That should grease the wheels to stop the strike, which has idled or slowed production at 10 GM assembly plants. It’s easy to see why GM is doing it. GM claims that the strike cost the company $800 million in earnings and $2.1 billion in cash in the first quarter. So spending $200 million to help end the strike was comparatively a small price to pay.

But should GM intervene to help parts makers with labor problems? It’s pretty tough to make that argument. GM had to help bankrupt Delphi Corp. The auto maker spun Delphi off in 1998 but still had contractual obligations to the parts firm’s union workers and retirees. That isn’t the case at American Axle, which was formed by company Chairman Richard Dauch when he and some investors bought some weak-performing axle plants from GM in 1994. Dauch has done wonders for those parts-making operations. But he has also had 14 years to make sense of his labor deals and diversify the company to get more than 20% of its business from someone other than GM. He hasn't. So after spending some $8.3 billion helping Delphi get out of bankruptcy and restructure, GM has to help him get end a standoff with the UAW. The only way this makes sense is if Dauch settles the strike, gets lower labor costs and passes some of the savings on to GM.

I like Jim Henry's and Dave Welch's analysis on this. Here's mine:

Bacon here. Bacon. Get your free bacon here. Bacon right on the hood of this here Dodge Durango. Get your bacon here.

And here is that of the Union for Concerned Scientists:

WASHINGTON (May 6, 2008) - Chrysler announced today that it will cover gasoline costs above $2.99 a gallon for customers who buy or lease a new vehicle from the company. The offer is limited to the first three years customers use their cars and covers up to 12,000 miles per year.

According the Union of Concerned Scientists (UCS), Chrysler is trying to fool consumers into overlooking its vehicles' poor fuel economy and environmental performance. The savings the Chrysler program offers, the organization says, don't measure up to the savings one would get from purchasing a fuel-efficient vehicle.

Below is a statement by David Friedman, research director for UCS's Clean Vehicles Program:

"Chrysler is trying to pull a fast one on potential car buyers. It's using this cynical deal to distract consumers from the fact that its cars get poor gas mileage. Rather than sticking customers with gas guzzlers, Chrysler should focus on delivering more miles per gallon. That would not only save their customers money at the pump, it would help cut America's oil addiction and reduce global warming pollution at the same time.

"At the current price of $3.61 a gallon, the buyer of an average Chrysler vehicle would save $400 a year under Chrysler's deal. But a mere 3-mpg boost would yield the same savings over the 15,000 miles per year typically driven in the first three years of ownership. Over the lifetime of a vehicle, such a fuel economy increase would save drivers more than $3,000. It wouldn't stop saving drivers money after just three years.

"Instead of gambling with Chrysler on the price of gas over the next three years, car buyers should go with the certainty of a fuel-efficient vehicle."

Chrysler finished at the bottom of UCS's most recent ranking of auto company environmental performance. It also performed poorly in the Environmental Protection Agency's fuel economy trends report.

For UCS's automaker rankings, go to: www.ucsusa.org/clean_vehicles/vehicles_health/automaker-rankings-2007.html.

But boy are they trying to keep a grip on the past. Gasoline under $3 a gallon is so 2004. The bottom line is that Chrysler has to do this because the company's product line is stuck in the '90s. Big suvs, pickups and jeeps are increasingly irrelevant to middle class consumers who find $3.61 a gallon a burden if they can't get at least 25 mpg. Even Chrysler’s thrifty options, like the Dodge Caliber compact, simply do not stack up with the competition is selling first-rate small cars like the Honda Civic or Toyota Corolla. Will many shoppers really buy a Sebring over a Toyota Camry, Honda Accord, Nissan Altima or Chevy Malibu? I’ll save you the research. They aren’t. Yes, it’s a good marketing move. But it’s necessitated because Cerberus bought a company with a product line that is mostly out of date.

TH!NK city is an environmental vehicle, emission free and 95 percent recyclable. It reaches a top speed of 100 km (65 miles) per hour and can drive up to 180 km (110 miles) on a single charge.

Ray Lane, a Kleiner Perkins Managing Partner and Chairman of TH!NK North America, said, “The transportation industry is undergoing its largest transformation since Henry Ford built the Model T. Today we are witnessing a seminal event – the first highway-capable electric vehicle intended for mass production, representing a big step toward a zero emission transportation industry.”

Th!nk previously made its way into the U.S. around 2000-2001 when it was in a venture with Ford Motor Co. Even though Ford chairman Bill Ford is the one with "green" running through his veins, it was then CEO jac Nasser who cut the deal with Th!nk to provide neighborhood electric cars (the golf cart-like vhicles you see in gated resorts and the like) and eventually an electric city car. Ford dealers also briefly sold Th!nk bicycles with an electric battery assist at dealerships.

Hey, those ideas were hatched back when yahoo.com's stock was almost $500 per share and vendors I know were being paid with pets.com options.

There is so much wrong with the idea of a gas tax holiday, it’s hard to know where to start. It will add to the deficit, psychologically encourage people to drive more and short-change road and bridge repair budgets. It’s also an administrative and planning nightmare to turn a tax off in May and turn it back on in September.

But Clinton knows a piece of election year bacon when she sees it. John McCain was the first to suggest it. Senator Obama is against it for all the economic and rational reasons. For not the first time, Senator Clinton is trying to persuade voters that she is more like John McCain than she is like Barack Obama.

The gas taxes go to supporting road and bridge projects. But in the GOP cum Sean Hannity world, any tax is a bad tax, so the more a candidate is for a tax rollback, the better the GOP likes it, even if it doesn’t make sense.

Mrs. Clinton introduced legislation in the Senate today proposing the gas tax holiday and covering the cost of it through a “windfall profits” tax on oil companies, a campaign spokesman said. Yikes.

This is legislation that has no shot of being passed this year. None. Zero. Zip. And even if by some miraculous method, the bill did get passed…guess what oil companies would do to make up for it? They’d raise the wholesale price of gas. So, it would be a wash for the consumer at best. But Clinton would be able to say she gave voters a tax holiday, and put an extra $25 bucks in their wallets on top of the Federal checks people will soon be getting.

Even though Mark Penn has been sidelined as the Clinton chief strategist, one mole in the Clinton campaign tells me that the polling they have seen shows that a gas tax holiday tests off the charts with the working class white voters Clinton sees as her key in what’s left of her chances to take the nomination away from Obama.

The next important state for Clinton to put in her win column is Indiana, a state full of working class white voters who have seen their state decimated by job loss. I hate to say this, but its true. The Clinton campaign polls for what scores with less educated voters. So, the strategy is to pursue whatever tests bests among people with the least education.

Say it slowly, and it sounds worse than how I just put it. The more education a person has, the more likely he or she is to support Obama. The less schooling one has, the more likely they connect with Clinton. There is a theme here. And this gas tax holiday fiasco is a microcosm of the situation in the Democratic party. Give them $25.00, and hope they don;t realize that they will be re-taxed by the oil companiees if her bill went through, and by state and Federal government later to make up for lost highway funds when her bill doesn't go through.

This was also the reason Clinton went on the O’Reilly Factor this week. O’Reilly, like Hannity and Limbaugh have bigger audiences than, say, Don Imus. But Imus has always gotten much more money per 30-second ad, because his listeners are more educated and affluent and spend more money.

In Clinton’s words: “I believe it is important to get every member of Congress on the record. Do they stand with hard pressed Americans who are trying to pay their gas bills at the gas station or do they once again stand with the big oil companies? That’s a vote I’m going to try to get, because I want to know where they stand and I want them to tell us - are they with us or against us?”

In case you missed it—this is taken from the Bush playbook where he has told Congress that to vote against the Iraq occupation appropriations is to vote against the troops.

Clinton’s only hope of getting the nomination rests with super-delegates, a big chunk of which are in Congress. This approach may get her popular votes in Indiana, but playing the Bush card with Congress is likely to get her a pie in the face from her own party members.

It is the Hannitization and O’Reillyization of Hillary Clinton. This is her strategy of appealing to Indianians and North Carolinians who vote next week, two markets where right-wing radio, by the way, is big.

But here’s the problem facing the United Auto Workers. They have very little leverage. About 80% of the company’s business comes from GM. The auto maker ‘s dealers have plenty of pickups and suvs despite the fact that the two-month strike has idled or reduced production at 10 GM assembly plants, most of which make trucks.

Now the UAW has even less leverage because GM’s move to cut a shift at four truck plants means they don’t need the truck axles that the striking UAW members aren’t making. In fact, an American Axle plant in Mexico can make enough parts to give GM what it needs so long as those shifts are cancelled. Sure, the strike is hurting American Axle. But the company has plenty of cash. And GM won’t intervene to help solve the strike. Unless truck sales take a sharp and very unexpected turn upward, GM won’t need to get involved. And so the picketers will march on, but for what?

The investment in Boston-based Mascoma comes at a time when the whole ethanol industry, as well as the U.S. government, is under fire for pushing ethanol too fast when it can only be made from corn on a mass scale. That policy has helped drive up the cost of corn, as well as food, and helped, many argue, drive food shortages in developing countries.

GM President Fritz Henderson said the investment in the company is because of its "best-in-class microorganisms and enzymes could lead a transformation to a new era of biofuels."

Earlier this year, GM inked a deal with Coskata Inc., of suburban Chicago. Coskata is building an ethanol plant in Pennsylvania.

Companies like Mascoma and Coskata are pursuing ways too break down cellulose, as well as certain kinds of trash, to convert it to bio-fuel.

In the case of Mascoma, the company says its thermochemical process will work with many kinds of plant matter, including wood chips, switch grass and farm waste.

Mascoma plans to complete a pilot plant near Rome, N.Y., which will produce 200,000 gallons a year of ethanol. The plant will use paper mill sludge as its raw material. But it will be able to convert other materials to motor fuel.

He told us that the deals to supply Chrysler with a Versa and to have Chrysler build Nissan's Titans are deals that stand alone. And they are.

Ghosn also said that this is a time where the markets wouldn't like to try and absorb a big deal like Renault-Nissan taking on Chrysler. I don't know about that. Deals are still cooking in other industries. Ghosn still wants a North American alliance partner. I don't ever see it being Ford. And GM was a non-starter. Unless he is eyeballing Tesla or Shelby, Chrysler is it.

What seems pretty clear is that Chrysler LLC owner Cerberus Capital would love love love to off-load the automaker for more than it has put in, even if it's $5.00. Center for Automotive Research chsirman David Cole told me this week that, "Cerberus doesn't have a lot of time with this thing."

Carlos knows that he is really the only game in town for Chrysler. Ghosn, in my estimation, is smart. He sees Chrysler's price going down from here, not up. And he can afford to wait Cerberus out for a while.

Meantime, DaimlerChrysler Daimler AG has reduced the value of its minority stake in Chrysler LLC by almost two-thirds after the U.S. automaker made a 340 million euro ($529.1 million) punch to Daimler's pretax profits in the first quarter.

Daimler retained a 19.9 percent stake in Chrysler when it sold the majority control in August 2007 to Cerberus. Daimler now values its stake in Chrysler at 547 million euros ($851.2 million). At the time of the sale, Daimler valued the stake at 1.4 billion euros ($2.18 billion.

Gasoline prices and a weak housing market, which keeps contractors out of dealerships, have hammered pickup sales. In the first quarter, sales of the Chevy Silverado and GMC Sierra pickups were down 19% and 6% respectively. What’s worse is that GM-North America President said in a statement that GM sees “a downward trend on current and future market demand for full-size trucks.” That means that GM doesn’t see a rebound in one of its most-profitable business lines anytime soon. And it’s cold comfort that GM’s rivals, even Toyota, have had to slow down their trucks plants in face of the current market, too.

Here’s the deeper problem. With gas prices inching closer toward $4 a gallon, consumers will keep moving toward smaller vehicles. GM doesn’t have a strong brand image for many of those vehicles. And no one makes the $5,000 or more in profits that pickups once delivered. All the company can really do is keep designing new crossover suvs and passenger cars for the individual buyers. Then the company has to hope that the housing market rebounds eventually and helps shore up truck sales. But that market has clearly shifted. GM, Ford and Chrysler, all three of whom have long relied heavily on truck profits, will have to start making money elsewhere.

Kerkorian’s firm, Tracinda Corp., announced it has acquired a 4.7 percent stake in Ford, and plans a $170 million cash offer for an additional 20 million shares.

The bid for a stake in Ford follows earlier, unsuccessful efforts by Mr. Kerkorian to buy Chrysler and force General Motors into an alliance with foreign automaker Renault-Nissan.

Tracinda said in a statement Monday that it has bought 100 million Ford shares since April 2 for about $690 million. On April 1, Ford shares closed at $5.97. Last week, Ford announced it has earned $100 million in the first quarter, much better than Wall Street had anticipated.

Ford shares closed at $7.50. Thursday, the day of the earnings announcement, Ford shares closed at $8.40. Goldman Sachs on Friday put a target price of $9.00 on the automaker. In mid-day trading on the NYSE after Kerkorian’s announcement was made, Ford was trading around $8.22 and closed at $8.21.

So, between April 2 and today, Ford shares have appreciated 38%. There is a reason why Kerkorian is a billionaire.

But while he bother the boards and managements of DaimlerChrysler and GM, it remains to be seen what trouble Kerkorian can cause at Ford. It has already sold off the Premier Auto Group. IT still has Volvo, but that's because the offered prices weren't high enough to buy it last year. It is likely still on the block to the right bidder. It has changed management. It is on track to make profit next year. And the Ford family controls 40% of the voting stock through its Class B shares. It’s a poison-pill structure that was built into the company back in the 1950s.

Ford appears to be doing everything it can to fix the company, end the losses and return to regular profits.

So far, Kerkorian’s investment looks good from a sheer return-on-investment standpoint. Maybe, that’s all he is doing—making money. But that doesn’t fit with his history of also seeking some control and influence at car companies, and getting a board seat.

Kerkorian’s investment advisor on the auto industry, Jerry York, had board seats at Chrysler and GM. Little came of it. I will have a seat on Ford’s board before the Ford family invites Jerry York to be on its board, or even feels pressure from Wall Street to do so.

On Monday, Ford confirmed that CEO Alan Mulally met with York in early April after York had a long standing request to meet with the CEO.

All we can do for now is stay tuned.

Holman W. Jenkins Jr. does make one reasonable point. The Department of Transportation’s announcement that automakers will have to boost fuel efficiency in their cars and trucks by 4.5% a year until 2015, is subject to change by a future Congress and White House if automakers can’t get there, market conditions and oil prices changes, etc. There are a host of things that can happen between now and then to move the goal posts.

But here is where Holman W. Jenkins, Jr. loses me. “America's biggest near-dead car company called in reporters this month to boast – boast! – about its willingness to lose money on its forthcoming electric car. That includes betting the farm on whether batteries can be developed with the necessary power-to-weight ratio and life expectancy to give the car its needed usability. "Whatever it takes to do, we will do" to deliver the plug-in Volt by a 2010 deadline, project leader Frank Weber told journalists.”

The scientists I have interviewed over the past few years tell me that not only is the technology within reach, but that it makes too much sense not to pursue with gusto. Do costs have to be brought down? Yes. But never has an application of technology come along that so perfectly matched the peculiarities of the U.S. driver. The plug-in is designed to run between 40 and 50 miles on an electrical charge. If you have to go a longer distance, an engine that kicks on to recharge the battery will get you there. It takes the nervousness of running out of juice out of the mix.

Honda doesn't see the market for plug-ins. Okay. But Honda have us the awkward looking Insight to answer the Prius, as well as the Ridgeline pickup and the Element. Honda's read of the consumer desire side of the busines can be off.

GM sees the Volt and its plug-in siblings as a new lens through which the U.S. and world will view the company—if it gets the products right and delivers. But fault the company for over-spending on breakthrough technology? Why? GM has gotten management decisions wrong plenty of times (linking with Italian automaker Fiat before its financial renaissance comes to mind) They have also gotten product decisions wrong plenty of times (see: Pontiac Aztek, Chevy Outlander and Saturn LS to name a few.).

A financial and management commitment to bring a game-changing technology to showrooms is hardly something to criticize. As Toyota has proved, the presence of the Prius in showrooms and in the papers makes even its thirstiest gas suckers like the Sequoia and Tundra appear greener than GM’s vehicles even when they aren’t.

More from Holman W. Jenkins, Jr. “For some number of dollars, GM can afford to bribe consumers to drive Volts off the lot…”

GM is betting that there will be early adopters, as well as government incentives to help consumers buy the new technology…just as there were for the Prius. GM opted out of hybrids in the 1990s because it rightly saw that gas-electric hybrids were an inelegant engineering solution for higher fuel economy. It made a bet that hydrogen-powered cars would come along faster than reality tells us now is the case.

Yes, it’s a bit of a roll of the dice for GM. And it’s unlike the way the “near death” automaker Jenkins describes has behaved in the past. From my vantage point, it looks like GM is taking in the political reality that we will never have European-style gas taxes to drive demand for smaller vehicles, so it is trying to one-up Toyota on the technology front. If GM falls on its face in the execution, we can all write that story. But to pillory the company for trying? What for?

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