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Michigan ponders its automotive future in the connected age

Few people take cars more seriously than Michiganders. I've been to the home of BMW in Germany. I've been to Kia's HQ in Korea. I've seen Honda's goods in Japan. No one, from the factory worker to the executive in her pinstriped suit, is more obsessed with cars than Michigan Inc. That's why it was interesting this week to see the state have a moment of introspection four hours north of the Motor City on a scenic island called Mackinac. Ironically, cars are not allowed here. Normally a tourist trap, it played placed host to the Mackinac Public Policy conference this week. While politics took center stage ( I may be the only person here not considering a run for governor) the evolution of the industry through connectivity and data was a theme of the conference. If you're reading this in New York, Silicon Valley, or one of the automotive heartlands listed above, you do care about this. If Michigan rethinks its approach to the car business – and makes moves to become more competitive – that affects you the consumer and enthusiast. It's jobs. It's technology, and it's a competition to see who's going to be the leader. More than a century after Henry Ford made mass production a thing, more than 70 years after Detroit's Arsenal of Democracy helped win World War II, and nearly a decade after the historic bankruptcies of General Motors and Chrysler, the car business is on solid footing again and looking to the future. What's next? Michigan is still home to thousands of auto workers, tech centers (including gleaming facilities built by Toyota and Hyundai), and the headquarters of the three American carmakers. Just because the economy is good doesn't mean it's a given connected cars and mobility advancements are going to come from this state. A lot of it's not. Tesla, Uber, Lyft, Faraday Future, and other transportation mediums have spouted up other places. Michigan leaders and Detroit's carmakers understand this reality. Reflecting on the past means admitting the future is not a given, a key undertone this week in Mackinac. It's about using existing resources, like skilled labor, to move forward. "We do have the number of technicians and technical expertise here in this state," says Stephen Polk," conference chair and former CEO of auto data firm R.L. Polk & Co. To that end, Ford is placing increased emphasis on a division called Smart Mobility, which is an in-house unit focusing on autonomy, connectivity, and forward-looking ideas.

Ferrari stock demand exceeding supply

As with the Ferrari cars, so it is with shares in the company's initial public offering: When Ferrari has a limited quantity of something to sell, demand far outstrips supply. Investors told banks weeks ago that bids for the $1 billion in stock – up to 18.89 million shares – would exceed the number of shares available over the entire expected range of $48 to $52. Ten percent of the company is going on the block' Bloomberg reports that the books close on the IPO on Monday at 4:00 pm. The final price will be set on Tuesday, and trading will begin Wednesday under the ticker symbol RACE on the New York Stock Exchange. Piero Ferrari, the son of Enzo Ferrari, will hold onto the ten-percent stake he currently has in the company. Fiat Chrysler will disburse the final 80 percent to its investors sometime in 2016. In combination with spinning Ferrari off from its parent company next year, the share sale is expected to put $4 billion into Fiat Chrysler coffers, which will be used to help fuel the growth of Alfa Romeo, Jeep, and Maserati. Assuming all goes to plan, Bloomberg says Ferrari will be valued at roughly $12 billion, a number $1 billion greater than the valuation Fiat Chrysler CEO Sergio Marchionne put on Ferrari earlier this year and higher than the brand's own internal assessment. Related Video:

Treasury says auto bailout tally drops to $20.3 billion

In December, the US Treasury announced that it was going to sell all of its shares in General Motors within 12 to 15 months. The first tranche of the 500-million total shares was purchased by GM, which took 200 million of them at $27.50 per share. That price represents an eight-percent premium over the market price at the time. The remaining 300 million shares will be sold "through various means in an orderly fashion."
Of the $418 billion disbursed through the Troubled Asset Relief Program (TARP), a report in Automotive News indicates that "about 93 percent" has been paid back, and the latest figures put Treasury's loss from the program overall at $55.58 billion. That's a $4.1 billion improvement on the last figure, when the expected red ink added up to $59.68 billion. The auto industry's portion of that loss is estimated to be $20.3 billion, a 16-percent drop from the earlier estimate of $24.3 billion.
The Treasury now owns 19 percent of GM, but if all goes well, there will be no more cause for anyone to utter "Government Motors" by the end of Q1 next year. A loss of some kind is still expected, however. Although GM's stock price is close to $29 at the time of this writing, that's still $4 below its IPO price and well below the $72 share price necessary for the government to come out even on its GM investment. On second thought, maybe the ribbing will continue.