About James Bryant

Cerberus Capital Management certainly isn’t wasting any time assembling a super group management team for Chrysler. Robert Nardelli as CEO seemed odd and perfect at the same time. Since that announcement a few others have come along, but Chrysler’s most masterful coup has been the talent raid on Toyota that nabbed them Jim Press, the King Midas of Toyota Motor North America. Press recently was named President and COO of Toyota Motor North America and was also the first non-Japanese to be named to the board of the Toyota mother ship back in Tokyo.

So why is Press leaving Toyota after 37 very successful years? It is likely that he chose to leave because he hit the ceiling. He’d probably have had zero chance of ever being CEO of Toyota Corporation. And if he can do for Chrysler what Carlos Ghosn did for Nissan, he will almost certainly be CEO of Chrysler eventually. Then there’s the money. Cerberus and other private equity firms often pay a (relatively) paltry salary but give the CEO a big cut of the action when things go well. So loyalty and sentiment aside, Press probably took the deal because he loves a good challenge and because it could be very lucrative for him personally.

But before he starts shopping for yachts, he’s got to roll up his sleeves and do the hard work. He has the title of Co-Chairman and Co-President, which he shares with former Chrysler boss Tom LaSorda. Press is the sales guy and LaSorda’s the manufacturing guy. They will have to work together to fill the gaps in Chrysler’s line-up. The company has few product hits (with the exception of the 300C and the Wrangler); they have no small cars, the minivans need tweaking, and their lineup of SUVs is behind the times.

Nardelli has a three-year plan to get Chrysler’s financial house in order and is looking ahead 10 years to anticipate drivers’ wants and needs. Having Jim Press in his corner is probably the best thing that could have happened to the new Chrysler CEO.

As housing foreclosures continue at a steady clip, the implosion of the sub-prime lending market is sending ripples into some surprising corners of the economy. The jitters are being felt in the automotive retail market as money for all kinds of loans dries up like Texas floodwaters in the August heat. New car dealers initiated a record number of sub-prime auto loans in 2006 to the tune of $50 billion. If the Fed’s actions to stop the madness don’t hold fast, the damage could spread to some industries thought to be largely immune to such issues.

One such area is the US motorcycle market, traditionally dominated by Harley-Davidson and Japanese giants like Honda and Yamaha. The big toys for big boys market is populated by middle- to upper-middle-class consumers with the discretionary income to afford easy entry into the two-wheeled weekend warrior lifestyle. But second quarter numbers put out by Harley suggest there may be big trouble in Biker Land.

After a long period of mid-life-crisis-fueled sales and earnings, Harley had good second-quarter earnings, but experienced a 5% drop in US retail sales which offset a 15% increase in worldwide sales. The result was a net 1% drop in overall sales.

Harley’s not alone. The California-based Motorcycle Industry Council reports that US motorcycle sales are down for the first time in more than 10 years. Compared to the first half of 2006, motorcycle sales are down 7%.

There are a lot of theories floating around to explain the drop. Some suggest the rise in gas prices are making consumers cautious — a curious explanation as $3 gas was cited in 2006 as a cause of increased motorcycle sales. Others say sub-prime concerns in the housing and auto sectors are making loans less available. Others blame a summer of freaky weather.

Despite the concerns in the motorcycle market, it’s safe to say the jitters in the economy will be all but forgotten as the mustachioed motorcyclists head out for a Labor Day of easy riding and hard partying.

You can almost hear the collective “Aw, nuts” at Ford, GM, and Chrysler. As the Detroit Three try to get their North American operations back on track, Indian carmaker Mahindra & Mahindra has announced it plans to bring a lineup of compact pickups and SUVs to the US market by 2009.

The vehicles will not be a threat to the Detroit Three’s full-size, feature-laden pickups (what us Texans colloquially call Cowboy Cadillacs), at least not at first. Mahindra & Mahindra’s first product rollouts will be based on its Scorpio SUV, and they include a two-door pickup, two four-door pickups, and two five-door SUVs. All will have the same four-cylinder, diesel engine. Mahindra & Mahindra may add gasoline engines later.

Mahindra & Mahindra says prices for the vehicles will be at the low end of the spectrum for small trucks. To keep the price down Mahindra & Mahindra is trying to avoid the 25% US tariff on imported trucks (called the chicken tax) by lobbying Washington to change the law — something the company admits is unlikely to happen any time soon. (You can bet the Detroit Three’s lobbyists will fight tooth and nail to stop any attempt to change the law.) Another end-around the tariff would be for Mahindra & Mahindra to build an assembly plant in the US. But the company wants to dip its toe in the water before making any big cash outlays for plants and equipment in the US.

Mahindra & Mahindra has an “If I can make it there, I can make it anywhere” strategy for entering the US, reasoning that if it can convince the fussiest car buyers on earth to buy its trucks, everyone else on the planet will follow suit.

So Detroit can focus on defending its big pickup turf from Toyota (Tundra), and Nissan (Titan) for now. But if the Indian four-banger catches on, the next Cowboy Cadillac you buy might really be an Indian.

Negotiations between the Detroit Three and the United Auto Workers (UAW) union are officially underway, and the stakes are pretty darn high. UAW president Ron Gettelfinger is looking to secure another four-year contract that would grant UAW-represented workers a modicum of job security at a very insecure time for the US car industry.

On the other side of the table, GM, Ford, and Chrysler hope to wring cost reductions from the negotiations, primarily in the area of health care and pension benefits. The Detroit Three claim the US manufacturing operations of its Japanese rivals pay about $25 less per hour for labor, a notion Gettelfinger refutes, sort of. According to the reporting of an AP staff writer, Gettelfinger said he doubts the presence of a labor cost gap, but then conceded that such a gap is possible. Let the gamesmanship begin!

Gettelfinger is playing it coy when it comes to Ford, the member of the Detroit Three most agree is in the worst shape. When talks kicked off at Ford last week, Gettelfinger said he wouldn’t comment on how Ford’s financial predicament would affect the UAW’s approach at the bargaining table. But he did say “… they’ve got a lot of cash, by the way.” What Gettelfinger didn’t say is that much of Ford’s cash was borrowed — and most of Ford’s factories and subsidiaries like Volvo and Ford Motor Credit were put up as collateral. Nice try, Ron.

Of course what would UAW bargaining be without vague threats of a strike? To make the threat appear, well, threatening, about 100 protestors, mostly retirees, gathered outside GM HQ to wave signs and engage the media. Protestors pointed to excessive executive bonuses and overseas plant construction as proof belying the disingenuous claim of, “We’re flat broke!” coming from the Detroit Three.

Unfortunately for UAW workers, the Detroit Three’s balance sheets tell a competing story.

Sales incentives are like crack cocaine for the Detroit Three. Every year it’s the same story — as autumn nears Ford, GM, and Chrysler are strung-out from a summer of binging on incentives — or paying customers to drive cars off the lot.

The story goes like this — the Detroit Three have too much capacity so they build too many vehicles, especially the gas guzzlers nobody wants. So by the summer they have to offer crazy incentives to get cars off the lot to make room for next year’s models that no one will want either. By the end of the summer the Big Three are haggard and dopey from three months of losing cash in the interest of saving market share and clearing bloated inventories. GM, Ford, and Chrysler are forced to chase the incentives dragon, or be clobbered in a price war.

Meanwhile foreign rivals — primarily Japanese ones — stick to their guns on pricing, for the most part, and slowly but relentlessly chip away at the Detroit Three’s market share.

According to Automotive News, 2007 will likely be the tipping point where foreign players collectively have a 50% or better share of the US car market.

Toyota has had a knife in the back of the Detroit Three for years, but this summer it is twisting the blade by getting in on the incentives game in an ingenious and merciless way. With a new Tundra factory in San Antonio, Toyota is raising incentives on Tundras in hopes of capturing more truck market share. GM was trying to wean itself off incentives. GM’s average 2007 incentive is down a few hundred dollars compared to 2006, so Toyota is raising Tundra incentives to kick GM while it’s down.

So there’s never been a better time to hit the dealer lots and snatch up a great deal, at least until next summer, anyway.