chrysler

Chrysler to renovate Toledo Machining Plant with USD72m

by on August 24, 2011

menafn.com…

(MENAFN) Chrysler Group LLC said that as part of the company’s plans to expand investments in Ohio, the carmaker would invest USD72 million in order to add new equipment and renovate the Toledo …

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Chrysler to renovate Toledo Machining Plant with USD72m

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Obama Distances Himself From New Economic Sputters

by on June 4, 2011

Huffington Post…

WASHINGTON — Distancing himself from new economic sputters, President Barack Obama on Saturday declared that recent “headwinds” were the result of high gasoline prices, Japan’s disastrous earthquake and jitters over a European fiscal crisis. He cited the U.S. auto industry’s resurgence as an inspiration for a broader recovery. “We’re a people who don’t give up, who do big things, who shape our own destiny,” the president said in his weekly radio and Internet address . The message was taped Friday during Obama’s visit to a Chrysler plant in Toledo, Ohio. And the address was hardly different than the remarks he offered to about 350 Chrysler workers. The White House has spent practically every day this week drawing attention to the industry comeback and taking credit for Obama’s unpopular decision to bail out Chrysler and General Motors and guide them through bankruptcy in 2009. Like Friday’s comments to Chrysler workers, Obama’s address Saturday did not mention the bleak unemployment numbers announced Friday for the month of May. The Bureau of Labor Statistics said the economy last month created only a net 54,000 jobs and unemployment inched up to 9.1 percent. “We’re facing some tough headwinds,” Obama said. “Lately, it’s high gas prices, the earthquake in Japan and unease about the European fiscal situation. That will happen from time to time.” The Bush and Obama administrations pumped $80 billion in taxpayer money into Chrysler and GM, with Obama guiding the companies into bankruptcy. The companies are now reporting profits, Chrysler has paid back all but $1.3 billion of its federal infusion, and the White House declared this week that the overall loss to taxpayers will be $14 billion, far less than initially expected. Delivering the Republican address , Sen. Lamar Alexander of Tennessee cast the Obama administration as too friendly to labor unions and said industries are more likely to flourish in environments where unions don’t hold as much sway. He noted that foreign auto companies like Nissan and Volkswagen have chosen to set up plants in his home state, a state with right-to-work laws that don’t require employees to join unions or pay union dues. He cited the case of Boeing, which was accused last month by the National Labor Relations Board of retaliating against union workers in Washington state who went on strike in 2008 by locating a new assembly line for its 787 aircraft in South Carolina, a state with right-to-work laws. The NLRB is seeking a court order that would force Boeing to return all 787 assembly work to Washington. “Our goal should be to make it easier and cheaper to create private-sector jobs in this country,” Alexander said. “Giving workers the right to join or not to join a union helps to create a competitive environment in which more manufacturers like Nissan and Boeing can make here what they sell here.” WATCH:

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Obama Distances Himself From New Economic Sputters

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No IPO before 2012: Chrysler CEO

June 4, 2011

No IPO before 2012: Chrysler CEO

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‘From The Brink Of Extinction’

May 28, 2011

WASHINGTON — Vice President Joe Biden on Saturday credited the Obama administration’s intervention for the American auto industry’s recovery from “the brink of extinction” and pointed to Chrysler’s early repayment of the federal loan that saved it from disaster. “This announcement came six years ahead of schedule – and just two years after Chrysler Corp. emerged from bankruptcy,” Biden said in the administration’s weekly radio and Internet address. “It’s a sign of what’s happening throughout the American automobile industry.” Biden also said that General Motors, which went through bankruptcy and has come back strong, announced in the past week that its Detroit Hamtramck factory in Michigan will run three shifts for the first time in its 26-year history. “You know, that’s 2,500 more good, paying jobs,” he said. Biden, who provided the weekly address because President Barack Obama was traveling in Europe, credited the efforts of the Obama administration for the resurgence of the auto industry through its assistance. “Because of what we did, the auto industry is rising again,” Biden said. “Manufacturing is coming back. And our economy is recovering and it’s gaining traction.” Obama will visit a Chrysler plant in Toledo, Ohio, next Friday to discuss the carmaker’s recovery. Chrysler announced Tuesday the repayment of $5.9 billion in U.S. loans and $1.7 billion in loans from the governments of Canada and Ontario. It covers most of the federal bailout money that saved the company after it nearly ran out of cash in 2009 and went through a government-led bankruptcy. GM and Chrysler were on the verge of collapse in the final days of the Bush administration after Congress failed to approve an emergency loan package. The Bush administration gave the companies $17.4 billion in loans and required them to develop a restructuring plan by mid-February 2009. Obama’s administration pumped billions more into the carmakers later that spring but won concessions from industry stakeholders, allowing them to push GM and Chrysler through bankruptcy court in the summer of 2009. The Republicans’ weekly address focused on the party’s plan to create jobs. House Majority Leader Eric Cantor, R-Va., said boosting employment requires cutting taxes, reducing regulations, completing bogged-down trade agreements with several countries and expanding energy exploration in the United States. “All of these elements will help encourage growth and long-term economic stability,” Cantor said. “By putting in place policies that encourage businesses to expand, innovators to innovate and allows leaders to lead, we will not only begin to put our budget on a path to balance, but we’ll get Americans working again.” ___ Online Array Array

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Fiat to purchase US stake in Chrysler

May 28, 2011

Fiat to purchase US stake in Chrysler

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Chrysler Back In The Black Two Years After Bailout

May 2, 2011

Two years after it was escorted through bankruptcy reorganization by the White House and with the help of loans from U.S. and Canadian taxpayers, Chrysler has posted its first quarterly profit.

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Video: Soave Says Fiat’s Raised Chrysler Stake Part of Original Plan

April 21, 2011

April 21 (Bloomberg) — Laura Soave, head of the Fiat brand for Chrysler Group LLC, talks about Fiat SpA’s decision to increase its stake in Chrysler. Soave, speaking with Deirdre Bolton on Bloomberg Television’s “InsideTrack,” also discusses Fiat’s re-entry in the North American market and the automaker’s 500 Cabrio model. (Source: Bloomberg)

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Video: Fiat Raises Stake in Chrysler, Marchionne Gains Control

April 21, 2011

April 21 (Bloomberg) — Bloomberg’ Tommaso Ebhardt reports from Milan on Fiat SpA’s increase of its stake in Chrysler Group LLC to 51 percent. Bloomberg’s Deirdre Bolton also speaks on Bloomberg Television’s “InsideTrack.”

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Fiat to increase its Chrysler stake to 46%

April 21, 2011

Fiat to increase its Chrysler stake to 46%

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Video: Marchionne Sees Chrysler Refinancing Completed by July

April 18, 2011

April 18 (Bloomberg) — Sergio Marchionne, chief executive officer of Fiat SpA, talks about plans to complete the refinancing package for Chrysler by the end of the second quarter. He spoke with Bloomberg’s Tommaso Ebhardt and Flavia Rotondi at the Fiat track at Balocco, near Turin, Italy, on April 11.

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Fiat: to raise Chrysler stake in days

April 12, 2011

Fiat: to raise Chrysler stake in days

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U.S. Criticized Over Chrysler Financial Settlement

January 13, 2011

WASHINGTON (By John Crawley) – The U.S. Treasury may not have fully vetted the settlement of its interest in Chrysler Financial last year and not gotten a strong enough return for taxpayers, a bailout watchdog said in a report on Thursday. The deal most clearly illustrated a broader finding of the bipartisan Congressional Oversight Panel: that the Obama administration may be too enamored of the politically appealing scenario of quickly cutting its stake in the auto business rather than patiently managing taxpayer interests. “Treasury’s efforts have in some cases lacked transparency and accountability,” said former Delaware Senator Ted Kaufman, who headed the group’s last report on the auto sector. Kaufman stressed his group understood the administration faced tough decisions in orchestrating their overhaul and bankruptcy. Despite the criticism, the panel said in the report that the government’s intervention was ambitious and the companies now “appear to be on a promising course.” However, he said taxpayers will likely lose billions on now-public GM, and Treasury may have “left money on the table” in its dealings with private equity firm Cerberus Capital Management over Chrysler Financial, the automaker’s one-time consumer financing arm. Treasury has recovered about half of the $50 billion extended to GM in return for nearly 61 percent of the restructured company, and about $2.2 billion of the $12 billion given to Chrysler in exchange for a 10 percent interest. Treasury assumed 40 percent of Chrysler Financial’s equity as part of a $3.5 billion pre-bankruptcy loan in January 2009 to the lending unit’s parent, Chrysler Holding, which was owned at the time by Cerberus. Treasury settled for $1.9 billion — a loss of $1.6 billion on the loan — in May 2010, transferring the stake to Cerberus, which became the sole owner. Cerberus then agreed to sell the financing business for $6.3 billion to Toronto Dominion Bank in December, raising eyebrows over Treasury’s handling of the settlement. The panel found that Treasury officials apparently conducted “limited valuation due diligence, focusing on the merits of the offer from Cerberus,” the report said. Treasury, the panel said, expected that Chrysler Financial would be wound down, which would limit its value, and noted at the time of settlement the price paid by Cerberus was fair. Chrysler Financial, however, continued to make investments in its business before finding a strategic partner in TD Bank. Treasury disputed the conclusion it may not have fully vetted the Chrysler Financial settlement, saying it conducted several months of due diligence and hired an independent financial adviser to assist in valuation and check for other potential buyers. The panel was appointed by Congress to review bailouts under the Troubled Asset Relief Program. General Motors Co and Chrysler, now under management control of Italy’s Fiat Spa, received bailout and bankruptcy assistance from the Treasury in 2009. Ron Bloom, the administration’s pointman on auto restructuring, said in Detroit this week that the bailouts prevented widespread economic hardship. He also said the Treasury is moving responsibly to exit the business and that turnarounds at GM and Chrysler have “yielded concrete returns remarkably quickly.” Chrysler’s resurgence especially, he said, “has surprised just about everyone.” (Reporting by John Crawley; Editing by Richard Chang) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Chrysler, Volkswagen Issue Large Recalls

December 15, 2010

WASHINGTON — Chrysler and Volkswagen announced large recalls Wednesday to address potential accidental air bag deployments and possible fuel leaks. Chrysler Group LLC said it was recalling more than 367,000 minivans to address potential accidental air bag deployments in 2008 model year Chrysler Town and Country and Dodge Grand Caravan minivans. The automaker said water could leak near the heating and air conditioner drain. That could cause the air bag warning light to go off and deploy the air bag by accident. Chrysler spokesman Vince Muniga said the automaker was aware of 30 complaints of air bags deploying inadvertently and five injuries since February 2008. Volkswagen of America is recalling more than 228,000 vehicles, including 2007-2009 model year Golf, Jetta, Jetta Sportwagen, Rabbit and 2006-2010 New Beetle small cars. VW says on all of the recalled vehicles except the New Beetle, a small plastic tab in the windshield wiper fluid reservoir could rub against a fuel supply line under the hood. A fuel leak could develop and lead to fires. On New Beetles under recall, a fastening clamp on the hydraulic hose of the power steering system could be located in the wrong place and rub against a fuel supply line under the hood. It could also lead to a fuel leak and a fire. VW spokesman Kerry Christopher said there had been no reports of fires, crashes or injuries. Chrysler’s recall is expected to begin in February and dealers will replace the drain ring free of charge. Volkswagen is beginning its recall in late January and dealers will either remove the plastic tab or inspect the position of the clamp and adjust it free of charge. Owners can contact Chrysler at (800) 853-1403 and Volkswagen at (800) 822-8987.

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Fiat eyes partnership with Chrysler

November 28, 2010

Fiat eyes partnership with Chrysler

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Video: Francois Says Chrysler Has Improved Vehicle Quality: Video

November 19, 2010

Nov. 18 (Bloomberg) — Olivier Francois, head of the Chrysler brand at Chrysler Group LLC, discusses Chrysler’s revamped models. Francois talks with Pimm Fox on Bloomberg Television’s “Taking Stock” from the Los Angeles Auto Show. (Source: Bloomberg)

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Video: Greenbriar’s Greenwald Expects U.S. Auto Sales to Rise

November 19, 2010

Nov. 18 (Bloomberg) — Gerald Greenwald, managing partner at Greenbriar Equity Group LLC and a former chairman of Chrysler Motors, discusses General Motors Co.’s initial public offering and the outlook for the automobile industry. Greenwald talks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Video: Greenwald Says GM to `Do Very Well’ Over Next 2-3 Years

November 16, 2010

Nov. 16 (Bloomberg) — Gerald Greenwald, managing partner at Greenbriar Equity Group LLC and a former chairman of Chrysler Motors, discusses General Motors Co.’s plan to raise as much as $12 billion in the second-largest U.S. initial public offering on record after increasing the asking price by 14 percent. Greenwald speaks with Carol Massar and Jon Erlichman on Bloomberg Television’s “In the Loop With Betty Liu.” (Source: Bloomberg)

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Companies That Received Bailout Money Giving Generously To Candidates

October 25, 2010

Senate Minority Leader Mitch McConnell (Ky.) was a fierce critic of the federal bailout of General Motors and Chrysler last year, saying he “cannot ask the American taxpayer to subsidize failure.” But General Motors doesn’t seem to hold a grudge.

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Obama’s Stimulus Revives Car Town, Dropping Unemployment Rate

October 22, 2010

Kokomo is going back to work. A year and a half ago the fate of this car town, home to four Chrysler plants and a Delphi facility, was as uncertain as the American auto industry itself. Now, thanks largely to the federal government, the town’s unemployment rate has gone from over 20% to under 14%.

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The Most Famous American Brands In Foreign Hands (PHOTOS)

October 8, 2010

By Michael B. Sauter, Charles B. Stockdale, Douglas A. McIntyre, 24/7 Wall St. : The most powerful brands in the world, based on name recognition and earnings, usually take decades to create. The most fertile period of brand creation in America lasted from the 1880s to 1920s. Ford, Marlboro, Coca-Cola, AT&T, Colgate, and JP Morgan are just a few of the world’s most well-known brands that were launched during that period. Many of America’s most famous brands have been sold to foreign companies. Some corporations based overseas sought access to US markets and used acquisitions to accelerate the process. The purchase of the IBM ThinkPad brand by China-based Lenovo and the buyout of Firestone by Japan-based Bridgestone allowed each of the acquirers to obtain large revenues in the US . It would have otherwise taken the companies years to launch their own American brands. Some of the attempts by foreign companies to move into the US market through acquisition have been failures. One of the largest recent catastrophes was the “merger” of Chrysler with German-based Daimler-Benz. Daimler management quickly took control of the new firm and hoped to use the Chrysler dealer network and Daimler engineering prowess to gain a larger share of what was then the world’s largest car market. The plan was a spectacular failure. Chrysler was sold by Daimler to private equity interests and went bankrupt two years ago. Chrysler’s management is now controlled by Italian car company Fiat. Companies that buy famous brands take a fairly simple risk: can they trade on the good will that the brand has gained with consumers over time. Whether this works relies, to a large extent, on the amount the acquirer pays for the brand, as would be expected. The accounting profession has even fashioned a term used to describe the purchase of a company for much more than its hard assets and short-term cash flow. “Goodwill” is defined as what a buyer pays beyond “prudent” value, often in terms of reputation or brand equity – things which cannot be measured with perfect accuracy through a normal financial analysis. The list below is the 24/7 Wall St. selection of fourteen iconic American brands which have been bought by foreign companies. Most of these transactions seem to have been successful, at least to the extent that all the brands still exist and have significant sales. The purchases acted as conduits to consumers that the buyers would probably not otherwise have had. The history of these brands stands as a reminder that acquisitions can be successful. For that reason, the purchase of premium brands remains and will almost certainly remain a permanent part of the M&A landscape. Below are America’s most famous brands in foreign hands. For more articles like this one, be sure to check out 24/7 Wall St.

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Video: Greenwald Says Chrysler CEO Has Good Chance at 2011 IPO: Video

September 16, 2010

Sept. 16 (Bloomberg) — Gerald Greenwald, managing partner at Greenbriar Equity Group LLC and a former chairman of Chrysler Motors, talks about Chrysler Group LLC Chief Executive Officer Sergio Marchionne’s remarks that the U.S. carmaker will probably sell shares publicly in the second half of 2011. Greenwald speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Zach Carter: Handcuffs For Wall Street, Not Happy-Talk

September 12, 2010

The Washington Post has published a very silly op-ed by Chrystia Freeland accusing President Barack Obama of unfairly “demonizing” Wall Street. Freeland wants to see Obama tone down his rhetoric and play nice with executives in pursuit of a harmonious economic recovery. The trouble is, Obama hasn’t actually deployed harsh words against Wall Street. What’s more, in order to avoid being characterized as “anti-business,” the Obama administration has refused to mete out serious punishment for outright financial fraud. Complaining about nouns and adjectives is a little ridiculous when handcuffs and prison sentences are in order. Freeland is a long-time business editor at Reuters and the Financial Times, and the story she spins about the financial crisis comes across as very reasonable. It’s also completely inaccurate. Here’s the key line: “Stricter regulation of financial services is necessary not because American bankers were bad, but because the rules governing them were.” Bank regulations were lousy, of course. But Wall Street spent decades lobbying hard for those rules , and screamed bloody murder when Obama had the audacity to tweak them. More importantly, the financial crisis was not only the result of bad rules. It was the result of bad rules and rampant, straightforward fraud, something a seasoned business editor like Freeland ought to know. Seeking economic harmony with criminals seems like a pretty poor foundation for an economic recovery. The FBI was warning about an ” epidemic ” of mortgage fraud as early as 2004. Mortgage fraud is typically perpetrated by lenders, not borrowers–80 percent of the time, according to the FBI. Banks made a lot of quick bucks over the past decade by illegally conning borrowers. Then bankers who knew these loans were fraudulent still packaged them into securities and sold them to investors without disclosing that fraud. They lied to their own shareholders about how many bad loans were on their books, and lied to them about the bonuses that were derived from the entire scheme. When you do these things, you are stealing lots of money from innocent people, and you are, in fact, behaving badly (to put it mildly). The fraud allegations that have emerged over the past year are not restricted to a few bad apples at shady companies– they involve some of the largest players in global finance. Washington Mutual executives knew their company was issuing fraudulent loans , and securitized them anyway without stopping the influx of fraud in the lending pipeline. Wachovia is settling charges that it illegally laundered $380 billion in drug money in order to maintain access to liquidity. Barclays is accused of illegally laundering money from Iran , Sudan and other nations, jumping through elaborate technical hoops to conceal the source of their funds. Goldman Sachs set up its own clients to fail and bragged about their “shitty deals.” Citibank executives deceived their shareholders about the extent of their subprime mortgage holdings. Bank of America executives concealed heavy losses from the Merrill Lynch merger, and then lied to their shareholders about the massive bonuses they were paying out. IndyMac Bank and at least five other banks cooked their books by backdating capital injections. For the past decade, fraud has been a mainstream business on Wall Street. That’s to be expected–massive financial crashes simply do not occur without widespread fraud. After the savings and loan crisis, more than 1,000 bankers went to jail for fraud, and the S&L bust was a much smaller debacle than the frenzy that took down Wall Street in 2008. This is not to suggest that everyone on Wall Street is a criminal–many of these frauds were committed against reasonable financial professionals. But the only reason we haven’t we seen throngs of financiers in handcuffs over the past two years is precisely because Obama has been listening to people like Freeland, trying to avoid “demonizing” bankers who broke the law. Obama critics like hedge fund manager Daniel Loeb have been calling him “anti-business” precisely because some fraud charges have surfaced in the past two years– even though his agencies have gone easy on the fraudsters themselves. The regulators Obama kept on board at the Office of Thrift Supervision (OTS) and the Office of the Comptroller of the Currency (OCC) have not recommended any fraud prosecutions to the Justice Department–and we know that the OTS itself was involved in the illegal backdating scheme at IndyMac and other banks. The SEC has not pursued civil fraud cases against some of the executives it believes were involved in Citibank’s subprime scam, nor is the agency seeking serious accountability for Barclays. Nothing has happened to Lehman Brothers or Bank of America for their Enron-style derivatives scams that hid debt from investors, or to Merrill Lynch for its self-dealing of subprime derivatives . The Justice Department is letting Wachovia off the hook for laundering drug money. Let me repeat that: the Obama administration has been so eager to please Wall Street that it is letting bankers get away with laundering drug money . Applying the law equally to all citizens isn’t demonization and it isn’t socialism– it’s a basic proponent of justice. When you steal a lot of money, you go to jail. When your theft crashes the global economy and throws 8 million people out of work, you go to jail for a long time. Obama doesn’t just need tough talk for Wall Street, he needs to prosecute the frauds that were committed, and explain them to the American people. Nothing about this should be threatening to the millions of fair and reasonable American financial professionals who have done nothing wrong. If you examine Freeland’s two examples of so-called “demonization,” her story simply becomes absurd. When hedge funds who owned Chrysler bonds complained about losing money in the Chrysler bankruptcy, Obama called them “speculators” who needed to take losses. That’s perfectly reasonable. They were speculators , and they speculated on a company that went bankrupt. When you invest in a bad company, you lose money. That’s how capitalism works. Freeland also claims that Obama was “out of line in permitting the denunciation of Goldman Sachs.” Goldman deserved to be denounced– their ABACUS scam was abhorrent , and it wasn’t the only egregious act the company engaged in (see: ” shitty deal “). But Obama has had plenty of nice things to say about Goldman. He defended the massive bonus that Goldman CEO Lloyd Blankfein paid himself, and praised Blankfein as a “savvy” fellow . You cannot reason with someone who claims he is being demonized when you call him “savvy,” nor should you. Any president who neglects basic principles of justice and standards for economic security in order to pamper princely executives isn’t doing his job. Ethical financiers and reasonable business editors should have nothing to fear from a president who criticizes and prosecutes illegal finance.

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Video: Greenwald Discusses GM IPO Filing, Whitacre’s Departure: Video

August 19, 2010

Aug. 19 (Bloomberg) — Gerald Greenwald, managing partner of Greenbriar Equity Group LLC and a former chairman of Chrysler Motors, discusses General Motors Co.’s planned initial share offering and the decision of Chief Executive Officer Ed Whitacre to step down. Greenwald speaks on Bloomberg Television’s “In the Loop With Betty Liu.” (This report is an excerpt. Source: Bloomberg)

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Auto Industry Goes From Gloom To Economic Bright Spot

August 14, 2010

After a dismal period of huge losses and deep cuts that culminated in the Obama administration’s bailout of General Motors and Chrysler, the gloom over the American auto industry is starting to lift.

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Auto Industry Goes From Gloom To Economic Bright Spot

August 14, 2010

After a dismal period of huge losses and deep cuts that culminated in the Obama administration’s bailout of General Motors and Chrysler, the gloom over the American auto industry is starting to lift.

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Video: Schuster Sees `Progressive Recovery’ for U.S. Automakers: Video

July 30, 2010

July 30 (Bloomberg) — Jeffrey Schuster, executive director of global forecasting at J.D. Power & Associates, discusses the outlook for the U.S. auto industry and the prospects of an initial public offering by General Motors Co. President Barack Obama travels to the Detroit area today to visit a Chrysler plant and a GM facility that are adding production. Schuster speaks with Carol Massar on Bloomberg Television’s “In the Loop With Betty Liu.” (Source: Bloomberg)

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Video: Greenwald Sees Good Chance Automakers Will Repay Bailout: Video

July 30, 2010

July 30 (Bloomberg) — Gerald Greenwald, managing partner of Greenbriar Equity Group LLC and a former chairman of Chrysler Motors, talks about the likelihood General Motors Co. and Chrysler Group LLC will repay funds received from the U.S. government to help the automakers avoid collapse. Greenwald, speaking with Deirdre Bolton on Bloomberg Television’s “InsideTrack,” also discusses the necessity of the auto bailout and the industry outlook. (Source: Bloomberg)

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Video: Bloom `Hopeful’ of General Motors IPO This Year: Video

July 30, 2010

July 30 (Bloomberg) — Ron Bloom, senior counselor to the U.S. Treasury on manufacturing policy, discusses the government’s rescue of the automobile industry and the outlook for an initial public offering of shares in General Motors Co. President Barack Obama travels to the Detroit area today to visit a Chrysler plant and a GM facility that are adding production. Bloom speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Obama To Visit Big Three Auto Plants In Michigan, Illinois Next Week

July 23, 2010

WASHINGTON — President Barack Obama will visit U.S. auto plants in Michigan and Illinois next week to highlight his administration’s decision to rescue General Motors and Chrysler last year and revitalize the U.S. auto industry. Obama plans to use trips to General Motors and Chrysler plants in Detroit on July 30 and a Ford assembly plant in his hometown of Chicago on Aug. 5 to discuss the progress in the U.S. auto industry following the government-led bankruptcies of GM and Chrysler. White House press secretary Robert Gibbs said Friday that Obama will acknowledge the decisions to save GM and Chrysler were unpopular with many Americans but necessary to save hundreds of thousands of jobs and help rebuild the auto industry for the future. “The president believes that the decisions that we made around the auto industry are a parable for where we are economically. We had to make some tough and even unpopular decisions but those decisions are laying a new foundation for economic growth and a brighter future,” Gibbs said. GM and Chrysler received tens of billions of dollars in federal aid to undergo swift bankruptcies last year and have begun to show signs of rebounding. GM, which is majority-owned by the government, posted a quarterly profit in May and has repaid nearly $7 billion in loans from the U.S. government while preparing for an initial stock offering that could further repay taxpayers. Chrysler, which was placed under control of Italian automaker Fiat as part of its bankruptcy, posted a $143 million first-quarter operating profit. It has made sales gains during the spring and summer months. Ford did not receive federal aid, and announced a second quarter profit of $2.6 billion amid sales that far outpaced the rest of the industry. It was Ford’s fifth straight quarterly profit. Obama has tried to sell the administration’s work with the auto industry as one of the success stories of his recovery program. Obama will visit GM’s Hamtramck plant, which is gearing up to make the Chevrolet Volt rechargeable electric car. The plant is one of nine plants that the automaker will keep open during the typical two-week summer shutdown to boost production of popular models. In nearby Detroit, Obama will tour the Jefferson North Chrysler plant. It recently added a second shift of production, adding about 1,100 jobs to the plant. Workers there recently launched the new 2011 Jeep Grand Cherokee. The following week, Obama will tour the Chicago plant where Ford is building the new Explorer sport utility vehicle. The redesigned SUV, which will be revealed on Monday, is expected to show major improvements in fuel efficiency. The president will also raise money for Democrat Alexi Giannoulias, the Illinois state treasurer who is seeking Obama’s old Senate seat. Giannoulias has been outpaced in fundraising by Republican Mark Kirk, a congressman from Chicago’s northern suburbs.

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Inspector General Criticizes Treasury’s Role In GM, Chryslsr Dealer Closures

July 18, 2010

A government watchdog is criticizing the Treasury Department for urging General Motors and Chrysler to quickly reduce the size of their dealership networks — a move that cost jobs during the recession. The special inspector general for the government’s bailout program says the Treasury didn’t do enough to make sure that speeding up those closings was necessary for the companies’ long-term health. “At a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions’ broader economic impact,” the report states. “In response to the [Treasury Department] Auto Team’s rejection of their restructuring plans and in light of their intervening bankruptcies, GM and Chrysler significantly accelerated their dealership termination timetables, with Chrysler terminating 789 dealerships by June 10, 2009, and GM announcing plans to wind down 1,454 dealerships by October 2010.” “Job losses at terminated dealerships were apparently not a substantial factor in the [Treasury Department] Auto Team’s consideration of the dealership termination issue.” Read the full report: SIGTARP Report on Auto Bailout

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Jeep to Take Global Lead Role as Chryslers Are Rebadged Lancias in Europe

June 20, 2010

By Jeff Green June 20 (Bloomberg) — Chrysler Group LLC’s Jeep brand will become the subsidiary’s primary global make in the first half of next year as Fiat SpA emphasizes the Lancia nameplate in Europe, a top executive said. Chrysler’s minivan, Sebring and 300 models will be rebadged as Lancias across most of Europe at the end of the first quarter or early in the second, Michael Manley , Chrysler Group’s international chief, said in an interview. Sharing models among the brands is part of a plan outlined by Fiat and Chrysler Chief Executive Officer Sergio Marchionne in November, Manley said. Chrysler aims for Jeep to account for half of Chrysler Group’s international sales, up from closer to a third historically, he said. The goal will be to have two brands — Jeep and one other — from the Chrysler Group in every market, Manley said at an event to introduce the new version of the Jeep Grand Cherokee last week in California. “The brand is global, it’s very well known everywhere around the world,” Manley said. “With our partnership with Fiat we can now focus on Jeep as an international brand.” Fiat , which also owns Maserati and Ferrari, is trying to share engines and other parts among models from Fiat, Chrysler, Dodge, Jeep and Alfa Romeo brands to save $2.9 billion over five years. Fiat controls the U.S. automaker through a 20 percent stake granted as part of last year’s U.S.-backed bankruptcy. U.K. Gets Chryslers In Europe, some Dodge models will also be sold and the Chrysler name will be kept on the minivan in the U.K., Manley said. Most of Lancia’s approximately 125,000 sales annually are in Italy. Chrysler-badged vehicles will continue to be sold in Latin America and Asia, while the North American use of Chrysler won’t change, he said. Marchionne said April 21 that he plans to double revenue from cars and light-commercial vehicles to 51 billion euros ($63 billion) by 2014. Turin, Italy-based Fiat aims to boost deliveries by 73 percent in the period by expanding in Europe and emerging markets, re-entering North America and relaunching the Alfa Romeo and Lancia brands. Fiat has a worldwide sales target of 3.8 million cars and commercial vans in 2014, compared with 2.2 million last year, Marchionne said April 21 in a strategy presentation. Combined with Auburn Hills, Michigan-based Chrysler Group, deliveries would total 6 million cars. To contact the reporter on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net .

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Chrysler’s U.S. Vehicle Sales Said to Have Increased More Than 30% in May

June 2, 2010

By Doron Levin and Bill Koenig June 2 (Bloomberg) — Chrysler Group LLC’s May U.S. vehicle sales may have risen by more than 30 percent, a person familiar with the results said. The company is scheduled to release May sales figures later today. To contact the reporter on this story: Doron Levin in Detroit at dlevin5@bloomberg.net

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Chrysler ADDS More Than 1,000 Jobs In Detroit

May 21, 2010

DETROIT — Chrysler Group LLC gave a big boost to the battered Michigan economy Friday when it announced plans to add about 1,100 workers to help build the new Jeep Grand Cherokee. The company made the announcement at a Detroit factory as it celebrated the start of Grand Cherokee production. Chrysler said it expects strong sales of the new sport utility vehicle, which is due in showrooms next month. Almost all the workers will be new hires, which Chrysler can pay about $14 per hour, about half the hourly rate received by current workers represented by the United Auto Workers union. The workers will staff a second shift at the factory, called the Jefferson North Assembly Plant, starting July 19. The announcement is good news for Michigan, which has the highest unemployment rate in the nation at 14 percent and has struggled for years with the decline of Detroit’s automakers. CEO Sergio Marchionne joined 1,400 current plant workers and a number of federal, state and local officials to celebrate the start of Grand Cherokee production. The new vehicle is more efficient and car-like than the current model, Chrysler said. Marchionne said the additional jobs show how confident he and other company executives are about the success of the Grand Cherokee. When asked whether the hirings are a gamble based on the state of the economy, Marchionne smiled and said: “Don’t be so skeptical. It’s a good day. Enjoy it.” Chrysler has only about 100 laid-off workers in the Detroit area who haven’t been recalled, so the company can take advantage of a provision in its contract with the UAW that gives newly hired workers much lower wages and benefits. Thousands of factory workers took buyout and early retirement offers when Chrysler ran into financial difficulties in 2008 and last year. The company eventually went through bankruptcy protection, cleansing it of burdensome debt. “This day will go down in history that Chrysler is indeed the comeback kid,” United Auto Workers Vice President General Holiefield said. At the celebration, Marchionne, who also heads Italy’s Fiat Group SpA, drove one of the new sport utility vehicles through the plant and to a stop in front of the stage. He and front-seat passenger Michigan Gov. Jennifer Granholm emerged from the SUV to applause from the workers. “We’re here to declare that Chrysler is back!” Granholm shouted. Chrysler Group LLC began making the Grand Cherokees in recent weeks, and Friday’s event served as the official launch. The start of production was eagerly awaited by Chrysler dealers, who have been without a totally new product since the Ram pickup came out late in 2008. Mike Andretta, owner of a Chrysler dealership in Beaver Springs, Pa., says he’s hoping the new vehicle will be a boost to his bottom line. “We’re surviving month-to-month. We need new product – quickly,” he said. “The old Grand Cherokee’s been kind of dead for the last two years now, so that market we don’t really get a lot of business in any more.” “Once the word gets out, I think it’s going to be a success,” Andretta said. “I don’t think any dealership will survive solely on the new Jeep Grand Cherokee, but it’ll help, and we need new stuff.” The jobs and new product celebration capped a busy week for Chrysler. On Thursday Marchionne said the company is considering a public stock offering sometime next year. Marchionne said there is enough demand in the marketplace to support initial public offerings for Chrysler and General Motors Co., both of which were restructured in government-funded bankruptcy protection cases last year. He also said Chrysler struggled through a painful restructuring last year, and he never wants to see the company lose money again, predicting that U.S. vehicle sales will top 11 million this year and 12 million in 2011. Sales slumped to 10.4 million last year, the worst in more than a quarter century. Chrysler would have been sold off in pieces in late 2008 or early 2009 if the U.S. government had not stepped in with billions in aid. The government put Marchionne in charge of turning around the Auburn Hills automaker and gave Fiat a 20 percent stake in the company. But on Friday, Marchionne was all smiles, talking about the “milestone launch” of the Jeep Grand Cherokee, a totally new version of the venerable SUV. The new model is more efficient than the old one, behaving more like a car than a truck on suburban highways. Yet it still has off-road capability, the company said. Governor Granholm was just happy to see jobs added in Michigan rather than southern states, where Asian and European automakers have set up factories. “It’s not made in some Southern cornfield plant,” she said. “It’s made right here.” ___ AP Auto Writer Tom Krisher in Detroit contributed to this report.

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Chrysler ADDS More Than 1,000 Jobs In Detroit

May 21, 2010

DETROIT — Chrysler Group LLC gave a big boost to the battered Michigan economy Friday when it announced plans to add about 1,100 workers to help build the new Jeep Grand Cherokee. The company made the announcement at a Detroit factory as it celebrated the start of Grand Cherokee production. Chrysler said it expects strong sales of the new sport utility vehicle, which is due in showrooms next month. Almost all the workers will be new hires, which Chrysler can pay about $14 per hour, about half the hourly rate received by current workers represented by the United Auto Workers union. The workers will staff a second shift at the factory, called the Jefferson North Assembly Plant, starting July 19. The announcement is good news for Michigan, which has the highest unemployment rate in the nation at 14 percent and has struggled for years with the decline of Detroit’s automakers. CEO Sergio Marchionne joined 1,400 current plant workers and a number of federal, state and local officials to celebrate the start of Grand Cherokee production. The new vehicle is more efficient and car-like than the current model, Chrysler said. Marchionne said the additional jobs show how confident he and other company executives are about the success of the Grand Cherokee. When asked whether the hirings are a gamble based on the state of the economy, Marchionne smiled and said: “Don’t be so skeptical. It’s a good day. Enjoy it.” Chrysler has only about 100 laid-off workers in the Detroit area who haven’t been recalled, so the company can take advantage of a provision in its contract with the UAW that gives newly hired workers much lower wages and benefits. Thousands of factory workers took buyout and early retirement offers when Chrysler ran into financial difficulties in 2008 and last year. The company eventually went through bankruptcy protection, cleansing it of burdensome debt. “This day will go down in history that Chrysler is indeed the comeback kid,” United Auto Workers Vice President General Holiefield said. At the celebration, Marchionne, who also heads Italy’s Fiat Group SpA, drove one of the new sport utility vehicles through the plant and to a stop in front of the stage. He and front-seat passenger Michigan Gov. Jennifer Granholm emerged from the SUV to applause from the workers. “We’re here to declare that Chrysler is back!” Granholm shouted. Chrysler Group LLC began making the Grand Cherokees in recent weeks, and Friday’s event served as the official launch. The start of production was eagerly awaited by Chrysler dealers, who have been without a totally new product since the Ram pickup came out late in 2008. Mike Andretta, owner of a Chrysler dealership in Beaver Springs, Pa., says he’s hoping the new vehicle will be a boost to his bottom line. “We’re surviving month-to-month. We need new product – quickly,” he said. “The old Grand Cherokee’s been kind of dead for the last two years now, so that market we don’t really get a lot of business in any more.” “Once the word gets out, I think it’s going to be a success,” Andretta said. “I don’t think any dealership will survive solely on the new Jeep Grand Cherokee, but it’ll help, and we need new stuff.” The jobs and new product celebration capped a busy week for Chrysler. On Thursday Marchionne said the company is considering a public stock offering sometime next year. Marchionne said there is enough demand in the marketplace to support initial public offerings for Chrysler and General Motors Co., both of which were restructured in government-funded bankruptcy protection cases last year. He also said Chrysler struggled through a painful restructuring last year, and he never wants to see the company lose money again, predicting that U.S. vehicle sales will top 11 million this year and 12 million in 2011. Sales slumped to 10.4 million last year, the worst in more than a quarter century. Chrysler would have been sold off in pieces in late 2008 or early 2009 if the U.S. government had not stepped in with billions in aid. The government put Marchionne in charge of turning around the Auburn Hills automaker and gave Fiat a 20 percent stake in the company. But on Friday, Marchionne was all smiles, talking about the “milestone launch” of the Jeep Grand Cherokee, a totally new version of the venerable SUV. The new model is more efficient than the old one, behaving more like a car than a truck on suburban highways. Yet it still has off-road capability, the company said. Governor Granholm was just happy to see jobs added in Michigan rather than southern states, where Asian and European automakers have set up factories. “It’s not made in some Southern cornfield plant,” she said. “It’s made right here.” ___ AP Auto Writer Tom Krisher in Detroit contributed to this report.

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Chrysler Loan Leads To $2.1 BILLION Loss For Treasury

May 17, 2010

WASHINGTON — The Treasury Department said Monday it will lose $1.6 billion on a loan made to Chrysler in early 2009. Taxpayer losses from bailing out Chrysler and General Motors are expected to rise as high as $34 billion, congressional auditors have said. Treasury said Monday that Chrysler repaid $1.9 billion of a $4 billion loan, which was extended before the company filed for Chapter 11. The government hopes to get another $500 million from the company that emerged from bankruptcy, Chrysler Group LLC. Treasury officials said that the government had no plans to boost its stake in the new Chrysler to cover those losses. It also acknowledged another $1.9 billion in potential losses from a separate loan that had been made to the company that went through bankruptcy proceedings. It indicated slim hopes of recouping much if anything from that separate $1.9 billion loan. The original $4 loan was made in January 2009, when the Bush administration was scrambling to rescue Chrysler, GM and their auto financing arms. The Congressional Budget Office estimated in March that the government’s $85 billion bailout of the automakers would cost taxpayers $34 billion. Much of it will depend on how much the government recovers from its eventual sale of nearly 61 percent of GM and about 10 percent of Chrysler. GM has said it could conduct a public stock offering later this year. Chrysler officials have said a public stock offering is not likely before 2011. The Treasury Department made the announcement about the loss from Chrysler on a day when GM reported its first quarterly profit in nearly three years. That moved GM closer to a stock offering that would repay at least part of the $43 billion it owes the government. Chrysler Holding is the parent company of the old Chrysler. It is owned by private equity firm Cerberus Capital Management. Cerberus bought Chrysler from Daimler AG in 2007. Chrysler came close to running out of money at the end of 2008, so the U.S. government stepped in, authorizing $15.5 billion in aid and appointing Fiat SpA to run the new Chrysler after it emerged from bankruptcy protection. The old Chrysler’s assets, along with its finance arm, became Chrysler Holding. Treasury said it has received repayments of $3.9 billion to date, including the $1.9 billion repayment and a $1.5 billion loan paid off by Chrysler Financial. Chrysler also assumed $500 million of Old Chrysler’s debt, reducing the debt to the government. ___ Associated Press Writers Ken Thomas in Washington and Dee-Ann Durbin in Detroit contributed to this report.

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The Three-Headed Dog Will See You Now

March 26, 2010

Catholic hospital operator Caritas Christi this week agreed to sell itself to Cerberus Capital Management, in a deal Caritas Christi CEO Ralph de la Torre called “good news.” Considering Caritas Christi’s new owner is named after a three-headed dog from hell, I’m sure the company’s 2,000 pensioners, 13,000 employees, and countless patients are praying he’s right. In an internal email obtained by peHUB, de la Torre outlined the benefits of the $830 million deal and specific favorable commitments from Cerberus. The deal is a turnaround of the hospital, which has struggled to compete with large teaching hospitals in its region. For its part, Cerberus has learned a thing or two about getting involved in sticky public turnaround situations. The firm famously took a beating with its failure of an investment in Chrysler. Yet the old devil dogs are back for more. Aside from the dangers involved in buying non-profit, Church-affiliated organization that happens to be in the business of saving peoples’ lives, Caritas Chrisi is also one of the largest employers in the state of Massachusetts. The stakes seem pretty high. And the way Cerberus did this deal may end up really helping, or really, really hurting them in the end. The firm appears to be pre-empting bad press by agreeing to some generous terms as part of the deal. They include: The firm will take on pension obligations for 12,000 employees The firm will keep management in place and allow all patient care and operating decisions to be made by doctors and hospital leadership The hospitals will retain their Catholic identities Cerberus will maintain current employment levels Cerberus will not cut residency programs or change the company’s physician network and relationships with third party vendors and service providers The company will continue its charitable care, community benefits and pastoral care Commitments of at least $400 million in capital projects, including $100 million for immediate capital projects Cerberus will hold the investment for three years. It all sounds reassuring for the company’s employees and patients. But is it reassuring for investors? That’s a lot of rule-following and tight-rope walking for a private equity firm. The challenge seems daunting, because, think about it, when executing a turnaround, what do most firms do? They change management, find “fat” in the form of staff, services and programs and cut it, and change customer and vendor relationships. All things Cerberus is forbidden to do. Failure to execute the turnaround while keeping its promises could generate the ire of the Massachusetts general public and even the Catholic Church. Even I’m terrified of pissing off the Catholic Church, and I went to Catholic School. Cerberus’s investment experience in patient care companies is largely limited to the biotechnology sector. The firm won back a little dignity lost in the Chrysler bru-ha-ha with its $905 million IPO of Talacris Biotherapeutics, a maker of plasma-derived protein therapies formed by Cerberus in 2005. The deal’s close requires regulatory and other governmental approvals, including public hearings to solicit feedback from the community. De la Torre said those would likely take a number of months. He urged employees to “redouble” their efforts during that time. “We can’t for a second assume that the ‘pressure is off’ and that we can declare victory.”

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Jerome York Dead: Apple Director Dies At Age 71

March 18, 2010

DETROIT — Jerome York, an Apple Inc. board member and a financial wizard credited with turning around Chrysler and IBM, died Thursday of a brain aneurysm. He was 71. He died at a Pontiac, Mich., hospital after being taken there on Tuesday night. York, who led an investigation of Apple’s stock option practices, was a pillar of financial and business expertise, Apple Inc. CEO Steve Jobs said. Jobs said York joined Apple’s board in 1997 when most people doubted the company’s future; since then, the company has launched such highly successful products as the iPhone and the iPod. “It’s been a privilege to know and work with Jerry, and I’m going to miss him a lot,” Jobs said in a statement. York worked for all three Detroit automakers starting in the 1960s. More recently, he advised investor Kirk Kerkorian in a failed takeover attempt of Chrysler and in efforts to reform General Motors Co. In 2006, three years before GM went into bankruptcy protection, York warned the company that its business model was seriously flawed. As Chrysler’s chief financial officer from 1990 to 1993, York helped restore the No. 3 automaker to profitability with cost cuts and asset sales and was considered a potential successor to then-chairman Lee Iacocca. Despite the cuts, York kept investing in new vehicle development, said Bud Liebler, vice president of marketing and public relations at Chrysler from 1980 to 2001. At one point, York ran the Dodge brand, where he upgraded the engine of the Ram truck to make it more powerful and gave the truck more aggressive looks, a wildly popular move. “He wouldn’t cut costs that were going to help you build your business. He would cut superfluous costs,” Liebler said. York thrived on stressful situations, Liebler said. “He attacked them all with the same relish and vigor. It was about controlling the costs,” Liebler said. Former Delphi Corp. CEO and turnaround specialist Steve Miller, who was York’s boss when Chrysler was trying to stay afloat in 1979, remembers York passing out after working all night on a presentation for Iacocca. “He shoves the book over to me and says, ‘Take it from here,’” Miller remembered. Yet York was released from the hospital and returned to work the next day. In a statement Thursday, Iacocca said York “was an integral part of Chrysler’s success, the very best in finance. I am grateful for all he did and proud to say he was not only on my team but my friend.” York joined Chrysler in 1979 and left in 1993 to become IBM Corp.’s chief financial officer. For two years, he oversaw IBM’s brutal downsizing and transformation from a hardware company on the brink of collapse to a software and services powerhouse. IBM shed more than 150,000 workers in the 1990s and racked up nearly $16 billion in losses over five years. Louis Gerstner, retired CEO of IBM, said York “demanded deep, insightful analysis of business issues before decisions were made.” York left IBM in 1995 to become vice chairman of Tracinda Corp., Kerkorian’s investment company. The billionaire teamed with Iacocca and made an offer to buy Chrysler that year, but later retreated. Ralph Whitworth, a San Diego investment fund manager who also advised Kerkorian on the Chrysler takeover attempt, said that had Kerkorian prevailed, York would have enforced the discipline needed to fix quality problems that has plagued Chrysler to this day. After Kerkorian bought up GM shares in 2006, York was named to that automaker’s board. York supported an alliance with Nissan Motor Co. and Renault SA and wanted to pare down GM’s stable of brands. He resigned shortly after GM ended talks with Renault and Nissan, citing “grave reservations concerning the ability of the company’s current business model to successfully compete” with Asian automakers. Three years later, GM entered bankruptcy protection and shed four of its eight brands. Kerkorian called York “a unique individual with boundless courage, charisma and intellect and a deep appreciation of the automotive industry.” York also served as chairman and CEO of Micro Warehouse Inc., a computer retailer, for three years. Besides Apple, he was a board member at Tyco International Ltd. and auto supplier Dana Holding Corp. At Apple, York and fellow board member Al Gore led an investigation in 2006 on the company’s practice of retroactively setting a stock option’s exercise price to a low point to boost profits when the options are cashed in. Apple acknowledged some backdating between 1997 and 2002, and restated several years’ worth of financial statements, which York’s committee said corrected the matter. The Securities and Exchange Commission and federal prosecutors also launched separate investigations. The SEC’s probe ended with settlements with two high-level executives, and the criminal investigation was closed without any indictments. But York’s part in the investigation was not without conflict. As a board member, he made decisions about executive compensation, including options grants. York was born in Memphis, Tenn., in 1938 and graduated from the U.S. Military Academy at West Point. He earned a Master of Science degree from the Massachusetts Institute of Technology and a Master of Business Administration degree from the University of Michigan, where there is an endowed professorship in his name. York is survived by his wife, Eilene, and four children. ___ AP Technology Writers Jordan Robertson in San Francisco and Jessica Mintz in Seattle contributed to this report.

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Video: Doron Levin Says Jerome York Was `Very Honorable Person’: Video

March 18, 2010

March 18 (Bloomberg) — Doron Levin, editor-at-large at Bloomberg News, talks with Mark Crumpton and Lori Rothman about the legacy of Jerome York, who died today at the age of 71. York, a director of Apple Inc., was also former chief financial officer at Chrysler Corp. and International Business Machines Corp., and adviser to investor Kirk Kerkorian. (Source: Bloomberg)

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Jerome York, Apple Director, Hospitalized Following Collapse

March 17, 2010

Jerome York, a director of Apple Inc. since 1997 and former chief financial officer of International Business Machines Corp. and Chrysler Corp., was hospitalized in critical condition today in Pontiac, Michigan. York, 71, collapsed at his Rochester, Michigan, home Tuesday night, according to his wife, Eilene York, and was taken to Pontiac Osteopathic Hospital by ambulance.

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Fiat May Need to Convince on Chrysler Before Seeking Automotive Unit IPO

March 11, 2010

By Sara Gay Forden March 11 (Bloomberg) — Fiat SpA , the Italian carmaker that helped Chrysler Group LLC emerge from bankruptcy, may wait to turn around the U.S. business before deciding on a share sale or spinoff for its automotive division. The Italian company’s stock has risen 19 percent this month on speculation that Chief Executive Officer Sergio Marchionne may carve out Fiat’s biggest unit as a new company. Fiat executives have so far sent mixed signals about whether an initial public offering of the division will take place. A separation of the auto manufacturing operations, which generated 56 percent of Fiat’s revenue last year, would give Marchionne an entity to facilitate future alliances, and a share sale would generate cash for international expansion . The maker of Puntos and Ferraris must show progress at Chrysler, of which it owns 20 percent, before convincing investors to buy shares in the unit, said Royal Bank of Scotland analyst Jose Asumendi . “Fiat has too much on its hands right now to think about a possible spinoff,” said London-based Asumendi, who advises holding Fiat’s stock. “The priority is to resurrect Chrysler, make it profitable and repay its government loans.” Fiat Automobile, not including Fiat’s 20 percent stake in Chrysler, is worth about 5.9 billion euros ($8 billion), or 53 percent of Fiat’s market value , said Stephen Pope , chief global equity strategist at Cantor Fitzgerald in London. “Get the U.S. strategy right and in six years time, Fiat Auto could be worth 20 percent more.” Holding Pattern Fiat derives the remainder of its revenue from units including truckmaker Iveco SpA and CNH Global NV , an agricultural and construction machinery maker. Marchionne plans to detail on April 21 in Turin, Italy, how Chrysler, which he also runs, will improve Fiat’s profitability through shared sales efforts and technology. The CEO is trying to shore up both companies as government incentives to buy new cars end in Europe and Chrysler’s U.S. market share lags a 10.5 percent target for 2010. Chrysler is “in a year of hibernation” and talk of a separate Fiat Auto is “premature,” Kristina Church , an analyst at Barclays Capital, wrote in a March 8 note. Barclays upgraded Fiat to “equal weight” from “underweight” in part because the shares may benefit from the speculation. Fiat’s surge this month is more than triple that of the Bloomberg World Auto Manufacturers Index , which includes Fiat and has risen 5.4 percent. Ford Motor Co., the only major U.S. carmaker that didn’t take a government bailout, has jumped sevenfold in 12 months and is up 28 percent since the beginning of the year, compared with a 10 percent decline by Fiat. Partial Sale That recent share gain might persuade executives to press ahead with a share sale sooner rather than later, said Pierre Bergeron , a credit analyst at Societe Generale SA in Paris. The company’s perceived value is unlikely to rise soon because Fiat and Chrysler offer a weak product lineup in a challenging U.S. market, he said. A partial sale or spinoff this year, of a 30 percent stake, could give Fiat additional options for consolidating its debt, Bergeron said. Fiat could also sell more after that, he said. A spinoff “is not dead,” Marchionne told reporters March 3 in Geneva. A day earlier, Chairman Luca Cordero di Montezemolo told Bloomberg News that he didn’t foresee a share sale. ‘Conjecture’ Responding to a request from Italy’s stock market regulator, Fiat said March 6 that media reports about an IPO or spinoff are “conjecture” and that it isn’t planning any “extraordinary transactions.” A company spokesman declined to comment further yesterday. Marchionne said last year that the creation of a separate auto company may take several years. Fiat will be held back this year by declining car sales, pricing pressure and industry overcapacity, Barclays’s Church wrote. Fiat makes about 2 million cars annually, while Chrysler manufactured 1.3 million last year. That’s short of Marchionne’s contention that to survive as a global automaker , a company needs production of at least 5 million vehicles. Last year, the carve-out speculation centered on Fiat’s bid for General Motors Co.’s Opel because a purchase could have given Fiat the scale Marchionne says is necessary to survive. GM eventually decided to keep the European operations. Marchionne needs to show success with current strategic plans before he considers creating one automotive group, analysts at Goldman Sachs Group Inc. led by Stefan Burgstaller said March 8 as they added Fiat to a “conviction buy” list. Dodge Chargers, 300s Fiat acquired the 20 percent stake in Auburn Hills, Michigan-based Chrysler in June as part of a plan to help the U.S. carmaker emerge from bankruptcy. The Italian company can lift the holding to 35 percent in increments by meeting targets such as building an engine in the U.S., and can win control after government loans are repaid. Chrysler is refreshing most models, including the Jeep Grand Cherokee. New Chrysler 300s and Dodge Chargers will use the first platform developed jointly with Fiat, which plans to begin selling its 500 subcompact in the U.S. in early 2011. Marchionne has said Chrysler may have an IPO after 2010. Tesla Motors Inc., the Palo Alto, California-based producer of a $109,000 electric Roadster, filed in January for an initial public offering to raise as much as $100 million. Detroit-based GM, which emerged from bankruptcy July 10, could hold an IPO by late 2010, Chairman Ed Whitacre has said. Fiat may have earnings before interest, taxes, depreciation and amortization of 4.26 billion euros this year, a 14 percent increase from 2009, according to the average estimate of 26 analysts surveyed by Bloomberg. Chrysler had Ebitda of $200 million in 2009’s third quarter and posted a sales gain in February, its first in 26 months. Bondholders One hurdle to a separate Fiat Auto is how the carmaker will apportion its bonds, according to Alessandro Frigerio , a fund manager at RMJ Sgr, which oversees about 100 million euros and owns Fiat shares. Fiat’s bonds totaled 11.4 billion euros at the end of 2009, according to its annual report . “It’s a complicated transaction that has to satisfy both the bondholders and the shareholders,” Frigerio said. “The transaction is also very much tied to how things go at Chrysler, which is still in the preliminary stages of the restructuring.” To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net

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Marchionne Pins Alfa Romeo’s Comeback in U.S. on Giulietta Model in Europe

March 1, 2010

By Sara Gay Forden March 1 (Bloomberg) — Fiat SpA Chief Executive Officer Sergio Marchionne’s plan to revive the Alfa Romeo brand in the U.S. may get a boost from a new hatchback in Europe. At the Geneva auto show this week, Alfa Romeo will unveil the Giulietta, created for Europe to replace the Alfa 147 introduced 10 years ago. With its sculpted rear, rounded triangular headlights and a selection of five turbocharged engines, the model will become the basis of a new larger sedan for the U.S., possibly in 2012. Alfa Romeo is 190,000 cars short of an annual target of 300,000 to make money and Marchionne said in January that he’s reviewing the 100-year-old brand. The Giulietta may help accelerate Alfa Romeo’s return to the U.S., the world’s most profitable luxury-car market, as the brand examines plans to make vehicles with Fiat partner Chrysler Group LLC, said Andrew Close , a London-based analyst at IHS Global Insight. “The beauty of America is that even a niche car can still have volume,” said Close, a specialist in powertrain, in a phone interview. “Alfa probably has the biggest opportunity of all the Fiat brands to assert its premium position in the U.S. market, which could help them climb out of the hole that they’re in.” Turin, Italy-based Fiat in January appointed Harald Wester , the automaker’s technology chief and CEO of the Maserati and Abarth brands, to run Alfa Romeo. Wester may use Maserati’s dealer network to bolster Alfa Romeo’s premium positioning, Close said. Audi, Mercedes-Benz At stake is Fiat’s ability to compete with Daimler AG’s Mercedes-Benz and Volkswagen AG’s Audi, brands that Marchionne has said Alfa Romeo isn’t keeping up with. The Giulietta will compete with cars including VW’s Golf and the BMW 1-Series from Munich-based Bayerische Motoren Werke AG . “It’s the best car we’ve ever built,” Marchionne said Feb. 27 in Michigan before a fund-raising event for his native region of Abruzzo, Italy, which was struck by an earthquake last year. Fiat estimates that Giulietta sales may reach as many as 100,000 units a year. Last year’s introduction of the Mito sport hatchback helped lift Alfa Romeo sales to 110,000 in 2009. Other Alfa Romeo models still in production include the 159, the GT, Brera and Spider. Alfa Romeo has been held back by costs to develop the larger luxury sedans needed to round out its product range. The cost of developing new models can range from 500 million euros ($681 million) to 1 billion euros, said Andrea Alghisi , an automotive consultant at AlixPartners in Milan. Unprofitable Alfa Romeo needs to add two larger sedans to replace the 159, a compact executive sedan introduced in 2005, and the 166, a larger sedan sold between 1998 and 2007, according to Alghisi. A new Duetto, priced at about 40,000 euros, would also be important to create allure for the brand, he added. Max Warburton , an analyst at Bernstein Research in London, estimates that Alfa Romeo is losing 300 million euros to 400 million euros a year. Fiat doesn’t disclose sales and earnings for Alfa Romeo and declined to discuss the unit’s financials. “The market has completely changed. There are many competitors that weren’t there before. The task has become much more difficult,” Marchionne told reporters Jan. 20 in Milan. “Alfa has become our baby to nurse.” Share Performance Fiat has declined 24 percent this year in Milan trading, compared with a 12 percent drop in the eight-member Bloomberg Europe Autos Index, which includes Fiat. The Italian carmaker rose as much as 2.3 percent today, the first increase in six trading days, and was up 0.5 percent at 7.77 euros at 10:22 a.m. local time. Alfa Romeo, which produced its first model in 1910 and whose cars once raced for Italy during Mussolini’s dictatorship, is Fiat’s only entry in the mid-level luxury market. Fiat offers cheaper and fuel-efficient Puntos and Pandas at one end, and Ferrari and Maserati supercars at the other. Made famous by the Duetto Spider driven by Dustin Hoffman in the film “The Graduate,” Alfa abandoned North America in 1995, after sales fell by more than half to 565 cars in 1994. One of the brand’s halos was the 8C Competizione series, which was built in the 1930s, revived as a concept car in 2003 and released for sale in 2007. A limited edition 8C was introduced last year in coupe and spider versions for as much as 213,000 euros and all 1,000 cars sold out immediately to collectors and Alfa Romeo enthusiasts, 200 of them in the U.S. Chrysler Platform The Giulietta’s sculpted rear and headlights are among design features borrowed from the 8C . Fiat hasn’t said how much the car, which goes on sale in May, will cost. It is the debut model for Fiat’s “Compact” platform, or underbody of the car. Chrysler will also use that platform to develop four models, including new Dodge and Chrysler compact sedans and replacements for the mid-size Dodge Avenger and Chrysler Sebring, according to the Auburn Hills, Michigan-based carmaker’s business plan. Fiat owns 20 percent of Chrysler and Marchionne runs both companies. Through its alliance with Chrysler, Alfa Romeo could use Chrysler’s 300C platform and possibly its new Pentastar V6 engine for the executive sedan, said Alghisi. A platform still needs to be found for the car that will replace the 166, which may be called Giulia, and will be a flagship model for the brand, Alghisi said. The Compact platform may be too small to stretch for the larger sedan, he added. “Alfa has a legacy, but it has consistently failed to deliver products that live up to the brand,” said Philippe Houchois , an automotive specialist at UBS AG in London who has a “neutral” recommendation on Fiat shares. “The success of the Giulietta will determine whether Fiat will continue to invest in the brand.” To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net

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Ford, Toyota Take Market Share From GM in Stabilizing U.S. Auto Industry

January 5, 2010

By Jeff Green and Mike Ramsey Jan. 5 (Bloomberg) — Ford Motor Co. , Toyota Motor Corp. and Honda Motor Co. posted U.S. sales gains in December that beat analysts’ estimates as the industry showed signs of stabilizing after its worst year in almost three decades. General Motors Co. reported a 5.7 percent drop in light- vehicle deliveries, worse than analysts anticipated, while Chrysler Group LLC ’s 3.7 percent decline exceeded estimates. Ford sales soared 33 percent, and Toyota jumped 32 percent. “People are waking up and realizing the world didn’t end and are starting to return to showrooms,” said Aaron Bragman , a forecaster at IHS Global Insight in Troy, Michigan. “It’s way too early to say the trend is pointing north, but if it continues this quarter, it’s a positive sign.” An industrywide increase for December would cap automakers’ first quarterly improvement since the last three months of 2006, after October and November totals were little changed. The recession and bankruptcies at the predecessors of Detroit-based GM and Chrysler ravaged 2009 sales. Honda said U.S. deliveries increased 24 percent, and Nissan Motor Co. jumped 18 percent. The results reshuffled the industry rankings in the U.S., with Honda climbing past Auburn Hills, Michigan-based Chrysler and into fourth place for the first time in full-year sales. Ford, spurred by an 83 percent gain for the Fusion and a doubling of Taurus sales, said the December results gave the Dearborn, Michigan-based automaker an estimated 15 percent of 2009 U.S. sales for the first full-year increase in its home market since 1995. Ford said 2008’s total was about 14 percent. ‘Acceptable Buy’ “Ford is suddenly becoming an acceptable buy for people who it wasn’t before,” said John Wolkonowicz , an IHS Global Insight analyst in Lexington, Massachusetts. “Ford is a cool purchase now, which it didn’t used to be. And that is huge.” The shares rose 80 cents, or 7.8 percent, to $11.08 at 2:37 p.m. in New York Stock Exchange composite trading, after touching $11.24 for the highest intraday price since June 2005. The seasonally adjusted annual sales rate may be 11.1 million light vehicles, according to the average estimate of eight analysts in a Bloomberg survey, while Chrysler today projected the rate at 11.3 million. That would be up from 10.3 million in December 2008 and mark the second straight monthly gain, according to data compiled by Bloomberg. Manufacturers, dealers and investors use the sales rate to compare monthly totals by taking into account seasonal buying patterns. Industry sales may have totaled 10.4 million units in 2009, the fewest since 1982, according to market researcher Edmunds.com in Santa Monica, California. U.S. sales were 13.2 million in 2008, according to researcher Autodata Corp., after averaging 16.8 million this decade through 2007. Analysts’ Estimates Sales estimates for the U.S.-based automakers represented the average of six analysts surveyed by Bloomberg, and the projections for Japan’s Toyota, Honda and Nissan were issued by Edmunds.com. The estimates are based on daily selling rates. December had 28 selling days, 2 more than in 2008. Sales comparisons would be about 8 percentage points higher without the adjustment. For example, GM’s adjusted sales decline was 12.4 percent, bigger than the 10.6 percent drop projected by the analysts. Ford’s tally includes the Volvo brand, which the automaker plans to sell. Industry sales in 2010 may rise 19 percent to 12.4 million because of the need for new vehicles and improving availability of consumer credit, said Sean McAlinden , chief economist for the Center for Automotive Research in Ann Arbor, Michigan. Other preliminary forecasts for industrywide sales range from Chrysler’s outlook of about 10.8 million to Ford’s 12.3 million. 2010 Outlook “For 2010, I’m leaving my seat belt on because I think volatility is still an element of the new norm,” Ken Czubay , Ford vice president of U.S. marketing sales and service, said on a conference call. Al Castignetti , Nissan’s vice president of U.S. sales, wouldn’t give a forecast for industry sales growth this year beyond saying that his “personal view is we’re not going to see 10 percent or 15 percent increase.” “I’m fairly optimistic,” Castignetti said. “The market will get better, credit will get better.” Chrysler Incentives Chrysler announced new incentives of no-interest, five-year financing or $3,000 in cash rebates on virtually of its 2010 model-year vehicles. Chief Executive Officer Sergio Marchionne has said repeatedly he wants to move away from incentives because they undermine the value of the brands. Surging unemployment and tight credit depressed 2009 sales, especially in the first half, when the annual rate didn’t exceed 10 million. Sales rose in August, spurred by government incentives to turn in older models. Fourth-quarter industry results were little changed heading into December, after a drop of 104 units in October and a gain of 139 in November, according to Woodcliff Lake, New Jersey-based researcher Autodata. GM said light-vehicle sales in December fell to 207,538 units, while Ford’s deliveries increased to 184,655. Nissan’s sales totaled 73,404, and Honda’s U.S. deliveries were 107,143. Chrysler’s tally was 86,523. Hyundai Motor Co. , South Korea’s largest automaker, said sales rose 41 percent in December to 33,797. The full-year results showed the toll on the industry from the deepest U.S. economic slump since the Great Depression. Light-vehicle sales at GM fell 30 percent to 2,071,749, the fewest since 1952, according to data compiled by the trade publication Automotive News. Ford’s 2009 sales fell 15 percent to 1.68 million, while Chrysler tumbled 36 percent, to 931,402. That marked the automaker’s first annual total of fewer than 1 million units since 1963, according to Automotive News. Nissan sales fell 19 percent for the year, to 770,103 cars and trucks. Honda also declined 19 percent to 1,150,784. Seoul- based Hyundai said U.S. sales rose 8.3 percent to 435,064. To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net ; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net .

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Ford, Nissan U.S. Auto Sales Exceed Estimates in Sign of Industry Recovery

January 5, 2010

By Jeff Green and Mike Ramsey Jan. 5 (Bloomberg) — Ford Motor Co. and Nissan Motor Co. posted U.S. sales gains in December that beat analysts’ estimates as the industry showed signs of stabilizing after the worst year in almost three decades. Ford’s deliveries including the Volvo brand jumped 33 percent to 184,655, the Dearborn, Michigan-based company said today in a statement. Nissan’s sales rose 18 percent to 73,404. Chrysler Group LLC said sales fell 3.7 percent to 86,523. “People are waking up and realizing the world didn’t end and are starting to return to showrooms,” said Aaron Bragman , a forecaster at IHS Global Insight in Troy, Michigan. “It’s way too early to say the trend is pointing north, but if it continues this quarter, it’s a positive sign.” An industrywide increase for December would cap automakers’ first quarterly improvement since the last three months of 2006, after October and November totals were little changed. The recession and bankruptcies at the predecessors of General Motors Co. and Chrysler ravaged 2009 sales. Ford rose 8 percent to $11.10 at 12:14 p.m. in New York Stock Exchange composite trading. The shares touched $11.21 earlier for the biggest intraday advance since Nov. 2. The seasonally adjusted annual sales rate may be 11.1 million light vehicles, according to the average estimate of eight analysts in a Bloomberg survey. That would be up from 10.3 million in December 2008 and mark the second straight monthly gain, according to data compiled by Bloomberg. Industry Total Manufacturers, dealers and investors use the sales rate to compare monthly totals by taking into account seasonal buying patterns. Industry sales may have totaled 10.4 million units in 2009, the fewest since 1982, according to market researcher Edmunds.com in Santa Monica, California. U.S. sales were 13.2 million in 2008, according to researcher Autodata Corp., after averaging 16.8 million this decade through 2007. GM, based in Detroit, may say December sales fell 10.6 percent, according to the average estimates of 6 analysts surveyed by Bloomberg. The average estimate for Ford was for a 13 percent gain, and a 13.9 percent decrease for Auburn Hills, Michigan-based Chrysler, according to the analysts. The estimates are based on daily selling rates. December had 28 selling days, 2 more than in 2008. Without the adjustment, sales comparisons would be about 8 percentage points higher. Ford, Chrysler and Nissan all beat estimates on that basis. Japanese Automakers Among Japan-based automakers, Toyota Motor Corp. probably boosted sales by 21 percent, Honda Motor Co. gained 7.8 percent, according to estimates by Edmunds.com. Hyundai Motor Co. , South Korea’s largest automaker, may report a 52.1 percent increase, Edmunds.com projected. Edmunds.com estimated a 4.9 percent gain for Nissan. Industry sales in 2010 may rise 19 percent to 12.4 million because of the need for new vehicles and improving availability of consumer credit, said Sean McAlinden , chief economist for the Center for Automotive Research in Ann Arbor, Michigan. Other preliminary forecasts for industrywide sales range from Chrysler’s outlook of about 10.8 million to Ford’s 12.3 million. Surging unemployment and tight credit depressed 2009 sales, especially in the first half, when the annual rate didn’t exceed 10 million. Sales rose last year in August, spurred by government incentives to turn in older models. Fourth-quarter industry results were little changed heading into December, after a drop of 104 units in October and a gain of 139 in November, according to Woodcliff Lake, New Jersey-based researcher Autodata. To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net ; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net .

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Chrysler May Drop 145 Dealers on Lack of Financing for Vehicle Purchases

November 18, 2009

By Doron Levin and Mike Ramsey Nov. 18 (Bloomberg) — Chrysler Group LLC may have to terminate as many as 145 more U.S. dealers unless the retailers can find lenders to finance their new-vehicle inventory. GMAC Inc., which replaced Chrysler Financial as preferred lender for the Auburn Hills, Michigan-based automaker’s dealers, has been negotiating with Chrysler retailers, said Sue Mallino , a GMAC spokeswoman. If dealers can’t get the financing from GMAC, they may lose their franchise agreement unless they can find another lender, said Kathy Graham , a Chrysler spokeswoman. The outcome may mean fewer dealerships for Chrysler, which has about 2,400 U.S. outlets after terminating 789 as part of a government-aided bankruptcy reorganization. Chrysler exited court protection after six weeks on June 10 under the control of Fiat SpA. GMAC took over preferred financing duties for Chrysler dealers as part of the reorganization. Of about 1,500 dealers that applied to Detroit-based GMAC to finance their vehicle inventory, about 90 percent will qualify, Mallino said. She said 85 dealers have been refused such financing and 50 to 60 others are still in negotiations. GMAC said it has asked some dealers for more collateral as a condition for financing. Financing Snag Mike Wolcott, owner of two Chrysler-Dodge-Jeep dealerships in Pittsburgh, said he has been unable to convert interim vehicle financing with GMAC into permanent funding. Chrysler Financial, owned by Cerberus Capital Management LP, holds mortgages on his dealerships and has declined to subordinate its interest in those loans to GMAC, Wolcott said. GMAC wants that as a condition to lend him money to buy vehicles, he said. Chrysler Financial “is playing chicken to force us to find other mortgages so they can cash out,” Wolcott said. He said he’s contacted “six to eight” lenders about refinancing the $6.5 million loan on his two dealerships, without success. Amber Gowen , a Chrysler Financial spokeswoman, said the lender “continues to cooperate with GMAC and Chrysler Group LLC to transition the dealer network, including the critical and prompt redistribution of vehicles and dealership financing.” To contact the reporters on this story: Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net ; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net ;

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GMAC posts smaller net loss in 3rd quarter on improved results in …

November 4, 2009

May 9th, 2009 How could a government-run GMAC reshape car sales ?DETROIT — With the federal government almost certain to take control of GMAC Financial Services, analysts suggest it could become a loan machine that gives General Motors and Chrysler a … GMAC says 1st -qtr loss widens to $675M as credit markets weigh on auto, mortgage businesses. May 6th, 2009 GMAC won’t necessarily follow GM to Chapter 11NEW YORK — GMAC Financial Services said Tuesday that it will not be …

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Ford’s October U.S. Vehicle Sales Rise 3.1% for Third Gain in Four Months

November 3, 2009

By Jeff Green and Alex Ortolani Nov. 3 (Bloomberg) — Ford Motor Co. said its October U.S. auto sales rose 3.1 percent, the third gain in four months, after the industry rebounded from the drop in demand that followed the government’s so-called cash for clunkers program. The total including the Volvo brand increased to 136,920 cars and trucks from 132,838 a year earlier, the Dearborn, Michigan-based automaker said in a statement today. That beat analysts’ estimates. “The economy is beginning to recover,” Dana Johnson , chief economist at Dallas-based Comerica Bank, said in an interview. “We probably lost some car sales in September because inventory was so low they couldn’t make deliveries. Auto sales are now probably trending up and they should be up noticeably in the first quarter.” Industry sales slid 23 percent in September after the end of the federal rebates of as much as $4,500 for buyers who traded in older, less fuel-efficient vehicles. The program ran from July 27 through Aug. 24, contributing to an August industry sales increase that was the first monthly gain since 2007. Industrywide October sales of cars and trucks ran at a seasonally adjusted annual rate of 10.3 million, based on the average of 9 analyst estimates compiled by Bloomberg. The rate was 10.6 million a year earlier. Sales at a pace of 10 million or more would make October the first month this year to top that mark without the benefit of the clunkers incentives. Before a 5.1 percent drop in September, Ford posted U.S. sales gains in July and August, powered by consumer demand for the clunkers cash. That was the first time that Ford, General Motors Co. or Chrysler Group LLC increased deliveries for two or more months since GM’s August-October streak in 2007. GM, Chrysler GM, which had a 45 percent decline in October 2008 on reduced access to financing, may say sales last month rose 4.6 percent, the average of seven analyst estimates. Chrysler Group LLC may report a 29 percent drop, according to the analysts. The estimates are based on daily selling rates. October had 28 selling days, one more than 2008. Ford, GM, Chrysler and some automakers don’t adjust for the difference in sales days. Toyota Motor Corp. and Honda Motor Co. are among automakers that use adjusted figures. Ford was predicted to fall 4.4 percent, adjusted for sales days. On that basis, its sales fell 0.6 percent. Nissan Motor Co. sales probably rose 3.2 percent in the month, the average of three analysts’ projections, while Toyota fell 6.9 percent and Honda dropped 5.6 percent. Toyota sales fell by a “single-digit” percentage last month from a year earlier, Bob Carter , group vice president for the company’s U.S. sales unit, said yesterday at a Detroit briefing. Toyota through September reported a 28 percent decline, as the industry total dropped 27 percent. Toyota estimated that October’s industrywide seasonally adjusted annual selling rate was in the range of 10.3 million to 10.5 million, Carter said. Hyundai Motor Co. , which has gained market share this year, may report an increase of 33 percent for the month, according to market-research firm Edmunds.com. Hyundai’s October 2008 U.S. sales fell 31 percent. To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net ; Alex Ortolani in Southfield, Michigan, at aortolani1@bloomberg.net

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Ford Posts $1B Profit In Third Quarter, Forecasts A "Solidly Profitable" 2011

November 2, 2009

DEARBORN, Mich. — Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, surprised investors with net income of nearly $1 billion in the third quarter and forecast a “solidly profitable” 2011. The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford’s shares rose 68 cents, or 9.8 percent, to $7.68 in morning trading. The latest results signal that Ford’s turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn’t posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments. Ford, based in Dearborn, Mich., reported third-quarter net income of $997 million, or 29 cents per share. Its profit forecast for 2011 was a step above previous guidance of break-even or better for the year. Ford’s key North American car and truck division posted a pretax profit of $357 million, the division’s first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement. Excluding one-time items, Ford earned 26 cents per share, blowing away analysts’ expectations of a loss of 12 cents. The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter, accomplished through layoffs in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development. Chief financial officer Lewis Booth said the company took in $1.3 billion more than it spent in the quarter, an improvement over its $1 billion cash burn in the second quarter. “That’s a huge deal,” Booth said. Ford’s plan to create demand and get better prices for its products, coupled with cost cuts, gave the company confidence that it will make money in 2011, Booth said. But Ford still faces obstacles in its turnaround. Last week, workers overwhelmingly rejected an agreement with the United Auto Workers that would have brought Ford’s labor costs in line with rivals General Motors Corp. and Chrysler LLC. Workers objected to clauses limiting their right to strike and freezing entry-level wages, and felt the company was healthy enough and didn’t need further concessions. The rejected deal also would have changed rules so skilled tradesmen such as electricians and pipefitters work in teams and perform more than one task. Rejection of the deal isn’t likely to place Ford at an immediate cost disadvantage to its crosstown rivals because savings from the concessions are longer-term, said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass. Neither the company nor the UAW has released any cost savings numbers. The third-quarter profit makes it extremely unlikely that the company will push to head back to the bargaining table before the current UAW contract expires in the fall of 2011, and union leaders also are unlikely to take another deal to the membership, Chaison said. “I think the company has no credibility asking for concessions now, and I think the leadership is quite embarrased for making a case for concessions,” he said. Chaison said Ford could make some noise about moving new vehicle production to Canada, where unionized workers on Sunday approved a package of concessions, but it’s more likely that Ford will live with the current contract until 2011. The other area where Ford has a cost disadvantage is debt. Ford reported $26.9 billion in debt, up $800 million from the second quarter. The company avoided the same fate as rivals Chrysler and GM by mortgaging its factories and even the familiar blue oval logo to borrow $23.5 billion before credit markets froze last year. Ford didn’t quantify the impact of Cash for Clunkers, which offered buyers rebates to trade in their vehicles. The program helped Ford cut costly incentives and raise production. It also won buyers; the fuel-efficient Ford Focus sedan and Ford Escape, a small SUV, were among the top five sellers under clunkers. Ford sales climbed 17 percent in August thanks to the program. Ford’s revenue fell $800 million for the quarter, to $30.9 billion, due mainly to its financial services arm, Ford Motor Credit, making fewer loans. But the division still posted a pretax profit of $677 million, and revenue from auto operations rose slightly to $27.9 billion. Ford also has benefited from consumer goodwill after it declined government bailout money and didn’t go into bankruptcy over the summer as GM and Chrysler did. Ford grabbed sales from its rivals, posting the largest increase in market share of any automaker in September. Ford expects an overall gain in U.S. market share in 2009, a feat it hasn’t accomplished since 1995. (This version CORRECTS 5th graf that Ford’s North American car and truck division posted the first pretax profit since the first quarter of 2005 sted company’s first pretax profit since first quarter of 2005)

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Citigroup, Bank of America Top Executives Averaged $18 Million Pay in 2008

October 24, 2009

By Bradley Keoun Oct. 24 (Bloomberg) — Citigroup Inc. and Bank of America Corp. paid top executives an average of $18.2 million each last year as the banks accepted $90 billion of bailout funds, records from Treasury Department paymaster Kenneth Feinberg show. Citigroup paid $390.2 million to 21 people, an average of $18.6 million each, the records released Oct. 22 show. Bank of America paid $227.8 million to 13 executives, or $17.5 million apiece, according to Feinberg, who didn’t name them. The review excluded top-paid employees from 2008 who have since left. Average pay for managers at the two banks was almost double that of the other five bailed-out companies reviewed by Feinberg . He ordered 2009 pay cuts averaging more than 50 percent for 136 executives at the seven firms after President Barack Obama said “it does offend our values” when company executives “pay themselves huge bonuses even as they continue to rely on taxpayer assistance.” Overall, the employees whose pay was reviewed by Feinberg will get $339.7 million this year, or an average of $2.5 million. The totals for 2008 and 2009 were derived using figures Feinberg provided on the dollar amount and percentage decline between the two years. Citigroup spokesman Stephen Cohen and Bank of America spokesman Scott Silvestri declined to comment. Feinberg cut the Citigroup executives’ pay by $272 million, or 70 percent, from last year. They’ll still get $118.4 million this year, or an average of $5.6 million each. Most of the pay is in the form of restricted stock, complying with a Feinberg requirement that the companies encourage executives to focus on long-term performance. Pandit’s $1 Pay Citigroup’s 2009 total includes $1 for Chief Executive Officer Vikram Pandit , 52, who in January volunteered to slash his pay after getting $10.8 million in 2008. Feinberg stipulated “$0” in pay for Andrew Hall , the former head of Citigroup’s energy-trading unit, who was paid about $100 million in 2008. Citigroup agreed earlier this month to sell the unit, Phibro LLC, to Occidental Petroleum Corp., which will foot Hall’s 2009 tab. Citigroup sought aid from the Treasury Department last year as it posted a record net loss of $27.7 billion. Citigroup previously had only disclosed the 2008 pay for Pandit, former Chief Financial Officer Gary Crittenden and Citi’s three other highest-paid officers, former Asia head Ajay Banga , trading chief James Forese and Vice Chairman Stephen Volk. The five of them made a combined $56 million, or an average of $11.2 million each. Bank of America Charlotte, North Carolina-based Bank of America will pay the 13 top executives a total of $78.6 million in 2009, according to Feinberg. While the total is down by 66 percent from last year, the executives will still get an average of about $6 million each. CEO Kenneth Lewis , 62, who plans to step down at the end of the year, is working for free this year. He still stands to collect pension benefits that earlier this year were valued at $53.2 million, David Schmidt , senior consultant at James F. Reda & Associates, a New York compensation consulting firm, said Oct. 1. Lewis also has accumulated common shares worth about $57 million, deferred compensation of about $10 million and restricted stock of about $5 million, Schmidt said. The other five companies reviewed by Feinberg were GMAC LLC, American International Group Inc., General Motors Corp, Chrysler Group and Chrysler Financial. The 22 GMAC executives covered by Feinberg’s review will get an average $3.17 million in 2009 pay, while AIG’s 13 top executives will average $2.42 million. The average was $1.1 million at General Motors, $507,424 at Chrysler Group and $310,506 at Chrysler Financial. The highest approved pay among all the covered executives was $10.5 million for Robert Benmosche , the CEO of AIG, whose bailout totals $182 billion. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

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Buying a New Car Gets Pricier as GM, Ford Cut Inventory to Avoid Discounts

September 29, 2009

By Keith Naughton Sept. 29 (Bloomberg) — Buyers who have been waiting for better deals on new cars may be disappointed. General Motors Co. and Ford Motor Co., bucking decades of tradition, are weaning themselves from dependence on profit- sapping discounts after factory shutdowns curbed dealers’ supply of cars and trucks. Incentives on GM, Ford and Chrysler Group LLC autos plunged 26 percent to $3,278 in August from a March peak, while discounts industrywide fell 22 percent to $2,474, according to researcher Edmunds.com. The U.S. automakers’ vehicles sold for an average of $2,000 more in the second quarter than a year earlier, said researcher J.D. Power and Associates. “As we suffered through the worst automotive recession in our lifetimes, the lesson automakers learned was to stay under control and not bloat inventory, which you have to follow with huge incentives to move the metal,” said Jeff Schuster , an analyst at J.D. Power. “From now on, we’re going to see a more cautious approach to incentives.” The paucity of bargains for consumers is a healthy sign for Detroit automakers once willing to pile on money-losing rebates to win more market share, said Schuster, who is based in Detroit. Now, the companies are finally matching output to demand, he said. Boosting the price paid by buyers, not just the number on the window sticker, is pivotal. Ford, alone among the domestic trio in avoiding bankruptcy, lost $30 billion in the past three years, while GM and Chrysler relied on $65 billion in U.S. loans to reorganize in court. ‘Pull the Trigger’ Ford buyers paid an average of $2,000 more for each vehicle in the second quarter, according to the automaker. That translated into a $900 million increase in net pricing in North America during the period, Ford Chief Financial Officer Lewis Booth said July 23. Researcher Autodata Corp. estimated that Ford pared spending on discounts 27 percent this year. The average price per vehicle commanded by GM, Ford and Chrysler in the U.S. rose 7.3 percent to $27,571 in the second quarter, from $25,567 a year earlier, according to J.D. Power. Industrywide, average vehicle prices rose to $26,921 in the second quarter from $25,954 a year earlier, Westlake Village, California-based J.D. Power said. “If your inventories are aligned with demand, there’s not as much temptation to pull the trigger and match the competition with incentives,” George Pipas , Ford’s sales analyst said in an interview. ‘No Deals’ Detroit teacher Doris McDaniel, who was shopping on Sept. 25 at Avis Ford in Southfield, Michigan, said she was frustrated at finding few bargains in searching for a fuel-efficient new car to replace her Nissan Motor Co. truck. “With the way the economy is, I was thinking cars should be much cheaper,” McDaniel, who wouldn’t give her age, said in an interview. “After the clunkers thing, I thought the incentives would still be out there. But there’s no incentives. No deals. No anything.” When a salesman showed her a $41,000 Flex wagon in the showroom, she peered at the price and said, “Too much.” Extended summer plant closings at GM and Chrysler halted the flow of new autos amid sales at the worst levels in almost 30 years, while Ford cut inventory in half since the start of the year. The U.S. cash for clunkers program shrank supplies to the lowest since at least 1985, according to researcher Ward’s AutoInfoBank of Southfield, Michigan. Toyota’s Way A lack of cash also crimped U.S. automakers’ discounting, J.D. Power’s Schuster said. Japan’s two biggest automakers, Toyota Motor Corp. and Honda Motor Co., have long championed limiting inventory to curb incentives, he said. Toyota offered discounts averaging $1,584 on each vehicle this year and Honda’s figure was $1,567, according to Woodcliff Lake, New Jersey-based Autodata. GM’s spending averaged $3,418 through August, while Dearborn, Michigan-based Ford’s was $2,811 and Chrysler’s was $4,407, Autodata estimated. Rebate fatigue also may be shaping Detroit’s retreat from incentives, said Jessica Caldwell , an auto analyst with Santa Monica, California-based Edmunds.com. Even record discounts earlier this year couldn’t shield the U.S. auto market from a 28 percent sales decline through August under the pressure of job losses and plunging home values. Detroit automakers began turning to rebates more than 30 years ago, when Chrysler used former baseball player-turned- announcer Joe Garagiola in a 1975 Super Bowl commercial with the catchphrase, “Buy a car, get a check.” GM unveiled no-interest loans on most models after the terrorist attacks of Sept. 11, 2001, and in 2005, the year after its last profit, offered employee discounts to all buyers. ‘All Been Done’ This month, the biggest U.S. automaker offered a 60-day money-back guarantee to help regain credibility with car buyers. “The big blockbuster, peanut-butter-approach programs like zero-percent financing and employee discounts for everyone have all been done before,” John McDonald , a spokesman for Detroit- based GM, said in an interview. With assembly lines cranking up again now that inventory is depleted, the incentives restraint at GM, Ford and Auburn Hills, Michigan-based Chrysler may be tested, Caldwell said. “Automakers have to pull the lever and increase production in an unknown market,” she said. “They could find there are no buyers out there and have to raise incentives again. It’s a vicious circle.” September U.S. sales probably will run at an annual rate of 9.34 million vehicles, 34 percent lower than in August when the clunkers program was in place, Edmunds said yesterday. That’s better than Edmunds’ Sept. 17 forecast for an 8.8 million pace. Not Chasing ‘Blindly’ Ford, which posted its first sales gains since 2007 in July and August, said Sept. 16 it expects to boost 2009 market share while keeping inventory and spending in check. “We’re not just chasing market share blindly,” Chief Financial Officer Lewis Booth told investors at the Frankfurt Motor Show Sept. 16. Ford rose 20 cents, or 2.7 percent, to $7.49 at 4:15 p.m. in New York Stock Exchange composite trading. The company’s shares have more than tripled this year. Toyota’s plan to spend $1 billion on fourth-quarter advertising, incentives and other marketing support is “larger than average,” Irv Miller , group vice president for Toyota’s U.S. sales unit, said in a Sept. 16 interview. Gordon Stewart, a Toyota and Chevrolet dealer, said he hopes the ad blitzes from the two automakers will stimulate sales that have fallen to “the slowest ever” since the end of the clunkers discounts. He isn’t counting on big incentives. “We’re in a transition period where people are waiting for the next deal and it’s just not coming,” said Stewart, who owns a Toyota store in Alabama and four Chevrolet outlets in Georgia, Florida and Michigan. “We’re just not going to buy business anymore.” To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net

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Video: Another Look – More Cash for Clunkers

July 31, 2009

Interview with of River Oaks Chrysler Vice President Alan Helfman (Bloomberg News)

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