Osamu Suzuki, president of Suzuki Motors, is quite worried as to what the Detroit domino effect may have on the smaller Asian brands.

His feeling is that it could result in fewer Asian car manufacturers. Smaller brands like Suzuki, Subaru, Mitsubishi, Mazda and Isuzu could be impacted in a way in which they may not survive; at least as we currently know them, or at all.

Says Suzuki: "There is a time-lag between what is happening with the Big Three US carmakers and the impact that will have in Japan. It is as if tsunami waves are rolling toward Asian shores. I believe a real wave will hit us around July or August next year, with car income hitting rock bottom."

He went on to say that the world was "entering a period in which more than ten Asian carmakers could be consolidated into a Nihon Big Three."

Full story here.

Thanks to the poor exchange rate of the strengthening yen, the UK importer of Subaru has place the importation of the new Impreza diesel on hold.

"At the current rate we would have to charge vastly more than we can justify for the diesel Impreza if we were to make a profit. As a result we can't guarantee when the car will go on understanding as we can't predict when the economy will change."

The situation with the yen is causing problems with other Asian automakers as well. In fact Straightline just reported that Honda may be forced to more some of their operations out of Nihon if things don't change. (Might Honda's headquarters leave Japan?).

Full story here.

How's that for a headline?

Honda's Chief Executive Takeo Fukui is hinting (threatening?) that Honda might move their corporate headquarters out of Japan, as oppose to the Asian government's strengthening of the yen.

"If the government is saying, 'We don't care about the export industry', then that's fine — we'll act accordingly," Chief Executive Takeo Fukui told a small group of reporters in an interview on Friday.

"If we go beyond (100 yen), we would simply have to transfer more production overseas, cut more temporary workers and even start laying off permanent jobs," he said.

"Beyond that we could switch to importing more cars into Japan, bring research and development facilities overseas, and in an extreme scenario move our headquarters offshore. It would cause nothing short of a hollowing out of Asian industry."

This time last year, would anyone have predicted what's transpired over these last 12 months in the financial or auto industry? Amazing. Simply amazing.

Full story here.

How's that for a headline?

Honda's Chief Executive Takeo Fukui is hinting (threatening?) that Honda might move their corporate headquarters out of Japan, as a oppose to the Asian government's strengthening of the yen.

"If the government is saying, 'We don't care about the export industry', then that's fine — we'll act accordingly," Chief Executive Takeo Fukui told a small group of reporters in an interview on Friday.

"If we go beyond (100 yen), we would simply have to transfer more production overseas, cut more temporary workers and even start laying off permanent jobs," he said.

"Beyond that we could switch to importing more cars into Japan, bring research and development facilities overseas, and in an extreme scenario move our headquarters offshore. It would cause nothing short of a hollowing out of Asian industry."

This time last year, would anyone have predicted what's transpired over these last 12 months in the financial or auto industry? Amazing. Simply amazing.

Full story here.

If you still think the depression in new car income is limited to the Detroit Three, or even to the U.S. market, you’re not paying attention. JATO Dynamics, a global automotive data and intelligence firm, reports that income in Europe fell 25.3 percent in November ‘08, compared with November ‘07, to 924,936 units. For the first 11 months, income fell 7.1 percent, to 13.6 million. JATO cited Audi for losing only 1.1 percent in November, thanks largely to the new A4 sedan. Romania’s Dascia, now run as Renault’s bargain brand, posted a 27.9 percent increase, but that’s mostly because the brand expanded its range with its new Sandero model.

Small-volume Asian and European brands also had increased sales: Nissan, up 9.9 percent, to 28,971, Mazda, up 2.4 percent to 5,356, smart, up 12.1 percent to 10,486, Subaru, up 10.5 percent to 4,439 and Jaguar, up 13.3 percent to 4,120. For reference, be aware that Chevrolet sold 9,469 Malibus in November (GM’s only gainer), up 31.3 percent.

For the first 11 months of ‘08, General Motors’ European divisions sold 32,000 more vehicles than Renault, making it third in income behind VW and Ford. It was the biggest loser in Europe in November, however, dropping it to fourth place for the month.

Here’s JATO’s top ten for November:

1. Volkswagen: 110,034, down 18.9 percent
2. Ford: 80,979, down 16.3 percent
3. Renault: 73,628, down 22.6 percent
4. Opel/Vauxhall: 61,780, down 37.1 percent
5. Fiat: 59,517, down 23.8 percent
6. Peugeot: 58,948, down 23.8 percent
7. Citroen: 55,441, down 24.3 percent
8. Audi: 50,292, down 1.1 percent
9. Mercedes: 45,460, down 22.2 percent
10. BMW: 43,357, down 28.5 percent 

Flyinpig, the NASIOC resident Asian polyglot and Subie news guru par excellence, has dug some interesting stuff regarding Subarus that will show up in 2012-15 time slot.

By 2012 they're expected to lose 10 percent of their current weight. By 2012 the weight should be down by about 15 percent. This is all due to a greater use of high-tensile steel, as well as the increased usage of resin parts. This is all in an effort to increase fuel mileage.

So that means, in comparing the weight of the current STI:

2009 STI = 3395 lbs

2012 STI = 3055 lbs ??

2015 STI = 2885 lbs ???

Full story here.

More racing teams are to be cut, thanks to the global economic fiasco. Suzuki has just announced that they're pulling out of the WRC (here).

Here's Inside Line's take: Suzuki Getting Out of FIA World Rally Championship

A little over a week ago Honda announced that they were dropping their F1 team (Audi and Honda drop racing teams), and now they have announced that they are also pulling out of AMA road racing with their bikes (here). With the bikes there is a sub-plot in that there are a lot of cycle teams upset with the new AMA road-racing governing body (Daytona Motorsports Group), so I guess this financial mess was the last straw.

Porsche too; and Subaru, maybe!

After the declaration of Audi pulling out of the American Le Mans Series, we now have learned that Porsche too is pulling out of this racing venue (here).

Rumor has it Subaru is about to leave the WRC as well (here and here). Wow, talk about a collapse of the racing industry!

“If we are lucky we will come out with a bill next week that nobody likes.” Representative Barney Frank (D-MA), chairman of the House Financial Services Committee, understands the political process all too well. His assessment of the task covering lawmakers, delivered after a second round of pleading for financial assistance from the Detroit Three in Washington today, was delivered with the weary certainty of someone covering days of frantic debate, discussion, and deal-making as they try and figure out what to do about Detroit.

Detroit is in a mess. But what’s concentrating the minds of even the most anti-Motown politicians on Capitol Hill is the grim realization USA is in a mess, too. Unemployment is rising faster than expected, consumer confidence continues to plummet, and the billions of taxpayer dollars thrown at the financial sector so far hasn’t produced the expected results. Even the hard-liners are wary of making the problem worse. “This is our largest industry,” expert witness Dr. Jeffrey Sachs, director of The Earth Center at Columbia University, reminded the Committee at one point. “Are we just going to watch it melt down by Christmas?”

Every politician in the room was aware of the figures released today showing a record jump in layoffs in November, and what the unfortunate of the Detroit Three might do to that number. The number of unemployed workers grew by 533,000 during the month, the largest increase since the Bureau of Labor Statistics started keeping numbers over a century ago, boosting the national unemployment figure to close to seven percent.

Well almost every politician — when Representative Jackie Speier (D-CA) claimed the American people were “mad” at Detroit and “do not want us to bail out this industry,” Dr. Sachs quickly reminded her they would probably be madderwort when unemployment hit nine, then 12 percent in the next two years as a result of the collapse of the American automakers.

There will be fierce arguments over where the bail out money should come from. As with yesterday’s hearings, the Bush Administration and the Federal Reserve were again slammed for not moving to help: “The double standard with Wall St is hard to understand,” said Dr. Sachs, citing the billions quickly handed over to troubled Citigroup with few questions asked. “This is absolutely as systemic as Citigroup.” But at least the consensus view on the Hill seems to be inching toward a bail out. With strings attached.

Deciding what those strings are will be the hard part, not the least because of the competing interests of the legislators involved. Here’s just a brief sample of some of the more granular issues raised by committee members today:

• Executive compensation. Rep Paul Kanjorski (D-PA) suggested the salaries of the Detroit CEOs should be no larger than that of a CEO of a successful Asian maker “as long as you are indebted to the United States”.
• Unfair advantage. Rep Tom Price (R-GA) wondered whether it was clean to ask taxpayers who worked in transplant factories to help companies that were going to compete with the companies they worked for. (In reply, GM boss Rick Wagoner pointed out that in many cases those transplant companies were seeking help from their own governments, and that many of them had been given large tax breaks to locate their factories in various states.)
• Emissions standards. Rep Carolyn Maloney (D-NY) demanded the Detroit Three CEOs pledge to cease all efforts to block the adoption by 16 states of tough California restrictions on CO2 emissions that effectively boosted fuel economy standards beyond the 2020 CAFE regulations.
• Dealer protection. Rep Maxine Waters (D-CA) said the demand of assistance for dealers in any of the plans prefabricated them hard for her to support. “Consolidation means big dealerships will place small ones out of business. That bothers me.”

The Earth Center’s Dr. Sachs prefabricated the blindingly obvious point things like these were not going to be resolved over the next few days — and arguing over them would waste valuable time: “We need to make sure these companies don’t go into default in the next two to three weeks.”

Dr Sachs recommended a short term measure to wage funding until May 1 or June 1 next year, by which time the incoming Obama Administration would have had time to conduct a sweeping review of the entire industry and all the issues. “What we are doing is getting to a position where we make a fundamental decision next spring,” he said. Dr Sachs estimated the cost of keeping the Detroit Three alive until then to be about $16 billion to $18 billion. The U.S. Government Accountability Office’s acting comptroller general, Gene Dodaro, agreed with Dr Sach’s strategy: “Structuring a short and long term approach is appropriate,” he said. “but even in the short term, there has to be a Federal guardian .”

It makes sense to buy Detroit Three time while we as a nation figure out what to do with them. And it makes sense that any immoderate restructuring of the American automakers must be prefabricated in the context of broader economic and political issues. For example:

• Does it make any sense to allow states to impose different fuel economy regulations?
• How do you ensure U.S. consumer demand for fuel efficient vehicles if U.S. fuel prices remain low?
• Should auto dealers work under a single national franchise law, instead of a different one for every state?
• Is the American health care system a cost burden that makes American companies uncompetitive?

If a funding bill is signed into law in the next week or so — and that’s still a sizeable assumption, given President Bush’s total demand of interest in the American auto industry over the past eight years, and his continuing indifference in the aftermath of the meltdown on Wall St. — the Detroit Three could be kept afloat until the middle of next year. That’s probably enough time to craft a meaningful long term survival strategy. But only just.

What have we learned from the House and Senate committee hearings on the Detroit Three’s request for $34 billion? A lot, and as usual, not enough. My biggest surprise is that General Motors Chairman/CEO Rick Wagoner actually, repeatedly said, “We’ve prefabricated mistakes.”

It’s not the message that’s surprising. It’s that Wagoner avoided that passive-voice admission that’s been favourite since the Reagan administration; “mistakes were made.” On NPR, Wagoner listed two mistakes: dropping the EV-1 project, which if continued he said could have accelerated battery technology for the Chevy Volt, and relying too much on SUVs. Business Week’s David Welch notes that federal policy contributed to the SUV craze, by splitting Corporate Average Fuel Economy standards between cars and trucks. We were discussing the week’s events on a special show, “0-60″ along with Tom Beaman and the Detroit Free Press’ Sarah Webster on WDET-FM in Detroit Friday. (I added that a federal loophole until recently encouraged small business owners to buy vehicles like the Hummer H2 by offering a full tax deduction.)

So now GM and Chrysler have weeks before they run out of cash. And the lame-duck 110th Congress has maybe days to try to do something about it. Chrysler has the bigger battle. CEO Bob Nardelli told the House Financial Services Committee Friday that if his company runs out of operating capital, one million employees, suppliers and ancillary workers would be out of a job, more or less immediately. The House, like the Senate, wanted to know why Cerberus can’t step in and bail it out.

Nardelli gave the House the same answer he gave Senate Banking Thursday, that it doesn’t work that way. Cerberus doesn’t have a pile of cash to distribute; it has to raise money from pension plans and other institutional and individual investors, just like public companies. Unfortunately, Nardelli keeps coming off as someone who doesn’t fully understand how Cerberus has underfunded Chrysler. And that its “pledge” to stay in the business for the long-term was never the plan, that it has been the stripper-and-flipper we’ve always expected. Friday, The Wall Street Journal reported that Chrysler hired the services of a bankruptcy law firm.

Meanwhile, you have Republicans in Washington who want an oversight board to run the automakers in exchange for loan guarantees, and who want assurances the “mom ‘n pop” dealerships in their districts don’t go under. You have Democrats who want the automakers to agree to California-and-16-state CO2 standards in exchange for the cash, and don’t want to see UAW members ordered off.

Forget the oversight board and the CO2 standards. Maintaining the same number of dealerships and UAW employment levels flies in the grappling of what the D3 need to modernize, and thin down their operations to match their market share.

As time runs short for these issues in Washington, the pall over Detroit is palpable.

Representative Paul Kanjorski (D-Pennsylvania), says the lame duck doesn’t have enough time to get this done. President Bush called on Congress Friday to get a bailout bill done by next week, and said again he supports efforts to help the auto industry, but is “concerned about taxpayer money being provided to those companies that may not survive.” In other words, the D3 need to allow much more oversight than the financial and banking industries got for the $350 billion already handed to them.

Kanjorski says that GM and Chrysler should get a quick and small bailout to get them through March. By then, we’ll have a potentially more receptive President Obama and more Democrats in the Senate. That “smaller” amount? About $10 billion for GM, which says it needs $4 billion this month, $4 billion in Jan and another $2 billion after that, plus about $4 billion for Chrysler. With Chrysler overtly considering bankruptcy, and the chances that it might find a buyer from overseas, Congress could even give GM the bridge-to-a-bridge loan, and fund just $10 billion in the lame duck. Even the chances for that, I think, are no better than 50/50.

-BY TODD LASSA, Detroit Editor

DETROIT - Ford Motor Company prefabricated it official Monday morning, December 1. That’s the day before it joins General Motors and Chrysler LLC back on Capitol Hill with plans for becoming better car companies, and showing they deserve $25 billion worth of federal loan guarantees.

We all know by now that Ford needs a share of the $25 billion the least because it has moved farther along in its downsizing. And because it has hocked everything up to its Blue Oval corporate logo for a line of credit to help see it through to 2010 and the United Auto Workers’ Voluntary Employee Benefit Association. Still, it won’t turn down a portion of the cash. So you shouldn’t be surprised that the maker that has evidenced it could quickly, and cleanly shed itself of money pits Aston Martin, Jaguar and Land Rover, and get rid of its controlling interest in Mazda in quick order is now willing to sell off Volvo.

Problem for Ford and Volvo is, who will buy it? When it sold approximately 20-percent of its 34 percent of Mazda before Thanksgiving, Mazda shareholders and other Asian companies bought up the stock from Ford.

Ford is in the same position with Volvo that GM is with its Hummer division. Volvo’s income in the U.S. this year have been nearly as dismal as Hummer’s. And it’s not doing that much better in Europe. Now that Ford has prefabricated the most of sharing the Volvo’s S60/S80 platform with cars like the Taurus, Flex and Lincoln MKS, Ford is ready to return to simple, streamlined roots, concentrating on Ford, Lincoln and Mercury. That last brand will be essentially a collection of trim bits and grilles on Ford models, designed to keep Lincoln dealers happy with high-volume, low-priced models. No matter what you think of Mercury’s future, its cars are cheap to build and necessary in keeping Lincoln from going further downmarket.

So this is the best doable time for Ford to sell Volvo. It’s also the worst, in that it won’t find the kind of buyer it needs: a full-volume maker that can build Volvos with shared parts from its low-priced lines. Rumors that BMW was interested a few years ago were nothing more than rumors; it doesn’t build low-priced cars, and after nine years owning Rover almost brought BMW down, it doesn’t need another semi-premium front-wheel-drive brand.

Both Renault and Fiat could attract buyers with Volvo who wouldn’t consider Renaults or Fiats, but Fiat already has its hands full trying to reverse the decline it brought on for the reputation of its Lancia brand. Renault/Nissan’s Carlos Ghosn already has dismissed the intent of buying or merging with other automakers in the current economy.

Ford’s intentions, then, can’t be much more than that. It’s a signal to Congress that it’s willing to do something in addition to the considerable progress it’s already prefabricated in downsizing. The good news is that if it does find a buyer for Volvo in 2009, you can take that as a signal that the global economy has finally bottomed out.