installing a software fix that would override the accelerator if both the brakes and accelerator are being pushed. Fair question. But in this arena, it was also a rhetorical one.</p> <p> I’m not letting Toyota off the hook. Far from it. Clearly there are serious problems. Edmunds.com mined the government’s database and found that Toyota has more sudden acceleration complaints than any carmaker. As I pointed out in <a href="http://www.businessweek.com/magazine/content/07_27/b4041060.htm">this </a>story in 2007, the company’s growth has led to many of its problems. Today, Toyota Motor Corp. President Akio Toyoda is expected to say in a prepared statement that, “I would like to point out here that Toyota’s priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before.”</p> <p> That admission may be the most significant thing to come from these hearings. Since Congress will not find the end-all cause for the recall problems, Akio’s statement would declare from the very top that Toyota is just like any car company. It sought growth and profits and lost its focus on quality. If the top executive says that today, as the company says he will, that will be the company’s biggest loss. The grandson of the company’s founder will fuel the new belief that his company is no longer the special one. Even Toyota loyalists will get that message.<br /> </p>" } } ["channel"]=> array(9) { ["title"]=> string(24) "Auto Beat - BusinessWeek" ["link"]=> string(43) "http://www.businessweek.com/autos/autobeat/" ["description"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["language"]=> string(2) "en" ["copyright"]=> string(14) "Copyright 2010" ["lastbuilddate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["generator"]=> string(34) "http://www.movabletype.org/?v=3.16" ["docs"]=> string(37) "http://blogs.law.harvard.edu/tech/rss" ["tagline"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." } ["textinput"]=> array(0) { } ["image"]=> array(0) { } ["feed_type"]=> string(3) "RSS" ["feed_version"]=> string(3) "2.0" ["stack"]=> array(0) { } ["inchannel"]=> bool(false) ["initem"]=> bool(false) ["incontent"]=> bool(false) ["intextinput"]=> bool(false) ["inimage"]=> bool(false) ["current_field"]=> string(0) "" ["current_namespace"]=> bool(false) ["_CONTENT_CONSTRUCTS"]=> array(6) { [0]=> string(7) "content" [1]=> string(7) "summary" [2]=> string(4) "info" [3]=> string(5) "title" [4]=> string(7) "tagline" [5]=> string(9) "copyright" } ["last_modified"]=> string(31) "Sat, 01 May 2010 05:17:48 GMT " } } ["feed"]=> object(MagpieRSS)#86 (18) { ["parser"]=> resource(64) of type (Unknown) ["current_item"]=> array(0) { } ["items"]=> array(15) { [0]=> array(8) { ["title"]=> string(61) "GM pays back its loans and Whitacre stirs up some controversy" ["description"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["pubdate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "14" } ["summary"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" } [1]=> array(9) { ["title"]=> string(83) "Detroit's opportune moment. American cars are better than Asian cars, Americans say" ["description"]=> string(2595) "<p> Well, I haven’t heard too many people say this since the late ‘70s: American cars are better than Asian cars. No, really. Associated Press and GfK Roper Public Affairs and Media conducted a survey of 1,000 adults in early March. The results showed that 38% of Americans said that they think American cars are the best-made vehicles and 33% said Asian cars are the best. The same survey done in December 2006 showed that 46% of Americans thought that Asian cars were the best and just 29% favored American cars.</p> <p> This is especially good news for Ford and General Motors, both of which are in different stages of a turnaround. Chrysler gets a bit of a boost here, too, though the company’s product line has yet to get the same kind of overhaul as its two larger Detroit rivals have done. Making some hay of this kind of sentiment will be tougher until Chrysler has some new cars to tout. All three can capitalize on this newfound respect if they continue to build better models and if, a big IF in GM’s case, they can market the cars well. They also need to show better business results.</p> <p> There is one big question. How long will this last? The survey was done March 3 though March 8, when Toyota’s recall news hit a fever pitch. Toyota has been the talisman of Japanese industrial superiority. When its brand image takes the kind of body blows Toyota has sustained in recent months, you can bet the others will feel some of the pain. Remember, too, that Ford was also putting out good news. The Dearborn, Mich., automaker is firmly in the black and sales are surging. A lot of the change in consumer attitude comes from reversing fortunes at Toyota and Ford.</p> <p> GM could burnish its image further in mid-May when the company will release its first-quarter earnings. Already riding a high from the fact that it paid off $8.4 billion in government loans about five years early, GM could look sharper still by reporting a tidy profit, which is possible. It may only be an operating profit, with one-time charges and problems in Europe still dragging earnings down. But the company is expected to show a profit.</p> <p> This could be an inflection point for Detroit. After years of losing to Japan, GM, Ford and Chrysler became a symbol of American failure. While Google and Yahoo showed the way to the Internet and Apple has dominated Sony in portable music players, Detroit continued to strike out. If Motown carmakers put out a few more hot cars and keep improving quality, they may be able to finally steal back respect and a lot of customers.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/detroits_opport.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/detroits_opport.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(5) "Autos" ["pubdate"]=> string(31) "Fri, 23 Apr 2010 16:38:35 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "23" } ["summary"]=> string(2595) "<p> Well, I haven’t heard too many people say this since the late ‘70s: American cars are better than Asian cars. No, really. Associated Press and GfK Roper Public Affairs and Media conducted a survey of 1,000 adults in early March. The results showed that 38% of Americans said that they think American cars are the best-made vehicles and 33% said Asian cars are the best. The same survey done in December 2006 showed that 46% of Americans thought that Asian cars were the best and just 29% favored American cars.</p> <p> This is especially good news for Ford and General Motors, both of which are in different stages of a turnaround. Chrysler gets a bit of a boost here, too, though the company’s product line has yet to get the same kind of overhaul as its two larger Detroit rivals have done. Making some hay of this kind of sentiment will be tougher until Chrysler has some new cars to tout. All three can capitalize on this newfound respect if they continue to build better models and if, a big IF in GM’s case, they can market the cars well. They also need to show better business results.</p> <p> There is one big question. How long will this last? The survey was done March 3 though March 8, when Toyota’s recall news hit a fever pitch. Toyota has been the talisman of Japanese industrial superiority. When its brand image takes the kind of body blows Toyota has sustained in recent months, you can bet the others will feel some of the pain. Remember, too, that Ford was also putting out good news. The Dearborn, Mich., automaker is firmly in the black and sales are surging. A lot of the change in consumer attitude comes from reversing fortunes at Toyota and Ford.</p> <p> GM could burnish its image further in mid-May when the company will release its first-quarter earnings. Already riding a high from the fact that it paid off $8.4 billion in government loans about five years early, GM could look sharper still by reporting a tidy profit, which is possible. It may only be an operating profit, with one-time charges and problems in Europe still dragging earnings down. But the company is expected to show a profit.</p> <p> This could be an inflection point for Detroit. After years of losing to Japan, GM, Ford and Chrysler became a symbol of American failure. While Google and Yahoo showed the way to the Internet and Apple has dominated Sony in portable music players, Detroit continued to strike out. If Motown carmakers put out a few more hot cars and keep improving quality, they may be able to finally steal back respect and a lot of customers.<br /> </p>" } [2]=> array(9) { ["title"]=> string(59) "GM to pay off government debt. Will it be Ed's Lido moment?" ["description"]=> string(2560) "<p><img alt="Ed Whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Ed%20Whitacre.jpg" width="432" height="304" /></p> <p><br /> GM CEO Ed Whitacre is scheduled to be at the company’s Fairfax, Kan., plant tomorrow to announce that his company has paid the debt portion of the government’s assistance back early. Sources briefed on his plan say that he will announce that GM has paid the remaining $5.8 billion back to the U.S. Treasury Department and Canada and Ontario governments by the time he addresses the press at the plant. It’s a big step, but don’t expect a Lee Iacocca moment.</p> <p> Back in 1983, Chrysler paid off a $1.5 billion rescue loan—which was backed by the U.S. government—and the company settled the account early. Iacocca made the most of the moment, saying, “We at Chrysler borrow money the old-fashioned way. We pay it back.” That was vintage Lido. He never missed an opportunity to make a sales pitch or take over a room with his personality.</p> <p> GM’s situation is different. Paying off its government debt early is, no doubt, an impressive feat. But GM’s can’t declare a big victory yet. The government invested about $50 billion in GM. The loan portion from the U.S. and Canada was $8.4 billion. The rest of the investment came in equity. That’s why the U.S. owns 61% of GM. The taxpayers will only get all of their money back once GM launches an initial public stock offering and if the Feds can eventually sell the stock at a price fat enough to recoup the rest of the investment. Whether that happens depends on many factors, like GM’s progress in fixing its woeful European business, how fast the economy and car sales improve and—not to be discounted—fuel prices. If gasoline prices soar, sales of profitable SUVs can take a hit. Crude oil prices are up 81% during the past year.</p> <p> There’s another reason this won’t be a Iacocca moment. Whitacre is no Iacocca. He was an unqualified success at AT&T and has gotten traction at GM. He is certainly a CEO with some chops. But he is also a man of few words. Whitacre may have starred in GM’s ads, but he does not ham it up for the cameras the way Iacocca did. Besides Bob Lutz, what car executive really does? A source close to Whitacre says his message will be that the loans are paid back in full, with interest and ahead of schedule. That’s Whitacre’s style. Short, to the point and without a lot of ballyhoo. Besides, he can’t go Lido until delivers big profits and a doll of a stock offering.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_to_pay_off_g.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_to_pay_off_g.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(17) "Cars and Politics" ["pubdate"]=> string(31) "Tue, 20 Apr 2010 15:19:30 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "10" } ["summary"]=> string(2560) "<p><img alt="Ed Whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Ed%20Whitacre.jpg" width="432" height="304" /></p> <p><br /> GM CEO Ed Whitacre is scheduled to be at the company’s Fairfax, Kan., plant tomorrow to announce that his company has paid the debt portion of the government’s assistance back early. Sources briefed on his plan say that he will announce that GM has paid the remaining $5.8 billion back to the U.S. Treasury Department and Canada and Ontario governments by the time he addresses the press at the plant. It’s a big step, but don’t expect a Lee Iacocca moment.</p> <p> Back in 1983, Chrysler paid off a $1.5 billion rescue loan—which was backed by the U.S. government—and the company settled the account early. Iacocca made the most of the moment, saying, “We at Chrysler borrow money the old-fashioned way. We pay it back.” That was vintage Lido. He never missed an opportunity to make a sales pitch or take over a room with his personality.</p> <p> GM’s situation is different. Paying off its government debt early is, no doubt, an impressive feat. But GM’s can’t declare a big victory yet. The government invested about $50 billion in GM. The loan portion from the U.S. and Canada was $8.4 billion. The rest of the investment came in equity. That’s why the U.S. owns 61% of GM. The taxpayers will only get all of their money back once GM launches an initial public stock offering and if the Feds can eventually sell the stock at a price fat enough to recoup the rest of the investment. Whether that happens depends on many factors, like GM’s progress in fixing its woeful European business, how fast the economy and car sales improve and—not to be discounted—fuel prices. If gasoline prices soar, sales of profitable SUVs can take a hit. Crude oil prices are up 81% during the past year.</p> <p> There’s another reason this won’t be a Iacocca moment. Whitacre is no Iacocca. He was an unqualified success at AT&T and has gotten traction at GM. He is certainly a CEO with some chops. But he is also a man of few words. Whitacre may have starred in GM’s ads, but he does not ham it up for the cameras the way Iacocca did. Besides Bob Lutz, what car executive really does? A source close to Whitacre says his message will be that the loans are paid back in full, with interest and ahead of schedule. That’s Whitacre’s style. Short, to the point and without a lot of ballyhoo. Besides, he can’t go Lido until delivers big profits and a doll of a stock offering.</p>" } [3]=> array(9) { ["title"]=> string(49) "Consumer Reports Calls Lexus GX 460 a Safety Risk" ["description"]=> string(2202) "<p> By now, Toyota executives must be afraid to go to their inboxes or turn on the news. These days, doing either is likely to reveal yet another challenge to the company’s safety image. The latest blow comes from Consumer Reports, which has judged the Lexus GX 460 a safety risk. The consumer advocacy magazine then slapped a “Don’t Buy” rating on the GX.</p> <p> What’s worse is that Toyota’s latest public flogging has nothing to do with floor mats, sticky gas pedals or brake systems. CR bought a GX 460 and had four engineers drive the SUV in the magazine’s emergency handling test. They put the SUV through the paces, making tight turns through a serpentine course to see when stability control will kick in. All four drivers found that the rear of the GX slid out further than any other SUV before stability control kicked in. CR called the SUV a rollover risk and won’t lift its “Don’t Buy” rating until Toyota fixes the problem.</p> <p> If that’s not bad enough, Toyota has told its dealers to halt sales of the SUV. That’s the second time this year they have had to stop selling models while engineers try to figure out what’s wrong. The company said on its website that its own engineers conduct similar tests and didn’t get the same result. Toyota is trying to replicate CR’s results and see if a fix is needed. As an aside, CR said it is not aware of any rollover accidents in the Lexus.</p> <p> So what gives? Has Toyota completely forgotten how to make a safe vehicle? This is actually a rarity for Toyota, says Jake Fisher, senior automotive engineer at CR. Toyota was the first company to put stability control on all of its models. The 4Runner SUV, which is built on a similar platform as the GX, does just fine, Fisher says. </p> <p> Still, this is a nasty blow for a company whose safety record and corporate reputation have been under siege for months. If I were in safety and compliance at Toyota, I’d have engineers poring over every vehicle making doubly sure it meets tests run by Consumer Reports, the Insurance Institute for Highway Safety and government tests. This company needs to get its safety record out of the headlines.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/consumer_report.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/consumer_report.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Tue, 13 Apr 2010 18:16:56 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "1" } ["summary"]=> string(2202) "<p> By now, Toyota executives must be afraid to go to their inboxes or turn on the news. These days, doing either is likely to reveal yet another challenge to the company’s safety image. The latest blow comes from Consumer Reports, which has judged the Lexus GX 460 a safety risk. The consumer advocacy magazine then slapped a “Don’t Buy” rating on the GX.</p> <p> What’s worse is that Toyota’s latest public flogging has nothing to do with floor mats, sticky gas pedals or brake systems. CR bought a GX 460 and had four engineers drive the SUV in the magazine’s emergency handling test. They put the SUV through the paces, making tight turns through a serpentine course to see when stability control will kick in. All four drivers found that the rear of the GX slid out further than any other SUV before stability control kicked in. CR called the SUV a rollover risk and won’t lift its “Don’t Buy” rating until Toyota fixes the problem.</p> <p> If that’s not bad enough, Toyota has told its dealers to halt sales of the SUV. That’s the second time this year they have had to stop selling models while engineers try to figure out what’s wrong. The company said on its website that its own engineers conduct similar tests and didn’t get the same result. Toyota is trying to replicate CR’s results and see if a fix is needed. As an aside, CR said it is not aware of any rollover accidents in the Lexus.</p> <p> So what gives? Has Toyota completely forgotten how to make a safe vehicle? This is actually a rarity for Toyota, says Jake Fisher, senior automotive engineer at CR. Toyota was the first company to put stability control on all of its models. The 4Runner SUV, which is built on a similar platform as the GX, does just fine, Fisher says. </p> <p> Still, this is a nasty blow for a company whose safety record and corporate reputation have been under siege for months. If I were in safety and compliance at Toyota, I’d have engineers poring over every vehicle making doubly sure it meets tests run by Consumer Reports, the Insurance Institute for Highway Safety and government tests. This company needs to get its safety record out of the headlines.</p>" } [4]=> array(9) { ["title"]=> string(61) "GM's Whitacre writes to the troops. Profit may not be far off" ["description"]=> string(2198) "<p><img alt="whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/whitacre.jpg" width="100" height="75" /></p> <p> General Motors Chairman and CEO Ed Whitacre has sent out his second memo in two weeks in an effort to make his rank-and-file staffers feel better about working at GM. In his latest note, sent out on April 12, Whitacre wrote to the staff that, “I anticipate solid operating results when we report our financials in May.” This follows a March 31 memo in which the media-shy Texan said that the major executive changes are already done. The current team will take GM forward, he wrote.</p> <p>Whitacre didn’t say exactly what he means by “solid operating results.” Given his impatience for real results, I’d bet that means, at long last, some black ink. Consider a few facts. If you exclude $2.6 billion in costs for a union retiree healthcare fund, $400 million in currency losses and $100 million to wind down Saturn, GM lost just $300 million in the fourth quarter of 2009. During that same quarter, sales were down 24% in the U.S. </p> <p>In the first quarter of this year, GM’s sales are up 18.4%. GM has some red-hot models, such as the Chevrolet Camaro pony car and Chevy Equinox and GMC Terrain SUVs. The company is adding production for all three vehicles. The company is even boosting production for its full-sized Chevy Tahoe and GMC Yukon SUVs built in Arlington, Texas. Hey, I don’t know who wants those guzzlers, knowing that gasoline prices will rise again. But they are selling and GM will make a mint off of them while they are hot.</p> <p>Don’t forget a couple other things. That healthcare trust that GM poured money into took over retiree medical benefits starting on Dec. 31. So you can trim those costs for the first quarter. Going forward, GM will also be able to hire new workers at half the pay of the assembly-line veterans. Throw in rising sales in Asia and South America, and GM might really have something. GM’s troubled European business will be drag on earnings until the company can get it fixed. But elsewhere, we are seeing the seeds of a turnaround. It all starts with a bit of black ink.</p> <p><br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gms_whitacre_wr.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gms_whitacre_wr.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Mon, 12 Apr 2010 23:13:48 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "6" } ["summary"]=> string(2198) "<p><img alt="whitacre.jpg" src="http://www.businessweek.com/autos/autobeat/archives/whitacre.jpg" width="100" height="75" /></p> <p> General Motors Chairman and CEO Ed Whitacre has sent out his second memo in two weeks in an effort to make his rank-and-file staffers feel better about working at GM. In his latest note, sent out on April 12, Whitacre wrote to the staff that, “I anticipate solid operating results when we report our financials in May.” This follows a March 31 memo in which the media-shy Texan said that the major executive changes are already done. The current team will take GM forward, he wrote.</p> <p>Whitacre didn’t say exactly what he means by “solid operating results.” Given his impatience for real results, I’d bet that means, at long last, some black ink. Consider a few facts. If you exclude $2.6 billion in costs for a union retiree healthcare fund, $400 million in currency losses and $100 million to wind down Saturn, GM lost just $300 million in the fourth quarter of 2009. During that same quarter, sales were down 24% in the U.S. </p> <p>In the first quarter of this year, GM’s sales are up 18.4%. GM has some red-hot models, such as the Chevrolet Camaro pony car and Chevy Equinox and GMC Terrain SUVs. The company is adding production for all three vehicles. The company is even boosting production for its full-sized Chevy Tahoe and GMC Yukon SUVs built in Arlington, Texas. Hey, I don’t know who wants those guzzlers, knowing that gasoline prices will rise again. But they are selling and GM will make a mint off of them while they are hot.</p> <p>Don’t forget a couple other things. That healthcare trust that GM poured money into took over retiree medical benefits starting on Dec. 31. So you can trim those costs for the first quarter. Going forward, GM will also be able to hire new workers at half the pay of the assembly-line veterans. Throw in rising sales in Asia and South America, and GM might really have something. GM’s troubled European business will be drag on earnings until the company can get it fixed. But elsewhere, we are seeing the seeds of a turnaround. It all starts with a bit of black ink.</p> <p><br /> </p>" } [5]=> array(9) { ["title"]=> string(56) "Renault-Nissan and Daimler could work. Ghosn will insist" ["description"]=> string(2839) "<p> When Renault-Nissan CEO Carlos Ghosn first formed the Franco-Japanese car alliance, he joked at the 1999 Tokyo Motor Show about serving sushi and Chardonnay. Well, let’s slather some spatzle on the side, shall we? Renault-Nissan and Daimler AG will form a global automotive triumvirate by swapping each other 3.1% stakes in each other. It’s not a merger, mind you, but an alliance strung together with only a small equity stake.</p> <p> If it works, it will be through Ghosn’s force of will. Automotive alliances and mergers have a poor record, to say the least. This is especially true when Daimler is involved. The company’s acquisition of Chrysler ended in failure. Partnerships with Hyundai and Mitsubishi didn’t bear much fruit either. </p> <p> In this case, I’ll give Ghosn his due. The Renault-Nissan alliance is one example of an alliance that has worked. Both companies have shared engines, parts and vehicle platforms to expand their offerings faster and more cheaply than they otherwise might have done. Ghosn had the advantage of running both companies. He won’t get into an alliance without knowing that there are some real projects in the works.</p> <p> On a call today with American journlaists, Daimler CEO Dieter Zetsche, who was CEO of Chrysler during the failed merger, said this deal is different because the three companies have already hammered out specific projects to work on. “In the past,” he said, “we decided on an alliance and then later decided what to work on. We have specific concrete projects we are working on.”</p> <p> By combining car technology and manufacturing capabilities, the two companies will jointly develop future compacts and the Smart and Renault Twingo subcompacts, as well as other small cars. A four-passenger Smart is said to be in the works. The jointly-developed small cars are supposed to be ready for sale by 2013. Daimler’s Mercedes luxury unit can also help Nissan develop luxury cars for Infiniti. On a conference call with journalists, Ghosn said a 4-liter Mercedes engine could find its way into Infiniti cars in the U.S. Zetsche said the two companies will also work to develop electric cars together. The two companies also plan to build cars in each other’s U.S. plants. Nissan has two large factories in Smyrna, Tenn. and Canton, Miss. Mercedes has an assembly plant in Alabama. </p> <p> I’m not a fan of auto alliances and mergers. Even small ventures like Nummi—the soon-to-be-closed plant in Fremont, Calif., that General Motors and Toyota ran for decades gave more benefit to the Japanese giant than it did to GM. In recent years, Toyota used much more of the production. In this case, I think the deal will yield some dividends. Ghosn won’t have it any other way. Just don’t serve any raw bratwurst, please.<br /> </p>" ["link"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/04/renault-nissan.html" ["guid"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/04/renault-nissan.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(5) "Deals" ["pubdate"]=> string(31) "Wed, 07 Apr 2010 09:33:18 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "7" } ["summary"]=> string(2839) "<p> When Renault-Nissan CEO Carlos Ghosn first formed the Franco-Japanese car alliance, he joked at the 1999 Tokyo Motor Show about serving sushi and Chardonnay. Well, let’s slather some spatzle on the side, shall we? Renault-Nissan and Daimler AG will form a global automotive triumvirate by swapping each other 3.1% stakes in each other. It’s not a merger, mind you, but an alliance strung together with only a small equity stake.</p> <p> If it works, it will be through Ghosn’s force of will. Automotive alliances and mergers have a poor record, to say the least. This is especially true when Daimler is involved. The company’s acquisition of Chrysler ended in failure. Partnerships with Hyundai and Mitsubishi didn’t bear much fruit either. </p> <p> In this case, I’ll give Ghosn his due. The Renault-Nissan alliance is one example of an alliance that has worked. Both companies have shared engines, parts and vehicle platforms to expand their offerings faster and more cheaply than they otherwise might have done. Ghosn had the advantage of running both companies. He won’t get into an alliance without knowing that there are some real projects in the works.</p> <p> On a call today with American journlaists, Daimler CEO Dieter Zetsche, who was CEO of Chrysler during the failed merger, said this deal is different because the three companies have already hammered out specific projects to work on. “In the past,” he said, “we decided on an alliance and then later decided what to work on. We have specific concrete projects we are working on.”</p> <p> By combining car technology and manufacturing capabilities, the two companies will jointly develop future compacts and the Smart and Renault Twingo subcompacts, as well as other small cars. A four-passenger Smart is said to be in the works. The jointly-developed small cars are supposed to be ready for sale by 2013. Daimler’s Mercedes luxury unit can also help Nissan develop luxury cars for Infiniti. On a conference call with journalists, Ghosn said a 4-liter Mercedes engine could find its way into Infiniti cars in the U.S. Zetsche said the two companies will also work to develop electric cars together. The two companies also plan to build cars in each other’s U.S. plants. Nissan has two large factories in Smyrna, Tenn. and Canton, Miss. Mercedes has an assembly plant in Alabama. </p> <p> I’m not a fan of auto alliances and mergers. Even small ventures like Nummi—the soon-to-be-closed plant in Fremont, Calif., that General Motors and Toyota ran for decades gave more benefit to the Japanese giant than it did to GM. In recent years, Toyota used much more of the production. In this case, I think the deal will yield some dividends. Ghosn won’t have it any other way. Just don’t serve any raw bratwurst, please.<br /> </p>" } [6]=> array(9) { ["title"]=> string(44) "GM pushes for buzz, but market share fizzles" ["description"]=> string(2629) "<p><img alt="Camaro3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Camaro3.jpg" width="500" height="333" /></p> <p> They came one after the other over the course of about 15 minutes, four press releases teasing us with big sales gains made by General Motors. First, a press release at 9:54 a.m. today saying that Chevrolet sales were up a whopping 41 percent. GM offered no more detail. We’d have to wait until 10:45 to get the goods. Two minutes later, Buick is up 76 percent, said the release. Then it’s GMC up 45% and finally Cadillac up 42 percent. It was a cunning move since GM knows that in news cycles where the delivery of data bits and sound bites is measured in seconds, the wires would simply post those headlines and get the details later. They dutifully did just that.</p> <p> So for about an hour this morning, GM had some juicy headlines out on the news wires boasting whopping sales gains for its four remaining brands. Looks like a good month, right? Well, when the details finally emerged it wasn’t such a great month after all. Remember, this time last year the economy was reeling from the financial crisis. The car market was at historic lows and GM was gliding straight toward bankruptcy court. So March 2009 is an easy comparison for the writers of press releases.</p> <p> Once we could dig into the numbers and ask some questions, GM didn’t exactly hit the cover off the ball. Marketing Vice President Susan Docherty said that sales to corporate and rental fleets were up 64 percent. Fleet sales tend to be less profitable since carmakers often sell those car to rental agencies at a discount. Sales to Pontiac, Hummer, Saab and Saturn, which are all being killed off are sold, plummeted and GM hasn’t been able to recoup all of the buyers. The bottom line is that GM’s market share fell to 17.6 percent, down from 18 percent this time last year and well off the 18.7 percent pace the company has set for this year.</p> <p> The company does have some great new models. The Chevy Equinox, GMC Terrain and Cadillac SRX SUVs are hotter than a two-dollar pistol. So is the Camaro (pictured above) which outsold the rival Ford Mustang 8,900 to 5,900. Even Buick has a hit with its LaCrosse sedan. As fast as those cars are selling, GM needs to get more people to give those four surviving brands a look. Otherwise, Chairman and CEO Ed Whitacre’s unofficial target of 20 percent market share by the end of this year will be a mirage. Today’s play was cunning. But it will take more than PR schemes to convince GM’s skeptics that it has turned things around.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pushes_for_b.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pushes_for_b.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Thu, 01 Apr 2010 18:06:30 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "14" } ["summary"]=> string(2629) "<p><img alt="Camaro3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Camaro3.jpg" width="500" height="333" /></p> <p> They came one after the other over the course of about 15 minutes, four press releases teasing us with big sales gains made by General Motors. First, a press release at 9:54 a.m. today saying that Chevrolet sales were up a whopping 41 percent. GM offered no more detail. We’d have to wait until 10:45 to get the goods. Two minutes later, Buick is up 76 percent, said the release. Then it’s GMC up 45% and finally Cadillac up 42 percent. It was a cunning move since GM knows that in news cycles where the delivery of data bits and sound bites is measured in seconds, the wires would simply post those headlines and get the details later. They dutifully did just that.</p> <p> So for about an hour this morning, GM had some juicy headlines out on the news wires boasting whopping sales gains for its four remaining brands. Looks like a good month, right? Well, when the details finally emerged it wasn’t such a great month after all. Remember, this time last year the economy was reeling from the financial crisis. The car market was at historic lows and GM was gliding straight toward bankruptcy court. So March 2009 is an easy comparison for the writers of press releases.</p> <p> Once we could dig into the numbers and ask some questions, GM didn’t exactly hit the cover off the ball. Marketing Vice President Susan Docherty said that sales to corporate and rental fleets were up 64 percent. Fleet sales tend to be less profitable since carmakers often sell those car to rental agencies at a discount. Sales to Pontiac, Hummer, Saab and Saturn, which are all being killed off are sold, plummeted and GM hasn’t been able to recoup all of the buyers. The bottom line is that GM’s market share fell to 17.6 percent, down from 18 percent this time last year and well off the 18.7 percent pace the company has set for this year.</p> <p> The company does have some great new models. The Chevy Equinox, GMC Terrain and Cadillac SRX SUVs are hotter than a two-dollar pistol. So is the Camaro (pictured above) which outsold the rival Ford Mustang 8,900 to 5,900. Even Buick has a hit with its LaCrosse sedan. As fast as those cars are selling, GM needs to get more people to give those four surviving brands a look. Otherwise, Chairman and CEO Ed Whitacre’s unofficial target of 20 percent market share by the end of this year will be a mirage. Today’s play was cunning. But it will take more than PR schemes to convince GM’s skeptics that it has turned things around.<br /> </p>" } [7]=> array(9) { ["title"]=> string(50) "Geely buys Volvo. Believe it or not, it could work" ["description"]=> string(2968) "<p><img alt="Volvo2.JPG" src="http://www.businessweek.com/autos/autobeat/archives/Volvo2.JPG" width="320" height="302" /></p> <p>Mergers and acquisitions in the car business have a terrible record. DaimlerChrysler stands tall as the worst example of a bad marriage. General Motors made a hash of Saab and Hummer and its tie-ups with Isuzu, Suzuki and Subaru didn’t yield much either. Tata has struggled with Jaguar and Land Rover and now that Ford is sending Volvo off in a boat to China, we have to ask, can Geely make a go of this?</p> <p> It’s going to be a tough job. Geely is paying $1.8 billion for the brand. Volvo sales of 335,000 globally are off 11% this year and 27% off their peak, according to this Bloomberg story. The Swedish carmaker has lost $2.6 billion during the last two years. The brand hasn’t been a real moneymaker for a very long time. Its costs are high and prices are strong, but Volvo doesn’t command luxury premiums for its cars. </p> <p> On paper, at least, this could be a very good deal for Volvo. Be clear about one thing. Zhejiang Geely Holding Co., not the carmaker, is buying Volvo. This is an important distinction, says Jim Hall, principal of 2953 Analytics in Birmingham, Mich. It indicates that Volvo won’t just be folded into Geely and lose the brand’s strong Nordic identity. Geely Chairman Li Shufu said with unintentional humor that, “I see Volvo as a tiger. It belongs to the forest and shouldn’t be contained in the zoo,” Li said in Mandarin. “The heart of the tiger is in Sweden and Belgium.” </p> <p> Volvo will keep its own management team, board of directors and headquarters in Gothenburg, Sweden. That would indicate that Volvo will keep its Swedish heritage and cachet. European and American Volvo loyalists will still be buying cars engineered in Gothenburg and built in Europe. .</p> <p> What that would mean, however, is that Geely is buying Volvo and lingering on with the same money-losing structure. That’s where China comes in. The Chinese luxury market is booming and still has room for some other players to come in and build a brand. Geely will assemble Volvo cars in China using cheaper manufacturing, Hall says. The brand is upscale and Geely ownership might even be seen as preferable by Chinese consumers. So the company car grow sales and get fatter margins in China. That makes the business case work better than it ever did either under Ford or as an independent carmaker. </p> <p> After so many failed auto deals, this one has the makings of a success. Of course, it means Geely can’t manhandle Volvo. They need to rely on Ford and the Swedes for technology that will make the Chinese cars real Volvos. In short, they should manage it as a separate subsidiary the way Volkswagen Group runs Audi AG. Give it autonomy and let the tiger run. Volvo is a niche brand and will never be a cash cow. But it certainly could work if Geely gives it some independence.</p>" ["link"]=> string(82) "http://www.businessweek.com/autos/autobeat/archives/2010/03/geely_buys_volv_1.html" ["guid"]=> string(82) "http://www.businessweek.com/autos/autobeat/archives/2010/03/geely_buys_volv_1.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(5) "Deals" ["pubdate"]=> string(31) "Mon, 29 Mar 2010 16:42:46 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "10" } ["summary"]=> string(2968) "<p><img alt="Volvo2.JPG" src="http://www.businessweek.com/autos/autobeat/archives/Volvo2.JPG" width="320" height="302" /></p> <p>Mergers and acquisitions in the car business have a terrible record. DaimlerChrysler stands tall as the worst example of a bad marriage. General Motors made a hash of Saab and Hummer and its tie-ups with Isuzu, Suzuki and Subaru didn’t yield much either. Tata has struggled with Jaguar and Land Rover and now that Ford is sending Volvo off in a boat to China, we have to ask, can Geely make a go of this?</p> <p> It’s going to be a tough job. Geely is paying $1.8 billion for the brand. Volvo sales of 335,000 globally are off 11% this year and 27% off their peak, according to this Bloomberg story. The Swedish carmaker has lost $2.6 billion during the last two years. The brand hasn’t been a real moneymaker for a very long time. Its costs are high and prices are strong, but Volvo doesn’t command luxury premiums for its cars. </p> <p> On paper, at least, this could be a very good deal for Volvo. Be clear about one thing. Zhejiang Geely Holding Co., not the carmaker, is buying Volvo. This is an important distinction, says Jim Hall, principal of 2953 Analytics in Birmingham, Mich. It indicates that Volvo won’t just be folded into Geely and lose the brand’s strong Nordic identity. Geely Chairman Li Shufu said with unintentional humor that, “I see Volvo as a tiger. It belongs to the forest and shouldn’t be contained in the zoo,” Li said in Mandarin. “The heart of the tiger is in Sweden and Belgium.” </p> <p> Volvo will keep its own management team, board of directors and headquarters in Gothenburg, Sweden. That would indicate that Volvo will keep its Swedish heritage and cachet. European and American Volvo loyalists will still be buying cars engineered in Gothenburg and built in Europe. .</p> <p> What that would mean, however, is that Geely is buying Volvo and lingering on with the same money-losing structure. That’s where China comes in. The Chinese luxury market is booming and still has room for some other players to come in and build a brand. Geely will assemble Volvo cars in China using cheaper manufacturing, Hall says. The brand is upscale and Geely ownership might even be seen as preferable by Chinese consumers. So the company car grow sales and get fatter margins in China. That makes the business case work better than it ever did either under Ford or as an independent carmaker. </p> <p> After so many failed auto deals, this one has the makings of a success. Of course, it means Geely can’t manhandle Volvo. They need to rely on Ford and the Swedes for technology that will make the Chinese cars real Volvos. In short, they should manage it as a separate subsidiary the way Volkswagen Group runs Audi AG. Give it autonomy and let the tiger run. Volvo is a niche brand and will never be a cash cow. But it certainly could work if Geely gives it some independence.</p>" } [8]=> array(9) { ["title"]=> string(67) "Toyota makes deals and drive the market up. Don't expect it to last" ["description"]=> string(1736) "<p> If mid-month sales numbers from Edmunds.com are any indicator, the car market may be finally picking up. The Santa Monica, Calif.-based consumer research site says that through Mar. 18 , car sales were on pace for a 13.5 million annualized adjusted sales rate. That’s a nice clip considering that most analysts think car sales will be in the 11 million or 11.5 million range. But don’t get too excited yet.</p> <p> Edmunds also says that there are a lot of deals in the market right now. Toyota is trying to put a salve on its market woes with zero-percent financing and other deals. Competitors followed suit with big incentives of their own. Toyota’s offers boosted consideration of their cars by 40%, Edmunds said. And that 13.5-million vehicle sales rate says that other car companies are finding takers for these deals, as well. In other words, the auto companies are buying the sales boost</p> <p> Carmakers are loathe to continue such discounting. Look at the trouble General Motors, Ford and Chrysler got in throughout the decade by splashing cash for sales. Chrysler is still doing all it can to keep sales going until new models arrive. But GM and Ford have worked hard to get better pricing on their newest cars. Ford has bragged about fatter prices in recent earnings announcement. GM CEO Ed Whitacre wants sales growth without having to buy it. Even Toyota, battered as the company is by its string of recalls, won’t want to give away its long-held pricing advantage, either. That leads me to believe that the deals won’t last all year. It’s at least a good sign that people are willing to shop at all. Just temper the enthusiasm until consumers go back to showrooms without needing a bribe.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyota_makes_de.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyota_makes_de.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(22) "Markets and Management" ["pubdate"]=> string(31) "Wed, 24 Mar 2010 17:44:34 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "5" } ["summary"]=> string(1736) "<p> If mid-month sales numbers from Edmunds.com are any indicator, the car market may be finally picking up. The Santa Monica, Calif.-based consumer research site says that through Mar. 18 , car sales were on pace for a 13.5 million annualized adjusted sales rate. That’s a nice clip considering that most analysts think car sales will be in the 11 million or 11.5 million range. But don’t get too excited yet.</p> <p> Edmunds also says that there are a lot of deals in the market right now. Toyota is trying to put a salve on its market woes with zero-percent financing and other deals. Competitors followed suit with big incentives of their own. Toyota’s offers boosted consideration of their cars by 40%, Edmunds said. And that 13.5-million vehicle sales rate says that other car companies are finding takers for these deals, as well. In other words, the auto companies are buying the sales boost</p> <p> Carmakers are loathe to continue such discounting. Look at the trouble General Motors, Ford and Chrysler got in throughout the decade by splashing cash for sales. Chrysler is still doing all it can to keep sales going until new models arrive. But GM and Ford have worked hard to get better pricing on their newest cars. Ford has bragged about fatter prices in recent earnings announcement. GM CEO Ed Whitacre wants sales growth without having to buy it. Even Toyota, battered as the company is by its string of recalls, won’t want to give away its long-held pricing advantage, either. That leads me to believe that the deals won’t last all year. It’s at least a good sign that people are willing to shop at all. Just temper the enthusiasm until consumers go back to showrooms without needing a bribe.<br /> </p>" } [9]=> array(9) { ["title"]=> string(51) "Jerry York passes. Farewell to a turnaround maestro" ["description"]=> string(4325) "<p><img alt="York.jpg" src="http://www.businessweek.com/autos/autobeat/archives/York.jpg" width="340" height="273" /></p> <p>I am regrettably late writing about this. As most readers know, former Chrysler Corp. and IBM Corp CFO Jerome York passed away on March 18. York will be most recently remembered for his role as the brain trust behind Kirk Kerkorian’s investment in General Motors in 2006 and their attempt to force the auto giant into a shotgun marriage with Carlos Ghosn’s Renault-Nissan. The attempt was half-baked and destined for failure. </p> <p>York should be remembered for much more. The flinty finance guy was a tough veteran of some big turnaround jobs. He knew how to rescue bad companies. Let’s look at that foray into General Motors. It’s true that York failed to create major change at the troubled automaker. But the U.S. Treasury Department and its auto task force wound up doing many of the things that York said needed to be done. Management wasn’t going to bite the bullet until the company was nearly out of money and facing bankruptcy.</p> <p>A veteran of turnaround jobs at Chrysler and IBM, York had a few key points for any company in trouble. Ditch bad operations and focus on fixing the core business. Simplify the company and its brands. Most of all, create accountability and a sense of crisis. That means firing any executive who couldn’t get the job done.</p> <p>Over dinner one night during the GM saga York told me the company needed to pare its brands down and focus on the core. Saab and Hummer were two that he wanted to put up for sale. Under former CEO Rick Wagoner, that wasn’t going to happen. But once the Treasury Department and its hired advisors came in, they started looking at every brand. They even pressed to find a business case for Buick and GMC, which remain with GM to this day. But the Feds ordered closure or sale of the rest. Pontiac and Saturn are gone. Saab is sold and Hummer will be sold or, more likely, wound down. Bankruptcy helped that happen, of course, but York knew which direction to go. York’s mantra was simple. Sell non-core businesses and focus cash and executive time on the parts that matter.</p> <p> He also wanted to see a restructuring of GM’s massive union obligations. That was much tougher to do back in 2006, when bankruptcy was unthinkable. York wanted to take on the United Auto Workers union to slash retiree benefits and labor costs. Wagoner got some of that done on his own. Ultimately, the government-funded bankruptcy helped get a health-care fund done with less cash than GM initially was going to give it.</p> <p> Sure, York’s Renault-Nissan gambit had no chance of working. Wagoner would never give the deal a real look because he knew it was a means for York and Kerkorian to replace him with Renault-Nissan CEO Carlos Ghosn. It didn’t work, and three years later it was left to the government to fire Wagoner. Auto Task Force leader Steve Rattner said GM was as poorly-managed as any company he had ever seen. York told me on several occasions that Wagoner was the problem. It appears he was ahead of the game on that call. York said the company needed an outsider to come into GM and create a bit of fear. Today, the company has that leader in Ed Whitacre. The AT&T boss may end up being just the outside voice GM needs. Time will tell, but Whitacre is shaking things up.</p> <p> Don’t forget who Jerry York was. He was the CFO at IBM under Louis Gerstner and a major player in saving the company. Spendthrift executives used to quake before going before York. He wanted to create a sense of urgency and it worked. IBM’s turnaround is legendary. </p> <p> Now that York has passed and car guy Bob Lutz is retiring from GM, the industry is losing a couple of the executives who played key roles in some big fix-it jobs. They have been replaced by outsiders like Whitacre, Ford’s Alan Mulally and Fiat-Chrysler’s Sergio Marchionne. Hopefully those men and the young executives coming up will have the kind of business sense to truly compete. They can always take a few cues from York. Stay focused. Cut the weak stuff out. Invest in your core business and make sure the troops know that there are consequences for failing. That is York’s legacy. Farewell, Jerry.</p> <p><br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/jerry_york_pass.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/jerry_york_pass.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(8) "Car Guys" ["pubdate"]=> string(31) "Mon, 22 Mar 2010 18:42:15 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "1" } ["summary"]=> string(4325) "<p><img alt="York.jpg" src="http://www.businessweek.com/autos/autobeat/archives/York.jpg" width="340" height="273" /></p> <p>I am regrettably late writing about this. As most readers know, former Chrysler Corp. and IBM Corp CFO Jerome York passed away on March 18. York will be most recently remembered for his role as the brain trust behind Kirk Kerkorian’s investment in General Motors in 2006 and their attempt to force the auto giant into a shotgun marriage with Carlos Ghosn’s Renault-Nissan. The attempt was half-baked and destined for failure. </p> <p>York should be remembered for much more. The flinty finance guy was a tough veteran of some big turnaround jobs. He knew how to rescue bad companies. Let’s look at that foray into General Motors. It’s true that York failed to create major change at the troubled automaker. But the U.S. Treasury Department and its auto task force wound up doing many of the things that York said needed to be done. Management wasn’t going to bite the bullet until the company was nearly out of money and facing bankruptcy.</p> <p>A veteran of turnaround jobs at Chrysler and IBM, York had a few key points for any company in trouble. Ditch bad operations and focus on fixing the core business. Simplify the company and its brands. Most of all, create accountability and a sense of crisis. That means firing any executive who couldn’t get the job done.</p> <p>Over dinner one night during the GM saga York told me the company needed to pare its brands down and focus on the core. Saab and Hummer were two that he wanted to put up for sale. Under former CEO Rick Wagoner, that wasn’t going to happen. But once the Treasury Department and its hired advisors came in, they started looking at every brand. They even pressed to find a business case for Buick and GMC, which remain with GM to this day. But the Feds ordered closure or sale of the rest. Pontiac and Saturn are gone. Saab is sold and Hummer will be sold or, more likely, wound down. Bankruptcy helped that happen, of course, but York knew which direction to go. York’s mantra was simple. Sell non-core businesses and focus cash and executive time on the parts that matter.</p> <p> He also wanted to see a restructuring of GM’s massive union obligations. That was much tougher to do back in 2006, when bankruptcy was unthinkable. York wanted to take on the United Auto Workers union to slash retiree benefits and labor costs. Wagoner got some of that done on his own. Ultimately, the government-funded bankruptcy helped get a health-care fund done with less cash than GM initially was going to give it.</p> <p> Sure, York’s Renault-Nissan gambit had no chance of working. Wagoner would never give the deal a real look because he knew it was a means for York and Kerkorian to replace him with Renault-Nissan CEO Carlos Ghosn. It didn’t work, and three years later it was left to the government to fire Wagoner. Auto Task Force leader Steve Rattner said GM was as poorly-managed as any company he had ever seen. York told me on several occasions that Wagoner was the problem. It appears he was ahead of the game on that call. York said the company needed an outsider to come into GM and create a bit of fear. Today, the company has that leader in Ed Whitacre. The AT&T boss may end up being just the outside voice GM needs. Time will tell, but Whitacre is shaking things up.</p> <p> Don’t forget who Jerry York was. He was the CFO at IBM under Louis Gerstner and a major player in saving the company. Spendthrift executives used to quake before going before York. He wanted to create a sense of urgency and it worked. IBM’s turnaround is legendary. </p> <p> Now that York has passed and car guy Bob Lutz is retiring from GM, the industry is losing a couple of the executives who played key roles in some big fix-it jobs. They have been replaced by outsiders like Whitacre, Ford’s Alan Mulally and Fiat-Chrysler’s Sergio Marchionne. Hopefully those men and the young executives coming up will have the kind of business sense to truly compete. They can always take a few cues from York. Stay focused. Cut the weak stuff out. Invest in your core business and make sure the troops know that there are consequences for failing. That is York’s legacy. Farewell, Jerry.</p> <p><br /> </p>" } [10]=> array(9) { ["title"]=> string(79) "Toyota's incentive deals drive interest. Can the company drive pricing back up?" ["description"]=> string(2082) "<p> Toyota is looking more like Detroit’s Big Three all the time. First the quality problems and now the company has a big incentive campaign to win back loyalty. Toyota is offering 0% financing for up to five years and some discounted lease deals as a way to get buyers to look at its cars in the wake of its seemingly unending recall problems. The latest problem came in San Diego when a driver of a 2008 Prius claimed he couldn’t stop the car even though he was braking hard.</p> <p> The incentive deal appears to be working, according to Edmunds.com. The company said in <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahOrD5gJcdhg">this </a>Bloomberg story that Toyota may report a 30% boost in sales in March thanks to the offers. That comparison comes off a particularly bad March 2009 when the recession was hammering auto sales. Still, it’s good news if Toyota can gin up more sales interest when the company’s recall drama is a mainstay in the 24-hour news cycle. </p> <p> There is a bigger point here. As I pointed out in <a href="http://www.businessweek.com/magazine/content/10_08/b4167038017102.htm">this </a>Bloomberg BusinessWeek story, Toyota’s troubles will put its brand on a more even playing field with its rivals, creating an opening for Ford, Honda, General Motors, Hyundai-Kia and others to steal buyers. The first casualty of Toyota’s problems may be pricing. Getting fat sticker prices is partly a function of brand strength. Toyota’s brand has taken body blows and the company is discounting to lure shoppers to showrooms. </p> <p> How long will this last? It could be quite a while. GM started 0% financing back in 2001 and never got off the discounting treadmill. To minimize the damage to its pricing, and therefore profits, Toyota will have to find an end to these recalls and tell a credible story that its quality is up to snuff. That means the company has to get a fix that stops these problems with runaway Priuses and other sudden acceleration claims. Only good engineering and time will heal these wounds.</p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyotas_incenti.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/toyotas_incenti.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(20) "Companies Under Fire" ["pubdate"]=> string(31) "Wed, 10 Mar 2010 11:56:58 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "48" } ["summary"]=> string(2082) "<p> Toyota is looking more like Detroit’s Big Three all the time. First the quality problems and now the company has a big incentive campaign to win back loyalty. Toyota is offering 0% financing for up to five years and some discounted lease deals as a way to get buyers to look at its cars in the wake of its seemingly unending recall problems. The latest problem came in San Diego when a driver of a 2008 Prius claimed he couldn’t stop the car even though he was braking hard.</p> <p> The incentive deal appears to be working, according to Edmunds.com. The company said in <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahOrD5gJcdhg">this </a>Bloomberg story that Toyota may report a 30% boost in sales in March thanks to the offers. That comparison comes off a particularly bad March 2009 when the recession was hammering auto sales. Still, it’s good news if Toyota can gin up more sales interest when the company’s recall drama is a mainstay in the 24-hour news cycle. </p> <p> There is a bigger point here. As I pointed out in <a href="http://www.businessweek.com/magazine/content/10_08/b4167038017102.htm">this </a>Bloomberg BusinessWeek story, Toyota’s troubles will put its brand on a more even playing field with its rivals, creating an opening for Ford, Honda, General Motors, Hyundai-Kia and others to steal buyers. The first casualty of Toyota’s problems may be pricing. Getting fat sticker prices is partly a function of brand strength. Toyota’s brand has taken body blows and the company is discounting to lure shoppers to showrooms. </p> <p> How long will this last? It could be quite a while. GM started 0% financing back in 2001 and never got off the discounting treadmill. To minimize the damage to its pricing, and therefore profits, Toyota will have to find an end to these recalls and tell a credible story that its quality is up to snuff. That means the company has to get a fix that stops these problems with runaway Priuses and other sudden acceleration claims. Only good engineering and time will heal these wounds.</p>" } [11]=> array(9) { ["title"]=> string(49) "Bob Lutz retires from GM. Long live his influence" ["description"]=> string(5757) "<p><img alt="Lutz3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Lutz3.jpg" width="368" height="348" /></p> <p> It truly is the end of an era. Bob Lutz, the cocksure maverick who led a product renaissance at both General Motors and Chrysler, will retire effective May 1. When Lutz goes, the industry will lose one of its best car guys and a strong personality known as much for his gravelly pronouncements at auto shows as he was for the automobiles he helped create.</p> <p> GM will surely miss his direction in the company’s new-car works. When Lutz arrived in September 2001, GM was putting out bland cars and cutting corners on all but its most-profitable pickup trucks and SUVs. Designers also took a back seat when the company set up to develop a new model. The company would engineer the underpinnings of a car, putting all considerations from engineering, manufacturing and marketing first. Then designers would wrap a steel body around it. The results were typically rote and boxy. When GM tried to step out with design, it ended up with cars like the famously garish Pontiac Aztek SUV.</p> <p> Lutz brought design to the forefront. The company started its new cars with the styling concept first and then started to make changes for fuel economy, cabin space or aerodynamics or any other practical attribute. Stylists didn’t win every battle, but clearly design has improved immensely under Lutz’s reign. It took several years for Lutz’s overhaul to take hold. When it did, the results were much better cars that typically sold for thousands of dollars more than the old model they replaced. The current Cadillac CTS and Chevrolet Camaro have been critically praised. The Camaro has consistently outsold the rival Ford Mustang since its launch last year. GM has had to add production for the Chevy Equinox and GMC Terrain SUVs. </p> <p> Under Lutz, GM spent more cash to spruce up GM’s cabins, where the company’s finance-driven management team had often shaved budgets. Eric Noble, president of California auto consulting firm The CarLab, said the Malibu has nicer materials inside than a Toyota Camry. The Saturn Aura and Malibu won North American Car of the Year awards in 2007 and 2008. </p> <p> Lutz also spearheaded the Chevrolet Volt program. The fruits of that work will come this fall when GM starts selling the car, which is engineered to run purely on electric power for 40 miles. Lutz had to make three passes at now-fired GM Chairman and CEO Rick Wagoner to get an electric car approved.</p> <p> Lutz wasn’t Mr. Green. This is a guy who flies his own jet fighter and has a passion for sports cars. He argued against government fuel economy rules and eschewed hybrid-electric cars until he saw the kind of marketing mileage Toyota was getting for its Prius. He famously declared Global Warming “a total crock.” </p> <p> He also had some misreads when it came to the models he put out. The new GTO in 2004 was a cult favorite among gearheads, but the car was based on Australia’s Holden Monaro coupe and its jellybean styling looked dated. GM sold about 1,000 GTOs a month before ending production after three years. Remember the truck-nosed minivans? Lutz put an SUV face on the Chevy Uplander, Saturn Relay, Pontiac Montana and Buick Terrazza in 2005 and they, too, flopped. Lutz said at the time that it was a low-budget program. It was also bad badge engineering.</p> <p> More recently, Lutz was overseeing marketing. He played a big role in the “May the Best Car Win” campaign that compared GM’s models to the best from Japan and Germany. It was audacious and showed that the company had confidence in the new cars Lutz and GM’s team had produced. GM still has a long way to go to convince some consumers to give its cars a look, but the campaign boosted showroom traffic.</p> <p> Things changed in December. Whitacre and the board fired former CEO Fritz Henderson and later made Lutz an advisor. Lutz was dismayed at Henderson’s dismissal. Being an advisor with little authority didn’t suit his style, either. As Henderson told me today, Lutz “wants to be in the game.” At 78, Lutz has had a long run. If he isn’t having a major impact, he may as well kick back.</p> <p> Someone has to pick up where he leaves off. Without Lutz to bring a product focus to GM, the company may surely be lost right now. Tom Stephens, GM’s vice chairman of global product operations, and GM-North America President Mark Reuss are the two men who will have to keep the car culture burning at GM, says Jim Hall. Lutz says he left a system in place to make sure it happens. And the two executives minding the car works have the sense to keep it going. Stephens is a car nut with an impressive collection of muscle cars and deep engineering knowledge. Reuss recently ran GM’s Holden business, where he had a big hand in developing the Camaro and beloved Pontiac G8 sports sedan. He is an engineer by training and has just the kind of expertise GM needs high up in management.</p> <p> There may be tremendous pressure to return to old habits. Chairman and CEO Ed Whitacre is driven to boost sales, turn a profit and take GM public as soon as he can. That way the government can sell its 61% stake and GM can ditch the “Government Motors” moniker. But with that drive could come the pressure to shave costs to show potential investors a better bottom line. That isn’t to say Whitacre doesn’t believe in good products, though he has said little on the subject. But the company will have to resist the urge to pinch pennies. And management will do it without Lutz’s force of will. Hopefully for GM’s sake, the team he leaves behind will be able to do it.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bob_lutz_retire.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bob_lutz_retire.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(8) "Car Guys" ["pubdate"]=> string(31) "Wed, 03 Mar 2010 17:26:49 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "19" } ["summary"]=> string(5757) "<p><img alt="Lutz3.jpg" src="http://www.businessweek.com/autos/autobeat/archives/Lutz3.jpg" width="368" height="348" /></p> <p> It truly is the end of an era. Bob Lutz, the cocksure maverick who led a product renaissance at both General Motors and Chrysler, will retire effective May 1. When Lutz goes, the industry will lose one of its best car guys and a strong personality known as much for his gravelly pronouncements at auto shows as he was for the automobiles he helped create.</p> <p> GM will surely miss his direction in the company’s new-car works. When Lutz arrived in September 2001, GM was putting out bland cars and cutting corners on all but its most-profitable pickup trucks and SUVs. Designers also took a back seat when the company set up to develop a new model. The company would engineer the underpinnings of a car, putting all considerations from engineering, manufacturing and marketing first. Then designers would wrap a steel body around it. The results were typically rote and boxy. When GM tried to step out with design, it ended up with cars like the famously garish Pontiac Aztek SUV.</p> <p> Lutz brought design to the forefront. The company started its new cars with the styling concept first and then started to make changes for fuel economy, cabin space or aerodynamics or any other practical attribute. Stylists didn’t win every battle, but clearly design has improved immensely under Lutz’s reign. It took several years for Lutz’s overhaul to take hold. When it did, the results were much better cars that typically sold for thousands of dollars more than the old model they replaced. The current Cadillac CTS and Chevrolet Camaro have been critically praised. The Camaro has consistently outsold the rival Ford Mustang since its launch last year. GM has had to add production for the Chevy Equinox and GMC Terrain SUVs. </p> <p> Under Lutz, GM spent more cash to spruce up GM’s cabins, where the company’s finance-driven management team had often shaved budgets. Eric Noble, president of California auto consulting firm The CarLab, said the Malibu has nicer materials inside than a Toyota Camry. The Saturn Aura and Malibu won North American Car of the Year awards in 2007 and 2008. </p> <p> Lutz also spearheaded the Chevrolet Volt program. The fruits of that work will come this fall when GM starts selling the car, which is engineered to run purely on electric power for 40 miles. Lutz had to make three passes at now-fired GM Chairman and CEO Rick Wagoner to get an electric car approved.</p> <p> Lutz wasn’t Mr. Green. This is a guy who flies his own jet fighter and has a passion for sports cars. He argued against government fuel economy rules and eschewed hybrid-electric cars until he saw the kind of marketing mileage Toyota was getting for its Prius. He famously declared Global Warming “a total crock.” </p> <p> He also had some misreads when it came to the models he put out. The new GTO in 2004 was a cult favorite among gearheads, but the car was based on Australia’s Holden Monaro coupe and its jellybean styling looked dated. GM sold about 1,000 GTOs a month before ending production after three years. Remember the truck-nosed minivans? Lutz put an SUV face on the Chevy Uplander, Saturn Relay, Pontiac Montana and Buick Terrazza in 2005 and they, too, flopped. Lutz said at the time that it was a low-budget program. It was also bad badge engineering.</p> <p> More recently, Lutz was overseeing marketing. He played a big role in the “May the Best Car Win” campaign that compared GM’s models to the best from Japan and Germany. It was audacious and showed that the company had confidence in the new cars Lutz and GM’s team had produced. GM still has a long way to go to convince some consumers to give its cars a look, but the campaign boosted showroom traffic.</p> <p> Things changed in December. Whitacre and the board fired former CEO Fritz Henderson and later made Lutz an advisor. Lutz was dismayed at Henderson’s dismissal. Being an advisor with little authority didn’t suit his style, either. As Henderson told me today, Lutz “wants to be in the game.” At 78, Lutz has had a long run. If he isn’t having a major impact, he may as well kick back.</p> <p> Someone has to pick up where he leaves off. Without Lutz to bring a product focus to GM, the company may surely be lost right now. Tom Stephens, GM’s vice chairman of global product operations, and GM-North America President Mark Reuss are the two men who will have to keep the car culture burning at GM, says Jim Hall. Lutz says he left a system in place to make sure it happens. And the two executives minding the car works have the sense to keep it going. Stephens is a car nut with an impressive collection of muscle cars and deep engineering knowledge. Reuss recently ran GM’s Holden business, where he had a big hand in developing the Camaro and beloved Pontiac G8 sports sedan. He is an engineer by training and has just the kind of expertise GM needs high up in management.</p> <p> There may be tremendous pressure to return to old habits. Chairman and CEO Ed Whitacre is driven to boost sales, turn a profit and take GM public as soon as he can. That way the government can sell its 61% stake and GM can ditch the “Government Motors” moniker. But with that drive could come the pressure to shave costs to show potential investors a better bottom line. That isn’t to say Whitacre doesn’t believe in good products, though he has said little on the subject. But the company will have to resist the urge to pinch pennies. And management will do it without Lutz’s force of will. Hopefully for GM’s sake, the team he leaves behind will be able to do it.<br /> </p>" } [12]=> array(9) { ["title"]=> string(39) "Bad timing: GM recalls 1.3 million cars" ["description"]=> string(1999) "<p><br /> Well, so much for racing through the gap left open by Toyota’s recall saga. General Motors said late Monday that it will recall 1.3 million compact cars to fix a power steering problem. </p> <p>The timing is terrible. GM may have just benefitted from Toyota’s problems as the company’s sales rose 11.5% in February. The more important number is that sales for the four brands it is keeping —Buick, Cadillac, Chevrolet and GMC—rose 32% in the month. That’s a sign that GM found some buyers who might have shopped Toyota otherwise.</p> <p>Keeping that momentum just got a little tougher. GM said that the company will start the recall following 1,100 complaints about the power steering in its small cars. GM is recalling the 2005 through 2010 Chevrolet Cobalt, 2007 through 2010 Pontiac G5, 2005 and 2006 Pontiac Pursuit sold in Canada and the 2005 and 2006 Pontiac G4 sold in Mexico. </p> <p>The company can hope that its big recall will be lost in the shuffle of Toyota’s ongoing recall problems and the related government hearings. Toyota’s problems give all of its rivals a chance to prove that their cars are as good as, or better than Toyota’s models. Honda can make that claim. Its quality scores have been good for years. Hyundai and Ford have been making progress for several years, giving them a credible story. GM has been making headway with quality but still had a lot of work to do to convince consumers that its cars are just as good as those sold by Toyota.<br /> <br /> At a time when recalls are big news, this is a set back. Recalls happen all the time and this one pales next to the 8 million cars Toyota has recalled recently. So, GM may still be able to take advantage of Toyota’s big stumble. At the least, consumers will view Toyota’s quality on a more even field with most other carmakers. But GM just gave the skeptical consumers that the company needs to win over a reason to believe that it hasn’t closed the quality gap. <br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bad_timing_gm_r.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/03/bad_timing_gm_r.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(7) "Quality" ["pubdate"]=> string(31) "Tue, 02 Mar 2010 15:18:23 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "46" } ["summary"]=> string(1999) "<p><br /> Well, so much for racing through the gap left open by Toyota’s recall saga. General Motors said late Monday that it will recall 1.3 million compact cars to fix a power steering problem. </p> <p>The timing is terrible. GM may have just benefitted from Toyota’s problems as the company’s sales rose 11.5% in February. The more important number is that sales for the four brands it is keeping —Buick, Cadillac, Chevrolet and GMC—rose 32% in the month. That’s a sign that GM found some buyers who might have shopped Toyota otherwise.</p> <p>Keeping that momentum just got a little tougher. GM said that the company will start the recall following 1,100 complaints about the power steering in its small cars. GM is recalling the 2005 through 2010 Chevrolet Cobalt, 2007 through 2010 Pontiac G5, 2005 and 2006 Pontiac Pursuit sold in Canada and the 2005 and 2006 Pontiac G4 sold in Mexico. </p> <p>The company can hope that its big recall will be lost in the shuffle of Toyota’s ongoing recall problems and the related government hearings. Toyota’s problems give all of its rivals a chance to prove that their cars are as good as, or better than Toyota’s models. Honda can make that claim. Its quality scores have been good for years. Hyundai and Ford have been making progress for several years, giving them a credible story. GM has been making headway with quality but still had a lot of work to do to convince consumers that its cars are just as good as those sold by Toyota.<br /> <br /> At a time when recalls are big news, this is a set back. Recalls happen all the time and this one pales next to the 8 million cars Toyota has recalled recently. So, GM may still be able to take advantage of Toyota’s big stumble. At the least, consumers will view Toyota’s quality on a more even field with most other carmakers. But GM just gave the skeptical consumers that the company needs to win over a reason to believe that it hasn’t closed the quality gap. <br /> </p>" } [13]=> array(9) { ["title"]=> string(45) "GM is shopping (or is that 'Saab-ing') Hummer" ["description"]=> string(2469) "<p><img alt="10c5-Hummer_HX_Concept.jpg" src="http://www.businessweek.com/autos/autobeat/archives/10c5-Hummer_HX_Concept.jpg" width="500" height="373" /></p> <p><br /> There’s a new verb in the auto vernacular. Saab-ing it. That’s what people inside Hummer and General Motors say they are doing with the menacing-SUV brand now that a tentative deal to sell it to China’s Sichuan Tengzhong Industrial Machinery has fallen through. GM says they will wind Hummer down. Recall over the past several months before closing the sale of Saab to Spyker Cars that GM said a couple of times that a sale was unlikely. They said that they planned to wind it down, thereby putting pressure on any bidder to come up with a cash deal quickly. It worked. So GM is playing a similar game with Hummer. The company says Hummer is in wind down mode, but if a buyer comes along with cash in hand there still could be a sale.</p> <p> Well, I have another definition of Saab-ing it. GM management has already done it with Hummer. They just didn’t know it. To Saab a car brand means to buy it, give it some initial investment money in the early honeymoon years and then starve it of new models and marketing dollars until it has to either be shuttered or sold. GM spent a pittance on Saab and Hummer marketing in recent years. After the H3 was launched, GM didn’t add anything new. They had a great concept called the HX (pictured above) but it was never built. Both Hummer and Saab were limited to just two models to sell for most of their existence under GM ownership. Nothing in equaled nothing out. </p> <p> To be fair, Hummer is a tough sell these days. Americans are in a recession-driven period of austerity. Fuel is cheap, but the prospect of a gasoline price spike sits on the consumer’s shoulder like a fat gargoyle. In an era when conspicuous consumption is scorned and consumer confidence is low, Hummer would be a tough sell. </p> <p> That said, Lamborghini and Ferrari aren’t withering away. A new buyer could take Hummer back to what it was before GM bought it and Saabed it. It could be a niche brand selling expensive, recreational, ultra-rugged suvs that can go anywhere. And by anywhere, I don’t mean the speed bumps in the prep school parking lot. I mean the Dakota Badlands. Remember the H1? Imagine that, only more refined. In other words, it could be to suvs what Ferrari or Lambo are to sports cars, but its new owner can’t Saab it.<br /> </p>" ["link"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/02/gm_is_shopping.html" ["guid"]=> string(79) "http://www.businessweek.com/autos/autobeat/archives/2010/02/gm_is_shopping.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(17) "Brands Under Fire" ["pubdate"]=> string(31) "Thu, 25 Feb 2010 16:49:09 -0500" ["slash"]=> array(1) { ["comments"]=> string(1) "7" } ["summary"]=> string(2469) "<p><img alt="10c5-Hummer_HX_Concept.jpg" src="http://www.businessweek.com/autos/autobeat/archives/10c5-Hummer_HX_Concept.jpg" width="500" height="373" /></p> <p><br /> There’s a new verb in the auto vernacular. Saab-ing it. That’s what people inside Hummer and General Motors say they are doing with the menacing-SUV brand now that a tentative deal to sell it to China’s Sichuan Tengzhong Industrial Machinery has fallen through. GM says they will wind Hummer down. Recall over the past several months before closing the sale of Saab to Spyker Cars that GM said a couple of times that a sale was unlikely. They said that they planned to wind it down, thereby putting pressure on any bidder to come up with a cash deal quickly. It worked. So GM is playing a similar game with Hummer. The company says Hummer is in wind down mode, but if a buyer comes along with cash in hand there still could be a sale.</p> <p> Well, I have another definition of Saab-ing it. GM management has already done it with Hummer. They just didn’t know it. To Saab a car brand means to buy it, give it some initial investment money in the early honeymoon years and then starve it of new models and marketing dollars until it has to either be shuttered or sold. GM spent a pittance on Saab and Hummer marketing in recent years. After the H3 was launched, GM didn’t add anything new. They had a great concept called the HX (pictured above) but it was never built. Both Hummer and Saab were limited to just two models to sell for most of their existence under GM ownership. Nothing in equaled nothing out. </p> <p> To be fair, Hummer is a tough sell these days. Americans are in a recession-driven period of austerity. Fuel is cheap, but the prospect of a gasoline price spike sits on the consumer’s shoulder like a fat gargoyle. In an era when conspicuous consumption is scorned and consumer confidence is low, Hummer would be a tough sell. </p> <p> That said, Lamborghini and Ferrari aren’t withering away. A new buyer could take Hummer back to what it was before GM bought it and Saabed it. It could be a niche brand selling expensive, recreational, ultra-rugged suvs that can go anywhere. And by anywhere, I don’t mean the speed bumps in the prep school parking lot. I mean the Dakota Badlands. Remember the H1? Imagine that, only more refined. In other words, it could be to suvs what Ferrari or Lambo are to sports cars, but its new owner can’t Saab it.<br /> </p>" } [14]=> array(9) { ["title"]=> string(49) "Degrees of Losing: Toyota's Trouble in Washington" ["description"]=> string(3970) "<p>In the black comedy “The War of the Roses,” the divorce attorney played by Danny DeVito advises his client, played by Michael Douglas, that, “There is no winning! Only degrees of losing!” That brings me to the Congressional hearings over Toyota’s sudden acceleration issues and recalls. </p> <p> Yesterday it was James Lentz, the president and COO of Toyota Motor Sales USA, who took the stand for his grilling from Congress. He certainly affirmed some things that make Toyota look bad. He admitted that the company didn’t do a good job of collecting customer complaints from its various global operations. He said that Toyota’s U.S. executives can’t order a recall without say-so from management in Japan. That slows the process. And he said that, while Toyota doesn’t believe that electronics or software are responsible for the sudden acceleration incidents, he couldn’t say for certain that the fixes to floor mats and accelerator pedals will keep accidents from happening again. </p> <p> None of those admissions are revelations. They have been reported in the past or discussed by the company. But these hearings aren’t about revelations. They are about forcing Toyota to publicly affirm that the company made mistakes. And it’s about members of Congress showing that they side with the little guy, whose votes they covet. To show how silly these hearings can get, at one point a member of Congress asked Lentz which executive oversees Toyota’s Washington office, which handles safety and compliance issues. Turns out it’s not Lentz. He’s a sales guy. It’s Yoshimi Inaba, the president and COO of Toyota Motor North America. The Congresswoman then asked him why he was testifying. He responded simply that he was asked to be there. In other words, Congress invited the wrong guy.</p> <p> But so long as Lentz was there, he got his beating. Rep. Edward Markey (D-Mass.) was particularly tough on him. When Lentz admitted that, “We didn’t do a very good job of sharing information across the globe,” Markey responded saying, “That’s just unacceptable.” He also took Lentz to task on the fact that the company says it has no reason to believe that electronics or software are the problems causing some of Toyota’s cars to suddenly take off. It’s either the floor mat or an accelerator pedal, Toyota believes. But Markey pushed on. He demanded to know why Toyota was installing a software fix that would override the accelerator if both the brakes and accelerator are being pushed. Fair question. But in this arena, it was also a rhetorical one.</p> <p> I’m not letting Toyota off the hook. Far from it. Clearly there are serious problems. Edmunds.com mined the government’s database and found that Toyota has more sudden acceleration complaints than any carmaker. As I pointed out in <a href="http://www.businessweek.com/magazine/content/07_27/b4041060.htm">this </a>story in 2007, the company’s growth has led to many of its problems. Today, Toyota Motor Corp. President Akio Toyoda is expected to say in a prepared statement that, “I would like to point out here that Toyota’s priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before.”</p> <p> That admission may be the most significant thing to come from these hearings. Since Congress will not find the end-all cause for the recall problems, Akio’s statement would declare from the very top that Toyota is just like any car company. It sought growth and profits and lost its focus on quality. If the top executive says that today, as the company says he will, that will be the company’s biggest loss. The grandson of the company’s founder will fuel the new belief that his company is no longer the special one. Even Toyota loyalists will get that message.<br /> </p>" ["link"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/02/degrees_of_losi.html" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/02/degrees_of_losi.html" ["dc"]=> array(1) { ["creator"]=> string(11) "David Welch" } ["category"]=> string(17) "Cars and Politics" ["pubdate"]=> string(31) "Wed, 24 Feb 2010 11:31:17 -0500" ["slash"]=> array(1) { ["comments"]=> string(2) "27" } ["summary"]=> string(3970) "<p>In the black comedy “The War of the Roses,” the divorce attorney played by Danny DeVito advises his client, played by Michael Douglas, that, “There is no winning! Only degrees of losing!” That brings me to the Congressional hearings over Toyota’s sudden acceleration issues and recalls. </p> <p> Yesterday it was James Lentz, the president and COO of Toyota Motor Sales USA, who took the stand for his grilling from Congress. He certainly affirmed some things that make Toyota look bad. He admitted that the company didn’t do a good job of collecting customer complaints from its various global operations. He said that Toyota’s U.S. executives can’t order a recall without say-so from management in Japan. That slows the process. And he said that, while Toyota doesn’t believe that electronics or software are responsible for the sudden acceleration incidents, he couldn’t say for certain that the fixes to floor mats and accelerator pedals will keep accidents from happening again. </p> <p> None of those admissions are revelations. They have been reported in the past or discussed by the company. But these hearings aren’t about revelations. They are about forcing Toyota to publicly affirm that the company made mistakes. And it’s about members of Congress showing that they side with the little guy, whose votes they covet. To show how silly these hearings can get, at one point a member of Congress asked Lentz which executive oversees Toyota’s Washington office, which handles safety and compliance issues. Turns out it’s not Lentz. He’s a sales guy. It’s Yoshimi Inaba, the president and COO of Toyota Motor North America. The Congresswoman then asked him why he was testifying. He responded simply that he was asked to be there. In other words, Congress invited the wrong guy.</p> <p> But so long as Lentz was there, he got his beating. Rep. Edward Markey (D-Mass.) was particularly tough on him. When Lentz admitted that, “We didn’t do a very good job of sharing information across the globe,” Markey responded saying, “That’s just unacceptable.” He also took Lentz to task on the fact that the company says it has no reason to believe that electronics or software are the problems causing some of Toyota’s cars to suddenly take off. It’s either the floor mat or an accelerator pedal, Toyota believes. But Markey pushed on. He demanded to know why Toyota was installing a software fix that would override the accelerator if both the brakes and accelerator are being pushed. Fair question. But in this arena, it was also a rhetorical one.</p> <p> I’m not letting Toyota off the hook. Far from it. Clearly there are serious problems. Edmunds.com mined the government’s database and found that Toyota has more sudden acceleration complaints than any carmaker. As I pointed out in <a href="http://www.businessweek.com/magazine/content/07_27/b4041060.htm">this </a>story in 2007, the company’s growth has led to many of its problems. Today, Toyota Motor Corp. President Akio Toyoda is expected to say in a prepared statement that, “I would like to point out here that Toyota’s priority has traditionally been the following: First; Safety, Second; Quality, and Third; Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before.”</p> <p> That admission may be the most significant thing to come from these hearings. Since Congress will not find the end-all cause for the recall problems, Akio’s statement would declare from the very top that Toyota is just like any car company. It sought growth and profits and lost its focus on quality. If the top executive says that today, as the company says he will, that will be the company’s biggest loss. The grandson of the company’s founder will fuel the new belief that his company is no longer the special one. Even Toyota loyalists will get that message.<br /> </p>" } } ["channel"]=> array(9) { ["title"]=> string(24) "Auto Beat - BusinessWeek" ["link"]=> string(43) "http://www.businessweek.com/autos/autobeat/" ["description"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["language"]=> string(2) "en" ["copyright"]=> string(14) "Copyright 2010" ["lastbuilddate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["generator"]=> string(34) "http://www.movabletype.org/?v=3.16" ["docs"]=> string(37) "http://blogs.law.harvard.edu/tech/rss" ["tagline"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." } ["textinput"]=> array(0) { } ["image"]=> array(0) { } ["feed_type"]=> string(3) "RSS" ["feed_version"]=> string(3) "2.0" ["stack"]=> array(0) { } ["inchannel"]=> bool(false) ["initem"]=> bool(false) ["incontent"]=> bool(false) ["intextinput"]=> bool(false) ["inimage"]=> bool(false) ["current_field"]=> string(0) "" ["current_namespace"]=> bool(false) ["_CONTENT_CONSTRUCTS"]=> array(6) { [0]=> string(7) "content" [1]=> string(7) "summary" [2]=> string(4) "info" [3]=> string(5) "title" [4]=> string(7) "tagline" [5]=> string(9) "copyright" } ["last_modified"]=> string(31) "Sat, 01 May 2010 05:17:48 GMT " } ["feedmeta"]=> array(23) { ["feed/title"]=> string(24) "Auto Beat - BusinessWeek" ["feed/link"]=> string(43) "http://www.businessweek.com/autos/autobeat/" ["feed/language"]=> string(2) "en" ["feed/copyright"]=> string(14) "Copyright 2010" ["feed/lastbuilddate"]=> string(31) "Thu, 29 Apr 2010 14:14:12 -0500" ["feed/generator"]=> string(34) "http://www.movabletype.org/?v=3.16" ["feed/docs"]=> string(37) "http://blogs.law.harvard.edu/tech/rss" ["feed/id"]=> string(52) "http://www.businessweek.com/autos/autobeat/index.rss" ["update/last"]=> int(1283869761) ["update/ttl"]=> int(33) ["update/timed"]=> string(13) "automatically" ["update/hold"]=> string(9) "scheduled" ["map authors"]=> array(1) { ["name"]=> array(10) { ["auto beat"]=> string(1) "1" ["businessweek online -- auto beat"]=> string(1) "1" ["david welchdavid kileydavid kileydavid kileydavid kileyian rowleydavid welchdavid welchian rowleydavid welchdavid welchdavid kileydavid welchian rowleydavid kiley"]=> string(1) "1" ["david kileydavid welchdavid kileydavid kileydavid kileydavid kileyian rowleydavid welchdavid welchian rowleydavid welchdavid welchdavid kileydavid welchian rowley"]=> string(1) "1" ["david kiley"]=> string(1) "1" ["dan beucke"]=> string(1) "1" ["david welch"]=> string(1) "1" ["ian rowley"]=> string(1) "1" ["ira sager"]=> string(1) "1" ["carol matlack"]=> string(1) "1" } } ["feed/description"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["feed/tagline"]=> string(140) "Get the latest auto industry news and car information. Read automotive supplier news and keep up to date on the latest auto industry trends." ["feed/webmaster"]=> string(28) "bwwebmaster@businessweek.com" ["feed/ttl"]=> string(2) "10" ["feed/author"]=> string(105) " " ["feed/author_name"]=> string(162) "David KileyDavid WelchDavid KileyDavid KileyDavid KileyDavid KileyIan RowleyDavid WelchDavid WelchIan RowleyDavid WelchDavid WelchDavid KileyDavid WelchIan Rowley" ["feed/author_email"]=> string(285) "david_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comdavid_kiley-blogs@businessweek.comian_rowley@businessweek.comian_rowley@businessweek.comdavid_kiley-blogs@businessweek.comian_rowley@businessweek.com" ["link/uri"]=> string(52) "http://www.businessweek.com/autos/autobeat/index.rss" ["link/name"]=> string(24) "Auto Beat - BusinessWeek" ["link/id"]=> string(2) "17" } ["post"]=> array(15) { ["post_title"]=> string(61) "GM pays back its loans and Whitacre stirs up some controversy" ["post_content"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" ["post_excerpt"]=> string(3745) "<p> You’d think that General Motors Chairman and CEO Ed Whitacre, who built AT&T with $200 billion worth of deals, would be a savvy poker player. Well, judging from the grousing over his recent <a href="http://www.youtube.com/watch?v=oUIP9NGsH9o">television ad</a>, in which he talks about paying off the government’s loans ahead of schedule, he may have overplayed his hand. Yes, GM paid off $8.4 billion in loans to the U.S. Treasury and the governments of Ontario and Canada about five years early. But crowing about it in a television commercial has generated some controversy.</p> <p> You don’t have to go too far to find someone in the commentariat grousing about how GM paid back the loans. The gripe is that GM paid the debt portion of the government’s investment with cash the company got from the government’s equity investment. Here’s how it works. When GM emerged from bankruptcy, it got $49.5 billion in cash. The U.S. Treasury and governments of Ontario and Canada gave GM $8.4 billion in loans. The rest of the money was given to GM in exchange for stock. The U.S. government owns 61% of the company and Canada owns 11.7%. Back in July, the feds decided to give GM enough cash to get through a longer, deeper recession, according to a former member of President Obama’s Auto Task Force, who asked not to be named because the discussions were private. As the economy started to recover and auto sales have climbed, GM found it had more cash on hand than it needed. Repaying the government loans wasn’t such a hard thing to do. So when Whitacre goes on television saying “we have repaid our government loans, in full, with interest, five years ahead of the original schedule,” his comments raised a few hackles. “They were repaying Uncle Sam with money they already got from the government,” snapped Maryann Keller, an independent consultant in Stamford, Conn. Senator Chuck Grassley (R-Iowa) weighed in during his weekly webcast calling Whitacre’s television appearance, “a little bit disingenuous.” He also said, “They’re paying it back with bailout money that they have from the federal government in the first place.” <br /> <br /> To be fair, there is plenty of politics in play. Some critics simply didn’t like the bailout in the first place. The early payment is a small sign that GM’s business is getting back on track. If the company’s sales were tanking and cash flow was a problem, they’d keep all of the money until things turned around. GM’s sales are up 18.4% this year. GM-North America President Mark Reuss has done a commendable job of reining in incentive spending, giving GM better pricing on its cars. The company may turn at least an operating profit this year. So far, Whitacre and GM are doing many of the things they need to do to turn the business around. </p> <p> The problem is that the early payoff shows only that GM is stable enough to give some money back. They aren’t making big profits yet. It’s one small benchmark on a longer haul. Going on television raised a hue and cry to a feat that some see as pretty marginal. There’s one other problem with Whitacre’s ad. He kicks it off by saying, “a lot of Americans didn’t agree with giving General Motors a second chance. Quite frankly, I can respect that.” Why would Whitacre want to remind Americans that the company needed to be bailed out? GM has a bit of momentum in the market. Vehicles like the Chevrolet Camaro, Buick Lacrosse sedan and Cadillac SRX and Chevy Equinox SUVs are red hot. Clearly, plenty of consumers are getting past the now-tired “Government Motors” tag and buying GM’s cars on their merits. If Ed goes on TV again, he might want to start with that.</p>" ["epoch"]=> array(3) { ["issued"]=> int(1272568452) ["created"]=> NULL ["modified"]=> int(1272568452) } ["post_date"]=> string(19) "2010-04-29 15:14:12" ["post_modified"]=> string(19) "2010-04-29 15:14:12" ["post_date_gmt"]=> string(19) "2010-04-29 19:14:12" ["post_modified_gmt"]=> string(19) "2010-04-29 19:14:12" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(4) "open" ["guid"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" ["meta"]=> array(5) { ["syndication_source"]=> string(24) "Auto Beat - BusinessWeek" ["syndication_source_uri"]=> string(43) "http://www.businessweek.com/autos/autobeat/" ["syndication_feed"]=> string(52) "http://www.businessweek.com/autos/autobeat/index.rss" ["syndication_feed_id"]=> string(2) "17" ["syndication_permalink"]=> string(80) "http://www.businessweek.com/autos/autobeat/archives/2010/04/gm_pays_back_it.html" } ["post_author"]=> int(1) ["post_category"]=> array(1) { [0]=> int(1) } } ["_base"]=> NULL ["_freshness"]=> int(2) ["_wp_id"]=> int(0) ["strip_attrs"]=> array(2) { [0]=> array(2) { [0]=> string(6) "[a-z]+" [1]=> string(5) "style" } [1]=> array(2) { [0]=> string(6) "[a-z]+" [1]=> string(6) "target" } } }