Way back in 1979 when Chrysler needed government help, there was a political cartoon that perfectly captured the situation. If featured an old Plymouth Fury with giant tail fins teetering halfway over a cliff, with a tow truck parked nearby. A bystander wearing a shirt labeled U.S. Taxpayer was staring at the car on the cliff. The tow truck driver was nonchalantly picking his teeth and telling the taxpayer, "I can tow it out, or push it over the cliff, but either way it's going to cost you."
And so here we are again, only this time it's not just Chrysler. Now GM and Ford need to get towed back onto solid ground, too. And while there are plenty of people saying, "Let them die," the reality is that it'll be cheaper to bail them out.
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
There is only one number that really matters in today's financial report from General Motors: how much cash it has in the kitty. And the answer is, not enough. GM is now burning through its cash reserves at a rate that will run short before Christmas.
Every month GM spends $13 billion to pay all the bills that keep the company running. And it has to pay out even more on top of that to meet other obligations, like paying the UAW for the VEBA or bailing out Delphi. Like all other companies, GM keeps a reserve of cash on hand that it can dip into when it doesn't sell enough new cars to get the money to pay its bills. But that cash reserve is running out fast.
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
Anyone watching the auto industry these days is acutely aware that General Motors is hurtling towards disaster. It's burning through cash reserves at a rate that will put it in Chapter 11 sometime next year, no matter how much management says "that's not an option." It's still being crushed by its legacy costs, yes, even after concessions from the UAW. And it just witnessed its own finance arm, GMAC, essentially pull out of the automotive lending business.
What was an emergency just a month ago has now blossomed into a full blown crisis. Unless something is done quickly, General Motors could collapse.
This is why we're hearing talks of a potential GM-Chrysler merger, and of a bailout from the Federal Government.
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
Pity the poor car buyer who wants to be a smart consumer and reads all the quality studies before going to the showroom. How do you know what to believe?
For example, Consumer Reports' Reliability Survey gives props to the Scion xD. But Strategic Vision's Total Quality Award gives props to the Scion xB. And J.D. Power puts Scion near the bottom of the list of its Vehicle Dependability Survey. Who do you believe?
The problem is that these studies all measure different aspects of quality. Unfortunately, the mass media doesn't have time to delve into these distinctions and so all we get is their sound-bite analysis. Their favorite is that the Detroit Three are lagging behind the "foreign automakers" in quality.
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
The headlines say General Motors is feverishly putting a plan together to take over Chrysler. From my standpoint, only two theories can explain why this is happening. Either the billionaire boys from Cerberus have a master plan to revamp the American auto industry, or they are in so far over their heads that they don't know what they're doing. More on that in a minute.
If GM does take over Chrysler, then Walter P. Chrysler will be turning in his grave. After all, Walter P. quit GM back in 1919 because he didn't like the direction in which the company was going, and later went on to start the company that still bears his name.
A takeover of Chrysler will be the kiss of death for the company. The only way GM can justify taking it over will be to take an axe to its operations. You think Chrysler has shriveled to a shadow of its former self over the last two years? You ain't seen nothin' yet.
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
When Chrysler rolled out three electric vehicle prototypes a couple of weeks ago most EV experts were skeptical. They were even more skeptical when the company claimed that it would have an EV on sale by 2010. Wait a minute, everyone wondered, how could Chrysler have caught up with GM, Nissan and other automakers who have been working on EV's for a lot longer?
Well, to hear Chrysler tell it, it's not behind at all. It is the first major automaker to actually allow members of the media and dealers to drive its production-intent EV's. The company claims it's been working on EV's for at least two and a half years-or about the same time as the other major OEM's. Its effort came out of the fuel cell program it was working on with Mercedes, back in the good 'ole DCX days. They merely pulled the fuel cell out and dropped in a battery pack.
John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
A few years back I made a bet with a former Director of Engineering at General Motors. I bet him five bucks that Americans would fall in love with modern diesel engines and would want them in their cars. Specifically, I predicted that diesel sales in passenger cars would reach 1 million units by 2012. He bet it wouldn't happen.
Last year I ran into him and he ruefully conceded he was probably going to lose the bet. But that was last year. Now I'm pretty sure I'm the one who's going to lose. What a difference a year makes!
John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
There's a lot of talk about making the U.S. energy independent. Or getting off oil altogether. I guess anyone who believes it can easily be done has never taken the time to count how many millions of barrels of oil we import every day. Damn do we use a lot of oil!
Some say the country is in trouble because we don't have an energy policy. That's not true. We do have a policy. It doesn't have a grandiose name attached to it, but for decades now, with strong bi-partisan support, the U.S. has maintained very low gasoline taxes, has legislated cleaner fuels (which yields less fuel), and has put strict limits on drilling.
We seem to be saying that we don't want to use oil, but since we don't want to hurt the "little guy," we'll keep it as cheap as possible.
John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
When Alan Mulally came to the Ford Motor Company two years ago he finally forced the company to face reality. It wasn't going to go anywhere, he told his executive team, unless it put all its resources into resuscitating the Ford brand on a global basis.
So Jaguar and Land Rover were given the heave-ho, and Volvo was put "under review." The decision was made to let Mercury slowly die, and Lincoln's turn-around was put on the back burner until the Ford brand revived.
But as the company formulated its turn-around plan, it slowly dawned on everyone involved that there was a real opportunity to save Mercury. They figured out a way to give the brand a unique line-up of vehicles without breaking the bank. So in April of this year they took their ideas to Mulally, and after extensive studies they got the go-ahead in June to save it.
John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
Chrysler has been harshly criticized by analysts and the media. And with good reason. It's lost a ton of sales and market share. It had to bail out of leasing when its residuals plummeted. It came up $6 billion short trying to renew its credit lines. And its debt rating is pure junk.
Ever since Cerberus took Chrysler private they've only doled out dribs and drabs of information about the company. So analysts and reporters (including me!) rushed in to fill the vacuum, mostly with negative news. That woke the company up to the fact that it better start communicating with the outside world.
And that landed me an interview for Autoline with Tom LaSorda, the vice chairman of the company, who offered up a lot more information than I ever expected.
Way back in 1979 when Chrysler needed government help, there was a political cartoon that perfectly captured the situation. If featured an old Plymouth Fury with giant tail fins teetering halfway over a cliff, with a tow truck parked nearby. A bystander wearing a shirt labeled U.S. Taxpayer was staring at the car on the cliff. The tow truck driver was nonchalantly picking his teeth and telling the taxpayer, "I can tow it out, or push it over the cliff, but either way it's going to cost you."
Chrysler has been harshly criticized by analysts and the media. And with good reason. It's lost a ton of sales and market share. It had to bail out of leasing when its residuals plummeted. It came up $6 billion short trying to renew its credit lines. And its debt rating is pure junk.
Officially Official: 2010 Ford Mustang!
2010 Ford Mustang revealed early on Ford's own website!
2009 Nissan 370Z rolls out early in So. Cal
VIDEO: 2009 Nissan 370Z revealed early in So. Cal.
BRABUS begins business of tuning the Tesla Roadster
In the Autoblog Garage: 2009 Mercedes Benz C63 AMG
In the Autoblog Garage: 2009 Hyundai Genesis
In the Autoblog Garage: 2009 Chevrolet Traverse LT
Knight Rider: The Liveblog -- Season 1, Episode 7
