A Big Three magic-carpet ride

The Big Three are going on a big road trip. One of them is driving a Ford, one a Chevy and one vaporware.

Last month, the chief executives of General Motors, Ford Motor and Chrysler ate a Chevy Suburban-size portion of humble pie after lawmakers discovered they had flown in private jets to Washington to ask for $25 billion in aid.

"There's a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands," said Rep. Gary L. Ackerman (D-N.Y.), not long before Congress sent the execs back to Detroit to come up with a better plan.

Now they're heading back to Washington, but this time they're driving. One report said that driving rather than flying private, once all the expenses are totted up, could save the automakers $15,000, which could help explain why the companies felt comfortable requesting $9 billion more this time around.

On Tuesday, Ford's CEO, Alan Mulally, began his drive in a Ford Escape hybrid, taking time to give ... 

... telephone interviews as he rode along (we trust he was using a hands-free device).

On Wednesday, GM Chairman and CEO Rick Wagoner is expected to saddle up a Chevy Malibu hybrid and make the nine-hour, 520-mile drive.

Not to be left out, Chrysler's chairman and CEO, Bob Nardelli, will make the drive as well. Chrysler hasn't revealed what vehicle it will be but said it's a hybrid. Unless he's making the trip in a Toyota Prius, the best bet is that it's either a 2009 Dodge Durango hybrid or a 2009 Chrysler Aspen hybrid, the long-anticipated hybrids from the smallest of the American carmakers.

And therein lies the problem. Technically, those two Chrysler vehicles don't exist. At least not in any practical sense. Only a few hybrids were built.

Turns out that before Chrysler ever delivered its first hybrid SUV to a dealership lot, the company decided to shutter the Delaware factory that was to produce the things in order to cut costs. The factory is staying open until the end of the year, but it's cranking out only 2008 model-year vehicles -- i.e., no hybrids.

Of course, the few that were built were needed so the auto company could trot them out to auto shows and the like (they were on display at the L.A. Auto Show over the last few weeks).

So to the extent that Nardelli's ride is in a hybrid, it serves less as a reminder of how American carmakers are working to deliver the cars of the future than as a rolling monument to, well, failure.

Talk about a delicious irony.

-- Ken Bensinger

Photo of the unveiling of the Chrysler Aspen hybrid and Dodge Durango hybrid at the 2007 L.A. Auto Show courtesy of Chrysler

Comments

[stunned]

Wow - talk about being penny wise and pound foolish. A CEO's time is money. For them to drive 19 hours round trip to make a point is just absurd. How much productivity loss are they taking in order to placate the turds in Washington? This is one of the lamest PR stunts I have heard in a long time. Poor decisions like this is why these companies are failing...

[Sal B]

What I don't quite understand is why everyone is beating up on the auto companies, when they were producing vehicles that people wanted to buy, however foolishly, and now demanding fully-conceived plans from the automakers before any aid can be rendered.

What fully-conceived plans were required before all the financial giants got all their loot? And what limits on executive compensation? Seems to me Paulson just handed out the loot and $140 Billion in tax breaks to banks that buy other banks without asking *anything* in return.

[John Acheson]

Did they every consider vehicle-sharing???

[Alan Mulally]

Everyone wants to beat up on General Motors and Ford, blaming them for this and for that. Everyone wants to point out the mistakes they've made, the bad decisions, the woeful planning. Everyone pleasures in seeing the companies fail. Yet no one has beat up on Chrysler...until now. So I say kudos. Kudos to you and yours.

[Eric Hedman]

The biggest problem the big three have right now is that because of the banking crisis far fewer people can afford to or qualify for a loan to buy a car. Yes they have made bad decisions, but the immediate crisis is mostly caused by the banking crisis. Many of the long term issues can be blamed on the auto companies and their unions. When everybody beats up on the banks, as they rightfully should, they don't bother to also point their fingers back at themselves for taking part in the consumer side of this debacle. A little thinking ahead by all of us (the auto companies, the President, Congress, the banks and most of all us the consumers - me included) could go along way to avoiding these problems.

[fzdybel]

I wish Congress would stop showing us to the world for the dunces we are. Rick Wagoner made $15.7 M in 2007. At that rate, this little road trip where he drives himself is costing GM over $135K, not counting insurance, gas or the mileage put on the vehicle. When he's flown by company plane, for a cost less than a fifth of that, he can actually work in transit. Congress may as well stand on their chairs and all join in a rousing chorus of "Americans are Stoopid!!"

[nate]

I'm glad these guys are on the road for long hours. It'll at least keep their incompetence out of the board room

[jjw]

Why would Paulson ask his friends on Wall Street to do anything they didn't want to do? Who do you think is going to make sure he is taken care of after all this is over? Joe Taxpayer??? Paulson is either clueless or deliberate in giving billions to banks with NO requirements to use it to make loans, which was SUPPOSEDLY the justification for bailouts. And if you think he is clueless, than you are too!! Don't you wish you were Paulson friend?

[David Theiss]

I'm glad McCain's PR team still has clients.

[jk]

here's an idea that 1)satisfies conservatives who want the market to dictate winners and losers 2)compensates the uaw for their sacrifices 3)holds congress accountable for risking loss of our taxpayer money:

congress should utilize their position of power to demand extraordinary changes before releasing any money. Half the auto industry's problem is pension and health care benefits and the other half is the corrupt influence buying and lobbying actions of the executives of the auto industry to perpetuate only the largest guzzlers to which they could turn a profit. So let a prepackaged bankruptcy occur in exchange for the money. But key in this agreement is if uaw has to give up say 50% of their bargains they made since the '70's, then ALL past gm, ford, chrysler executives who walked away with outrageous parachutes and salaries and stock compensation, must also sign on to return 50% of their "winnings" to also aid the afflicted company. Neither party should be exempt from today's concessions of past deals that they both signed on the paperwork. Congress should send a signal loud and clear that the old days of lobbyists controlling policy by corrupt influence buying has ended and in fact, now "does not pay". past directors, ceo's, cfo's etc can all be given the chance to accept this deal by the bankruptcy judge or walk away empty handed.

furthermore, not all of what the auto industry wants need be given out in cash. if a interim term measure is needed to relieve pressure from retiree health care costs is needed to put us manufacturers on equal footing to countries like canada, germany etc, who's country pays for their health care costs. then while the us health care system is being revamped, allow some selected portion of workers to get care under some government system - VA or age waved medicare.
Let the us industries compete on as equal footing as possible with other countries, and then let them sink or swim as appropriate by the free market.

[James P]

They should file Chapter 11, continue in business, and reorganize their debt. The Bankruptcy Trustee has the authority to nullify all union contracts, and would do so. The Big Three would emerge, in a few years, leaner and meaner. And profitable. That's what Bankruptcy is for. A bailout will just delay the inevitable.

[Bubba]

Chrysler is proof that bankers and accountants can not run a successful car company. The accountants held on ever-tighter grip GM for 40 years, until finally the engineering and design momentum was exhausted. Cerberus thought they could bring Chrysler around with financial wizardry, layoffs, outsourcing and cost cutting. They forgot to make cars or even trucks that people want to buy. Finance people are essential to decide how much and how many, but you need car people and engineers to do the fundamentals in a car company.

It's not like soap and beer - people will pay extra for a brand name car, but only so much and only for so long. Nobody thought Toyota could eat Cadillac and Lincoln (remember them?) and then Lexus arrived with an unkown name and a solid product. Today the Lexus name adds thousands to a car's value, because buyers trust there's something worth the $$ under the nameplate.

[point-taken]

+1. Nice post Bubba.

[acoaxet]

why doesn't the UAW and management implement an immediate 15% pay cut across the board to save their company??

[Robert Laughing]

Back in the 50s, when TV was fresh, new, trying different things, there was a show called QUEEN FOR A DAY: 3 contestants got up and told giant sob (as in cry, vs son of a bush...but wait! aren't we all crying now?) story - how hard life was, how they toiled from before dawn, to well late into the dark of night. The audience applaused, and it was measured by the sound level...the winner got her washing machine, or a new stove, a whole new wardrobe etc.....HISTORY REPEATS! Now we got 3 sobs from detroit, all well fed, giving Congress a sob story, waiting for their $50 BILLION handout....talk about INFLATION!!! Put them in a ring with short swords, unleash the tigers, lions and grizzles....last one standing, gets a bailout.

[356man]

If Porsche can buy VW, let them buy the Big 3, too. Get them cheap and then have engineering and design rule the companies, not the bean counters.