'Oh the Tangled Web We Weave . . .'

The NY Times is reporting that GM is seeking an equity stake in Fiat for the turnover of GM's Latin American and European operations.

So Fiat owns Chrysler and GM owns a big chunk of Fiat? Ho boy. ; -)

Porsche and Volkswagen

In a slightly breathless piece, attempting to tie the story into current industry conditions, CNN reports that Porsche and Volkswagen are merging.

If you haven't been following the industry, you may come away thinking the world is coming to an end. But in reality Porsche has owned a majority stake in VW for about a year plus. This is merely the culmination of some internal politics on the composition of the boardroom.

The piece mentions 10 brands, and most folks would be hard pressed to name all 10. (I only came up with 8 when I tried yesterday.) But they are; Audi, Bentley, Bugatti, Porsche, Skoda, SEAT, Porsche, Volkswagen and a couple of truck makers.

(Hmmm, listed Porsche twice - I need to check for additional fingers now. ; -)

Biofuels

More on this later - there are some interesting things going on in alternative fuel sources. But here is an article from MotorAuthority that highlights government spending for biofuels. I am pleased to see that the administration has earmarked the bulk of the funding to pilot and demonstration units.

This means that this funding isn't just there to subsidize corn to ethanol. We know that works and we know its strengths and weaknesses. But there are a number of interesting alternatives to corn as a raw component for fuel. Here's one I've got my eye on: Sapphire Energy - they are working on converting algae to gasoline.

Another View of the Chrysler Bailout

From this Atlantic piece by Megan McArdle:

When the government gives money to favored constituencies--well, I don't like it, but as PJ O'Rourke says, that's basically what our government does. "It ought to be right there in the constitution: 'We the People, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and give money to jerks . . . ' " But when it starts stepping in and trying to bypass the bankruptcy rules in order to make someone else give money to jerks, that's different in magnitude, and in kind.

I concur. What we needed to do was let our legal system run its course (and it can be expedited if need be). Of course the other piece of this I didn't quote was the notion that the institutions that have received TARP funds (and who now find the rules for repaying those funds changing) are on the hook to do their masters' bidding.

What we don't want are extra-legal reaches and grabs for our money - remember who ends up paying for all of this. We now own, thanks to our taxdollars-at-work, Chrysler and GM - we must want them to succeed. But what control do we have?

Chrylser Bankruptcy Proceedings

The bankruptcy judge has ruled against the senior debtors. Look for a quick turnaround and the empty hull of Chrysler to start churning out Fiat products in the next two years (with our tax dollars limping them along in the foreseeable future).

So who wants to loan money to a corporation that may be 'nationalized' now?

I'm still of the opinion that this company will not be profitable in my lifetime. But we're practically giving it away to Fiat. Frankly disgusting.

GM's Penny Stock

Automotive News reports overnight that GM will issue sixty billion (60,000,000,000) new shares of stock that they'll parcel out to the bondholders, gummint, UAW and give out as tickets to be redeemed for prizes at Chuck E. Cheese (well maybe all of the above except the last ; -).

So how much will GM shares be worth this morning? They closed at $1.85 yesterday. GM's current market cap is $1.13B so it looks like they're expanding equity by about 100 times current. Definitely penny stock territory.

Hmmmmm, I'll need to double check calculations after a full dosage of coffee, but if you haven't dumped your GM stock yet - it may be too late.

Fiat's UK Customer Satisfaction Numbers

MotorAuthority has this story regarding Fiat's UK J.D. Power satisfaction rankings.

I owned a Fiat, a 128, an important vehicle in the grand scheme of things (at least LJK Setright thought so). But it was not a very well built car. That was in 1976, however, and hopefully Fiat has learned a few things about screwing cars together in the intervening years. ; -)

Fiat's Ambition

Fiat, not long from financial ill health itself, seems to be intent on soaking up the marginal players in the current business cycle. They are intent on picking up GM's Europe holdings.

Frankly this is a bit troubling because neither Chrysler or GM Europe has made a profit recently. Will these two additions prove to be the 'gravitas' that propels Fiat to the forefront of automakers, or will they prove to be the Albatross around the neck that brings Fiat down?

I suspect the answer will depend on the type of recovery we see from the current recession. If it is a V-shaped or even U-shaped recovery, they may come out smelling like a rose. But if it is an L-shaped recovery, Fiat may wish it hadn't reached for an Opel or Dodge too far. ; -)

Mini/Micro Cars

The Suez crisis occurred in 1956 and in its wake the first of many oil price shocks hit western economies. Europe had yet to completely recover from the effects of World War II and if an individual could buy a car, it probably couldn't be very much of a car. But cars were being produced, mini and micro cars. And a great number of them came from Germany, where tax and licensing laws made the little vehicles appealing.

While a lot of folks are familiar with the BMW Isetta, there were a number of other interesting German micro cars, from Messerschmitt, Lloyd, Glas, and Heinkel for example. Some of these and others were found at the Kansas City Mini Micro Car Show on May 3.

So without further ado here are a few pictures from the show:

The BMW Isetta 300.



A Heinkel bubble car.



The NSU Prinz (a little later on the scene than the previous two):



A real jewel of a small car, the Abarth 750, gorgeous Italian bodywork.



And for good measure, something that predates them all, the Cruved Dash Oldsmobile from 1903:



Really small cars have probably seen their time in the sun come and go in western economies. Safety considerations have driven weight and size up (it is economically difficult to build a truly light weight car that meets current safety standards). That's why cars like the Aptera are three wheelers, they have a different set of safety standards to meet.

These are fun cars to see but especially when they are in motion in traffic! ; -)

Another View of those 'Greedy' Hedge Funds

The Business Insider has this article up on the Chrysler Chapter 11 bankruptcy.

If you refuse to honor the debt, or deal with the debt in accordance to prevailing laws, how will you ever be able to borrow money? Who will be willing to lend? That's just what is going on with the auto industry bailouts. Got a union shop? Sorry, have fun attracting bondholders.

However, one of the overlooked pieces of the Chrysler puzzle is how to handle the dealers. There are too many, and there are contractual obligations to the dealers if Chrysler wishes to close them. The bankruptcy should clear some of those obligations.

And I'm afraid a friend of mine who owns a Chrysler dealership, and his employees, will be negatively impacted.