29 September 2009

Chrysler Faces Chilly Autumn

Story from the Wall Street Journal

Already mired in a tough year, Chrysler Group LLC appears headed for more bad news.

The auto maker's dealers are bracing for a steep drop in September sales due to the unusually lean inventories the company was left with after its bankruptcy reorganization and a long summer shutdown of its plants.

Most car makers expect a sales lull after an August surge sparked by the U.S. government's "cash for clunkers" incentive program. But analysts say Chrysler is on track for a significantly weaker showing than rivals.

IHS Global Insight projects Chrysler's September sales will fall 30% from September 2008, compared with a 19% slide industrywide. Meanwhile, Toyota Motor Corp., which also has low inventories, is expected to see U.S. sales drop 15%, Global Insight says.

A deep sales decline would add to the headaches facing Sergio Marchionne, chief executive of both Chrysler and its new alliance partner, Fiat SpA. Since taking the post in June, Mr. Marchionne has reorganized and thinned out Chrysler's management and has been trying to fashion a long-term model strategy that adds Fiat-developed cars to Chrysler's lineup.

The work has proved more difficult than Chrysler's new Italian owners expected, according to people familiar with the matter. Thousands of engineers left Chrysler in the last few years as it offered job buyouts. That weakened its development capability and slowed progress on its product plan, these people said.

Chrysler's ownership history also has distorted its product-creation system. Under the ownership of Daimler AG, which ended in 2007, the company relied heavily on the German parent to engineer certain vehicles such as the Chrysler 300 and key components. Now it lacks those resources.

As a result, Chrysler and Mr. Marchionne have had little progress to report publicly in the last two months. In contrast, General Motors Co., which also went through a government-sponsored bankruptcy, has been showing off new models it is working on, including the Volt plug-in hybrid, and talking about coming cars, including compact models for Cadillac and Buick. GM also kicked off a marketing and ad campaign featuring its new chairman, Edward E. Whitacre Jr.

Mr. Marchionne is expected to speak to reporters this week at an auto show in Frankfurt, Germany, but he may give only a timetable for when Chrysler expects to unveil its new model strategy rather than reveal the strategy itself.

As part of the plan, Chrysler is expected to announce it will make the Fiat 500 subcompact in Mexico for sale by Chrysler dealers, build another Fiat-developed small car at a U.S. plant, and work with Fiat to devise a new midsize sedan -- a high-volume segment where Chrysler barely competes now, people familiar with the company's strategy said.

The strategy will be discussed at a company board meeting later this month, these people said. Chrysler declined to comment on its product plans.

Meantime, Chrysler dealers said sales are falling because they have few vehicles on their lots.

"September is starting off extremely slow," said Dave Kelleher, owner of two Chrysler dealerships in the Philadelphia area. Mr. Kelleher's stores together usually sell about 150 vehicles a month, but right now he has only 72 in stock. "If I sell all the cars on my lots I will have one of my worst months this year," he said.

At the end of August, Chrysler's inventory fell to about 100,238 vehicles, enough to last just 28 days at the current selling rate, according to the company. A year ago it had a 93-day supply.

People familiar Chrysler's thinking said the company is betting the drop in inventory will boost the prices customers pay so the auto maker can pull back on costly rebates.

The strategy appears to have had an effect. According to Edmunds.com, the average price consumers paid for Chrysler vehicles in August was $29,032, the highest in 12 months.

Still, the company is aiming for a 60-day supply by the end of the year, said a person familiar with the company's thinking.

But boosting inventory is proving difficult. Chrysler said Monday it had to delay adding a second shift to an Illinois plant by more than a month due to issues with suppliers.

Housing More Affordable For The "Move-Up" Buyer

Associated Press Story

Welcome to Grayling, where residents paddle canoes through town on the winding AuSable River, ride snowmobiles on forest trails and take scenic walks among 150-year-old trees at Hartwick Pines State Park.

The former logging town ensconced in the woods of central Michigan owns another distinguishing trait, according to a Coldwell Banker study: Grayling's 6,500 residents live in the nation's most affordable housing market.

The real estate firm on Wednesday released its annual survey of the price of a 2,200-square-foot home with four bedrooms, 21/2 baths and an attached garage.

Comparing homes that meet those criteria in more than 300 markets, the lowest average price was in Grayling, where such a house costs about $112,000. On the other end of the spectrum lies the San Diego neighborhood of La Jolla, Calif., where a similar home costs more than $2.1 million.

The study's results also show that homes matching the study's criteria are becoming more affordable. About a third of the markets in the survey boast an average price below $200,000, the highest number in the past five years. Nationally, prices are down 30 percent from their peak in mid-2006.

The type of property used in the survey represents a "move-up" home, bought by someone who wants a larger place to live because of lifestyle changes, such as a new job or having children.

These buyers often need to sell a home before moving up, a dicey proposition during the housing recession. But the first-time homebuyer tax credit of up to $8,000 has spurred sales of homes in the lowest price ranges, allowing sellers to become "move-up" buyers. Buyers are getting more for their money because of low prices and attractive mortgage rates.

"This represents a unique opportunity for move-up buyers to get back into the market," said Jim Gillespie, president and CEO of Coldwell Banker Real Estate.

Known as a solid second home market, Grayling took a hit after the troubled economy, particularly the embattled U.S. auto industry, led owners to sell off property in their recreation destinations.

Sales lagged until recent months, and prices are starting to stabilize at affordable levels, said Laurie Jamison, a broker at Coldwell Banker Cornell Realty in Grayling. For about $200,000, a buyer can secure a four-bedroom home on the AuSable River.

"People are shocked at what they're able to get at that price," Jamison said.

Joining Grayling in the top five least expensive markets were Akron, Ohio, with an average price of $121,885; Fayetteville, N.C. ($130,875); Canton, Ohio ($131,867); and Detroit ($132,000).

On the high end, La Jolla residents are paying a premium for it's proximity to a big city, easy access to the Pacific Ocean and sunny weather. Other California markets like Beverly Hills and Palo Alto have similar qualities, and also are in the study's top five most-expensive markets.

While La Jolla also experienced a slight downturn, the area has seen sales improve by about 6 percent year-over year, said Rick Hoffman, president of Coldwell Banker San Diego. Prices have decreased from the peak three years ago, to the point where move-up buyers are getting more for their dollar.

"(La Jolla) has always been known for beach-front living and for having a real sense of community," said Rick Hoffman, CEO of Coldwell Banker San Diego. "It still has a little bit of a small town feel."

California claimed eight of the top 10 most expensive U.S. housing markets. Completing the top five were Beverly Hills. ($1,981,750); Greenwich, Conn. ($1,519,250); Palo Alto ($1,489,726) and Santa Monica, Calif. ($1,460,912).

The Golden State also had the largest difference between its most and least expensive markets. Lancaster, Calif., registered an average sales price of $165,205, more than $1.9 million lower than La Jolla.

Oklahoma had the smallest difference, with about $9,400 separating Oklahoma City ($164,250) and Tulsa ($154,800).

And, for buyers wondering what a 2,200-square-foot house with four bedrooms, 21/2 baths and a garage would cost overseas, Coldwell Banker surveyed 57 markets in 29 countries.

The most expensive market is the Asian metropolis of Singapore, where the sample home averages $1.9 million. The least expensive is Salinas, Ecuador, which sits on the Pacific coast. The average price of the sample home in Salinas is about $69,000.

Detroit Unions Ramp Up Protests

Associated Press Story

City workers and the mayor's office are approaching a weekend deadline on possible cuts to hundreds of jobs if unions don't agree to wage cuts and other concessions aimed at saving cash-starved Detroit from further fiscal misery.

The 7,700-member Detroit Federation of Teachers also is negotiating a new contract with the city's troubled public school district, which is looking for ways to save money.

Their respective battles come as Mayor Dave Bing tries to wipe out a $300 million deficit and schools' emergency financial manager Robert Bobb restructures the district while working to fill a $259 million budget hole.

About 85 city and school district employees gathered outside City Hall on Wednesday afternoon, many with signs bearing messages such as, "Lay off Dave Bing," "We demand a decent contract" and "Save Detroit."

Larry Carson, 53, a 15-year veteran of the city's water department, held a sign that read, "Keep City Jobs!" Carson said he's most concerned about jobs being privatized and workers not being replaced after they leave or retire.

"Go to any plant in the water department. We are understaffed," Carson said. "If you keep this up, somebody's going to get hurt."

"The budget situation is unusually bad right now, and not losing ground may be hard," Albion College professor and University of Michigan labor researcher Greg Saltzman said.

"Unions are going to fight much harder to keep things they already have than to get new things they never had before."

Bing was elected in a May 5 runoff and already has laid off about 300 workers. He has said another 1,000 could lose their jobs Saturday unless bargaining units agree to 10 percent wage cuts in unpaid furlough days and other contract concessions.

Detroit has about 13,000 employees.

Ten labor unions have endorsed his opponent, Tom Barrow, in the upcoming Nov. 3 general election. The American Federation of State, County and Municipal Employees, which represents 90,000 workers throughout Michigan, shifted its support from Bing to Barrow. AFSCME Local 207 in Detroit has been a prime mover behind the anti-Bing demonstrations.

"We confronted them in negotiations that if the unions take the concessions will the layoffs go away, and they said 'no,'" said John Riehl, president of the 1,000-member local.

"We want to let the public know about the cutbacks and damage to the city, and how angry and upset we are with this mayor."

Several smaller groups among the city's 50 bargaining units already have agreed to concessions, mayoral spokesman Ed Cardenas said.

"We can always pull back the number of layoffs going into effect," he said.

Just over 1,000 Detroit teachers and staff have been laid off since Bobb was appointed in March by Gov. Jennifer Granholm to clean up the district's finances.

About 590 have been called back to work. Another 400 have retired.

Contract negotiations are moving along, but "folks are definitely pushing back," teachers' union President Keith Johnson said.

"They're also being asked to work longer days and a longer school year, yet be paid less. That's not going to happen," he said. "People still have to provide for their families. Those who make the least are asked to give the most."

27 September 2009

GM To Add Third Shifts

As Posted to the Wall Street Journal

General Motors Co. will add a third shift to three plants, restoring 2,400 jobs in its second move to put U.S. employees back to work and boost production.

GM and rivals Chrysler Group LLC and Ford Motor Co. have been attempting to respond to new demand without relapsing into a habit of producing too much product and then relying on incentives to reduce the inventory.

Last month, the nation's largest auto maker by sales said it would increase North American production by 20% in the fourth quarter and put 1,350 employees back to work. It was GM's first production increase since global auto sales began their sharp decline last year.

The company said Tuesday that it will add the shifts to its Fairfax, Kan.; Fort Wayne, Ind.; and Lansing Delta Township, Mich., plants.

The Fairfax plant will become the only builder of the Chevrolet Malibu when the Orion, Mich., plant ends production of the car in November.

In Fort Wayne, GM said it will add production of heavy-duty pickups. The Lansing Delta Township facility will add the Chevy Traverse to its production. The new shifts in Fort Wayne and Lansing are set to begin in April.

Ford Motor Expanding Asian Presence

As Posted to the Wall Street Journal

Ford Motor Co. is making a major push this week in Asia -- long a weak link in its global operations -- as part of an ambitious strategy started three years ago by Chief Executive Alan Mulally.

In India on Wednesday, Mr. Mulally unveiled a new low-cost small car specifically developed for Asia that will be built at a newly expanded Indian plant. The vehicle, called the Figo (pronounced fee-go), will be sold in India and exported to other countries in the Asia-Pacific region.

On Friday, Ford will announce plans to open its third assembly plant in China, according to people familiar with the matter.

The two moves will significantly increase Ford's production capacity in the fastest growing region in the global auto industry, and will give the company a new car that is priced and sized for a large swath of buyers across Asia.

"Alan fully recognizes that we had to be strong in all three areas of the world if Ford Motor Co. was going to be a cohesive, integrated and successful company," said John Parker, executive vice president of Ford's Asia-Pacific operations.

The new small car -- Figo is colloquial Italian for "cool" -- is due to be launched in 2010. It was developed as part of a $500 million investment in India announced January 2008. Part of the investment doubled capacity at a plant near Chennai to more than 200,000 cars a year.

The tiny four-door hatchback with cat-eye headlamps gives Ford an entry into an increasingly important segment of the Asian market.

The vehicle is expected to sell for under $10,000, within reach of many people in India's growing middle class.

Ford believes the Figo will appeal to customers who want more than a bare-bones vehicle, such as the $2,000 Nano developed by Indian auto maker Tata Motors.

For Ford, which sold only about 30,000 vehicles in India last year, the Figo "will be quite crucial for further growth," said Asish Mathew Jose, market analyst for Segment Y, an automotive research company in Goa, India.

In China, which is expected to pass the U.S. as the largest auto market this year, Ford has two plants that together can produce about 447,000 cars a year. The company is expected to announce a third plant with partner Chonqing Changan Automobile Co., bringing total capacity to more than 600,000 vehicles a year.

Ford still faces many challenges in Asia, however. Even with the new capacity it still trails key competitors in China.

Toyota Motor Corp. can make 800,000 vehicles a year, and expects to lift that to more than one million in a few years, a Toyota spokesman said. General Motors Co., which got an earlier start in China than Ford, has partnerships and joint ventures that give it total capacity of 1.29 million vehicles a year, including small commercial vans.

The Ford name isn't uniformly known in India or China, and its dealer networks are still developing. In China, Ford has 216 full-service dealers, compared to Toyota's more than 500 and GM's more than 800. Ford accounts for about 2% of car sales in the Asia-Pacific market.

Shoring up Ford's Asian operations has been a critical goal for Mr. Mulally, a former Boeing Co. executive with substantial experience in the region. But since arriving at Ford in 2006, Mr. Mulally has had to focus on keeping its U.S. operations afloat.

He is credited with having taken quick action to put the company in a much stronger position than rivals GM and Chrysler Group LLC, both of which went through bankruptcy and took government bailouts.

At the same time, however, Mr. Mulally also dispatched executives to find out what was holding up growth in Asia. They found an organization that wasn't focused enough on the region's two giant markets, China and India.

In China, Ford has lagged behind GM, Toyota, Volkswagen AG and other Western auto makers. According to J.D. Power & Associates, Ford is the No. 12 auto brand in China in terms of sales.

The company has been slowed in part because its partner is located in Chonqing, in the less developed western provinces. There, Ford hasn't always been able to find suppliers for certain components, forcing it to use more expensive imported parts, Ford officials said. That hurts the profits, they said.

GM and VW, in contrast, have plants near Shanghai, an area teeming with auto suppliers and consumers with cash to spend.

In India, Ford struggled early on with models that proved too expensive for Indian consumers. Now, the Fiesta subcompact is its top seller, and a model called the Endeavor is the country's top-selling sport-utility vehicle.

In 2008, even as Ford's problems worsened in North America, the company mapped out a plan to invest $2 billion to become more competitive in Asia. It started work on the Figo and recently, Ford said it would move its Asian headquarters from Thailand to Shanghai.

Ford is now working to consolidate manufacturing in four regions. It also seeks a more cohesive regional approach instead of country-by-country operations, and is working to enhance the Ford brand.

"We concluded that we wanted to focus on the Ford brand because this is what you were going to have to do if you wanted to create a Ford powerhouse around the world," Mr. Mulally said in an interview.

While committed to building products in the markets in which they are sold, Mr. Mulally said he wouldn't rule out making Fords in Asia for the U.S. market. When GM recently considered a similar move it caused an uproar at the United Auto Workers union.

18 September 2009

An allergen-free bedroom for your child

By The Examiner

A bedroom should be a place to rest, a place to relax and ultimately, sleep. Yet, for children with allergies, their bedrooms might be a place that wreaks havoc on their symptoms. There are many things you, as a parent, can do to help your child get the rest he or she needs.

One of the main things you need to provide your child with allergy free furniture. If you take one day a week to go through their room and really clean up, you'll be doing your child a favor. Dust, moving furniture to get blind spots, and make sure you even get that ceiling fan wiped down too. Then sweep or vacuum the room out. While doing this, have your child in another area of the house so the allergens you're cleaning and getting rid of are not bothering him or her as they are standing by.

Once a week, also wash the linens in hot water, This hot water is important to kill the allergens. This simple routine in itself may do wonders for your child, in that the bed is where they spend the most time.

With the floors, dressers and bedding all washed and ready to go, take a good look around their room for opportunities to put cleanroom funiture. What else can be done around the room? You can vacuum their curtains. Provide them with an allergen-friendly bed and/or pillow protector. Perhaps move out of their room things that sit out and contain a lot of fabric, like big chairs and wall-hangings like quilts. These things can call carry dust mites.

And, speaking of dust mites, be mindful of all the stuffed animals. These toys can trigger all kinds of reactions because of the dust mites that like to breed there. Wash stuffed animals often or even put them in the freezer for 24 hours once a month. The freezing kills off dust mites, too. That will make you both sleep better.

16 September 2009

Honda to Sell Battery Car in U.S.

By The Wall Street Journal

Honda Motor Co. will likely launch an all-electric car in the U.S. in a few years, according to executives familiar with the matter, as rising interest in fuel efficiency prompts increasing interest in battery-powered vehicles.

According to company executives, the Tokyo-based auto maker plans to make the foray cautiously, and is likely to limit the availability of the new car, perhaps to a region within the U.S. The specific time frame was unclear.

The executives said Honda is expected to display at next month's Tokyo auto show a prototype of the battery car it plans to launch in the U.S. The knowledgeable executives said Honda is also considering selling the all-electric battery car in Japan.

The executives said the planned move is a reaction in part to prospects for tightening requirements in the U.S. for more fuel-efficient cars. They also said the move is intended as a response to growing competition in alternative-fuel technologies from Honda rivals such as Nissan Motor Co. and Toyota Motor Corp.

Honda continues to believe that gasoline-electric hybrid cars, such as its Civic hybrid and Toyota's Prius car, have the most promising future among many different alternative-energy vehicles, and said the company will continue to expand offerings of hybrid vehicles.

It has also maintained that battery and other key technologies for all-electric cars are premature. Its top leaders have said that Honda saw only a limited future in pure-electric vehicles, pointing to their insufficient driving range on a single full charge, scarce infrastructure of charging stations in most cities and questions about the safety of lithium-ion batteries that are likely to power such vehicles.

But a number of rivals plan to expand their electric-car offerings, raising the prospect that Honda could be left behind if they take off.

Honda's move follows the launch in Japan earlier this year by Mitsubishi Motors Corp. of a small battery-powered car called i-MiEV. Nissan, meanwhile, has said it plans to start selling a compact battery car, the Leaf, in the U.S., Europe and Japan late next year, while Toyota has said it will start selling an electric car in the U.S. by 2012.

General Motors Co. plans to start selling next year the Chevy Volt, a plug-in electric hybrid car with a small gasoline engine dedicated to charging batteries on board. General Motors is also re-evaluating their Michigan Medicare to help lower costs during their reorganization. By doing so, it will help get the Chevy Volt off the production line and on to showrooms around the U.S. quicker.

Toyota, the world's biggest auto maker by sales volume, appears to be changing its stance on the importance of regular hybrid vehicles such as the Prius. At an industry conference in Tianjin, China, over the weekend, Akira Sasaki, a Toyota senior managing director, said the company believes that mostly electric vehicles known as plug-in hybrids are "the most promising technology" among an array of alternative-energy vehicle technologies to replace gasoline-fueled cars for the near future.

While gasoline-electric hybrids such as the Prius run on a combination of gasoline and internally generated electricity, plug-in hybrids can be recharged via an electrical socket and drive mostly on electricity, with a gasoline engine on board used to charge the car's battery when it runs out of power. Mr. Sasaki didn't say what type of plug-in car Toyota is designing.

Toyota plans to launch a plug-in hybrid car in the U.S., Europe and Japan on a limited scale by year end.

GM Chief Talks Tough as Board Is Set to Meet on Opel, New Marketing Push

By The Wall Street Journal

The board of General Motors Co. on Tuesday kicks off a two-day meeting that is expected to determine the fate of the auto maker's ailing Opel unit in Germany. The meeting also is likely to solidify a major shift in the balance of power at GM.

For years, GM management ran the company with little interference from the board. But after the company's reorganization in bankruptcy, and the emergence of the U.S. government as GM's largest shareholder, its new board under Chairman Edward E. Whitacre Jr. has become the dominant power. It is keeping management on a tight leash and exerting increasing influence over the company's operations.

On Tuesday, the board also will review a major marketing campaign the company plans to unleash later this month. The marketing push is linked to Mr. Whitacre's insistence that GM find a way to boost revenue and halt its declining U.S. market share.

Edward Whitacre Jr GM Chairman"He's said to us that 'you've been given a clean balance sheet, now apply the same focus to market share and sales,'" said one person familiar with Mr. Whitacre's views.

Mr. Whitacre declined to be interviewed for this article.

Having such an activist board and chairman would be unusual at many large corporations. At GM, it is a sea change. In the past, the company's directors almost always went along with the strategy of its former chief executive and chairman, Rick Wagoner. Rarely did the old board question management's assumptions or forecasts, people familiar with the matter said.

The hands-on style of Mr. Whitacre and other new board members carries some risk. But so far, there have been no signs of serious friction between Mr. Whitacre and the company's new CEO, Frederick "Fritz" Henderson.

After its 40-day stay in bankruptcy court, the car maker has to jump-start sales, end a streak of billion-dollar losses and formulate a global strategy while operating as a considerably smaller player in North America.

GM also has to re-evaluate their Michigan medicare and prepare for a public offering of stock to raise money to pay back some of the $50 billion U.S. taxpayers have given it. The offering is supposed to take place in the middle of next year, leaving GM only about 12 months to whip itself into shape.

Medicare Michigan and the future stock offerings of GM puts the spotlight on Mr. Whitacre. As the former CEO of AT&T Corp., the 67-year-old Mr. Whitacre came into the job with no auto experience. The straight-talking executive with a bulldozing style was selected in June by the Obama administration's auto task force, and given broad authority to safeguard the government's GM investment.

The task force also selected Mr. Henderson to serve as CEO, but made it clear to Mr. Whitacre that it was up to the board's discretion whether Mr. Henderson and his team would remain, said people familiar with the matter.

The mandate puts considerable pressure on Mr. Henderson and three of his top lieutenants: Vice Chairman Robert Lutz, Chief Financial Officer Ray Young and Vice President Mark LaNeve, who oversees sales.

Probably the clearest signal so far of the board's new power came Aug. 21, when directors convened via teleconference to discuss GM's ailing Opel unit and British sister company Vauxhall.

Mr. Henderson hoped to get a green light to sell a majority stake in Opel/Vauxhall to a group led by Canadian auto supplier Magna International Inc., the only deal the German government was willing to help finance. Mr. Henderson also was open to selling a majority stake to RHJ International Inc., a Belgian private-equity group, although it would be more difficult to fund that deal without Germany's help.

But before Mr. Henderson got very far, the board brought him to an abrupt stop. How, the directors wanted to know, would GM compete in Europe if it relinquished control of Opel, according to people familiar with the call. Did GM have to settle for the Magna deal? Why couldn't the company consider alternatives -- including keeping all of Opel?

"They needed a lot more information than we could give in a one-hour phone call," one person familiar with the meeting said.

Since then, Mr. Whitacre has continued looking into GM to understand how the company thinks and operates, even at levels well below the executive suite. The chairman spent Sept. 1 and 2 meeting with employees at GM headquarters in downtown Detroit, said people familiar with the matter. The discussions involved groups of 10 to 15 GM workers from various levels and disciplines, these people said.

The sessions are known inside GM as "diagonal slice" meetings, meant to cut across the organization and provide a view of the company's inner workings. Each lasted about 45 minutes.

While the meetings aren't a new idea -- Mr. Wagoner held them as well -- Mr. Whitacre doesn't have the management duties of a CEO that Mr. Wagoner had. And the new chairman had a tough new message for employees: deliver results or leave, said people familiar with the sessions.

Mr. Whitacre "stressed accountability at all levels" of the company and made it clear that "if we think it's going to go back to being business as usual we are mistaken," said a person who attended one of the meetings.

"People kept talking about Ed's impatience when he was first named to the job," another person familiar with Mr. Whitacre's meetings said. "Well, we're seeing that first hand."

Two areas where Mr. Whitacre wants to see progress quickly is boosting revenue and halting the decline in U.S. market share.

In August, GM's share of U.S. auto sales fell by five percentage points, to 19.5% from 24.5% a year earlier. Executives blamed a particularly strong August 2008 as one reason for the decline. GM also cut its customer-incentive spending by 8% during the month compared to August 2008.

Mr. Whitacre has told GM executives to figure out a way to lift market share while keeping inventories lean and trimming incentives such as rebates, said people familiar with the discussions. Conventional wisdom in Detroit holds that cutting incentives and inventories usually results in lower market share.

10 September 2009

G.M. Said to Agree to Sell Opel to Magna, With Strings

By The New York Times

General MotorsGeneral Motors told the German government Thursday that it had chosen to sell its European operations to Magna International, the Canadian-Austrian auto parts and engineering company, but with conditions, according to a person close to the decision.

“We have been told that it has finally gone to Magna,” the person said, who requested anonymity since the decision has not been announced. A news conference was scheduled at 4:15 p.m. in Berlin.

However, the person added that conditions have been ttached to what G.M. is offering Magna, conditions that could drag the already lengthy negotiation past Sept. 27, the date of Germany’s national elections.

Magna’s last bid would give it and Sberbank, its Russian partner in the deal, a combined 55 percent stake in Germany-based Opel, the main G.M. operation in Europe, as well as Vauxhall, based in Britain. G.M. would keep a 35 percent stake, while Opel’s employees, who have actively campaigned for Magna, would have 10 percent.

Magna had the support of the Opel works council chairman, Klaus Franz, because it promised to save more jobs and would give Opel greater access to Russia, an expanding market.

The employees and German government officials have firmly opposed a competing bid from RHJ International, a Brussels-based private equity firm, although some G.M. executives appeared, at times, to favor it over the Magna bid because of concern about the Russian involvement.

Since G.M. filed for bankruptcy in June, Opel’s assets have been co-owned by a trusteeship in Germany, with 65 percent, and G.M., which holds the rest..

The decision by G.M. to sell to Magna brings to a close months of drama played out between the German government and Washington but also between the Chancellery and the ministries here in Berlin.

Chancellor Angela Merkel uncharacteristically stuck her neck out in favor of Magna in recent weeks, lobbying in both Washington and Moscow. It was a political gamble, but one she appears to have won.

03 September 2009

GM's CEO Fails to Win Support for Magna Deal

By The Wall Street Journal

General Motors Co. executives failed to win board backing Friday for their plan to sell a majority stake in its Opel/Vauxhall division to a group led by auto supplier Magna International Inc., according to people familiar with the situation.

The board also has reservations over details of a German government plan to back a sale with 4.5 billion euros in guarantees.

German officials have given strong backing to the Magna-led consortium since choosing them as a preferred partner in May. But this has left GM board members uneasy about the sale process.

GM said Friday that the board had made "no decision" on Opel, but their action highlights the new level of scrutiny facing executives long used to more passive intervention.

Chief Executive Frederick "Fritz" Henderson and fellow executives backed the Magna-led consortium, which also included Russia's Sberbank and auto maker OAZ Gaz. But GM's board said a competing offer from Belgian investment group RHJ International SA should be taken more seriously, these people said.

Mr. Henderson's management team has committed to doing work on how to approach the future of Opel and its sister Vauxhall unit, two people said. The board is seeking more clarity on GM's strategy in Europe if it accedes control of Opel while retaining a minority stake.

In addition, members want more specific details of Germany's commitment to finance Opel. One person involved in the matter said GM's management team has been pressed to take more time to craft a more favorable scenario.

Opel, long a crucial sales and product-development unit for the Detroit auto maker, is seen as a critical cog in GM's attempt to rebuild as a global player in the auto industry.

The Magna-led bid has received widespread backing from German politicians, who are expected to comment on GM's move early Saturday. Magna declined to comment.

The Opel/Vauxhall business lost $2 billion in the first quarter of 2009 and is being run by the trust with 1.5 billion euros in German government loans. A final decision on any sale will be taken by the trust in coordination with European and U.S. authorities.

Deputy CEO Press to Leave Chrysler

By The Wall Street Journal

DETROIT -- Chrysler Group LLC Deputy Chief Executive Jim Press is planning to leave the auto maker before the end of the year, according to people who have been informed of the plan, as Fiat SpA seeks to revive the car company that two months ago emerged from bankruptcy.

Mr. Press, a former star at Toyota Motor Corp., was the only one of Chrysler's top executives retained after the company's bailout. He was kept on as a special adviser to Sergio Marchionne, who now serves as CEO of both Chrysler and Fiat.

But Mr. Press has been stripped of many of his responsibilities, and recent missteps have strained his relationship with Chrysler dealers.

Mr. Press, 62 years old, is expected to leave Chrysler by the end of November, according to one of the people informed of the plan.

Jim Press Chrysler CEOReached on his cellphone, Mr. Press said, "I don't think anything has been released about management changes." He declined further comment.

A Chrysler spokesman declined to comment.

The departure comes two months after Mr. Marchionne's initial management shakeup, which created a flatter structure of 23 executives, including Mr. Press, reporting directly to him.

In his current position, Mr. Press -- unlike the three executives in charge of the Chrysler, Dodge and Jeep brands -- doesn't have any direct operational control over departments that Mr. Marchionne is concentrating on to lead the turnaround.

"The thing about Jim Press is he presided over one of the biggest automotive expansions in corporate history at Toyota," said Aaron Bragman, an automotive analyst at IHS Global Insight. "To throw him into a crisis situation like Chrysler may not be the perfect environment for him. He's not a turnaround guy."

Mr. Press's exit will end a tough two-year run at Chrysler. Hired by Chrysler's former owner Cerberus Capital Management LP in September 2007, Mr. Press came in with high expectations as one of the top auto executives.

In his 37-year career at Toyota, the Kansas native became a powerful figure, exerting influence over all aspects of Toyota's U.S. sales unit and building a strong reputation among auto dealers. Eventually, he became the first non-Japanese elected to the company's board of directors.

Mr. Press's high standing among dealers was expected to help Chrysler win support among dealers to shrink its network. His deep knowledge of Toyota's corporate culture was seen as an asset to Chrysler.

At Chrysler, Mr. Press started working to revamp the way the company developed new models, but after only a few months his relationship with then CEO Bob Nardelli became strained, said people familiar with the matter.

As the company's financial troubles deepened in 2008 and early 2009, Mr. Press continued to work with the auto maker's dealers, but he played a smaller role in more strategic issues, they said. The search for alliance partners and talks with Fiat, for example, were led by Vice Chairman Tom LaSorda and Mr. Nardelli, these people said.

Mr. Press lost credibility among dealers after he came out in January and February to rally dealers to order more cars and trucks, saying that would help the company survive. Many did, but Chrysler still filed for bankruptcy, leaving dealers who loaded up their lots with cars and trucks that became difficult to sell.

Mr. Press ran afoul of dealers again in June when Chrysler dropped 789 of them from its retail network as part of its bankruptcy organization. At that time, he called the dealership cuts the "most difficult business decision" of his career.