Steve Parker Motoring / The Car Nut

OCTOBER NEW CAR/TRUCK SALES REPORTS SHOULD FAVOR OBAMA

This Monday, the new car and truck sales reports for the month of October will be announced, and are expected to be the worst in 25-or-more years.

Those numbers should be used to bring more voters to the polls the next day, solid members of the Democratic Party and those who might vote that way for the first time. Democratic candidates and volunteers working phone banks in some key states should use these numbers to convince those still (somehow) undecided or too depressed by their own economic situation to vote to do something positive and vote for Barack Obama and other Democrats running for office, locally, statewide and nationally.

(Above, The Daewoo Lacetti was put on-sale in South Korea last week, and Michael Grimaldi, on the right, CEO of GM/Daewoo, along with the prerequisite-in-Asia models, made its public introduction; Below, the Chevrolet Cruze, US version of the Lacetti, was introduced at October's Paris Car Show, but may be delayed in the US until 2011; Bottom, Cruze's interior).

Friday on CNBC, an auto industry analyst said that if General Motors were to go bankrupt, more than two million Americans would lose their jobs, including those working directly for GM, at their hundreds of supplier companies, all of their dealership personnel – the list goes on and on.

And several analysts agree that GM is burning through $1 billion a month – in cash they don’t have.

GM’s condition is so bad that one of their most important new high-mileage vehicles, the Chevrolet Cruze, could be delayed in the US until 2011 or farther, while the car is being built and sold in South Korea now and plans call for its sale in Europe in March, 2009. And GM’s much-vaunted Volt plug-in hybrid may also be delayed for the same reason.

(If the high-mileage Cruze's interior turns out to be as spacious in its production cars as it is in this artwork, Chevy might have a winner on its hands).

Click below for more on why Barack Obama should be elected President and why the auto industry - and all of us - will benefit from his election.

$50 BILLION FOR THE DETROIT THREE? YEA OR NAY?

(Barack Obama says "Stop!" the sorrowful state of the Detroit Three!)

The Detroit News reports today (8-27) that long-time US Senator Carl Levin (D - MI) has gone on-record at the Democratic National Convention in Denver, telling reporters there he is working to win passage of a roughly $50 billion package of government-issued loans to assist the Detroit Three automakers. That's right, Fifty Billion Dollars. As the late Illinois Senator Everett Dirksen was purported to have said, "A billion here and a billion there ... Pretty soon you're talking about some serious money."

If the funds are government-issued loans, the Detroit Three would be able to borrow the money at the lowest possible interest rates, something their sub-investment  grade credit standings would not allow in the open market. These direct loans would be payable over 20 years and the government could opt to defer all payments on the loans for five years. The favorable interest rates will save them $100 million on every $1 billion they borrow.

But the day after Levin's talk with reporters, GM's executive in charge of North American product, Bob Lutz, said his company would welcome "loan guarantees," similar to the ones which saved Chrysler in 1979.

I spoke with Jesse Snyder, a long-time reporter and Online Community Editor for Crain's Automotive News weekly, and he told me that there's "a fine haze over the entire question (of whether the funds, if any, would be direct loans or loan guarantees). Levin has proposed $50 billion in direct loans from the government. I think of it as the opening bid."These days, that’s an offer they literally can’t refuse.

The proposal has been backed by Barack Obama. It would cost taxpayers $7.5 billion to guarantee the loans. (Robby Gordon has successfully raced this Hummer off-road truck in endurance events like the Baja 500; Gordon told us that this particular Hummer is worth north of $2 million)

The pain of high gas and diesel prices is most acute at the Detroit Three, but even mighty Toyota is affected. The soaring cost of steel has that company considering raising prices in Japan without a model makeover for the first time in three decades, the Japanese automaker said Wednesday. Speculation has been that Toyota will be forced to announce higher prices in Japan - a move even Toyota acknowledges could be critically damaging for an already sluggish Japanese market. Nissan Chief Executive Carlos Ghosn has hinted he is waiting for its bigger rival, Toyota, to take the lead to make it easier for others to follow suit.

Jack Hoogendyk, a Michigan state lawmaker from Kalamazoo, and Levin’s Republican competition for his senate seat, supports a program authorized in last year's energy bill which OK'd up to $25 billion in loans to the automakers over five years -- a program that would cost the public $3.75 billion. But Congress has yet to provide any money to actually fund the program and the White House hasn't said if it would back the effort. (Ford just sold-off Jaguar, whose short-lived Formula One team didn't fare much better than its parent company is doing now)

These loans differ from the government help given Chrysler in 1979, when the company seemed destined for bankruptcy. What saved Chrysler was not an infusion of government money, as Levin is now working for, but $1.2 billion in loan guarantees provided by the federal government – so successful was that timely injection of cash that the company paid all their loans back, and early. Because of that success, the program to save Chrysler didn't cost taxpayers a penny.

That kind of luxury doesn’t exist for the Detroit Three today.

Click below for much, much more on a possible $50 billion tax-payer-backed program to save the Detroit Three.