John Shiels

By MAC MORRISON




Corvette Racing's C6.R won the American Le Mans Series' inaugural Green Challenge competition at Petit Le Mans, but General Motors' troubles with the type of green that really matters have thrown the Corvette's future into disarray.

Multiple sources confirm that the General's financial crisis has led the company to put whatever plans it had for the next-generation Corvette on indefinite hold, with no official or set timetable.

In this climate--we've even heard tales of janitors removing lightbulbs from corporate headquarters in an effort to save money--not only is an all-new C7 now more than just a few years away, but even a significantly refreshed or upgraded C6 looks unlikely to appear anytime soon.

One version of the story says that when the decision was made to shelve the C7 for the time being, a plan was suggested to upgrade the C6 significantly in 2012 as a '13 model. Today's Corvette would be eight years old at that point and as much as 12 years old by the time the upgraded car was finally phased out in favor of the C7. Had this occurred, the C6 would have gone down as tied with the C4 generation as the second-longest-serving model in Corvette history. As things stand, multiple sources say this idea also is dead.

Perhaps the most disconcerting thing for fans is not that a new car has been delayed but that GM leadership does not appear to have a clear roadmap for the Corvette's future. On the other hand, no one has suggested that the model is in danger of becoming extinct. While the Corvette is the most visible GM product to enthusiasts and therefore the subject of much speculation, the fact is that GM's entire product port-folio was under review as of press time.

"Whether [you are talking about] the C6 or C7, I'm not going to comment on future product [specifics], including engines or any of that," Corvette vehicle-line executive Tom Wallace told AutoWeek. "We're still working on future Corvettes, but the scope of change is not yet decided. There are changes, some neat stuff, coming for 2010 that I can't talk about yet."

However, Wallace did not imply that those changes would cause anyone to consider the 2010 C6 to be a new car. He also denied that there ever was a specific year targeted for the C7's launch. And he acknowledged that new-in-2007 federal standards pushing corporate average fuel economy to 35 mpg by 2020 are playing a role in determining the layout and hardware of the next-generation Corvette but stressed that the issue "hasn't inhibited Corvettes. No one is saying we're not doing Corvettes. We're still bullish on Corvettes."

Asked whether there was any chance that the car could die, Wallace was emphatic. "No way," he said.

But with the next car's characteristics not even decided and GM in financial disarray, we don't anticipate the next incarnation of America's sports car to bow before 2014--and we won't be surprised if that estimate turns out to be optimistic.

rws.1

interesting.....

Falcon

The Corvette was about axed in 1992, but was granted a reprieve. The politics and thought processes that go into building a car, particularly a Corvette, are mind boggling.

Read "All Corvettes Are Red" for an inside baseball view of how a car is produced.

AU N EGL

Corvette is a cash cow for Chevy. So dont think it will be axed.

mikahb

A great book - I think that was the last straw that made me decide that (at that point, someday) I was going to buy a C5.

I doubt it will happen, but even if the Corvette does go away for a while it wouldn't be for long. My first thought when I heard that GM and Chrysler were in talks was "Hmmm - Viper? Vette? Can't really have both!"

John Shiels

small portion of cash with 30,000 units. They need vehicles that sell a million units a year at a decent profit like Taurus used to do. If they made 10,000 per Vette @ 30,000 units they would have 30 million in profit which is chump change to them as they burn through one billion per month. It will be long in the tooth like the C4 was with a few new body pieces.

Like the trucks and SUV's GM has cancelled development on it will be a long rough road ahead.

billla

Sounds like another ACAR situation...and that resulted in the C5 which I feel is one of the best Corvettes ever produced.

I'm sure they'll find a way to keep the C6 fresh and interesting.

John Shiels

Viper is done unfortunately. GM needs the 11 billion in cash Chrysler has so I think it will move forward fast with the merger. Cars sales coming from near 17 million to probably below 14 this year nd predicted 13 million there will be some real tough times in the OEM auto industry and the parts suppliers. I think you will see parts supply problems soon from all manufacturers.


Saturday, October 18, 2008
GM-Chrysler talks advance
Cerberus pushes for quick deal; Financial crisis ramps up pressure to join forces
Christine Tierney, David Shepardson and Alisa Priddle / The Detroit News
Cerberus Capital Management LP founder Stephen Feinberg, a driving force behind the negotiations to combine General Motors Corp. and Chrysler LLC, is pushing for a rapid deal before both automakers are weakened further in this treacherous environment, say sources familiar with the situation.

GM President Frederick Henderson and Vice Chairman Bob Lutz also want to conclude an agreement quickly, the sources said. Chairman and CEO Rick Wagoner is said to subscribe to the logic of such a deal but seems more guarded about the prospect of putting together two money-losing automakers facing similar challenges, the sources said. Some GM directors share those concerns.

The parties met Friday, but Feinberg was not directly involved with the talks. The negotiations have been complicated by the disclosure last week that they were taking place even though they were at a preliminary stage. But officials on both sides want to conclude a deal quickly -- preferably before the presidential election on Nov. 4, when candidates might be more amenable to requests for help.

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Cerberus and GM declined to comment.

Under one scenario being discussed, GM would absorb Chrysler and draw on its cash hoard -- $11.7 billion on June 30 -- to wind down some of its businesses, brands and dealerships to slash costs.

The other potential suitor for Chrysler, the Renault-Nissan alliance, is weighing whether to continue negotiations in this tricky financial climate.

Feinberg is said by people close to the talks to favor a deal with GM as a solution to the U.S. auto industry's mounting difficulties.

Detroit's automakers are losing money and their market value has shrunk dramatically. According to the assessment of major banks, the U.S. automakers are not able to invest sufficiently in future products and technology to remain competitive, and they cannot obtain credit in this climate.

Their dire situation poses a problem for major banks, including Bank of America, Citibank, J.P. Morgan Chase and Wells Fargo, whose combined exposure to the industry runs into the tens of billions of dollars, said one source close to the situation. The automakers' weakness also has reduced the value of Cerberus' automotive holdings, including Chrysler, acquired last year from Daimler AG for $7.2 billion, most of which was injected into Chrysler.

"It's a way for Cerberus to get out before it all blows up," said Joe Phillippi, president of AutoTrends Consulting Inc. in Short Hills, N.J.

"When Cerberus put this deal together, they felt this would be a medium-term holding" of five to seven years, he said.

"When they were doing their scenarios, I'm sure they never anticipated the industry would go from 17 million to 13 million or less (annual U.S. sales) in a very few short years, while they're still trying to right-size the industry."

After obtaining $23 billion in credit lines and loans in 2006, Ford Motor Co. is considered the best equipped to withstand a prolonged recession and a weak auto market. However, GM and Chrysler are viewed as more vulnerable in this downturn, with bankers assessing that the risk of bankruptcy may not be high but it is "meaningful," according to the source.

Sources close to the situation stress that many possibilities are being explored.

Feinberg's view, according to people familiar with the situation, is that GM and Chrysler should pair up before they are irreversibly weakened.

GM, which lost $18.8 billion in the first half of this year, is burning through at least $1 billion a month, analysts estimate.

It had access to about $21 billion cash and $5 billion in available credit at the end of June, and is in the midst of cutting $10 billion in costs by the end of 2009 and raising $5 billion through asset sales and borrowing. But analysts say it may run short of cash as the industry environment worsens.

Investment firm Goldman Sachs estimates U.S. auto sales will slide next year to 13 million cars and trucks from 13.8 million this year. In a note issued Friday, Goldman said it expected the market to recover only to 14 million units in 2010 -- compared with 16.1 million last year.

"We think lower affordability will materially impact auto sales," analyst Patrick Archambault wrote in the report. "Our base-case estimate is for a reduction in 'trend demand' to an average of 14 million units over the next several years versus our previous estimate of 16 million."

While union leaders have spoken out against a GM-Chrysler deal that could ravage Chrysler, industry insiders say some union and management officials consider that a deal, while painful, may spare the industry worse pain.

"The most brutal thing is companies going down," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "What the union has to have more than anything is sustainable, profitable employers."

A source familiar with the situation said some reports had overstated the GM board's reservations to a Chrysler deal.

Cerberus, meanwhile, is interested in obtaining the remainder of GMAC Financial Services after having bought 51 percent from GM in 2006. GMAC is hoping to benefit from the government's purchase of bad loans from financial institutions.

Part of the pressure on Cerberus comes from investment banks, which were "very comfortable with Cerberus running GMAC, but uncomfortable with Cerberus being in the auto business."

Robert Snell contributed to this report. You can reach Christine Tierney at (313) 222-1463 or

parkerracing

Look for Viper to be sold off either way as both sides need cash. /:\

John Shiels

doesn't seem like much interest in Viper so far. I guess the economy and making a small run of cars on it's own may make it cost way more further reducing sales of it.

All the comp coupes and even regular Vipers may have a parts suppy problem real soon.

sothpaw2

This is not surprising. If the C6 was to be a 7-8 year run, based on the C5 development (All Corvettes Are Red), GM would be really busy next year with test mules and such.

As in 1992 when things were dire, I expected them to decide to kill all Corvette development now and rely soley on C6 for a while. What was surprising was when they upped C6' hp to 430 after just 3 MY runs. I thought they would wait and do that in 2009 for the MY 2010, perhaps w/a few new body panels.

They are in better shape w/ the C6 then they were w/the C4 in 1992.

I expect the C7, due to the delay, will be a reduced hp car since it might be released in 2015 or 2016, too close to 2020.

So the base 430 hp C6 is the pinnacle of Corvette performance value. 430 hp for $40k in 2008 dollars is going to best of "the good old days".

elh0102

GM and Chrysler, hmmmmm........ trying to remember the last time I saw two drunks walk a straight line. Where does two proven losing leadership teams, supported by gutless directors, look to find a succesful team? The US car industry has for years been way too big, with enormous inefficiences and, now, a back-breaking unfunded pension liability. They are only now beginning to realize something very fundamental; if customers will not buy your product, even at per-unit losses, maybe it's time to stop making it! There is no painless way through it, and the current economic melt down, with credit resources drying up, may force some extreme actions soon. The Corvette trademark is worth a lot, but I'm not sure who would buy it. Who knows, maybe a European Corvette? (I never thought Budweiser would be German.)

robvuk

10k times 30k is $300 million. And I'm just guessing here but I'll bet the profit of unit production is twice that. Agreed, still chump change but it would also be stupid to blow off $600 million a year on such a small division produced in one plant.

On another note, if the C6 ran for 8 years, just like the C5, that would bring us the C7 in 2013 anyway. Why is everybody all worked up over it if it shows up in 2014 or even 2015, only one or two years late? Nothing abnormal there. That's still a LONG way off and anything could happen between now and then. Hopefully the economy won't be in the dumper that long and all they have to do coast and give us a little freshening up between now and then.

Just a theory here but my guess is that the C6 will stick around for 2013 any way, so that they can have a 60th Anniversary edition to close out the C6 with. Special package to bolster the sales on the last year model.

John Shiels

your right add 4 0's. duh I was thinking 1,000 They are saying 2014 is even optimistic so that puts you where?

robvuk

Ok. A 2013 anniversary model and a 2014 Commemorative edition.

Still only 10 years. Tied with C1 and still way less than C3 and C4.

Oyishdog

If worse comes to worse, I'd like to see Corvette spun off as its own brand and have an opperating model similar to Porsche. With the models Corvette has now, it is very close already (car wise). Keep the factory race team, but develop factory supported race cars offered to the public for racing.

They could even further develop the Solstice/Sky into a Boxster/Cayman competitor, but sell it under one brand name, Corvette. GM is too big to support themselves with extremely low cash flow.

John Shiels

cars are changing a lot more rapidly now than way back in C4 time. If they don't have the cash they will be left behind in every sector uf the market, Everyone will be buying 556 HP CTS-V

SouthernSon

I DO NOT want to have to support the brakes and tires on that heavy vehicle at the track.....

John Shiels

I am talking in general sales terms not tracking it. Probably run well with BIG tires.

quick04Z06

Can the Feds afford to lose the US auto business?

If the Dems win, we all know their union affiliations will demand they keep GM on life support to keep the union workers employed. The Reps may be less union friendly and more into globalization, but even they would be hard pressed to let GM fail.

The real question is will the Asians and the Arabs continue to fund the US Treasury's Visa card?

GM would be well served to cut all brands in the US (eliminating overlap) but for Chevy, Cadillac, Corvette (separate brand, sep dealers), and "Duesenberg" (GM needs a super premium brand selling $200-300,000.00 cars--huge profit margin; lots of cash to develop, but they need to tap into this market and the Cadillac 16 prototype is sitting in a hanger somewhere); They can still sell Buicks in China. If GM takes Chrysler, they should kill all of its brands except their minivans, and they would be sold under the Chrysler brand. There is nothing else Chrysler makes that is really worthwhile but pickups (Chevy trucks are just fine instead) and the Viper, and the Viper is going to be sold off. In any event, who really needs Viper if you have Corvette?

In any event, if I have to drink InBevWeiser and drive a Porschette, I am going to be sick....