As this is written, no decision had been reached, at least publicly, about the Detroit Three’s request for a $50 billion loan or loan guarantee from, well, from us. US Senator Carl Levin (D-MI) was at both recent political conventions, as were the heads of the Detroit Three, aggressively pushing this plan.
Remember US Sen. Everett Dirksen’s line about cash? “A billion here and a billion there, and pretty soon you’re talking about some real money.” Yes, this is real money. (Barack Obama has stated his support for a $50 billion loan package for Detroit's car-makers; Below, John McCain has said he'll support an amount closer to $25 billion).
As just one example: Detroit has to get very busy, very quickly, in developing their own versions of the new
“clean diesels.” Volkswagen, Mercedes-Benz, Audi and other European car-makers are bringing them to the US; their emissions so clean they’ve been approved by the California Air Resources Board, with the toughest standards in the country. Audi and VW will use the “TDI” designation for their new clean diesels; Mercedes calls their versions “BlueTec.”
Asian manufacturers are hopping on the bandwagon; the 2009 Nissan Maxima is available with a diesel engine option.
But clean diesels are just one example of where Detroit must play catch-up.
For more on the Detroit Three's real challenges, and whether or not they deserve any help at all from the public sector, click below.
GM’s Chevrolet and Saturn have gas/electric hybrids in their showrooms, and more are planned. GM’s crossover Equinox hydrogen-fueled fuel cell electric vehicle is being tested across the country, as is Honda’s similarly-powered FCX Clarity sedan.
If the money allows GM to bring their plug-in hybrid Volt concept car to market late in 2010, that could draw many import-only buyers back to The General. Volt has a small on-board gasoline engine (which GM craftily calls a “generator”) which charges Volt’s batteries so its wheels, turned by electric motors, stay turning. GM says Volt’s batteries can be recharged overnight via any standard 110-volt outlet. (GM's hydrogen-fueled fuel cell EV crossover, and, below, Honda's similarly-powered FCX Clarity sedan have both begun road-testing in the US).
Compared to Ford and Chrysler, though, GM might as well be “Buck Rogers in the 25th Century.”
In the 2008 Ford line-up, there is one gas/electric hybrid, found in their Escape SUV. Their all-new Flex
crossover is a wonderful styling exercise, but stuck with a big V6 engine, it’s no mileage champ. Ford says they’ll bring the Euro version of their Focus to the US. It sports features like Volvo's five-cylinder 225-horsepower engine and a six-speed double-clutch transmission to rival VW's Direct Shift Gearbox (DSG), which can improve mileage and performance.
Robert Nardelli, fired by his own board of directors at Home Depot this past January, now runs privately-owned Chrysler (yes, I, too, don’t quite understand). Guesting on the Charlie Rose program on PBS last week, Nardelli discouraged me. After discussing their oxymoronic “Hemi Hybrids,” Rose asked Nardelli if Chrysler will have anything like the Chevrolet Volt. Nardelli smiled knowingly and said, to paraphrase, “Oh, yeah, just wait’ll next year!”
That’s what we’ve heard from Detroit executives for 30 years, since the first oil embargoes and gasoline shortages in the early 1970s. Detroit should have started planning for now … then. Other car companies did, didn’t they? (Cutaway of a Dodge Durango equipped with a Hemi Hybrid powerplant).
All three are in big trouble in America, still their most-important market. If our government loans money directly to the car-makers, they’ll pay it back at the lowest possible interest rates. If the monies are loan guarantees, then banks loan the money, and the government guarantees payback if any Detroit car-maker defaults.
Some have suggested that, as one of many conditions of these loans, the top management of all three firms must be replaced, and with no “golden parachutes” allowed.
GM, Ford and Chrysler are now run by three men with little or no experience in developing, creating, styling, engineering, building or marketing cars and trucks. GM’s Rick Wagoner has been a “bean-counter” there for decades; Ford’s Alan Mulally most-recently headed Boeing, and Chrysler’s Nardelli was an executive at General Electric and Home Depot.
As a good friend once opined, about a similar situation, “These guys wouldn’t know a good car if they got run over by one.”
Will this money save the Detroit Three from self-imposed implosion? “Who knows?” is the only honest
answer. All I do know is that the millions of American men and women who would join the ranks of the unemployed if any of the Detroit Three utterly fail should never be punished for the shortsightedness and, arguably, the stupidity of the few people who run them.
(Robert Nardelli, right, was hired by Cerberus Capital Management to run their new plaything, the Chrysler Corporation. Nardelli previously headed General Electric and, until how own board of directors threw him out this past January, was running Home Depot. To the rear is Tom LaSorda, not the Dodgers manager, but an actual car guy. LaSorda, 51, the son of a former autoworker union president, rocketed through Chrysler's top ranks to CEO faster than anyone in the automaker's history. He joined Chrysler in 2000, after spending 23 years climbing up the executive line at General Motors)
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