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WASHINGTON, D.C. -- Many members of Congress believe they know what the car company of the future should look like.

"A business model based on gas -- a gas-guzzling past -- is unacceptable," Sen. Charles E. Schumer, D-N.Y., said last week. "We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car."

But the car company Schumer and other lawmakers envision for the future could turn out to be a money-losing operation, not part of a "sustainable U.S. auto industry" that President-elect Barack Obama and most members of Congress say they want to create.

Continue reading "Hybrid vehicles: Auto companies yet to learn how to build car of the future and make a profit" »

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DETROIT, Michigan — Chrysler is unlikely to survive as an independent company, even if Congress approves $25 billion in aid to Michigan's automakers, a new study says.

Auto sales have fallen so sharply there's no longer enough business for three domestic automakers, according to a report released Tuesday by the Anderson Economic Group in East Lansing.

And several foreign nameplates with tiny market shares, possibly Mitsubishi and Saab, could exit the shrinking U.S. market, said Patrick Anderson, president of the Anderson Economic.

Seven foreign automakers, including Nissan have pulled out of the upcoming North American International Auto Show in Detroit.

"The real crisis is being driven by the fact that people aren't buying cars now," Anderson said in a conference call with reporters.

Continue reading "Chrysler can't survive on its own, study predicts; Do you now support a GM-Chrysler merger?" »

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DETROIT, Michigan -- A list of job cuts, shuttered factories, canceled bonuses and commitments to fuel-efficient cars won't be enough next week when U.S. automakers get another shot to persuade Congress to give them $25 billion in loans.

Through the Thanksgiving weekend, teams will be tagging more meat to throw at skeptical lawmakers who vilified the automakers' top executives the last time they went to Washington. That means executive pay cuts, union concessions and perhaps even higher fuel economy requirements and a glimpse at top-secret product plans.

At General Motors, the largest of the Detroit Three and probably the most needy, teams are preparing a detailed plan, first for GM's board Monday, then for delivery to Congress by a Tuesday deadline. The House Financial Services Committee plans to hear testimony on the loan requests Dec. 5.

Continue reading "GM, Ford, Chrysler told to show scarifice during next week's meeting with Congress loan requests" »

FLINT TOWNSHIP, Michigan -- A senior economist with the Federal Reserve offered a word of advice Tuesday for the Detroit Three automakers.

Change.

"Anyone who wants to survive has to be a strong proponent of change," said Sam Kahan, a senior economist at the Federal Reserve Bank of Chicago-Detroit Branch. "That requires education, flexibility and thinking outside of the box. You've got to be a step ahead of the guy behind you."

In a 90-minute presentation about the economic and financial scene Tuesday at Baker College of Flint, Kahan offered few predictions about what the future holds.

"I can tell you with confidence that a recovery will come," he said. "I can't tell you when."

Prior to his talk, Kahan told the Flint Journal that the best case scenario would be a typical recession that lasts about a year. The worst case scenario could be similar to the 15 years of economic stagnation Japan suffered from 1990 to 2005.

Continue reading "Federal Reserve economist assesses bailouts, auto industry in Baker College of Flint presentation" »

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When General Motors left Washington empty-handed last week, among the lingering questions was whether its huge pension fund could topple and crush the government's pension insurance program.

The quick answer is, probably not -- at least for now.

When any pension fund fails, usually as part of a bankruptcy, the government takes over its assets as well as its payments to retirees. In GM's case, its plan would dwarf the nation's pension insurance fund.

Continue reading "GM pension fund is healthy, but not without pitfalls" »

GRAND BLANC TOWNSHIP, Michigan -- Despite a tough economy, Al Serra Auto Plaza finished No. 1 in the nation in October for sales of Chevrolets, Buicks, GMCs and Hummers.

In a written statement, Al Serra Auto Plaza General Manager Denny Dunfield attributed the achievement to keeping up inventory and pushing incentives.

The dealership also is deferring customer payments for 90 days on new vehicles purchased through the end of the year.

Continue reading "Al Serra Auto Plaza in Grand Blanc Township leads nation in October sales" »

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NEW YORK -- Cash-strapped General Motors insists declaring bankruptcy would be disastrous because it would scare away customers.

And while it's unlikely Chevrolet and Cadillac owners would be left with worthless warranties and no replacement parts, the headlines about the Detroit Three's dire situation may already be keeping buyers away.

"If GM is under the imminent threat of bankruptcy or actually declares bankruptcy, I would not consider a GM product," said Kevin Ketels, who might replace his family's 2004 Toyota RAV4 late next year. "I just don't know if the company will be around to fulfill their warranty obligations. Will they be there for me? There are too many unknowns and a car is my second-biggest investment next to my house."

The 38-year-old from Grosse Pointe Woods would be among the 80 percent of Americans who GM insists wouldn't even consider a GM brand if the company were in bankruptcy. Chief Executive Rick Wagoner brought up the statistic from a CNW Research survey last week during his congressional plea for $25 billion in federal loans.

Continue reading "GM insists bankruptcy would spell disaster and scare away customers; Would you still buy a GM vehicle?" »

LOS ANGELES, California -- With the U.S. all but certainly in a recession and many skittish consumers hesitant to buy even a Honda Accord, it would seem the last thing anyone would need is a $400,000 Rolls-Royce Phantom.

But sales of many high-end luxury cars are bucking the trend of plummeting car sales, and their makers and industry watchers at the Los Angeles Auto Show this week are confident that they will weather the industry downturn just fine.

Models in spaghetti-strap dresses circled Maserati's display at the show, which opens to the public today, while Italian executives in fine suits talked up the Ferrari California and subdued Britons bragged that the Lotus Evora is so exquisite "it goes beyond the sense of touch."

Continue reading "Rolls-Royce posts 32 percent sales increase; Other ultra-luxury vehicle companies also do well while auto industry struggles" »

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WASHINGTON, D.C. -- The congressional stalemate over whether to toss the country's big automakers a $25-billion life preserver reflects a divided public, which a poll shows is evenly split over whether to come to Detroit's rescue.

Forty-nine percent oppose giving the ailing Detroit Three car companies federal assistance if they are close to failing, while 47 percent support the idea, according to a Gallup Poll conducted in recent days. If one of the manufacturers was certain to go out of business without the aid, the number backing the idea edges up to 56 percent.

The split even shows up locally, where reliance on the auto industry is intense. Unscientific polls on The Flint Journal's Web site, mlive.com/flintjournal, find ambivalence on questions such as whether the government should bail out U.S. automakers. Nearly 57 percent of more than 600 respondents said no, and 43 percent said yes.

The proposal for a new $25-billion federal loan for the automakers has stalled in Congress, where it is supported by many Democrats but opposed by President George W. Bush and Republicans.

Continue reading "Auto bailout: Public divided on the Big 3 Detroit automakers and whether the government should help; Vote and look at Flint Journal polls on this issue" »

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DETROIT, Michigan -- United Auto Workers President Ron Gettelfinger urged Congress and the Bush administration to act immediately on loans for the U.S. automakers, saying one or more of them could collapse by the end of the year without it.

Gettelfinger spoke at a Detroit news conference just as reports surfaced that a bipartisan group of auto-state senators had reached a compromise on bailing out Chrysler LLC, Ford Motor Co. and General Motors Corp.

The deal still faces heavy opposition, however.

Continue reading "Ron Gettelfinger, UAW president, says Washington inaction on bailout plan 'not an option'" »

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WASHINGTON, D.C. -- A plan to give troubled U.S. automakers billions of dollars in government-backed loans is stalled on Capitol Hill, leaving the fate of hundreds of thousands of workers and Detroit's once-venerable car companies hanging in the balance.

Senate Majority Leader Harry Reid, D-Nev., canceled plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. The Bush administration and congressional Republicans have rejected the Democrats' plan to dip into that pot of money.

Warning of economic disaster, a bipartisan group of senators from auto industry states is trying to reach a deal on an alternative package. Even if an agreement can be reached, Reid signaled Thursday that the Senate would likely not be able to consider the bill until after Thanksgiving.

"We have some procedural roadblocks," Reid said.

With all sides sensing doom for a Big Three automaker rescue, the finger-pointing began. White House press secretary Dana Perino said that if Congress "leaves for a two-month vacation without having addressed this important issue ... then Congress will bear responsibility for anything that happens."

Continue reading "Auto bailout: Plan to rescue GM, Ford and Chrysler stalls in U.S. Senate" »

WASHINGTON, D.C. -- Detroit automakers are running out of time in their quest to convince skeptical lawmakers that Congress should throw them a $25-billion lifeline.

Top executives with General Motors, Ford and Chrysler were to return to Congress today, appearing before a House committee to plead for a "bridge loan" to give them a massive infusion of cash to prevent millions of layoffs, stave off bankruptcy and stabilize their teetering companies.

Continue reading "Auto bailout: Time, hope fading for aid for automotive industry, GM, Ford and Chrysler" »

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WASHINGTON, D.C. -- Detroit's Big Three auto makers are begging Congress for a $25 billion government rescue, while the legislation clings to life support on Capitol Hill and top lawmakers and the White House suffer from bailout fatigue.

Democratic congressional leaders want to tap the $700 billion Wall Street rescue package for new loans to U.S. auto manufacturers and suppliers, but the White House and GOP lawmakers say the beleaguered industry shouldn't get any new funds.

President George W. Bush and GOP lawmakers instead propose diverting $25 billion in loans approved by Congress in September -- designed to help auto manufacturers retool their factories so they can make more fuel-efficient vehicles -- to cover the firms' immediate financial woes.

But auto executives, backed by leading Democrats, insist they need another $25 billion in emergency loans to avert a collapse of one or more of their companies before year's end.

That would bring the total federal help for the industry to $50 billion this year.

The executives, along with the head of the United Auto Workers union, were making their case Tuesday at a hearing before the Senate Banking Committee as auto bailout backers hunted the votes necessary to pass the plan in a postelection session.

Continue reading "Auto bailout: Big 3 automakers beg for aid as bailout bill stalls" »

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WASHINGTON, D.C. -- Hardline opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.

The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors Corp., Ford Motor Co. and Chrysler LLC have offered to reduce the size of the rescue to win backing in Congress.

Senate Democrats intended to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote was expected as early as Wednesday.

A White House alternative would let the car companies take $25 billion in loans previously approved to develop fuel-efficient vehicles and use the money for more immediate needs. Congressional Democrats oppose the White House plan as shortsighted.

Majority Democrats will need at least a dozen GOP votes in the Senate to prevent opponents from blocking their measure -- assuming all Senate Democrats support it.

Continue reading "Showdown looming in Congress of automaker rescue; Ford, GM and Chrysler seek $25 billion" »

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AUBURN HILLS, Michigan -- The auto industry is in the tank, there's talk of bankruptcies, and no one knows who will survive.

So, what's Gibbs Technologies doing?

Continue reading "Auburn Hills firm tries unusual strategy: expanding and planning new vehicles amidst auto industry's meltdown" »