(Source: Detroit Free Press)

Mike Thompson of Detroit Free Press (Freep.com) has nicely captured the sentiments of the American public (at least, the sensible ones) about Chrysler repaying the $5.9 billion bailout money.  God knows how much bickering will happen when the political leadership decides to spend it on other programs.

Image courtesy: Free.com - Mike Thompson: Taxpayers get their money back from Chrysler

Note: For what it is worth, I’d also add this: It is nice to see the taxpayer $$ safely return to the government’s coffers, unlike what happened with some of the Wall Street beneficiaries.  This timely intervention from the U.S. Government not only prevented an American icon from vanishing without a trace, but it also saved thousands of jobs in a city that is already reeling from some really bad economic decisions.

(Source: Studydriving.com via Infographlove)

Interestingly, the infographic below summarizes the data into this nugget: Americans make better cars than Japanese.  No wonder GM and Ford are making a comeback.  After all, this country love a good comeback.

(Sources:  White House.gov & Freep.com)

Watching GM turn the corner from a disastrous dud and morph into a Detroit’s Stud and a Wall Street darling, no could’ve been happier than President Obama and his team of economic advisors at the White House, who advised him on the bailout that rescued thousands of jobs and the iconic brand from a collapse.  The stunning turnaround culminated with a successful IPO debuting in the marketplace today. General Motors stock closed at $34.19 today, just above the $33 price of the initial public offering.

An elated President Obama convened a press conference this afternoon and shared his sentiment and belief in GM’s recovery strategy.

Today, one of the toughest tales of the recession took another big step towards becoming a success story.

General Motors relaunched itself as a public company, cutting the government’s stake in the company by nearly half.  What’s more, American taxpayers are now positioned to recover more than my administration invested in GM.

And that’s a very good thing.  Last year, we told GM’s management and workers that if they made the tough decisions necessary to make themselves more competitive in the 21st century — decisions requiring real leadership, fresh thinking and also some shared sacrifice –- then we would stand by them.  And because they did, the American auto industry -– an industry that’s been the proud symbol of America’s manufacturing might for a century; an industry that helped to build our middle class -– is once again on the rise.

Our automakers are in the midst of their strongest period of job growth in more than a decade.  Since GM and Chrysler emerged from bankruptcy, the industry has created more than 75,000 new jobs.  For the first time in six years, Ford, GM and Chrysler are all operating at a profit.  In fact, last week, GM announced its best quarter in over 11 years.  And most importantly, American workers are back at the assembly line manufacturing the high-quality, fuel-efficient, American-made cars of tomorrow, capable of going toe to toe with any other manufacturer in the world. Click here to read the president’s entire speech.

Freep’s awesome cartoonist Mike Thompson charts this wonderful recovery from a dud to a darling with a series of cartoons on his blog.  He also adds the following to go with his nice drawings:

As if this weren’t bad enough for auto bailout critics, the Ann Arbor-based Center for Automotive Research has released a report that validates the logic behind the bailout. As Free Press business writer Greg Gardner reported, “The CAR study says the federal government would have spent $28.6 billion more than it did on unemployment benefits, Medicare, Social Security and other programs had the automakers liquidated. So the entire rescue will pay for itself if the government can generate $38 billion from selling its shares.” But perhaps the most chilling details in the story were the report’s conclusions that liquidation of the two auto companies would have meant the loss of 1.4 million jobs and $121 billion in personal income.

Whew!  This above facts-full paragraph must be making many of the naysayers, like the conservative columnist Mr. George Will feel like throwing up.  A couple of days ago, he wrote an op-ed titled , Toxic Volt, on Washington Post saying a whole lot of negative things about the President’s Bailout for GM.  The President and Steven Rattner, the brains behind the execution of the bailout plan, should be chuckling over the phone talking about how bad they feel for George Will.  Sadly enough, the doubters still continue to find a way to question the legitimacy of success. Fox Business  News in an article on its website says massive dilution from existing shares, warrants and grants, as well as unfunded pension costs. And GM’s cash flow is still heavily reliant on tens of billions of dollars in tax breaks and taxpayer-backed loans from the Dept. of Energy.

Image Courtesy: Freep.com

If this is not victory enough for the President, today GM notched another impressive feat, which is more like a beautiful foil to the wonderful present inside – the IPO. The Detroit Free Press reports that the Chevrolet Volt extended-range electric vehicle has won Green Car of the Year, beating out the pure-electric Nissan Leaf, hours after General Motors returned to the stock market. The award, decided by judges that include environmental enthusiasts and Green Car Journal editors, comes the same week as the Volt won MotorTrend Car of the Year and Automobile Magazine’s Automobile of the Year.  How awesome could that for a man who was chided constantly by his opponents for the decisions he made to save the brand and the thousands of jobs associated with the existence of the brand.

I bet tonight the President of the United States will have a drink to celebrate one of his biggest victories since assuming office.  He will probably sleep a little better tonight with one less thing to worry about.

Related articles

• Obama Praises GM Bailout as Shares Gain 4% in IPO (dailyfinance.com)
• GM’s Chevy Volt wins Green Car of the Year (reuters.com)
• General Motors shares jump on Wall Street return (chron.com)
• GM’s Chevrolet Volt Named 2011 Green Car of the Year (dailyfinance.com)
• GM shares rise on return to Wall Street trading (washingtontimes.com)
• GM shares jump in post-IPO return to market (reuters.com)
• Chevrolet Volt wins Green Car of the Year award (theglobeandmail.com)
• General Motors Opens Up 6% Post-IPO >GM – Wall Street Journal (news.google.com)
• How General motors came back from the brink (independent.co.uk)
• Watch: Obama On GM: ‘The American Auto Industry … Is Once Again On The Rise’ (mediaite.com)
• Obama Hails GM Stock Sale as Policy Success- YOU DECIDE: Would You Buy GM Stock? (foxnews.com)
• President Obama on GM: “One of the Toughest Tales” Becoming a “Success Story” (whitehouse.gov)
• General Motors shares jump on Wall Street return (thenewstribune.com)
• Obama: GM Stock Sale a Success for His Policy (abcnews.go.com)
• GM IPO The Biggest In U.S. History (huffingtonpost.com)
• Obama: GM’s stock sale shows ‘tough decisions’ paid off (cnn.com)
• Obama to hail GM IPO (forexlive.com)
• CORRECTED – WRAPUP 4-GM shares jump in post-IPO return to market (reuters.com)
• RPT-(Nov 17)-UPDATE 12-GM IPO raises $20.1 bln biggest US IPO (reuters.com)
• You: How GM IPO Proves the Tea Party Wrong (newsweek.com)
• Good News on GM and the Auto Bailout, but Will Americans Care? (politicsdaily.com)
• Obama: GM Stock Sale a Success for His Policy (politics.usnews.com)

(Source: Wall Street Journal)

Today’s WSJ had a nice article about the Korean Automaker, explaining what makes it a successful car in the US.   Worth a read..

….The leading Korean car company’s name rhymes with the first day of the week, as in “Hyundai, Bloody Hyundai.” Which is pretty much what the company’s competitors are saying to themselves these days about Hyundai’s remarkable success over the past few years.

Last year Hyundai’s global sales bucked the industry’s decline and rose 5% to 4.2 million cars and trucks. Even in the U.S., the world’s most competitive car market, Hyundai’s sales rose 0.8% in the first eight months of this year, while Ford’s sales dropped 25% in the same period and GM’s plunged 35%. The major Japanese auto makers suffered declines between 25% and 30%.

Hyundai’s success stems from a sustained corporate effort at reinvention—the very same word General Motors is using to describe its mission these days. The Hyundai story should provide GM with a road map.

For years, Hyundai enjoyed a protected home market in Korea. This ensured its prosperity there, but the lack of competition meant the company didn’t develop the product quality or consistency to compete effectively in international markets. The result: Hyundai’s initial U.S. success in 1986 was undercut quickly by quality problems.

A decade ago, Hyundai acquired Kia, a victim of a mid-1990s shakeout in the Korean auto industry. It also established a new quality-control division charged with boosting reliability by emulating Toyota’s vaunted manufacturing methods. To allay lingering concerns over quality, Hyundai put warranties of 10 years or 100,000 miles on vehicles sold in America.

Their campaign began to show results, and the big breakthrough came in 2004, when Hyundai tied Honda for second place in the prestigious J.D. Power & Co. Initial Quality Survey. Also that year, Hyundai completed its first U.S. assembly plant, near Montgomery, Ala.

On the marketing front, last January the Hyundai division launched an innovative “Assurance Program” in the U.S.: Buyers return their cars if they lose their job within a year after their purchase. The offer generated buzz and resonated with the public, as Hyundai’s recent U.S. sales results demonstrate, even though buyers have turned in fewer than 50 cars under the program, which continues through year-end.

…..Both U.S. companies will have to make their marketing more relevant. Hyundai’s 10-year warranties and the “Assurance Program” succeeded because they addressed specific customer concerns—the former about the brand’s reliability, the latter about the economic environment…….

Click here to read the entire article.

(Source:  Mint.com via Autoblog)

Ever wondered what’s the state of the american auto industry? Over the past several months we came across several reports of the ailing American autopia, including those with horrific financial reports, Government bailout in billions, mergers and acquisitions that changed the auto industry landscape worldwide, the glorious performance of American automakers during the short lived Cash for Clunkers boost, etc.  Along the way, there were few attempts to depict the ever-changing amoebic state of the auto industry from a 30,000ft level, in an easy to understand format.  But so far (what little I have read), nothing comes close to what the brilliant folks at Mint.com have done.

Image Courtesy: Mint.com - Click the image to see an enlarged version

They say a picture is worth a thousand words, and we’d add that the above graph is tantamount to an engaging novella. It charts the massive brand exodus among the Detroit contingent, which looks like a quadruple reverse drawn up on the telestrator by John Madden. If that isn’t sobering enough, the text below shows just how much Detroit automakers have shrunk since 2006. Overall, attrition at Ford, GM and Chrysler accounts for an astonishing 144,600 workers in only three years. No wonder Michigan has the highest unemployment rate in the nation. The chart also gives a brief look at the up-and-coming members of the US auto industry, including Tesla, BYD, Tata and Smart, along with a quick blurb about the future of each of the automakers represented.

TranspotGooru Musings:    The only glitch that I spotted in the above graph is the introductory line on the blurb about Chinese Automaker BYD – “Recently bought by Warren Buffet….”  Actually, the company is publicly traded, and its major shareholder is Wang Chuan-Fu who started BYD (the letters are the initials of the company’s Chinese name).  Mr. Buffet’s Bekshire Hathaway has invested $232 Million  thus far and is consider to expand its investment further. Berkshire Hathaway first tried to buy 25% of BYD, but Wang turned down the offer. He wanted to be in business with Buffett – to enhance his brand and open doors in the U.S., he says – but he would not let go of more than 10% of BYD’s stock.

(Source: Wall Street Journal, Detroit Free Press,  Reuters, Autoblog, JDPower.com)

* Ford, Chevrolet close in on Toyota brand

* Lexus, Porsche rank No. 1 and No. 2 for new car quality

* BMW’s Mini ranks last in J.D. Power survey

New vehicles sold by Chrysler, Ford and GM’s domestic brands have improved in initial quality by an average of 10% compared with 2008, but Toyota Motor Corp. was the star of this year’s study on initial quality from J.D. Power and Associates.

The study was released today at an Automotive Press Association luncheon at the Detroit Athletic Club.

Image Courtesy: J.D Power and Associates via Autoblog

Toyota’s Lexus brand ranked first among all nameplates with 84 problems per 100 vehicles. Toyota also captured 10 segment awards — more than any other corporation in the 2009 study.

Luxury brands captured the top three spots, while Chevrolet, Ford and Toyota were in what amounted to a statistical dead heat further down in the rankings, the survey by J.D. Power and Associates found.

“Have the leading domestic nameplates caught up with Toyota? The answer is almost,” Dave Sargent, vice president for auto research at J.D. Power, told reporters at a briefing in Detroit. The quality gap between the foreign imports and the Detroit auto makers is now the smallest it has ever been, David Sargent, JD Power’s vice president of automotive research, said during a speech at the Automotive Press Association in Detroit. The domestics lagged behind the foreign auto makers by just six points.

The 2009 Initial Quality Study (IQS) provides information gathered from over 80,000 purchasers and lessees of 2009 model-year vehicles. Performance is measured using a “problems per 100 vehicles (PP100)” metric. A lower PP100 score indicates better performance and a higher PP100 score indicates worse performance. The 2009 study covers a total of 228 total problems, and organizes them into the following eight categories:

• Exterior
• The Driving Experience
• Features/Controls/Displays
• Audio/Entertainment/Navigation
• Seats
• HVAC, or Climate Controls
• Interior
• Engine/Transmission

The highlights of the 2009 IQS study (courtesy of J.D. Power & Associates):

• Overall, the industry average for initial quality is 108 problems per 100 vehicles (PP100) in 2009, down from 118 PP100 in 2008. Initial quality for domestic brands has improved to an average of 112 PP100 in 2009 from 124 PP100 in 2008, while import brands have improved to an average of 106 PP100 in 2009 from 114 PP100 in 2008.
• Lexus leads the overall nameplate rankings, averaging 84 PP100. This is the 12th time Lexus has been the highest-ranked brand in the 20 years it has been included in the IQS and the first time since 2005.
• Following in the rankings are Porsche, Cadillac (which moves from 10th rank position in 2008 to third in 2009),Hyundai (improves from 13th rank position in 2008 to fourth in 2009) and Honda, rounding out the top five.
• Toyota Motor Corporation captures 10 segment awards—more than any other automaker in the 2009 study—including five for Lexus, four for Toyota and one forScion. Lexus receives awards for the IS, GS, GX, LSand LX models. The Lexus LX has the fewest quality problems in the industry, with just 52 PP100. Toyota models receiving awards in their respective segments are the 4Runner (in a tie); Sienna; Tundra (in a tie); andYaris.
• Ford receives three awards for the Edge (in a tie); F-150 (in a tie); and Mustang. Garnering two awards each are Nissan (Altima and Z); and Honda (CR-V, in a tie, and Ridgeline).
• Also receiving segment awards are: Chevrolet TrailBlazer (in a tie), Chrysler PT Cruiser (in a tie), GMC Yukon, Hyundai Elantra Sedan, Mercury Sable and Scion tC.
• Suzuki is the most-improved nameplate in the industry this year. A reduction of 49 PP100 moves the Japanese brand from 32nd place in 2008 to ninth place this year. Suzuki is also the most improved nameplate for both Defects/Malfunctions and Design-related problems. Also, Saturn improves by 37 PP100 and Jeep by 30 PP100.
• The Toyota Motor Corporation assembly plant in Higashi-Fuji, Japan, receives the Platinum Plant Quality Award for producing vehicles yielding the fewest defects and malfunctions. Averaging just 29 PP100, the plant produces the Lexus SC 430 and Toyota Corolla. (Plant awards are based solely on average levels of defects and malfunctions and exclude design-related problems.)
• Among North and South American plants, the Honda plant in East Liberty, Ohio, which produces the Civic Sedan, CR-V and Element, achieves the Gold Plant Quality Award.
• In the Europe and Africa region, Daimler’s East London, South Africa, plant, which produces the Mercedes-Benz C-Class, receives the Gold Plant Quality Award.

The results underscored the competitive pressure on the industry at a time when U.S. sales have been driven to 30-year lows and both GM and Chrysler have been forced to rely on federal financing to restructure through bankruptcy.

U.S. automakers have spent heavily in recent years in a bid to close the gap with the Japanese automakers led by Toyota and Honda, which have established a reputation for eliminating flaws from engineering and manufacturing.

This year, GM’s Cadillac brand is the highest ranked domestic nameplate with 91 problems per 100 vehicles. Cadillac is ranked third and moved up from 10th last year.

Ford Motor Co. received the second most segment awards of any automaker with top rankings for its redesigned F-150 pickup, Ford Mustang mid-size sports car, Ford Edge crossover and Mercury Sable full-size sedan.

Brands that do well — typically luxury cars top the list — can use the results to bolster advertising campaigns. The vehicles were evaluated between November through February. “High quality enhances an auto maker’s reputation for reliability which is a critical purchase consideration for many consumers,” Mr. Sargent said.

Boosted by a strong reception for its high-end Genesis sedan, Hyundai Motor Co (005380.KS) pushed ahead of both Toyota and Honda Motor Co (7267.T) to become the top-ranked mass-market auto brand and No. 4 overall.

Honda ranked No. 5, followed by Mercedes-Benz, Toyota, Ford and GM’s Chevrolet.

Click here to read the entire 2009 Initial Quality Study Results.

(Source: Dow Jones via Wall Street Journal & LeftLane News.com, WTOP)

Italy’s Fiat is the new owner of most of Chrysler’s assets, closing a deal Wednesday that saves the troubled U.S. automaker from liquidation and places a new company in the hands of Fiat’s CEO.  The deal creates a leaner company known as Chrysler Group LLC, which is not in bankruptcy protection and is free of billions in debt, 789 underperforming dealerships and burdensome labor costs that hobbled the old Chrysler LLC.   The future of Chrysler Group LLC began to take shape Wednesday as its new leadership announced sweeping management and organizational changes.

The announcements came as Chrysler merged its assets with Fiat SpA (FIATY), following a six-week bankruptcy process for the U.S. auto maker. The last hurdle to the sale of Chrysler assets to Fiat was cleared late Tuesday when the U.S. Supreme Court rejected creditors’ objections to the deal.

The completion of the Chrysler deal bolsters President Barack Obama’s administration, which guided Chrysler through bankruptcy and hopes that a concurrent restructuring at General Motors Corp. (GM), which filed for Chapter 11 on June 1, will also be completed quickly.

Chrysler confirmed that its new Chief Executive is Sergio Marchionne, who also serves as Fiat’s CEO. Marchionne replaces Robert Nardelli, who served as Chrysler’s chief for the past 20 months. As reported, Robert Kidder, the lead independent director at Morgan Stanley, will become chairman of Chrysler’s new board of directors. Current Vice Chairman Jim Press will be appointed deputy CEO and special advisor, the company said.

Marchionne said in a letter to Chrysler employees that the company will be more focused and nimble, benefiting significantly from its global alliance with the Italian auto maker.   The new Chrysler Group LLC noted that it would soon reopen Chrysler factories that were idled during the bankruptcy process, costing the automaker $100 million per day.

Under the old Chrysler, the automaker’s three brands – Chrysler, Dodge and Jeep – were all vertically integrated. However, Fiat has now separate all parts of Chrysler—including its Mopar parts division – with executives heading up each division. The new setup largely mirrors Fiat’s management style with its Fiat, Alfa Romeoand Lancia brands.

“The new company moves forward with significant strategic advantages, including a healthy balance sheet, a competitive cost structure, a leaner and more efficient dealer network, sound supplier agreements and significantly improved product quality and operational efficiency,” he said in the letter.

Chrysler, the smallest of the three U.S. auto makers, sought emergency government aid and was forced to file for bankruptcy in recent months owing to a steep decline in sales that drained the company’s cash. Chrysler enters this new chapter of its storied history at a time when the outlook for the auto industry remains bleak, amid continued economic weakness and tight credit conditions. Jim Press – Chrysler’s former co-president – might have been questioning his decision to move from Toyota to Chrysler in 2007 in recent weeks, but the automotive exec’s career is safe as Fiat CEO Sergio Marchionne has named Press the deputy CEO of the reborn Chrysler.

Michael Manley, Michale Accavitti and Peter Fong, all of whom were previously with Chrysler, will run Jeep, Dodge and Chrysler, respectively. Pietro Gorlier, who joins Chrysler from Fiat, will head Mopar.

(Source:  AP via Yahoo)

The Supreme Court on Tuesday cleared the way for Chrysler LLC’s sale to Fiat, turning down a last-ditch appeal by opponents that included consumer groups and three Indiana pension plans.

The court rejected a plea to block the sale of most of Chrysler’s assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court’s intervention could have scuttled the sale.

A federal appeals court in New York had earlier approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene.

Justice Ruth Bader Ginsburg ordered a temporary delay just before a 4 p.m. deadline on Monday. A little more than 24 hours later, the court freed the automakers to complete their deal.

The opponents include a trio of Indiana pension plans, consumer groups and individuals with product-related lawsuits.

The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.

“The applicants have not carried that burden,” the court said.

Indiana Treasurer Richard Mourdock expressed disappointment with the decision and said options seem limited for opponents of the sale. “Obviously the supreme court of the land is the supreme court of the land,” Mourdock said. “The United States government has, I continue to believe, acted egregiously by taking away the traditional rights held by secured creditors.”

(Source: New York Times & Fox News)

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.  

Image Courtesy: New York Times

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.  

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”

But now, according to those who joined him in the middle of his crash course about the automakers’ downward spiral, he has emerged as one of the most influential voices in what may become President Obama’s biggest experiment yet in federal economic intervention.  So what does Mr.Deese’s resume look like? It should be impressive, considering he’s managing America’s $458,000 per dayinvoluntary investment.

Deese grew up in a Boston suburb, the son of a political science professor at Boston College. He moved to Vermont and attended Middlebury College, where he studied political science and also took time to host a campus radio show called “Bedknobs and Beatniks,” described in one write-up as “a format of music, news, discussion and banter.”

While far more prominent members of the administration are making the big decisions about Detroit, it is Mr. Deese who is often narrowing their options.

A month ago, when the administration was divided over whether to support Fiat’s bid to take over much of Chrysler, it was Mr. Deese who spoke out strongly against simply letting the company go into liquidation, according to several people who were present for the debate.

“Brian grasps both the economics and the politics about as quickly as I’ve seen anyone do this,” said Lawrence H. Summers, the head of the National Economic Council who is not known for being patient whenever he believes an analysis is sub-par — or disagrees with his own. “And there he was in the Roosevelt Room, speaking up vigorously to make the point that the costs we were going to incur giving Fiat a chance were no greater than some of the hidden costs of liquidation.”

Mr. Deese was not the only one favoring the Fiat deal, but his lengthy memorandum on how liquidation would increase Medicaid costs, unemployment insurance and municipal bankruptcies ended the debate. The administration supported the deal, and it seems likely to become a reality on Monday, if a federal judge handling the high-speed bankruptcy proceeding approves the sale of Chrysler’s best assets to the Italian carmaker.

Click here to read the entire article.