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Billionaires turn their backs at Detroit while Chinese women buy new cars with 3 months of breastfeeding. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.

In a sign that the worst is yet to come, turn-around artists are turning their backs on Detroit's auto makers. Billionaire Kirk Kerkorian is unwinding his holdings in Ford Motor Co. , after his nearly one billion dollar investment (made when he thought Ford was cheap) lost two thirds of its value and is heading further South. Kerkorian had to pledge 50 million shares of his MGM Mirage Casino to back the credit line he used to buy into Ford. The house is clearly on fire when supposedly recession-proof investments in vice are pawned to prop up auto makers. (However, even vice isn't what it used to be. )

Cerberus, urged (pressured? threatened?) by JPMorgan Chase & Co. and Citigroup Inc., which hold a lot of the debt from Cerberus's purchase of Chrysler from Germany's DaimlerChrysler AG in August 2007, is frantically trying to foist Chrysler upon GM. Cerberus is also in talks with Nissan Motor Co., Renault SA, and everybody else who listens. Insiders view these talks just as a side show make the prospective groom jealous and to lend more urgency to the wedding with GM. The Chrysler/GM marriage has been praised in the mainstream press as the savior of the U.S. auto industry, as a "win-win" situation full of "synergy" potential. These words rank big in the Dictionary of Corporate Bullshit - smart people head for the exit when these words are used. Our friends over at (If Google is an indication , TTAC should trademark the term, it might be worth more than Joe The Plumber.)

"Typical investors, and Cerberus is anything but typical, are running from the automotive industry," said Warren Feder , partner at Carl Marks Advisory Group LLC in New York. "It's hard to see any upside with a degree of comfort, and you need that to make an equity investment."

Next year, China could buy more cars than Americans

If Patel is right (and, see above, his firm has an intimate knowledge of the auto business,) and if China maintains a - by Chinese standards - rather benign growth rate, come 2009, the Chinese auto market might be the same size or even larger than the U.S. In the beginning of this year, the China Association of Automobile Manufacturers, had already predicted 10 million units for 2008. With growth slowing in China, the Chinese may not quite reach that target this year - or maybe they will. Next year, unless the sky will fall, 11 million cars sold in Chinas are entirely doable. Anyway, Bloomberg says that the exit of Kerkorian, Cerberus & Co. "may leave the U.S. auto industry without new funding just as sales head to a 26-year low."

China may sell more cars in 2009 than the U.S.

If Patel is right (and, see above, his firm paid dearly for insider knowledge about the auto business,) and if China maintains a - by Chinese standards - rather sedate growth rate, come 2009, the Chinese auto market might be the same size or even larger than the U.S. The China Association of Automobile Manufacturers, had already predicted 10 million units for 2008, but with growth slowing in China, the Eastern Empire may not reach that target this year. Next year, unless the sky will fall, 11 million cars sold in Chinas are entirely in the cards.

U.S. auto industry goes hungry. Babies too.

Bloomberg says that the exit of Kerkorian, Cerberus & Co. "may leave the U.S. auto industry without new funding just as sales head to a 26-year low."

Now for a truly disturbing tidbit from someone who measures consumer habits in real-time: "Most consumers are worried about: 'Will I have enough to put food on the table so my family can eat?" Eduardo Castro-Wright, President and CEO of Wal-Mart's U.S. operations told attendees of a luncheon sponsored by Town Hall Los Angeles. When paychecks come in, his stores see spikes of sales of baby formula, "suggesting consumers are rushing to buy such necessities as soon as they have the cash," Reuters reported. Reuters continued: "As the economy worsens, Wal-Mart's customers have increasingly shown signs of living paycheck to paycheck. Wal-Mart's sales typically surge around pay periods at the beginning and middle of the month. Castro-Wright said that spike has become more pronounced as consumers' budgets become more stressed."

3 months of breastfeeding buys a new car

Cut to China. In the wake of the milk worries, affluent Chinese parents of babies have turned to "milk mothers" or "Nai Ma" who breast feed their new-born if the real mother doesn't want to or can't. Baby formula? No, thank you. Or "bu, xie, xie," as they say here. Don't trust the stuff. They want the real thing for their precious. In Beijing, a milk mother from the provinces can clear between $300 and $1600 a month, with free room and only the best of free food. The starting salary of a secretary in Beijing is around $300 a month, and she must use the money to pay for food and shelter.

Back to topic #1: If a family can barely feed their babies, the likelihood of buying a new car is nil or worse. The Chinese milk mother can buy a new car for cash with three or 5 months earnings (if she opts for a better model.) The International Breastfeeding Committee of WHO/Unicef recommends breastfeeding for six months. Chinese hospitals recommend a year or more. After a year of watching TV and feeding the baby, the milk mother will have two or three cars to take home. Meanwhile, back in the U.S.A., parents need parts to keep their cars running, at least twice a month, for a trip to Wal-Mart.

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