Filed under: GM
GM considers selling off ACDelco
In this economic climate, everyone is looking to generate cash and reduce overhead. And General Motors is certainly no exception, the automotive giant already having announced its intention to sell off its HUMMER brand. The General is also looking to offload its facility in Strasbourg, France. But the biggest sale yet could be the potential divestment from ACDelco, one of GM's parts subsidiaries.
ACDelco has been in operation for over 100 years, and offers no fewer than 37 product lines encompassing some 100,000 different parts on offer, both for GM vehicles and those made by rival automakers. The sale of ACDelco is part of a campaign to raise several billion in liquid assets for GM, and in as bold a sign of the times as any, the corporation has selected Merrill Lynch to manage the sale process. Full details in the press release after the jump.
[Source: General Motors]
PRESS RELEASE
General Motors Explores Potential Sale of ACDelco
General Motors (NYSE:GM) announced today that it is exploring a potential sale of ACDelco, its global independent aftermarket parts business, a brand of GM Service & Parts Operations. A sale is expected to promote more rapid growth of ACDelco globally.
As the company announced in July, GM is undertaking a number of initiatives to bolster its liquidity position by approximately $15 billion through year-end 2009, including the sale of assets which are expected to generate approximately $2-4 billion of liquidity. In addition to the ACDelco business, GM previously announced it is exploring the potential sale of its Hummer brand and its technical and manufacturing center in Strasbourg, France.
ACDelco provides light-duty maintenance and repair parts and associated services for both GM and non-GM vehicles in more than 100 countries. Part of GM Service & Parts Operations, ACDelco is headquartered in Grand Blanc, MI, with approximately 600 employees worldwide.
GM has retained Merrill Lynch to assist in this initiative.
About ACDelco
With over 100 years of experience in the automotive aftermarket industry, ACDelco is a global leader in automotive replacement parts and related services. Products include maintenance parts commonly replaced during the lifetime of a vehicle (e.g., batteries, oil filters, air filters, wiper blades, shocks and brakes), as well as repair parts (e.g., alternators, radiators, chassis and heating/cooling components).
ACDelco is among the world's best known comprehensive All Makes, All Models providers, featuring high quality auto parts for both GM and non-GM vehicles and services, with the brand's "genuine OE" reputation signifying high quality replacement parts, support and training in the automotive aftermarket. In the United States, ACDelco offers 37 full product lines with over 100,000 part numbers, comprised of both GM original equipment and All Makes, All Models product.
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Reader Comments (Page 1 of 2)
Christian de Saint Preux 5:04PM (10/22/2008)
I can't believe this... What is next? ford selling Motorscraft?
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SeattleJeremy 5:59PM (10/22/2008)
If this sale goes well, Ford might consider it.
Gabagool 5:04PM (10/22/2008)
The sad part is that when GM will turn around (they will eventually) people will say that ohh look how good of a job Wagoner did, look how great the cars are that came out when he was a CEO, and no one will even remember that he sold 51% of GMAC, ADELCO and soon will sell TOPKICK, people do not see that he destroyed the company, most people in here only the car side of the business.
Of course some do not even see the car side, those people still think that Malibu will one day outsell Camry and Accord.
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Upthewazzu 5:11PM (10/22/2008)
Gabagool-
Your assuming that those companies weren't excess bloat to begin with. Sometimes trimming down is a good thing. Bigger is not always better.
Gabagool 5:21PM (10/22/2008)
That is one way of looking at things, another way is that he is simply selling off parts that most people do not really care about and improve things that people do care about.
That is not the case for investors, he is selling parts of the company to get all that cash to run a part of the company that he shows zero ability for.
That One Person 8:12PM (10/22/2008)
You do realize that Wagoner helped save GM before (remember the name Roger Smith?). He even admitted to making mistakes (killing the EV1 and not looking into hybrids). I still have faith in the guy. I just hope he can steer the boat in the right direction. The guy has too many things going against him at this time (credit crisis, perception, etc.).
I don't blame Wagoner for selling off parts of GM. GM was too big for it's own good. and Toyota has proven that TWO companies (Lexus and Toyota) can make you number one.
JCoke 5:39PM (10/22/2008)
Why so sure they will turn around?
Absent a government bailout, they will go bankrupt. There is no if and or but about it. They were losing a billion a month BEFORE everyone was convinced the Great Depression had come again. And their 1/3 of the 25 bill they already handed out will stave off destruction for a few months at most. They will be down to the operational reserve by mid-2009.
They are selling every asset they can, they are cutting R&D, they've put Vette development on hold. And they are still losing a billion a month. You see hope where?
GM is dying. A bailout will let it limp along for a while longer, but unless it becomes a very different and much smaller company, it will die a little bit later.
I'm not trying to dance on GMs grave here, but people still don't realize how serious this situation is. Absent government action, you are watching GM's death throes.
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J. D. Billiford 6:30PM (10/22/2008)
>>> You leave very little to disagree with here, JCoke.
And what's even sadder is that GM is in such a rush to "merge" with Chrysler so it can siphon off it's cash reserves, that killing off a viable competitor and putting thousands of people out of work seems almost like an after thought.
If you're right about GM being on it's death bed, it's repulsive to think the company will become nothing more than a whirlpool pulling down Chrysler, and no telling who else along with it.
Gabagool 7:35PM (10/22/2008)
You said it, BAILOUT.
I read just today on AutoNews, government is planning another bailout for Detroit, but this time there's no restriction to make cars greener.
JCoke 9:44AM (10/23/2008)
Yeah, there will almost certainly be a bailout. But people need to get that this is some very serious sh**. This isn't just recession blues or high gas price flu. These companies are fundamentally sick, and we should not let the government just pour some money down their throat so they limp along and die on someone elses watch. To survive they are going to have to fire a lot of people, cut a lot of dealers, and generally do stuff that won't sit too well with the politicians.
tekd 4:31AM (10/24/2008)
I hate to say it but you're right. GM probably should have just bit the bullet and filed for bankruptcy back when they still had money and could have actually benefited from the ability to dump all those old contracts. Now if they file for bankruptcy there wouldn't be anything left of the company because their creditors are owed more than what GM's worth now. If it weren't for the government loans they're getting they probably wouldn't even survive into mid '09.
You know what really pisses me off though? I keep hearing about how the wall street ceos are the evil ones benefitting from their bailout, when in reality the government will probably end up profiting from the bailout, and the government straight up took hundreds of millions from those CEOs when it diluted the shares of AIG, Freddie Mac, and Fannie Mae. Plus they fired AIG's old CEO and took away his bonus.
Meanwhile Wagoner here gets massive loans and nobody complains that this retard keeps sucking down a huge salary? Seriously I hope someone starts demanding lower compensation for detroit execs too, because it's pissing me off that they're loaning GM my tax dollars so they can pay Wagoner millions a year to run GM into the ground. Do you realize that they paid him $15.7 million last year?! To what, reward him for helping GM lose $39 billion dollars? How the hell this idiot gets to keep that money while taking taxpayer funded loans is beyond me.
Mark 5:55PM (10/22/2008)
this seems like a silly move
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SeattleJeremy 6:01PM (10/22/2008)
Selling GMAC was a mistake. This too may come back and bite them.
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whofan 8:27PM (10/22/2008)
Well $25 billion is just a drop in the bucket to save the US auto industry.
All the so called bail out Chrysler got in 1980 was government backed loans wich they paid back fast.
This time the Government needs to save Chrysler from GM then work to help GM out.
I wish Chrysler could stand on its own two feet and not merge with anyone.
If Ford plays its cards right they could come out a big winner when GM sucks Chrysler down with it.
I really hope all the big could pull out of this and leave us who buy American with the choices we have today.
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socarboy99 8:47PM (10/22/2008)
Rick Waggner says "AC-Delco...its like buying time"!
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Driver X 11:26PM (10/22/2008)
Rick Wagoner is Kamakaze Pilot!
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Cardude 4:36AM (10/23/2008)
JCoke, I agree GM and the other 2 Detroit automakers need to shrink into niche players specializing in trucks, suvs, full size cars, larger (Malibu & Lacrosse size) mid size cars, and muscle sports cars. Those are the vehicles that they do best. It's time for them to face that fact and act accordingly. Also I think it would be really stupid if they sell off the medium duty truck line.
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Made in USA 3:10AM (10/24/2008)
I think GM has the absolute worst leadership ever. I think it is time to go into recovery mode and stop the fire sale. Greed has reared its ugly head. Everyone has made profits at the General's expense. If management is serious about turning things around, I'd like to see them put their money where their mouth is - what is wrong with a salary of $100,000 a year for these execs? Stop the ridiculous executive wages and provide a modest return on shareholder investment - while there is still a company to invest in... Dump the savings into the company's coffers and rebuild the company. Selling ACDelco is like putting a bandaid on a severed artery. GE makes its money off of service after the sale. They sell a service contract with almost every locomotive they sell. Parts fall into the service contract. GM could have pushed that more with Electromotive too - but they did not want to invest in that industry either. The gravy train is gone, all of the low lying fruit have been picked. The General is half the company it was in 1988 - It is going to take a lot of work and dedication to get back on track. Selling divisions will only delay the slow death that is occurring today.
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stas peterson 4:51PM (11/03/2008)
I just love the idiots like JCCoke, with a smidgeon of wrong information, who can't tell the difference between a one-time write-off, and an operating loss.
GM is eliminating a lot of liabilities with one time writeoffs and paper losses, and cleaning and scrubing its balance sheet.
When the market turn comes, GM profits will zoom and their tax liabilities will be nill, for many years.
If you think GM and Ford and Chrysler, the entire US auto manufacturing sector, will be allowed to go bankrupt, you are truly smoking some bad rope.
Meanwhile serious investors know the first principle of investing : "Buy low... "
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tina 1:29PM (11/07/2008)
Well, ACDelco might not have a buyer. Or GM rather. They have sought out Merrill Lynch to sell them but Cerebrus hasn't bit and now GM is looking at Delphi since GM still owes them money. Now with recent news of the big loss GM took. You know ACDelco is the most profitable of GMs holdings and has been for awhile. Out selling even Onstar and Chevy products. This is why the want to sell because it is so profitable. But what happens if the economic slump still keeps coming and they do get a buyer and sell ACDelco? What are they left with but items that are not selling and if they don't sell over 2009, 2010, 2011 and so on then what will happen to GM. I think selling ACDelco is a very dumb move myself. I think they should retain what is making them money and maybe take some paycuts in upper management. Like Rick for instance. What the heck does he truly need 8mil a year for? Cut back on the high salaries. Don't cut your employees however cuz you will need them when the economy does turn upward and you need to maintain what customer base you have and rebuild it and you can't do that with 1 employee per territory as I have seen many companies revert to during this time. No company in the history of companies has ever made money or made it back 100% by laying off employees. NOT ONE CO!!! Remember that GM CEO Rick. And the board of directors. You want to survive this crunch, keep what you have because they will be profitable for you again. Once you sell off all the money makers you are left with non money makers and then you are ripe for a buyout. How the heck GM would you like to be so destitute that you file chapter 13 and then Toyota comes along and buys you. That would totally suck. GM is an American company and we don't have any true American started companies anymore. Everything is all foreign. If GM has to close its doors or be bought out by foreign investors we can say goodbye to the America we have known and loved for 200+ years. So, my vote is hang on to what you got. Don't layoff upper management or board members, just skim so of their salaries. If they are making 8 mil, cut it to 4 mil for the time being. If middle class families can learn to cope with going from 60k salary to unemployment and figure it out, then so can your board and upper management. Figure out a way besides selling and laying off of how to make it work. I put you GM and Rick to the challenge. Be creative. Don't resort to the same thing every other company does. Use your imagination and your employees that are so devoted to you.
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