Tokyo Motor Show looking thin on the ground as manufacturers pull out

May 25th, 2009 by Darren Cottingham

Tokyo Motor Show

Porsche and Maserati are the latest party poopers for the biennial Tokyo Motor Show, adding to BMW, Volkswagen, Volvo, Ford, GM, Chrysler and more. That’s 22 foreign brands that will be staying at home watching the telly as the world focuses its attention on the new releases of other manufacturers. Japan’s 14 domestic manufacturers will almost certainly have a strong presence, but who is left out of the foreign marques: Ferrari, Hyundai, Lotus and possibly Kia.

This will take the number of cars at the show down by around 50%.

2010 Opel Astra revealed before Frankfurt debut

May 14th, 2009 by Darren Cottingham

Opel Astra fq

Financially troubled carmaker Opel has just released details of its upcoming next-generation 2010 Astra before its official debut at the Frankfurt Motor Show this September.

The 2010 Astra’s design is inspired by the larger Opel Insignia, it shows off all-new sheet metal that takes cues from its big brother and packages it into a smaller, more fluid shape. The fascia, headlamps and back-end reflect Opel’s new design direction, along with the sculpted sides and raked-back windscreen.

The new Astra has a wheelbase that stretches 2.8 inches longer than the outgoing model. The “wing and blade” design language employed on the exterior carries through to the interior, and joins ergonomic seats and the new Opel Eye front camera system, which can apparently recognise road signs and warns drivers if they veer out of their lane.

There will be a total of eight different engines available, including four CDTI common-rail diesels with displacements ranging from 1.3- to 2.0-litres and outputs of between 95 and 160 hp. Another four gas-powered units, with displacements between 1.4- and 1.6-litres, dish out between 100 and 180 hp along with a new turbocharged 1.4-litre that replaces the outgoing naturally aspirated 1.8-litre and puts out 140 hp and 14% more torque, while lowering fuel consumption.

The wraps officially come off the five-door Astra later this year, while a four-door sedan, three-door hatch and a two-mode hybrid variant are expected to debut in 2010. Global sales should begin towards the end of 2009, and hopefully we will see the new 2010 Astra down here in NZ next year with a Holden badge whacked on the front.

Corvette paying its rent for now

May 11th, 2009 by Darren Cottingham

Corvette ZR1 2009 fq

According to Fritz Henderson, the newly-appointed CEO of General Motors, the future holds exciting things for Chevrolet’s iconic sportscar. Corvette fans were concerned late last year when GM admitted that development of the next-gen C7 Corvette platform was put on “indefinite hold, with no official or set timetable.”

In a bit of good news for Corvette fans, Henderson stated that the “Corvette pays its rent,” meaning that it’s a money-making operation for The General. Now, the longer the automaker can flog off the current C6 architecture, the more profitable it will ultimately be.

No word yet on when the new Covette platform will be revealed, but Henderson is quick to point out that the current C6 chassis is still an excellent unit to build off and one that’s fully competitive with the best sportscars from around the world.

Fiat to make more acquisitions including Opel and Saab

May 5th, 2009 by Darren Cottingham

Fiat logo

Fiat’s new alliance with Chrysler may only be the beginning for the Italian automaker. According recent reports coming out of the UK and Germany, the Fiat’s expansion plans aren’t limited to its 20% stake in Chrysler — Fiat is also considering acquiring General Motors’ European operations, including Opel, Vauxhall and Saab.

A new super-company would be formed that includes Fiat, Lancia and Alfa Romeo, along with Chrysler and GM Europe, into one corporate entity worth around $106 billion USD and would rival Volkswagen in being the world’s second largest automaker behind Toyota.

In an interview with the Financial Times, Fiat’s CEO Sergio Marchionne spoke about the potential union, “From an engineering and industrial point of view, this is a marriage made in heaven” and with the full support of the automaker’s board, Marchionne hopes to have the deal completed this month, with shares of the new company temporarily dubbed Fiat/Opel — available in the coming months.

Marchionne believes that the alliance would make Fiat a stronger player in the global marketplace during the economic downturn and through merging Fiat and Opel’s B- and C-segment platforms, along with absorbing Opel’s larger D-platform and Fiat’s sub-compact A-segment offerings, could save around 1 billion euros each year.

German trade unions are throwing a spanner, citing concerns about job losses and factory closures, and according to the German magazine WirtschaftWoche, Fiat’s initial offer of $1.33 billion to acquire GM’s European operations was rejected.

Marchionne is scheduled to present Fiat’s plan to an assortment of German leaders this week. Check back for further updates.

Pontiac is dead – what now for Holden? An AU$1billion loss! (+video)

April 28th, 2009 by Darren Cottingham

Pontiac is dead

We were quite bullish on Holden’s future until this morning when we read GM’s press release. We were of the opinion that it would cost GM too much to ditch Holden, but it seems that by any measures necessary, GM will slash costs, even if that means ditching brands that could once again flourish.

The problem for Holden is that now Pontiac has gone, there’ll be no more orders for the G8, which is based on the Commodore. Holden was banking on selling 30,000 of these in the US and another 70,000 worldwide. US$77m was spent upgrading the Port Elizabeth factory in Australia to build left-hand drive vehicles.

Holden’s only hope is to rebadge the Commodore/G8 as a Chevy – something that’s already done in some markets.

The words fire sale come to mind as GM heads towards Chapter 11 bankruptcy protection.

Here’s GM’s full press release, and a video of the press conference.


FOR RELEASE: 2009-04-27

GM Accelerates its Reinvention as a Leaner, More Viable Company

Updated Viability Plan Speeds, Deepens Restructuring of U.S. Operations

DETROIT — General Motors (NYSE: GM) today presented an updated Viability Plan that will speed the reinvention of GM’s U.S. operations into a leaner, more customer-focused, and more cost-competitive automaker.

The Viability Plan is included in an exchange offer whereby GM is offering certain bondholders shares of GM common stock and accrued interest in exchange for certain outstanding notes.
Revised Viability Plan goes further and faster

The Viability Plan announced today builds on the February 17 Viability Plan submitted to the U.S. Treasury. The revised Plan accelerates the timeline for a number of important actions and makes deeper cuts in several key areas of GM’s operations, with the objective to make us a leaner, faster, and more customer-focused organization going forward.
Significant changes include:

* A focus on four core brands in the U.S. – Chevrolet, Cadillac, Buick and GMC – with fewer nameplates and a more competitive level of marketing support per brand.
* A more aggressive restructuring of GM’s U.S. dealer organization to better focus dealer resources for improved sales and customer service.
* Improved U.S. capacity utilization through accelerated idling and closures of powertrain, stamping, and assembly plants.
* Lower structural costs, which GM North America (GMNA) projects will enable it to breakeven (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles, based on the pricing and share assumptions in the plan. This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007.

“We are taking tough but necessary actions that are critical to GM’s long-term viability,” said Fritz Henderson, GM president and CEO. “Our responsibility is clear – to secure GM’s future – and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team.”
Fewer U.S. brands, nameplates, and dealers

As part of the revised Viability Plan and the need to move faster and further, GM in the U.S. will focus its resources on four core brands, Chevrolet, Cadillac, Buick and GMC. The Pontiac brand will be phased out by the end of 2010. GM will offer a total of 34 nameplates in 2010, a reduction of 29 percent from 48 nameplates in 2008, reflecting both the reduction in brands and continued emphasis on fewer and stronger entries. This four-brand strategy will enable GM to better focus its new product development programs and provide more competitive levels of market support.

The revised plan moves up the resolution of Saab, Saturn, and Hummer to the end of 2009, at the latest. Updates on these brands will be provided as these initiatives progress.

Working with its dealers, GM anticipates reducing its U.S. dealer count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent. This is a further reduction of 500 dealers, and four years sooner, than in the February 17 Plan. The goal is to accomplish this reduction in an orderly, cost-effective, and customer-focused way. This reduction in U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets. More details on these initiatives will be provided in May.
Sales volume and market share projections

The Viability Plan anticipates improved financial results despite more conservative U.S. sales volume expectations going forward. The lower volume expectations are the result of managing the business with fewer nameplates and dealers, leaner inventories, and reduced market share. To address the inventory issue, GM on April 23 announced U.S. production schedule reductions of approximately 190,000 vehicles during the second and early third quarters of 2009.

The Viability Plan also reduces GM’s market share projections to adjust for the impact of the brand and dealer consolidation, as well as for the short-term impact of speculation regarding a GM bankruptcy. The plan assumes a 19.5 percent share in 2009, with share stabilizing in the 18.4 to 18.9 percent range in subsequent years.

“We have strong new product coming for our four core brands: the Chevrolet Camaro, Equinox, Cruze and Volt; Buick LaCrosse; GMC Terrain; and Cadillac SRX and CTS Sport Wagon and Coupe,” said Henderson. “A tighter focus by GM and its dealers will help give these products the capital investment, marketing and advertising support they need to be truly successful.”
Lower structural costs, lower breakeven point

The Viability Plan also lowers GMNA’s breakeven volume to a U.S. annual industry volume of 10 million total vehicles, based on the pricing and share assumptions in the plan. This lower breakeven point (at an adjusted EBIT level) better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury in its March 30 viability plan assessment.

GM will lower its breakeven point by cutting its structural costs faster and deeper than had previously been planned:

* Manufacturing: Consistent with the mandate to accelerate restructuring, we plan to reduce the total number of assembly, powertrain, and stamping plants in the U.S. from 47 in 2008 to 34 by the end of 2010, a reduction of 28 percent, and to 31 by 2012. This would reflect the acceleration of six plant idling/closures from the February 17 plan, and one additional plant idling. Throughout this transition, GM will continue to implement its flexible global manufacturing strategy (GMS), which allows multiple body styles and architectures to be built in one plant. This enables GM to use its capital more efficiently, increase capacity utilization, and respond more quickly to market shifts.

* Employment: U.S. hourly employment levels are projected to be reduced from about 61,000 in 2008 to 40,000 in 2010, a 34 percent reduction, and level off at about 38,000 starting in 2011. This further planned reduction of an additional 7,000 to 8,000 employees from the February 17 Plan is primarily the result of the previously discussed operational efficiencies, nameplate reductions, and plant closings. GM also anticipates a further decline in salaried and executive employment as it continues to assess its structure and execute the Viability Plan. More details will be announced as soon as they are finalized with the various stakeholders.
* Labor costs: The Viability Plan assumes a reduction of U.S. hourly labor costs from $7.6 billion in 2008 to $5 billion in 2010, a 34 percent reduction. GM will continue to work with its UAW partners to accomplish this through a reduction in total U.S. hourly employment as well as through modifications in the collective bargaining agreement.

As a result of these and other actions, GMNA’s structural costs are projected to decline 25 percent, from $30.8 billion in 2008 to $23.2 billion in 2010, a further decline of $1.8 billion by 2010 versus the February 17 Plan.
Strengthening GM’s balance sheet

Another key element of GM’s restructuring will be taking the necessary actions to strengthen its balance sheet. GM today took an important step in improving its balance sheet by launching a bond exchange offer for approximately $27 billion of its unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity.

“A stronger balance sheet would free the company to invest in the products and technologies of the future,” Henderson said. “It will also help provide stability and security to our customers, our dealers, our employees, and our suppliers.”

Another important part of improving the balance sheet will be the ongoing discussions with the UAW to modify the terms of the Voluntary Employee Benefit Association (VEBA), and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50 percent of GM’s outstanding U.S. Treasury debt at June 1, 2009, and at least 50 percent of GM’s future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions.

In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction.

Throughout the Plan, GM will continue to make significant investment in future products and new technologies, with an investment of $5.4 billion in 2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014. Very importantly, development and testing of the Chevy Volt extended-range electric car remains on track for start of production by the end of 2010 and arrival in Chevrolet dealer showrooms soon thereafter.

“The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring,” Henderson said. “We appreciate their support and direction. This stronger, leaner business model will enable GM to keep doing what it does best – provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country’s economy and environment.”

# # #

About GM – General Motors Corp. (NYSE: GM), one of the world’s largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 243,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM’s largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at

Forward-Looking Statements – In this press release and in related comments by our management, our use of the words “plan,” “expect,” “anticipate,” “ensure,” “promote,” “believe,” “improve,” “intend,” “enable,” “continue,” “will,” “may,” “would,” “could,” “should,” “project,” “positioned” or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Among other items, such factors might include: our ability to comply with the requirements of our credit agreement with the U.S. Treasury; our ability to execute the restructuring plans that we have disclosed, our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; the ability of our foreign subsidiaries to restructure and receive financial support from their local governments or other sources; our ability to restore consumers’ confidence in our viability and to continue to attract customers, particularly for our new products; our ability to sell, spin-off or phase out some of our brands, to manage the distribution channels for our products, and to complete other planned asset sales; and the overall strength and stability of general economic conditions and of the automotive industry, both in the U.S. and globally.

Our most recent reports on SEC Forms 10-K, 10-Q and 8-K provide information about these and other factors, which may be revised or supplemented in future reports to the SEC on those forms.

Is the Australian car manufacturing industry doomed?

April 15th, 2009 by Darren Cottingham

Holden Commodore SS Sportwagon rq

Is the Australian car manufacturing industry going to the dingoes? An industry analyst has predicted Holden will be the first to go, and that no amount of Australian government intervention will reverse the steep decline in new car sales coupled with the fact that Australian manufacturers lose money on every car they produce.

Holden has recently halved production at its South Australian plant from 600 to around 310. If Holden goes, so could Ford (another big victim of the credit crunch), and ultimately Toyota. But is it a correct assumption?

It certainly isn’t anything new – Car and SUV reported months ago that the bailouts from the US government would force Ford and GM to look at consolidating operations. But, Holden has a weapon: the Commodore. It is very successful in the Middle East, and America has adopted it in the form of the Pontiac G8. Ford America has not adopted the Falcon (which, arguably, is a slightly better car).

While we think that Holden and Ford (and perhaps Toyota) will be around for quite some time in Australia, here are some of the influencing factors so you can decide for yourself:

GM is too broke to develop a new rear-wheel-drive platform, so the Zeta platform that underpins the Camaro and Commodore could see active service for 10 years.

The global exposure to V8 Supercars will surely keep at least FPV and HSV in business, even if they become niche manufacturers.

Australians thrive on the competition between Ford and Holden. GM may retrench, but it would still need to badge its cars Holden to have credibility, or it will lose sales to other manufacturers

And therefore, branding: Ford has the advantage as there’s no difference in name between Ford overseas and Ford in Australia; Holden has a lot of brand equity in Oz – is would be expensive (and potentially damaging to its value) to just ditch Holden. And who would want to buy it?

Exchange rates will make European cars relatively more expensive than domestically produced cars

Car sales have hit an 8-year low and there’s a glut of new cars and near-new cars on the market at knock-down prices.

Australian car manufacturers are losing money on cars they produce

China could pose a threat in terms of manufacturing capability – it pays its workers pitifully

US government bailouts may come with conditions to remove unprofitable centres – this might be especially true of GM which is teetering on declaring bankruptcy so it can restructure

Hummer survives for a few more weeks

April 6th, 2009 by Darren Cottingham


General Motors has been trying to throw an offload of its Hummer division for almost a year now. Despite optimism late last year indicating that it could have the troubled brand off its books for good before 2009 rolled around, we are now nearing the end of the first quarter of ’09 and Hummer remains entirely owned by GM.

According to a new reports Hummer has been granted a final 3 week death row reprieve to get a deal started for its purchase. GM has claimed all along that there are multiple parties interested in the brand, and that’s apparently still the case.

A GM spokesperson has said that companies from “all different parts of the world” are in the mix to purchase Hummer and the automaker is “cautiously optimistic” that a sale will be made. If a decision to sell Hummer isn’t made in the next few weeks, it sounds like the brand will likely be pushed out into the cold to die quietly.

Saab may have to merge with Volvo

March 5th, 2009 by Darren Cottingham

Saab logo

In a desperate bid for survival Saab may look at a possible merger with Volvo, it isn’t the first time a partnership has been discussed. Back in the 1970s the two Swedish automakers were a hair away from merging 240s and 900s, but instead followed separate paths. Now, with both brands facing difficult sales numbers and uncertain futures, GM’s Bob Lutz thinks a merger sounds good once again. Lutz thinks it’d be a way for Ford and General Motors to both rid themselves of problematic business units. The soon-to-be former Car King from GM offers no insight about how the merged companies might actually start making a profit both automakers have serious financial issues. While Volvo has secured a promise of $546 million from the European Investment Bank, Saab is walking a much tougher path to survival.

Ultimately, a merger between Saab and Volvo would be great for their parent companies, but no one knows yet how exactly it would benefit the Swedish brands as they hold on for dear life.

Road Tests

Silver Sponsors

Wheeltalk Team

Richard-Edwards-2016Richard Edwards

Managing editor

linkedinphotoDarren Cottingham

Motoring writer

robertbarry-headRobert Barry

Chief reporter

Ian-Ferguson-6Ian Ferguson

Advertising Consultant

debDeborah Baxter

Operations Manager

RSS Latest News from Dieseltalk

Latest News from Autotalk