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It’s been a crazy few days as news broke that Chrysler and General Motors have been in talks to combine operations. It turns out that there’s a pretty significant back-story to these proceedings, and it involves Cerberus Capital Management’s possible desire to shed its car-building operations and acquire the rest of GMAC, of which it already holds a controlling stake of 51%, with GM holding holding the other 49%. According to reports, Cerberus would like to combine Chrysler Financial with GMAC, which would allow it to merge the offices of the two financial institutions and reduce costs. All right, that might make some sense, but what about merging the two automakers? That’s the part that seems so confusing to analysts and us meager bloggers. Somehow, we feel certain that there’s more to this story, which we’ll be hearing about for some time.

The financial peril that currently faces the U.S. domestic automakers is no secret, and according to Wall Street Journal report published yesterday, Ford is mulling over the possibility of unloading at least part of its controlling stake in Mazda to raise cash. Japanese media, via the AP, said that Ford would likely keep some interests in the Japanese automaker after such a move — no surprise when you consider how closely tied Ford and Madza are right now in terms of shared technology. The Oval’s third-quarter numbers are expected to be pretty ugly, and the Journal’s source said that the potential sale of its Mazda holdings is one of many moves reportedly under consideration as Dearborn looks for ways to add to its cash on hand. For its part, Mazda denies that any decision has been made (a non-denial, really — no outlets reported that a deal had yet been completed) and Ford weighed in with a to-be-expected “no comment.” As they say, to be continued…

The auto market is in the tank right now, with sales dropping to 1991 levels and Detroit automakers in a cash crunch of horrendous proportions. Even Japanese automakers are struggling, and perhaps the biggest sign that something is terribly wrong is that Toyota is even feeling the pain. The Japanese automaker’s sales dropped by an incredible 32% last month compared to September 2007, which was preceded by drops of 9.7%, 18% and 11% in prior months. Toyota has already lowered its global sales target for the year to 9.5 million units to reflect the trouble it’s experiencing in the U.S. market, but recent news from Europe is that production is being cut there, as well.

The worst news for Toyota would likely be welcome news to the rest of the automotive universe: the Japanese juggernaut will only rake in about $12 billion of profit this year. While that’s an absolute treasure trove of cold, hard cash, it’s about 40% less than Toyota had earlier forecasted. Toyota’s stock has also taken a hit during these challenging times, with its current value down about $23 per share under its 52-week high of $58.76. The worst part about the automotive market is that there appears to be no end in sight, which means there is more bad news to come; even from Toyota.

While we knew Formula 1 racing was an expensive venture, leave it to the 2008/2009 edition of Formula Money to spell-out the jaw-dropping finances for us. According to their latest guide, the supporting cast will shell out over $3 billion this year in team resources — with Toyota dropping more than $445 million of it alone. McLaren is a close second at $433 million, while Ferrari rounds out the top three with $414 million coming out of pocket. If you take a look at team resources divided by points scored, each point cost Ferrari $1.9 million in 2007 (while each point cost Honda a staggering $57.2 million during the same period!). With the financial markets around the world roiled in turmoil, many are wondering when the F1 budgets are going to feel the pinch… Thanks for the tip, Keith!

Ford and GM claimed losses of over $20 billion in the second quarter of 2008, which is more than the GDP of some developing countries. Chrysler has seen larger sales decreases than its fellow Detroit automakers, but in terms of cash losses, team Pentastar is way ahead of the domestic pack. Chrysler CEO Bob Nardelli gave dealers the financial lowdown Tuesday, but declined to provide details to reporters. Even though Chrysler’s losses of $400 million are far less daunting than its U.S. counterparts, the Auburn Hills, MI automaker is far from overjoyed. Nardelli told dealers that the losses came in spite of large-scale cost cutting, and he mentioned that 2008 sales were down 24% year over year.

The privately owned automaker still has $11 billion on hand, but Nardelli warned that if Congress doesn’t approve a $25 billion loan, more job cuts and other cost cutting measures would be necessary. Chrysler also needs the federal loan to reach its goal of bringing just one of its three recently introduced EVs to market by the end of 2010.

Both Cerberus and Daimler have announced plans for the German automaker to sell the remaining 19.9-percent stake in Chrysler to the private equity firm. According to reports coming out of Germany, that relatively small stake in the American automaker is still weighing down Daimler’s stock price. Perhaps the Germans aren’t so sure that Chrysler’s new electric vehicles will ever see the light of day? In any case, both sides suggest that all the rest of the two company’s relationships would continue, so technology sharing and diesel engines could still be made available to Chrysler from its former German parents.

Note that the first 80-percent of Chrysler was sold to Cerberus for $7.4 billion. We wonder what the other 20-percent is worth.

Nissan announced today a price increase for the 2009 GT-R, raising the MSRP nearly $7,000 from $69,850 to $76,840. The price for the Premium model has been increased even more, going from $71,900 to $79,090 in one fell swoop. Fortunately, the adjusted prices do not affect customers who placed their orders with dealers before September 5. Nissan cited increased material costs as the reason for the adjustment.

Since the GT-R is already one of the best performance bargains on the market today and customers are paying a premium to own one, we doubt that the price increase will have any effect on sales. Still, $7,000 is a serious chunk of change that could go towards aftermarket toys from Cobb Tuning or HKS.

The current economic environment in the United States is hurting all auto makers these days, even mighty Toyota, which was once considered immune to so-called market realities. Though its overall performance last year would be considered a stellar achievement for any other automaker, Toyota’s 28% profit plunge in the fourth quarter of 2007 points to an expected 27% drop in annual profits in 2008. If Toyota’s revised forecast proves accurate, 2008 would break a nine-year stretch of profit growth. In addition to the slowing U.S. market, Toyota also cites high material prices, the worldwide credit crunch and a strong yen as contributing factors in its mild downturn.

Toyota’s expected profit drop is certainly newsworthy, but we just have to wonder how the money-losing American car companies will cope in the U.S. market with the same issues. While sales of cars are gaining strength, the SUV and truck markets are sinking with what could be Titanic-like implications for the truck-heavy lines from Ford, Chrysler and GM.
[Source: Toyota]

It’s just plain difficult to follow Ford Motor Company lately, as there seems to be more rumors about the embattled American icon than any other automaker. On any given day, all, some, or none of the Premiere Automotive Group could be for sale, and everyone from Renault to Hyundai, even the Russians, could be the most interested suitors.

In the past couple weeks, a sale of Jaguar and Land Rover has appeared more and more likely, as Ford has hired KPMG to assist in a possible sale. In a recent interview with the Free Press, however, Way Forward architect and Ford President of the Americas, Mark Fields, claims that Volvo definitely isn’t on the block. The product portfolios of the Ford brand and Volvo are far too intertwined at this point, especially in Europe, for a split to pan out in the Blue Oval’s favor. Ford will likely combine the R&D between the two brands further in North America, where Ford is working to bring down costs.

For our money, it makes sense to keep Volvo in the fold, if only because the Swedish automaker represents one of the few outright success stories in the Ford portfolio.

[Source: Freep]

There’s breaking news and then there’s braking news. In a development of the latter, Brembo is considering investing in Pininfarina. The news is part of a larger development that has Indian automaker Tata and sportscar scion Piero Ferrari taking stake in the design house, and could involve several other investors including Vincent Bollore to raise 100 million euros in capital for an electric car venture between the French investor and the Italian styling firm.

Currently, the Pininfarina family holds 55-percent of the eponymous company, but is willing to share its shares with additional investors in order to keep the company in the black and moving forward.

[Source: Automotive News Europe – Sub. Req.]