Michigan Automotive News

Army veteran admits to faking paralysis to avoid going to Iraq and filing false suit against Ford for product liability

Sat, 07 Nov 2009 15:09:45 UTC

An Army veteran admitted in federal court Friday that he plotted with his wife to bilk the U.S. government by faking paralysis after a car wreck to get disability benefits and avoid being deployed to Iraq. Jeffrey Rush, 27, also pleaded guilty to fraud charges tied to his product-liability lawsuit against Ford Motor Co. and a seat-belt maker over...

Jeffrey Rush, 27, also pleaded guilty to fraud charges tied to his product-liability lawsuit against Ford Motor Co. and a seat-belt maker over the 2004 rollover accident he claimed led to his becoming a paraplegic.

Federal prosecutors alleged Rush, now of Nashville, Tenn., and wife Amy Rush, 25, stood to get millions of dollars in their scam, much of it in the Ford lawsuit that unraveled and eventually was dropped by their attorney when he figured out he was being duped by the couple.

As part of the scheme, court records show, Rush wrongly got $107,857 in benefits from the Department of Veterans Affairs and scammed an additional $28,730 from the Social Security Administration. Court documents and discussions offered no details on how Rush perpetuated the scheme.

Rush, standing upright in court Friday with shoulders slouched and hands folded in front of him, pleaded guilty to two fraud conspiracy counts and one count apiece of mail fraud and making false statements to the Social Security Administration.

Rush, who entered the pleas without any deal with prosecutors, faces up to 65 years in prison and $1 million in fines when sentenced Feb. 17. He remains free on bond. Amy Rush pleaded guilty last month to similar charges and awaits Jan. 22 sentencing.

Jeffrey Rush was assigned to the 24th Transportation Company at Kansas' Fort Riley in June 2004 when that outfit was warned it would be deployed "in the near future" in support of troops in Iraq.

Five months later, Rush was involved in a one-car rollover accident with his own vehicle. Several times afterward, Rush told medical specialists he could not walk and had lost bowel and bladder control, baffling doctors who could not pinpoint the source of his paralysis.

Rush's Army company was deployed to Iraq some seven weeks after the wreck.

Over the next several months, Rush insisted in requests for compensation and special housing that he couldn't move from the waist down, eventually getting a medical discharge from the Army in July 2005 and drawing $2,700 in monthly VA benefits.

On Dec. 9, 2005, in St. Clair County, the Rushes sued Ford and the maker of the seat belts used in Rush's 2002 Explorer Sport Trac, blaming both companies for his supposed paralysis and his wife's resulting "loss of consortium and conjugal relations." The Rushes went on to have a child in July 2006.

The lawsuit demanded at least $400,000 in damages, though the Rushes' attorney, Bruce Cook, had reached a $6 million settlement in another case involving a similar vehicle. The lawsuit came just weeks after the automaker supplied Rush with a van worth $32,674.

Cook told The Associated Press on Friday that it became clear he was being duped by the Rushes, who he said fumbled for an explanation of how Amy Rush got pregnant and how the supposedly wheelchair-bound Rush's legs stayed so muscular despite their claimed lack of use.

Cook said he dropped the lawsuit in April 2006 and apologized to Ford.

AP Sources: GM Europe CEO Carl-Peter Forster to leave post

Fri, 06 Nov 2009 16:17:19 UTC

Two people briefed on the decision say Carl-Peter Forster, the chief executive of General Motors Europe, will leave the company.

AP File PhotoCEO of General Motors Europe Carl Peter Forster, right, and CEO of General Motors, Detroit, Fritz Henderson, left, wait for the start of a meeting at EU headquarters in Brussels, Friday March 13, 2009.
Two people briefed on the decision say Carl-Peter Forster, the chief executive of General Motors Europe, will leave the company.

One of the people said Friday that Forster will be replaced temporarily by Nick Reilly, who is now president of GM's international operations. GM will search for a permanent new CEO of GM Europe.

The two people asked not to be identified because the decision has not been made public.

The moves come after the GM board decided this week to keep its European Opel and Vauxhall units. The board rejected a plan to sell a majority stake in Opel to a group led by Canadian auto parts maker Magna International Inc. and Russian lender Sberbank.

One of the people also says that Hans Demant will remain on as head of the Opel management board.

GM CEO Fritz Henderson: US aid can be used to fix Opel if needed

Thu, 05 Nov 2009 18:33:23 UTC

General Motors Co. could tap some of the $50 billion in aid it has received from the U.S. government to help finance its plan to restructure its European Opel unit, GM's top executive said Thursday. But CEO Fritz Henderson said it would do so only if necessary and would try to finance the $4.5 billion (3 billion euros) restructuring...

AP File PhotoIn this July 10, 2009 file photo General Motors Corp. CEO Fritz Henderson addresses the media during a news conference at the company's headquarters in Detroit.

General Motors Co. could tap some of the $50 billion in aid it has received from the U.S. government to help finance its plan to restructure its European Opel unit, GM's top executive said Thursday.

But CEO Fritz Henderson said it would do so only if necessary and would try to finance the $4.5 billion (3 billion euros) restructuring with loans from European countries, money generated by Opel and by reducing royalties that Opel pays GM for use of technology.

Henderson's statements come two days after GM's board shocked German leaders and labor unions by rejecting a plan to sell 55 percent of Opel to a partnership of Canadian auto parts supplier Magna International Inc. and Russian lender Sperbank.

The move angered politicians and labor leaders, who had expected the Magna deal to go through. Fearing widespread layoffs, thousands of Opel workers walked off the job across Germany Thursday in protest.

Just how much of the financing would come from European governments and GM will be the subject of negotiations that will get under way soon.

Henderson said GM is refining a plan to revive the struggling Opel and will present it soon to governments in Germany, Spain, Great Britain and Poland, as well as labor unions.

GM could be forced to fund the bulk of the plan through royalty cost reductions or even direct aid from U.S. operations, but it is hoping to get most of the money from governments. Taking Opel into insolvency also is an option, although it is not preferred by GM.

Henderson said GM's first loan agreement with the U.S. government last December prohibited spending money anywhere but the U.S. However, aid granted in August after GM left bankruptcy protection allows money to be spent in other countries, he said.

"We certainly need to be prudent about it, be very careful about it, but we do have the ability to run a global business," he said.

He also said Opel's cash situation has improved with a recovering European auto market.

Henderson conceded that GM has a lot of work to do to fix its relationship with European labor unions. Unions agreed to cost concessions to make the Magna deal work but said it would withdraw them now that GM has nixed the deal.

The automaker has said it would cut about the same number of jobs as Magna would have, or about 10,500, or 20 percent of Opel's work force. Henderson would not give details of which plants would be closed.

GM also would have helped support the Magna deal through royalty payment reductions, said John Smith, the company's chief negotiator in the Opel restructuring. He said in an interview Thursday that GM has a greater chance of success in restructuring Opel than Magna because of its knowledge of the auto business and because it won't have to get other investors to agree with decisions.

"We will be better able to implement this plan," he said.

Ford to unveil air bag seatbelts in 2011 Explorer

Thu, 05 Nov 2009 12:18:48 UTC

Air bags have long been mounted in the steering wheel, dashboard and sides of vehicles. Now, they're in the seat belts.

AP PhotoIn this photo made Monday, Nov. 2, 2009, Edward DeSmet, left, technical specialist, Global Seatbelts, Body Engineering and Srini Sundararajan, right, technical leader, Passive Safety, Research and Advanced Engineering adjust a crash dummy with an inflatable seat belt on a demonstrator at Ford Motor Co. in Dearborn, Mich. Ford Motor Co.

Air bags have long been mounted in the steering wheel, dashboard and sides of vehicles. Now, they're in the seat belts.

Ford Motor Co. plans to introduce seat belt-mounted air bags in the back seat of the 2011 Ford Explorer sport utility vehicle, which will hit the market next fall. Ford says it's the first automaker to mass produce the technology.

The belts have a cylindrical air bag that stretches from the buckle to the shoulder and fits inside a pocket sewn into the belt. If the air bag is needed, the car sends a signal that releases the bag. It inflates more gently than a front air bag, and with cooler air, so it's safer for children.

Srini Sundararajan, the Ford engineer who was chiefly responsible for developing the seat belts, says the wider belts and bags help distribute crash forces across the occupant's chest, so there's less chance of a serious injury. They also help support the occupant's head and neck.

"The top two lifesaving devices today are the seat belt and the air bag. This combines them into one great feature," Sundararajan said.

Ford has been working on the technology for a decade and had to overcome numerous challenges bringing it to market.

For example, front air bags are powered by a pyrotechnic device that generates hot gas. They also deploy very quickly because they need to cover a greater distance before they reach the driver or passenger. Seat belt air bags don't have that distance to cover, so they can deploy more gently, although Srini said they're still fully deployed in a tenth of a second. They also use cold gas technology.

Ford introduced a back-seat air bag concept at the North American International Auto Show in Detroit in 2001, but the inflator was located in the trunk and it rattled around too much, bothering drivers, Sundararajan said.

Ford also did a significant amount of testing to make sure the bags would protect children, even if they're sleeping and their heads are drooping. The belt also works with booster seats.

Sue Cischke, Ford's group vice president for sustainability, environmental and safety engineering, wouldn't say how much the belts with air bags will cost, but she did say the technology is expensive. They will be available as an option at first, since some drivers — particularly those without children — may not feel they need them.

"With any new safety technology, you have to do a lot to educate the consumer," she said. "We're not sure what people will value with this."

Cischke said the Explorer was chosen for the new seat belts because it's popular with families and has also been a platform for other safety introductions, such as side-curtain air bags and stability control. Cischke said the price could come down substantially if Ford decides to put the seat belts on other vehicles.

Edward DeSmet, a technical seat belt specialist at Ford, said test subjects found the padded belts even more comfortable than regular ones. He hopes that leads more people to use them. U.S. seat belt usage in back seats is still at a dismal 60 percent, compared with 83 percent in the vehicle as a whole, DeSmet said.

GM's Opel move raises anger, new uncertainty

Thu, 05 Nov 2009 06:36:58 UTC

General Motors Co.'s decision to scrap the sale of European subsidiary Opel raised new uncertainty Wednesday over the unit's future, astonishing politicians in Germany and Russia, and prompting workers to plan walkouts in protest. The GM board's unexpected decision to call off the sale to auto parts maker Magna International Inc. and Russian lender Sberbank was a startling end...

AP File PhotoThe sun reflects in an Opel logo in Bochum, western Germany.General Motors Co.'s decision to scrap the sale of European subsidiary Opel raised new uncertainty Wednesday over the unit's future, astonishing politicians in Germany and Russia, and prompting workers to plan walkouts in protest.

The GM board's unexpected decision to call off the sale to auto parts maker Magna International Inc. and Russian lender Sberbank was a startling end to months of haggling in which Chancellor Angela Merkel and other German leaders had strongly backed the deal.

Now German workers worry GM will make even more cuts to return Opel to profit than Magna would have. Still, the decision won a cautious welcome from union officials in Britain and Poland, where workers had feared possible cutbacks in a Magna takeover.

John Smith, GM's chief negotiator for the sale of Opel, said in a conference call Wednesday that GM's plan was similar but not identical to that presented by Magna and Sberbank, which had called for the elimination of 10,500 European jobs or about 20 percent of the work force. Smith did not elaborate on possible job losses.

"We feel that ... once people have a chance to look at it closely, if they liked the Magna plan, they will also like" GM's plan, he said. "We're going to let the plan speak for itself."

"We'll very soon present to the European governments" the plan, Smith said. He added that GM hopes "to arrive by the first quarter at a restructuring plan with the governments and the unions."

GM's decision handed Merkel's new center-right coalition government an unwelcome test just a week after taking office. German officials swiftly demanded a restructuring plan from Detroit and vowed to recover by Nov. 30 a €1.5 billion ($2.2 billion) bridge loan granted to keep Opel afloat as a buyer was sought.

"We will get the taxpayers' money back," new Economy Minister Rainer Bruederle told reporters. "Dealing with employees in this way eight weeks before Christmas is in no way acceptable," he added.

GM's Smith said the U.S. automaker would repay the loan "if we're requested to do so" by Germany.

"We've already begun to repay some of the bridge loan," Smith told reporters on the conference call. "All that is outstanding is roughly €900 million."

Merkel, who was flying home from a speech to the U.S. Congress when GM announced its decision, made no public comment Wednesday, but officials made clear their annoyance.

Spokesman Ulrich Wilhelm criticized GM's "surprising 180-degree turn" and said Merkel may soon speak with President Barack Obama about the issue. GM is majority owned by the U.S. government, which said it wasn't involved in the decision to keep Opel.

On Wednesday, Merkel spoke with Opel's chief employee representative, Klaus Franz, who said it was "a black day for Opel."

There was a furious reaction from the governor of Germany's most populous state, North Rhine-Westphalia — which is home to Opel's Bochum plant and holds elections next May that will offer a crucial test for Merkel's new governing coalition.

"After many promises and months of negotiations ... GM has left workers out in the cold," said Juergen Ruettgers, a deputy leader of Merkel's party. "This attitude from General Motors shows the ugly face of turbo capitalism. It is completely unacceptable."

Russia, which had backed the Magna-Sberbank plan, also was caught by surprise.

"The decision by GM to turn down the deal was astonishing," state news agencies quoted Prime Minister Vladimir Putin's spokesman, Dmitry Peskov, as saying.

Germany had promised €4.5 billion in further financing to support plans for Magna and Sberbank to take a 55 percent stake in Opel — a pledge that drew concerns from the European Union's competition commissioner.

With those plans off the table, Germany appeared unenthusiastic about pledging any new support — though it wasn't ruling it out.

"General Motors has the right to make an application, we have the duty to examine this application, and the outcome of this is open," Bruederle said.

GM, which said the European business environment and GM's health have both improved since the company put up Opel for sale, put the cost of restructuring at €3 billion.

Unions and employees had offered cost-cutting concessions to ease a Magna deal, such as forgoing pay increases, that are now off the table. GM will face a new battle to secure concessions for its own plan — and raised the prospect of a bankruptcy if it is blocked.

"It is in the interest of the unions to negotiate a deal with GM," GM Europe spokeswoman Karin Kirchner said. Failure to restructure "would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved."

However, German labor representatives were defiant.

"We won't help shape the way back to General Motors," Franz said. "Instead, we'll take up our classic function of defending the workers."

Franz said workers would start brief work stoppages Thursday. Rudi Kennes, another employee representative, said workers at the Antwerp plant in Belgium, whose future is uncertain, would walk off shifts on Friday and Sunday to warn GM against job cuts.

In Spain, Industry Minister Miguel Sebastian said Madrid would not make concessions to GM beyond a deal it had with Magna to accept 900 job cuts at Opel's Zaragoza plant.

"We are not willing to budge even an inch," he said.

The mood was different in Poland and Britain, where workers had feared pressure to save jobs in Germany would leave them bearing the brunt of cutbacks.

Magna had said it planned to cut about 10,500 of the 50,000 jobs at Opel and sister brand Vauxhall in Europe, with less than half the job cuts, or around 4,500, in Germany — home to around half the work force. It also said it would keep all four German plants open.

"The future is still uncertain, but our fear is smaller," said Miroslaw Rzezniczek, a Solidarity union official at the Gliwice plant in Poland. "Magna ... did not want to guarantee that our plant will not be closed."

Despite the lack of details, "I am pleased we will be dealing with GM because we know them and we understand their culture — and they know us," said John Featherstone, a Unite union official at Vauxhall's Ellesmere Port, England plant.

There was plenty of resignation, but little optimism, at the Ruesselsheim plant in Germany, where Adam Opel GmbH has its headquarters.

"They led us all around by our noses," worker Michael Kleinmann said. "They're not interested in the fate of individuals."

Co-worker Ali Yildiz said: "Now everything's possible again, just like a year ago."

Analysis: Clunker pickups traded for new pickups

Thu, 05 Nov 2009 00:44:23 UTC

The most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

AP File PhotoThe most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.The most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

The single most common swap — which occurred more than 8,200 times — involved Ford F150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

Owners of thousands more large old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only barely improved mileage in the middle teens, according to AP's analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state. Those deals helped the Ford F150 and Chevy Silverado — along with Ford's Escape midsize SUV — climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-for-truck and truck-for-SUV deals totaled at least $911 million.

In scores of deals, the government reported spending a total of $562,500 in rebates for new cars and trucks that got worse or the same mileage as the trade-ins — in apparent violation of the program's requirements. The government said it is investigating those reports and said in some cases they were probably entered incorrectly by dealers or based on outdated fuel economy figures.

The National Highway Traffic Safety Administration is still reviewing the reports, and any dealers that submitted invalid trade-ins will be directed to return the government rebate, spokesman Eric Bolton said Wednesday.

The new data, obtained by the AP under the Freedom of Information Act, include details of 677,081 clunker trade-ins processed by the government through Oct. 16. More than 95,000 of the new vehicles purchased under the program — or about one in seven — got less than 20 mpg, according to the data.

The new figures, requested four months ago by the AP, represent the first substantial outside accounting of the clunkers program, lauded by the White House and the Transportation Department for improving fuel economy, stimulating sales and taking the dirtiest vehicles off the road. The data show the average fuel economy was 15.8 mpg for the old vehicles and 24.9 for the new ones. But plenty of consumers bought relatively low-mileage trucks and SUVs with the help of government checks.

"If we're looking for the environmental story here, we're going to be disappointed," said Jeremy Anwyl, chief executive at Edmunds.com, an analyst firm. "It might have started out from the perspective of improving the environment, but it got detoured as a way to stimulate the economy."

Popular high-mileage commuter cars including the Toyota Corolla, Honda Civic, Toyota Camry and Ford Focus also were among the Top 10 most popular new vehicles bought under the four-week program, with 105,280 of those models sold for a total of about $2 billion.

Bolton, the NHTSA spokesman, said Wednesday the program "proved to be a win for the economy and the environment" because it helped financially struggling dealerships and auto manufacturers and because, under the program's rules, clunkers necessarily were replaced with vehicles that got better mileage.

Chris Moss of Smithtown, N.Y., traded in his 1992 white Ford F150 pickup — "it had 5 million miles on it and needed $50,000 in repairs, if you know what I mean" — for a new Chevrolet Malibu hybrid for his wife. When he drove his old truck to the dealership's back lot with the rest of the clunkers, "90 percent of what you saw were old 150s and Explorers," he said. Moss posted a video on YouTube of his old truck's final day, called "Rust In Peace."

The $3 billion program, known officially as the Car Allowance Rebate System, ran from July 27 to Aug. 25 and generally required that new vehicles get better mileage — at least 22 mpg for cars and either 15 mpg or 18 mpg for trucks depending on class — and that trade-ins get no more than 18 mpg. The trade-ins were required to be destroyed in exchange for either $3,500 or $4,500 rebates.

"The value that the customer got for a lot of these vehicles was just a gift, no question," said Scott Pundt, sales vice president for the Dorschel Group of Rochester, N.Y., the No. 4 dealership in the U.S. with 592 vehicles sold under the program. "We were appraising 220,000-mile vehicles that were really rough, and they were getting $3,500 or $4,500 for them." Four out of five old cars turned in there exceeded 100,000 miles.

Some deals raise eyebrows:

— In at least 145 cases, mostly involving trucks, the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. The government said it was continuing to investigate. A driver in Negaunee, Mich., traded a 1987 Suburban that got 18 mpg for $3,500 toward a new Silverado pickup that got only 15 mpg. An Indianapolis driver traded a 1985 Mercedes 190 that got 27 mpg for $3,500 toward a new Volkswagen Rabbit that got only 24 mpg. "It's possible some quirky deal slipped through the cracks," Anwyl said.

— In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.

— A driver in Arlington, Va., traded a 1999 Ford Explorer with 15 mpg in July for $3,500 toward a new $28,000 Jeep Commander that weighs about 4,700 pounds and gets 16 mpg.

— In at least 32 deals, drivers traded older vehicles for new large trucks — including versions of Toyota Tundras, GMC Sierras, Chevrolet Silverados, Dodge Rams and Ford F150 pickups — that got only 14 mpg.

— A driver in West, Texas, earned $4,500 in July in exchange for a 1989 Chevrolet Suburban SUV that got 14 mpg and bought a 2009 Suburban that weighed 5,900 pounds and got 16 mpg. Across Texas, seven of the 10 most common transactions involved drivers trading old pickups for new ones.

Car-crazy California led clunker sales with more than 76,000 trade-ins, followed by Texas with roughly 43,000 and New York with nearly 37,000. In California, the Honda Civic was the No. 1 new car and no pickups ranked higher than 18th. In New York, the Hyundai Elantra was No. 1.

The clunkers program was very good for Longo Toyota of El Monte, Calif., just east of Los Angeles, which sold more than twice as many vehicles under the program as any other dealership in the country, worth more than $30 million. That sole dealership was responsible for 1,432 sales worth nearly $6 million in clunkers rebates, mostly from its sales of 323 Toyota Camrys, 277 Corollas and 171 Priuses.

"We knew it was just a matter of when, not if, we were going to get paid, so we kept our foot on the gas," Longo president Tom Rudnai said Wednesday.

The next-best dealership was Price-Simms Inc. of Sunnyvale, Calif., with 672 sales of vehicles worth about $16.1 million, mostly from its sales of 213 Priuses and 134 Camrys.

Pundt said his dealership in Rochester advertised aggressively to consumers and operated three shifts of employees to submit claims. "We had people in here through the middle of the night, working 2 a.m. until 7 a.m.," he said. "The computer was so slow."

Can Fiat-Chrysler CEO Sergio Marchionne save Detroit automaker?

Thu, 05 Nov 2009 00:36:37 UTC

Auto executive offered ambitious outlook Wednesday for struggling automaker.

AP PhotoChrysler Group LLC CEO Sergio Marchionne arrives for a news briefing at the automaker's headquarters in Auburn Hills on Wednesday. AUBURN HILLS -- Here we go again.

Chrysler Group LLC, it seems, needs to be saved from oblivion about once a decade.

Now, it's Fiat SpA's turn.

My initial impression after listening to a six-hour presentation on Chrysler's five-year business plan at the company's headquarters Wednesday: Fiat-Chrysler Chief Executive Officer Sergio Marchionne has a whale of a job on his hands.

Marchionne, dressed in his trademark black crew-neck sweater, quickly tried to knock down speculation Chrysler is running short of money just five months after exiting bankruptcy.

Chrysler had $5.7 billion in cash at the end of September, up from $4 billion in June, Marchionne said.

He added Chrysler broke even on an operating-income basis in September.

Chief Financial Officer Richard Palmer predicted Chrysler will generate an operating profit of as much as $5.2 billion by 2014.

Finances are improving, even though Chrysler's sales are down 39 percent this year, Marchionne asserted.

"The new Chrysler is being increasingly parsimonious these days, i.e. cheap," he said about corporate spending to about 400 analysts, dealers and journalist.

Badly-needed new products are on their way.

The Fiat 500, a hit in Europe, will be sold in many metro-area Chrysler dealers by the end of next year. But will the tiny 500, about the size of BMW's Mini, be too small for mainstream American buyers?

Chrysler also will have to survive mostly on refreshed current models over the next two years until nearly a dozen new models, mostly developed by Fiat, go on sale. That will be a dicey proposition in a highly competitive market.

In a projection that seems awfully ambitious, Chrysler is planning to more than double sales in the United States, from 950,000 this year to 2 million in 2014.

Palmer said Chrysler intends to pay off its federal loans in full by 2014.

Even President Barack Obama's Administration and the General Accounting Office do not expect that to happen.

The federal government, which owns 10 percent of Chrysler, has loaned the company $15.5 billion since December.

A parade of Chrysler executives expressed confidence that they can restore the troubled automaker to prosperity.

"The lights simply never turn off around here anymore," said Ralph Gilles, president of the Dodge brand. "We plan to make some history."

But this is a company that has been pummeled by a disastrous merger with German automaker Daimler, the inability of subsequent owner Cerberus Capital Management LP to fix a myriad of problems and a collapse in U.S. auto sales.

It was sobering to hear how the basics of automaking -- developing new products, parts purchasing and quality -- were broken at Chrysler.

"When I arrived at Chrysler two years ago, there was no definition of quality," said Doug Betts, senior vice president of quality.

In 2007, it took 71 days to fix a vehicle problem after it was discovered, he said.

It's no wonder Marchionne never wears a coat and tie. With all the work to be done at Chrysler, he doesn't have time to put them on.

THE PLAN

Auburn Hills-based Chrysler Group LLC plans to overhaul its vehicles with technology from Italian partner Fiat SpA, saying it has the cash to pay for it -- assisted by the federal government and lower operating costs:

• Chrysler has improved cash position from $4 billion in June to $5.7 billion on Sept. 30.

• Projects doubling of U.S. sales to 2 million cars and trucks by 2014.

• About a dozen new Chrysler, Dodge and Jeep models will be introduced by 2013. More than half will be developed from Fiat's vehicle platforms.

• Chrysler expects to earn an operating profit of as much as $5.2 billion by 2014.

Source: Chrysler Group, LLC/Fiat SpA

E-mail Rick Haglund: rhaglund@boothmichigan.com

Chrysler aims to revamp Dodge cars under new plan

Wed, 04 Nov 2009 18:17:09 UTC

Chrysler plans to revamp its struggling Dodge car brand under a new turnaround plan and says the company's cash has grown by nearly $2 billion since it exited bankruptcy protection in June.

AP PhotoThe Fiat 500 is seen at the Chrysler Group LLC headquarters in Auburn Hills. Chrysler flopped in the midsize sedan market, the largest and most competitive for American cars. Now, new Italian management is promising to change that by bulking up a small Fiat for U.S. drivers.AUBURN HILLS — Chrysler plans to revamp its struggling Dodge car brand under a new turnaround plan and says the company's cash has grown by nearly $2 billion since it exited bankruptcy protection in June.

Under the plan, the automaker aims to introduce four new Dodges by 2013 and put new exteriors, interiors and engines on most of its current lineup. The new Dodges include a mid-size sedan for the North American market designed by Fiat SpA, the Italian automaker that now owns 35 percent of Chrysler.

That sedan is a key component of Chrysler LLC's five-year overhaul, which is being outlined here Wednesday. Chrysler currently lacks a competitive product in the segment, the largest in the U.S. car market.

But it will be tough to win back U.S. consumers, who are skeptical of Chrysler's quality. The automaker's sales are down sharply this year as a weak U.S. economy curbs overall demand for autos and buyers flee to other brands.

The 84-year-old Chrysler lost upward of $8 billion last year and would have run out of cash had the U.S. government not stepped in with $15.5 billion in aid. Chrysler was forced into bankruptcy protection earlier this year.

Chrysler CEO Sergio Marchionne said Wednesday the automaker's cash has grown by $1.7 billion since it exited Chapter 11 this summer and totaled $5.7 billion at the end of September. He also said Chrysler was breaking even in that month.

Chairman C. Robert Kidder said the company intends to go public and repay its loans "with all deliberate speed."

But the automaker will also need to offer better cars to improve its fortunes. Chrysler's current mid-size offerings are the Sebring and Dodge Avenger, which sell poorly and have received low marks from Consumer Reports and others.

Sebring sales were down 71 percent during the first 10 months of this year, while Avenger sales were off 45 percent. The Auburn Hills-based company has sold only 44,000 of both models combined, far short of the 294,493 Camrys sold by Toyota, the top-selling car in the U.S.

Another key to Chrysler's revival is whether it can tackle quality problems. Doug Betts, senior vice president of quality, said that work is under way.

He said the company has been restructured so the 14 teams focusing on specific areas act quickly to resolve problems.

When he arrived late in 2007, it took 71 days for someone to begin working on a problem, so the Chrysler's ability to raise its quality fell behind rivals.

"Seventy-one days goes to zero days," Betts said.

Fiat has plans to replace most of Chrysler's engines with its own. Paolo Ferrero, senior vice president of powertrain, said the number of Chrysler-designed engines will drop to 12 percent by 2014 from 84 percent currently, with many larger engines replaced by smaller, four-cylinder ones.

Chrysler CEO Marchionne: cash up more than $1B since emerging from bankruptcy

Wed, 04 Nov 2009 16:53:16 UTC

Chrysler is announcing a new business plan at a daylong event today, including the introduction of three new Dodge cars by 2013 and new exteriors, interiors and engines on most of its current lineup.

AP PhotoChrysler Group LLC CEO Sergio Marchionne arrives for a news briefing at the automaker's headquarters in Auburn Hills on Wednesday.AUBURN HILLS — Chrysler CEO Sergio Marchionne says the automaker is on firmer financial footing as it attempts to revive the company's sagging fortunes.

Chrysler is announcing a new business plan at a daylong event Wednesday, including the introduction of three new Dodge cars by 2013 and new exteriors, interiors and engines on most of its current lineup.

A key component of the plan is a midsize sedan based on a bulked up Fiat design. Chrysler hopes the car will make it more competitive in midsize sedans, the largest segment of the U.S. car market.

Marchione says Chrysler had $5.7 billion in cash at the end of September, up more than a billion dollars since the company emerged from bankruptcy protection in June. He also says Chrysler was breaking even for the month of September.

GMAC Financial Services 3Q loss narrows

Wed, 04 Nov 2009 16:01:14 UTC

NEW YORK — GMAC Financial Services, the main lender for General Motors Co. and Chrysler Group LLC, said Wednesday it loss narrowed to $767 million in the third quarter, as its auto lending unit made money while its home mortgage unit reported another loss. The company's earnings report comes a week after the Treasury Department said it was in...

AP File PhotoIn this file photo taken Thursday, April 30, 2009, a GMAC sign is shown at a GM/Chrysler dealership in Oakland, Calif.NEW YORK — GMAC Financial Services, the main lender for General Motors Co. and Chrysler Group LLC, said Wednesday it loss narrowed to $767 million in the third quarter, as its auto lending unit made money while its home mortgage unit reported another loss.

The company's earnings report comes a week after the Treasury Department said it was in talks with the New York-based lender over a third round of taxpayer aid. Neither GMAC nor a Treasury spokeswoman offered any updates on those talks on Wednesday.

The government mandated earlier this year that GMAC raise an additional $11.5 billion in capital by early November after undergoing a "stress test" along with 18 other banks. While other banks deemed undercapitalized have been able to raise funds from private investors, GMAC has been forced to go back to the government.

GMAC has already received $12.5 billion in loans from the U.S. government, which owns a 35 percent stake in the company. GMAC is a crucial player in the auto industry, providing loans for a large number of GM and Chrysler dealers to pay for the dealers on their lots. It also provides retail financing to many of their customers.

GMAC said its net loss was $767 million versus a loss of $2.52 billion in the same quarter last year.

The company said the results were hurt by several one-time items and by a handful of business lines that the company is discontinuing, including its consumer property and casualty insurance business and three international auto financing operations. Excluding these items, the company said it lost $77 million.

GMAC said its ResCap mortgage-lending unit continued to struggle. The unit has been hit hard by the downturn in the housing market and lost $747 million during the quarter. A large portion of the unit's loss was due to a $515 million expense to increase repurchase reserves, the company said. The unit posted a loss of $1.95 billion last year.

One bright spot was the company's auto-financing unit, which reported a profit of $395 million, compared with a year-ago loss of $379 million. GMAC said its lending to Chrysler customers more than tripled in the third quarter to $720 million. Earlier this year, the company became the preferred lender for Chrysler. The Treasury Department recently informed Chrysler's former lender, Chrysler Financial, that it would have to shut down by the end of 2011.

GMAC also runs an online banking unit called Ally Bank, which offers comparatively high interest rates and has attracted a large number of new depositors recently. Deposits rose by $2.3 billion during the quarter, GMAC said.

Its insurance segment — whose results exclude the discontinued property and casualty insurance businesses — earned $81 million during the quarter, up from $73 million last year.

TRW Automotive turns 3Q profit on lower costs

Wed, 04 Nov 2009 14:48:40 UTC

TRW Automotive Holdings Corp. posted a third-quarter profit of $56 million on Wednesday, as cost cuts helped the auto parts supplier recover from a loss a year earlier. It also raised its full-year sales forecast.

LIVONIA -- TRW Automotive Holdings Corp. posted a third-quarter profit of $56 million on Wednesday, as cost cuts helped the auto parts supplier recover from a loss a year earlier. It also raised its full-year sales forecast.

Its shares rose 7.7 percent to $18.30 in premarket trading.

The maker of automotive safety systems attributed the improved third-quarter results to cost cutting efforts, which helped offset falling sales. TRW and other auto parts suppliers have been forced to slash costs as automakers have cut production over the last year, though the company said that trend has begun to reverse.

"The benefits achieved from our restructuring and cost containment actions combined with increasing vehicle production schedules had a significant positive impact on our third quarter results," John C. Plant, President and CEO, said in a statement.

The company said its profit for the quarter ended Oct. 2 came to 50 cents per share, well ahead of Wall Street's expectations. The company lost $54 million, or 53 cents per share, in the same period last year.

Excluding restructuring and other charges, the company earned 68 cents per share.

Revenue fell 13.5 percent to $3.12 billion from $3.59 billion a year ago.

Analysts surveyed by Thomson Reuters expected the company to report a smaller profit of 16 cents per share on $2.87 billion in revenue, on average. Such estimates typically exclude charges and other one-time items.

The company said it expects 2009 sales of $11.4 billion. Earlier in the year, it forecast between $10.5 billion and $10.9 billion.

Delphi Automotive creates new board of directors led by ex-Dupont Chairman John Krol

Wed, 04 Nov 2009 11:52:50 UTC

Delphi Automotive LLP, which exited bankruptcy protection last month, said Wednesday that it has created a new board that will be led by former DuPont Chairman John Krol.

AP PhotoA crew from Saginaw-based Midway Signs removes the 'D' from the roof of Delphi's Plant 4, in Buena Vista Township, Mich., Tuesday, Oct. 6, 2009.

Delphi Automotive LLP, which exited bankruptcy protection last month, said Wednesday that it has created a new board that will be led by former DuPont Chairman John Krol.

The Troy, Mich., auto parts supplier has also tapped General Motors executive Gary Cowger for a seat. Cowger, 62, serves as GM's group vice president of global manufacturing and labor relations but plans to retire from the company on Dec. 1.

Privately held Delphi said the remainder of the board will be filled with individuals from a variety of fields, including those experienced in electronics, finance and automotive manufacturing and supply.

Among them are Rajiv Gupta, former chairman and CEO of specialty materials producer Rohm and Haas Co., and J. Randall MacDonald, senior vice president of human resources at IBM. Other board members include Xerox Corp. Vice Chairman and Chief Financial Officer Lawrence Zimmerman and Flextronics International Ltd. CEO Michael McNamara.

"We are pleased that these talented, highly respected leaders will guide Delphi on our journey as a new company," Delphi President and CEO Rodney O'Neal said in a statement.

Delphi left bankruptcy protection in October, almost four years after its filing. Delphi emerged as a new company after completing a deal with its lenders and receiving a promise for billions in loans from GM, which once owned Delphi and buys critical parts from them.

When Delphi filed for bankruptcy protection on Oct. 8, 2005, it was the largest such filing for the industry at the time and the 13th largest in U.S. history with $17.1 billion in assets.

GM board decides to keep European Opel unit

Wed, 04 Nov 2009 02:39:24 UTC

General Motors Co. said Tuesday it will keep its European Opel unit and restructure it instead of selling a 55 percent stake to Canadian auto parts maker Magna International and its partner, Russian lender Sberbank.

AP file photoThe sun reflects in an Opel logo in Bochum, western Germany.DETROIT — General Motors Co. said Tuesday it will keep its European Opel unit and restructure it instead of selling a 55 percent stake to Canadian auto parts maker Magna International and its partner, Russian lender Sberbank.

GM's board of directors made the decision at a daylong meeting after determining that a 3 billion euros ($4.43 billion) restructuring plan was significantly lower than what GM would have had to contribute to other bidders for the division. GM CEO Fritz Henderson added that Europe's business environment and GM's overall health have both improved since it put the division up for sale.

The decision ends a year of uncertainty for the troubled Opel brand and its English sister, Vauxhall. Henderson said in a statement that GM will present its restructuring plan to the German government soon.

Ulrich Wilhelm, spokesman for Chancellor Angela Merkel said the German government "regrets the decision" by GM's board.

"With this decision, an investor process has been broken off which was conducted intensively by all those involved, including GM, over a period of more than six months," Wilhelm said in a statement. Germany now expects GM to strengthen Opel and to pay back the euro1.5 billion in bridge credit granted early this year, he added.

In a brief statement, Magna co-CEO Siegfried Wolf said his company would continue to support Opel and GM in the future.

"We understand that the board concluded that it was in GM's best interests to retain Opel, which plays an important role within GM's global organization," he said.

A spokeswoman for the Obama administration said the government was not involved in GM's decision to keep Opel.

The move came even though Opel's unions on Tuesday reached agreement with Magna for 265 million euros ($390 million) a year in cost cuts. Henderson said it will work with Europe's unions "to develop a plan for meaningful contributions to Opel's restructuring."

GM, which has lost more than $80 billion in the last four years and has received about $50 billion in aid from the U.S. government, had announced plans to sell Opel in order to focus on more profitable regions, including Latin America and Asia.

But the potential sale had been fraught with complications. In August, GM rejected a deal to sell Opel to Magna because it preferred Brussels-based investor RHJ International SA.

The offer from RHJ International required less government aid but appeared likely to involve more job cuts in Germany, something the German government had been keen to avoid as it headed into elections in September.

After Germany agreed to provide some euro4.5 billion ($6.6 billion) in financial aid for the Magna deal in September, GM announced it would sell Opel to the Magna consortium. But the deal was still set to face European Union scrutiny.

Last month, the EU set a deadline for Nov. 27 to decide whether the Magna and Sberbank takeover could cause competition problems. The EU also was considering examining German government subsidies to Opel. Germany hadn't formally asked for EU approval to give the euro4.5 billion to Opel's new buyers.

Other concerns remain. Workers have said they would rescind the pay concessions announced Monday if there is any outcome besides a deal with Magna. That could leave GM at significant financial risk. Magna had said it planned to cut about 10,500 Opel jobs in Europe, with 4,500 in Germany, but that it would keep four German plants open.

The governor of the German state of Hesse, where Opel's Ruesselsheim headquarters is located, reacted angrily to the decision.

"I am very shocked and at the same time angry that the months-long efforts to find as good a solution as possible for Opel Europe have failed because of GM," said Roland Koch, a deputy leader of Merkel's party, the Christian Democratic Union. "In view of the negative experiences of recent years with GM's business policy I am greatly concerned about the future of the company and its jobs."

Also Tuesday, Henderson said GM planned to resume work directly with Russian automaker GAZ on modernizing its operations and other projects. GM had been concerned that Magna would give some of its future auto designs to GAZ, which competes with Chevrolet.

GM Europe employs 54,000 workers in total and sells Opel and Vauxhall cars as well as Cadillac and Chevrolet. GM Europe reported a pretax loss of $1.6 billion in 2008, compared with a profit of $55 million the year before.

GM Europe has the fourth-highest auto sales in Europe, after VW Group, PSA Group and Ford Motor Co., according to the European Automobile Manufacturers' Association. European sales had fallen 6.6 percent through September, but sales of Opel and Vauxhall cars have fallen even further, with a drop of 11.4 percent.

Under a structure created earlier this year to keep Opel out of GM's filing for bankruptcy protection, 65 percent of Opel has been formally under the care of a trust since the beginning of June, with GM holding the remaining 35 percent.

The trust said in a statement late Tuesday that it "takes note of the decision." It said the GM's board's decision did not require the trust's approval.

"I hope, also in the interests of Opel employees, that this decision helps Opel to new economic stability," said the trust's head, Fred Irwin.

GM, Ford report October auto sales increases compared to 2008

Wed, 04 Nov 2009 01:04:21 UTC

It was the third time in four months Ford has posted a sales increase.

A row of Ford Mustangs at a Ford dealership in Wexford, Pa. Ford Motor Co. reported a $1 billion third-quarter profit Tuesday.DETROIT -- General Motors Co. reversed a 21-month sales slide by posting a 4.1 percent increase in October from a year ago, as GM and several other automakers began to benefit from a mildly improving economy.

It was the first year-over-year sales increase for GM since January 2008, the Detroit-based automaker reported Tuesday.

"We're seeing the industry get some legs under it," said Mike DiGiovanni, GM's chief sales analyst.

Erich Merkle, president of Autoconomy.com in Grand Rapids, said year-over-year comparisons should get easier for automakers because sales fell off a cliff in the financial meltdown last fall.

"It would be a disaster if we didn't start to see sales improve," he said.

Many economists say the worst recession in more than 50 years is over, although job growth and more robust consumer spending are likely months away.

October's seasonally-adjusted annual selling rate jumped to 10.46 million vehicles from 9.22 million in September in the aftermath of "cash for clunkers," according to Autodata Corp., of Woodcliff Lake, N.J.

Ford Motor Co. reported its sales rose 3.1 percent, mainly on the strength of its new Taurus sedan and several other car and crossover models.

It was the third time in the past four months that Detroit-based Ford has posted a sales increase.

"The Ford plan is working," said Ken Czubay, Ford's vice president of U.S. marketing, sales and service.

Ford also announced a surprise third-quarter profit of nearly $1 billion on Monday and said it expects to be solidly profitable in 2011.

Chrysler Group LLC, continued to be the industry laggard, posting a 30 percent sales drop last month compared to October 2008.

But Auburn Hills-based Chrysler said sales rose 6 percent from September and announced a new round of incentives through the end of this month, including zero percent financing on all Chrysler, Dodge and Jeep models.

Fiat Group SpA and Chrysler Chief Executive Officer Sergio Marchionne is announcing the company's five-year business plan Wednesday .

Many Chrysler Group models are expected to be replaced with Fiat vehicles over the next several years.

Asian automakers turned in a mixed performance.

Hyundai Motor Co. saw sales rise 48.9 percent while Kia, part of the Hyundai group, posted a 45.3 percent increase. Nissan Motor Co., Ltd., said its sales rose 5.6 percent, while sales at Toyota Motor Corp. and Honda Motor Co. were flat from a year ago.

General Motors executives said the automaker's improving sales show that its post-bankruptcy business and marketing plans are bearing fruit.

Sales are rising, even though GM has eliminated four of its eight brands and cut thousands of dealers.

"We're certainly not going to declare victory today, but we are making progress in driving our brand and sales performance," said Susan Docherty, GM's new vice president of U.S. sales.

GM's "May the Best Car Win" marketing promotion, which included a 60-day money-back guarantee, has been extended to Jan. 4.

But GM's sales push has come at a cost.

The automaker spent an industry-leading $4,277 per vehicle on incentives, well above the industry average of $2,468, according to Santa Monica, Calif.-based Edmunds Inc., a consumer automotive information firm.

Docherty said it will take months for GM to wean itself off high-incentive spending.

"This didn't happen overnight," she said.

"We're not going to solve it overnight."

E-mail Rick Haglund: rhaglund@boothmichigan.com

Wolverine Coil Spring honored for regional work force development

Tue, 03 Nov 2009 22:23:41 UTC

Jay Dunwell received the Employer of Excellence Award from ACT for his support of the National Career Readiness Certificate.

Jay DunwellGRAND RAPIDS -- Jay Dunwell, president of Wolverine Coil Spring, 818 Front Ave. NW, was honored in Washington, D.C., last week for his efforts toward regional work force development.

Dunwell received the Employer of Excellence Award from ACT for his support of the National Career Readiness Certificate, a test that proves high school graduates have essential employability skills such as reading and math.

Wolverine Coil Spring served as a pilot site when the certificate was rolled out in West Michigan, helping it get adopted by the state Department of Labor and Economic Growth.

E-mail the author of this story: localnews@grpress.com