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Thursday, May 31, 2007
Wednesday, May 23, 2007
Gas Prices Worse than 1981 Spike
NEW YORK –- Gasoline prices have risen to levels never seen before at the pump as even the inflation-adjusted price for a gallon of unleaded topped the 1981 record price that had stood for 26 years.
And experts warn that higher prices could be coming as Americans prepare to hit the road for the Memorial Day holiday and the start of the summer driving season.
The Lundberg Survey, a bi-weekly gas price tracking service, showed the price of a gallon of unleaded at $3.18 in its latest reading released on Sunday. That's up more than 11-cents from its reading of two weeks ago.
The Energy Information Administration's latest pump price, when adjusted for inflation, also reached a new record high. The EIA said yesterday that the average price for regular unleaded gas soared 11.5 cents over the past week to a new record of $3.22 a gallon. That's the same all-time high fuel cost reached in March 1981.
Confirming those findings, the motorist group AAA said its daily survey of up to 85,000 gas stations nationwide has been showing a series of record high prices in current dollars since May 13, and Monday the average price for a gallon of self-serve unleaded hit $3.196. The AAA said that's the ninth straight record high and up from Sunday's record of $3.178.
Before this recent run of record-high gas prices, the highest price ever recorded in current dollars was $3.057 in the AAA survey, and that was set Sept. 4 and Sept. 5, 2005 in the wake of Hurricane Katrina. That storm disrupted refinery operations and pipelines and caused a temporary spike in prices above the $3 mark for eight days.
Experts agree the current price increases are due to problems in gasoline supplies and refinery output. The average gas price went above $3 a gallon on May 4 and has continued to climb since.
The AAA said that unless prices fall suddenly, Wednesday will mark the longest stretch of $3 gas in its survey's history.
Nationwide, few states showed an average gas price below $3. California had the highest average price, with a gallon of self-serve unleaded coasting $3.457, up a bit from Sunday's $3.453.
New Jersey continued to have the least expensive gas price — the average price on Monday was $2.938 a gallon.
Four more states — Alabama, Mississippi, Tennessee and Virginia — became the latest states to cross the $3 a gallon mark.
Cerberus must guard the personal data
 | Edward Lapham is the executive editor of Automotive News. He writes commentaries for Automotive News online every business day. His commentaries also can be found here. |
Automotive News
May 22, 2007 - 3:31 pm
My biggest concern is what could happen after Chrysler Financial is tucked into the Cerberus portfolio.
The issue isn't really the specter of a hookup between Chrysler Financial and GMAC Financial Services. GMAC and Chrysler are in the same business but they don't directly compete because, mostly, GMAC finances GM products and Chrysler Financial finances Chrysler products.
Call me paranoid, but what makes me nervous is the massive consolidation of personal financial information that will be in the possession of companies controlled by Cerberus, and therefore in the possession of Cerberus itself.
And it's not just GMAC and Chrysler Financial.
Cerberus also has investments in the department store Mervyns, Houston-based Aegis Mortgage and Green Tree, a consumer loan company in St. Paul, Minn.
And that's just in the United States. Aozora Bank, based in Tokyo, and Bank Leumi, which is headquartered in Tel-Aviv, also are in the Cerberus portfolio.
I'm sure that each of those financial institutions complies with all applicable regulations and uses the utmost care to safeguard its customers from identity theft and other abuses of their personal information and data.
The powers that be at Cerberus undoubtedly are mindful of the awesome responsibility they have and almost certainly have installed firewalls and other protections to keep the data separate and prevent anyone from co-mingling them.
But in this era of rampant identity theft, when a stolen laptop can be a treasure trove of personal information with the potential to wreak havoc in thousands of lives, anything is possible.
Is it so tough to imagine someone -- a disgruntled employee, determined terrorist, cunning mobster or even a hormone-deranged teenage hacker -- defeating the security system and violating millions of us?
Yes, I know, I know. That stuff only happens in the movies or on TV.
Call me paranoid, but I'd just as soon not risk it.
Chery says deal with Chrysler not halted
Reuters |
May 23, 2007 - 9:00 am
SHANGHAI (Reuters) -- China's Chery Automobile Co. said today a framework deal with DaimlerChrysler AG to build Chrysler-branded cars was still proceeding, denying a German paper report it had been halted.
Chery, which reached an initial agreement with Chrysler last year, wants to re-examine the deal, Handelsblatt said this week, citing a senior Chery executive.
The decision, the paper said, came after DaimlerChrysler agreed last week to sell its money-losing Chrysler group to private equity firm Cerberus Capital Management LP in a $7.41 billion deal.
But a Chery spokesman told Reuters today that the newspaper had misquoted his colleague and that the earlier deal with Chrysler was progressing.
Under the agreement unveiled in late December, Chery would build small cars under the Chrysler badge for sale in Europe and the United States, paving the way for the ambitious Chinese automaker to sell its own-brand vehicles in mature markets eventually.
The Chery spokesman declined to elaborate on the status of that deal, which still needs Chinese government approval, or confirm whether Chery wants to renegotiate the terms with Chrysler's new owner.
"I don't think the deal will be called off," said George Magliano, director of North American auto industry research at Global Insight.
"There's a lot riding for both Chery and Chrysler in this," he said, noting that this would be the quickest and safest way for the Chinese automaker to tap the U.S. market, while Chrysler needed a small car.
Chery, a mid-sized but fast-growing player in east China, had made some inroads in emerging markets in Southeast Asia, Africa and the Middle East, where pricing remains a critical factor to push sales.
However, it has had little success so far in breaking into mature markets in the United States or Europe.
Some in industry favor California CO2 rules
Harry Stoffer
Automotive News
May 22, 2007 - 8:55 am
UPDATED: 5/22/07 1:48 P.M.
|  |
Dealer Adam Lee, who heads a 12-franchise group in Maine, testified at a U.S. EPA hearing today in favor of a waiver for California to implement its own rules.
Lee, who describes his Lee Auto Malls as Maine's biggest seller of hybrid vehicles, told a panel of EPA officials that automakers "need a not-so-gentle nudge" to produce more environmentally friendly vehicles.
Also testifying for the waiver was Joseph Kubsh, representing companies that make components to cut vehicle pollution. He is executive director of the Manufacturers of Emission Controls Association.
That left an official of the Alliance of Automobile Manufacturers as the only industry witness against granting a waiver under the Clean Air Act.
But Doug Greenhaus of the National Automobile Dealers Association, observing from the audience, told Automotive News that NADA will be submitting written comments against the waiver. He is NADA's director of environment, health and safety.
At today's hearing Steven Douglas of the alliance testified that California has failed to prove that its "regulations would help address the issue of climate change or global warming in a concrete manner" or improve air quality.
He is director of environmental affairs for the alliance, representing the Detroit 3, Toyota and five other automakers.
Numerous witnesses from states and environmental groups lined up to testify in favor of allowing California to implement vehicle emissions different from those of the federal government.
A second hearing is set for May 30 in Sacramento.
EPA Administrator Stephen Johnson has promised to move expeditiously but responsibly on the explosive issue, which could force automakers to make fundamental changes in cars and trucks.
Eleven other states have adopted the California-style rules, which require an estimated 30 percent reduction in greenhouse gases from cars and trucks by 2016. Together with California, those states have nearly 40 percent of the U.S. new-vehicle market.
Automakers and dealers have challenged the rules in federal courts as an illegal attempt to regulate fuel economy, a power reserved by the federal government. The main greenhouse gas is carbon dioxide, a byproduct of burning fuel but also a natural part of the atmosphere.
California Gov. Arnold Schwarzenegger and Connecticut Gov. Jodi Rell, both Republicans, said Monday, May 21, that "it borders on malfeasance" for the federal government to block efforts by states to protect public health and welfare from the effects of climate change. The remarks were in a joint column published by the Washington Post.
California submitted its waiver request 16 months ago.
The EPA has granted frequent waivers over the years to California to have air pollution rules different from those of the federal government.
But the Bush administration held the position that the EPA could not regulate -- and could not authorize states to regulate -- carbon dioxide under the Clean Air Act. The law is aimed primarily at toxic pollution and tailpipe emissions that cause lung-damaging smog.
But the U.S. Supreme Court ruled on April 2 that the EPA must determine if greenhouse gases pose a threat to public health and, if so, to regulate them, using the Clean Air Act.
Meanwhile, Congress is considering a range of measures to cut petroleum consumption and greenhouse gas emissions.
Douglas, in his testimony for automakers today, said industry support for a comprehensive national solution makes a patchwork of state rules "not just unnecessary but actually counterproductive."
Friday, May 18, 2007
Magnitude 5.5 - HOKKAIDO, JAPAN REGION
| Magnitude | 5.5 |
|---|---|
| Date-Time | = Coordinated Universal Time = local time at epicenter |
| Location | 41.617°N, 141.982°E |
| Depth | 55.6 km (34.5 miles) |
| Region | HOKKAIDO, JAPAN REGION |
| Distances | 105 km (65 miles) E of Hakodate, Hokkaido, Japan 130 km (80 miles) NNE of Hachinohe, Honshu, Japan 135 km (85 miles) NE of Aomori, Honshu, Japan 690 km (430 miles) NNE of TOKYO, Japan |
| Location Uncertainty | horizontal +/- 7.2 km (4.5 miles); depth +/- 9.2 km (5.7 miles) |
| Parameters | Nst=141, Nph=141, Dmin=107.2 km, Rmss=0.88 sec, Gp=104°, M-type=body magnitude (Mb), Version=6 |
| Source |
|
| Event ID | us2007cmbe |
Tuesday, May 15, 2007
CHRYSLER SOLD FOR $7.4B
CHRYSLER SOLD FOR $7.4B
Toledo Jeep employees fret over job security, benefits
New owner Cerberus is tight-lipped about plans
 See AP video ( ASSOCIATED PRESS ) |
After nine years of ownership by a German-based firm, the Toledo Jeep Assembly Plant and its parent company are entering a new era.
DaimlerChrysler AG said yesterday it will sell 80.1 percent of the sputtering Chrysler Group to Cerberus Capital Management LP for $7.4 billion, marking the first time that a private equity group has owned a Big Three auto manufacturer.
The acquisition of the Chrysler Group, which lost $1.5 billion last year, will end the 1998 merger of Daimler-Benz and Chrysler Corp.
| ( THE BLADE/JEREMY WADSWORTH ) |
Tim Steele, an employee for 22 years, said the United Auto Workers likely will be asked to accept concessions when the union begins contract talks with the automaker this summer.
“I’m hoping that it is good for everybody,” Jeff Ferris, a 44-year-old production worker, said of the deal.
But employee Randi Downes expressed reservations about the buyer.
| |
The Jeep Liberty, Dodge Nitro, and redesigned Jeep Wrangler are made at the multifactory complex off Stickney Avenue.
The system of supplier factories at the assembly complex that is used to build the Wrangler is a new concept in the production of vehicles in the United States. The complex has more than 4,500 employees.
Chrysler also operates a machining plant in Perrysburg Township and has a joint-venture engine plant in Dundee, Mich.
Under the deal, DaimlerChrysler AG will retain 19.9 percent of Chrysler. After the sale is complete, the German firm will be known as Daimler AG.
The sale of Chrysler to the New York firm was announced yesterday in Stuttgart by DaimlerChrysler’s Chief Executive Dieter Zetsche, who put the company on the block three months ago at the urging of board members and investors.
Cerberus Chairman John Snow, a Toledo native, was at the news conference in Germany.
“We think at this particular point in Chrysler’s history, there may be opportunities in the private world, the world of private investment, that create more room for growth and expansion, that allow management to focus with greater intensity on the day-to-day business of producing better cars,” Mr. Snow said.
The new company, which will be called Chrysler Holding LLC, will take over about $18 billion in existing employee health and pension obligations. The sale is expected to be completed by Sept. 30.
|
Ron Gettelfinger, UAW president, expressed support for the deal yesterday after earlier objecting to a possible sale to a private equity group.
“It’s going to happen,” Mr. Gettelfinger said, “and we’re going to make it happen in the best interests of our membership.
“There will be an infusion of cash put into this company, and a lot of things are going to happen that are in the best interests of moving forward,” the union president said.
Cerberus is buying Chrysler at a bargain price, said Ron Harbour, president of Harbour Consulting in Troy, Mich. And getting the Toledo-born Jeep brand in the deal was a coup for Cerberus, Mr. Harbour said.
|
With two plants built in the last few years, including one where suppliers share the financial burden and work for the hot-selling Jeep Wrangler, the Toledo Jeep complex is one of the deal’s strongest assets, he said.
“For Toledo, this is a good thing,” Mr. Harbour said. Cerberus appears to be building up its auto industry interests, Mr. Harbour said. Having Chrysler provides an anchor and it is unlikely Cerberus will want to sell the automaker or the Jeep brand in the next few years, he said.
No more plant closures or other manufacturing changes are likely to be announced before negotiations with the United Auto Workers this summer, Mr. Harbour added.
The buyer intends to take the company private, and it will no longer have publicly traded stock. Private-equity firms, which are investment pools financed by large pension funds, wealthy investors, and others, typically buy struggling companies, improve profitability, and later re-sell them.
Jeep, Dodge, and Chrysler are likely to stay together for now, but negotiations with the UAW will play a major part in determining their futures, said Tina Jantzi, manager of North American forecasting for J.D. Power and Associates.
| HEADQUARTERS: • Auburn Hills, Mich. CHIEF EXECUTIVE: • Tom LaSorda (will remain) |
J.D. Power, meanwhile, is raising its sales expectations this year for the Wrangler. The other two Toledo-made products, the Jeep Liberty and Dodge Nitro, also are doing well, Ms. Jantzi said.
‘We’re pretty optimistic’
“We’re pretty optimistic for all three of them,” she said.
Representatives of Cerberus visited Toledo and toured the Jeep Assembly complex during the last month, according to employees.
The upcoming negotiations between the Big Three automakers and the UAW will be pivotal in shaping the future of Chrysler, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
“It is not survivable without doing some major things,” he said. “If they don’t come with an agreement that allows them to be more competitive over the long term, it is going to be horrible over the next few years.”
| • New York CHIEF EXECUTIVE: • Stephen Feinberg AUTOMOTIVE HOLDINGS: • CTA Acoustics, Madison Heights, Mich., makes acoustical and thermal insulation products • GDX Automotive Inc., Farmington Hills, Mich., makes and supplies vehicle seating and parts • GMAC LLC, Detroit, financial services company that offers auto loans, other products • Guilford Mills, Wilmington, N.C., auto seat supplier • Peguform Group, Germany, makes interior/exterior plastic parts |
“We feel pretty comfortable they will see our northwest Ohio facility as one of — if not the — centerpiece of the acquisition,” Mr. Finkbeiner said.
Staff writers Julie M. McKinnon and Tom Troy contributed to this report. Information from the Associated Press also was used.
Thursday, May 10, 2007
Magna's Stronach sees deal on Chrysler over next few weeks
05.10.07, 2:23 PM ETOTTAWA (AFX) - Canadian auto parts firm Magna International is hoping 'over the next few weeks' to announce an agreement to buy Chrysler, the loss-making US unit of DaimlerChrysler AG, Magna chairman Frank Stronach said.
Magna, which has teamed up with Toronto-based investment giant Onex Corp, has been reported to be readying a 5 bln usd offer for 80 pct of Chrysler. The Canadian firm also today obtained a big investment from a Russian group.
Under the plan believed to be in the works, DaimlerChrysler (nyse: DCX - news - people ) would retain a 20 pct stake in the Detroit-based carmaker.
'Well, of course we have an interest in Chrysler for the simple reason we have thousands of jobs involved,' the Austrian-born Stronach told public broadcaster CBC.
'Over the next few weeks, we hope that we can play a constructive involvement in the future of Chrysler,' he said. 'We do not like to compete with our customers, so we would not have a majority in there.'
DaimlerChrysler is one of Magna's largest customer, purchasing almost 25 pct of its annual sales, while unit Chrysler accounts for 15 pct of Magna's sales.
'We have teamed up with Onex. We have a financial partner and financially we have a very viable concept. We have major banks which are lined up,' Stronach told the Globe and Mail.
But Chrysler, which is in the midst of chopping 13,000 jobs and closing plants in North America as part of a restructuring move, could expect more cost-cutting measures under Magna's stewardship, Stronach said.
'Sometimes when you're sick, you've got to take some drastic measures and that's unfortunate,' Stronach said of Chrysler. 'What do we have to do to create a healthy patient?'
Earlier today, Russian metals firm Basic Element, owned by oligarch Oleg Deripaska, announced it will buy a stake in Magna for 1.54 bln usd (1.13 bln eur).
Separately, Magna reported a first-quarter profit of 218 mln usd, up 2.8 pct from a year ago, on revenues of 6.4 bln usd.
PSA: Carjacking Rule #213 - Pick A Subtle Target
WINDING ROADS
We’re not up on proper carjacking tips and etiquette, but we’re guessing that selecting the most conspicuous car on the street for a target is probably a recipe for disaster.
So it is for a pair of men in Tampa, who have been charged with armed carjacking after they lifted a lime-green 2006 Dodge Charger. The suspects also didn’t count on the plucky owner hanging on to his car as the driver attempted to get away, aiming the Charger at parked cars in an attempt to get him off the car. The episode has also cost one of the carjackers an attempted murder charge.
How were they caught? Why, the Dodge’s beacon-like Sublime paint was spotted behind a fence where the car was being stripped for parts.
Brilliant.
+ St Petersburg Times: Lime-green car points men in blue to suspects
Divorse of Equals
| Edward Lapham is the executive editor of Automotive News. He writes commentaries for Automotive News online every business day. His commentaries also can be found here. |
Edward Lapham | Automotive News
May 10, 2007 - 11:37 am
|  |
Every market has its ups and downs, and so does every automaker, although the downs never seem to be as deep or as long for some companies.
For some time, there has been bad stuff coming around for the Detroit 3 -- especially in North America, where sales have been sluggish and where from time to time they've used incentives to sell cars and trucks.
But General Motors, Ford and Chrysler aren't the only automakers having problems in their home markets.
The Mercedes-Benz car group -- which seems eager to jettison the struggling Chrysler group -- is itself battling a dramatic sales decline in Germany. Some of it is due to sluggishness. Some of it may be residual damage from the recent days of lousy quality. Some of it is due to marketing blunders.
Our German-language sister publication, Automobilwoche, reports that Mercedes has told its dealers to work harder at selling dealer demos, to push vehicles already in inventory and to take advantage of the factory's marketing promotions.
Dealers say the problem is that Mercedes has screwed up the market for its cars by buying too much business with rebates.
That sounds a lot like the issues facing Chrysler in the United States.
It has been three months since DaimlerChrysler CEO Dieter Zetsche declared that Chrysler is for sale, and a deal seems imminent. But if a deal isn't consummated soon, it may be time for plan B.
Given the problems facing Mercedes in Germany, wouldn't it make sense for Chrysler to dump Mercedes?
In a marriage, either partner can file for divorce. So why not, in what the prenuptial agreement billed as a merger of equals?
After all, in the global car biz, was umhergeht, kommt herum.
What goes around, comes around.
DaimlerChrysler Trademark Update
Team Mopar Drifters Hübinette, Cook and Hogan Present a Triple Threat at Road Atlanta
| by Darren Jacobs, Team Mopar Racing CENTER LINE, Mich. -- Team Mopar drifter and two-time Road Atlanta event winner Samuel Hübinette will have some company this weekend as he looks to notch his third win at the track. When Hübinette gazes out the window of his Mopar Dodge Charger SRT8 drift machine, he’ll see Snake eyes — the Dodge Viper SRT10s of fellow Team Mopar drifters Chris Cook and Nick Hogan. |  |
Magna, Onex after Chrysler
May 10, 2007 04:30 AM
Magna International Inc. chair Frank Stronach says Chrysler faces job cuts if his company and Onex Corp. take control of the ailing auto maker.
In confirming a formal bid with Onex for the first time, Stronach told reporters yesterday money-losing Chrysler Group will need changes to become profitable again and that will mean fewer jobs and an overhaul in labour relations.
"I think that will be unavoidable," he said about job cuts, speaking after the annual shareholders meeting of Magna Entertainment Corp. "Sometimes, when you are sick, you've got to take some drastic measures. And that's unfortunate."
Chrysler, an arm of DaimlerChrysler AG, employs more than 81,000 workers in Canada, the U.S. and Mexico.
Earlier this year, the company announced it would cut 13,000 production and office jobs before the end of 2009, including 2,100 in Canada.
Stronach, who controls Aurora-based Magna, did not reveal how much employment levels would need to drop or whether Chrysler would close more plants. Chrysler has 11,000 employees in Canada.
At the same time, Stronach noted Chrysler could eventually grow again and create jobs.
Buzz Hargrove, president of the Canadian Auto Workers union, said he didn't anticipate any further cuts here because Chrysler's operations are efficient and productive.
The CAW and the United Auto Workers have said they want German-based DaimlerChrysler to keep Chrysler but if it sells the company, a group including Magna would be a preferable suitor.
The unions fear major U.S.-based equity firms that are considering bids for Chrysler would "strip and flip" the auto maker for a quick profit at the expense of thousands of jobs.
Stronach also said if his company and Onex succeed in a bid he would insist on profit sharing, a hallmark of Magna's culture, and other changes to boost innovation and productivity.
"That would be automatic," Stronach said of profit sharing. "You must create an attitude, you must create an environment. We want them to be part-owners and we want them to be competitive."
He stressed that improvement in labour relations "will determine" if Chrysler survives.
Stronach also repeated the need for a "framework of fairness" between management and labour at Chrysler. Magna and its unions are currently working on such an arrangement at the company's Canadian and U.S. plants.
As part of that deal, the CAW and the UAW would get easier access to Magna plants by eliminating divisive organizing drives. Instead, the company would allow workers to vote immediately on first contracts that foster co-operation for more innovation and efficiencies.
Regarding the bid for Chrysler, Stronach would not disclose the size of Magna's stake under a new ownership structure but said it would not increase the company's debt.
"Keep in mind, we've got $2 billion (U.S.) in cash in the bank," he said. "I will not gamble Magna away for Chrysler."
He described the bid as "financially, a very viable concept" with backing from major banks in addition to Toronto-based Onex.
"Everyone knows how averse I am to debt," he said, reflecting on Magna's brush with bankruptcy in the early 1990s.
Stronach noted Magna would not need to be in control of Chrysler "as long as the framework for corporate governance is solid."
Magna and Onex would also welcome other partners in the buyout group, he said.
Reports have suggested that suitors would start bidding at $4.5 billion to $5 billion while DaimlerChrysler values the North American arm of the company at between $8 billion and $9 billion.
Stronach said Magna, the world's third-largest auto parts maker, does not want to compete against its customers. But there are many joint ventures between major auto makers now, he added. "I think as the world evolves, it's more crucial to have strategic partners."
Magna already operates a paint shop for a Chrysler assembly plant in the U.S. The company also assembles models at a plant in Austria for some auto makers in the European market.
It has sought a deal with an auto maker to build complete vehicles in North America for several years.
An overview of Chrysler Group's suitors, options
DaimlerChrysler AG is not talking about the companies supposedly interested in buying the Chrysler Group. But here is the state of industry thinking:
Potential investors
• Magna International Inc. and Onex Corp.: The Canadian team of auto-parts supplier and investment company is considered the front-runner by a KeyBanc Capital Markets analyst, and a German industry newspaper has said the group is the lone serious bidder. The Canadian Auto Workers union prefers this tandem over the other bidders.
• Cerberus Capital Management: A private equity firm that might hold an edge with some Chrysler workers, having hired former Chrysler Chief Operating Officer Wolfgang Bernhard, who helped orchestrate the automaker's previous turnaround along with current DaimlerChrysler Chairman Dieter Zetsche. Bernhard has been seen recently at Chrysler headquarters in Auburn Hills.
• Blackstone Group: A private equity firm with experience in the auto industry. Some experts say Blackstone's offer might be helped by the fact that because so little is known of its bid, plans or leadership team, no one has anything to criticize.
• Kirk Kerkorian: The billionaire's investment company Tracinda Corp. has made its $4.5-billion bid public. but it supposedly was not looked upon favorably, in part because of Kerkorian's contentious history with DaimlerChrysler. In the 1990s, he attempted to buy Chrysler but failed. Some experts have praised Tracinda's idea of giving the UAW an ownership stake in Chrysler in exchange for health-care concessions, an idea they expect others to follow.
• Employee Ownership Committee: The group of hourly workers from Toledo appears to be a long shot. It says its offer is not taken seriously.
• General Motors Corp.: The Detroit automaker was one of the first names to emerge as an interested party. The crosstown rival had talks with DaimlerChrysler about a potential deal that effectively would have GM taking Chrysler off Daimler's hands. Talks fell to the side when DaimlerChrysler sought a better deal on the open market.
Wild cards
• The UAW: Union President Ron Gettelfinger has made his position clear: DaimlerChrysler should stay together. Whenever he speaks publicly about the issue, that's what Gettelfinger says. His office, meanwhile, has received numerous telephone calls from prospective buyers seeking support.
• Long-term liabilities: Analysts estimate the long-term value of promised health-care and pension benefits to Chrysler employees at $16.5 billion to $19.2 billion. Who pays for these and how?
• Option to keep: Zetsche and other DaimlerChrysler officials have said repeatedly that "all options are on the table." By definition, that would include the option not to sell Chrysler.
Queries about Chrysler likely at Magna meeting
TOEDOBLADE.COM | DETROIT — Executives of Magna International Inc. are likely to face questions at today’s annual shareholder meeting about Chairman Frank Stronach’s pursuit of a stake in DaimlerChrysler AG’s Chrysler Group, according to some analysts who follow the company.
But if Mr. Stronach decides to buy into the struggling automaker, no shareholder will be able to stop him. Mr. Stronach controls a vast majority of the company’s Class B shares that carry 500 votes each.
Magna has confirmed its interest in buying Chrysler, and many U.S. analysts have named the Canadian company the front-runner in the bidding, along with partner Onex Corp., a Canadian investment conglomerate.
Workers say their DCX bid rebuffed
Toledo group eyes a shot at Chrysler
May 10, 2007
All options may not be on the table for the Chrysler Group after all.
Chrysler hourly workers trying to put together an employee-led buyout of the U.S. unit of DaimlerChrysler AG say they're not being taken seriously -- "hitting a wall" -- even though they have assembled a team of advisers and investment bankers.
A representative from the group said Wednesday it has been in contact with JPMorgan, DaimlerChrysler's investment bank, only to be told that talks with other bidders are far along."They said they are instructed by Germany not to hand out any information to anyone," Richard Caires, a Connecticut investor retained by the Chrysler Employee Ownership Committee to help put together a deal, told the Free Press. "He also said they're far along in the process and what you read in the papers is not far off from the mark -- meaning Magna."
A person familiar with the matter confirmed that the employee group's representatives have had contact with DaimlerChrysler's representatives.
An offer by Canadian auto supplier Magna International Inc. and its investment partner Onex Corp. has been generating the most buzz lately as a likely front-runner among bids to buy the Chrysler Group. Other bidders are believed to be private equity firms Blackstone Group and Cerberus Capital Management.
Magna Chairman Frank Stronach is sure to receive questions about the Chrysler bid during Magna's annual meeting today in Toronto.
The Chrysler Group's future was thrown into uncertainty in February when DaimlerChrysler AG Chief Executive Dieter Zetsche indicated the U.S. division might be sold.
While several interested groups have emerged publicly, DaimlerChrysler officials seem to be taking the Magna-Onex, Cerberus and Blackstone groups the most seriously.
The employee group emerged during the DaimlerChrysler annual meeting in Berlin in April, when a shareholder, wearing an orange T-shirt that read: "You are leaving the American sector" out of what she called solidarity for the UAW, read a letter from the Toledo-based group asking for consideration.
Since then, Michele Mauder, the head of the employee group, has worked to put something together.
The group formed a limited-liability corporation and signed up Morpheus Capital Advisors of New York City. The group is trying to make the case that it is the best choice for the future of the employees.
"We've been asking for the financial books. Now that we have committed ourselves to an investor and got our financial banking from New York banks, Daimler and JPMorgan will not let us see the books. We are hitting a wall," said Mauder, a UAW member who works at the Chrysler Jeep plant in Toledo. "There are a few they are letting in. Doctor Z has said numerous times that all options are on the table, but if that is true, we need to know what's going on behind the scenes."
DaimlerChrysler's practice has been not to comment on prospective bidders.
UAW President Ron Gettelfinger has said repeatedly that the union's goal is to keep DaimlerChrysler together. He has referred to the Toledo group's proposal as sketchy.
Mauder's group, which she says has about 50 people on the committee, has met with officials from Kirk Kerkorian's Tracinda Corp., she said.
Kerkorian, who tried a Chrysler takeover in the 1900s, has offered $4.5 billion to buy Chrysler, but the offer apparently has been pushed to the sidelines because of his contentious history with the company.
KeyBanc Capital Markets has said the Magna-Onex offer is about $5 billion, but its true value could be much more to DaimlerChrysler if the buyer took on its pension and health-care liabilities, which have been estimated to be worth as much as nearly $20 billion.
Kerkorian has proposed that the UAW be given an ownership stake in Chrysler in exchange for union concessions on health care.
"Whatever the unions are going to negotiate for givebacks ... has to be voted on by the rank and file. Well, the rank and file are sitting here saying we are interested in pursuing this," said Caires.
He said the group will be able to put together financing. "We are confident that we can raise the necessary capital," he said. "What Michele's group is going to need is getting Daimler to say, 'OK, let's see what you got.' That's it, that's all she needs. What she has been getting is polite lip service from the union and from Daimler. They don't want this to happen."
He added: "They are hoping this goes away."
Report: Magna boss sees 'drastic' steps at Chrysler
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 | Magna Chairman Frank Stronach expects a decision regarding the potential purchase to be made during the next few weeks. |
Reuters |
May 10, 2007 - 5:00 am
UPDATED: 5/10/07 8:47 A.M.
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"Sometimes when you're sick, you've got to take some drastic measures and that's unfortunate," said Stronach, chairman and founder of the Canadian auto parts maker, about Chrysler, according to the Globe and Mail.
"What do we have to do to create a healthy patient?" he added.
Stronach said Magna wants to acquire Chrysler, with backing from financial partner Onex Corp. Magna also would like DaimlerChrysler to retain a stake in Chrysler, he said.
Today, Magna said a company controlled by Russian billionaire Oleg Deripaska would invest some $1.54 billion in Magna to help the Canadian company's growth prospects in Russian and other markets.
Ex-DCX engine unit, bought by private-equity firm, is still standing
Photos from MTU Detroit Diesel
MTU Detroit Diesel President and CEO Ulrich Kemnitz says its owner, EQT Partners, a Swedish private-equity firm, is continuing to invest in its business.
Christine Tierney / The Detroit New
In the year since DaimlerChrysler AG sold its off-highway engine unit, the operation has increased its sales and headcount, belying the notion businesses sold to private equity firms inevitably get savaged.
EQT Partners, the Swedish private-equity firm that bought the unit and renamed it Tognum Group, announced last month it was acquiring a generator-set maker in Minnesota.
"It's a testament of our owner wanting to further invest in our business," said Ulrich Kemnitz, CEO of MTU Detroit Diesel, a Detroit-based off-highway manufacturer formerly owned by DaimlerChrysler and now part of Germany-based Tognum.
MTU Detroit Diesel is also doubling its salaried work force in Detroit, where it builds big engines for power generators, mining trucks, boats and other large vehicles, to more than 200.
DaimlerChrysler officials point to Tognum and other successful private-equity deals as the company studies offers for Auburn Hills-based Chrysler Group, which the German automaker put up for sale earlier this year.
"In deals we've done in the past with private-equity groups, the main criteria were, 'What does the investor want to do with the company? What is the strategy?' " said a DaimlerChrysler official, speaking on condition of anonymity.
Among the leading candidates bidding for Chrysler are private-equity firms Blackstone Group and Cerberus Capital Management and Canadian supplier Magna International Inc. Top General Motors Corp. officials also have spoken with DaimlerChrysler about a deal.
DaimlerChrysler's labor representatives, including United Auto Workers President Ron Gettelfinger, who sits on the automaker's supervisory board, are wary of private-equity bidders. They view them as inclined to break firms apart for a quick profit, a perception hardened by the UAW's difficult wage negotiations with Cerberus, a possible buyer of bankrupt supplier Delphi Corp.
But Joe Phillippi, president of AutoTrends Consulting Inc., said private-equity firms are not usually harsher owners. "For the most part, it's not necessarily more brutal. The worst scenario is GM buys Chrysler -- there, you'd see a veritable bloodbath over time."
Although DaimlerChrysler does not have equity in Tognum, it retains close ties. "It's a very amicable relationship," said Bryan Mangum, marketing manager at MTU Detroit Diesel.
MTU Detroit Diesel's 100 or so hourly workers are employed by DaimlerChrysler and represented by UAW Local 163 under the terms agreed to when the automaker sold the off-highway activities in March 2006. "We reimburse Detroit Diesel," the engine business still owned by DaimlerChrysler, "for their expense," Kemnitz said.
MTU Detroit Diesel leases space in a 3 million-square-foot DaimlerChrysler site that straddles Detroit and Redford.
Tognum has about $3.3 billion in annual sales, and business is growing worldwide. In the United States, it has won contracts to supply engines to the U.S. Coast Guard, which is renewing its fleet.
EQT is contemplating an initial public offering for Tognum but hasn't disclosed the timing.
Chrysler exceeds buyout projections
Josee Valcourt / The Detroit News - - DaimlerChrysler AG's Chrysler Group -- amid a turnaround effort that calls for shedding 9,000 U.S. hourly positions over three years -- received more buyout applications than it needed at affected plants. "Corporate wide, we have exceeded our original projections," said Chrysler spokeswoman Michele Tinson. She declined to elaborate. Workers in Detroit had until April 16 to determine if they wanted to take the automaker up on the buyout offer. Deadlines varied at other sites, with the latest on April 23 for St. Louis North and South employees. Chrysler, which posted a $680 million loss in 2006, offered U.S. blue-collar workers at certain plants a retirement package that includes a $70,000 lump sum plus health care and pension benefits. Workers with less seniority were also offered buyout packages worth $100,000 and six months of limited health benefits. Both programs were made available in early March after Chrysler revealed its comeback strategy on Feb. 14. Chrysler isn't providing an update on the number of applications it received to date from workers ready to leave the company. But by early April, Chrysler was well on its way to reaching its target of 5,875 reduced hourly positions for the year. Some 4,312 hourly employees represented by the United Auto Workers in the U.S. and in Canada -- where Chrysler hopes to shave 2,000 blue-collar jobs -- submitted paperwork to accept the buyouts. Among them are 1,600 Michigan workers. In total, the automaker wants to eliminate 11,000 union-represented positions by 2009 in the U.S. and Canada as it also moves to cut 400,000 units of production as part of its restructuring. Some 2,000 salaried jobs also will be trimmed. In addition, Chrysler plans to cut third shifts from Warren Truck plant and its St. Louis factory, and idle its Newark, Del. factory. Blue-collar workers will learn when they will be let go between April 30 and June 30. "Our manufacturing facilities will determine when the accepted programs will be activated," said Tinson, based upon the manpower needs of each targeted factory.
This Day in Auto History: 10 MAY
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 | Source: Automobile History Day By Day, by Douglas A. Wick |
Deposits Placed for 12,600 Smart Cars
© 2007 The Associated Press DETROIT — United Auto Group Inc., the nation's second largest auto retailer, Wednesday said that in just over five weeks it has received $99 deposits from 12,600 people eager to be among the first buyers of DaimlerChrysler AG's two-seat Smart mini car when it hits U.S. showrooms in 2008.
United Auto Group, which owns the Smart USA division of DaimlerChrysler's Smart unit, kicked off a program in March that offers people the opportunity to be a Smart "insider" and get on a waiting list in return for a refundable $99 deposit. United Auto Group Vice President Tony Pordon said the company has seen considerable interest in the product due to a growing demand for fuel-efficient cars and a continued interest in unique cars.
"With fuel prices escalating and this car promising 40 miles per gallon, they're looking at it as an economical way to be able to adapt to changes in the marketplace," Pordon said. Smart vehicles are slated to have a base price below $12,000.
Smart cars are about the size of golf carts but more technologically advanced than many of the cars already on U.S. roads. While Smart products are dwarfed by most vehicles, they are certified with four-star crash worthiness.
Edmunds.com auto analyst Michelle Krebs noted that DaimlerChrysler was going to put Smart cars on sale earlier in the decade, but that effort stalled due to financial problems DaimlerChrysler had at the Smart division. Now, "with gas prices looking at $4 a gallon this summer, this is perfect timing," said Krebs.
Pordon said the company does not know how many people who have given deposits will follow through and actually buy a Smart two-seater, but he expects the retention rate to be high. The company only plans to sell 16,000 Smarts next year in three configurations _ the base "Pure" model, the upgraded "Passion" model and the "Passion" cabriolet.
While consumers are given a shot at getting in line for what might be a hot product, United Auto Group sees the $99 deposit scheme as an ideal way to do consumer research. Essentially, the company is getting a fairly accurate snapshot of what kind of models its buyer-base is interested in, so it can order pools of cars from DaimlerChrysler that they can actually sell in North America. Pordon said the most popular Smart model has proven to be the Passion edition.
Pordon said that the company could conceivably sell out of the first year's expected volume before the vehicle goes on sale. United Auto Group, which primarily sells luxury models and import brands in the United States, in addition to operations in Europe, is kicking off a 50-city road show this month in order to drum up more demand.
United Auto Group is currently weeding out 50 to 60 dealers from an initial field of more than 1,000 interested dealers that will be selected as exclusive outlets for the vehicles starting in 2008. Pordon said the company has seen considerable consumer interest in California, New York, Washington, D.C., and even in Michigan, where the Big Three Detroit auto makers dominate.
The initial popularity of Smart comes at a time when mini cars are not even on sale in the United States. The so-called sub-compact, or B-segment, currently represents the smallest vehicle class in the United States and most major manufacturers have a product in the sub-compact class or plans to enter it by decade's end. BMW AG sells a line of Mini Cooper vehicles in the United States, but those vehicles are much larger than DaimlerChrysler's Smart cars.
Mini cars have taken off in other established markets, including Western Europe, as high energy prices have driven popularity of smaller models. Domestic U.S. auto makers have long stayed away from investing too heavily in manufacturing smaller cars because they offer little or no profit potential and Americans continue to prefer larger cars.
General Motors Corp., however, is eyeing the embryonic U.S. mini car segment as a potential frontier worthy of exploration. At the New York auto show, GM showed off three mini cars built and designed by the company's Korean unit.
Cruise Nights and Concept Vehicles Drive the Fun at the Walter P. Chrysler Museum this Summer
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AUBURN HILLS, Mich., May 10 /PRNewswire-FirstCall/ -- The fun will be at full throttle this summer as Cruise Nights return to the Walter P. Chrysler Museum in Auburn Hills, from 6 - 9 p.m. Thursdays, June 14 and 28, July 12 and 26 and Aug. 9 and 23.
Cruisers with vehicles of all makes and models -- and enthusiasts who simply enjoy the chrome and steel landscape -- can feast on the automotive eye-candy that will adorn the Museum's spacious grounds, including a must-see array of spectacular Chrysler Group concept vehicles.
Cruise Nights at the Walter P. Chrysler Museum will celebrate car culture -- rain or shine -- with music, free Museum tours and food concessions. A variety of Chrysler Group's most popular concept vehicles will be thematically displayed in the Museum's front circular drive each evening:
-- Dodge Challenger Night, June 14: Dodge Challenger, ACR Viper, Mopar SS Drag and Chrysler Nassau -- Classic Cruiser Night, June 28: Chrysler 300 Hemi(R) C, Chrysler Imperial, Chrysler Phaeton, Dodge Super Hemi -- Extreme Performance Night, July 12: Dodge Demon, Chrysler Firepower, Chrysler ME Four-Twelve and Dodge Tomahawk -- Radical Night, July 26: Akino, Expresso, Slingshot and Trio -- Jeep(R) Night, Aug. 9: Jeep(R) Gladiator, Jeep Hurricane, Jeep Jeepster, Jeep Rescue and Jeep Trailhawk -- Hot Truck Night, Aug. 23: Jeep Gladiator, Dodge M80, Dodge Power Wagon and Dodge Rampage
Product specialists will be on hand to answer questions about each Chrysler Group concept.
The Walter P. Chrysler Museum will award plaques each Cruise Night to participants with outstanding vehicles in three categories:
-- Museum Choice; -- Best Wheels for Wooing; and -- Best Challenger, Best Classic Cruiser, Best Performance Vehicle, Most Radical Ride, Best Jeep(R) and Hottest Truck, in keeping with Cruise Night themes. Revving up Cruise Nights fun will be: -- Cruis'news, on June 14, to individually photograph owners with their vehicles. Owners can pick-up their complimentary framed photo from the Museum during subsequent Cruise Nights. -- 94.7 WCSX, on June 28, with the Classic Rock Cruisers. Weekend jock KT will be on-hand to emcee and Focus Hope will sell raffle tickets for this year's WCSX Stone Soup project -- a 1968 Dodge Charger. -- 101 WRIF, on July 12 and 26, with the WRIF Muscle Car Club. A WRIF air ace will host the party both evenings, complete with station giveaways.
The Walter P. Chrysler Museum is located at the corner of Featherstone and Squirrel Rds. on the DaimlerChrysler complex in Auburn Hills. From I-75, take exit 78 (Chrysler Dr.) and follow the Museum signs.
Buyer Backs Out Of $10 M Bid For General Lee
May 9, 2007 03:09 PM Dukes of Hazzard fans upset that the most famous car in the world was up for sale can rest at ease - the General Lee is still owned by Bo Duke. John Schneider, the actor who played Bo Duke, put up his own 1969 orange Dodge Charger up for sale on eBay. Schneider had owned the vehicle since before the TV series began in 1979. The "General" was made famous by Bo and Luke Duke's several high-speed escapes from Sheriff Roscoe P. Coltrane. Now it seems an eBay buyer has pulled a fast one on Schneider. The Ventura County Star reported that William Fisher of Laguna Hills, Calif., made the winning bid of $9,900,500 for the General Lee. Fisher has reportedly failed to make a deposit for the car. The paper reported that Schneider's estate manager said the actor would pursue legal action against Fisher. Schneider had already left negative feedback for Fisher on his eBay account. "This is the guy that for fun, decided to bid on the General Lee. Thanks....," it reads. Prospective buyers had to register through eBay before placing bids so the online auction could verify the winner's ability to pay. Fisher's bid was only $100 more than the second-highest bid, according to the VenturaCountyStar.com. Schneider was selling the General Lee to finance an upcoming film. For now, the famous car sits in the garage of its longtime owner. Fisher's bid was only $100 more than the second-highest bid, according to the VenturaCountyStar.com. Schneider was selling the General Lee to finance an upcoming film. For now, the famous car sits in the garage of its longtime owner. 
Bo Duke's General Lee For Sale On eBay
Bo Duke, General Lee Visit Nashville
