GM Offers Money Back Deal On New Cars

GM has survived via a government sponsored bankruptcy...with the government pouring over $50 billion dollars into the automobile giant. GM has accumulated a negative perception with the public that their cars are unreliable, poorly designed and built. Much of that reputation has been earned over the last several decades.

That is not true of the latest models that GM has introduced. In fact, they are highly competitive, well built vehicles and with good gas mileage. Since the public perceptions persist....GM has decided on a trial basis to offer a 60 day money back guarantee. The money back guarantee is a marketing method to get people to try GM vehicles.

• Applies to 2009 and 2010 Chevrolet, Buick, Cadillac or GMC vehicles purchased between September 14 and November 30th
• Excludes Pontiac, Hummer and Saturn brands
  
• Vehicles can be returned after 31 days up to 60 days after purchase
• Buyers must be current on financing
• Buyers will be reimbursed the cost of the vehicle less any dealer-installed items
• Buyer who are upside down on the trade in will have that amount deducted from the refund
• Trades will not be returned

GM is planning a media blitz....including ads with Ed Whitacre, Jr. the new chairman of GM. Whiteacre was responsible for rebuilding AT&T after it's fall from telephone supremacy.

SUMMARY:

GM has done this before with the introduction of the Saturn brand in 1990. Saturn would allow buyers to return the vehicle within the first 30 days. The buyer could return the car to exchange for another car or a refund. The 30 day refund policy was discontinued after a few years as the Saturn line aged and became less competitive with foreign brands. This shows that the NEW GM is going to pull out all the stops to rebuild their business back to profitability.

Ford Sales Increase Due To Bankruptcies

Here is an interesting article on the American psyche.....it is interesting to see people's perceptions. Based on a survey released today from Rasmussen Reports....46% of Americans are more likely to by a Ford than vehicles from GM or Chrysler. The reason is that Ford did not take bailout money from the government. Apparently, there is a lot of resentment against the bailout.

The latest sales report for June substantiates the survey. Ford sales were down only 11% and GM sales were down 33% and Chrysler down 42% respectively. GM was in the midst of the bankruptcy during June so that may have had an impact on the survey. Chrysler had already come out of the bankruptcy.

One issue not addressed in the survey is that Ford quality has been continually improving over the last few years. In addition, they have brought out some very competitive cars like the Fusion Hybrid, Taurus and the Mustang. So, both quality and competitive cars could be part of the increase sales.

Personally, I was incensed the way that Chrysler closed 789 dealers giving them a minimum of notice...whereas GM gave their dealers that they were closing over a year to wind down the business. Closing that many dealers in the month of June may have impacted Chrysler sales in that month.....so we will see how this trend continues.

In fact, there were a number of people and organizations that were burned by the bankruptcies. The worst were people that had been severely hurt by vehicle malfunctions that now do not have much recourse since GM and Chrysler have gone into bankruptcy. I will be doing a future post on the damages inflicted due to the bankruptcies.

Another interesting fact is that 41% of Americans expect the quality of GM cars to get worse now that the government is the majority owner.


SUMMARY:

I don't necessarily agree with all the perceptions that have been outlined by the Rasmussen survey. I did not like the fact that GM and Chrysler had to be bailed out...but I viewed it as the only scenario that would work to save a number of jobs and deepening an extremely severe recession.

I hope that the government will stay out of GM and Chrysler management. In two or three years, the economy will be rebounding and auto sales will be increasing materially. I suspect that the GM will prepare a stock offering and the government will be out within a couple of years after that.

New GM To Emerge

Today is a milestone of American history......General Motors (GM) is about to exit bankruptcy. This is one of the largest and the fastest bankruptcy in American history! The bankruptcy judge Robert Gerber has ruled that GM will be allowed to sell the bulk of the good assets to the new GM. This is the final procedure that will allow the automaker to emerge from bankruptcy protection.

The old GM will be renamed Motors Liquidation Co....and those assets not transferred to the new GM will remain and be liquidated. This process may take up to 2-3 years to finalize. The GM stock is still traded in the over the counter market....but is virtually worthless.

The speed of the bankruptcy was initiated due to the Obama administration requirement otherwise the government would refuse to provide GM with additional funds unless it was out of bankruptcy court by July 10th.

"As nobody can seriously dispute, the only alternative to an immediate sale is liquidation — a disastrous result for GM's creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates," a comment out of the Gerber ruling.

There will be a number of appeals....some are by people that are suing GM citing liable in several auto accident cases. Other are GM's bondholders, unions and consumer groups indicating that their needs were disregarded in bankruptcy. A group of the Chrysler bondholders took their objections to the Supreme Court last month, which delayed Chrysler's exit from bankruptcy....but the court failed to hear their case.

The bankruptcy will allow GM to significantly reduce their debt....along with a renegotiated United Auto Workers(UAW) contract. GM will shed its non-profitable divisions Saturn, Pontiac, Hummer, Saab and Opel.

The new GM has an image problem.... baggage from the old GM....they are perceived as a auto company that is out of touch with the needs to the American public. GM grew fat and bloated and thought that whatever they built would be bought by the public.

Unfortunately, the public has some incredible choices....so the new GM will have to bring some dynamic vehicles to market. Then it will take a few years to change the public perceptions. Some of the cars that GM was building lately are actually very good cars....unfortunately most people have the old perception that GM cars stink!

The Chevy Cruze is an excellent choice as a compact car but GM will have serious competition from the Honda Civic, Toyota Corolla, and the Ford Fiesta. The challenge that GM will have is regaining the trust of Americans that have purchased foreign brands and are content with their choices.

When the bankruptcy is completed, GM will receive about $50 billion tax dollars. The government will own 61% of GM. The Obama administration has indicated that they will be hands off owner....but they have already selected AT&T Inc. CEO Ed Whitacre to chair the board. Whiteacre rebuilt AT&T after they were substantially down in market share and profits after the government sponsored breakup of AT&T.

SUMMARY:

GM will be a better company after this reorganization! I had predicted that this would be the solution back in my February 16th post...Time GM To Pay The Piper. GM will not have the substantial debt to service, the UAW has made substantial concessions to reduce the man hour cost. They have eliminated much of the dead weight that had accumulated over the years.

In the past, I had been very critical of the GM board. They should have replaced the CEO and President Rick Wagner since GM continued with substantial losses and declines in market share. As a shareholder, I would have been extremely upset.

Since, Ed Whitacre will be chairman of the board, expect positive things to happen. He knows how to run a large business and make it successful. The new GM will be a much better company....with products and service to match.

Cadillac Converj

The old General Motors in bankruptcy....the new General Motors will build cars like this! They will exit within the next several weeks a smaller but stronger corporation. The seeds are planted for the GM's return to building good cars....along with profitability. This is the type of product that GM is capable of producing. This is one of the cars that Bob Lutz originated the gorgeous 2+2 concept the Cadillac Converj.

Wow!!! This a an absolutely gorgeous car! It is designed with the thought that a car's beauty should dictate its appeal - not the powertrain. Although, the high-tech electric powertrain named the Voltec has a lot appeal in today's green auto market. The powertrain is an upgraded version of the Chevrolet Volt concept.

The electric motor for the Converj is the sole powertrain and can travel up to 40 miles on electricity alone before requiring the gas engine to power the electric motor. Here is the best part - the batteries can be recharged on a regular 110-volt household outlet which takes 8 hours or a 220-volt outlet which takes 3 hours.

The interior is just a gorgeous as the exterior with white suede, black leather seating and as aluminum and wood trim. The LED instrument panel has blue console illumination while the interior is bathed in white ambient lighting.

The forty mile range also covers most people's commutes.....after that it the gasoline engine turns on to power the electric motors.

GM has not announced production plans but the Chevy Volt is scheduled to happen by the end of 2010. Also, the pricing has not been announced but I would estimate in the $55 - $60k range.

SUMMARY:

I love the styling and cannot wait until I can drive this car! If GM had started making cars like this ten years ago, they would be flush with cash and would not be in bankruptcy or begging the government for funds.

One of the facts, that I would appreciate about this car is that you don't fill up you tank very often. Gas prices are starting to increase again! The latest price for regular gas in Southern California is $3.00 a gallon. Gas prices are anticipated to increase substantially in the near future.

I am of the opinion that electric cars are the next major wave in the automobile arena! This is a green technology that is being backed by the Obama administration.....so these type of vehicles will increase in popularity.

GM Sells Saab Brand

GM has been negotiating to sell the Saab brand to a Swedish company Koenigsegg Automotive AB. Koenigsegg is a Swedish manufacturer of high-performance sports cars based in Angelholm, Sweden. Koenigsegg along with some Norwegian investors have signed a letter of intent to purchase the Saab brand...with the sale to be consummated within several weeks.

Most people are not aware of the name....the company was founded in 1994 by Christian von Koenigseff, with the sole purpose of creating a world class supercar. The first street-legal production car was delivered in 2002.

Apart from developing manufacturing and selling the Koenigsegg line of supercar, Koenigsegg is also involved in "green technology" development programs. This enabled Koenigsegg to produce the CCXR - "Flower Power" flexfuel supercar as an example.


Koenigsegg is also active in development programs when it comes to plug-in electrical cars systems and next generation combustion engine technologies. Koenigsegg would be able to help Saab with the developement green technologies in their autos.

Koenigsegg holds a number of patents in the engine development area. In March, the Koenigsegg CCXR shown was chosen by Forbes to be one of the ten most beautiful cars in history.

Auto Sales for May

U.S. auto sales are still down 39% versus a year ago, which is still a substantial decline. It appears that the U.S. based automakers are having a rebound in sales with the exception of Chrysler. Sales were the best they have been since the summer of 2008....with a annual run rate of 1.1 million cars.

Ford and GM sold more cars in May and cut the downward spiral sales for the month. During April, Ford and GM sales were down 32% and 35% respectively. An interesting fact is that GM declared bankruptcy during May but their sales were up from the prior month. Meanwhile, Chrysler stayed down 47% for both months.

Mitsubishi down 58%
Chrysler down 47%
Honda down 42%
Toyota down 41%
Mazda down 40%
Nissan down 33%
Mercedes down 31%
General Motors down 29%
BMW down 28%
Ford down 24%

Volvo down 23%

Hyundai down 20%
Volkswagen down 16%
Kia down 16%
Subaru down 5%

It appears that new products were the reason behind the twenty percent increase in sales over April. The Ford Fusion, Ford Flex and the company's hybrids set sales records. In addition, two new Lincoln sedans the MKZ and the MKS helped Lincoln post a 2% increase.

Ford's Fusion set a record of 18,321 cars breaking into the top three mid-size sedan market for the first time since July 2002. The Ford Fusion and Mercury Milan have the best predicted reliability among all mid-size sedans. The Japanese brands have dominated the mid-size segment with the Toyota Camry and the Honda Accord.

May sales were up at a fairly decent run rate of 1.1 million cars annually. So, it appears that consumers had more faith in the future to spend money on high ticket items.

An interesting anomaly is that sales of Japanese brands continue with the downward spiral meanwhile U.S. manufacturers seem to be improving. We will have to monitor to see if that is a trend that will continue!

GM Sells Hummer To Chinese Company

The GM bankruptcy is going to speed things up very quickly. GM and the government have prepackaged this bankruptcy so it should be very quick approximately 60-90 days... the assets will be transferred to a new GM. There will be issues to be resolve in the old GM for approximately 2-3 years.

GM has apparently sold the Hummer brand to a Chinese manufacturer....Sichuan Tegzhog Heavy Industrial Machinery Co. Sichuan Tengzhog manufacturers road construction materials, plastics, and other industrial businesses. I have predicted for a while that the Chinese wanted to enter the U.S. market. I am surprised that one of the Chinese auto companies did not purchase Hummer...since Hummer already has a built in dealer network.

GM will manufacturer Hummers at the GM Shreveport, Louisiana plant thru 2010. It is estimated that the sale will save 3000 jobs temporarily between the plant, dealers and suppliers.

Summary:

I personally would not recommend that we sell U.S. assets to the Chinese. I am not a fan of the Chinese government economic practices or the business practices of many Chinese companies.

The Chinese have kept their currency artificially low so they can get more revenue and sales from the U. S. In the meantime, they have not purchased sufficient U.S. goods to have balanced trade.

The Chinese will keep production in the U.S. temporarily but then transfer the manufacturing to China. So, most of the U.S. jobs will be lost in 2-3 years. Hummer also supplies the military with the military Humvee! Are we now going to buy our military equipment from China?

GM to Sell Opel and Vauxhall to Magna

General Motors (GM) is working feverishly on a number of projects related to the bankruptcy. GM has scheduled an announcement for Monday morning....it is anticipated that they will declare a chapter eleven bankruptcy. The government had given them until June 1st to resolve their financial issues or file for bankruptcy. Presently, bond holders have withheld their approval of the deal to give them shares in GM in exchange for the bond debt. The United Automobile Workers have already reached an agreement with GM.

GM is also working on the sale of GM Europe to Magna International (MI). Magna International is a Canadian company based in Aurora, Ontario. It is Canada's largest automobile parts manufacturer and one of the country's largest companies. MI is a business to business company...with a name that is not well know to the public. They manufacturer parts for the Big 3 U.S. auto manufacturers in addition to Volkswagen, BMW, and Toyota.

The German government has requested that the GM subsidiary Opel be shielded from the parent GM's U.S. bankruptcy. The German government apparently be willing to put up 1.5 billion Euros($2.1 billion) for a bridge loan that would be repaid when the deal is closed.

It appears that Fiat has withdrawn from bidding on GM Europe, due to the German governments demand for emergency funds during the transition. Apparently, Fiat does not have the ability to fund the transaction.

Today, a memorandum of understanding was signed outlining a plan for the future ownership of the Opel and Vauxhall assets. The assets are to be transferred to a new company, which Magna International will take a 20 per cent stake and Sberbank, a Russian bank, will take a 35 per cent stake, giving their consortium a majority. GM will retain a 35 per cent holding, while the remaining 10 per cent will go to Opel employees.

The fate of Saab has not been resolved, but as soon as I have information I will advise!

Ford Overtakes GM In North American Production

General Motors (GM) has been the largest manufacturer in the united states since 1923. Due to the anticipated Chapter 11 bankruptcy filing GM will shrink substantially. Currently, GM has the following brands on the auction block....Hummer, Saab, GM Europe, and Saturn. In addition, they will discontinue the Pontiac brand.

Ford will displace GM as the largest North American auto producer this year. Ford’s North American output is actually expected to fall by 17.7 percent to 1.9 million units this year. But that number should keep the Blue Oval ahead of GM. GM is planning to sell or close the brands mentioned above.....also GM will cut production at 13 of its North American plants for up to 9 weeks this summer. GM North America should produce approximately 1.7 million vehicles this year.

Since the recession hit, GM financial problems have magnified. In 2008, Toyota overtook GM as the world's largest auto manufacturer. So it appears that GM will loose the second largest manufacturer in the world to Volkswagon.

Chrysler’s bankruptcy will also clear the way for Honda to move up to the number three spot. In fact, Chrysler will produce just over 900,000 vehicles this year – a decrease of more than 50 percent from last year – sliding the automaker all the way down to number five. Toyota should finish just ahead of Chrysler with approxximately 904,000 units produced.

Chrysler Closes 789 Dealers

Chrysler LLC announced today that they are planning on eliminating 789 of their 3,200 U.S. dealerships by early next month. They will formally petition the bankruptcy court...they indicated that the dealership network is antiquated and has too many stores competing with each other.

The issue with Chrysler is that these are the smaller dealers...they probably have done cost accounting and determined that it costs them more to support the dealers than they make from the sales of those dealers. Chrysler indicated that 50 % of the dealers accounted for 90 % of the the companies U. S. Sales.

Dealers were informed this morning via United Parcel Service letters...the letter notified all dealers if they if they would remain or be eliminated. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York, at that time the judge will approve or deny the motion. In most business bankrupcy cases, judges rely on the bankrupt corporations input to determine if contract cancellations are necessary.

Chrysler Vice Chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final and there will be no appeal process. Eliminating dealer will cut down on the cross town competition in many cases, which will increase dealer profits.

Chrysler is trying to cut the number of single brand dealers, so that Chrysler, Dodge and Jeep can be one dealership. Chrysler averages of 300 vehicles per dealer in 2008, meanwhile Honda sells 1,200 and Toyota sells 1,300 respectively.

The dealership cuts will cut also cut deep into the city budgets, as thousands of employees will be laid off and the city will loose sales tax revenue from vehicle sales.

My take is that this is one of the necessary steps to get Chrysler back in the game! It will be very painful to the employees, the dealers and the cities impacted. Chysler has done this so it can change the dealer contracts at will....outside of bankrupcy they would have been hit with a barrage of lawsuits.

I do feel that giving these small businesses less than a months notice is highly unfair! Many of these dealers have been with Chrysler for many years, then to tell them they don't have a contract under a month is very cold. The dealers should be notified and given time to take appropriate steps to wind down the business. Actually, this action will probably throw many of the dealers and employees impacted into bankrupcy themselves.

It is estimated that approximately 190,000 jobs would be lost from the GM and Chrysler bankrupcies.

Honda Clarity FCX Concept

Here is a future technology that one day may power automobiles. Presently, Honda, GM, and BMW have hydrogen fuel cell autos in development. Today's post is on the Honda FCX Clarity, which is Honda's entry into the hydrogen fuel cell automobile race. Honda believes it could start mass producing vehicles based on the FCX concept by the year 2018.

The advantage to hydrogen powered vehicles is that they are non polluting, the only product to come out of the tailpipe is water vapor. Hydrogen would be manufactured locally, therefore concerns about the cost and availability price of imported oil are negated. Check out the cars.com video!

The vehicle is powered by a .57-litre, 100kW Honda hydrogen fuel cell stack. Electricity is stored in a 288V lithium ion battery. The electric motor has 134 horsepower and powers the front wheels of the vehicle. The Clarity goes from 0-60 mph in 9.2 seconds, which is two seconds slower than the average four cylinder mid size car. The estimated range is 240 miles with a full tank of 4.1 kg compressed hydrogen. The Clarity is also available in one color Star Garnet Metallic.

Currently consumers are not currently allowed to purchase the vehicle. The Clarity is only available for leasing in the Southern California area.....where the hydrogen refueling stations are located. The leases are only available to a select 200 people over the next three years at $600.00 USD per month for 3 years. Fuel and maintenance are included with the lease cost! Here is an Car and Driver interview
with Jim Salomon the third person to lease a Clarity.

My take on this car is that Honda appears to be the most advanced of the manufacturers working on the technology. The Clarity launch is similar to the Saturn EVI launch back in the 1980's.

This could be the type of car that we are driving in twenty years. The most likely scenario is that a number of different technologies will be available in automobiles. Due to the major improvements in battery technology... the electric car may be the largest automobile technology in twenty years.

The problem with the hydrogen technology is that the hydrogen refueling infrastructure would have to be built to support those vehicles.

For additional information go to the Honda FCX Clarity website!

Ford Posts $1.4 Billion Loss

Prior posts have brought up the precarious state of the auto industry in the the U.S. and the world. Ford announced yesterday that it lost $1.4 billion dollars for the first quarter of 2009. OK, that is a huge number for any corporation!

Ford stock was up 11% percent yesterday on the news. Wall street had been expecting a larger loss based on the first quarter severe downturn of 37% in sales from 2008. So, Wall street voted with their pocketbooks and purchased the stock based on perceived positive news.

Ford CEO Alan Mulally has turned around the company since joining in the company in 2006. One of his first major moves was to obtain $23 billion bank loans in 2006. He had to mortgage every asset the company owned including the Ford blue oval.

Since Ford was able to obtain financing in 2006, they have been able to weather the financial crisis much better than GM and Chrysler. Mulally had the vision to know that if times were tough that cash is king. His financial acumen is paying huge dividends now...Ford has not needed a government bailout. Ford currently over $21 billion dollars in cash! They project that they have sufficient funds to go thru 2010 without any additional government support.

My take on this is that Mulally has done a superb job at Ford! They have not had to beg for government money...instead they can focus on getting to profitability.

There are two potential problems! First, if GM or Chrysler file for a chapter 11, that may negatively impact some of the automobile suppliers which could possibly disrupt Ford's ability to produce cars. A Chrysler bankruptcy appears eminent at this time! Second, if sales continue at this negative pace or get worse then they would require governmental assistance in 2011.

Check out the article written by Ken Bensinger of the LA times!

PUMA Concept

Is this your next ride? The Personal Urban Mobility and Accessibility (PUMA) is here. PUMA is an experimental electrically powered road vehicle, created by General Motors and Segway. The car uses two wheels, which are placed side-by-side similar to one half of a car. The PUMA design transfers the two-wheeled self-balancing characteristics of a Segway PT into a vehicle that can carry two passengers side-by-side at up to 35 miles per hour (56 km/h) for a distance of up to 35 miles (56 km).

The first public prototype was demonstrated on April 14, 2009, being formally announced by General Motors in advance of its display at the New York International Auto Show. Segway's CEO and President, James D. Norrod claimed that the use of General Motors' sales network worldwide could allow for PUMA sales to exceed the number of Segway PT models sold to date.

Norrod stated that using a "Neighborhood Electric Vehicle" size of lithium-ion batter would give the PUMA a range of 35 miles (56 km), and could be recharged in about three hours at a cost of .35 US cents. The prototype weighs approximately 300 pounds (140

The vehicle uses Segway's gyroscope dynamic stabilization technology to maintain balance across two parallel wheels while driving. In addition to the main driving wheels at each side of the vehicle, there are small stabilizing wheels at both front and rear to to support the vehicle whilst parked and to limit the maximum leaning angle.

One idea proposed is that the vehicle would make use of its Global Positioning System (GPS) determined position to avoid crashes with other vehicles. The position of the vehicle would be transmitted to other vehicles using a communications technology. By all of the vehicles knowing the position of vehicles, it would allow each of the cars to drive itself to avoid obstacles including other vehicles and pedestrians. The developers claim that crash-avoidance systems would obviate the need for airbags and would include seat belts exclusively for "comfort purposes".

Information provided via Wikipedia!

March Car Sales Are Up In Parts of The World

Government incentives are having an impact in various areas of the world for the month of March. Most of the increases are due to government programs to increase auto sales. Brazil auto sales are up 17% versus last March, the first increase in six months. Sales also rose strongly in France and Italy, with the decline slowing in Spain. China has just reported and sales are up 25% over last year. Germany has a new car for old car program in which almost a million people have taken advantage.

In Japan, the auto sales dropped 25% from last year, meanwhile Korean auto sales decreased by 19%. U.S. sales are still down substantially but by slightly lower number that in February.

• General Motors down 45%
• Ford down 41%
• Chrysler down 39%
• Toyota down 39%
• Nissan down 38%
• Honda down 36%
• Hyundai down 2%
  

GM is asking for $6 billion in aid from several countries, including Sweden, Germany, Britain and Thailand. German Chancellor Angela Merkel indicated that they need a viable restructuring plan before Germany considers any bailouts.

Many of the manufacturers think that the market may be bottoming and that we could start seeing sales increases by the end of the year. Share prices for the auto manufacturers increased today on speculation that the industry will start increasing sales. Toyota, Honda and Nissan were up 6 - 10% in trading in Tokyo.

General Motors EV1

Most people are not familiar with the Saturn EV1 now called the GM EV1. which was the first modern production electric vehicle from a major automaker. It was also the most recent fully electric car produced by General Motors in the United States.

Introduced in 1996, The EV1 electric cars were available in California and Arizona with a 3 year/30,000 mile lease only agreement. This was because the EV1 and its leasees were to be participants in a "real-world" engineering evaluation created by GM's Advanced Technology Vehicles group. GM was doing a market analysis and feasibility study as to the feasibility of producing and marketing a electric car in the U.S.

The EV1 was directly based on a prototype vehicle created by AeroVironment called the GM Impact. The Impact in turn had been based on design ideas first tested out in a record-breaking race car called the Sunraycer, a solar-electric vehicle the company created in 1987 specifically to win the World Solar Challenge, a trans-Australia race open to solar powered cars only.

All this effort was a result of the ZEV Mandate which required by 1998, 2% of all new cars sold by the seven major auto manufacturers in the state of California were to meet 'zero emission' standards as defined by the California Air Resources Board and 10% by 2003. The California ZEB mandate was subsequently cancelled.

The EV1 was discontinued after 1999, with all examples subsequently removed from the roads in 2003 by General Motors and crushed, except for a select few kept for educational purposes or as museum pieces. The car's discontinuation remains controversial.

In late 2003, GM officially canceled the EV1 program. GM stated that it could not sell enough of the cars to make the EV1 profitable. GM alleges that the EV1 cost GM $1 billion dollars. This, combined with the fact that their parts and service infrastructure costs required to maintain the existing EV1's for the state legislated minimum of 15 years, would mean the existing leases would not be renewed and all the cars would have to be returned to GM's possession.

According to GM Chairman and CEO Rick Wagoner, his worst decision of his tenure at GM was "axing the EV1 electric-car program and not putting the right resources into hybrids. It didn’t affect profitability, but it did affect image." Wagoner repeated his assertion after the December 2008 Senate hearings on the U.S. auto industry bailout request.

According to the March 13, 2007, issue of Newsweek, "GM R&D chief Larry Burns . . . now wishes GM hadn't killed the plug-in hybrid EV1 prototype his engineers had on the road a decade ago: 'If we could turn back the hands of time,' says Burns, 'we could have had the Chevy Volt 10 years earlier.'"

A documentary film debuted entitled Who Killed the Electric Car?, which outlines the debate. Also, people who had leases on EV1's were refusing to turn their cars in after the lease ended, that should have indicated something to the GM brass.

My take is that the EV1 was a decade ahead of its time. GM basically looked at the numbers and figured that it had cost enough money $1 billion dollars. The problem is GM did not have the vision to fully develop the project. The battery was the limiting factor at the time, the EV1 did not have the driving range necessary to be a commuter for many people. If GM had the vision to complete this project, GM would still be the largest car company in the world with the profits to match.

GM and Ford Announce New Buyer Assurance Plans

I do not agree with many of the actions taken by President Obama, I applaud President Obama's actions with regard to the auto companies. He has acted boldly, swiftly and decisively. I did not vote for him but I have been impressed with his leadership ability. These are difficult times and it requires substantial actions to get us thru these difficult economic times. The banks and AIG should have been handled in a similar manner to the auto companies.

The same needs to said of the leaders of our troubled companies. Today, Fritz Henderson the new CEO for GM announced its "Total Confidence" program. The Total Confidence program will make up to nine payments for up to $500 if the buyer is laid off during the first year of ownership. Customers do have to qualify for state unemployment to be eligible for the program.The program appears to be testing the waters, since it is effective from April 1 thru April 30th.

Ford Motor Co. also announced a similar program Tuesday, which will take over customer's payment of up to $700 a month for a year in the event of job loss. The Ford program goes thru June 1st.

These programs are similar to the Hyundai's program which has limited severe declines in their sales via a creative incentive for its customers. Hyundai will cover a new vehicle's depreciation if customers return a car within 12 months because they are unable to make payments due to a job loss, disability etc. GM's U.S. sales declined 51 percent and Ford's U.S. sales were down 44 percent in the first two months of 2009, compared to a market that declined 39 percent overall. Hyundai's sales rose 5 percent over the period.

These type of programs directly impact buyers concerns about the future. Buyers lack confidence that they will have their jobs in a few months, so why would someone buy a car under that scenario. People are also concerned about buying a car from a bankrupt company.

My take is that the U.S. based companies need to be aggressive to reassure their buyers that they are going to survive and prosper. GM and Ford should have instituted these programs originally, not in reaction to Hyundai's program.

White House Shreds Auto Restructing Plans

President Obama today announced that they have turned down the restructuring plans submitted by General Motors and Chrysler. GM apparently did not meet certain promises made in exchange for the $13.4 billion in government loans. Obama cited a failure in leadership in Detroit and Washington. My February 16th post GM Time To Pay the Piper outlines GM's misfortunes.

Apparently, the automotive task force was not convinced that the revised plans were viable, therefore the auto companies should not receive additional bailout money.

There have been over 400,000 jobs lost in the automobile sector in the last year. That includes manufacturers, dealers, and suppliers. Currently, Michigan which has the most automobile employees has over 10% unemployment.

“We cannot, we must not, and we will not let our auto industry simply vanish,” the president indicated in his speech. Obama will give GM 60 days to submit a new viability plan meanwhile providing operating money to GM. The automobile task force will find new management for GM, CEO Rick Wagoner was asked to resign yesterday. Fritz Henderson, GM's President and Chief Operating Officer will be the new CEO. New directors will now make up the majority of the GM Board of Directors If the new restructuring plan is approved permanent loans will follow.

Chrysler has less time than GM, they must reach a deal with Fiat SpA within thirty days. Fiat will be allowed to buy up to 35% of the struggling automaker. The Fiat deal would give Chrysler some small car designs with good fuel economy. Fiat would get stock for transferring the technology. If Chrysler is successful $6 billion in permanent loans would follow.

It is possible that if one or both companies do not put together a successful business plan, the auto task force will sponsor a structured bankruptcy. This would allow the companies to operate, reduce debt and restructure without fear of creditors.

This is a sad day for the auto industry! There will probably be many more people laid off due to this severe downturn. I am of the opinion that a government sponsored bankruptcy is the only way to get either of the companies turned around. GM will probably survive in a much smaller reorganization, Chrysler may not survive!

GM CEO Rick Wagoner

Rick Wagoner, Jr. Chairman and Chief Executive Officer of General Motors has resigned today as Chairman and CEO at General Motors at the request of the White House. The U.S. government will announce plans for restructuring of GM and Chrysler tomorrow. During Wagoner's unsuccessful tenure as CEO of General Motors, the market capitalization of GM has gone down by more than 90%.

In 1992, he was named GM's chief financial officer, in 1994 he became executive vice president and/or president of North American Operations, and in 1998 he was named president and chief operating officer. He became president and chief executive officer in June 2000 and was elected chairman on May 1, 2003. During his reign, GM shares have plummeted from around $60 in June 2000 to as low as $1.27 in March 2009, a loss of approximately 98%, and GM's share of North American cars sales went from 28.3% to 18.3%.

In an interview, Wagoner stated that the worst decision of his tenure at GM was "axing the Saturn EV1 electric-car program and not putting the right resources into hybrids. GM was at the forefront of electric automobiles with the EV1. It didn’t affect profitability, but it did affect image." The effect on the image was that the perception of GM changed from viewed as a technology innovator, into a perception of the company as having little interest in innovation. Meanwhile, serious competitors like Toyota were outperforming GM in nearly every measure. GM basically became a company that provided unexceptional cars in a market with a number of substantial competitors. GM, under Wagoner's leadership, failed to see clearly obvious trends.

My take is that Rick Wagoner should have been gone years ago! The fact that GM was mismanaged from the worlds largest car company from dominance in the auto world to begging for government bailouts is unthinkable. I find it hard to believe the that GM Board of Directors or the shareholders had not terminated him and selected someone else!

Chevrolet Corvette ZR1

In some of my previous posts, I outlined that some of the cars that GM produces are highly competitive in their respective classes. The Chevrolet Corvette is one of those cars, it is an example of what is going right at GM. Today, I am covering the best Corvette ever the ZR1.

The Corvette ZR1 is an incredible bargain in the super car arena. The ZR1 is the most expensive Corvette at $103,970 plus options, that price is double what the base Corvette costs. It is also the most expensive car that GM has ever produced!

The Corvette's foreign competition is priced $187,830 more for a Mercedes SL65 AMG and $323,940 more for a Lamborghini Murcielago LP640.

The supercharged LS9 V-8 delivers a tidal wave of power with 638 hp, the 0-60 is 3.3 seconds, and 60-0 is an amazing 97 feet. The ZR1 earned a 1.07 g on the skidpad. All these numbers are exceptional by any standard. Check out the Motor Trend video.

The braking is handled by huge 15.5 front and 15.0 rear ceramic disks. The ceramic disks make the ZR1 brakes strong, fade resistant and have terrific pedal feel.

Driving the car will give you an impression that the ZR1 can be a very civilized every day driver. But, when you step on the gas you quickly discover that this is no ordinary car. This is a refined, fast, powerful super machine that immediately stirs your adrenaline.

The ZRI uses carbon fiber on the interior, the hood and on the roof of the vehicle. It does not look at outlandish as some of the other super cars it competes against but delivers a superlative driving experience. In a recent Car and Driver comparison test the Corvette ZR1 won a comparison test over some very serious competitors.

Cadillac CTS

Earlier posts have gone over GM's financial problems. Today, I would like to bring you one of GM's success stories. As I have outlined in a previous post the CTS has chosen by Car And Driver as one of their 10 Best for both 2008 and 2009. Cadillac has not been on the 10 Best List since the Seville won in 1992. See the complete list at Car and Driver 10 Best List.

The CTS is the first Cadillac, in recent memory, to have good driving dynamics, an upscale interior and performance in its optional 302 hp, 3.6 liter direct-injection V-6. It also offers edgy styling, a refined driving experience and offers a manual for automotive enthusiasts. Actually, I could not believe I was driving a Cadillac! I had to take a look at the crest on the steering wheel a couple of times.

On the tech side, the CTS has a voice activated infotainment package featuring intelligent iPod® integration, 40 GB hard drive and an advanced hard-disk navigation system.

The pick of the liter is the CTS-V. This is a SUPER SEDAN! This car is a very refined and extremely capable sedan, handles extremely well, and brakes well.

The CTS-V’s supercharged 6.2-litre V8 engine delivers a heart pounding zero to 60 mph in 3.9 seconds and on to 191 mph where legal and 175 mph for the automatic transmission. These outstanding performance figures enabled the CTS-V to claim the unofficial lap record for a production car (7 mins 59.32 secs) around the Nürburgring’s legendary Nordschleife circuit in October 2008. Click here to see a video of a CTS-V in action, also note the exhaust note - it is even better in person.

The Cadillac CTS-V is fitted with the latest generation of the world’s fastest-reacting suspension technology, Magnetic Ride Control (MRC), which uses shock absorbers controlled by electro-magnets, rather than mechanical valves, accelerating response time. The CTS-V is also equipped with powerful Brembo brakes which account for the excellent stopping distances. These features, along with four-channel ABS, hydraulic brake assist and dynamic rear brake proportioning, ensure that the immense power is kept safely under control.

It’s not all about performance however, as the Cadillac boasts a range of luxury features fitted as standard including new, 14-way adjustable Recaro® performance driving seats, ‘hand cut-and-sewn’ double stitched leather and sueded material, and a high-gloss black Obsidian surface finish. The CTS-V is currently available in left-hand drive only and priced from at $59,995 in the US and in England £56,495 on-the-road (£58,995 for the automatic transmission model).