David Leggett's automotive industry blog - from just-auto.com

Fender and Defender

Mon, 05 Jan 2009 18:33:00 GMT

I'm a big fan of analogies and metaphors to help make points or draw lessons from history. The more creative or unusual they can be, still hanging together, the better (though you have to be careful with them; sometimes they can mislead). I enjoyed Mark Bursa's study of how Fender, under threat from low-cost competition, embraced that competition and contracted out manufacturing activity to the very people who threatened to put it out of business. Fender managed to carry on in business by going to where the cost is low and building its clever brand strategy on top of that. The parallels with the car business are certainly there. As Mark points out, this is the same low-cost manufacturing outsourcing model that the auto industry has been adopting. I guess the question is, how far do you take it?

With reference to JLR and the Land Rover Defender, I suspect the idea of making that vehicle in India will be something Tata will be definitely looking at, along with a possible rationalisation of UK manufacturing capacity.

Did wonder whether Mark's reference to Pink Floyd's Dave Gilmour was more than a bit wistful (I know he likes his music very much). Maybe in that parallel dimension we all sometimes imagine there's a megaband with a lead guitarist known by the very simple moniker, 'Coolbear'.

ANALYSIS: How to rebuild an icon

Funny ol' Friday

Fri, 02 Jan 2009 13:53:00 GMT

Today is a funny one isn't it? Some people are back at work, some are not. Some have holiday hangovers, some do not. If you are at work, there's maybe a sense of it being a bit quiet ahead of the main return to normality on Monday. It's a short week at least and today is perhaps a gentle way to ease yourself back into the world of work. I'll wish you a Happy New Year anyway.

The December US light vehicle numbers are out on Monday and another rough month is being widely predicted - the overall market number is likely to be 30-40% down on last year.

And as we look ahead to what this year has in store, it's not exactly the brightest of prospects. One silver lining in the general economic gloom: at least oil is cheap and likely to remain so. It looks like we won't have that pump price shock thing to contend with on top of the market downturn this year.

And another 'positive': the year-on-year trend in market numbers will be looking less bad as the comparison starts to be against a lower bench and the trend flattens out (I realise a bottoming out of demand isn't much of a positive, but I'm trying). The auto industry has probably been one of the worst performing sectors - alongside financial services, housing and consumer goods retailing - in terms of being hit hard and early by this economic downturn. The worst may not yet be over, but we know what to expect at least. More of the same until the economy gets a whole lot better. That's still the key.

Any other positives worth noting? Plusses are a wee bit thin on the ground. At least my urgent requirement to heat food on the move has finally been sorted and who can fail to have the cockles of their heart warmed by the tale of a hoarder who left behind a vintage Bugatti? Amazing.

Enjoy your weekend. Monday may be a slightly rude awakening.

US: December market headed under 10m units SAAR

Good wishes to all

Tue, 23 Dec 2008 13:04:00 GMT

Well, that's almost it for this year. It just remains for me to sign off and wish you all the best for the festive season (should you get one) and the year to come.

The just-auto editorial department will be having a festive break from tomorrow (December 24) and we'll be back in your inbox on January 2, 2009.

At least we here are fortunate enough to get a voluntary holiday break. For some the break this year will be involuntary and indefinite.

These have been - and still are - testing times for many and thoughts at this time are with those who have lost their jobs.

As a contributor to the just-auto forums recently noted, the numbers themselves also represent more than just a cost saving. There's a human cost. Many lives, at the very least, are disrupted, livelihoods or careers lost or damaged. In this industry at least, many companies have displayed an admirable degree of humanity as they attempt to transform in these trying times and that's good to see.

Let me at least end on a positive note. Restructuring and cost cutting, though painful, will be making many companies leaner and fitter. Energies will be focused much more intensely on what really works and gets a return. This is a resilient industry that has been adapting to one of the great challenges of our time in the shape of the environment. Getting through this recession in good shape is another challenge to face.
And when you look at some of the new products launched or coming and some of the research and development work going on, there's good reason to feel optimistic about this industry and its future prospects. It makes products that excite and are still at the very core of our lifestyle.

In emerging markets cars and car brands are hugely aspirational and those markets will continue to grow in the future. People love cars. And commercial vehicles are the lifeblood of the economy. This industry may be undergoing change but it isn't going away.

I would like to take this opportunity to wish everyone out there a happy, successful and peaceful 2009.

I would also like to thank the dedicated team around me - on the staff and also the freelance contributors - that create just-auto and also you for your continued support.

2009 will be a challenging year in the automotive industry globally, but when was that not the case?

Review of 2008

Toyota operating loss

Mon, 22 Dec 2008 16:05:00 GMT

If ever there was a sign of the collective nature of the immediate problems facing the auto industry generally, Toyota's announcement that it foresees an operating loss is surely it. Even the mighty Toyota is being buffeted by recessionary winds across the globe (okay, and a high yen).

What will Toyota's response be? Cost-cutting generally and looking to up the ratio of overseas to domestic production wherever possible are probably bankers.

But besides pulling back on new investments, it's still pretty unclear where markets are ultimately headed, where exchange rates will settle and therefore where you want to max out or reduce production capacity.

The industry forecasters have an unusually difficult task right now in trying to work out where automotive markets are going and on what timescale. How long will demand stay below trend and how much 'pent-up' automotive demand is building? Will credit taps gradually be turned on again over time? If so, how quickly?

Or is there a structural change taking place, consumers 'deleveraging' wherever they can and discovering that the household four- or five-year-old car is actually rather reliable (well done automakers!) and maybe not in need of replacement every two or three years after all? When credit becomes more available, will more of these people decide that actually they don't want it, preferring the extended car replacement cycles that save money?

For the economists and TIV (Total Industry Volume) forecasters it's about making some very difficult calls for a base case or central forecast for automotive markets over the next two years. I expect scenario forecasting will become even more popular next year.

JAPAN: Toyota predicts operating loss

The credit problem

Fri, 19 Dec 2008 18:44:00 GMT

I have just been chatting with Michelle Krebs over in snowy Detroit about today's developments on the 'bailout' of GM and Chrysler. The loans buy some time. How tight is it? Well, the energy department loan finance is on top, so it's maybe much better than it looks. This should see Detroit through to March 31.

Michelle made a very good point, which is that the underlying problem is the need for the banks to get lending again in order for market volume to recover.

Edmunds.com estimates that December's US sales will come in at 38% down on last year with a SAAR of just 9.8m units. Yes folks, an annualised running rate under 10m units. In 2007, the market was over 16m units.

There's certainly plenty for Obama to think about when he contemplates what Bush is handing over in January. And that's when the looking beyond the 'bridge to a bridge' gets going in earnest.

Just how do you get the banks lending again? As BO himself has observed, super-low 0% interest rates don't do a lot of good if you would like the finance but just can't get it.

US [updated 15:45GMT]: GM and Chrysler get fed loans

Aston Martin Routemaster

Fri, 19 Dec 2008 13:46:00 GMT

There has been a competition on to design a contemporary Routemaster bus (the classic red London double-decker bus that was phased out a few years ago and replaced with single deck articulated 'bendy buses'). A team from Aston Martin jointly won it.

If you follow the below link, there's a pdf that tells you more about the entries.

In the 'imagine' category kids have sent designs in, accompanied by short descriptions.

A ten-year-old apparently wrote this:

"I designed my bus to be eco friendly and comfortable for the passengers inside it. The bus has a hybrid engine powered by bio fuel. My bus has fuel saving tyres; the bus also has a lightweight aluminium streamlined body made out of recycled material."

Bright lad.

Big red bus

JLR supply chain

Fri, 19 Dec 2008 08:55:00 GMT

I heard an interesting item on the radio this morning that very amply illustrates how the supply chain in the English West Midlands is being hit very hard and quickly by reduced output at Jaguar Land Rover (JLR). When Rover went belly-up a few years' back, suppliers knew the writing was on the wall for some time before it hit, and could prepare by diversifying their customer base.

And the ultimate impact of that failure on the UK automotive supplier industry was much less severe than feared.

The current business crisis, on the other hand, has hit much more suddenly - in Britain's manufacturing heartland, as elsewhere in the world.

The radio clip is a reminder of the reason why the British government will feel compelled to act: jobs. This is about managing the economy so that the immediate impact of the recession is minimised and - more importantly - that long-term damage to Britain's economic health is kept to a minimum. When companies are gone, assets sold off at auction by the receivers, that's your lot. They're really gone. And manufacturing jobs are maybe seen as even more important in Britain now that the dangers of relying too much on services (especially financial) have been shown up so graphically.

In the recession of the early 1980s Britain lost a lot of manufacturing capacity. The loss to employment was severe, but the economy later grew its services sector dramatically to take up the slack. And some new manufacturing activity came in (eg FDI by Japanese car companies). But there was a pronounced structural shift in the economy from manufacturing to high-growth services. It's hard to see that happening again in the next decade. Hanging on to manufacturing jobs looks like the thing to try and do right now.

While Jaguar Land Rover may be owned by an Indian conglomerate, there are scores of jobs (and many are high value jobs, requiring skills and training) in Britain dependent upon its operation - directly and indirectly. Some will say that UK taxpayer money should not be used to support (via a soft loan to aid liquidity) a foreign-owned company and effectively transfer substantial UK Treasury resources to Tata. And it's a debate well worth having that illustrates one of the consequencies of globalisation in the modern corporate world. The lines of responsibility and accountability have become much more complex.

But in the cold reality of struggling companies and potentially harmful knock-on effects, governments will find it very difficult to stay out. To not get involved risks long-term damage to manufacturing capacity and the economy happening by default.

Tata is holding a few cards here. If support is not forthcoming, the spectre of work and jobs shifted from the UK to India might well come into play (and that can be an unspoken threat lurking in the background). From the vantage point of Bombay House (Tata's Mumbai HQ), to what extent should it be supporting or underwriting jobs (and relatively expensive ones at that) in Britain? The UK government, like many others facing up to this sudden economic crisis, has little choice but to act - and quickly.

After the dramatic banking sector shore-up in the autumn, it's the so-called real economy requiring support now.

It's maybe not as dramatic as Lehman going bust overnight, but the long-term consequences of what's now occuring in manufacturing industry - much of it under the radar in the small supplier companies - could be just as serious, if not more so.

Peston posting on the subject

JLR suppliers - radio clip

Festive cards

Thu, 18 Dec 2008 13:58:00 GMT

I expect the practice of sending out Christmas cards and diaries to fellow professionals will be down this year, an easy low-hanging saving to be made from marketing or PR budgets. And I guess the e-cards that you receive via email will be more numerous than ever.

There's one thing I think every year and the thought has just hit me again after opening a particularly bland festive card (from people I don't actually know at a major international company) in the email: do it properly or don't bother.

If you do it, please put a modicum of thought into it so that it makes an instant impact with some style or humour. Maybe inject some simple personality into it (get the digital camera out and let's see the team eating mince pies, santa hats on - how difficult is it?). Or use the opportunity to get some sort of halfway useful message across.

Or just forget it (and there is really nothing wrong with not bothering).

But the half-arsed festive image put together in 10 seconds with a name or names at the bottom and distributed to half the world's population doesn't do the sender a lot of favours. I hope I don't sound like Mr Grumpy, but the tacky going-through-the-motions stuff gets on my wick at this time of the year. Put some effort in, or just leave it. Please.

By the way, Happy Christmas (that's me done).

Volvo S60

Thu, 18 Dec 2008 12:55:00 GMT

The Volvo S60 concept certainly looks good. I wonder how much will make it into the production car...

The lack of a B-pillar and the LED headlights on the front (designed to look like little Viking long boat sculptures, according to Volvo) are a couple of touches it would be nice to see make the cut.

Will this car cause ripples of excitement among possible buyers for the company?

DETROIT PREVIEW: Volvo concept heralds S60 redesign

Would you invest in a hedge fund run by Mr Made-Off?

Wed, 17 Dec 2008 11:16:00 GMT

You just couldn't make it up could you? Bernard Madoff's hedge fund attracted investment funds from some pretty respected sources but it was all a bit, as we like to say in England, dodgy. In fact, it was a gigantic fraud, all smoke and mirrors. And his surname is pronounced as 'made off'. Only it's not a comedy sketch.

Our collective faith in the financial world is chipped away at a little bit more. Let's hope the regulators are on a steepish learning curve, past mistakes duly noted.

But, startling figures I have seen on the BBC website suggest that the ability of (or should I say failure of) businesses to be able to negotiate funding from their banks will bring the credit crisis storming to the front of the agenda once more in 2009.

The figures, reported by Robert Peston, the BBC's business editor, are from the Bank of England's quarterly bulletin and show that, in 2009, there will be a massive bulge in the value of bonds issued by European companies that have to be repaid.

Peston says that close to US$1000bn of what he terms "old world" companies' borrowings in the form of tradable debt has to be paid back during the next 12 months - with something like $800bn of this owed by financial companies and $200bn by non-financial companies.

"That would be a colossal sum to pay off at the best of times, and is equal to about five times what's been repaid in 2008. It is a disturbingly huge amount, at a time when even the bluest-of-blue-chip companies are finding it difficult and expensive to raise money by selling new corporate bonds," he says.

It's something else for the negatives column as far as the economic outlook is concerned in Europe. On the plus side, at least interest rates are coming down at an unprecedented rate. If the banks do start lending around the world (notwithstanding the above) then a slight improvement, coupled to cheap capital might bring a relatively sharp upturn. And there will be an element of pent-up demand building. And inflation is low.

But confidence will obviously be key and if you listen to the financial commentators, that's still some way off. Are there many more nasty surprises out there?

GI Top 10 economic predictions for 2009

Rescue packages

Mon, 15 Dec 2008 11:28:00 GMT

Tata-owned Jaguar Land Rover is said to be seeking a big loan from the British government to get it through next year and the squawking everywhere for government loans to aid liquidity for embattled auto firms is an interesting one isn't it?

Governments may feel obliged to offer 'rescue packages' for local auto firms and auto firms will feel that they shouldn't waste any time in lobbying/applying for available credit that is likely to be on much better terms than anything they can get privately.

And national governments will feel that they need to act to ensure that it's not their country that loses out in the industrial restructuring that the recession will inevitably cause. Why should, for example, the jobs disappear in Britain rather than in Germany or France? And the local units of auto firms will play on that fear of the recession and its long-term impact being disproportionately felt without the cheap credit and support that 'everyone else is getting'.

What about the danger that the taxpayer ends up subsidising firms that are relatively undeserving in the general clamour for cheap cash? It is something that governments need to consider and if the EU is worth anything, now's the time for it to show that it has a point as a body that can help to avoid beggar-thy-neighbour rescue packages by individual governments. There should be some sort of credible EU-wide response to the recession and its uneven impact on the European economy and its industries. But national governments appear to be stepping in in Europe, wherever you look.

Back to the UK. Did you see that the Royal Bank of Scotland effectively pulled the plug on parts maker Wagon when the refinancing it needed to avoid administration was refused by the bank? So much for the UK government's attempts to get the banks - some of whom we as taxpayers now partly own following their emergency recapitalisations - lending as part of industrial policy...

UK: Government mulls automaker aid

George Bush legacy

Mon, 15 Dec 2008 11:25:00 GMT

I guess George Bush is perhaps in a strange limbo at the moment.

Although he is still the President of the USA for a few more weeks, the pressure is mainly off. It's a time for valedictory speeches, tying up loose ends and maybe enjoying the trappings of office without some of the burdens. The difficult and taxing stuff is about to be handed over en masse to the new guy, so now's not a time for policy initiatives.

Did you see the footage of that press conference in Iraq yesterday at which a local journalist removed his shoes and threw them, one at a time, at George Dubya? The shoes moved through the air at pace and George had to react pretty smartly to avoid them - especially the first missile which also carried the element of surprise. (Impressive evasive action by GB - I wonder if he plays dodgeball?)

The guy who threw his shoes was making a serious point, but it was a little lost in the slightly comedic slapstick of the moment.

What struck me though, was the interview with Bush afterwards. He seemed very, very relaxed - jovial even - much more relaxed than I have seen him for a while. He's perhaps already got one eye on a more leisurely existence on his Texas ranch as an ex-President.

But he cannot afford to get completely demob happy. The auto industry's crisis is perhaps the major thing on his desk that he cannot just leave for the next man - the crisis is just too pressing.

How will the Bush Presidency be remembered? What will the legacy be?

Whatever you think of his tenure, there is probably one thing he doesn't want to be known as: the President who, in his final days of office, let General Motors die. After the Senate rejected the proposed federal loans package last week, attention has swung to other options for keeping GM in business and out of bankruptcy in the immediate short-term.

Look for something to happen this week.

US: White House signals auto loan turnaround

Bailout rejected; where next?

Fri, 12 Dec 2008 08:50:00 GMT

I am a bit surprised that the $14bn emergency loan package for automakers was rejected in the Senate. Of course, the likely vote numbers didn't look good for the bill's backers to start with. But I thought enough pressure would be brought to bear (especially from the White House) and that there would be a sense of not wanting to take the risk of not doing it, that would have got it through.

And as is often the case, maybe some concessions would be made at the last minute to appease opponents - and that seems to be where Bob Corker came in - to carry the day (and Corker's apparent conversion from being pro-Ch 11 to favouring a deal speaks volumes). Is the UAW really to blame? I don't know enough about the politics going on there, but I note that some are claiming the UAW stuff identified a convenient bogeyman for those who had other reasons for not wanting the bill passed.

But it does sound like the bill came close to winning enough support and I am surprised that it could be rejected by some - if I read this right - simply on the grounds that the UAW wouldn't agree right now to wages parity with Toyota et al in 2009 rather than in 2011. Couldn't that subject be returned to later in Q1 when the companies were supposed to get their full restructuring plans worked through - or be made to file for Ch 11 on March 31 - the whole shooting match overseen by a 'car czar'? This was supposed to be step one to keep the lights on.

The big question this morning is obviously this: what happens now? Chapter 11 must be a much more likely prospect for GM, given that it has said it will run out of money before the end of this month without an immediate $4bn cash injection (with a further $4bn needed to carry on next month). And the initial political reaction seems to be that the bill is dead and that's that until January. Can a small part of the $700bn Wall Street bailout money be made available? GM's immediate $8bn need would constitute just over 1% of that total - doesn't sound like much does it? What can GM itself do this month to stave off filing for Chapter 11? Is there a Plan B we don't yet know about even at this late stage?

And if Chapter 11 it really has to be, then how can that process best be managed to ensure that it doesn't make things worse and delivers the best outcome? (I see GM has hired a bankruptcy adviser.) Lots of questions.

It's not the end of the world. With the bill passed there were still going to be some very tough times and decisions ahead. That was a given, whatever happened. All the relevant actors need to focus on making sure that the baby does not go out with the bathwater now. If that happens, then the lawmakers in Washington and the industry's leaders will be collectively culpable for making things worse for many - not just in the US, incidentally.

What will Wall Street do today? In the minds of investors, the downside risks attached to the already fragile US economy just got significantly worse. Wherever you sit, that's surely not a good thing.

US [updated 10:45GMT]: Senate shoots down auto rescue package

Latest proActive is out

Thu, 11 Dec 2008 14:19:00 GMT

The latest issue of the e-magazine we produce on behalf of Lotus Engineering, proActive, is now available for download. There are a couple of very interesting pieces concerning the new Lotus Evora as well as an interview I did with Ian Foley, MD at Williams Hybrid Power. The Williams Hybrid story has more to it than you might think. While the folks there are working flat out on getting the new KERS technology ready for the 2009 F1 season, they also have an eye on future road car applications for their powered flywheel and there have already been discussions with relevant parties.

Anyway, Issue number 29 (crikey, are we really at 29 already? - seems like only yesterday we were having exploratory meetings to chew over the idea) is available for download. If you're signed up, you will already have received an e-mail.

proActive

GM, bailout, Corvette and Jay Leno

Wed, 10 Dec 2008 10:31:00 GMT

Well, it looks like a deal has been cobbled together between leading Democrats and the White House for some 'tideover' loan finance that should stave off immediate crisis at least. I wonder who will get the 'car czar' overseer role. To have credibility, it has to be someone with a reputation for financial prudence, or good business sense who is clearly not a 'car guy'. Paul Volcker's name has been mentioned. I wonder if I can lay a bet at Paddy Power yet? Jack Welch? What's Bill Gates up to now?.

As far as I can see, this $15bn deal takes us into Q1, when a whole lot more discussion gets under way on what happens next, the new Obama administration's attitude a key element.

There's some chatter on various websites about what might happen to bits of GM in the Ch 7 break-up scenario. There's even a suggestion in some quarters that Toyota might be a good home for Corvette. Yes folks, it's a crazy world we are living in.

I believe Jay Leno is something of a 'Vette fan. I enjoyed watching this Leno vid, the guy enthusing about the qualities of the new ZR1. Did he really say $60,000 a gallon for the high tech paint that won't crack in the sun?

Volvo and Changan?

Tue, 09 Dec 2008 15:46:00 GMT

Would Volvo Car look attractive to a Chinese car manufacturer? You betcha. As Tata did with Jaguar Land Rover, you effectively put your global strategic development on fast-forward by acquiring an established Western automaker - especially if it comes with a respected prestige brand. There's all that deep engineering knowledge, off-the-shelf products and major component systems, distribution networks and manufacturing plant assets to think about for starters.

And Volvo ought to be eminently turnaroundable (is that a word?), financially. The purchase price might be a slight sticking point though. And even the Chinese are likely to be a bit cautious at the moment, a downturn of uncertain magnitude on the cards for the Chinese economy and vehicle market.

The Changan news flurry is a curious one though. So, Ford thought it should tell its Chinese partner Volvo is for sale as a matter of 'courtesy'. Really? That's very polite indeed, isn't it? Because that's how Western automakers are with their Chinese partners generally - they have super-respectful and trusting relationships with them and tell them everything, naturally, I don't think. It wouldn't be a huge leap from that 'courtesy' to 'we'd welcome any thoughts you may have on this matter'.

And the subsequent media fallout and 'misreporting'? Well, it will be picked up especially keenly in Sweden where there may be some potential investors in Volvo who are hanging back at the moment, but nevertheless not exactly thrilled at the idea of a Chinese owner for the venerable Swedish car brand sucking it dry. And one word is guaranteed to get them going: Rover. This Changan talking to Ford about Volvo story might well flush those reluctant Swedes out, with wallets.

Is someone at Ford playing at the black art of media manipulation? Just a thought.

CHINA [updated 13:15GMT]: Ford denies Volvo sale talks with Changan

$1 salary illegal?

Tue, 09 Dec 2008 15:14:00 GMT

The leading execs of big companies sometimes live like rock stars and are pretty well compensated with both salary and stock options. So, they won't exactly be on the breadline if they take a pay cut to $1 a year. Don't spend it all at once guys. Maybe you can't...

One has to take one's laughs where one can in these economically challenged times. Is a symbolic $1 annual salary actually illegal? It must be under the minimum wage, eh? And how would you get paid the $1? In monthly instalments? Would it be processed like any other payroll sum? This from the Slate.

Slate

BMW's Michael Ganal

Tue, 09 Dec 2008 15:04:00 GMT

I was sorry to hear of the death of BMW board member Dr Michael Ganal yesterday, following what BMW described in its release as a 'severe' illness. Sounds like it was quick. He was only 54. I last saw him at the BMW Annual Report press conference at the end of March and I last interviewed him late last year at a BMW 1 Series Coupe event in Copenhagen. He was very good value for money, happy to perch at each table to answer journalists' questions long after dinner - and he had a good command of the varied subject matter. He seemed like a very 'safe pair of hands' and I'm sure he'll be much missed by colleagues.

DENMARK: BMW targets US with 1 Series Coupe

GERMANY: Former BMW CFO dies

An engineer writes

Mon, 08 Dec 2008 11:31:00 GMT

There's an interesting perspective here from someone who apparently worked as an engineer in the auto industry with wide experience - enough experience to offer some insight into Detroit's problems, as well as its hidden assets. There's also an interesting observation on the perception gap, consumers with long memories and the difference between big ticket and small ticket items in terms of consumer behaviours.

Former Insider on the Auto Bailout: Never Underestimate Brainpower in Detroit

The state of modern capitalism

Fri, 05 Dec 2008 09:55:00 GMT

There were more grim statistics on the UK vehicle market yesterday, with November's car sales down by over a third on last year.

The French certainly don't mess about when it comes to government support and a scrappage scheme has just been announced.

Scrappage schemes bring forward sales and that sounds like a simple policy instrument that deserves serious consideration as a low-cost goverment support option (that also helps to clean up the parc). Is the UK's government taking note? Does a 2.5% reduction in VAT really make much difference to anything? (If you're going to cut VAT why not cut it by much more and maybe create a smaller window - imagine if they had said that just for the month of December VAT would be 0% and the consumer spending lift that would have resulted in...)

And massive interest rate reductions don't make much difference if there's no new lending going on anyway. In fact, they probably send the message that the authorities are in panic mode and lacking any creativity in terms of policy response to the looming recession. A run on the pound can't be far off.

How does a depleted car market hit aftersales? Badly, and the effects could last for the long-term according to a study by Trend Tracker. The warranty cash-cow that garages adore will necessarily be smaller in future years due to lower car markets.

I see Honda is pulling out of Formula One, which has always been an expensive hobby for carmakers. Will anyone else follow? (Actually, with the hybrid tech allowed in for the 2009 season - that should provide a power boost when overtaking - it might be an interesting season ahead.)

Over in Washington, it's interesting to see the debate unfolding over a loans package for the Detroit 3. Great theatre, but a bit uncomfortable to watch given the stakes. Which way is it swinging? I think it may be going towards a view that something needs to happen; it's loans with an overseeing czar or maybe a 'pre-packaged' Chapter 11 if necessary to try and manage the process - though it is surely a prospect that will still be viewed with alarm by many.

But recessions are notable for post-event rationalisation and much finger pointing. So, we get the politicians making hay over what's gone wrong with Detroit and how culpable the car firms' managers have been. They tap into a crude populist view that Detroit is all screwed up and now needs to get what's coming. I find that distasteful as well as wrong-headed.

And it's the same finger pointing going on with the bankers here in England where the 'City' has all gone a bit wrong. Those bankers with their big bonuses and fancy suits (and cars) are a self-serving and irresponsible bunch who need to be controlled, the politicians moan. Maybe there's more than a grain of truth in that, but five minutes ago, before all this brown stuff hit the fan, those same bankers were being feted and fawned over and the politicians didn't want to regulate them for fear of upsetting the goose that lays golden eggs.

It's the politicians that really bug me, but I guess, as someone said, we get the politicians we deserve.

One thing I think this recession should do is cause everyone to question how modern capitalism functions and who the economy really serves. That might be a debate that is well overdue. There's a local authority in England (Essex) in the news for providing loans to local businesses that can't get funding because of the credit squeeze. That's popular, more popular than blokes in high-vis jackets endlessly resurfacing roads anyway. Perhaps fundamentals like the role of the public sector will come in for re-evaluation.

In a sense, the underlying state of modern capitalism is a consideration as pertinent to the 'bailout' (let's please not get hung up on the term, it is public money made available as a soft loan so the term isn't totally erroneous) hearings taking place in Washington as it is in the investment banks in London where security guards are issuing black plastic bags and escorting people who have done no wrong off the premises. In Detroit and London and all over the world, there are countless innocent victims out there.

What is a car company? Is it simply an economic entity that creates, through the convenient marriage of capital and labour, a product for sale in the market? Is it to be considered disspassionately as such? Or is it something more...

Myself and Mark Bursa were chatting about the situation for Detroit the other day. I found myself putting the case for the defence and we got some thoughts down on paper (below link). Well, no, not on paper exactly, but you know what I mean.

Other weighty issues compete for attention. What the heck is the bloke who played Mr Sulu in Star Trek doing in a sick-making reality TV show over here? Why'd he have to go and do that? And just what is the point of Robert Kilroy-Silk (the guy is supposed to be sitting as an elected representative in Brussels rather than eating spiders on the telly for our 'entertainment')? If ever there was a point to the perma-tanned pillock, it got up and left the room a long time ago.

Plenty to mull over on this fine winter's morn.

TALKING POINT: Should Congress approve a Big Three bailout?