Meet The New Chairman, Same As The Old Chairman

General Motors just announced that Edward Whitacre, Jr. will be the company’s new Chairman upon the launch of a revised GM company this summer. Kent Kresa has been serving as interim Chairman.
Six board members will be “retiring”. Whitacre will join current interim Chairman Kent Kresa, Philip A. Laskawy, Kathryn V. Marinello, Erroll B. Davis, Jr., E. Neville Isdell and President and Chief Executive Officer Frederick A. Henderson as the core of the board.

At first glance, it might seem like GM is following Ford’s lead by going outside the inbred automotive manufacturing community for its grand poobah. The 67-year-old Whitacre served as CEO of AT&T and Southwestern Bell from 1990 to 2007, which at first glance brings up comparisons to Ford’s selection of former Boeing executive Alan Mullally to be CEO of its company. The primary difference here is that Mullally had significant organizational and line operations experience when he was hired to be the hands-on leader. Whitacre’s experience is mostly in turning entrenched, old-school technology companies into larger companies by purchasing new technology companies. Plus, Whitacre’s position as Chairman is more of an advisory role.

Whitacre also serves on the boards of ExxonMobil and Burlington Northern Santa Fe, which leads one to ask: is it possible to find a guy who has been involved in more old technology / old white-men’s culture companies which have seen their market share shrink due to ignoring shifts?

In other words, it seems GM went out of the auto sector to find a Chairman who is most like a brother from another mother.

This being said, we wish Whitacre luck in his role and hope he surprises the world by working with Fritz Henderson to successfully reinvent GM.

Import Tuners, Hot Rods, Muscle Cars And “Getting It”

If I had a dollar for every collector car guy or hot rodder who communicated to me in some way their lack of understanding about import tuner cars and the kids who drive them, I’d be able to afford a thumping subwoofer and some neon lights for my ‘60 TR3. All too many car enthusiasts seem to look at the coffee-can exhaust crowd with one part confusion and another part disgust.

For those who grew up in the pre cell phone days, allow me to make this very simple for you: the kids you’re looking at driving slammed Civics with wings are just a younger version of you. You just haven’t made the connection yet.

So allow me to make the connection for you.

About ten years ago my father-in-law made some statement about not understanding why someone would do all that crazy garbage to a Honda. I simply asked him: “what was your first car?”

“A 1950 Ford” he replied.

“Did you buy it new?”

“No, it was my parents’ old car.” He explained.

“What was the first thing you did to it when it became ‘your car’?” I continued.

“I stripped off all that chrome. It’s what everyone did in those days.”

“And what did your parents think about that?”

“They asked me why I was ruining the car!”

After explaining that parents don’t give their kids hand-me-down ’50 Fords anymore…now it’s Accords, Civics, Corollas, Tiburons, Eclipses, Imprezas, and since there’s no chrome anymore to take off, personalization trends have swayed towards exhaust, wings, lenses, wheels…he “got it”.

“Getting it” doesn’t necessarily mean wanting it for yourself. It does, however, lead one to understand that spouting derogatory phrases at the guy with the stickers, aero kit and wing on the ten-year-old econobox is no different than your dad yelling at you for buying Cragars and glass-packs for Mom’s Impala…or your dad getting yelled-at by grandpa for unbolting the perfectly good fenders from the ’32 Ford and spending a week’s pay for and a weekend’s time installing that foolish Edelbrock intake and carb setup on its flathead.

At the end of the day, we’re all car people. We might express our love for the hobby in different ways based upon where, when and how we were exposed to cars, but at the core we’re far more similar than we usually realize.

And even if it isn’t your cup of tea, take solace in the notion that most of the drivers of cars you shake your head at today will be scolding their own kids for making similar counterproductive modifications to a hand-me-down family car in the future.

GM Files Chapter 11 and I Say “I Told You So”

This is about the right time to shout “I told you so”.

Way back on November 11, 2008, I wrote an article about why the US Government should not bail out the Big Three called Bail Out the Big Three? History Suggests “Don’t Do It!” I cited England’s debacle with British Leyland and the sad similarities to Chrysler, GM and Ford.

Chrysler already dropped the bomb and filed, then jumped into a panic marriage with Fiat to avoid being auctioned off in parts. Now today, GM dropped the other shoe by announcing this:

GM ANNOUNCES AGREEMENT WITH U.S. TREASURY AND CANADIAN GOVERNMENTS PROVIDING FAST TRACK TO COMPETITIVE FUTURE FOR ‘NEW GM’

NEW GM, BUILT FROM COMPANY’S STRONGEST OPERATIONS, EXPECTED TO LAUNCH IN 60-90 DAYS UNDER NEW OWNERSHIP

GM FILES VOLUNTARY CHAPTER 11 TO IMPLEMENT ‘363′ SALE AGREEMENT

GM IS OPEN FOR BUSINESS IN THE U.S. AND WORLDWIDE, HONORING ALL CUSTOMER COMMITMENTS

Warranty, service and customer support continue uninterrupted, backed by the U.S. and Canadian governments
Essential suppliers to be paid in the normal course
Employees to be paid in the normal course
Operations outside U.S. not included in court filing
DETROIT, June 1, 2009 – General Motors Corp. (NYSE: GM) today announced that it has reached agreements with the U.S. Treasury and the governments of Canada and Ontario to accelerate its reinvention and create a leaner, stronger “New GM” positioned for a profitable, self-sustaining and competitive future.

Pending approvals, the New GM is expected to launch in about 60 to 90 days as a separate and independent company from the current GM (”GM”), with two distinct advantages: it will be built from only GM’s best brands and operations, and it will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before. The New GM will incorporate the terms of GM’s recent agreements with the United Auto Workers (UAW) and Canadian Auto Workers (CAW) unions and will be led by GM’s current management team.

The New GM will execute the key elements of its April 27 viability plan, along with additional initiatives, to achieve winning financial results by putting customers first, concentrating on adding to the company’s line of award-winning cars and trucks through four core brands and continuing to invest in green, energy-saving technologies.

Under its plan, GM will sell substantially all of its global assets to the New GM. To implement the sale agreement, GM and three domestic subsidiaries have filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York, and the sale is subject to the approval of the Court. Because GM’s sale of assets to the New GM already has the support of the U.S. Treasury, the UAW and a substantial portion of GM’s unsecured bondholders, GM expects the sale to be approved and consummated expeditiously.

GM has asked the Court to approve a number of steps to protect current and new GM customers, ensure that its operations will continue uninterrupted during the court-supervised process, and provide for a smooth transition to the New GM.

GM dealers will continue to service GM vehicles and honor GM warranties, and U.S. and Canadian government guarantees of manufacturers’ warranties are designed to reassure consumers.
GM will use its cash-on-hand and a new Debtor-in-Possession (DIP) financing of approximately $33 billion to: ensure an uninterrupted supply of goods and services and provide for other cash requirements prior to closing of the asset sale; fund liabilities to secured lenders; and provide contingency funding to handle any potential unexpected needs. Furthermore, in conjunction with the sale, the U.S. Treasury and the Canadian and Ontario governments will provide funds to administer the wind down of the remaining assets and the closing of the chapter 11 cases.
GM employees worldwide will become part of the New GM.
“Today marks a defining moment in the reinvention of GM as a leaner, more customer-focused, and more cost-competitive company that, above all, can quickly generate winning bottom line results,” said Fritz Henderson, GM president and CEO. “The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunity for us to reinvent our business. We are going to do it once and do it right. The court-supervised process we are pursuing provides us with powerful tools to accelerate and complete our reinvention, as well as strong safeguards for our customers and our business. We are focused on the job at hand, for the benefit of our customers, employees, dealers, suppliers, retirees, taxpayers, investors and other stakeholders.

“We recognize the sacrifices that so many have been asked to make as we have worked to reinvent GM and the automobile,” said Henderson. “GM deeply appreciates the support and the demonstration of confidence in our future by President Obama, the Presidential Task Force on Autos, the Canadian and Ontario governments, American and Canadian taxpayers, the unsecured bondholders who are supporting the proposed sale transaction, the UAW and CAW and their leadership, and the men and women of GM, including our retirees. You have enabled us to carry out this vital transformation for the good of GM, our customers and the economy, and we are working to validate your trust each day.

“From day one, the New GM will be well-positioned to capitalize on the award-winning vehicles we have developed and launched during the past few years, and on our investments in exciting new technologies like the Chevy Volt, so that we can build and return value to our customers and to the millions who will have a stake in our success. The New GM will play a critical role in the future of the automobile, and assure that the U.S. has a strong stake in this rapidly changing global manufacturing industry,” Henderson said.

Business operations continue globally without interruption

GM’s North American manufacturing operations continues to monitor production output to make sure it aligns with market demand, and currently intends to ramp up manufacturing operations as market demand improves during the latter half of the year.

None of GM’s operations outside of the U.S. are included in the U.S. court filings or court-supervised process, and these filings have no direct legal impact on GM’s plans and operations outside the U.S. GM confirmed that all business operations are continuing without interruption in its Europe; Latin America, Africa and the Middle East; and Asia Pacific regions.

“Worldwide, GM dealers are open for business, offering competitive financing options on our award-winning vehicles, continuing to honor our industry-leading warranty coverage, and providing outstanding service,” said Henderson. “Furthermore, the U.S. Treasury and the Canadian governments have issued a strong vote of confidence by backing GM’s vehicle warranties.”

GM has filed various “first day” motions with the Court to ensure the company’s continued ability to conduct normal business operations. Upon Court approval, GM will be expressly authorized, among other things, to:

Honor all obligations to customers and continue customer programs, including warranties, without interruption
Respect our operating and financing agreements with GMAC, supporting continued wholesale financing for dealers and retail financing for customers
Pay dealers’ open accounts and continue warranty and incentive programs
Pay essential suppliers and logistics providers for goods and services provided before and after the company’s court filings
Continue pay and benefits for employees and retirees; however, the amount of non-qualified pension for some executive retirees may be affected.
The New GM

GM’s agreements with the U.S. Treasury, the Canadian and Ontario governments and the UAW and CAW, in addition to the support of a substantial portion of GM’s unsecured bondholders, will enable the New GM to be a leaner, faster and more customer-focused enterprise, consistent with the vision, goals and plans of GM’s enhanced operating plan announced April 27.

The New GM will:

Focus on four core brands in the U.S. – Chevrolet, Cadillac, Buick and GMC – with fewer nameplates and a more competitive level of marketing support per brand
Effectively close the competitive gap in active worker labor costs compared with transplant auto manufacturers
More efficiently utilize U.S. capacity while increasing over time the percentage of U.S. sales manufactured domestically
Feature lower structural costs enabling its North American region to break even (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles. This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007
Achieve its lower structural costs in part by further reducing 2009 salaried employment in North America from its year-end total of 35,100 to approximately 27,200, and continuing to improve its balance sheet by reducing retiree benefits for salaried retirees and non-UAW hourly retirees
Provide a higher level of customer service through a more focused U.S. network of approximately 3,600 dealers
Continue and increase its investment and leadership in fuel economy and advanced propulsion technologies
Capital Structure of the New GM

A critical element of GM’s reinvention is to achieve a significantly stronger and healthier balance sheet. On March 31, 2009, GM reported consolidated debt of $54.4 billion, along with additional liabilities, including an estimated $20 billion obligation to the UAW VEBA.

Under GM’s agreements with the U.S. Treasury, the Canadian and Ontario governments, and the UAW and CAW, and with the support of a substantial portion of GM’s unsecured bondholders, upon closing of GM’s sale of assets to the New GM, the New GM’s capital structure will be comprised of:

Approximately $17 billion in total consolidated debt, including:
$6.7 billion of debt owed to the U.S. Treasury
$1.3 billion of debt owed to the Canadian and Ontario governments
$2.5 billion of notes issued to the new Voluntary Employee Beneficiary Association (New VEBA)
Approximately $6.8 billion of other, primarily international debt, but excluding Europe
$9 billion of perpetual preferred stock with a 9 percent annual dividend, payable quarterly in cash, $2.1 billion of which will be issued to the U.S. Treasury, $0.4 billion of which will be issued to the Canadian and Ontario governments and $6.5 billion of which will be issued to the New VEBA
Common equity, 60.8 percent of which will be owned by the U.S. Treasury, 11.7 percent of which will be owned by the Canadian and Ontario governments, 17.5 percent of which will be owned by the New VEBA, and 10 percent of which has been reserved for GM for the benefit of the unsecured bondholders and other unsecured creditors of GM
Warrants granted to the New VEBA to acquire newly issued shares in the New GM equal to 2.5 percent of its outstanding common equity
Warrants granted to GM at closing to acquire newly issued shares in the New GM equal to 15 percent of its outstanding common equity, with various exercise prices and expirations
Other than the $8 billion of debt owed to the U.S. Treasury and the Canadian and Ontario governments by the New GM, all amounts owed by GM or the New GM to the U.S. Treasury and Canadian and Ontario governments would be equitized in exchange for the New GM securities described above, and no other debt will be owed by GM to the U.S. Treasury and the Canadian and Ontario governments.

GM Europe Restructuring

GM announced separately today, GM Europe has an agreement for €1.5 billion of bridge financing from the German government and a Memorandum of Understanding to partner with Magna International Inc. Under the agreement, the Opel/Vauxhall assets have been pooled under Adam Opel GmbH, with the majority of the shares of Adam Opel GmbH being put into an independent trust (the balance to remain with General Motors), while final negotiations with Magna proceed. Negotiations to close the agreement should take several weeks. Additional details will be available athttp://media.gm.com/eur/gm/en/.

New products and technologies on track

The New GM, with its strong financial base and best-in-class dealer network, will support a portfolio of award-winning vehicles, including the Chevy Malibu (2008 North American Car of the Year and J.D. Power and Associates’ segment leader in its 2008 Initial Quality Survey), Cadillac CTS (Motor Trend Car of the Year) and its Buick brand (tied for 1st place in J.D. Power and Associates’ 2009 Vehicle Dependability Study). The New GM will have a number of key vehicle launches in 2009 and 2010, including:

Chevrolet Camaro, a dramatic, moderately priced sport coupe with highway fuel economy of up to 29 mpg
An all-new Buick LaCrosse premium midsize sedan
The luxury midsize Cadillac SRX crossover and CTS Sport Wagon
The Chevy Equinox and GMC Terrain, midsize crossovers with class-leading highway fuel economy of 32 mpg
The Chevy Cruze, GM’s new global compact car
The revolutionary Chevy Volt, an extended-range electric vehicle that can travel up to 40 miles on battery power alone with the extended-range capability of more than 300 total miles.
“Our products are our future, and our lineup of new cars and crossovers are a great foundation for success,” said Henderson. “The New GM is here to stay, and our brands position us to compete well in profitable segments with vehicles that are second-to-none.”

GM also reaffirmed its commitment to improve the fuel efficiency of its vehicle fleet, meet or exceed new federal fuel economy and emissions regulations, and push ahead with advanced propulsion technology. GM will launch the Chevrolet Volt extended range electric vehicle in 2010, expects to have 14 hybrid models in production by 2012, and will have 65 percent of vehicles alternative-fuel capable by 2014.

“The New GM will become a long-term global leader in the development of fuel-efficient and advanced-technology vehicles,” said Henderson. “In doing so, the New GM will contribute to the development of advanced engineering and manufacturing capabilities in the United States, which are critical to the future of the U.S. economy.”

GM’s primary bankruptcy counsel is Weil, Gotshal & Manges LLP. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM’s restructuring advisor is AP Services LLP and its financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP.

More information about GM’s chapter 11 cases is available at www.GM.com/restructuring.

Court filings and claims information are available at www.GMcourtdocs.com.

Why is it that nobody ever believes me? What insight could I possibly have as an automotive historian with Fortune 500 product and corporate marketing experience and a stint in D.C. working for a Member of Congress on transportation issues?

Just trust me next time and we’ll save a ton of money to put towards things that will inevitably show a better return…because bailing out GM and Chrysler is the government’s version of frame-off restoring a Chevette to Pebble Beach standards.

Don’t Blame The UAW — Update

It appears that when GM engages the UAW in an effort to work together to promote their common interests (such as: “survival”) good things happen. GM and UAW announced today a new agreement:

DETROIT, Mich. – General Motors today confirmed that its UAW-represented employees have ratified the modifications to the GM-UAW 2007 National Labor Agreement. The amended agreement covers approximately 54,000 hourly employees located in 46 U.S. facilities.

“The leadership demonstrated by UAW president Ron Gettelfinger and UAW vice president Cal Rapson, and the hard work from the members of the GM and UAW negotiating teams, resulted in an innovative agreement that will enable GM to be fully competitive and has eliminated the gap with our competitors,” said Diana Tremblay, vice president of GM’s Labor Relations. “We very much appreciate the support of our employees and retirees. Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks.”

Key highlights under the modified agreement include attainment of cost and cash savings comprehended in the GM Viability Plan that will enable the company to eliminate the wage and benefit gap with its competitors. It also includes changes to the agreements regarding the Voluntary Employee Beneficiary Association (VEBA) trust for retiree healthcare. The agreement also highlights GM’s plan to utilize an idled assembly and stamping facility for future production of a compact/small car in the United States to meet future fuel efficiency regulations.

In other words, in exchange for a healthy cut in overall compensation (wages, health insurance coverage/retirement benefits) GM agreed to use UAW workers to build the cars instrumental to its survival, including the Volt.

This is a good move by both sides.

An Anti-Union Guy Says: Don’t Blame the UAW

I’ll start by making it crystal clear: I don’t like unions. Most unions, in my humble opinion, penalize the best workers and deliver unjustified compensation to the worst. As a guy who loves to negotiate on my own, I’d only join a union as a last-resort.

That being said, America’s infatuation with demonizing the United Auto Workers is DEAD WRONG. Almost everything you’ve heard or believe about the UAW is not accurate, because the UAW is different from most unions.

Myth number one is the UAW, like all unions, exists only because it makes the leaders rich off of union dues. Guess what? Ron Gettelfinger, the President of the UAW, made $156,000 in 2007 and just under $160,000 in 2008. It might sound like a lot of money, but consider that this most powerful union boss in the world makes less than almost any regional union chief. For instance, the Service Employees International Union (SEIU) Local 32B-32J chapter in New York was paying its president $530,000 each year.

Even better, a person with no experience and no education can get a base of $80,000 if he is lucky enough to get a Longshoreman’s union entry-level job.

In comparison, Rick Wagoner, former President of GM, had a 2008 salary of $2.2 million. Bob Lutz, GM’s former high-profile VP, saw $1.56 million in 2008. Gettelfinger, the demonized head of this so-called greedy union in actuality makes less money than the average GM low-level department director.

Myth number two is that the UAW has no interest in the survivability of the auto companies and has never been interested in anything other than better pay and benefits. This is totally untrue. Indeed, in 1949, UAW President Walter Reuther oversaw the publication of a position paper called “A Small Car Named Desire”, which urged The Big Three to start producing smaller, more fuel efficient cars, because that is exactly what the UAW perceived the American public would want. The Big Three’s top brass told Reuther to stick to negotiating contracts, rather than tell them how to run their businesses.

Throughout the 1960s and 1970s, the UAW was regulated by the Big Three to being concerned only about protecting members’ benefits. By the late 1970s, the UAW started to see the foreign competition as a legitimate threat to the US auto industry, even when Big Three SWAT (strengths, weaknesses, opportunities, and threats) analyses focused solely on one another in each segment.

The UAW urged foreign automakers to build their cars here in the USA. Unfortunately for them, right-to-work states did better jobs of lobbying, so most foreign-owned shops became non-union.

Interestingly, though, the Japanese-owned factories seemed to offer fair compensation for work. So what does that say about the Big Three? To me it says they were…and still are greedy, shortsighted, too inbred, and insulated to see that it was their own damn fault, not the UAW’s, for the domestic auto industry’s collapse.

The verdict on proposed changes to automotive and clean air standards

I could go into great detail about all that I’ve learned about the issue from my background with transportation issues for Members of Congress, product line development and management for corporate America, discussion with industry insiders from work in automotive journalism, but instead I’ll just say this about the current administration’s proposed changes to fuel economy and pollution regulations:

Do it!

It will be great for domestic automotive companies and their American consumers, because every single time the Big Three have faced tougher standards (such as 1968 and 1975), they have succeeded far beyond their foreign rivals.

Give engineers and developers tough goals and they will deliver great products built more efficiently and at lower cost than ever expected.

Yesterday was the Prius. Tomorrow is the Chevy Volt. By 2016 there will be levels of high-performance, range, comfort, style, safety, and affordability about which we can only dream today.

What will Chrysler do with the remaining 2367 dealerships?

Chrysler announced that it will be pulling the contracts of a quarter of its dealerships. The worst-performing 789 dealerships will no longer be authorized Chrysler-Dodge-Jeeps retailers and service centers.

The talking heads are all over this issue. Some say that it is a bad move that will cost jobs, others say it will help save the company. Another group are focusing on the recent news that Chrysler executives are using loopholes to increase their salaries when they should be finding ways of keeping dealerships open.

Here’s my take: it’s about time Chrysler downsized its dealer network. If you’re like me, the first thing that came to your mind when you read the press release was “CHRYSLER HAS 3156 DEALERSHIPS!?!?!” Remember, folks, Chrysler, Dodge and Jeep only sold 1,453,122 units in 2008, which means the average was 460 car sales per dealership total – or each dealer selling 1.26 new vehicles per day. In actuality, Chrysler noted over 90-percent of sales were made by the top half of dealerships.

But the problem is deeper than it seems. The Big Three have a habit of selling dealership franchise contracts to anyone with money. They don’t give a crap about internal competition, nor do they care about quality of service at dealerships. At best, the Big Three have made a half-assed approach to quality-control, usually in the form of sending surveys to customers. If you’re like me and have circled “not satisfied” on one of these, you’ll know that the only thing that will happen is you’ll be treated even worse when you bring your vehicle in for service. (I actually had a Chevrolet dealership service manager in Shelton, WA yell at me for indicating on a surbey that I was “not satisfied” that my three-month-old Corvette had been in his shop for six weeks as they fumbled trying to repaint the car’s rear panel that had come botched from the factory!)

Having too many dealerships means that there aren’t nearly enough top-quality sales and service personnel to go around. Furthermore, it’s harder – and more importantly MORE EXPENSIVE to maintain effective sales and service training programs. Therefore, domestic dealerships have been the cesspool for auto-related incompetence.

My least fond memory of dealing with Chrysler dealerships was when my 1991 Le Baron convertible would sporadically buck and shutter. With the car still under its factory warranty, I made over a dozen trips to three Chrysler dealerships in the Seattle area to address the problem over a six month time frame. Two dealerships indicated that although they could duplicate the problem, they had spent so much time on it and thrown so many new parts at it that they’d have to start charging me for any future parts or service – even though the problem was occurring with more frequency! (I wound up calling a mechanic my family had used back in the 1970s, and the mechanic was able to diagnose AND FIX the problem within TEN MINUTES – a loose wire in the wiring harness for the ignition and fuel systems.)

It’s not just a problem with Chrysler. Last year when I had dinner with Bob Lutz from GM, I asked him his plan to train service centers to handle the complex Chevy Volt, especially when it was already common knowledge that most dealerships weren’t qualified to effectively maintain Corvettes (and then I cited my personal experience taking my new Corvette in fourteen times in two years to fix seven problems – four of which were caused by dealers trying to fix the other problems). Lutz’s comeback was “you know, dealerships are independent, so we don’t have much say with what they do. I suppose most of the Volt won’t be serviced at dealerships…the parts will just be replaced there.”

As for the sales side, not only are Chrysler dealerships (as well as GM and Ford stores) saddled with plenty of inferior products, but also these shops must compete with somewhere around 50 other dealerships with the same cars in their own state – not to mention all those with competing products. And since there’s little to no training for sales people, it’s every man and woman for themselves.

If you don’t believe there’s a difference, go walk into two different BMW or Lexus dealerships. Notice how the showroom looks, how the sales staff approaches the interaction, and the types of information provided. In contrast, go to two Chrysler, Ford or GM dealers…make them Lincoln or Caddy dealers if you prefer a more apples-to-apples comparison. The lack of structure and education is apparent in the Big Three.

With real market pricing available a click away on the web, there’s no need for ten dealers of one brand to be competing within the same metropolitan area. Chrysler is right to lower costs by cutting the dealership fat. GM and Ford should follow. Then they all need to get more from less by actually investing in some BMW-style education for sales and service.

It’s time for the Big Three…and maybe the US government (which outlawed direct sales to customers) to rethink the relationship between dealers and manufacturers.

Pontiac to be taken out behind the woodshed in 2010

Bye bye Mr. Pontiac guy. Drove my Chevy to the levy, because nobody has driven a Pontiac since 1979…

Today GM announced its worst kept secret since the Corvette ZR1 – that it is killing Pontiac. I wonder, however, if you can really kill something that has been dead for years. The announcement has caused a steep decline in stock price of body cladding and steering wheel-mounted button suppliers, as well as caused panic among the lower quartile of automotive design soon-to-be graduates, who now will have one fewer opportunity for employment.

Just a number of months ago GM announced that Pontiac was destined to become a niche brand. Since Pontiac has offered no clear segment leaders…or any platform leaders, for that matter, the nameplate has been operating functionally as a niche brand since the Trans Am ceased to be an image and sales success (yet still lagging behind Camaro in total units) back in the “Smokey and the Bandit” era.

In all honesty, this a smart move that is a long time coming. With the exception of the GTO (1964-1972), Trans Am (1969-1979), Bonneville (1957-1959), and possibly the Catalina Sport Coupe 421ci (1961 until it was eclipsed by the GTO in ‘64), Pontiac really has never been a really impressive auto builder. Seeing that it started as a lower-priced alternative to Oakland, it was always too close to Chevy. Calling it the “performance division” was really nothing more than marketing spin.

As for the rest of GM’s death row: Hummer, Saturn, Saab, only time will tell if these will be purchased or just shut-down. Saturn dealers are dropping like flies, making it less desirable to companies like Fiat, which could use the distributors to sell their fuel-efficient cars if and when a deal with Chrysler falls through.

The so-called surviving brands, Chevy, Buick, Caddy, and GMC still have a long way to go. GMC could just as easily be killed, since most GMC are shared products with Chevy. Buick is only popular in China and in US retirement home parking lots, so it could eventually become a Far East-only brand.

Caddy and Chevy are safe, because when inferior cars to Lexus, BMW, Toyota, and Honda are built, Chevy and Cadillac will build them…with “more horsepower” as the sole reason the company will cite for the products being better.

With three out of my last four new cars coming from GM (two Corvettes and an Oldsmobile Intrigue) one might accuse me of utilizing humor to hide my frustration.

Saturn will leave GM’s orbit and then probably fizzle-out

In these uncertain times, there are still those things that can be predicted with 100-percent certainty. One of those is that Saturn will be spinning out of GM’s orbit in the near future.

GM has admitted they want to either “wind down” or sell Saturn. Rumors have been swirling about a deal to sell Saturn to an ownership group led by Black Oak Partners, LLC. We don’t know much at all about Black Oak Partners, but our opinion is that it might as well be the Oak Ridge Boys, because Saturn has little chance of survival on its own.

There was a time and place when a stand-alone Saturn made sense. That time was about 1993 or 1994 when Saturn’s products were unique, and the buzz about the company was that it made great import-fighters.

GM management’s ego, greed, shortsightedness, and general strategic-ADD quickly made Saturn irrelevant. The new company with new products morphed into a young company with a stale product line. Almost fifteen years passed before the division actually received some decent products again. Unfortunately, the products Saturn received were all badge-engineered with other GM products.

So it begs the obvious question: why would anyone – Black Oak Ridge Boys Partners Blues Brothers Band or any of the other rumored “multiple suitors” want to buy a company that only produces products that are nearly identical to other products on the market? Even if Saturn’s offerings are in many ways better than its current platform- mates, that’s still a huge problem. Furthermore, with ultra-high CAFE standards staring manufacturers in the face, an independent Saturn would need some serious deep pockets for R+D.

It’s sad…the Sky roadster could have been a legend. It was prettier than the Solstice and a better size than competition like the Miata. Like all GM vehicles, it needed another generation to work out the cost-induced quality (meaning not-engineered-out) glitches. Similarly, the Aura could have evolved into a great Accord/Camry killer, instead of just an “alternative”.

And imagine had GM been more Johnny-on-the-spot and brought the Volt technology out quicker and put Saturn as the cutting-edge hybrid leader. Instead, if anyone buys Saturn, they’ll need to license the Volt technology from GM, rather than possibly buying the Saturn Volt technology and licensing it back to GM. (Yes, we know GM would have never let it happen, but as they say – “if the price was right!”)

Instead we’ll probably see Black Oak Partners or a bunch of dealers buy Saturn. And just like all the times it happened in the past (remember when Avanti was bought from Studebaker?) the company will quickly fall from relevance, but slowly fizzle out of existence.

The unholy offspring of a Fiat buyout of Chrysler

The world is already buzzing at the possibility that Fiat will buy out Chrysler. In actuality, Fiat already owns 35-percent of Chrysler (bought with the payoff money it received from General Motors), but the chances of the company taking a full majority position are Slim Whitman-to-nun chucks.

It did get me thinking, though, about all the wonderful things a Fiat-Chrysler merger would bring……

Thousands of jobs for local mechanics: What do you get when you combine the member of the Big Three that always runs dead last in quality with the automaker that, if it weren’t for Land Rover, would usually be last in quality world-wide? Busy dealership service businesses in need of every available mechanic to keep up with demand.

Abarth Viper: If Abarth could turn a lowly Fiat 500 into a wicked firebreathing Zagato Double Bubble race-winner, just imagine what the Fiat-owned tuning company could do with a V10 with over ten-times the displacement! One question, though…I wonder how they’ll get that V10 to fit behind the Viper’s trunk?

Style to the style-challenged: When one considers that the Chrysler/Dodge/Jeep product lines are riddled with more vehicles whacked with the world’s most effective ugly stick, it becomes clear that only the Italians are capable of visually un-f***ing the likes of the Caliber, Sebring, Commander, and Nitro.

Capturing the coveted “Retro” segment: The Big Three have been going toe-to-toe trying to capture what was perceived to be a huge market for retro vehicles. The 2005 Ford Mustang started the trend with lower sales than previous non-retro ponies. The Camaro and the Challenger, like the Challenger of 1970, hit the market in a terrible climate for such cars, which should provide little opportunity for success. What Fiat can provide to Chrysler dealers is a true retro car in its 500 – an undersized car totally unknown to the core demographic that will be totally modified, hence grossly compromised at huge cost to meet US regulations, requiring that it be sold at a price far higher than better and more reliable domestics, so in the end only that weird electrical engineer at the end of the street and that “unique” at the downtown librarian will buy ‘em. Sounds like the 1970s all over again.

The Hemi class at Concorso Italiano: It’s just a matter of time before a bunch of NASCAR-lovin’ gearheads file a class action lawsuit to get their SRT8s onto the show field at every major Italian concours in America.

The new Magnum-500: Then- a type of wheel found on Scat Pack Mopars. Now: buy a Fiat 500 and get a new, but still unsold 2007 Dodge Magnum wagon free.

Dodge Ferrari of Scranton: If Dodge is Chrysler’s performance division and Ferrari is Fiat’s, then it would make sense to combine (for the sake of economies of scale, of course) Dodge and Ferrari dealerships. Craftsman Truck guys to the left of ya, F1 zealots to the right!

And what should be the ace-in-the-hole to solidify a go-ahead for the merger deal: the ability to recreate for a new generation the greatest car in the history of the world: The 2011 Chrysler-Maserati TC.