As a diversion from the doom ‘n’ gloom surrounding the auto industry, I have been enjoying the History Channel’s new season of Ice Road Truckers in which brave people drive heavily-laden trucks across frozen Canadian Far North roads – in just the few weeks the winter season allows – rushing supplies to natural gas fields. The seasoned veterans call this the ‘dash for the cash’ (a year’s salary can be made in under two months) and there’s a parallel between that and the ongoing talks about auto industry consolidation this week.
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First up, on Monday, there were US reports that GM’s interest in a deal with Chrysler was due, at least in part, to envious eyes on Chrysler’s cash pile, said to have been close to US$12bn last June. Analysts have been concerned with GM’s cash burn, said to be $1bn a month, and access to even some of Chrysler’s liquidity would help, along with some of that $25bn in federal loans recently approved by Washington.
Ford is not immune, either. On Wednesday came reports that it is selling some of its stake in Mazda, again freeing up some of that essential cash. Mazda and Ford have been good for each other – the Japanese firm’s expertise in smaller vehicles and engines, which dates back to a pickup truck deal almost 40 years ago, has helped Ford while the US firm’s ability to amortise platform and engine R&D costs over a much wider range and volume of models has helped Mazda.
Also at Ford, a vote of confidence was apparently lost as bullionaire Kirk Kerorian’s Tracinda sold off part of his stake amid rumours the whole could be offloaded.
Next there came reports that Nissan could take a slice of Chrysler, with which it in increasingly sharing model expertise – in due course the Japanese firm will provide small cars for Chrysler while its US partner does what it does best – make large pickup trucks for both. Such a deal was seen as leaving Chrysler largely intact, unlike any deal with GM, which would have many product and plant overlaps, but there were also suggestions GM might simply seek outside investment to secure that vital cash flow.
In a week of mostly gloomy news there were a few positives. One was BMW’s providing more details of its electric Mini which makes its debut at the LA show next month. Officials at a media event in London this week were upbeat about the car, saying the trial of 500 leased to customers in California, New Jersey and New York would provide valuable ‘real world’ answers to questions such as ‘Is a 150-mile range enough?’ One key selling point seems to be the 2-1/2-hour full ‘refuel’ available from a special home-recharge pack. A trial in congestion-charge London (EVs are exempt) would make sense but there’s no firm word on that yet. An EV project for Australia was also announced this week.
But don’t write off the old internal combustion engine just yet. As this feature shows, debate on the future of electrics and hybrids is ongoing – and robust.
Enjoy your weekend,
Graeme Roberts
Deputy Editor
just-auto.com
