Batten Down the Hatches.

The bailout has been rejected. Say it again, but this time, think about what the implications will be. Are you curled up in a fetal position yet? You should be.

In a stiff vote of 205 to 228, the House sealed the deal on the $700 billion bailout package.

How can the leaders of our nation be so obtuse? Without this package, Armageddon has waltzed into our lives and will surely Riverdance on our chest – with spiked heels.

Was Warren Buffet’s warning to Congress not enough? The fact the markets have stumbled downwards for a year, doesn’t say anything? When the Canadian dollar reigns triumphant, we have a problem.

The House members should be ashamed of themselves. Although, they believe that they have saved the taxpayer and the greater good by screwing over Wall Street. I guess they do not believe in trickle-down economics. Life on Main Street is going to get harder.

In turn, we will see the struggling automotive industry get even worse. With the lack of credit availability and much tighter spending habits, it is unlikely we shall see a rise in auto sales.

The end of the week will bring results from September’s US SAAR auto sales. I am looking forward to the numbers and what they bring; however, I do not believe it will be positive given the macroeconomic environment. Even with the insane incentives, I do not think many buyers lined up this month.

Oil is under $100 as of press time, so, gas prices should lower within two weeks. Let’s see how that shoe drops.

In the meantime, I have constructed a tinfoil hat which should, in these times, protect against Armageddon visitors. I suggest you do the same if you intend to ride this one out.

rp

Audi Mania!

Audi has done it again and again. If there is a third time, I promise it will be a charm. Audi has blessed the world with two new sport-sedans and they’re pissed off.

The new RS6 sedan will be utilizing the same power plant as the avant, which is out overseas. The statistics are astounding: 580 bhp accompanied by 479 lb-ft of torque. Essentially, that is the same as God descending from the heavens. Striking and awesome.

Source: Autoblog.com

The twin-turbo V10 means business and will not stand for anything less. 0-60 comes in an Audi-claimed 4.5 seconds. I think it is safe to assume it can knock off a couple tenths of a second from their claim, albeit with 580 bhp, I was hoping for a sub four second number.

Source: Autoblog.com

I am going to stop there though. Long story short, it would be a fantastic rival to BMW’s M5 and Mercedes’ E63 AMG, but the Audi folks will not be bringing the RS6 stateside. I find this quite disheartening because it is head and shoulders above its competitors – at least in styling.

Something we Yankees can relate to is the B8 S4. Yes, she will be coming stateside.

One problem; no more avant!

Blasphemy. From the company that produces the best wagons in the planet, we have received the shaft.

Looking beyond this disturbing fact, Audi has done a fantastic job putting together a respectable offering. Fitted with a new 3.0 TFSI supercharged V6, the new S4 will do 0-60 in a claimed 5.1 seconds. Not bad. The specs are pretty nice, 333 bhp and 325 lb-ft torque. Personally, I would have loved to see a twin-turbo set up a la B5 S4. God, I loved that car and just about every B5 owner did as well.

Source: Audiworld.com

Matted to the new engine is a fresh 7-speed “S tronic,” dual clutch transmission. You can expect this “S tronic,” gadgetry to impress with head-snapping upshifts. As with all modern transmissions, I am stoked to hear the throttle blips.

An interesting option is the new quattroSport rear differential. I want to hear more details on this when they are available.

The car’s interior is, as expected, stunning. Audi does every interior “right.” They really do. A mixture of top-notch plastics, piano black trim and aluminum adorn the cockpit. If that center stack is oriented slightly towards the driver, Audi has won me over – for good.

Source: Audiworld.com

Audi has been turning out fantastic designs as of late. The brand is where BMW use to be; subtle, classic and aggressive designs. Remember the E39 M5, the E46 M3? How about the E38 7-series? The new design language Audi has tapped will make many new styling triumphs. I wish I could shake the designer(s) hand.

Expect the B8 S4 in showrooms next fall as a 2010 model – womp womp.

Conspiracy theory: Audi kept the B8’s bhp under 350 in order to make room for a new RS4 which I presume will debut with upwards of 450-500 bhp.

In other Audi-related news, I will be covering the Audi Mileage Marathon from Chicago to Denver. It will be a very nice way to get more acquainted with Audi’s diesel variants.

rp

Chevrolet Volt Revealed to the Public

Newsflash! Exciting event on the horizon.

I hope that is enough explanation for my absence.

Moving along, it appears as though General Motor’s Volt is well, not spectacular. The technology is far from awe-inspiring. Especially, when GM had the EV-1. At least they got the Camaro right.

I was expecting much more. Disappointed, to say the least.
The upcoming Volt’s design has been radically revamped as well. Although the company claims the changes were done for aerodynamic purposes, I do not understand why they would alienate an excited fan base. The Volt had a pretty reasonable following with individuals putting deposits on the concepts design; it was that good.

Source: carmagazine.co.uk

Clearly, GM was not thinking clearly from a marketing perspective. Before revealing this concept, the company should have put the car through its paces and determined if aerodynamic changes were necessary. Maybe “the General,” will figure this out after they see an exodus from the waiting list.

Source: carmagazine.co.uk

The car’s rather blasé styling leaves me cold. I was holding higher expectations for such a ground breaking car. Perhaps I became a victim of the over hyped media blitz this car is receiving.

Does anyone else think this car’s styling is eerily similar to the Honda Civic? To clarify, I am speaking of its front-end. That is not necessarily a bad thing, as I feel the Civic has a nice, conservative look to it.

Source: myride.com

It would have been nice to see something original and groundbreaking for this auto. Kind of like the concept.

In other news, the company announced plans to build a new $370 million plant to produce four-cylinder engines for the Volt as well as other models.

rp

When it Rains it Pours.

Although the soul intent of this site is to provide automotive commentary, this is too big of a story to ignore.

News is breaking nearly every minute. I have been watching Marketwatch, Bloomberg and CNN in disbelief since 12:00 midnight.

The stories get worse every second.

MER and BAC in talks? What?! Now BAC is buying MER? What the hell?

LEH's suitors turned and walked? LEH is filing chapter 11. Wow.

$70 billion fund being set up? What is this?!

AIG is looking for a $40 billion loan from the Fed? How can this happen?

All hell is breaking loose on the street early Monday morning.

God help us all.

rp

Challenger Report: Painting an Ugly Picture

With the financial industry in chaos, thank you Lehman Brothers, the auto sector is looking quite subdued right now.

But wait, there’s more.

Challenger, Gray & Christmas is the nation’s first and oldest outplacement consulting firm. You know what that means; these are the job cuts guys. The firm’s most recently released report displays some rubbish numbers for the auto industry, which lead August in job cuts.

To be more specific, automotive accounted for 17,233 job cuts - a nice chunk out of the 88,736 cuts for August. Year-to-date, the automotive industry has tallied up a significant 80,323 cuts. This is nearly an 83 percent increase year-over-year from 43,897 cuts in August 2007.

Data: Challenger, Gray & Christmas

When I spoke with John Challenger, CG&C’s Chief Executive Officer, in July, he did not seem to believe we would surpass one million cuts for the year. Granted, many things have changed since and it appears that the markets will breach that epic number.

In his latest report, Challenger said “We have not seen this level of summer job cutting since 2002, when the country was still struggling to recover in the wake of the 2001 recession and September 11.”

I assume that at the current pace we will reach somewhere in between the levels of 2002 and 2003; approximately 1.2-1.4 million job cuts for the year 2008. Please note the graph “Yearly Job Cuts.” You can see the level we are at year-to-date compared to previous year totals.

Data: Challenger, Gray & Christmas

Clearly, this will yield a sizable impact on the auto builders. Not only will they be shedding staff to compensate for their cash burns, the companies will also experience even poorer sales due to less consumer spending.

With this in mind, I reinforce my position on September’s US SAAR Total Sales data coming back weaker from August.

Get out your helmets. It is going to be a rough ride into 2009.

rp

What Happened to Free Markets?

Another bailout? Again? Could it be possible?

Yes. Unfortunate but true, it is becoming more common talk that we could see another bailout with the automakers stepping into the batter’s box.

As my prior write-up noted, sales remain to struggle even taking into account August’s seasonality. Not very positive looking charts, down below. Year-over-year the “Big three,” have taken on serious debts and have managed to align themselves in an unfavorable position regarding their model offerings.

Now, the United States government has aided in two bailouts - namely Bear Stearns and the Fannie/Freddie debacle – and this has the auto industry feeling as though they deserve their fair share. Thus, this has raised the chatter on a possible automotive industry bailout due to the sizeable losses which have been reported from the domestic builders.

This is a tough situation.

On one hand, the government has to look to protect the workers of the automotive industry and guard the US economy. Remarkably, the US economy has managed to prevail relative to the damage already done. It is a wonder if this could be the final straw.

The other hand paints a different picture, depicting the government star-gazing as the manufacturers fail or consolidate to stay afloat.

American auto manufacturers got away with producing over-sized vehicles for far too long and the industry is paying the piper. To analogize, the American OEMs faltered precisely where the big banks ran astray - they got greedy. General Motors, Ford and Chrysler all had high margin truck portfolios which yielded big rewards; unfortunately, risk reared its ugly head.

The past year has provided some stellar collapses. Real estate, mortgage-backs and now sport utility vehicles. Unfortunately, there are going to be repercussions for these firm’s actions. The only way I can see the playing out is through mergers or consolidations.

Welcome to the SUV bubble.

rp

August SAAR data: A Fluke.

Although we are currently in one of the greatest eras for automobile development and innovation, sales are still tanking.

August’s US SAAR total sales have painted a reasonably grim picture. You may ask, “how?” or “why?” The approximate 1.2 million vehicle sales increase can be seen as artificial due to the incentives that you can find on 2008 models and gas guzzling sport utility vehicles.

Data: Bloomberg

A CNN report implied that due to oil’s recent pull back, currently near $106 per barrel, consumers are starting to get back into sport utility vehicles. Check the 8th and 9th paragraph of that story. I am not sure if I believe that as I do not see gas prices below $3.50 in my region; what would motivate someone to run out and buy a SUV?

Are the incentives that good? What does it matter if you pay your savings back in gas bills during the vested life of the vehicle?

Back to the SAAR data. Another crucial point which must be taken into consideration is that during this time of year, auto dealers are attempting to push out as many of the prior year’s cars out of their inventory before the new models are introduced. There is a seasonal re occurrence and you can see it on the Domestic Sales and Japanese Sales charts.

Data: Bloomberg

Last August, Domestics and Japanese autos saw a nice up-tick in their respective sales. This year, it appears that General Motors is seeing a similar trajectory while Ford and Chrysler are struggling. The Japanese are fairing well with similar trends in respect to last year.

Data: Bloomberg

Essentially, after taking into consideration the seasonality of August’s numbers, as well as the significant increase in incentives I can not foresee this year’s car sales to remain on this upward trend. I am calling August a fluke. It is extremely negative to see that Ford and Chrysler are struggling with sales this past month when there should have been an improvement in sales given the current incentive programs and 2008 model year liquidations.

Out of curiosity I inserted trend lines into these charts and it appears the only company which is doing well sales-wise is Honda. The company, known for its gas-sipping cars, recently surpassed the Ford F-150 as the most sold model in a given month - Three cheers for the Honda Civic. Pretty earth-shattering news for the car world.

If you want to see how bad things have gotten, look at the year-over-year numbers. They will turn anyone who is not squeamish a nice shade of green. US SAAR has declined nearly 16% while the big three, General Motors, Ford and Chrysler lost 20%, 25%, and 34%, respectively. The Japanese are doing much better albeit not well by any means; Toyota’s sales lost 9% YOY while Honda dropped 7% in sales.

The Domestics will have to keep their chin up during this time of distress and pray their new models and changes reverse their losses. Good luck, boys.

Watch for next month's SAAR data to downtrend, I can not see it rising or going flat.

rp

Lexus IS-F: Ready to Rumble

Published this week, on Monday, was my first auto review.

Essentially, it details the experience of having an IS-F for several days. Thankfully, I was able to tack on an extra 500 miles onto its odometer while gaining further insight into the latest technology coming out of Japan.


Take a look and I am sure you will walk away with a different perspective on Japanese autos and their future in the United States.

rp

Small Cars Coming Back in a Big Way

As we have been seeing many firms beginning to change their model line-ups due to depressed sales and higher energy costs, small cars are back.

Source: NYTimes
Car: Volkswagen space up! Concept

A great article in a recent publication of Winding Road, the online magazine details future pint-sized options and gives insight into upcoming offerings. If you are interested in the future of small cars and what it will hold, I highly suggest checking this out.

Particularly interesting to me are the new Volkswagen Scirocco and the Alfa Romeo MiTo. Both are beautiful examples with fantastic styling and decent drivetrains.

Personally, I harbor a love for the Scirocco because the 197hp engine mated to a DSG transmission is fantastic. I yearn for throttle-blipping.

I am crossing my fingers Volkswagen gets their reliability in check. As an original owner of the 2004 Volkswagen Touareg, nicknamed “disaster” by yours truly, I have a pretty good idea of what VW can do to ruin an awesome machine.

Check out the feature, it is a worth while read.

rp