The Obama administration unveils its restructuring plan for the troubled auto industry today, and in a surprise move, GM's Chief Executive Rick Wagoner will be stepping down, too. For an analysis, The Takeaway talks with New York Times Senior Business Correspondent Micheline Maynard in Detroit and Sheryl Gay Stolberg who is covering the story from D.C.
"The feeling was that, as the White House officials said, they needed a clean sheet. But you might say it more simply that someone's head had to roll." —New York Times correspondent Sheryl Gay Stolberg on Rick Wagoner leaving General Motors
It's Monday, which means it is time to take a look at the week ahead. For their educated guesses as to what is on the agenda for the week is James Surowiecki, The Balance Sheet writer for The New Yorker, and Marcus Mabry, international business editor for the New York Times.
What's on this week's agenda?
Monday: GM chief expected to step down
• The chairman and chief executive of General Motors Corp. of eight years, Rick Wagoner, is resigning.
• Wagoner's unexpected move is part of an agreement made by GM with the Obama administration.
• We'll learn more about the strings of President Obama's auto bailout plan in a speech by the president Monday morning.
• More: G.M. Chief Is Said to Be Resigning in Deal With U.S. (The New York Times)
• More: GM chairman to leave US car maker (BBC)
Monday: President Obama's auto team is expected to offer aid to GM and Chrysler
Tuesday: Election Tuesday symbolizes judgment on president
• Tuesday's election for the successor to Senator Kirsten Gillibrand, D-N.Y., pits Republican Jim Tedisco against Democrat Scott Murphy who has the backing of President Obama
• Leaders say the selection will be a judgment on the president, stimulus plan and strength of the political parties
• More: NY House race seen as first test of Obama's power (The Associated Press)
Tuesday–Thursday: President Obama and the First Lady begin their first overseas tour
• Mr. Obama will meet with Chinese leader Hu Jintao, Russian President Dmitry Medvedev, British Prime Minister Gordon Brown, British Queen Elizabeth II, and heads of state from Saudi Arabia, India and South Korea.
• President Obama will seek support for his new Afghanistan-Pakistan plan from European nations and deal with the issue of Iranian nuclear ambitions.
• The president will also seek to maintain Chinese support for purchasing U.S. government debt and ease tensions with Russia over energy and missile defense.
• He will also be seeking help to enlist Iran in the U.S. effort to stabilize Afghanistan and Pakistan.
• President Obama will be attending the G-20 summit, as well as a 60th anniversary summit of the North Atlantic Treaty Organization, and a European Union-U.S. summit.
•More: Regulation Goals Replace Stimulus Push (Wall Street Journal)
• More: Barack Obama: 'Every decision we're making counts' (The Telegraph)
The crisis in the auto industry is not just taking it's toll on American brands. While the Saturn and Hummer maybe a thing of the past here, in Europe, Saab is at risk, and in Russia, the famed Lada car company may be at risk of going under entirely. And they haven't been able to pay their hockey team in three months. In fact, there is an entire city that depends on making the car mdash;it's home town of Togliatti in central Russia. For more, The Takeaway is joined by Rupert Wingfield-Hayes in Moscow.
Not familiar with Lada? Maybe this commercial will help bring you up to speed.
Tiny, affordable cars may seem like a great idea for the environment and the pocketbook. But our guest Linda Blake says putting thousands of Tata Nanos on India's roads is actually a bad idea for India's developing and smog-choked cities. She joins us now to explain.
TIMELINE: CARS FOR THE PEOPLE
Ford Model T 1909 Considered the first affordable car in America, Henry Ford's Model T sold for $850, undercutting competition priced between $2,000 and $3,000. "It will be low in price that no man making a good salary will be unable to own one, and enjoy with his family the blessing of hours of pleasure in God's great open spaces," Ford said.
AMC Rambler 1958 The Rambler's manufacturer, American Motor Corporation, was the only auto company to turn a profit during the recession of 1958. Created cheaply by conserving on steel, it became a car of choice and eventually won a Motor Trends "Car of the Year" award in 1963.
Toyota Tiara 1964 The 1960's forced American car manufacturers to face competition from abroad. Toyota's Tiara was the first of many successful Japanese imports. In 1967, the Tiara sold for $1,670, cheaper than the average American car.
Volkswagen Beetle 1960's The Volkswagen Beetle, another car in the new wave of imports, sold at around the same price as the Tiara, $1,675. But by 1973, Beetles were selling much better than the Tiara, surpassing sales records of the previous record holder, the Ford Model T.
Zastava Yugo 1985 Just 141,500 of Zastava's Yugos sold in the United States from 1985 to 1991, making it one of the worst-selling cars ever. However, priced at $4,000 when it was first introduced, it was the cheapest car available at the time. In 1991, due to United Nations sanctions on Yugoslavia, the car had to be pulled from the U.S. market. An updated version of the car is still sells in several countries, including Egypt and Poland.
Chevrolet Aveo 2009 Priced at $11,965, the Aveo is currently the cheapest small car produced by a U.S. automaker. "Well, the Aveo is cheap, but, well, it's cheap," read a recent review of affordable small cars in U.S. News & World Report.
Tata Nano 2009 The Nano, produced by India's Tata Motors, is small. It's 10 feet long and five feet wide, and runs at a top speed of about 60 mph. In India, one can purchase the basic model, without radio, air conditioning or air bags, for $2,500 — It meets Indian safety standards and gets an admirable 50 miles to the gallon.
The U.S. Treasury will give five billion dollars to auto suppliers in a bid to inject liquidity into the struggling industry that employs 500,000 people in the U.S. But you can’t call this one a bailout. Automakers GM and Chrysler now have to decide which suppliers will survive and which will fail. The Takeaway talks to Justin Hyde, Washington Correspondent for the Detroit Free Press.
Auditors for automaker General Motors are raising "substantial doubt" about whether the company will be able to continue operations. They say the company may need to file for bankruptcy protection if it can’t work out a successful restructuring plan in the face of mounting losses and huge debts. This news comes from the annual report GM filed with the SEC today. For what this means for Detroit, the nation, and the car industry, we turn to Jerome Vaughan, our friend and news director at WDET in Detroit.
Facing a triple threat from the spiraling economy, mortgage foreclosures and an ailing auto industry, President Obama began his economic counteroffensive this week. He signed a huge stimulus bill, was given a multi-billion dollar plan to restructure car makers and announced a $50 billion foreclosure rescue. All of these moves resonate in Detroit, a city struggling with foreclosures and ground zero of the auto industry meltdown. Jerome Vaughn is the News Program Director at WDET-FM in Detroit and he joins The Takeaway this morning.
As part of their grand reconstruction plan, GM announced yesterday it was ending production of four car brands, including Saturn. This would seem to go against GM’s entire marketing platform that has been in place since the 1920’s, where the brand of the car fits the car buyer. Is variety no longer the spice of GM's life? Joining us this morning to talk about GM’s limiting its image is Micheline Maynard, senior business correspondent for The New York Times.
Today is a big day for General Motors. They are preparing to announce how they plan to repay the $13.4 billion loan Congress doled out late last year. Workers at GM plants are anxiously awaiting to hear the detail of the plan, too, because their union is in the middle of negotiating a health care plan with the automaker. Nick Bunkley has been covering this developing story for our partner, the New York Times, and he joins us now.
Three popular trucks have received bad ratings in side crash tests from the Insurance Institute for Highway Safety, a non-profit group backed by car insurance companies. Here's video via YouTube:
The IIHS test results don't all jibe with ratings from the National Highway Traffic Safety Administration, where the Silverado gets five stars for side-impact safety. You can look up all the safety ratings for your car or truck at the NHTSA's safercar.gov Web site.
All eyes are on Detroit this week as the annual North American International Auto Show starts its engines. As the American auto industry struggles, with dismal car sales and a skeptical Washington doling out bridge loans, this show is considered by many as Detroit's last stand. Joining us now for an insider's view of the Detroit car show is Lawrence Ulrich, a Detroit native and writer for the New York Times.
An advertisement for the Detroit auto show in better times.
