financials

There were about three million fewer cars sold in 2008 than 2007. Based on 2007's numbers, it would be the same as if Acura, Audi, BMW, Chrysler, Dodge, Jeep, Lexus, MINI, Porsche, and Saab all closed their doors in 2008. In terms of pure automotive carnage, that's not the kind of damage you can just buff out. And the predictions for the future agree on two points: it's going to get worse, and it won't return to what it was for years to come.

Just because Toyota is still spending on Formula 1 and the Lexus LF-A doesn't mean its not cinching up the fiscal belts -- scaling back at the Detroit Auto Show, killing Australia's TRD division, and delaying a highly anticipated sports car. And now you can add stopping construction on new factories to that list.

The Wall Street Journal puts forth the case that the government's $5 billion lifeline to GMAC has given GMAC a competitive advantage compared to its rivals. After the taxpayer cash was received, GMAC dropped the required credit score to get a loan and began offering 0% financing on several models, and rates from about 1% to 6% on a host of others. While doing so, it admitted that "without this [loan] . . . we would not be able to do this today."

On Monday, December 29, Chrysler and General Motors were supposed to get the first installments of its allotted funds from the $17.4 billion dollar bridge loans. On Wednesday, GM got it's $4 billion. Chrysler, on the other hand, is still "finalizing the details of our financial assistance." The U.S. Treasury - the body disbursing the funds - didn't have much to say beyond that, either, merely reiterating that it wants to get the deal done within a timeline that satisfies Chrylser's funding needs.

GMAC - and ergo General Motors - just got another Christmas present: the Federal Reserve has granted GMAC bank holding status. GMAC has billions of dollars of bonds coming due over the next 12 months, but doesn't have the liquidity to cover the obligations. As of last week, the financing company was in the midst of a bond buyback effort in order to raise enough money to qualify for bank holding status. Now that it's been granted, GMAC can tap the Troubled Asset Relief Fund intended for financial institutions, pay its debts and (probably) avoid bankruptcy.

Whenever we drive from Los Angeles to Phoenix, we always stop at the Flying J in Blythe, California to refuel - and that might mean "refueling" on coffee, trail mix and a rented audiobook instead of gasoline.

So in case you haven't heard, a few economies are having a few hiccups, money isn't easy to get as it used to be, and consumer belt-tightening is turning into fastening the rope more securely around sackcloth robes. That is, unless you're looking for a BMW M-car. BMW's M division sold more cars worldwide through the end of August of this year than it had in all of 2007. But the economic world didn't end until September, you say? Well, that didn't stop the moneyed from showing up at the M division's door: it sold another 6,000 cars through the end of November, which already puts the branch up fifty-percent over last year's total sales. You can check out the press release after the jump, and walk away knowing that no matter what, there is always enough sun somewhere for people to make hay.

Mitt Romney, former Massachusetts governor, former entrant in the marathon to win the White House, and current automotive industry expert (who knew?) had a few things to say in the New York Times today on the potential auto industry bailout. The opening paragraph says it all: "IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won't go overnight, but its demise will be virtually guaranteed."

From November 28 to December 11, GM is holding back incentive payments to dealers, including dealer cash and customer cash. Why? in the words of Mark LaNeve, GM's VP of North American sales, because "Anytime you can delay any kind of a payment, it helps cash flow" And cash is probably the most important four-letter word in any GM dictionary.