Capmark Financial Group Inc.!

It would seem as though General Motors has finally been able to do something right! Just when it seemed like Rick Wagner could not dig GM’s grave any deeper, the former CFO was titled in two awesome announcements; one yesterday with a deal made with Delphi and the UAW; and one today with the sale of a unit of GMAC.

First let’s get the old news out of the way… The Delphi/UAW headache was looking like it was going nowhere fast. Delphi even pushed back threats of asking the bankruptcy judge to order the UAW contracts void. Had that actually happened, the UAW workers would not have bothered to come to work (duh). GM, being the top buyer (and former parent company) would have had a lack of parts and other vital supplies which would equal no more Chevy Tahoe’s, Corvettes or Caddy STS-V’s or any other car or truck. Basically a total shut down of Delphi would mean a total shut down of General Motors; which is why the guys over at Delphi didn’t ask for a court order.

The deal stuck would allow about 113,000 hourly employees to opt for early retirement with a “buy out” of anywhere between 35,000 to 100,000 dollars depending on the rank and age of each employee. About 30,000 employees come from General Motors various factories, the rest coming from Delphi with a few thousand coming from the various “job banks” GM has set up to fire people with out actually firing them.

Now for the best news to come from GM since the 1990 ZR-1 Corvette or maybe the STS-V… well it’s really good news anyway. General Motors Acceptance Group was able to sell 78% of its mortgage unit. This deal is kind of hard to understand because the sale involves three firms and the renaming of the unit that was sold. To try to keep things simple, I will attempt to design an analysis for you, the loyal All American reader.

I am not too sure if I even can do a very good job here; BUT GM has as a part of the larger company, GMAC. GMAC has as a part of the company its commercial mortgage unit. 78% of that unit has been sold to Kohlberg Kravis Roberts & Co., Five Mile Capital Partners and Goldman Sachs Capital Partners and will be renamed Capmark financial Group Inc. Most importantly Capmark financial Group Inc. will open with investment grade bonds rated at BBB. That is the lowest investment grade given by the S&P500, but it’s a whole hell of a lot better than the junk bond status held by the rest of GMAC.

What this really means for GMAC is it continues to be only division of General Motors that is making money; but more importantly the rating companies may look favorably and rate GMAC bonds under investment grade. The reason for the new name is not just as a formality from the takeover of majority equity but an attempt to fool the rating companies into thinking the legacy of GMAC is no longer a factor. What this means for GM is maybe the company it not so doomed after all. This is not a done deal yet, and everything needs to be finalized.

Dear Mr. General Motors: essay three

Now that I have covered the some of the history and what I feel are the more important things that need to be done to the product, I would like to tell everyone here a little story about my first car. Like I said before when I gained the privilege to drive a motor vehicle at the young age of 17, I was given the keys to a 1994 Pontiac Grand AM. I did not buy the car my self, but rather my father bought it for my older brother and after my brother moved out on his own, the car was handed down to me. Because it was my first car, and because I have always dreamed of the day when I could drive on my own, I took care of this car like it was a child. I washed... scratch that, I detailed it regularly and kept up with regular maintenance, I never raced it (not like I ever could) and I always parked it in the shade. I guess you could say I had a love for this car, like any red blooded American would for his first car; it's like a right of passage in this great land.

I was shocked and horrified one day to find that my baby was not running the way it always had before. I did what anybody else would do in my shoes, and I parked it in the driveway and took my mothers car for the day. As I was sitting in class I was not taking notes, or listening to the teacher at all, but rather wondering what was wrong with my car. I ran over all of the things I did; change oil? Changed. Check tire pressure? Pressured. Check coolant level? Leveled. The air cleaner? Clean!!! There was about a million and one things that could have gone wrong on any given day, but I couldn't think of one that gave me the driving characteristic I got that day. When I went home at the end of the day, I asked my father what he thought. He told me to put the car up on jacks and drain the oil. I told him I just changed the oil and it was fine, but I did anyway... what I found was a white substance floating in my oil. I knew what had happened and was now seeing dollar signs running up.

If you have never experienced this before, I should hope you never have to. What had happened was a gasket on the intake manifold had failed and as a result coolant (remember I had though about the coolant level) was slowly leaking into the crankcase. If any coolant mixes with the oil in the crankcase, the oil loses its viscosity and can no longer lubricate the engine. I was not experiencing high engine temps because I still had "normal" fluids running (at the least the coolant was working and keeping temps down). after I changed the oil and put the car down off of the jack stands, I called my local dealer and asked the techs for some advise; the person I talked to told me to tow, that's right, TOW the car to the dealer and they will run a diagnostic test and tell me for sure. I was right (duh) and asked the tech working on my car what my choices were.

What I heard next was not to my likening at all. He told me to start looking for a new car, but in the mean time he would try a thicker oil. The reason for all that? The rod bearings in my engine were "shot" and had to be replaced. Total cost of work would exceed the value of the vehicle and so my car was basically totaled. It is a very sad story to tell if you ask me. I realize my car was nothing special, just your run of the mill Grand AM, but still it was my first car, it was a part of me, and I lost it forever. The point of trying a thicker oil (like a 30w-40 instead of a 10w-30) was to see if I could salvage what little was left of my engine for another month or so.

Fast forward to now, and the fact that the same 3.1 liter engine in my 1994 Pontiac Grand AM is still being made the same way, and put into your favorite GM car is scary at best. Any car sold with a 3400 engine has this same defect. Although the chances of it happening to you are low, it can happen and the longer you go the worse it gets. By the way, to replace the gasket costs about $800; the part is only 10 bucks or so, so it is all in labor!

General Motors has done a fine job so far in bringing up the quality of their vehicles, but why the General even let its standards get so low is really the problem. This never should have happened to me. In the 1950's and 1960's problems with Chevy’s leaking oil were considered standard, I know there were black spots on my grandparent's driveway from the 1964 Biscayne wagon they had. But nowadays if your car leaks oil, there may be a very serious problem. Maybe it is really just because everyone is so much more aware of it, and is being more proactive about it.

I doubt that is really it though, and I am sure you will all agree with me when I say I do not want any car I own, be it Chevy or BMW to leak oil or any other fluid on my drive way! Nor would I want my 17 year old kid driving around New Jersey (were it only takes about an hour to cross the state) with a car that might fail him on the high way! Had I been on the high way, moving at the speed limit of 65 with this engine problem, I would most likely had my pistons shoot out of the block. At the very least the engine temps would have gotten to high, and the block would have cracked.

Well, now; Let me get back on track a little here, and establish a real problem within the General... quality is lagging, and there is really nothing in General Motors to fix this problem. Sure, Car Czar Bob Lutz is trying his best to improve the cars General motors produces, but he does not get to pick and chose what engine a car gets, so General Motors brass puts in the old tired engines and drive trains... Hell, a 35,000 dollar Buick still has a four speed automatic, mean while the Lincoln Zephyr (sorry ford, the MKZ) has a six speed. Standard. So why should GM develop new engines and transmissions? The fact is, the General doesn’t. End of story. The old adage, "if it's not broke, don’t fix it" stays true to today. But it is broke, and GM still will not fix it. That’s why they are only making cars that "can now compete" and not cars that are taking the market.

Dear Mr General Motors: essay two

In the last essay I discussed what I think General Motors should do in order to no longer produce the same vehicle five times over. I touched on a few other points, such as quality and naming, and as such I will try not to readdress these issues. I will however point out that in due time those issues will be addressed in due time. For now, I want to speak a little about production of new cars in foreign counties.

Some people I have come in contact with have expressed a concern that the new 2008 (hopefully) Camaro will be made in Canada. I understand that these people would rather have the American Icon built in America, with American tools parts and labor. It should really come as no surprise, however that General Motors (or should I say Chevy if my last essay has any impact) would consider the Canadian plant for future production. The old Camaro was built in that factory so why shouldn’t the new one be built there as well? Unless both of the factories update big time they will be closed, so fret not UAW, the CAW is taking the punches this time.

Why should it matter, in a greater part, if the Camaro is built in Canada if the Aveo is built in Korea, and God knows how many other cars are built in Mexico? Not to mention that many parts in our lovely GM vehicle are produced overseas regardless where the car is assembled. If this is such a major concern of the consumer then maybe they should quite their job and go work for General Motors as a nonunion worker. This way at least they will have the same experience 30,000 people will go through this year.

I am a big proponent of cutting the UAW work force. I do not consider them to be the only factor; however, they are a large factor. In truth, it’s the Management of about 30 years ago that really is to blame for this. A number of years ago, Business Week wrote a three or four page article about this problem, but I will try to sum it up in three paragraphs. Mostly it is just stupid and greedy people who didn’t care about the future after their tenure.

The last time the General Motors/United Auto Workers contract was up for negotiations, GM was making a boat load of money, Honda and Toyota were not even a blip on the screen much less BMW with the famed 2002. The Gas shortage hadn’t happened or was considered a minor upset in an otherwise business as usual world at General Motors. So GM gave with little argument the UAW its demands for very generous wage structure, retirement plan, and health care coverage.

Fast forward to the 1980’s and shit has almost literally hit the fan. Chrysler is in dire straights Ford is trying to figure what went wrong in the 1970’s (remember the Mustang II?) and GM has now noticed Honda, and BMW. Unfortunately for General Motors, nobody cared enough to start, maybe building better more completive cars then, when they had the money.

As a result, cars like the iconic Corvette were unchanged for 14 years, and technology was being used from over 20 years ago. And even with the joy this writer gets when he says that GM’s small block was the best V8 and largely unchanged from the original 1955 short block, it never should have happened. This also set up the proper conditions for major cutbacks in new technology development. One reason is it still works, so why change it, and the other is now GM started losing market share little by little while maintaining the same production. I sometimes hate to say this as it deals with a perfect world and not the real world, but its simple economics. A surplus was created and now efficiency and quality has gone down.

Well what about the CTS, and the G6, these cars seem to do well up against the competition, (the BMW 3series and Honda Accord). Sure they do, but not good enough. My father looked at a Cadillac STS (or Seville Touring Sedan, for the traditionalists) and found the BMW 530i to be the better buy, he leased it for three years, and if he does not a different car, can buy it for less then market due to a low residual after the lease is up. Compare that to the Caddy, with horrible lease deals, and no resale value, he would have to buy the car, all 60,000 dollars worth in cash. I am sorry but very few Americans have that kind of cash on hand.

Why do these cars not make the par? Well mostly due to the ever changing world of automobiles. When the G6 was being developed, a new Accord was also in the works in Japan, so General Motors is playing a game of catch up. They are doing well; don’t get me wrong, but not good enough.

Other concerns are also plaguing the giant that is General Motors. Mostly, and in the fore front of most headlines is the Delphi bankruptcy made innumerably worse by Dana Corp’s announcement last week. I watched in horror as the stocks of both Ford and General Motors tanked and the headlines raced. The current plight of GM is largely as follows:

-A controlling interest of GMAC must be sold to give GM’s checking account the 10 billion dollars it so badly needs to further its restructuring.

-The 2 billion in cash gained from the 17.4% sale of equity in Suzuki added to the hopeful 10 billion gained from a sale of GMAC as well as the cash gained from the sale of other non-core divisions must be spent wisely.

A buyout or early retirement plan should be offered (as it may be soon) to reduce the current labor surplus from the GM job bank.

The job bank must be killed. I’m sorry (not really but I feel I need to say something) but if I am fired from a company, they do not continue paying me for not working.

New technology and models need to be brought into production quicker, do not rush the production as this may result in poor quality control (my friends GMC Envoy was in the shop more than on the road)

I will continue discussing the quality control in my next essay, and let you all know what happened to my 1994 Grand AM.

Dear Mr General Motors:

Hello all and most especially Mr. Lutz, and Mr. Wagner and the rest of the General Motors board who may read, or hear this. I have quite a bit to say here and I do not want my thoughts to be construed as saying ‘GM must do this, or cannot at all to that’ but rather taken into consideration as you end you monthly meeting and try to turn around the giant that is General Motors.

As it is today, I do not own title to a General Motors vehicle, however my first car as a teenager with a new license was a 1994 Pontiac Grand AM. This car’s engine failed one day when an uncommon but well known problem with the lower intake manifold gasket failed causing coolant to leak into the crank case causing crank baring failure. I will speak about this experience in more detail a little later. My father is a classic car collector and holds title to a 1965 Chevy Corvette, and a 1975 Cadillac El Dorado convertible. He and I have restored these two cars, as well as a 1971 Corvette that was sold to purchase the 1965. My father and I where planning on, but did not, restore his fist classic purchase; a 1967 Cadillac Coupe Deville.

I have been what is known as “a Chevy guy” my entire life as my father bought the 1970 corvette when I was nine years old, and owned the 1967 Caddy since before I had conscience memory. I love this company even though I have no real ownership in any part. As such I feel great pain when the stock does poorly, or when I walk into a dealer and the cars I see are nowhere near what they used to be in terms of excitement, quality, and sprit.

Many people I talk to and many of the comments I read on various weblogs, have taken different positions on just what General Motors has become and where it is heading. I would like to think my position is well informed and not as hasty as others. With that being said, I feel as though the “old way of doing things” might be considered. I do not mean how things where done in the 1980’s or the 1970’s as some people consider to be “the old days” and not even what General Motors was doing in the 1960’s (one of GM’s best decades). But rather what made General Motors such a large and prosperous company… That is simply divisionalation.

The new buzz for this concept is “no more badge engineering” but that does not solve the greater problem at hand. SAAB was condemned at one point by someone at General Motors for being its own company even though GM had complete control (or 100 percent equity) of SAAB. I realize that during that time, and even now, SAAB has been losing money hand over fist, but that really has nothing to do with my point. I am merely stating the facts for now, because also during that time SAAB was developing some awesome technology that never would have got to see the spot light as an independent company, but never did anyway, because General Motors thought is not in the greater goods interests. I will take this time to be a little rash, and very harsh and say that sounds a lot like communism to me.

Now that General Motors is for the most part up the creek or so we sometimes say, it is time to shed the bureaucracy that is not General Motors’ management and start making fine automobiles. The badge engineering is still going on, and platform sharing is still running rampant. Even the little things like the naming of products can change the buying dynamics of consumers. An example would be the Grand AM turned G6; everyone knows what a Grand AM should cost, and what to expect, but the G6 left many people saying “I don’t know what this thing is! Is it the same as the Grand AM???” Well YES! It is the same as the Grand AM, so why bother changing the name??? I have been told by my friends in the business world that it was to shed the legacy of the Grand AM (and others) as to improve the image of Pontiac (and others). Okay, I can see that, but still there was no need to kill the Grand AM, while Pontiac was still making the GTO-my-god-it’s-a-holden-monaro.

To end this small rant, I would like to pose a more serious (however funny or curious) question. What’s so wrong with Ventura? Remember the Pontiac Ventura? I know what this car was; and could be again. But these is more to call to question why, if General Motors is going to bring back iconic names and proceed to butcher them, not bring back the more common names of what a car really was, a mass-market sedan or coupe. Cars like the Bel-air or the Parisienne/Catalina, Skylark.

One last thing I want to say for the record: I hate Saturn and everything about it. How dare General Motors kill Oldsmobile and try to upscale Saturn in its place! If anything else please do not think I am so stupid as to not be able to see with my own two eyes just how idiotic this is. Bad, bad, bad managing, just what in God’s name where you thinking? I know that in today’s market a 442 would beat the pants off of a Mustang GT500 any day of the week.

Anyway, there is much more I would like to say, but that will have to wait for a later time, as I do not want to run this too long. A quick bullet point follows:

-divide the company into its original divisions (including Oldsmobile, please)

-drop the late 1990’s foreign naming scheme (numbers and letters) for true General Motors names like ROADMASTER.

-I know I didn’t get too much into this for this post, but quality control is a must, either that, or charge a lot less for the hunk of junk I am buying… I’m going to need the extra money I saved to fix it later.

Thank you for listening to my rant, I realize I got a little hot tempered at the end, and I would like to have said more, but like I said I do not want to tell you how to run your company. I would like to see a 442 on the way though… maybe even a GS455.

PS: my next car (as an ‘everyday’ car) will most likely be a 1963 Chevy Impala because nothing made by any car company today fits my needs or wants.

Dodge makes an AMC?

Not quite, although the new Dodge concept sealing all of the headlines in the mini-subcompact market (think Scion xB/xA) is named after the old AMC Hornet and the cheep as all get out way of thinking is the same, that’s all these two cars share. The Dodge Hornet is a tiny little Scion fighter that will give the competition a lot to worry about. Dodge has been blitzing the market with new cars, trucks, and minivans for years now, starting with the Dodge Ram 1500, then the 300C and Magnum, with the charger coming in a little later. On the much higher end of things, is the wonderful little crossfire which is built on the old M-B CLK, and the Pacifica built on the same platform as the M-B Rclass. Now there are three new concepts, two of which DCX admits will be built; the Dodge Nitro a crossover built from the Jeep Liberty and the Caliber compact 5-door (which will also have a Jeep twin).

I have tried not to post anything on this car because I feel as though if Dodge is really serious about competing with Scion, then it needs to dedicate a brand to doing it. Don't forget that Scion is really Toyoda. Has DCX thought about bring back the Plymouth brand back from the dead, or will Dodge and Chrysler continue to produce a range of cars from less then 15K (the neon) to just under 100K (the Viper)? Anyway, with that aside, I love this little pocket rocket!

I normally don’t like these buzzy little things, I feel like there are too many civics and c-something-x's around buzzing with turbo's way too big for their engine and causing my eardrums to ring for the rest of the day. When I saw this concept, I wrote it off as just another nitch vehicle and looked at the Caliber and Nitro closer to see if they can touch my Protege5 (we covered why I own one so don't say anything). But this thing, with all of the press coverage and the crowds around the dodge booth the nitro (even if Dodge says otherwise) will now be built. It's not the first time this happened... the Corvette, the ssR, the new Camaro, the Blackwood, the GTO and many more came into the spot light; some did well, others died almost as soon as the show was over.

This little car is not yet intended for sale in the US and is marketed for the small Euro segment of the dodge brand. If you ever go to Europe, look at just how small the cars are over there... Don't forget that the compact segment was new to America when Honda's and Toyoda's started to wash up on our shores. Before then if you asked an American (after he got out of his looooooong Impala, or Galaxy 500 XL) what a compact car is he would most likely say a car that got hit from the front and the back.

Ok, enough making fun of this car, now for the good stuff, and why I think dodge might want to try to sell this car here in America. First... it's good looks. Yes, I am a modernist, and as a design student at Arizona State University, I can say this car look sexy! It is a box at its best. There is always something to say when a small car is not ashamed to say "look at me! I'm a small car, and I will kick you ass!" This is one of those cars, it has a small engine, but it uses a supper or maybe a turbo charger to get fast times on the track. I don’t have any numbers, but in a video from AutoBlog, this thing looks like is wants to move.

If a box can ever look fast while it is stopped, this one does it, and does it well. The wide fender flares and upright grille make this car look like it just got back from basic training and wants to go fight a war! If nothing else, the nice looking concept will be dumbed down for production, and everyone (myself included) will be upset, no matter how unsurprised, when dodge unveils the production version with huge trim gaps, and shiny hard plastic which are now found on the upsetting Charger and 300C. Both of which are cars that looked nice on the turn table, but didn’t quite make it up to par in production.