Sunday, July 30, 2006

Report helps lift workers' spirits

Thursday, July 27, 2006
Report helps lift workers' spirits
Optimism, employees say, was tempered with awareness that there's still a lot of work to do.
Sharon Terlep / The Detroit News

DETROIT -- A rare wave of optimism swept through General Motors Corp. Renaissance Center world headquarters and elsewhere throughout the company on Wednesday as news of better-than-expected earnings spread to employees.

GM's $1.2 billion second-quarter operating profit -- a $1.4 billion improvement from a year ago -- gave workers some good news to discuss in the office, over lunch and on factory floors.

At the RenCen in Detroit, workers packed into managers' offices and break rooms to hear a taped announcement by GM Chairman and Chief Executive Officer Rick Wagoner explaining what the numbers mean for the company. GM typically makes such announcements when quarterly earnings are announced.

"Sales are up. It's exciting," said Rob Skillman, a contract GM employee who works in the RenCen. "It's what everybody's talking about."

Inside the building on Wednesday morning, workers watched the 30-minute taped message by Wagoner, which was followed by another presentation geared toward the company's North American and regional operations. GM has been making the announcements to communicate with workers for about 15 years, typically airing them each quarter, GM spokesman Robert Herta said.

"A lot of us watched the broadcast and felt optimistic afterwards," Herta said. He said GM also worked to spread the word through managers and the company's intranet.

"We walked away with the idea that we bottomed out and have now turned a corner and are going up," said a GM white-collar worker who didn't want to be named. "There was a lot of energy and excitement. We didn't know it was going to be that good."

The peppiness, several employees said, was tempered with awareness that much work needs to be done to turn GM around.

"People are cautious and they're looking at this quarter by quarter," Skillman said. "We'll see if it continues."

Others were more skeptical.

"One day we're doing bad and then one day were doing good -- it's hard to believe," said Frank Pena Jr., who works at GM's service parts operations in Swartz Creek. "Whether they lose money or make $10 billion, I think the attitude is that it doesn't really affect us. We're not going to get better pay or benefits if they make money."

You can reach Sharon Terlep at (313) 223-4686 or

© Copyright 2006 The Detroit News. All rights reserved.

GM global operations back in black

Thursday, July 27, 2006
GM global operations back in black
Christine Tierney / The Detroit News

DETROIT -- General Motors Corp. is still losing money in North America, but the U.S. automaker is holding its own in other regions where it's not handicapped by high labor and legacy costs.

GM's Asia-Pacific operations were its most profitable regional business in the second quarter, contributing $167 million, or nearly half of the company's $362 million in earnings from its global automotive operations.

The return to profit of GM's global automotive operations, which had been in the red since 2004, was due primarily to a dramatic improvement in its North American activities.

But GM North America still lost $85 million, excluding special items, in the April-to-June quarter, while the other regions all reported profits on that basis.

In the Far East, for instance, GM earns $530, on average, on each car and truck it sells. By contrast, it loses nearly $70 on each vehicle sold in its home market.

GM is downsizing its U.S. operations while building up some of its overseas activities. It has cut the number of employees in North America to 167,000 in the second quarter from 177,000 a year earlier, while more than doubling its Asia-Pacific work force to 34,000.

The biggest improvement in GM's overseas activities occurred in its Latin America, Africa and Middle East operations. Earnings surged to $156 million from $25 million, fueled by higher sales in Brazil and an expansion of GM's presence in the Middle East.

"This is a very good number," said GM Chief Financial Officer Fritz Henderson.

In Europe, however, GM is still struggling. It reported a jump in second-quarter profit to $124 million from $30 million, but the gain doesn't take into account a $182 million charge GM took in the quarter just ended for the planned closure of a factory in Portugal.

Merrill Lynch analyst John Murphy said GM's European earnings were in line with expectations, while the other regions' results were better than anticipated.

In late 2004, GM announced a deep restructuring of its European operations after years of losses.

But the European auto market grows increasingly competitive as low-cost Asian manufacturers make inroads, pushing local giants such as Volkswagen AG to overhaul their operations.

GM's market share in Europe slipped to 9.3 percent in the second quarter, from 9.6 percent.

The U.S. automaker is trying to bolster its presence in Europe partly by increasing sales of Chevrolet-branded vehicles developed by GM-Daewoo in South Korea.

"What's our opportunity in Europe? It's to leverage our scale," Henderson said. "No one ever said we're short of scale. We may be short of other things. But we've never been short of scale."

Henderson said Europe was one area that GM, Renault and Nissan Motor Co. executives would study in assessing the potential benefits of a three-way alliance.

Henderson, brought back to Detroit to help with the U.S. turnaround, previously headed GM Europe and prior to that, GM Asia-Pacific.

In recent years, GM has reaped big benefits from its timely investments in China. Its share of the big and fast-growing Chinese market had risen to 12 percent in the second quarter from 11.3 percent.

Its revenues in the Asia-Pacific region nearly doubled to $3.78 billion in the second quarter.

But its earnings slipped to $167 million from $183 million, reducing its profit margin in the region by more than half, due partly to rising price competition in China.

You can reach Christine Tierney at (313) 222-1463 or

© Copyright 2006 The Detroit News. All rights reserved.

GM readies key earnings report

Tuesday, July 25, 2006
GM readies key earnings report
Expected May-June profit could offer leverage amid talk of alliance with Nissan and Renault.
Brett Clanton / The Detroit News

In a critical earnings report due out Wednesday, General Motors Corp. is expected to provide the most concrete evidence to date that its turnaround plan is working and, perhaps, that it does not need Japanese and French partners to strengthen its competitive position around the globe.

The world's largest automaker is expected to show a profit in the May-July period despite a multibillion-dollar charge related to its North American restructuring.

Solid profits would be an important milestone for the automaker, which posted a $10.6 billion loss in 2005.

GM Chairman and CEO Rick Wagoner, who has been dogged by questions about his leadership, could cite the improved financial results to make the case that GM doesn't need an alliance with Nissan Motor Co. and Renault SA.

Billionaire investor Kirk Kerkorian has pressured Wagoner to explore the partnership as a way to accelerate change at GM. Wagoner has agreed to study a possible alliance but has indicated he is reluctant to do anything that could distract from the company's turnaround plan.

Analysts polled by Thomson Financial expect GM to earn 52 cents per share on $42.6 billion in revenue in the second quarter. That would make two consecutive profitable quarters after five quarterly losses in a row.

While GM's outlook may be improving slightly, DaimlerChrysler AG's second-quarter earnings, also out this week, could expose some weakness at the Auburn Hills-based Chrysler division.

After a string of hits following its 2001-04 turnaround, Chrysler is expected to see a steep drop in earnings or swing to an operating loss due to weakening sales and higher incentive spending.

The weaker performance should not impede its German parent from achieving profit goals this year, said Citigroup analyst John Lawson in a report. "But shaken confidence in Chrysler has reawakened long-term concerns on the unit."

Last week, it was Ford Motor Co. that surprised Wall Street with a $123 million loss in the second quarter and announced plans to speed up and expand its restructuring. This week, it will be GM and Chrysler in the spotlight.

Despite a slew of new model introductions this year, domestic automakers have continued to struggle in beating back gains by their Japanese rivals and also have been hit hard by a downturn in sales of gas-thirsty SUVs as fuel prices top $3 per gallon.

Through June, U.S. sales by domestic automakers were down 8 percent, and their combined market share had fallen to 54.9 percent, down from 58.3 percent for the same period a year ago, according to Autodata Corp.

Even so, analysts say GM may turn in better-than-expected financials for the second quarter for two main reasons: A 5 percent rise in average vehicle transaction prices due to excitement over new models; and an unexpected rise in factory production during the period. Automakers book a sale once a vehicle leaves the factory, not when a dealer sells the car or truck to a customer.

But Wall Street is also beginning to give GM credit for major cost-cutting actions that will shave $8 billion in annualized costs beginning next year, even if the savings have yet to appear in earnings.

In addition, they see risk of a strike lessening at Delphi Corp., GM's largest parts supplier. And they take a positive view of the federal Pension Benefit Guarantee Corp.'s approval last week of GM's pending deal to sell a majority of its GMAC financing arm. The deal, expected to close by year end, could steer $14 billion in cash to GM and allow the automaker to borrow money more cheaply.

"All considered, we believe the risk/reward continues to improve for GM," said Bear Stearns analyst Peter Nesvold in a Monday report in which he upgraded predictions for GM's second-quarter earnings to $0.56 per share, up from $0.18 per share.

In the second quarter, GM is expected to take a one-time charge of $3.8 billion for a sweeping buyout and early retirement plan that will eliminate more than 35,000 U.S. factory jobs by the end of the year.

But industry Burnham Securities analyst David Healy said not to read too much into the charge.

"Although the charge is a marker for this hugely successful program, it should be noted and forgotten, because it has no relation whatever to operations in the second quarter."

GM shares have risen more than 50 percent this year on optimism that the company's turnaround plan is gaining traction.

On Monday, GM's stock price rose 2.3 percent to $29.67 per share in New York Stock Exchange trading on reports that second-quarter results would be better than expected.

The renewed optimism has helped temporarily ease fears that GM will be forced into bankruptcy in coming years. As of Monday, bond traders effectively rated the chance of a GM bankruptcy at 50 percent within five years, down from a high point of around 62 percent this spring.

GM would not comment on analyst estimates for GM's quarterly earnings.

On Thursday, Chrysler will report quarterly earnings that some analysts predict will not be favorable. Industry watchers have warned of a "sharp deterioration" in results and possibly an operating loss in the quarter due to an over-reliance on profit-eating incentives and production cuts to reduce inventories.

You can reach Brett Clanton at (313) 222-2612 or

© Copyright 2006 The Detroit News. All rights reserved.

Saturday, July 29, 2006

Cadillac: 'Life, Liberty, Pursuit'

Thursday, July 27, 2006
Cadillac: 'Life, Liberty, Pursuit'
Brand hopes new ads will create buzz that lures younger buyers and luxury import owners.
Brett Clanton / The Detroit News

Say goodbye to Led Zeppelin, celebrity voice-overs and speeding silver cars. Cadillac has a new advertising campaign.

Unveiled Wednesday, it carries the theme "Life. Liberty. And The Pursuit." and signals a new approach to growing General Motors Corp's top luxury brand after a recent turnaround at the division.

The new ads seek to broaden Cadillac's appeal among younger buyers, import drivers and other target groups, and will try to reestablish the gold-standard image that once defined the historic marque.

Launching early next month, the new ads replace a 3-year-old campaign that featured the Led Zeppelin song "Rock and Roll," narration by actor Gary Sinise and a revamped model lineup that was meant to mark a sharp break from the faltering Cadillac of the 1980s and '90s.

Now that the brand is healthy again, Cadillac wants to move out of comeback mode and into attack position.

"We have raised awareness and achieved good momentum with the Cadillac brand," said Liz Vanzura, Cadillac's global marketing director. "But now it's time to put a face on the brand and invite more consumers to experience what Cadillac has to offer."

Since the launch of a 2001 turnaround plan, Cadillac has posted four years of consecutive sales gains, more than doubled its model lineup, improved quality scores and lowered the average age of Cadillac buyers by five years to 59.

Altering negative perceptions

But the brand still faces tough competition from foreign and domestic automakers, which are expanding offerings in the highly-profitable luxury category. And it will continue to fight negative perceptions formed during years when quality was lackluster and its vehicle lineup uninspiring.

"When you think of Cadillac now, you probably still think of it as a big, gas-guzzling car," said Eric Smallwood, vice president of Front Row Marketing in Port Huron. Cadillac's central challenge, he said, remains to convince carbuyers that's no longer the case.

Through June, Cadillac sales were down 9 percent, and its U.S. market share slipped to 1.3 percent, down from 1.4 percent a year ago, according to Autodata Corp.

Ads target five key groups

The outgoing "Break Through" campaign helped put Cadillac back on many shopping lists by highlighting the new, chiseled look of Cadillac models and trumpeting vehicle attributes.

But the goal of the new ads is to make the brand more inviting so customers are drawn to the cars and trucks as much for emotional reasons as rational ones.

"Our mission is to reignite a love affair with Cadillac," said Kevin Smith, a spokesman for the brand.

To make the brand more approachable, Cadillac will put people back in print and TV ads and use different voices and music. By contrast, the previous campaign used the same song and celebrity pitchman from the time it launched at the 2002 Super Bowl.

The new ads will be broadly aimed at customers Cadillac officials call "perpetual strivers," who fall into five groups: the young and ambitious "Move Up's;" the discerning "Alpha's;" the image-conscious "Hot Moms;" the import-driving Boomers; and the graying loyalists.

The campaign also will put greater focus on the brand's wreath and crest logo, which has been updated with two shimmer points to make it look 3-D and jewel-like. The famous insignia will appear, without words, at the close of TV ads. And when Cadillac writes its brand name in print ads or elsewhere, it will now use a classic cursive script that recalls its heritage.

New ad firm takes over

The new campaign is the work of Boston-based advertising firm Modernista!, which in June took over the Cadillac account from Leo Burnett, a firm that under different names had controlled the business for more than 70 years.

The move came shortly after Liz Vanzura, who had worked with Modernista! when she was marketing chief at GM's Hummer, arrived at Cadillac this spring.

But Cadillac officials say they recognized that a change was needed in the brand's advertising months before Vanzura joined the team. Concerned that complacency could sap the brand's momentum, Cadillac's leaders began meeting last fall to discuss ways to infuse new energy into marketing, Smith said.

"They said, 'Now's the time to look at what we can do next,'" he said.

You can reach Brett Clanton at (313) 222-2612 or

© Copyright 2006 The Detroit News. All rights reserved.

Nissan Chief Shares Agenda of GM Talks

July 21, 2006, 5:33AM
Nissan Chief Shares Agenda of GM Talks
By YURI KAGEYAMA AP Business Writer
© 2006 The Associated Press

TOKYO — The chief executive of Renault and Nissan said Friday that the initial 90-day talks with General Motors about a possible partnership will be about advantages in working together, but won't address the possibility of holding capital stakes.

"We are not making the capital investment inside General Motors as the first element or condition," Carlos Ghosn told reporters at Nissan Motor Co.'s Tokyo headquarters.

The initial talks are merely looking at whether the idea of a tie-up with GM makes sense, he said, shrugging off speculation in the media that he may be interested in as much as a 20 percent stake in General Motors.

Ghosn, who heads Nissan and its partner Renault SA of France, has been in talks with General Motors Corp. Chief Executive Rick Wagoner about a possible tie-up among the three automakers since American billionaire investor Kirk Kerkorian last month proposed GM consider joining the Renault-Nissan alliance.

The companies have agreed to study in a 90-day review the potential benefits of such an alliance, which would span three major auto markets _ the U.S., Europe and Japan _ and boast a combined annual production of 15 million vehicles.

Ghosn said teams made up of a senior official each from GM and Renault-Nissan have been set up to study possible "synergies," but he declined to say what the teams were studying. He also refused to give his assessment of GM.

But he said the benefits from a tie-up would be similar to what was gained from the Renault-Nissan alliance, which have included cost savings from buying auto parts together and sharing research while keeping the separate identities of the Nissan and Renault brands. Renault owns 44 percent in Nissan, which in turns owns 15 percent of Renault.

Some analysts say Ghosn may be exploring expanding the Renault-Nissan alliance to include GM as a way to fight the ambitions of booming Toyota Motor Corp., Japan's No. 1 automaker. Nissan ranks second in Japan.

"A big alliance is seen as necessary to avoid losing to the fantastic growth of Toyota," said Koichi Sugimoto, auto analyst with Nomura Securities Co. in Tokyo. "Toyota has been performing so well it's hard to find any way to win against Toyota."

Ghosn denied an alliance with GM was a way to fight Toyota.

"I don't think alliances are about being against something or someone," he said. "This is something that has to be positive."

The alliance between Nissan and Renault has been praised as highly successful since Ghosn was sent in by Renault in 1999 to the Japanese automaker to save it from near bankruptcy.

But there are also concerns that the proposed partnership could disappoint like the 1998 linking of Chrysler Corp. of the U.S. and German automaker Daimler-Benz AG.

Some analysts have criticized the idea of a Renault-Nissan-GM alliance, saying the potential benefits are unclear and the complicated process of meshing three companies could distract GM from its turnaround plan.

Detroit-based GM is struggling to revive its business after losing $10.6 billion last year and seeing its market share dwindle in North America. About 35,000 hourly workers recently agreed to retire or take buyouts and GM has announced plans to close a dozen plants by 2008.

But Ghosn brushed off the skeptics, noting he faced even more doubts when he was sent in by Renault to turn around Nissan.

"I've been through this movie seven years ago," he said. "When Renault announced the willingness to partnership with Nissan, everybody was against it."

Ghosn said he respects GM's symbolic importance to America.

"I am totally aware General Motors is an icon in the U.S.," he said, adding that Nissan has a similar status in Japan and Renault in France.

"Because I know that, I don't believe in anything hostile. I believe this has to be a strong partnership."

Nissan shares, which have recently lost gains to settle at about the same level they were a year ago, dipped 1.1 percent to finish in Tokyo at 1,155 yen ($9.9).

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Lutz: GM building hybrids for good press

Lutz: GM building hybrids for good press

General Motors Vice Chairman Bob Lutz said in an interview this week that GM doubts the benefits of hybrids, but must build them to improve its public image. "Hybrids are technologically of doubtful benefit, and expensive, but necessary from a political and public relations point of view," Lutz told Just-Auto. "Toyota has said, economically, hybrids make no sense. The reduction in fuel [consumption] does not pay for the technological content and cost of the vehicle so therefore economically it remains fairly nonsensical, so that's the left-brain analytical argument."

"The right brain is it's the popular thing to do, many people believe that if we all drove hybrids the world would suddenly get cooler again and then it's the patriotic thing to do because if you drive a hybrid you will no longer be funding the Arab terrorists, and so forth."

"So, with all those beliefs out there, you have to do a hybrid for public policy reasons."

"I don't care how much money you get out but when you've got two drivetrains, the sophisticated electronics and a big lithium-ion battery, you've got cost."

Lutz says diesels are also problematic. "The modern diesel is becoming more and more expensive as we have to have to gear up to meet Euro 5, which is very difficult."

"Let's not forget, a diesel engine is always going to be more expensive than a conventional petrol engine, that's the laws of physics."

In March, Lutz said GM is most enthusiastic about ethanol. "We think running the nation on E85 makes more sense than all the hybrids in the world," he said.


Friday, July 28, 2006

Foreign cars pass Big 3

Tuesday, July 25, 2006
Foreign cars pass Big 3
For the 1st time, U.S. drivers buy more import brands
Josee Valcourt / The Detroit News

For the first time, U.S. consumers are buying more cars and trucks built by foreign automakers than vehicles made by Detroit's traditional Big Three.

New statistics compiled by R.L. Polk and Co., which counts new car registrations and excludes sales to rental car agencies and other fleet customers, show foreign brands commanded 52.9 percent of the retail auto market in the first five months of 2006, while domestic automakers fell to 47.1 percent.

Domestic brands led foreign makes 51 percent to 49 percent over the same period last year.

While the power shift has been long in the making, it's nonetheless a disheartening sign that Detroit's auto industry is losing the battle for the hearts and wallets of American car buyers.

Domestic brands such as Chevrolet, Ford and Dodge still control more than half the U.S. market when fleet sales are included, but more profitable retail sales are considered the best indicator of which auto brands are most popular with customers.

"I'm not surprised," said Christian Wardlaw, senior analyst with, a car shopping Web site. "The proof is sitting there in black and white on paper. People can't refute it anymore."

About 2.55 million new domestic-brand cars and trucks were registered in the first five months of this year versus 2.86 million foreign nameplates in the same period, Polk reported. The foreign nameplates figure includes some brands such as Ford-owned Land Rover and Jaguar that are controlled by the Big Three.

Chrysler Group spokesman Kevin McCormick said the Auburn Hills-based company doesn't get caught up in the industry scorekeeping, saying the automaker is "focusing on things we can control in our business. Our strategy at a high level is to put out the best cars and trucks that we can at prices that are attractive to consumers."

But industry experts say the numbers illustrate that Asian automakers such as Toyota Motor Corp., Honda Motor Co and Nissan Motor Co. are doing a better job meeting the needs of U.S. car buyers.

Domestic brands have been hurt by lower quality scores, and more recently, a heavy reliance on large trucks and SUVs at a time of a high gas prices.

"People have been swapping SUVs for fuel-efficient cars, and the domestics' car lineup hasn't been as compelling as the Asians'," Wardlaw said.

Amenities factor in

Import brands are leveraging strong profits to turn out cars packed with safety features, creature comforts and the latest technology, said Phil Reed, consumer advice editor of auto research site

"With American cars, you say 'This is nice and this is nice but why couldn't they have done this?' " he said.

The Ford Escape Hybrid, for example, has an optional navigation system, but the screen that displays maps and approaching roads is too small, Reed said. In addition, a disc has to be inserted to operate the system, but there is no additional slot to play music CDs meaning the driver has to choose between listening to tunes and navigating streets.

With the availability of the Internet, buyers have become savvy about how to compare the optional versus standard features they can get for their money and can more easily calculate a vehicle's resale value.

Vehicles made by Toyota, Honda and other top foreign makes generally hold their value better than American brand cars and trucks, which are often heavily discounted.

"Toyota has a 10- to 15-year outlook on where the industry is heading," said James Bryant, automotive industry editor for Hoover's Inc., an online business resource site. "GM and Ford tend to play along with whatever happens to be the flavor of the week.

"Everybody knew that $3 gas was going to come eventually," he added. "We just didn't want to admit it."

And foreign automakers have done a better job capturing the emerging crossover SUV segment with vehicles like the Nissan Murano and U.S. automakers are racing to catch up with offerings like the upcoming Ford Edge.

Toyota registrations rise

Toyota's U.S. brands posted a 12.5 percent increase in retail sales in the first five months of the year. By contrast, GM's retail sales slipped 7.7 percent. Excluding fleet sales, Toyota brands now outsell Ford and Chrysler nameplates in the United States, Polk reported.

Wardlaw said competing carmakers aren't only leading in important segments but getting new products to the market at a faster pace.

The product life cycle for an Asian nameplate is about four to six years compared to six to eight years for a new domestic car or truck.

Wardlaw points out, for example, that the Ford Focus was merely refreshed for the U.S. market while the Focus sold in Europe was completely redesigned.

"What Americans got was a rehashed version of the old Focus and as a result, Ford isn't in a position to compete" against popular small vehicles such as the Honda Civic in the U.S. market at a time when gas prices are pushing consumers to cars.

In a separate study conducted by Monday, online purchase requests for large trucks such the Ford F-150 pickup fell 34 percent, and 43 percent for the Toyota Tundra and Chevrolet Silverado for the second quarter. In comparison, more fuel-efficient cars like the Toyota Camry and Yaris, and the Honda Civic posted gains.

"The trick for the domestic automakers is going to be that they need to spread development dollars across every development segment in which they want to compete, and that includes cars and trucks," Wardlaw said.

You can reach Josee Valcourt at (313) 222-2300 or

© Copyright 2006 The Detroit News. All rights reserved.

GM clears pension agency hurdle in sale of finance unit

Friday, July 21, 2006
GM clears pension agency hurdle in sale of finance unit
Federal insurer says transaction won't stop automakers from paying current, future retirees.
Greg Bensinger / Bloomberg News

General Motors Corp. received U.S. pension agency clearance on one of the conditions for the automaker's $14 billion sale of a majority of its finance unit.

The Pension Benefit Guaranty Corp. won't take action to terminate GM's pension plans or impose liability on the purchasers as a result of the sale, according to a July 14 letter that the agency confirmed Thursday. Detroit-based GM disclosed the letter in a U.S. regulatory filing.

"One of the conditions has been satisfied so we're clearly happy about that," GM spokeswoman Toni Simonetti said. "We'll continue to work to close this in the fourth quarter. There's much to do."

GM, the world's largest automaker, in April agreed to sell 51 percent of GMAC to Cerberus Capital Management LP, which also includes Aozora Bank and a PNC Financial Services Group Inc. unit. The federal pension insurer has been reviewing the transaction to ensure it won't inhibit GM's ability to meet an estimated $89 billion U.S. pension liability for current and future retirees.

"The PBGC has a lot of power to get in the way of a transaction like this if they want to, so this is one of the major hurdles for GM to getting this thing done," said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tenn.

"I think the PBGC saw that GM workers will be better off with this sale. GM should be thrilled."

GM Chief Executive Officer Rick Wagoner chose to seek a buyer for the unit after debt ratings for the automaker and GMAC were cut to junk last year by Moody's Investors Service, Standard & Poor's and Fitch Ratings. GM would get $10.1 billion from the sale this year, including a $2.7 billion distribution from GMAC, and expects $4 billion more over three years.

A separation of GMAC from the parent would help stabilize its debt rating, Wagoner said when he announced the sale of the finance-unit stake in April. GMAC financed leases and loans on 2.16 million cars and trucks worldwide last year and operates in 39 countries.

Simonetti said remaining conditions to completing the sale include maintaining minimum credit ratings for GM, GMAC and the Residential Capital Corp. real estate financing unit; termination and repayment of debts between GM and GMAC; getting other U.S. and international regulatory approvals; and securing required legal opinions.

"We remain enthusiastic about closing the transaction on schedule," said Peter Duda, a spokesman for New York-based Cerberus. Gary Pastorius, a spokesman for the pension agency, declined to comment beyond the filing.

GM shares closed Thursday up 3 cents at $28.55 in New York Stock Exchange composite trading. They have gained 47 percent this year to lead the Dow Jones Industrial Average.

© Copyright 2006 The Detroit News. All rights reserved.

Finishing the deal

General Motors Corp. still has a few hurdles remaining to complete the $14 billion sale of 51 percent of GMAC to Cerberus Capital Management.

Settle all debts between GM and GMAC.

Maintain a minimum credit rating for GM, GMAC and Residential Capital Corp., GM's real estate financing unit.

Obtain additional government agencies approval.

Thursday, July 27, 2006

GM plans upgrades to popular OnStar

Friday, July 21, 2006
GM plans upgrades to popular OnStar
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- General Motors Corp. will bolster its OnStar services this month to provide subscribers with even more vehicle diagnostic information, aimed at improving fuel economy in these days of $3 gasoline.

The 1.6 million OnStar users who have signed up for monthly vehicle diagnostic e-mail updates will also be informed of vehicle emissions, how many more miles before an oil change is necessary and whether the vehicle is capable of using flexible fuels like E85, which is made of 85 percent ethanol.

OnStar President Chet Huber said the additional features offer "safety, security and peace of mind and tangible financial benefits."

More than 100 million gallons of oil could be saved fleetwide over the next five years if motorists followed OnStar advice and didn't schedule unnecessary oil changes, according to GM. Huber said many vehicles don't need an oil change for more than 6,000 miles, but people get them earlier out of habit.

Without the new updates, drivers of vehicles with high emissions might not find out they wouldn't pass emissions tests in the 34 states that require them, Huber said. They also might not realize their fuel economy has declined by 5 percent.

In the next few months, GM also plans to add a feature that may do the most in preventing accidents and saving gas money: A tire pressure monitor. Nearly four out of every five passenger cars and trucks have under-inflated tires, costing motorists nearly $4 billion a year in wasted gas.

Sean Kane, president of Safety Research & Strategies, said people are often lulled into not thinking about their tires, especially since new cars often don't need maintenance for 100,000 miles.

"Anything that gets people to think more about their tires and tire safety is a good thing," Kane said. "Tires are better than they have been before, but people still need to make sure they are taking care of them."

Although OnStar is nearing its 10th anniversary in September, GM declines to talk about how profitable it is. OnStar has 4.5 million members and 50 million interactions with drivers. OnStar also sells hands-free wireless minutes and is nearing its one billionth minute sold.

With GM making OnStar standard in all vehicles in 2007 -- and giving all drivers a free one-year subscription -- OnStar expects to have more than 10 million subscribers in the next few years.

OnStar's safety features have drawn attention in Europe, where regulators have been working to implement a version since 2004.

In the European Union, an OnStar-type system is expected to be mandated in all cars by 2009. Called "eCall," it is expected to save 2,500 lives a year and reduce the severity of injuries by 15 percent. It will use the European equivalent of "911" -- there it's "112" -- and officials hope to reduce response time to serious accidents by 50 percent.

You can reach David Shepardson at (202) 662 - 8735 or

© Copyright 2006 The Detroit News. All rights reserved.

The Union Gap

The Union Gap
Labor Worries It Won't Have a Seat in a Ghosn-Led Alliance

By Dale Russakoff
Washington Post Staff Writer
Thursday, July 20, 2006; Page D01

Back in 2001, a United Auto Workers effort to organize Nissan Motor Co.'s North America flagship factory in Smyrna, Tenn., went down to crushing defeat. Nissan workers' two-to-one vote against the UAW dashed its hopes of penetrating the flourishing foreign-owned auto manufacturing sector in the United States. And it came with Nissan chief executive Carlos Ghosn's distinctive signature.

"It is without reservation to say that bringing a union into Smyrna could result to making Smyrna not competitive, which is not in your best interest or Nissan's," Ghosn said in a videotaped message played in the plant shortly before the election. The UAW released a transcript of the talk at the time.

Today, UAW President Ron Gettelfinger is making clear that he has "very serious concerns" about a proposed global alliance between General Motors Corp. and automakers Nissan and Renault SA -- both headed by Ghosn. The flamboyant Ghosn's five-year-old stance against the UAW is hardly the only reason.

The much larger issue, according to auto industry experts, is the precarious position of organized labor in the United States in an increasingly global auto industry.

While no one knows whether the three companies will ultimately opt for an alliance -- or, if they do, what shape it would take -- the idea alone dramatizes how much the already struggling union could have to lose.

"In Rick Wagoner [GM's chief executive] the UAW has a man who sees the union as a fact of life, now and in the future," said Clark University professor of labor relations Gary Chaison. "In Ghosn, they have a man who sees the union as a burden."

In his much celebrated turnaround of Nissan, Ghosn became known in Japan as the Ice Breaker for shattering long-established relationships with unions and suppliers and for laying off 21,000 people in a culture that once prized lifetime employment. Earlier, as an executive of the French company Michelin in Brazil, he was known by the nickname "le cost killer."

In trying to accomplish an equally difficult turnaround at GM, Wagoner has been noticeably accommodating of the UAW, and Gettelfinger of Wagoner, reflecting a sense of dependence on each other's survival.

When Wagoner determined that GM needed to eliminate 30,000 union jobs in the United States, he championed generous buyouts and early retirement packages that made it possible for workers to leave with some security, while squashing any threat that mass job reductions would provoke a crippling strike.

Gettelfinger, for his part, has led the union to make uncomfortable pay and benefit concessions in the middle of a contract, a step not taken since the Chrysler bailout more than 20 years ago, and has signaled there could be more givebacks in the 2007 contract, in recognition of GM's precarious financial condition. The automaker lost $10.6 billion last year and has suffered continuing erosion of its market share.

Foreign automakers Honda and Toyota pay wages roughly comparable to those of unionized workers at GM, Chrysler and Ford, a strategy that has helped prevent the UAW from gaining a foothold in the foreign manufacturing sector. The UAW said at the time it targeted Nissan in 2001 that its U.S. wages were the lowest of the Japanese automakers.

Nissan production workers at its newest plant, in Canton, Miss., start at $14.15 per hour and reach maximum pay of $24.47 in five years, according to Michael Steck, the company's senior director of human resources. GM workers start at $19.60 per hour, and reach the maximum of $28 an hour in three years, according to GM spokesman Dan Flores. The difference between the maximums is about $7,300 a year, but the best-paid autoworkers in foreign plants in the South can make up to $70,000 a year, including overtime and bonuses, compared with median household incomes of less than $50,000. According to an article in the Detroit Free Press, Nissan workers said they felt "blessed" to work for those wages.

Moreover, wages are not the top concern of foreign automakers in the United States. The much bigger worry, according to Chaison and others, is the spiraling cost of pensions and health care for retirees. GM says that these "legacy costs" add $1,500 to the prices of their automobiles.

"It's not really an anti-labor issue, it's an anti-cost issue," said Steven Szakaly, an economist for the Center for Automotive Research. "The foreign manufacturers looked at Ford and GM with enormous legacy costs and said we will nip the problem in the bud and avoid it."

Nissan recently announced that beginning next year it would no longer finance a secondary insurance policy for retirees aged 65 and older, and instead would give them a $2,500 annual stipend with which to buy their own Medigap insurance. Also, beginning Jan. 1, 2006, Nissan replaced its defined benefit pension plan with a defined contribution plan for new hires.

The UAW is already under pressure to make major concessions in retiree benefits when the contracts of the Big Three automakers come up for renegotiation in 2007. If GM becomes only one part of a global company, and if Wagoner's attitude toward the union no longer prevails, the pressure on health and retiree benefits could become even greater, Chaison said. "General Motors sees legacy costs as a commitment made to retired workers, in return for wages deferred many years ago," he said. "A new player entering the arena will not see it that way. Legacy costs to them could mean paying people who are not productive."

While the union has many concerns, an alliance among GM, Nissan and Renault could have some benefits for the UAW, depending on how it is structured. One auto industry expert suggested that Nissan may need more production capacity if its new American cars prove to be hits in the marketplace. Since GM has excess capacity, UAW workers might even end up making Nissan cars in GM factories.

GM also has had narrowly focused alliances with other foreign automakers that posed no threat to the union, including a joint venture with Toyota in California where UAW workers make the Pontiac Vibe and Toyota Matrix.

Staff writer Dina ElBoghdady and staff researcher Richard Drezen contributed to this report.

© Copyright 1996-2006 The Washington Post Company

Toyota not interested in joining proposed GM alliance

Thursday, July 20, 2006
Toyota not interested in joining proposed GM alliance
Yuri Kageyama / Associated Press

TOKYO -- Toyota has no interest in blocking or joining the proposed partnership between General Motors and the Renault-Nissan alliance, the Japanese automaker's president said Thursday.

The remarks from Toyota Motor Corp. President Katsuaki Watanabe come at a time when GM is in talks about a possible partnership with an alliance between Renault SA of France and Nissan Motor Co.

Speculation has been growing that Toyota may be considering proposing to General Motors Corp. an alternative option for a partnership, perhaps to block Japanese rival Nissan's growth ambitions.

Watanabe said he didn't want to comment about talks among other automakers but denied Toyota was interested in joining the proposed mega-alliance.

"We are not thinking about participating," he told reporters at a Tokyo hotel when asked about whether Toyota may either join or block the talks among GM, Renault and Nissan.

Watanabe also bowed in apology at the news conference to express regrets -- but not acknowledging wrongdoing -- for troubles linked to a criminal investigation into a recall case in 2004.

"I take this seriously and see it as a crisis," he said. "I want to apologize deeply for the troubles we have caused."

Prosecutors are investigating whether Toyota officials hid defects that may have caused a head-on collision in 2004 that injured five people.

Toyota has cooperated with General Motors in a few endeavors over the years, including developing ecological technology. The companies also jointly operate an auto plant in Fremont, California, called New United Motor Manufacturing Inc., or NUMMI, which was set up in 1984.

Watanabe said NUMMI and other friendly ties with GM will continue unchanged, but he said he does not foresee new tie-ups involving major stakes for his company.

When questioned by a reporter, Watanabe acknowledged Toyota remains open to such possibilities under different conditions. He refused to say what those conditions may be. He said he has not talked with GM Chief Executive Rick Wagoner since March.

Outside of its group of Japanese subsidiaries, Toyota does not have any auto alliances involving holding stakes.

The GM talks with Renault-Nissan began last week, after prodding by billionaire shareholder Kirk Kerkorian, and what may emerge remains unclear.

Joining together GM, Renault and Nissan would produce a mega-alliance like no other, spanning the three big auto markets of the world -- Europe, Japan and the U.S. -- with a combined annual production of 15 million vehicles.

Carlos Ghosn, who heads both Renault and Nissan, has said the cooperation should involve holding stakes in each other's company. But Ghosn has denied he wants Wagoner's job.

General Motors, which lost $10.6 billion last year, has been battered by staggering health care costs for its workers, retirees and family as it fights to maintain market share eroded by rivals, especially Japanese automakers.

Toyota, meanwhile, has recently seen its sterling reputation sullied by a series of recalls, and Watanabe apologized Thursday for troubles related a police investigation into the August 2004 accident and subsequent recall.

© Copyright 2006 The Detroit News. All rights reserved.

Wednesday, July 26, 2006

GM touts sweeter financing deals

Wednesday, July 19, 2006
GM touts sweeter financing deals
Instead of last year's employee discounts for all, more cash rebates, 0% loans are on tap.
Brett Clanton / The Detroit News

General Motors Corp. will launch discount programs today for six of its eight vehicle brands to pump up sales on the back end of the busy summer selling season.

The program will feature new cash incentives on select 2007 models and a menu of zero-percent financing options on remaining 2006 models that may turn out to be well-timed.

In the face of rising interest rates, a growing number of car buyers are choosing attractive financing deals over other discounts, new research shows.

With the promotion -- which includes Chevrolet, Buick, Pontiac, GMC, Saab and Saturn -- GM is resisting reviving last year's hugely successful employee-pricing-for-everyone offer.

For now, the automaker is sticking with a new strategy that favors more realistic sticker prices over profit-eating incentives, even as its sales and market share continue to slip.

The strategy is part of a sweeping plan to overhaul GM's North American auto business, which accounted for much of the company's $10.6 billion loss last year.

But GM has taken its lumps for pulling back on incentives as rivals go full-throttle with deals.

Through June, GM's sales are down 12 percent and its U.S. market share has fallen to 24.1 percent, from 26.8 percent a year ago, according to Autodata Corp.

But GM is making the right moves to fix its business, even if the process is painful now, said Tom Libby of J.D. Power and Associates' Power Information Network.

"When you adopt that program, you're going to see short-term struggling," he said. "But what they're doing is right on the money."

The new incentives come as GM prepares to report second-quarter earnings next week. Analysts are expecting the automaker to report a loss for the three months that ended June 30, mainly due to writing down the costs associated with 35,000 workers taking cash buyouts and early retirement offers.

But GM Chairman and CEO Rick Wagoner expects earnings to increase after the second quarter.

"We need to look behind that and look at the underlying business," Wagoner told reporters at the London auto show Tuesday. "We hope to continue to drive for significantly improved results."

Some analysts expect to see signs of progress in GM's second quarter results. Brad Rubin, an auto industry analyst with BNP Paribas in New York, said that, excluding the buyout charges, GM earnings "are probably better than people think."

The improvement is due partly to lower incentive spending and less dependence on fleet sales, although those gains could be offset by a surge in raw material costs and lower production volumes.

"More than likely it will be a down quarter, but it won't be as severe as last year," Rubin said. "GM is in a much better position."

GM's new summer sales promotion runs through Sept. 5 and is chiefly aimed at clearing out the last of the 2006 models, said John McDonald, a GM spokesman.

In keeping with a push to better distinguish GM's brands, he said, the automaker today will launch advertising for the discounts that is different for each participating brand.

Saturn's program, for instance, lets customers subtract 10 percent from the sum of the sticker price and destination charges, or choose other GM discounts. Other brands will pitch rebates and financing deals.

Cadillac and Hummer will not get new ads because their discounts launched earlier in July.

While the summer promotion mainly targets 2006 models, it will extend new cash and financing offers on some 2007 full-size SUVs and pickups, but no zero-percent interest deals.

But the central piece of the promotion is free financing for 36 months on many 2006 models. A select number of 2006 models will be eligible for free financing for 60 months, while GM will extend a zero-percent-for-72-months offer on big SUVs and pickups.

Competitive financing offers coupled with rising interest rates have spurred more consumers to finance vehicles rather than pay cash or lease, and to choose lower interest rates over other deals.

In the first nine days of July, more than 66 percent of new car buyers opted to finance, up from about 55 percent typically, said J.D. Power's Libby said.

GM dealers say they got a big boost early this month from the automaker's 72-hour sale over the Fourth of July weekend that offered zero-percent financing deals on a range of models.

That program brought GM within striking distance of its sales goal for July, dealers said. But the automaker's July sales are still expected to show a steep decline from last year's employee pricing-fueled boom.

You can reach Brett Clanton at (313) 222-2612 or

© Copyright 2006 The Detroit News. All rights reserved.

New deals at GM

Free financing for 36 months on many 2006 vehicles and for 60 months on select 2006 models

$2,000 trade-in assistance on '07 Chevy Tahoe, Suburban, Avalanche, GMC Yukon and Yukon XL

At Saturn, 10 percent off sum of sticker price and destination charge

At Saab, $500 bonus cash offer extended on 2006 9-3 2.0T sedan and 9-7X sport utility

$1,000 cash for GM employees, suppliers and dealers on '06 midsize SUVs

Senators push fuel standards

Thursday, July 20, 2006
Senators push fuel standards
Proposed bill would increase fuel economy by 4 percent each year; GM calls it unrealistic.
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- A bipartisan group of U.S. senators on Wednesday unveiled a bill that would increase fuel economy standards for the nation's passenger cars and light trucks by 4 percent each year -- about one mile per gallon annually -- starting after model year 2009.

Looking to end the months-long impasse over increasing fuel economy standards and offer a more flexible approach, the eight senators, led by Sen. Barack Obama, D-Ill., introduced the Fuel Economy Reform Act of 2006.

"Unlike other bills that set numerical mandates, this one would allow the National Highway Transportation Safety Administration to "revise the annual increase if (the NHTSA) concludes that the target cannot be reached with current technology or without compromising safety," it states.

"It is clear that the Achilles' heel of the most powerful country on earth is the oil we import and cannot live without," Obama said.

Cars and light trucks account for 40 percent of U.S. oil consumption.

Bush sought authority in April to raise the average fuel economy of the vehicles, but Congress has yet to allow it. Currently, fuel efficiency standards have not been raised for passenger cars since 1985.

Privately, international and domestic automakers think fuel economy legislation has little chance of passing this year, since Congress has other political battles to fight.

General Motors Corp. spokesman Greg Martin said the new bill isn't realistic, since automakers have a multi-year planning cycle.

"We should have some good sound experts and scientists say what's technically feasible," Martin said. "Fuel economy ultimately depends on what people buy. We're working hard on that front, from flexible-fuel vehicles to hybrids to ultimately fuel cells."

The Alliance of Automotive Manufacturers, which represents the Big 3 and Toyota among others, said it supports "the general goal of trying to enhance energy security and also basing fuel economy on what's feasible," said Gloria Bergquist, vice president at the alliance.

Fuel economy has to take into account safety, cost and jobs as well, she said.

You can reach David Shepardson at (202) 662 - 8735 or

© Copyright 2006 The Detroit News. All rights reserved.

Proposed changes

Congress is considering a bill to impose increases to mileage standards to passenger vehicles. The bill would:

Require a 4 percent annual increase by the 2009 model year for cars and 2013 for light trucks unless federal regulators said it wasn't feasible

Offer tax incentives for companies to retool parts and assembly plants to make more fuel efficient vehicles.

Establish different standards for different types of cars.

Tuesday, July 25, 2006

This pitch may sell: Be charitable, buy a Ford or GM vehicle

Wednesday, July 19, 2006
Mike Hudson: Car culture
This pitch may sell: Be charitable, buy a Ford or GM vehicle

GM and Ford are struggling every day to turn a profit. No matter how much they cut costs, buy out workers or slash prices at dealerships, those sales figures keep sinking and the bottom line keeps hurting.

Cue the marketing department. Would consumers buy cars from a charity?

It makes sense

Sick of buying cars from soulless corporations? Tired of your hard-earned dollars going to line the pockets of greedy shareholders? Isn't about time consumers had a not-for-profit option in cars?

From a consumer standpoint, it really would make sense. What makes you feel better than knowing a shiny quarter of your Ben & Jerry's Chunky Monkey potentially saved a leaf of rainforest? Well imagine the feeling you'd get knowing your car purchase is helping to pay for some old fogey's pills courtesy of GM's staggering legacy costs -- er, GM's "Greatest Generation" health care program.

While the guy who bought the Toyota helps enrich a bunch of boardroom sharks, your Ford purchase helps pay workers at idle plants -- er, helps pay for an extended sabbatical for workers in Ford's "Mandatory Vacation and Self-Fulfillment" program.

Problems become accolades in the charity world. At the church fair:

"These cookies are bit stale, Padre."

At the high school band car wash:

"You missed an entire half of my car and I think my wallet is missing."

"C'mon, you miser, it's for a good cause."

Well, consider Rick's of Michigan or Bill Ford's Own. These progressive firms -- based in southeast Michigan -- have turned the traditional auto business on its head. These people make cars simply to cover their costs. It's about community.

Writing it all off

Sure you might be able to find a better car elsewhere, but c'mon, we only make cars to help people. Did we mention your purchase is tax deductible?

The timing for this marketing couldn't be better. Warren Buffett recently cemented his place in American history by giving away $30 billion to charity. Instead of being a guy with more money than can be believed, the man is now a saint.

Bigger than his gift to humanity, he gave Detroit an even better present, being quoted as saying the American auto industry is little more than a health care system that happens to build cars.

Ford and GM have been giving away billions for decades. They support a regional economy. Hundreds of thousands of Americans depend on them for their livelihoods. For crying out loud, people, they helped create the middle class, the 40-hour workweek and employer provided benefits. The least you can do is buy a car.

Mike Hudson is a freelance writer and editor at the automotive Web site He can be reached at

© Copyright 2006 The Detroit News. All rights reserved.

Gettelfinger: GM must stay focused

Tuesday, July 18, 2006
Gettelfinger: GM must stay focused
UAW leader fears talks with rivals could stall turnaround
Brett Clanton / The Detroit News

DEARBORN -- United Auto Workers President Ron Gettelfinger said Monday he is "very concerned" that General Motors Corp.'s talk of a potential alliance with Japan's Nissan Motor Co. and France's Renault SA could distract GM from its turnaround.

"If the focus is taken away from where (GM is) headed right now ... and becomes more focused on this alliance, then I think that becomes a big issue," Gettelfinger said in his first public comments on the proposal since GM Chairman and CEO Rick Wagoner and Carlos Ghosn, CEO of Nissan and Renault, agreed Friday to explore the idea further.

His remarks came the same day Wagoner briefed GM board members about an internal review the three companies are launching to study the proposal. In a conference call, Wagoner told the board the 90-day review, headed by small executive teams at each company, will kick off immediately, said people familiar with the call.

Gettelfinger spoke to reporters after his testimony at a federal hearing in Dearborn exploring the impact of China on the U.S. auto industry. The UAW has been in the background in recent weeks as the automotive world digested the stunning news of a potential GM-Nissan-Renault alliance. But Gettelfinger emerged Monday to voice doubts about the tie-up, and emphasize the sacrifices the UAW has made in recent months to aid GM's recovery.

His comments signaled that the UAW, which represents more than 100,000 GM workers, does not intend to be sidelined for long in the discussions.

It will be critical for GM to win the UAW's blessing if the world's largest automaker decides to pursue a partnership with Nissan and Renault, said Harley Shaiken, a labor professor at University of California at Berkeley.

"If the UAW was vocal in its opposition, that would be a deciding, if not decisive, factor in possibly derailing this," Shaiken said.

GM is committed to seeing through its restructuring plan during talks with the foreign automakers, said GM spokeswoman Toni Simonetti.

"We fully intend to keep our eye on the ball with respect to the turnaround," she said.

On July 7, GM's board authorized a review of a potential tie-up with Nissan and Renault. Last Friday in Detroit, Wagoner and Ghosn hatched plans to launch a 90-day internal review of the companies to determine the potential benefits of a partnership.

Wagoner feels the heat

The idea of an alliance first came to light in a June 30 letter to the companies from billionaire investor Kirk Kerkorian, whose Tracinda Corp. owns 9.9 percent of GM shares. Kerkorian made the proposal after a secret meeting with Ghosn, an industry superstar whose openness to exploring an alliance has buoyed GM's stock in recent weeks.

But the proposal has also put pressure on Wagoner to either sell a significant stake of GM to a foreign automaker or prove that his turnaround plan is sufficient to revive the company after a $10.6 billion loss last year.

That determination will likely hang on the outcome of the internal company reviews taking place in the next three months.

Bob Lutz, GM's vice chairman and product development chief, said Monday he expected the companies to hold talks among teams of senior-level managers looking for potential savings in logistics, products, sales, production and purchasing.

"We need to measure the synergies of a re-regionalization with Renault in Europe and Nissan in Asia with the gains from the globalization at GM," Lutz said in an interview with Bloomberg News at the London Auto Show.

Deal offers range of results

Analysts are divided about the potential gains from a GM-Nissan-Renault partnership. GM already has a presence in most major international markets. As the world's largest automaker, it also benefits from economies of scale that may not be greatly improved with the addition of two smaller partners. And potential savings from shared components or vehicle underpinnings could be years away.

For the UAW, the benefits are murkier still. At worst, the alliance could mean further job losses. At best it means joining with an automaker whose U.S. operations are not unionized.

"It's unclear what the alliance adds," professor Shaiken said. "And the pitfalls are fairly apparent."

That's why Gettelfinger said he is encouraged that Wagoner is moving slowly on the proposal.

"I think Rick Wagoner is taking the right approach by being very cautious, and pacing it to his standards as opposed to somebody else's."

Gettelfinger said the UAW had not been asked to join talks on the proposed GM-Nissan-Renault alliance. But he said he is in regular contact with Wagoner, who he believes will include the union at the appropriate time.

"I'm sure before he did anything, he would invite us in as being a part of it. But I do not believe that at this juncture that's even within the realm of the reasonable before they make that decision themselves."

Stabenow hopeful, wary

U.S. Sen. Debbie Stabenow, D-Lansing, said it was hard to evaluate the merits of a GM-Nissan-Renault alliance because it is still in the early stages. But with Michigan losing thousands of auto jobs each year, she did not dismiss the idea of an alliance altogether.

"If some partnership allows us to strengthen our domestic auto industry, fine," said Stabenow, who also testified Monday at the federal hearing on China. "But if it means we're going to lose jobs, then I'm not for it."

Delphi, UAW apart on talks

Separately Monday, Gettelfinger said the UAW and bankrupt auto supplier Delphi Corp. are making little progress in negotiations over wage cuts and other concessions the parts maker is seeking as part of its reorganization. He did not eliminate the chance of a strike if the sides cannot come to terms.

"We have not ruled out any our options," Gettelfinger said.

Delphi spokesman Lindsey Williams disagreed with Gettelfinger's characterization of the negotiations.

"We have continued to meet in earnest with all of our unions in hopes of obtaining a consensual agreement," he said. "We remain hopeful that we will reach an agreement prior to Aug. 11."

Gettelfinger said the UAW had set aside the last two weeks for discussions, but that Delphi has not budged "one iota" from demands for steep wage and benefit cuts, despite the union's recent approval of a plan allowing the company to slash thousands of jobs with early retirement and buyout offers.

Gettelfinger suggested Delphi is dragging out the process so it can demand concessions in the final hours before an Aug. 11 deadline. A federal bankruptcy court hearing, resuming that day, will determine whether the supplier can reject labor contracts covering its 33,000 U.S. workers.

You can reach Brett Clanton at (313) 222-2612 or

© Copyright 2006 The Detroit News. All rights reserved.

At a glance

On Friday, General Motors Chairman and CEO Rick Wagoner and Carlos Ghosn, CEO of Nissan Motor Co. and Renault SA, agreed to launch an internal study of a potential alliance.

Wagoner told GM's board Monday that a 90-day review will begin immediately.

UAW President Ron Gettelfinger worries that the process could be a distraction from GM's turnaround plan.

UAW president says Delphi strike still a possibility

Monday, July 17, 2006
UAW president says Delphi strike still a possibility
Sarah Karush / Associated Press

DEARBORN -- United Auto Workers President Ron Gettelfinger said the union had made little progress in recent talks with Delphi Corp. and that a strike still was a possibility.

"We have not ruled out any of our options," the UAW president said Monday.

Gettelfinger said he had expected more concessions on wage and benefit issues from Delphi -- the automotive parts supplier that is in Chapter 11 bankruptcy protection -- after the company, the union and General Motors Corp. worked out an extensive program of early retirements and buyouts.

"I think the attrition package got them where they need to be, and they act like nothing has changed," Gettelfinger told reporters during a break in a hearing on Chinese trade practices at the University of Michigan-Dearborn.

Delphi has asked a New York judge to allow it to throw out its contracts with the UAW and other unions. The judge has agreed to postpone a hearing on that request until Aug. 11 to let the parties focus on negotiations. Delphi requested the postponement after reaching the agreement with the UAW and GM on buyouts for all its UAW-represented workers.

Gettelfinger said Monday that there would be more meetings before Aug. 11, but that he was not optimistic that progress would be made.

"It appears to me that Delphi has got us on a slow walk to August the 11th," he said.

Last week, Troy-based Delphi reported a $2.4 billion loss for 2005.

Delphi's bottom line should benefit later this year from the departure of 12,600 workers represented by the UAW who took early retirement offers. The company has replaced some of the workers with people hired at far lower hourly wage rates.

Even more Delphi workers could leave as buyout offers are extended to most of its remaining hourly workers.

© Copyright 2006 The Detroit News. All rights reserved.

Monday, July 24, 2006

GM hits it out of the ballpark

Saturday, July 15, 2006
Business Insider
GM hits it out of the ballpark

At baseball's All Star Game in Pittsburgh this week, Chevrolet quietly brought in a few celebrities for a sneak peek at its 2007 Silverado pickup. The idea was to begin building hype for the redesigned truck ahead of its launch this fall. Officials with the General Motors Corp. brand got an earful of compliments from the high-profile guests.

But they also got a few curve balls.

One came when Harold Reynolds and John Kruk, the hosts of ESPN's Emmy-winning "Baseball Tonight," saw the redesigned pickup Monday afternoon.

Kruk, a three-time all-star outfielder and first baseman, was clearly impressed and said he could see himself behind the wheel of another pickup.

"It's all I've ever owned," he said, before being asked if he meant Chevy pickups. Shaking his head, the burly commentator softly admitted that his first truck was not so tough. "When I was 16," he said, "I had a four-speed Datsun."

Country music superstars Big & Rich also surprised a few GM execs during a walk-around of the new Silverado. Dressed in cowboy hats and boots, as if fresh from the ranch, the pair at first asked all the right questions: What's it got under the hood? How much can it pull? What size are them wheels?

Then, "Big" Kenny Alphin opened the driver's side door and started poking around. After fumbling for a minute, he got to what was really on his mind: "Is there a plug for an iPod in it?" honors Caliber

The Dodge Caliber, featured in a TV ad that riled gay-rights supporters earlier this year, was ranked as the third most researched vehicle by gay consumers before purchasing a car or truck, according to a Top 10 list.

"The most important fact revealed in this data is that our community clearly supports companies that treat us with respect," reports "And for that, we thank all the gay-friendly companies in all industries in the U.S."

More than two months ago, Chrysler's Caliber spot featuring a fluttering fairy transforming objects and people into cuter versions was called offensive and homophobic by some gay advocates.

The protestors, which didn't include, said the commercial went too far when the fairy turned a male passer-by into a preppy pedestrian holding four pink leashes connected to Pomeranians. The suggestion, the groups said, was the man was turned into a homosexual.

Former Mercury rider in the lead

Mercury marketing executives are probably saying "that's our boy Floyd" as they watched former Mercury Pro Cycling Team rider Floyd Landis take the yellow jersey in the Tour de France on Thursday. Landis cut his teeth in cycling as a standout rider for the Mercury team from 1999-2001 before joining the U.S. Postal Cycling team. On Thursday, as a rider for the Phonak team, he emerged as a leader in the race during a punishing mountain stage of the world's most prestigious cycling event.

Contributors: Brett Clanton, Josee Valcourt and Rick Blanchard.

© Copyright 2006 The Detroit News. All rights reserved.

Alliance would give Ghosn muscle for the big leagues

Friday, July 14, 2006
Daniel Howes
Daniel Howes: Alliance would give Ghosn muscle for the big leagues

It's Carlos time.

Ghosn, that is, the CEO of Renault SA and Nissan Motor Co. who's scheduled to meet General Motors Corp. Chairman Rick Wagoner today and draw the broad parameters to study a potential three-way alliance of the automakers.

And if Ghosn's media blitz Thursday is any indication, he'll make a plausible case. He'll say this isn't about control, it's about finding solutions that make sense. He'll say this isn't about the Franco-Japanese hybrid fixing GM's problems, it's about GM fixing itself with whatever help the other two might offer.

He'll say, judging by his rhetoric, that he isn't angling to replace Wagoner atop GM or craft an organization -- if it ever gets that far -- that makes him Le Big Dog, no matter what it says on his business card.

He'll say that none of this would make much sense if the automakers don't own stakes in each other to prove their intent. He'll say he isn't talking to any other automakers about a potential alliance (i.e., Ford Motor Co.) -- at least not yet.

Seeking the Big Deal

Make no mistake: Ghosn's on a mission. Why wouldn't he be? His Nissan, a profitable industry darling the past few years, is stumbling, particularly in the all-important United States. Market share is down. Quality is suspect. Recalls are up -- and this is a Japanese automaker.

Renault, his latest rehab project, is profitable, too, but the vast chunk of its business is mired in slow-growth Europe. It needs broad roads into places like China and the United States. It needs the economies of scale from partnering with GM's Opel unit in Germany, a prospect certain to enrage European unions.

This guy clearly gets where the global auto industry is heading, but you get the unmistakable impression he knows he may not have the muscle to play when he gets there. Especially not with a beast like Toyota firing on all cylinders or a potential beast like GM (finally) showing signs of getting its act together.

He wouldn't be in Detroit otherwise, would he?

Study the track record

Ever since news of this proposed tie-up broke at the beginning of the July Fourth holiday, industry and Wall Street types have delivered all sorts of good reasons why a GM-Renault-Nissan Global Motors doesn't need to happen.

Fair enough. But there is one reason this alliance will get very serious consideration by GM management and, especially, its directors: Ghosn's record at Renault-Nissan and how sharply it contrasts to GM's over the same seven years.

Nissan in 1999 isn't GM today or just a few years ago. Yes, Nissan and Renault get government support for key fixed costs like pensions and health care. Yes, GM operates globally -- in purchasing, product development and manufacturing.

But it struggles to do what matters most -- make money, unlike Ghosn's companies.

Without the surplus cash that comes from profits, GM can't keep outrunning the competition. The only question is whether an alliance might get it where it wants to go sooner.

Daniel Howes' column appears Mondays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or Catch him Fridays with Paul W. Smith on NewsTalk 760-WJR.

© Copyright 2006 The Detroit News. All rights reserved.

Ghosn: Gung-ho about GM deal

Friday, July 14, 2006
Detroit News interview
Ghosn: Gung-ho about GM deal
Renault-Nissan CEO to meet with Wagoner today
Christine Tierney The Detroit News

NEW YORK -- Carlos Ghosn, chief executive of Renault SA and Nissan Motor Co., expressed confidence Thursday that the Franco-Japanese partnership would form an alliance with General Motors Corp. that would benefit all three automakers and transform the industry.

On the day before a crucial meeting with GM Chairman and CEO Rick Wagoner, Ghosn told The Detroit News a deal would succeed only if GM's board and top managers wanted it. But in contrast with Wagoner's tepid response to the proposal made by GM shareholder Kirk Kerkorian, Ghosn was eager to move forward.

"There is a possibility that in a few weeks we'll say, we don't think it's going to happen because we don't think the prize is big enough, or we don't think the willingness from both parties is strong enough," he said in his first public comments about the proposal since it was disclosed on June 30. "But if I didn't think there was more chance that we will outline a big prize, I wouldn't be here today.

"I think the potential is big."

Ghosn, a well-traveled French national born in Brazil, is scheduled to hold preliminary talks today with Wagoner in a highly anticipated meeting.

Ever since Kerkorian went public with his proposal that GM join the Renault-Nissan alliance, there has been a surge of speculation about Ghosn's role and Wagoner's future.

In an interview in midtown Manhattan, Ghosn spoke in broad terms about a deal that would fall far short of a merger but entail strong links.

He said Renault and Nissan would probably seek stakes in GM and board seats but he ruled out the notion that he could head GM as well as Renault and Nissan.

Effort goes beyond 'casual encounter'

He said an exchange of shareholdings was "probably desirable, so as not to make it a casual encounter between different companies" but a relationship in which it would be to everyone's interest for all to benefit.

"If you have a share exchange, it would be normal that you reflect it into the board constitution, but we're not there," Ghosn said.

Reports suggest Nissan and Renault might each take 10 percent stakes in GM, investing a total of $3 billion.

The two carmakers formed their alliance in 1999, when the Japanese automaker desperately needed cash and Renault was seeking a global partner. The French car manufacturer invested $5.4 billion at the outset and now holds 44 percent of Nissan. After Nissan recovered under Ghosn's leadership, it acquired a 15 percent stake in Renault.

The two companies maintain separate managements, headquarters, strategies and brands, but they produce vehicle underpinnings jointly and share engines and other costly components.

"What works between Renault and Nissan can work between Renault-Nissan and Company X," Ghosn said. "Today, we want to discuss if Company X can be GM, if there is enough mutual interest."

Such a three-way alliance would have a strong presence in all the world's major markets, accounting for nearly a quarter of global vehicle sales.

Such a deal would bolster the prospects for Renault and Nissan in future competition against giants such as Toyota Motor Corp.

"This would define the industry for many years to come if it were to happen," Ghosn said of a three-way alliance.

"But frankly, if it doesn't work out, it doesn't mean the concept of expanding the alliance is eliminated."

Asked whether he might consider Ford Motor Co. as an alternative partner, he said: "For the moment, what we're talking about is GM."

Ghosn's stance is bound to increase pressure on Wagoner and other GM managers to at least make a genuine effort to see if there are ways that the three car companies can benefit mutually by working together.

Sources close to GM say the automaker's top bosses, worn down by months-long restructuring efforts, reacted coolly to the proposal by Kerkorian, whose Tracinda Corp. owns 9.9 percent of GM.

Exec understands GM hesitance

Wagoner told The Detroit News Tuesday that he was approaching the proposal with an open mind, but he has alluded to GM's disappointing experiences with cross-border partners in the past. Last year, it spent $2 billion to extricate itself from a souring relationship with Italy's Fiat Auto.

Ghosn views GM's wariness as natural. "You tend to be more optimistic about alliances if you have a successful one, and you tend to be more pessimistic about alliances if you don't have a successful one," he said.

"We are probably more bullish about alliances because we have one which is working well. Obviously, we have to take into consideration emotional factors and past experiences, but at this level, we have to be very lucid and very objective about what the potential is," he said.

But in comments made to reporters and editors of The Washington Post, Wagoner downplayed the potential benefits.

"As we see the current business, there is no need for additional capital," Wagoner said, adding that the turnaround plan was "pretty far along".

At today's meeting, Ghosn and Wagoner are expected to discuss areas where the three companies might work together, such as parts purchasing or shared development of engines, chassis and technology.

"First we need to define what's the prize, what's the award for the three parties," Ghosn said. All three companies will assign top managers in various areas to assess possible benefits and cost-savings and tally them up.

"After you have outlined what is the prize, then you go to the second stage -- what kind of organization you should have in order to deliver," he said. "This is where you define whether it's going to be loose, or tight."

Some analysts worry that the deal-making might distract the three carmakers from their current objectives. Renault is striving to boost its profitability, Nissan is seeking to recover its growth momentum with a flurry of new model launches, and GM is only part-way toward a recovery.

Those plans are still top-priority. "I wouldn't do anything that would jeopardize the success of the plans of each company," Ghosn said. And while most of the benefits of an alliance would emerge in the long run, some might help the carmakers in the near term. "Any potential in purchasing can be immediate," he said.

While most analysts are moderating their criticism, given Ghosn's remarkable record fixing broken operations, they question whether even he can speed up GM's recovery.

"I don't know how Carlos Ghosn could help things progress any faster than they're moving now," said Erich Merkle, director of forecasting at IRN Inc. in Grand Rapids.

Willingness to see all sides a plus

For about a year, Ghosn has been casting about for a third partner, although he stressed that Renault and Nissan were not in a hurry to expand the alliance.

"Both companies are and will be doing pretty well, and we are pretty confident about our strategy," he said.

Ghosn was first approached by Jerry York, a longtime adviser to Kerkorian and a director on the GM board of directors. Their encounter led to a meeting in June between Ghosn and Kerkorian in Nashville, after the inauguration of Nissan's new U.S. headquarters.

Ghosn described his rapport with both Kerkorian and Wagoner as good. "Can I work with Rick? Yes, sure. I have known Rick for a while," he said.

As for Kerkorian, "I think he knows what he wants, and I think he's defending his interests and frankly, I understand that," he said.

"His vision is a vision of a shareholder of GM; my vision is the vision of a CEO of Renault and Nissan and someone looking for more potential for the alliance."

Ghosn has a warm and open manner, but his business style is no-nonsense and his aides describe him as a family man with no other social life.

Currently, he spends a lot of time on the corporate Gulfstream. He is based in Paris but spends about a week out of each month in Tokyo and a few days in the United States, where he heads Nissan's North American management team.

'Timing isn't the best,' he concedes

From Ghosn's standpoint, Kerkorian's overture came at a tricky moment. Renault is at the start of an ambitious four-year plan to raise its game, and Nissan's sales and profits are declining during the first half of the Japanese fiscal year because of a lull in new model introductions.

"The timing isn't the best, but when you have an opportunity, you don't select the timing of the opportunity. You take it or you don't," he said.

"We decided to take it when this opportunity was offered by an initiative that came from shareholders of GM."

Officials set 'crisp pace' for talks

Ghosn confirmed that both Renault and Nissan will form separate teams to study the pros and cons of a three-way alliance to assure shareholders of each company that their interests are being defended.

He does not expect a long process.

"This is not going to be an open-ended discussion which is going to go on for one year," he said. "We should obviously put a certain limit to the time."

In Washington, Wagoner told reporters he expected talks to proceed "at a crisp pace."

"Everyone would want to move to a yes or no decision promptly on something like this," he said, after testifying before a U.S. Senate committee on GM's high health-care costs.

He said he and Ghosn would discuss "the full range of options."

"It would be crazy for us to reject any good idea or any thoughtful idea on how we could be more competitive in what is a pretty tough global marketplace right now," he said.

Despite the success of the Renault-Nissan alliance, Ghosn also faces skepticism within the ranks at Renault and Nissan. GM's problems are daunting -- the automaker lost $10.6 billion and its share of the U.S. auto market keeps shrinking.

DaimlerChrysler AG's pursuit of alliances in the Far East, just two years after the merger of Daimler-Benz and Chrysler Corp. serves as a cautionary tale for the industry,

Could he be overstretching himself by bringing GM into the alliance?

"Was Nissan a step too far for Renault?" Ghosn replied.

"Everybody said that was going to be a disaster, this was a step too far, two mules don't make a racehorse," he said. "I've been to that movie."

Detroit News Staff Writers Brett Clanton and David Shepardson contributed to this report. You can reach Christine Tierney at (313) 222-1463 or

© Copyright 2006 The Detroit News. All rights reserved.

Sunday, July 23, 2006

Toyota may look to block Nissan/GM deal: report

Toyota may look to block Nissan/GM deal: report
Mon Jul 17, 5:52 AM ET

Top executives at Toyota Motor Corp. are considering options to head off rivals Nissan Motor Co. and Renault from forging an alliance with General Motors Corp. , according to BusinessWeek.

Citing unnamed sources, a July 15 article on the magazine's Web site said Japan's Toyota, the world's most profitable car maker, is considering its options and looking at different opportunities it could propose to GM.

"Toyota has no interest in seeing an alliance like this (linking Renault, Nissan and GM) take place," an executive, who asked not to be identified, told BusinessWeek.

GM, Renault SA and Nissan agreed on Friday to take 90 days to review the benefits of a potential alliance, which could lead to the birth of the world's biggest auto group with annual sales of 15 million vehicles -- the size of two Toyotas.

The decision followed a dinner meeting in Detroit between Wagoner and Carlos Ghosn, CEO of both Renault and Nissan.

A Toyota source said the company has "war-gamed" a way to assist GM, BusinessWeek said.

The magazine had no further details on Toyota's plans. It quoted Toyota spokesman Steven Curtis as saying that any talk of an offer from the company is "pure speculation."

Copyright © 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Copyright © 2006 Yahoo! Inc. All rights reserved.

Delphi top execs get more bonuses

Thursday, July 20, 2006
Delphi top execs get more bonuses
Supplier's unions, hit with wage and benefit cuts, blast payouts that may reach $74M in '06.
Brett Clanton / The Detroit News

A U.S. bankruptcy court on Wednesday approved an extension of a multimillion dollar bonus plan for top Delphi Corp. executives over the objections of unions representing its 33,000 U.S. factory workers.

The bonuses, which the supplier argued are vital to retain key employees as it restructures, will go to 460 top officers if Delphi hits certain earnings targets between July and December. Similar bonuses, cleared by the court in February , came to $36.3 million for the first six months of the year, Delphi said. The second piece will total roughly $20 million if the company meets the performance targets and up to $37.9 million if the targets are exceeded.

But the United Auto Workers and Delphi's other five unions blasted the payouts, which come as hourly workers are being asked to accept steep wage and benefit cuts to aid the company's turnaround.

The plan "sends the message that hourly workers are the dispensable commodities of the Chapter 11 case while the executives will be insulated from the effects of a dislocating transformation," the UAW said in a court filing prior to Wednesday's hearing.

U.S. Bankruptcy Judge Robert Drain ruled that the bonus plan is a reasonable incentive to retain top corporate officers during an uncertain time.

But he denied Delphi's request to let the bonuses renew automatically at the end of each six-month period while the supplier is in bankruptcy. To extend the plan further, Delphi will need court approval .

Delphi's executive bonus plans have been a source of controversy since the company filed for bankruptcy Oct. 8 and have served as an example in the broader discussion about the fairness of executive compensation levels nationwide.

This year, total cash compensation for the highest-paid U.S. executives rose to $5.1 million, a 41.3 percent gain over 2005 levels, according to ERI Economic Research Institute and the Wall Street Journal's

Average U.S. household income, meanwhile, has risen slightly more than 10 percent since 1992.

Delphi, which is expected to lose $2 billion this year, said compensation for its top officers has been effectively gutted in bankruptcy. Executives have received only base salary and benefits, or about half of what they would make in a typical year once performance bonuses are added.

Bankrupt companies often have to seek court approval of bonuses to keep top talent from leaving, said Linda Burwell of Nemeth Burwell PC, a Detroit law firm specializing in corporate restructuring issues.

But Delphi's request comes as the company is trying to negotiate up to 60 percent pay cuts and benefit reductions from factory workers to reduce overall labor costs.

Without concessions, Delphi will return to court on Aug. 11 and ask Judge Drain to reject its labor contracts, a move that would allow the company to impose wage cuts unilaterally and could push Delphi's unions closer to a strike.

"The approval of any bonus right now is really upsetting," said Jessie Chivers, 56, an electrician at a Delphi plant in Dayton, Ohio, with 29 years on the job. "We do all the work, they reap all the benefits."

In its filing, the UAW warned the bonuses could distract from the negotiations. It also opposed Delphi's request to lower second-half earnings targets to reflect "seasonal variations" in the supplier's business.

UAW spokesman Roger Kerson declined further comment Wednesday.

Delphi spokeswoman Claudia Piccinin said the company is pleased with the court's decision.

"This brings our executive compensation opportunities to competitive levels," she said. Delphi Chairman and CEO Steve Miller will not receive a bonus under the plan approved Wednesday, she said.

In October, Delphi will return to court seeking approval of a more controversial bonus plan that could give top officers a windfall of post-bankruptcy stock options and other payouts.

"Every hard-working American worker should be outraged," Todd Jordan, a Delphi worker in Kokomo, Ind., said of the bonuses. "If they're not, then they aren't paying attention."

You can reach Brett Clanton at (313) 222-2612 or

© Copyright 2006 The Detroit News. All rights reserved.

Toyota: Not interested in GM alliance

Tuesday, July 18, 2006
Toyota: Not interested in GM alliance
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Toyota Motor Corp. has not initiated discussions with General Motors Corp. about a possible alliance between the two companies, a top U.S. Toyota official said Monday.

"We're sitting on the sidelines watching this like all of the other automakers," Jim Press, president of Toyota's North America unit, said Monday night during a dinner with reporters.

His comments followed an official statement released earlier Monday by Toyota that was the automaker's first public response to speculation that it was pursuing a tie-up of its own with GM as an alternative to GM aligning with Renault SA and Nissan Motor Co.

"Our investigation reveals no discussions with GM have been initiated by Toyota and we can only conclude that there is no substance" to the speculation, Toyota said in the statement.

The statement followed a weekend report in Business Week that cited an unnamed Toyota executive as saying Toyota may try to forge an alliance with GM.

Press said the company isn't worried about a Nissan-Renault-GM tie-up. If such an arrangement made those companies stronger that would help Toyota, he said, because the company is boosted by tough competitors.

"We have a lot of goals and objectives to run our own company. We have a lot of work to do. Our goal has never been to see how big we can be," Press said.

But he believes that with globalization there will be further consolidation in the industry.

"Over time the smaller players are going to have a rough time competing, especially on the investment side," Press said. "I don't know when and I can't tell you how but there's going to be eight or nine or seven large companies split up the world."

All automakers are keeping tabs on the GM-Renault-Nissan negotiations, which began Friday when GM Chairman and CEO Rick Wagoner and Carlos Ghosn, CEO of Renault and Nissan, met.

Analysts said Monday they doubted Toyota would seriously consider buying an equity stake in GM, but could increase joint ventures involving the two automakers. Toyota and GM have had joint ventures since the 1980s.

"GM respects Toyota and Toyota respects GM, but no way would Toyota seek that kind of alliance," said David Healy, an auto analyst with New York-based Burnham Securities. "They don't need it. I take Toyota at their word that they aren't interested."

Toyota has no reason to be worried about a Renault-Nissan-GM tie-up, Healy said. "It would cause all of GM's leadership to quit, and cost GM market share, which only helps Toyota."

Toyota is also sensitive to the appearances of taking over an American company.

"They would rather commit hara-kiri (suicide) than look like they were trying to take over GM," Healy said.

Toyota and GM have a long-standing relationship, including sharing a manufacturing venture in Fremont, Calif., and cooperating on research. GM recently sold a stake in Fuji Heavy Industries to Toyota for $315 million.

During the dinner with reporters, Press also addressed several other topics:

Michigan has always been in contention for a new Toyota engine plant, along with a number of other states, Press said. He declined to say when Toyota might announce a decision.

Toyota continues to have great success with hybrids, with just a three-day supply of Priuses on dealer lots. Press said the company expected to sell around 200,000 this year, nearly 10 percent of total vehicle sales.

Toyota is "seriously considering" bringing a vehicle to market in the United States that runs on E85, an alternative fuel made of 85 percent ethanol. Detroit automakers have embraced E85 and have made support of the corn-based alternative fuel the centerpiece of their campaign to fight back a congressional mandate to force increases in fuel economy for passenger cars.

You can reach David Shepardson at (202) 662-8735 or

© Copyright 2006 The Detroit News. All rights reserved.