Ok, we admit that US$1.3 billion for Germany’s Opel brand may or may not be a fair number. But earlier in the week CNET reported on a story that largely went unnoticed. 

Germany company SolarWorld, a maker/developer of solar panels as well as solar-based cars has offered to help out failing automaker GM. Last week we reported on GM’s failed attempt to secure billions in government loans. This week, we’ve posted a Saturday Night Live spoof of the hearing.

Much more serious is CEO Frank Asbeck’s interest in GM’s German division Adam Opel. It’s nearly surprising that GM might be able to unload one of its divisions, let alone to a buyer that might be able to something very extraordinary with it.

GM should take the offer, whatever it is. The company is obviously not capable of developing energy-friendly cars of its own, so they might as well do us all a favour and unload the company to someone that can do the job. US$1,300,000,000 you say? Done deal!

Sources:

Transcript of SolarWorld CEO Frank Asbeck’s interview (German)

Opel

CNET

Yesterday, Congressional Republicans went on the record saying that they opposed an auto industry bailout. Today, long-time Democratic senator, Chris Dodd of Connecticut went on the record opposing a $25 billion bailout to the Big 3 automakers.

New York senator Chuck Schumer had this to say: 

“Survival of the auto companies is imperative for America to remain the global leader in innovation. We should not drop out of the race before we have a chance to compete.”

Unfortunately, Sen. Schumer’s analysis is short-sided and blindly optimistic. Of particular interest is the idea that by not approving this bailout, we will drop out of the auto industry and a major world player. Schumer argues that the U.S. will effectively lack competition in this area.

The reality is that the U.S. has never been terribly competitive when it comes to innovating the auto industry.

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Just about every automaker today is suffering from a poor economy. Most are wistful that they didn’t start producing small, fuel-efficient cars sooner, but the auto industry was caught off-guard before – anyone remember the late 1970s/early 1980s? Perhaps a read of Steve Miller’s The Turnaround Kid would be require reading for current auto industry execs. Granted most are not in as dire need to assistance as Chrysler was, but they could be if the downturn continues.

But this downturn could prove much more difficult than ever before because we see three issues at work. First, most consumers rely on financing and leasing to purchase vehicles. Even with a huge government investment, banks are using the money to cover themselves for past mistakes, rather than using the monies to start new auto loans. Second, the price of oil remains high and has effectively ended the “we love SUVs” craze. Spending $500 per month on petrol has certainly dried up that part of the auto industry. Third, and finally, government regulation is coupling with the second factor to require significant reduction in CO2 emission and greater gas efficiency. Some automakers have been successful in making changes to drive trains to comply to 130g/km regulations, but even Porsche, which makes among the most efficient sports cars is far from the target.
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In recent years General Motors has been on a cost-cutting spree. Buyouts have come and gone, plant closings, especially in the USA, have occurred and product strategy has evolved. GM has not done away with large SUVs, but has spent some resources on reducing environmental impact. The environmental awareness has allowed them to produced increasingly smaller cars, including the Aveo, which is actually produced by Daewoo in Korea. Despite the poor valuation of the US dollar, or perhaps because of it, GM has been forced to expand manufacturing operations well beyond the American borders. To call GM an American company is as to call Toyota or Honda Japanese. All three players have substantial investments outside of their home countries.
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Normally, we wouldn’t dare comment on Hummer, but it’s United Kingdom subsidiary has just launched a great new ad campaigned aimed apparently at younger men with children. Headed to Toys “R” Us??? Might as well pick up a Hummer while you’re there!

The best part? Only £26,495!

At Beyond the KM, we find that automotive news is a love-hate sort of relationship. We loved the new Porsche Turbo, but we hate the new Kia Rondo (and every Kia for that matter). We love new safety devices like Mercedes S-Class radar-guided cruise control, but hate when it fails.

Thus the relationship continues this week when Ford announced that it was resurrecting the Taurus name. As we stated months prior, we LOVED when they ditched the Taurus, and we HATE that they are bringing back the nameplate.

It is not to say that Taurus is the worst name for a car, certainly, the Sable (also being resurrected) is worse, and Lamborghini does name many of their cars after bull fighting legends (think Murciélago and Miura). The problem we have always had is that the Taurus name, while having seen heavy investment over the years, still stands for mediocrity. Would a food maker name a new flavor of cheese “the moldy, stinky jack” ??? We don’t think so.

In essence Ford is trying to resurrect a car that is not selling well hoping that the mediocrity of its predecessor will not drive buyers further away. The move by Ford proves mediocrity in the marketing organization and will likely show that no matter how fanciful the name, if you are producing junk, people won’t buy it. American carmakers still don’t seem to take cue from the Europeans and Japanese that quality is more important than nameplate. Chevy NOVA anyone?

Change is afoot in corporate offices in Europe’s automakers. GM and Ford have struggled for many years now with the harsh realities of the global auto market. Now those realities are knocking on the doors of the European automakers. About two-thirds of Western Europe’s carmakers have seen changes in the executive suite in the last two years.

The reasons vary, e.g. BMW’s Helmut Panke left due to age restrictions, yet the BMW board failed to grant him a waive to allow him to drive the ultimate machine longer. The fact remains though that boardrooms and shareholders, alike, are concerned about increasing competition from the Far East.

Once a joke to respectable manufacturers, the Chinese automakers - led by Shanghai Automotive Industry Corporation (SAIC) and Nanjing Automobile – are increasingly competitive. The Chinese are increasingly developing more and more sophisticated facilities and borrowing more and more from the Europeans. Take American Axle and Manufacturing. AAM has been setting up new factories at breakneck pace. Indeed some of the intellectual property has been sold to the Chinese as well.

What all of this means is that the Chinese now have a way to produce good quality cars, yet sell them for next to nothing. Therein lies the problem not just for Renault and Peugeot and VW. Mercedes-Benz and BMW must be careful in their strategies since companies like Chery, is planning to bring their “luxury” automotives to the U.S. market soon. At $20,000 Mercedes and BMW are tracking the company, you can be sure. In the end, automakers will find difficulty in beating the Chinese on price. They must find other ways or they will falter as Ford and GM have done.

The next part in this topic will deal with possible strategies that the European automakers might develop to combat the competition from the east.