By Colin Campbell - Friday, March 13, 2009 - 17 Comments
What Chrysler’s departure would mean for the Canadian auto industry
Chrysler’s threat this week to close its plants in Canada if it doesn’t win big union concessions is one of the most dramatic moves yet in the ongoing auto industry meltdown. In the words of one auto union official, it was like adding gasoline to a fire.
Chrysler president Tom LaSorda said the company needs to lower its labour costs by about 25 per cent, to $55 an hour from an estimated $75 an hour. He also said the company needs US$2.3 billion in government money if it’s to keep building cars in Canada.
On the surface, LaSorda’s demands appeared to be the kind of posturing that’s expected in such critical negotiations. Chrysler’s fate, after all, is hanging in the balance. But industry analysts say the threat is very real—the company could shift Canadian production to plants in the U.S. in a matter of months. And while the auto industry would likely survive such a move, the impacts would be severe and cause painful disruptions right through the entire industry. Continue…
By Colin Campbell - Wednesday, January 28, 2009 at 8:00 AM - 0 Comments
Magna says it will work with Ford to build a new electric car
Could Magna International grow from making just car parts into a full-fledged carmaker? It’s not all that far-fetched, say some industry pundits.
Last week, the Aurora, Ont.-based company hired former Chrysler executive Wolfgang Bernhard as a consultant, prompting a wave of rumours that the company was in talks to buy pieces of the struggling auto company. Magna, after all, had talks with Chrysler just last year about teaming up to build cars, and Bernhard had worked with Cerberus Capital Management when it took control of Chrysler in 2007. Both Magna and Chrysler immediately denied the reports. But that hasn’t dampened speculation that the company is looking to do more than make parts.
By Steve Maich - Friday, December 12, 2008 at 10:16 AM - 38 Comments
BY STEVE MAICH
The Congressional plan to bail out the Detroit auto industry died a swift death last night, but the White House may yet swoop in with a unilateral bailout of its own. Reports surfaced this morning to suggest that the Treasury Department, on the authority of the President (and presumably the U.S. Fed) would tap the $700 billion fund to bail out Wall Street in order to get enough cash to Detroit to keep the companies afloat until next year.
That, of course, would finally destroy any notion that the U.S. Government is actually operating with a coherent plan. I know, I know…nobody really believed that anymore anyway. But the Trouble Asset Recovery Plan (TARP) was first supposed to buy up bad mortgage assets, then got converted into a giant bank account to buy bank stocks, and now, apparently, it might also branch out into the car business. This, dear friends, is what’s known as making it up as you go along.
Unlike my friend Andrew Coyne, I’m a little more sympathetic to the idea that governments can lend a helping hand to industry in times of trouble. That said, these bailout plans are disasters in the making. The best explanation of why can be found here (a column from a month ago in the Wall Street Journal by Michael Levine.) Continue…
By selley - Monday, November 24, 2008 at 1:32 PM - 10 Comments
Must-reads: Conrad Black on a certain grotesque miscarriage of justice; Jeffrey Simpson on Henry Waxman; Don Macpherson on Mario Dumont; Greg Weston on Bob Rae; George Jonas on “Singapore of the North.”
Brother, can you spare a dime?
From Washington to Lima to the Circuit Gilles-Villeneuve, there’s bad news on the economy. But you already knew that.
The National Post‘s Terence Corcoran asks us if we really want the future of the North American auto industry to be in the hands of politicians intent on aping Jerry Maguire (“Until they show us the plan,” said Sen. Harry Reid, “we cannot show them the money”) or who actually believe “GM would be better off if CEO Rick Wagoner wandered about U.S. airports in search of his luggage.” By all accounts, he observes, a bailout would mean “further suppression of market forces from an industry already burdened by regulations that have driven it into the ground” and the “continued existence of union protections,” among other impediments to future success. Let them go bankrupt, Corcoran implores, in hopes they might someday be able to recover “in a genuine market.”
Playtime’s over, the Ottawa Citizen‘s Randall Denley advises Canadian union members in both the private and public sectors. It may well be unfair that government workers should suffer for the fiscal mismanagement of city councillors or school board trustees, he concedes, but “the same accusation could be made about the management of many corporations that are laying off employees. That doesn’t create any more money for raises.” He suggests the brothers and sisters be happy just to remain employed, and believes “sharing the pain” with their fellow Canadians isn’t too much to ask.
By selley - Friday, November 21, 2008 at 5:23 PM - 5 Comments
A close look at what used to be known as the Big Three
As a rule, recent years have not been kind to automakers. But amidst the general chaos, the North American car manufacturers—formerly the “Big Three,” now more accurately known as the “Detroit Three”—have sunk well below the rest. As the CEOs of Ford, General Motors and Chrysler plead for mercy from Washington, Macleans.ca presents a statistical snapshot of their nightmare.
Highest stock price of the five largest publicly traded automakers as of the Nov. 20 close on the New York Stock Exchange: $59.79 (Toyota)
Toyota’s stock price on Nov. 20, 2007: $110.07
Best performance of those five stocks over the past year: -43.9% (Honda)
Poorest performance: -89% (GM) Continue…
By Andrew Coyne - Thursday, November 20, 2008 at 8:00 AM - 133 Comments
The hope is that billions of dollars will succeed where hundreds of millions failed
Everyone has his own favourite story of Big Auto’s stupidity. Mine is the Great Invisible Japanese Trade Wall of the 1980s. At the time, Detroit was bellowing to the skies that Japan was keeping American cars out of its market, the better to support its case for restricting sales of Japanese cars in the U.S. If it was unclear how the Japanese were supposed to be doing this—Japan’s trade barriers were if anything rather lower than America’s—that only seemed to provoke Detroit to further heights of indignation: those inscrutable Orientals, with their mysterious, subtle ways. Of course you couldn’t see how they did it! That’s why it was so effective!
Until someone pointed out that the cars the Big Three were pressing upon the Japanese consumer were left-hand drive, suitable for driving on the right side of the road. It seems Japan drives on the left. Who knew? Continue…
By Aaron Wherry - Friday, November 14, 2008 at 5:30 PM - 9 Comments
January 16: Ottawa turns down auto aid
January 17: No bailout for Ford, Flaherty says
February 29: Canada won’t bail out auto industry: minister
April 1: Ford calls on Ottawa for funding
September 3: Tories pledge $80 million for Ford plant
September 26: McGuinty, Prentice at odds on funding
October 28: Prentice says no to auto parts bailout
November 8: Canada cautiously considers assistance to auto industry
November 10: Auto sector of particular concern, Flaherty says
November 10: Harper hints at auto bailout
November 12: Clement examining options for aid to auto sector
November 12: Flaherty, CAW spar over bailout for automakers
November 13: Don’t expect bailout: Flaherty to auto industry
November 13: Canada, U.S. talking about carmaker aid: Flaherty
November 13: Flaherty says any auto industry aid can’t be wasted
November 14: Ottawa ponders Canada-U.S. auto bailout plan
By Charlie Gillis - Thursday, October 2, 2008 at 12:00 AM - 10 Comments
The auto industry faces its biggest changes in 100 years
It must have been hard not to gloat. Chris Paine—filmmaker, eco-activist, gadfly to the lumbering beast of the U.S. auto industry—was sitting on a panel as a special guest of General Motors Corp., sharing thoughts on the future of transportation. Paine’s 2006 documentary Who Killed the Electric Car? had made him a blood enemy of GM, which is what happens when you suggest a company has conspired with government and Big Oil to scuttle its own product. Yet here was GM, flying Paine out to Detroit three weeks ago to witness the unveiling of—you guessed it—another electric car. At a symposium afterward, industry types who not long ago vilified him as a distorter of truth listened intently as he passed judgment on their efforts to reinvent themselves. “If they’re reaching out to people like me,” the filmmaker concluded, “they must be getting serious.”
In the last 12 months, such spectacles have become a norm in the auto industry, a looking-glass world where environmentalists now stand shoulder-to-shoulder with Big Three executives, and the head of General Motors openly muses about the electrification of the U.S. auto fleet. Words are cheap, of course. But these ones point to the carmakers doing something we never thought they would—decoupling themselves from oil—and recently the carmakers have backed the talk with action. Two weeks after GM unveiled the production model of the Chevy Volt, an electric car equipped with a gasoline generator to recharge its batteries, Chrysler stunned the auto world by introducing three electric-powered vehicles it developed in secret. The cars are projected for sale in 2010, which will put them on pace with both the Volt and a plug-in electric car Nissan Motor Corp. plans to test-market within two years.
And those are just the electric cars. Toyota is working on a plug-in version of the Prius that after a full charge would allow drivers to go 10 km while using scarcely a drop of gas. Ford is road-testing its Escape plug-in hybrid as we speak. Honda? Just got its hydrogen fuel-cell car approved for sale by the U.S. Environmental Protection Agency—an industry first, and a last hurdle before the car goes to market.
For people like Paine, it’s all a little dizzying. “I don’t trust car companies as a rule,” he told the liberal radio network Air America. “But they’re certainly making it look very real.” As recently as two years ago, GM maintained that its previous electric car, the EV1, was not commercially viable; now it’s staking its future on similar technology. Chrysler cranked out its three electric prototypes in one-quarter the time it normally takes to develop a new model, raising questions about whether it is truly ready to join what increasingly resembles an arms race.
Then again, fear has a way of clarifying the mind, and if one GM executive compared the Volt to “a moon shot,” it’s because Detroit is in desperate need of a success. According to some estimates, half of the cars sold in the world by 2020 will run on something other than gasoline. And fuel-saving alternatives are already the fastest-growing segment of the market, with sales of hybrids, including plug-ins, projected to climb to 2.5 million by 2015, from 500,000 in 2007. Yet the Big Three have allowed their Japanese competitors to dominate the field in recent years, with Toyota claiming more than half of the U.S. hybrid market last year.
Whether Detroit’s Hail Marys will close the gap is unclear. Consumers may rightly wonder whether they should commit to a vehicle developed in less time than it takes to age a decent bottle of wine. And what if the economy craters? What if the price of fuel goes back down? Sure, a car like the Volt costs one-sixth what it takes to drive an average car. But its projected US$40,000 price tag may drive a lot of mid-market buyers back toward fuel-efficient gas models.
With so many obstacles still ahead, drivers shouldn’t expect the Big Three to turn on a dime, says Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “This is going to be incremental,” he cautions. “These companies will start by selling 40,000 models, then 100,000 and so on.” Still, Cole isn’t one to overlook the psychological hurdle the industry has just crossed. At long last, carmakers are ready to part company with the internal combustion engine, he says, with implications for practically everyone on the planet: “We’re at the threshold of the biggest change in 100 years of the auto industry.”
By Colin Campbell - Tuesday, September 23, 2008 at 2:56 PM - 8 Comments
Chrysler is going electric. It announced today three new plug-in cars, the first of…
Chrysler is going electric. It announced today three new plug-in cars, the first of which will roll off production lines in 2010. Yes, the same date Chevy set for its electric Volt. Let the games begin. There’ll be plenty to say about this in the coming weeks and months. But for now, let’s just enjoy this picture of one of the new cars, the Lotus-inspired Dodge ev (there will also be a Jeep and minivan). Not sure about that bumblebee paint job, but here’s hoping it doesn’t undergo the kind of design dumbing-down the Volt did.
By Colin Campbell - Thursday, August 28, 2008 at 10:31 AM - 0 Comments
Chrysler is thinking about selling off the Dodge Viper, its iconic 600 hp sports…
Chrysler is thinking about selling off the Dodge Viper, its iconic 600 hp sports car. Like GM, which is trying to ditch its Hummer brand, Chrysler seems pretty desperate to reverse its money-losing ways, and get back on track. The company has said it wants to sell off over a $1 billion in assets. Unloading the Viper could go a long way to meeting that goal. (This story, from Business Week, floats the idea that Canada’s Magna might make a logical buyer).
But is it a smart move to ditch what is arguably the coolest car the company has ever made (and certainly the fastest)? It seems short sighted. The move won’t save Chrysler much money in the long run. Then again, some analysts say Chrysler has never been able to really leverage the Viper’s cool to help it sell other models.
Regardless what happens, the Viper’s street cred has never been higher. It just set the fastest lap time ever for a production car at the world famous Nürburgring. Have a look at the rather frightening video.
By Colin Campbell - Friday, June 27, 2008 at 7:37 AM - 0 Comments
So it finally happened. Oil passed $140 a barrel. The world as we know…
So it finally happened. Oil passed $140 a barrel. The world as we know it is ending. . .at least it is if you work for Chrysler, where the latest response to ever-worsening troubles was to trot-out an 83-year-old Lee Iacocca to give the troops a pep talk. “Things are going to be O.K,” he said. Ummm, really? Try harder Chrysler.