(Source: Jalopnik,  Freep & World Car Fans)

Looks like American automakers have found at least one more buyer for their vehicles. The U.S. government is planning on the purchase of $285 million worth of fleet vehicles that get better gas mileage than the current fleet. Under the plan, the General Services Administration will purchase more than 17,500 vehicles as a part of their existing deals with Chrysler, Ford, and General Motors.

U.S. President Barack Obama, and his administration, have said the purchases will take place by 1 June. Although it is unclear what will happen to the older fleet vehicles being replaced, many will likely be sold at government auctions.

The purchase is hardly a surprise. In the much talked about stimulus package approved by Congress, $300 million was included for the automotive purchase. This is not a gigantic purchase in the grand scheme of things, as the Big Three sold a combined total of 380,000 vehicles for March 2009. Still, the move may help to bolster confidence in the sector, while even a marginal increase in revenue would be welcomed by the automakers.

More than 14% of the vehicles will be hybrid sedans. 2,500 orders for the vehicles, which will likely include the Chevy Malibu, Ford Hybrid Fusion, and Saturn Aura, will be placed by the end of next week.

Image: Jalopnik

If nothing else, the move underscores the administration’s willingness to put its money where its mouth is: Last week, Obama sent GM and Chrysler back to the drawing board, saying they needed more aggressive restructuring plans if they were to get more government loans to survive. 

But he also promised this big government buy of fuel-efficient vehicles and created a special office to help communities in Michigan and elsewhere struggling with the downturn in the industry. In a prepared statement released today along with details of the planned purchases, Obama said, “The problems that caused this economic crisis weren’t created in a day and it will take time and hard work to get our economy back on track. But I am 100% committed to a strong American auto industry, and we will stand with America’s auto workers and their families during these difficult times.”

(Source: Autoblog; Photo: Benjamin Davidson@ Flickr)

Not surprisingly, officials from the Canadian and Ontario governments have followed the U.S. government’s leadby officially rejecting the restructuring plans of General Motors and Chrysler. The Canadian officials said the automakers’ current plans do not go far enough and will not be certified as they are. In fact, they’re basically copying and pasting the new deal for automakers announced by the U.S. government today, saying that GM has 60 days to redo its plan while receiving a portion of the C$3 billion it requested and Chrysler has 30 days to finalize its partnership with Fiat while receiving C$250 million of the C$1 billion it requested.  Click here read more.

(Source: Autoblog; Image: Doug Mills @ New York Times)

 

President Obama has just finished his press conference on the government’s determination of the viability of General Motors and Chrysler, and the gist is that both automakers have failed to convince the feds that their business plans deserve further investment. Obama and his task force will give GM enough working capital to survive another 60 days and prove its viability, though no dollar amount was given. Chrysler, meanwhile, is being given another 30 days and working capital up to $6 billion to finalize a partnership deal with Fiat. If a deal can’t be made and another partner is not found, Chrysler will get no more federal aid. Also, Fiat won’t be allowed to take a majority stake in Chrysler until the automaker repays all the money it has borrowed from the government so far. 

Perhaps the biggest news from the press conference is that the U.S. government will now fully back the warranties on vehicles sold by General Motors and Chrysler in the hopes that buyers will continue to consider their products amidst these tumultuous restructuring efforts. Also, the President has pledged to work with Congress to find funds to pay for a U.S.-version of the Cash for Clunkers program that has been so successful in Germany. 

BREAKING NEWS Report from WSJ: The Obama administration’s leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.

Click here to read the entire article.  Also, shown below is the PDF version of Restructuring Fact Sheet  compiled by The Truth About Cars.

 (Source:  CNNMoney.com Video: MSNBC via YouTube)

GM chief out in bailout shakeout

Rick Wagoner forced out of top spot as Obama administration moves to overhaul automaker.

 (Source: Business Week)

As the commercial model of India’s microcar is unveiled, U.S. carmakers would do well to learn from the innovations that brought it about

When Tata Motors (TTM) unveiled a prototype of its Nanomicrocar at the Delhi Auto Show in January 2008, auto executives around the world were aflutter. Quickly, they hustled teams to India to document the planned $2,000 “people’s car.” And industry watchers and innovation experts soon reported on the engineering and supply-chain breakthroughs behind the car.

Some 14 months later, Tata is set to show off the commercial version of the Nano, on Mar. 23. Today, the U.S. auto industry is struggling to survive, with General Motors (GM), once the world’s biggest carmaker, on the brink of bankruptcy. Look beyond the Nano halo and it’s clear that Tata Motors has problems of its own, from the $2.3 billion in debt it took on to purchase Jaguar and Land Rover from Ford Motor (F) last year to the sums sunk into the Nano assembly plant in West Bengal that had to be abandoned. On top of that, there are the Nano competitors in development.

Still, no one disputes that the Nano is innovative on multiple levels—from its engineering to its marketing to its manufacturing. So it’s hard to avoid the question: What can a humbled Detroit learn from the Tata Nano?

A lot. The lessons start with the vision of Ratan Tata, chairman of Tata Motors’ parent, Tata Group, to create an ultralow-cost car for a new category of Indian consumer: someone who couldn’t afford the $5,000 sticker price of what was then the cheapest car on the market and instead drove his family around on a $1,000 motorcycle. “Just in India there are 50 million to 100 million people caught in that automotive chasm,” says vice-president Vikas Sehgal, a principal at Booz & Co. And yet none of the automakers in India were focused on that segment. In that respect, the Nano is a great example of the so-called blue ocean strategy.

ROADS TO GREATNESS

“Great companies are built on creating new markets, not increasing market share in existing ones,” says Vijay Govindarajan, a professor at Tuck School of Business at Dartmouth College and chief innovation consultant at General Electric (GE), who quickly runs off 10 lessons for Detroit. Among them: U.S. automakers should focus less on incremental improvements to existing cars or adding a new model to the Cadillac line in order to compete against Lexus, and think more broadly about new market opportunities. Where, in other words, are Detroit’s blue oceans?

Click here to read the entire article.

(Source: Autoblog)

 

According to The Detroit News, the United Auto Workers is giving its blessings to a potential Chrysler-Fiat tie-up. Chrysler honcho Bob Nardelli earlier pegged the possible union as a $10 billion bonanza for Chrysler, since the Pentastar would save money on developing a range of platforms, engines, and cars. The UAW’s interest is, of course, the job savings: the partnership has been said to be worth 5,000 jobs that might otherwise be lost.

(Source: Detroit News via Autobloggreen)

 After driving the Chevy Volt prototype and sitting down for a number of discussions, the members of the president’s task force on the auto industry have returned to Washington. While the team was in Michiganover the past few days, they had a chance to see GM’s latest technology, look at what Chrysler has brewing, and spent time reviewing the viability plans of the automakers.

“We have been and will continue to work as hard and tirelessly as we can,” the official said. “This is obviously a very substantial undertaking and we want to move with all deliberate haste.”

The group spent most of the day in Detroit, visiting UAW President Ron Gettelfinger and other union officials in the morning before heading to Warren for meetings with GM and Chrysler.

Advisers to the task force visited Chrysler’s Warren truck assembly plant, meeting Chairman and CEO Robert Nardelli and other top executives, the company said in a written statement.

“In addition to meeting, the group toured the assembly plant and reviewed Chrysler current and future products, including electric and hybrid vehicles,” the company said. The meeting also included Chrysler Vice Chairmen Tom LaSorda and Jim Press and Chief Financial Officer Ron Kolka.

(Source: Wall Street Journal)

President Barack Obama’s auto team will spend Monday at the Detroit home of the Big Three as the administration begins to narrow its options for helping the reeling auto sector.

The field trip wraps up nearly three weeks of fact gathering by the team since General MotorsCorp. and Chrysler LLC submitted their rescue plans to the Treasury Department in the hopes of winning billions more in government loans. Ford Motor Co. is not seeking government aid.

Top Treasury Department advisers Steven Rattner and Ron Bloom, who are leading the auto task force, plan to use the day in Detroit to hone an array of lingering questions surrounding the companies’ rescue plans, which many analysts have criticized as overly optimistic. The team will also meet with the United Auto Workers union to discuss its willingness for deep compromises over wages, staff cutbacks and funding for its retiree health plan.

The weeks ahead are filled with peril for both the White House and the auto makers as administration officials face a March 31 deadline for deciding whether to give the companies nearly $22 billion more in federal assistance.

Click here to read the entire article.

(Source: Washington Post)

In the viability plans General Motors and Chrysler submitted to support their federal aid requests, the companies pledged to try to meet new fuel economy standards. 

Click here to read the entire article.

At issue was how the automakers would fund a Voluntary Employee Beneficiary Association, or VEBA. Millions in cash payments were due next year, but the cash-strapped automakers were hoping to talk the union into taking equity in the companies in lieu of real green dollars.

Although the details will differ, the fact that the UAW agreed to take on stock as part of the health care trust at one automaker makes it likely the union will do the same for the other two. The UAW generally gives all three domestic automakers about the same level of concessions to ensure one company is not more financially competitive than the other two.

Under the agreement, which still has to be ratified by union members, Ford has the option of issuing up to 50% of the payment in stock rather than cash. “The agreements, if finalized, will allow Ford to become competitive with foreign automakers’ U.S. manufacturing operations, and are critical to our efforts to operate through the current deep economic downturn without accessing government loans,” says Joe Hinrichs, Ford’s group vice president of labor affairs.