Wednesday, November 26, 2008

Cerberus claims it was misled in deal for Chrysler

By TOM KRISHER , 11.26.08, 04:42 PM EST

Relations between Chrysler's current and former owners turned ugly Wednesday when private equity firm Cerberus Capital Management LP accused Daimler AG of "intentionally and materially" misleading Cerberus before the German automaker sold Chrysler last year.

Both sides slugged it out with dueling news releases. Cerberus claimed Daimler breached the sale contract, while Daimler called the allegations absurd.

The unusual public feud likely is a prelude to arbitration or a lawsuit over the sale, said Peter Henning, a former Securities and Exchange Commission attorney who teaches at Wayne State University Law School in Detroit.

Cerberus' statement accused Daimler of misrepresenting changes in underwriting practices for vehicle financing and leasing. That means Cerberus is alleging that Daimler inflated the value of its lease and loan portfolio by lending money to buyers who didn't meet its lending standards, Henning said.

Cerberus, he said, is essentially saying that "Daimler gussied Chrysler up to make it look good."

They made it look better than it was and didn't disclose it, or actually even worse than not disclosing it, made misrepresentations," Henning said.

By making the allegations public, Cerberus appears to be conceding that its Chrysler investment hasn't gone well for the New York private equity firm.

"They expected Chrysler to be one thing, and in fact, it turned out to be something quite different," Henning said. "It's simply a statement that this company was a lot worse off than Cerberus thought when they got into the deal."


Automobile Quarterly
Automobile Quarterly
This Day in Auto History:

Richard Ralph Hallam Grant of General Motors is born in Ipswich, MA
Herbert Willetts of the Mobil Oil Corporation is born in Troy, NY
The Chrysler Imperial Series L80 is introduced
The Dearborn Motors Corporation is organized to market Ford tractors
Female racer Desire Wilson is born in Johannesburg, South Africa

Source: Automobile History Day By Day, by Douglas A. Wick

In tough times, Detroit auto show drives on

Some firms aren't coming to Cobo event, but Ford and GM unveiling key models


Plans for the 2009 North American International Auto Show have been scaled back, and some automakers have backed out.


As economic pressure builds on automakers, the impact on the 2009 North American International Auto Show in Detroit threatens to cut into much needed revenue for charities, catering companies and exhibit builders.

This year's event will be without seven automotive manufacturers that typically fight for precious space at Cobo Center, and many of the manufacturers that remain are cutting back on activities.

"Scaling back would be an understatement," said Scott Stubbs, president and chief executive officer of Warren-based H.B. Stubbs Cos., a company that builds exhibits for automotive companies. "There is a real imperative to cut costs and save on cash."

The auto show is perhaps the region's most important annual event, both from a glitz and real-dollar perspective. But much like the rest of Detroit, the show is feeling the effects of cost-cutting across the industry.

Each January, the event draws about 6,000 journalists from across the globe -- helping to maintain Detroit's profile as an automotive center.

It also draws hundreds of thousands of public visitors and annually raises about $6 million for 11 children's charities in a one-night event, which attracts about 15,000 people.

Charity preview a priority

But ticket sales have slowed for the charity preview -- the region's highest-grossing annual single-night fund-raising event.

"As an organization that was one of the founding partners of charity preview, we are thrilled with the event, but we are very concerned this year," said Len Krichko, president and CEO of the Boys & Girls Clubs of Southeastern Michigan.

Last year's charity preview raised about $6 million, and the portion that goes to the Boys & Girls Club is a significant part of the organization's annual budget.

Joe Serra, senior cochairman of the auto show, said sales of the $400 tickets for the charity preview are down about 3% from where they were at the end of November last year.

"That is the one event where I am going to plead to the public for support, because as we all know, those dollars go to children's charities," Serra said.

Last year, a short concert featuring Barenaked Ladies took place after the preview at Cobo Arena. Serra said organizers plan to hold a similar concert this year and add another undisclosed major entertainment event to boost ticket sales.

Serra said the auto show is bringing back an invitation-only event called the Gallery for wealthy individuals who are shopping for luxury cars such as Maserati, Lamborghini, Maybach and Bentley.

Manufacturers depart

Nissan Motor Co. stunned the Detroit Auto Dealers Association, the event's organizer, on Monday when it became the first major automaker to exit from this year's auto show.

Nissan said its decision was based on the big splash it made at the Los Angeles Auto Show earlier this month and the economic realities that the auto industry is facing.

"This is not in any way a commentary on auto shows in general or any auto show specifically," said Nissan spokesman Alan Buddendeck.

Other manufacturers that have backed out include Mitsubishi Motors Corp., Rolls-Royce, Land Rover, Ferrari and Suzuki. Porsche Cars North America Inc. was not part of 2008 show and is not returning for 2009.

Detroit's niche

Still, Serra said he is expecting that the show will feature about 45 new production and concept vehicles.

"Every show has their niche," Serra said. "And the Detroit show, our niche is the media. And in more cases than not, when these scale-backs happen ... that niche plays into our favor."

Even though General Motors Corp. has canceled its annual fashion show called GM Style, spokesman Scott Fosgard said the company plans to introduce three important vehicles -- Buick LaCrosse, Cadillac SRX and Chevrolet Equinox.

"Detroit is actually going to be a very big show for us," Fosgard said. "Now, we may not be doing all of the show-biz and Vegas-type actions, but I think we are going to have a lot of news, and we are going to do it in a way that is very cost-efficient."

Toyota Motor Corp. has canceled a news media event it typically holds at the Detroit Athletic Club, but plans to unveil its third-generation Prius and a new Lexus hybrid.

Honda Motor Co. still plans to hold a news conference to unveil its Insight, a new hybrid vehicle scheduled to go on sale in April, but said it has scaled back its original introduction plans.

Chrysler LLC said it only plans to host a news media party at a former Detroit firehouse across from Cobo Center on one night. In the past, festivities for journalists spanned several evenings.

Catering cuts

At this time last year, John Forte's catering company, Forte Belanger Catering in Troy, had booked about 10 events during the show, but so far this year, he has booked only one.

"I will say the bottom fell out," Forte said. "We have virtually nothing solid on the books for the auto show."

Forte said several potential events are on hold and may come through after Thanksgiving.

His situation is yet another sign that the 2009 auto show will be very different from any in recent memory.

Matt Prentice, CEO of Matt Prentice Restaurant Group, said the only event he has scheduled so far this year is for the charity preview night for Metro Detroit Area Ford Dealers.

"I would anticipate it's going to be a pretty quiet event from a food and beverage perspective," Prentice said of the auto show.

Renovation needed

But Serra argued that this is not the time to abandon plans to expand Cobo Center, the aging convention hall in Detroit where the show is held.

Legislation to create a regional authority that would oversee a $308-million plan to purchase, expand and renovate Cobo Center is pending in the state Legislature.

"Once we get through this and we get back to normal life, we will have as much need if not greater need," for a renovation and expansion of Cobo Center, Serra said.

Tuesday, November 25, 2008

Nardelli: Revival info to come

Chrysler to give details next month, he says in memo


Chrysler LLC Chairman and CEO Bob Nardelli told employees that the automaker will share more details next month on its reorganization.


Chrysler CEO Bob Nardelli told workers late Tuesday to expect more information next month on how the struggling automaker will reorganize "to adapt to its new realities."

At the moment, the Auburn Hills automaker is "totally focused on putting together our loan request presentation as we concentrate on the critical business issues at hand," the chief executive told workers in a message obtained by the Free Press.

Last week, Congress refused to authorize $25 billion in bridge loans to Detroit's struggling automakers, demanding that plans for viability be submitted by Dec. 2.

As executives at General Motors Corp. examine operations, they are discussing "all options," including whether the company should reduce its brands, a person familiar with the deliberations told the Free Press.

GM, which is seeking up to $12 billion in government loans, is expected to present a shorter, public version of its plan and a longer, confidential version for lawmakers. The automakers are to testify to the House Financial Services Committee Dec. 5. The Associated Press reported that the Senate Banking Committee will take testimony Dec. 3.

Ford could seek as much as $8 billion, but has said it may not need the money; Chrysler is seeking $7 billion. Executives at both GM and Chrysler have said their companies are in danger of reaching minimum levels of cash needed to sustain operations.

In his memo, Nardelli said Chrysler is prepared "to meet the 'accountability and viability' criteria requested and is ready to share our plans for returning Chrysler to profitability."

At the same time, Chrysler is trying to eliminate about 5,000 white-collar positions -- on top of the 29,000 job cuts already announced.

Salaried workers at Chrysler face a deadline today to sign up for buyout and retirement packages; they have until Nov. 30 to rescind. Chrysler has said involuntary separations will occur in December.

"Without question, 2008 has been a year of challenge and change, and next month will be no different," Nardelli said. "With a smaller team to face this difficult business environment, the company must once again adapt to its new realities."

"Beginning in December, more information regarding changes to how we will organize and operate will be available," he added. He thanked those workers leaving "for all they have done."

Nardelli reiterated his belief that cooperation within the industry is essential. "A collaborative approach could help government dollars go further and help achieve important national policy objectives related to energy security and environmental improvement," he wrote.

"For example, instead of the government giving each company a dollar to separately spend on technology, there should be ways to pool the investment to develop a shared technology that would benefit all three domestic automakers (much as we've already done with hybrid technology working with GM and others)."

In the short term, Nardelli said, Chrysler needs the federal aid to support ongoing operations. "Our goal is to emerge as a company that is leaner and more agile, and committed to relentlessly improving the quality of our products and our focus on customers," he said.

Nardelli told his workers that Chrysler, while appreciating the effort, could not -- "from a financial perspective" -- be involved as a participant or sponsor of efforts by suppliers and industry supporters to caravan to Washington as a sign of support for the automakers.

On Tuesday, GM announced the indefinite extension of the suspension of employee purchases of its shares under two benefit plans, Bloomberg reported. GM had planned to end the restrictions during the week of Nov. 9.

The news service also quoted a report from Himanshu Patel, a JPMorgan industry analyst, as saying GM must lower its profitability threshold to a U.S. market of 13 million vehicles from 16 million required now, a move that would require cutting $4.2 billion in additional costs, split between creditors and labor.

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SEMA 2008: Mopar(R) Unveils 2009 Mopar Drift Dodge Challenger at SEMA

Mopar(R), Chrysler LLC’s global service and parts division, is bringing the all-new Dodge Challenger to the next generation of motorsports enthusiasts. Mopar will unveil the much-anticipated 2009 Mopar Drift Dodge Challenger today at the 2008 Specialty Equipment Market Association (SEMA) Show in Las Vegas.

Team Mopar driver and two-time Formula Drift (FD) champion Samuel Hubinette, who will steer the Mopar Drift Dodge Challenger during the 2009 season, participated in the reveal. Hubinette’s team owner Shaun Carlson, owner of NuFormz Racing, was also in attendance. Carlson spearheaded the build of the Mopar Drift Dodge Challenger at his NuFormz Racing shop in Ontario, Calif.

The unveiling of the Mopar Drift Dodge Challenger at SEMA continues Mopar’s long commitment to the rising motorsport of drifting. Mopar and Hubinette teamed up to capture the inaugural FD championship in 2004, with Hubinette also taking the 2006 FD title. Hubinette has claimed nine career FD victories, a series high, spreading the word about Mopar power to the younger demographic of race fans that follow drifting.

“The debut of the Mopar Drift Dodge Challenger solidifies the Mopar theme - if you can dream it, you can build it with Mopar,” said Steve Shugg, Director of Sales and Marketing - Mopar, Chrysler LLC. “Mopar is reaching out to today’s car enthusiast by combining its storied racing heritage with a variety of performance and accessory products that allow customers to make a personal statement with their vehicle.”

Shaun Carlson and Samuel Hubinette on the 2009 Mopar Drift Dodge Challenger

The creation of the Mopar Drift Dodge Challenger was no easy task for Carlson and his NuFormz Racing crew.

“We learned a lot from building the Mopar Drift Dodge Charger, which Sam drove during the 2007 season, and transferred that knowledge to the Mopar Drift Dodge Challenger,” said Carlson. “When we decided to bring out a new competition drift car, what better platform than the new Dodge Challenger. It has cool styling, great aerodynamics and it’s a car that we feel is going to create a lot of buzz among fans of the FD Series.”

The Mopar Drift Dodge Challenger underwent modifications, including a variety of safety components such as a full roll-cage and a five-point harness. A front carbon-fiber splitter and rear carbon-fiber wing were added for improved aero dynamics, and weight was trimmed off the Dodge Challenger SRT8 chassis by utilizing a custom carbon-fiber body by NuFormz Racing.

“One of the biggest modifications was making the car light,” Carlson remarked. “Much of the body is now carbon-fiber, which cut quite a bit of weight. We’ve been able to put a lot of time, effort and hard work into this car. It’s going to be strong.”

The powerplant of the Mopar Drift Dodge Challenger features a Mopar A8 aluminum engine built by Gary Stanton Racing Engines, with Mopar W9 raised port heads, pumping out an estimated 850 hp and 849 lb-ft of torque to BFGoodrich tires. Additional Mopar components include Mopar front and rear sway bars on the suspension.

“This is going to be an exciting time, bringing out another car and another platform,” said Hubinette, who in 2009 will mark his sixth year as a member of Team Mopar. “All that we learned from building the Dodge Charger drift car is transformed into this car and really makes it competitive. The Dodge Challenger is definitely the hot vehicle right now - everybody’s talking about it. Having the vehicle built as a competition drift car is just going to add even more excitement. We’re pumped up about launching this car, doing some testing over the winter and getting it ready to rock, and then taking home some victories next year.”


Automobile Quarterly
Automobile Quarterly
This Day in Auto History:

Hyundai cofounder Chung Ju Yung is born in Asan, Tongcho, Kangwon Province, Korea
George H. Hunt, a principal developer of automotive safety glass, dies
The 1,933-mile Pan-American Road Race from Tuxtla Gutierrez to Ciudad Juarez, Mexico is won by Piero Taruffi in a Ferrari
The 1967 Plymouth Barracuda is introduced to complete the marque’s lineup

Source: Automobile History Day By Day, by Douglas A. Wick

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How Bad is U.S. Auto Market? Toyota’s Losing Money, Too

image Toyota iQIn the midst of the doom and gloom surrounding Ford, GM and Chrysler, it’s fair to point out that even mighty Toyota Motor Corp. lost money in North America in the last six months.

Toyota had an operating loss of 34.6 billion yen in the first half of its 2009 fiscal year, the period ending Sept. 30, versus an operating profit of 263 billion yen. Depending on the exchange rate, that’s an operating loss for the half of about $358 million.

That’s a lot better than the billions lost by the Detroit automakers, but it’s sufficiently dire by Toyota standards to warrant the creation of an “Emergency Profit Improvement Committee,” charged with a mandate to salvage a profit for the 2009 and 2010 fiscal years.

Specifically, the committee will review production capabilities, as well as the scale and timing of new projects, the company said in a Nov. 6 presentation.

Reading between the lines, Toyota until now has been so successful for so long, especially in the United States, it may have lost focus on its penny-pinching tradition.
Meanwhile, Toyota’s U.S. sales fell 32.3 percent in September from the year-ago month.

The drop prompted the company to offer unprecedented zero-percent financing deals. Despite the offers and a big advertising blitz, U.S. sales fell almost as much in October, down 23 percent from the year-ago month, according to AutoData Corp.

Toyota’s announcement seems to acknowledge the company may be trying to do too many things at once, like succeed in the fullsize pickup truck segment with the Toyota Tundra; the minicar segment with the Scion brand; the luxury car segment with the Lexus brand; and potentially create yet another entire lineup based around the popular Prius hybrid model.

Toyota certainly has enough product to go any way the market goes. On the cover sheet of its financial results, the company featured a picture of the tiny Toyota iQ model, which allegedly seats four, although based on its outside appearance, it’s hard to see how. The iQ goes on sale initially in Japan this month and in Europe in early 2009. No official word yet on the potential for North American sales.

UPDATE 1-JP Morgan widens '09 loss view for GM

Nov 25 (Reuters) - J.P. Morgan Securities widened its 2009 loss estimates for General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) on lower international earnings and likely higher interest costs from government debt.

J.P. Morgan forecasts a loss of $25.25 a share for the automaker for 2009, compared with its prior loss view of $22 per share.

The U.S. Congress has approved $25 billion in loans to help the auto industry change its U.S. factories to produce more fuel-efficient cars.

"We are deeply skeptical of the commercial prospects for government-dictated product plans," analyst Himanshu Patel said in a note, adding that the U.S. government's "focus on forcing GM to make greener cars is misguided."

The U.S. lawmakers are also pondering whether to provide a $25 billion aid package to help American automaker survive the current economic crisis.

J.P. Morgan expects the current Congress will authorize a short-term bridge loan that carries the Big Three -- GM, Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler, owned by private equity firm Cerberus Capital Management LP [CBS.UL] -- to the Obama administration.

The brokerage expects the new administration will be "tasked with crafting a second bailout that may (should) be contingent on more comprehensive restructuring involving labor/creditors and perhaps brands/dealers."

The brokerage estimates U.S. light vehicle SAAR (seasonally adjusted annual rate) of 10.9 million units, or down 32 percent from the year-ago period, for November. SAAR is a closely tracked indicator of auto industry demand.

GM sales are expected to be down 30 percent, Ford down 34 percent, and Chrysler down 42 percent for November, the brokerage added. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Gopakumar Warrier)

Monday, November 24, 2008

Chinese Carmakers Plan To Buy GM

By Management
Chinese carmakers SAIC and Dongfeng have plans to buy GM and Chrysler, China’s 21st Century Business Herald reported on November 18th. — this is one of China’s leading business newspapers, with a daily readership over 3 million. ...
Conservatively Speaking -

Dodge Tomahawk Motorcycle Concept Car in Review

Viper V10 engine

The Tomahawk is a Viper V-10 based motorcycle, a 500 horsepower engine with four wheels beneath it. The engine breathes through twin throttle bodies mounted right up front. (That's what the two round things above the front tires are).

* 500 bhp (372 kW) @ 5600 rpm (60.4 bhp/liter); 525 lb.-ft. (712 Nm) @ 4200 rpm
* 10-cylinder 90-degree V-type, liquid-cooled, 505 cubic inches (8277 cc)
* 356-T6 aluminum alloy block with cast-iron liners, aluminum alloy cylinder heads
* Bore x Stroke: 4.03 inches x 3.96 inches (102.4 x 100.6)
* Two pushrod-actuated overhead valves per cylinder
* Roller-type hydraulic lifters
* Sequential fuel injection with individual runners
* Compression Ratio: 9.6:1
* Max Engine Speed: 6000 rpm
* Fuel: Unleaded gasoline, 93 octane (R+M/2)
* Dry sump oil system takes 8 quarts of oil
* Cooling: Twin aluminum radiators mounted atop engine intake manifolds, force-fed from front-mounted, belt-driven turbine fan. Takes 11 quarts of antifreeze.
* Exhaust: Equal-length tubular stainless steel headers with dual collectors and central rear outlets


Length: 102”
Width: 27.7”
Height: 36.9”
Wheelbase: 76”
Seat Height: 29”
Weight: 1,500 lb
- Front: 8.75”
- Rear: 10”

Weight Dist: 49F/51R

Fuel: 3.25 gal

Safe and Sane: 2009 Dodge Challenger Gets Five-Star Front and Side Impact Rating

Posted Today 10:12 AM by Scott_Evans

While classic muscle cars are lauded for their good looks and incredible power, they're fairly unsafe by today's standards. Dodge was well aware of both of these facts when they designed the new Challenger and the proof is in the pudding. The 2009 Dodge Challenger not only looks great but has now received five-star front- and side-impact ratings for front- and rear-seat passengers, as well as a four-star rollover rating.

"Safety is a top priority in all Chrysler vehicles, and the all-new 2009 Dodge Challenger features the latest in safety and security features providing our customers with the peace of mind they want and expect," said Larry Lyons, Vice President of the Car and Minivan Product Team for Chrysler. "Dodge Challenger offers an unmistakable heritage design and delivers numerous advanced safety and security features."

Thanks to front airbags for both the driver and front seat passenger and side-curtain airbags for all the occupants, the Challenger gets five stars from the National Highway Traffic Safety Administration in both front and side impacts. The Challenger also fell just one percentage point shy of receiving a five-star rollover rating. Dodge credits a host of safety features including Traction Control, Electronic Stability Protection, a Tire Pressure Monitoring System, an Enhanced Accident Response System and more for the top safety ratings.

Source: Dodge, NHTSA

Buy One, Get One Free Dodge Rams in Florida

Posted: Nov. 24, 2008 10:11 a.m.

As the automotive industry struggles with the worst sales figures seen in almost two decades, ridiculous deals have begun appearing. They're typically short-lived, apply only to a handful of cars on one particular dealer's lot, and cover only models that aren't selling well. But they're still jaw-dropping.

Take, for instance, the buy-one-get-one-free Dodge Ram pickup truck at Rob Lambdin's University Dodge in Davie, Florida.

Consumerist spotted it first. They note, "The deal is you buy one Dodge Ram Quad Cab 1500 and you get a Dodge Ram Single Cab for free."

The fine print of the ad says that the offer is only valid on the day of publication, and may change without notice. But it's probably not a trick. Car dealers make payments on the cars on their lots - and when the vehicles sit unsold long enough, it can become cost-effective for the dealer to sell them at a loss just to free space on their lot for a car that's more likely to sell quickly.

The buy-one-get-one-free Ram comes on the heels of the buy-a-Chrysler-Pacifica-get-a-Chrysler-PT-Cruiser-for-$1 deal we saw last week. Have you seen a ridiculous car deal offered in your local newspaper? Let us know.

Research the best car deals for November with U.S. News' Car Reviews.

Detroit 3: Bankruptcy = doom
Could General Motors, Chrysler LLC or Ford Motor Co. survive a bankruptcy filing? Could the domestic industry? The CEOs of the Detroit 3 answered with an emphatic "no" last week when some Washington lawmakers broached bankruptcy -- even a quick, prepackaged one -- as an alternative to a $25 billion rescue package. FULL STORY

image Ch. 11 would hit dealers hard -- fast
A bankruptcy filing by a Detroit 3 automaker would kill many of its dealerships quickly even if the company successfully reorganizes, dealers' lawyers predict. Many dealerships that already are struggling with frozen credit and an economic recession would not survive the instant cash crunch if an automaker decides to seek Chapter 11 bankruptcy protection, the lawyers say. FULL STORY

Cuts beyond UAW's jobs bank seen

UAW President Ron Gettelfinger, in Washington on Tuesday, bristled this week at the notion that the union hasn't given concessions.

Concessions by the UAW on the jobs banks may help win support for federal loans to help Detroit's automakers survive the global credit crisis, but it would need to be part of a broad package of concessions from all levels of the companies, workers and analysts told the Free Press on Friday.

Carmakers defend use of planes for execs

With the airplanes used by the Detroit Three attracting almost as much attention this week as the cars they make, each automaker issued statements defending the way it uses airplanes for corporate travel.

Business news in brief: Mitsubishi to skip Detroit auto show

Mitsubishi Motors Corp. said it won't bring its latest models to the North American International Auto Show in Detroit in January, becoming at least the sixth automaker to abandon the industry's main U.S. showcase.

Democrats: Prove you can repay $25 billion

House Speaker Nancy Pelosi, D-Calif., speaks Friday during a news conference in Washington. Pelosi, striking a more positive tone after the automakers' plea for rescue was rebuffed, said she was committed to bringing Congress back the week of Dec. 8. "I am very optimistic and hopeful that they have gotten the message," she said.

Democratic leaders in Congress called on Detroit's automakers Friday to submit "credible" financial plans to lawmakers by Dec. 2 for spending up to $25 billion in government money, including vows for "significant sacrifices" by top executives.