Global auto news this week(2007.03.19 - 2007.03.24)

This week DaimlerChrysler deal hasn't seen much progress, but the deal was facing another hurdle when union workers on both sides of the Atlantic organized together to fight a sale of DaimlerChrysler AG's Chrysler Group to a private-equity buyer.  Promotional incentives for buying fuel-efficient vehicles ont only didn't help to ease the tension, buy hurt struggling North American auto makers deeper with the new taxation.

Here are the top news this week:

1.DaimlerChrysler eyes retaining some Chrysler ties      
From.reuters                                                          March 23 2007

DaimlerChrysler AG, in talks with potential buyers of its Chrysler Group, has outlined detailed areas of cooperation that it would be willing to continue between its Mercedes division and any new owners of Chrysler, people familiar with the matter said in The Wall Street Journal.

The discussion of continued cooperation with Mercedes in purchasing, component sharing and engineering indicates that talks with potential buyers are moving to a more advanced stage, the Journal said, and that Chrysler and Mercedes are likely to remain allied in the automotive industry even if they become separate companies.

DaimlerChrysler expects to have preliminary offers to buy Chrysler by the end of the month from at least three bidders: private equity firm Cerberus Capital Management LLC, the private-equity tandem of Blackstone Group [BG.UL] and Centerbridge Partners LP, and Canadian auto parts maker Magna International Inc. (MGa.TO: Quote, Profile, Research), according to people familiar with the matter.

2.Big Three auto makers will take a hit from budget incentives  
From:theglobeandmail              March 22 2007 
 
Federal incentives to encourage a shift from gas-guzzling SUVs to fuel-efficient “green cars” could hurt struggling North American auto makers by keeping some drivers out of the marketplace without significantly boosting sales of gasoline-electric hybrid cars, industry watchers say.

Auto analyst Dennis DesRosiers said Tuesday the government should be concerned with how auto makers might react to its budget plan, which favours hybrid cars with a rebate of up to $2,000 on the purchase but puts a $4,000 tax on SUVs and other vehicles that use high amounts of fuel.

3.Canada auto emissions incentives seen ineffective  
From:autonews                   March 21 2007

A Canadian government plan to offer rebates for fuel-efficient vehicles and heavily tax gas-guzzlers will do little to change consumer buying habits and curb emissions, industry observers and environment groups said today.

"The policy is ineffective and it's going to fail," said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. "There may be a few more consumers benefit by buying hybrids, but it will primarily be a tax grab by the federal government targeting buyers of ... large SUVs."

The Conservative government unveiled a rebate on Monday, March 19, of up to $1,700 (Canadian $2,000) for purchases of new fuel-efficient vehicles, and a levy of up to #3,444 (Canadian $4,000) on high-emissions passenger vehicles such as luxury SUVs.

The new tax on high-emissions vehicles will affect only 4 percent of the Canadian auto market and targets the most "inelastic" consumers, DesRosiers said in an interview.



4.Bush visit to Ford, GM plants may smooth tensions  
From:todayreuters           March 21 2007 
 
President George W. Bush will get a chance on Tuesday to smooth over hard feelings that arose last year when he twice postponed meeting with executives of U.S. automakers.

In a visit that will carry symbolism for struggling companies that were once a mainstay of the U.S. economy, Bush will tour Ford Motor Co. (F.N: Quote, Profile , Research) and General Motors Corp. (GM.N: Quote, Profile , Research) factories in the Kansas City area to get a glimpse of their latest hybrid cars and pitch his alternative-energy ideas.

Ford, GM and DaimlerChrysler AG's (DCXGn.DE: Quote, Profile , Research)(DCX.N: Quote, Profile , Research) Chrysler Group unit have shed thousands of jobs and shut plants to grapple with financial losses and eroding market share to Japan's Toyota Motor Corp. (7203.T: Quote, NEWS , Research) and Honda Motor Co.

Bush has made it clear the days of bailouts, such as the one for Chrysler in 1979, are long gone. But the auto giants remain eager for an audience to press concerns about overseas currency, mileage standards and health care.

They also want a large federal investment to help them advance alternative fuels and battery technology for electric cars.

The visit to Ford and GM plants gives the companies a chance to showcase their products and air their views.

While seeking to ease tensions, Bush also will promote a top domestic goal of cutting U.S. gasoline use by 20 percent over a decade by increasing vehicle mileage standards and encouraging alternative fuels -- like ethanol -- and gasoline/electric hybrid technology.

 

5.Unions vowing to fight Chrysler sale  
From:reuters March 20 2007 

Union leaders on both sides of the Atlantic are vowing to fight a sale of DaimlerChrysler AG's (DCXGn.DE: Quote, Profile, Research) Chrysler Group to a private-equity buyer, throwing a potential hurdle in front of a deal, according to a report in The Wall Street Journal.

The opposition comes as Cerberus Capital Management LLC is piecing together a team of auto-industry veterans headed by former Chrysler executive Wolfgang Bernhard to bolster its expected bid for the U.S. unit, people familiar with the matter said in the Journal.

Cerberus, the tandem of private-equity groups Blackstone Group and Centerbridge Partners LP, and Canadian supplier Magna International Inc. (MGa.TO: Quote, Profile, Research) have met with Chrysler executives and begun reviewing financial and product-development information. They are expected to present proposals by month's end.

The union sentiment raises the potential for a push by labor to block any deal that would involve deep cuts of union jobs, the Journal noted.

Blackstone, Centerbridge and Magna have begun meeting labor leaders in hopes of breaking down opposition before bids are submitted, people familiar with the matter said in the Journal.