The US auto industry is hurting bad these days. Their business model centered around large cars bought or leased on easy credit. With gas prices skyrocketing and  credit collapsing auto makers are getting hit hard and scaling back. Not only are jobs vanishing in the auto industry, but they are also vanishing in every industry tied to the auto industry.

The latest blow is hitting advertising.

In its latest attempt to save money, General Motors has asked its advertising agencies to slash their fees by as much as 20% this year and next.
GM Presses Ad Agencies on Costs The Wall Street Journal, August 7, 2008

So Sean's "You're a Great American" ad campaign has paid off for GM.  

Reuters highlights the success Sean had in influencing America to listen to his wisdom.    Analysts widen 2008 loss estimates for GM

Did you ever hear the story of the frog and the scorpion?

For years, Democrats outside of Michigan tried to coax Detroit into making more fuel efficient vehicles. The automakers, the autoworker unions, Republicans, and Michigan Democrats all fought those efforts tooth and nail. Successfully.

This is what their success looks like today:

General Motors Corp (GM.N) posted a $15.5 billion quarterly loss on Friday, as North American sales dropped by 20 percent and plunging prices for SUVs prompted deep charges for its auto finance business.

GM shares tumbled 6 percent in reaction to the automaker's announcement of the deeper-than-expected loss, the third-largest quarterly loss in its history.

The No. 1 U.S. automaker also burned through $3.6 billion in cash in the quarter as it reduced inventory of slower-selling vehicles in its slumping home market.

GM ended the second quarter with $21 billion in cash and $5 billion in credit facilities. It said it had provided notice in July that it would draw down $1 billion under a secured revolving loan facility.

It's going to get worse, too. While demand for SUVs and light trucks has collapsed, there are still lots of people out there with leases, and they're turning their trucks in. And given that no one wants trucks anymore, GM is left holding the bag.

On Thursday, GMAC LLC, GM's former financing arm, was forced to write down the value of the GM's lease contracts because of the slumping value of the carmaker's big SUVs.

Under lease contracts, automakers and their finance companies rent vehicles to consumers and sell the used vehicles when the leases expire at wholesale auctions.

But the collapse in demand for SUVs this year has been accompanied by a steep drop in their resale value as consumers flock to more fuel-efficient passenger cars.

The resulting drop in resale values on SUVs prompted a $717 million charge by GMAC and bigger subsidies by GM, which retains 49 percent of the finance company after spinning off the remainder to Cerberus Capital Management.

Too bad Detroit resisted making fuel efficient cars for so long, huh? Now, all those sales are going to the Japanese car companies who innovated in that space. This was all avoidable.

On the other hand, Exxon is doing great, so Republicans are happy.

This morning, on my commute to work (in ‘red state’ NE), I again made the mistake of turning on the radio to a popular local AM radio station.  The hosts were taking a small diversion into the political arena and played a heavily edited sound bite from one of BHO’s recent events.  To paraphrase, it intimated that more gas could be saved in the US if people would just properly inflate their tires that would be gained by offshore drilling.  The show’s host then, in disgust, stated that Obama was obviously "spectacularly under qualified" to be President.

Follow below the jump..........

http://www.nytimes.com/...

Toyota Motor sold nearly 300,000 more vehicles than General Motors in the first half of 2008 and appears to be on its way to ending G.M.’s 77-year reign as the world’s largest automaker.

Toyota said Wednesday that it sold 2.41 million vehicles in the second quarter, 2 percent more than a year ago. G.M. said its sales for the quarter fell 5 percent, to 2.28 million.

Both companies had record sales in emerging markets like China, but falling demand in the United States took a larger toll on G.M., whose lineup comprises more of the big trucks that consumers are shunning in response to high gasoline prices.

77 Years.

And now they are headed down to bankruptcy.

It's kind of sad in a pathetic, amusing way.

At $4+ a gallon, and with advances in technology, electric cars are finally about to hit the mainstream in the U.S. Just about all of the articles I've read about them so far have focused on the big issues with the cars themselves--how far they can go on a single charge, how much they'll cost, what sort of performance they'll have, etc. Today's Chicago Tribune has an interesting story which goes into the other questions as well, primarily the infrastructure necessary to support electric cars on a wide scale:

http://www.chicagotribune.com/...

Here's the full, astonishing quote out of the mouth of Rick Wagoner, the chief of General Motors:

   I’m determined and highly confident that G.M. will be a survivor.

That ought to send shivers up every stockholder's spine. A survivor, merely?

Four months from now, in September, Aptera will sell the first car in the US that gets 320 mpg.  Not 50 mpg like a Prius, or 100 mpg like in your wildest dreams, 320 mpg for a two passenger car.

What does this mean?  With today’s gas prices, and future gas prices, the Aptera is the first "car that pays for itself."  That should also help it sell itself.  It’s also a car that could keep you, and this country from being a slave to oil.  But let’s run the numbers and take a look.

[Note:  I have no financial interest in Aptera]

this is my original cartoon

I keep a sharp eye on Australia's CSIRO's travails and other breakthrough biotech research companies throughout the globe, in hope of being able to report some good news on the food front. Biotech firms such as CSIRO strive to bring out new crops using tried breeding techniques as opposed to recombinant DNA. Although genetic engineering has been said to be no different than ancient breeding methods, it is completely untrue.

I read somewhere that genetic engineering is like performing heart surgery with a shovel. Scientists, IMHO, do not yet understand living systems completely enough to perform DNA surgery without creating mutations which could be harmful to the environment and our health. Genetic engineering has created a chicken with four legs and no wings and created a goat with spider genes that creates "silk" in its milk. My own personal view is that GE is a radical technology, still in the experimental stages. It comes down to this simple fact: the GM process causes unnatural mutation and combination of the DNA in our food in a manner which excludes nature out of the process.

Call me old fashioned.

For America's Lil' Three (now down to 3.1%of total U.S. GDP (personal consumption spending now accounts for 70%)), the answer is likely to be Mexico. The reason? Automotive unions in Mexico have agreed to cut wages to 'near China levels':

http://biz.yahoo.com/...

A desire for change is an extremely powerful emotion and as any good politician knows, once that desire for change builds up enough momentum in the electorate, it can be impossible to stop.

But transformational change is not only happening in the political arena. It's also happening in cars and trucks. Yes, across the nation, cars and trucks are sending a similar message of change ... more below.

Now, first of all, be assured it had nothing to do with concerns for the environment, pollution, or climate change.

It's just not making enough money for them to keep dealing their main product

One of America's main drugs of choice, you see-oil-has become more expensive, and the main connects in the Middle East,etc consider us fiendish customers. Luckily for us, however, the almighty Market Gods will use their Invisible Hands to correct any problems our oil addiction might cause. And so forth.

You shouldn't be if you have any sense of what's going on in the auto industry and the economy.

General Motors will phase out the Janesville operation over the next year or so, eliminating about 2600 jobs in the process.  Once the largest employer in Janesville, the plant dates back to 1919.  Most recently the plant has been making SUVs and pickups.  With skyrocketing gasoline prices, those are not exactly flying out of the showroom these days.

My dad told me this weekend that some of his parts suppliers and buyers are shutting down their operations in Mexico and moving back to the States and into Canada.

Okay, I’ll bite, "why Dad?"

"Because of bribes.  The suppliers and buyers have told me that they’re tired of trying to get things done when you have to bribe everyone to get it done.  And if you don’t bribe all the right people, the workers don’t show up to produce anything at all."

I am an avid advocate for electric cars and green technology in particular.  I'm on the wait list for the Volt, have stock in several solar companies, and once Nanosolar comes out with a home package, my house is getting 8-10kW of solar power installed, so I can charge my volt and run my AC during the day for free.

BUT - in order to do all these things, they have to be COST-EFFECTIVE.  I could put solar on my roof today for about $5 a watt, but then it would take 20 years to pay for itself.  I could retrofit a prius to be a plug in hybrid, but it would take 10 years, even at $4 a gallon, to recoup the cost of doing so.  I'm a practical greenie.  Which is why I get so annoyed when I hear people talk about how GM "killed" the electric car.  More over the fold.

A month and a half ago, I posted an alert in Going EV #3: Tax credit for your EV... so long as it still burns gasoline (action item!).  The House had passed H.R. 5351 -- the Renewable Energy and Energy Conservation Tax Act of 2008 -- which, among other things offered massive incentives for vehicles with electric drivetrains.  However, it specifically mandated that they had to both have four wheels and still have an internal combustion engine, which excluded most EVs.  Lots of people contacted their elected representatives to remedy this situation, and it shows: just recently, the House sent a new bill to the Senate -- H.R. 6049 -- and it's a huge improvement.  However, for those who care about maximizing efficiency, more remains to be done.  

Read on for more details.