As President Barack Obama rides about Washington in his new custom-made Cadillac, he should remember that the men and women who furnished his stylish ride need to hear from him, and soon.

The domestic auto industry’s outlook is brightened only modestly by Chrysler’s announced partnering with Italian automaker Fiat. It’s a reasonable move for Chrysler, offering an opportunity to diminish the company’s historical reliance on minivans and Jeeps. Fiat’s strength in small cars and high-end nameplates will bring balance in exchange for a 35% stake in Chrysler.

But Fiat’s reluctance to invest the first euro of its own money in Chrysler is telling. So is the unhappy history of Fiat’s short-lived partnership with GM, which began with a similar vision of geographic and segment synergy.

Chrysler’s desperate need for cash persists, and some doomsayers suggest its alliance with Fiat could even exacerbate that predicament by triggering a repayment provision in the terms of its emergency loan from Uncle Sam. In any event, the Fiat partnership does nothing to address Chrysler’s immediate problems.

Equally ominous is UAW President Ron Gettelfinger’s warning that it will be “almost impossible” for the Big Three to meet the Feb. 17 deadline the Bush administration ordained for the delivery of detailed restructuring plans. The new administration shouldn’t wait three weeks to find out if this is more than hyperbole.

Appointing a car czar with broad, proactive authority should be a priority on par with tackling the foreclosure crisis. It’s also consistent with the new president’s commitment to fiscal transparency and more energy-efficient automobiles.

In his inaugural address, Obama warned that “our time of putting off unpleasant decisions … has surely passed.” That is doubly true in the auto industry, and the new administration should seize the initiative now.

SOURCE: Freep.com

NEW YORK (CNNMoney.com) — More than three out of four auto executives expect more bankruptcies in their industry, according to an annual survey by audit and accounting firm KPMG LLP.

The survey of 200 top executives from automakers and suppliers around the globe found 77% expect more industry bankruptcies, compared to just 36% who expected an increase in bankruptcies a year ago.

So far, major automakers have avoided bankruptcy in spite of years of losses. But there have been widespread bankruptcy filings among auto parts suppliers in recent years.

The survey was conducted in the fall, before the U.S. government offered a federal loan package to General Motors (GM, Fortune 500) and Chrysler LLC to allow them to avoid threatened bankruptcy filings. Other governments around the world are considering assistance for their own automakers due to the sharp downturn in global sales.

The survey also found that 46% of the executives believe the profit outlook for the overall industry will be volatile over the next five years, and another 24% see profitability continuing to decline. Only 15% of those surveyed expect profits to improve.

Betsy Meter, a partner in KPMG’s auto practice, said she believes concerns about bankruptcies are still high, despite the fact that GM and Chrysler have received emergency funding to avoid running out of the cash they need to operate.

“I suspect it’s moderated slightly, but I think there’s a great level of uncertainty,” she said.

While most automakers around the globe haven been hit hard during this recession, the three U.S. automakers are still viewed as particularly vulnerable by industry executives.

More than 60% of those surveyed believe that GM, Ford Motor (F, Fortune 500) and Chrysler will continue to lose global market share in the coming years, while comparable percentages believe that Toyota Motor (TM), Hyundai/Kia, Honda Motor (HMC) and Volkswagen will all gain share.

In addition, about 80% of the executives said they believe Chinese and Indian automakers will gain market share.

Still, industry executives haven’t completely written off the U.S. automakers. Asked if they agreed with the statement that restructuring efforts in the U.S. industry may yet succeed, 50% said they did. However, that was down from 58% who agreed with this statement a year ago.

SOURCE: CNNMONEY.COM

UAW negotiators from factories across America will begin arriving in Detroit on Wednesday to begin preparing for negotiations with Detroit’s automakers, which are under pressure from Congress to bring their labor costs in line with those of foreign automakers in return for federal aid.
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The preparations among the UAW leadership from GM, Ford and Chrysler facilities nationwide are expected to last at least three days, according to one negotiator who did not want his identity revealed. The UAW just ratified its last four-year national labor contract in 2007.

Negotiations with GM are expected to begin Monday, and everything is expected to be on the table, according to a person familiar with the union’s planning.

Despite that, the UAW on today stopped short of saying it is re-opening contract agreements reached with the Detroit Three a little over a year ago.

“We’ll sit down and have discussions along the lines of things we could do in the contracts and have that ratified without opening the contracts,” Gettelfinger said in a statement provided to the Free Press.

In December, the Bush administration agreed to provide $17.4 billion in federal loans from the Troubled Asset Relief Program to GM and Chrysler to prevent the two automakers from potential bankruptcy.

Ford Motor Co. has not asked for federal loans, but said it might do so if the economy deteriorates further. Ford is expected to seek any concessions from the union that GM and Chrysler receive as part of their federal aid package.

SOURCE: FREEP.COM