• Dec 2, 2008
General Motors has just revealed the plan it has submitted to Congress today, and the details show just how far the largest U.S. automaker is willing to go in order to secure bridge loans from the federal government. The plan includes selling Saab, possibly killing Saturn and scaling back Pontiac, as well as reducing dealers and shedding more workers, among other things. Here's the breakdown...
  • Focus on "core brands": Chevrolet, Buick, GMC and Cadillac
  • Launch predominately high mileage, energy-efficient cars and crossovers
  • Sell Saab, HUMMER
  • Sell or kill Saturn
  • Reduce Pontiac to a "niche" brand
  • Trim dealerships from 6,450 to 4,700
  • Reopen talks with UAW to cut manufacturing costs further
  • Reduce total workforce from 96,000 to 65-75,000
  • Negotiate with lenders, remove $35.6 billion in debt
To do all this, GM is asking for a total of $18 billion in loans, which is considerably more than the $10-12 billion that CEO Rick Wagoner requested in front of Congress a few weeks ago. It needs $12 billion in loans by the end of next March to make it through the rest of 2009 and another $6 billion in revolving credit if conditions don't begin to improve by then. The troubled automaker also states that it needs $4 billion by the end of this month to continue operating and intends to start repaying the loans by 2011.

In exchange for government loans, GM is also open to a government oversight board that would monitor how the money is used, as well as giving taxpayers a stake in the company. Also, not only would Rick Wagoner get his salary dropped to $1, a number of other unnamed senior execs would get pay cuts, too.

Is it all enough? Sound off in the comments after reading the official press release from GM after the jump.

[Source: GM, Automotive News - sub. req'd]

PRESS RELEASE

GM Submits Plan For Long-Term Viability To The U.S. Congress

  • Reaffirms GM's commitment to energy-saving vehicles and technologies
  • Outlines the need for Federal bridge loans and line of credit
  • Requests Federal board to oversee loans, assist with restructuring
  • Aggressive plan details GM actions to support long-term success
WASHINGTON – General Motors Corp. today submitted a plan to use Federal bridge loans to create a leaner, more competitive company, one that is profitable and self-sustaining for the long term.

The plan, submitted in response to Congressional hearings in November, includes a detailed blueprint for a successful, sustainable General Motors. Building on a product renaissance and comprehensive restructuring that has been under way for several years, the plan calls for:

  • Increased production of fuel-efficient vehicles and energy-saving technologies;
  • Rationalization of brands, models and retail outlets;
  • Reduced wage and benefit costs, including further reductions in executive compensation;
  • Significant capital structure restructuring;
  • Further consolidation in manufacturing operations.
GM is requesting term loans of up to $12 billion to provide adequate liquidity levels through December 31, 2009. GM anticipates an initial draw of $4 billion in December 2008. In addition to the bridge loans, the company is requesting a $6 billion line of credit to provide liquidity should a severe market downturn persist. GM's intent is to begin to repay the loans as soon as 2011.

Any draws would be conditioned on achieving specific restructuring requirements in the plan. To help expedite these actions and protect the taxpayers, GM is also seeking the creation of a Federal oversight board to oversee the loans and restructuring plan.

GM is requesting the bridge loans and credit line because of a sharp industry-wide decline in vehicle sales. This decline, due in large part to tight credit and record-low consumer confidence, has led to a corresponding drop in dealer orders that is adversely impacting GM's first-quarter production schedules, revenue forecasts, and liquidity outlook. Federal assistance would enable GM to weather a credit crisis that has driven U.S. industry sales to their lowest per-capita level in half a century, and help the company emerge fully competitive with all manufacturers operating in the U.S.

The complete GM plan is available online: General Motors Corporation Restructuring Plan for Long-Term Viability. Following are highlights from the plan.

Product Portfolio and Fuel Efficiency – GM has made significant progress in revamping its product lineup, with new GM cars like the Chevy Malibu, Cadillac CTS, Saturn Aura and Opel/Vauxhall Insignia earning car of the year awards.While remaining a full-line manufacturer, GM will substantially change its product mix over the next four years, and launch predominately high mileage, energy-efficient cars and crossovers.

In addition, the Chevy Volt, which can travel up to 40 miles on electricity alone, is scheduled for production in 2010, and GM is planning other vehicles using Volt's extended-range electric drivetrain. By 2012, more than half of GM vehicles will be flex-fuel capable, and the company will offer 15 hybrid models. GM will continue development of hydrogen fuel cell technology, which, when commercially deployed, will reduce automotive emissions to just water vapor.

During the 2009-12 plan window, GM will invest approximately $2.9 billion in alternative fuels and advanced propulsion technologies, which offer fuel economy improvements ranging from 12 percent to 120 percent, compared with conventional gas engines. As a result, we expect GM to become a significant creator of green jobs in the United States, as well helping suppliers and dealers transform the U.S. economy.

Market and Retail Operations – In the U.S., GM will focus its product development and marketing efforts on four core brands – Chevrolet, Cadillac, Buick and GMC. Pontiac will be a specialty brand with reduced product offerings within the Buick-Pontiac-GMC channel. Hummer has recently been put under strategic review, which includes the possible sale of the brand, and GM will immediately undertake a global strategic review of the Saab brand. As part of the plan, the company also will accelerate discussions with the Saturn retailers, consistent with their unique relationship, to explore alternatives for the Saturn brand.

Manufacturing and Structural Costs – GM will accelerate its current efforts to reduce manufacturing and structural costs, building on significant progress made over the past several years. GM currently has the most productive assembly plants in 11 of the 20 product segments measured by the Harbour Report, and it is a global leader in workplace safety. With the recently negotiated wage rates, turnover expected in our workforce, planned assembly plant consolidations, further productivity improvements in the plan, and additional changes to be negotiated, GM's wages and benefits for both current workers and new hires will be fully competitive with Toyota by 2012.

Balance Sheet Restructuring – Under the plan, GM would significantly reduce the debt currently carried on its balance sheet. GM plans to engage current lenders, bond holders and its unions to negotiate the needed changes. GM's plan would preserve the status of existing trade creditors and honor all outstanding warranty obligations to both dealers and consumers, in the U.S. and globally.

Compensation and Dividends – The plan calls for shared sacrifice, including further reduction in the number of executives and total compensation paid to senior leadership. For example, the chairman and CEO will reduce his salary to $1 per year. The plan also requires further changes in existing labor agreements, including job security provisions, paid time-off, and post-retirement health-care obligations. The common stock dividend will remain suspended during the life of the loans.

Temporary Federal Bridge Loans – GM is seeking a term bridge loan facility from the Federal government of $12 billion to cover operating requirements under a baseline forecast of 12 million U.S. industry vehicle sales for 2009. In addition, GM is seeking a revolving credit facility of $6 billion that could be drawn should severe industry conditions continue, resulting in sales of 10.5 million total vehicles in 2009. This bridge loan is expected to be fully repaid by 2012 under the baseline industry assumptions. Also, warrants issued as part of the loans would allow taxpayers to benefit from growth in the company's share price that might result from successful completion of the plan.

Once GM has completed the restructuring actions laid out in the plan, the company will be able to operate profitably at industry volumes between 12.5 and 13 million vehicles. This is substantially below the 17 million industry levels averaged over the last nine years, so it is considered to be a reasonably conservative assumption for gauging liquidity needs.

Federal Oversight Board – Given the importance and urgency of this restructuring for GM, other domestic manufacturers and the U.S. economy as a whole, the company supports the formation of a Federal oversight board. The board would help facilitate restructuring negotiations with a range of stakeholders.

GM's Commitment to Success

General Motors and its management are committed to the success of the plan summarized in the Congressional submission. The company's responsibility to its customers, shareholders, employees, retirees, dealers and suppliers is well recognized, as is its century-long commitment to our nation.

GM has never failed to meet a Congressional mandate in the important areas of fuel efficiency and vehicle emissions. We are among the leaders today in fuel efficiency, and set the industry standard for green manufacturing methods. We are committed to meeting the new fuel economy requirements of the 2007 Energy Independence and Security Act. The company's role in creating green technology and high-paying jobs of the future will increase substantially as a result of implementing the plan.

GM is proud of its century of contributions to the growth of our nation, and the company looks forward to making an equally meaningful contribution over the next century.


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  • 127 Comments
      • 6 Years Ago
      Together, the big three are responsible for one out of every 10 jobs. So, if they go bankrupt, we’ll have unemployment of 16 – 17 percent within two years. That’s depression territory. How many employees GM has. That number could possibly turn into 2.5 million. Those employed by dealerships, suppliers, ad agencies, and mechanic shops that all rely on GM to a heavy degree. If GM goes broke, or the flow of money to these companies stops. And then they layoff their workers. After about a year, we’d lose about 2.5 million workers thanks to a GM not geting the money they need NOW.

      Put someone in charge who knows the industry and where its going 10 15 to 25 years from now.

      i say put the money in the dealers hands because they know what to do with it. Who to spend it on and who deserve the money. why woulf someone with a 400 credit score get cash back Why. if someone with a 600 credit score they They should get something and 700 or higher should get the most cash back possible and with % financing.
      The consumer with a high credit score 700 or high should be threat as gold. Because how often do you see and 800 score. not that often

      if you re-do the credit rating system doesn't that help everyone?

      peace

      JoeT
      • 6 Years Ago
      Actually the Aura and Astra aren't selling as well as expected. Its a shame since both are pretty good cars. People still haven't gotten used to considering anything with the Saturn name.

      If anyone was thinking of an Aura, show them the Malibu and guess which one they usually pick. Astra has a high starting price for something that North American consumers are not really familiar with. (I'd take one over a Focus anyday)
        • 6 Years Ago
        i dont know about that claim that astra costs too much, i went with my dad to check one out, IMO the exterior didn't really excite me (although the 2 door was sharp), the interior looked cheap and was unergonomic....after i sat in it, i didnt even feel like driving it (Dad said the driving experience was in line with what he expected.) The dealer offered it to us for 14K with the GM Employee discount, the price was right but the car was crap.

        At the end of the Day we ended up buying a pontiac vibe (2009.) Interior was quality, driving was really nice, surprisingly good actually and i think it looks good. I know its half toyota, but at least GM gets all the money. We actually settled on the mazda3, but dealer was a D#$% and promised us a price he couldn't keep.

        The Aura is a nice car but I ultimately would pick the Malibu over it. The only car i'd miss from saturn is the Sky. I'd also say downsize Buick, and make GMC commercial.
        • 6 Years Ago
        Maybe they should bring the Astra over as a Pontiac or Chevy under their new plan?
      • 6 Years Ago
      Keeping GMC only makes sense if they stop selling trucks and SUVs at Chevrolet.

      As far as Saturn goes, just make the Astra a Chevrolet. Everything else they sell is already available in a Chevy or Pontiac guise anyway.
        • 6 Years Ago
        ^This is exactly what I was thinking. If they do keep selling products at GMC consumer orientated dealerships (not the commercial truck arm) they need to be truly unique.

        Get rid of ALL trucks and SUV's from Chevrolet and just keep the GMC ones. Chevrolet = cars. GMC= trucks/
      • 6 Years Ago
      Why GM, why must you continue to keep GMC?
        • 6 Years Ago
        Instant brand recognition. Just like HUMMER. you say the word HUMMER, and they immediately know what it is. Same for GMC.
      • 6 Years Ago
      Finally GM execs. took their heads out of their asses! Their plan sounds viable and realistic. GM is actually just now starting to make excellent cars particularly the new Chevy's and the new Caddies(the CTS is superb!). Saturn's time has come and gone and, frankly, so has Pontiac's. Buick is a mega seller in China so that is a money maker. GMC is well GMC. The question now is will they follow through.
      • 6 Years Ago
      If Pontiac is to be a niche brand, that suggests to me that they'll be selling lower-volume, performance-oriented cars like the G8, G8 ST, and Solstice.

      If Chevrolet is to be the main-steam, mass-market brand---which seems reasonable to me--then it doesn't make any sense to sell the Camaro and Corvette as Chevrolets. The only logical thing to do would be to turn the Camaro into a Firebird and sell the Corvette as a Pontiac. I know a Pontiac Corvette is heresy, but it does makes sense to put all your RWD performance cars together, don't you think?

      Keeping GMC is fine, as long as they stop selling trucks and truck-based SUVs through Chevy. All this badge-engineering and direct self-competition is stupid.

      I happen to like the new Saturns, and it certainly makes sense to sell the Vauxhalls/Opels here in the States, but I'm not sure how well they sell. Perhaps the Euro GM cars should be folded into Chevrolet. Given the nature of the other Saturns, it would make sense to ax the Sky and sell only the Solstice.

      Buick does really well in China. I'd be inclined to sell Buicks only in East Asia. Of course, if you already have the cars, you might as well sell a few in the States, too.

      Hummer can die. Or perhaps they can sell it---at a bargain-basement price---to Chrysler, to use as a single, large model of Jeep: the Jeep Hummer. Then the lawsuits over the 7-slot grill can finally be over.

      Saab should go up for sale.

      Cadillac is doing well as is. Keep going.
      • 6 Years Ago
      Just because Buick is a cash cow in China doesn't mean they need to keep it here. It's all just badge engineering, anyway. Kill the Buick brand here. We don't have Opels or Vauxhalls or Holdens - they're badged differently here. Could be the same with Buick. Here, Buick is an old person's car - not an executive's car, like in China. (and I'm 22, I think I've got a good perspective on this) GMC should go, too. The consumer part, anyway. And Pontiac going niche is a great idea. I'd keep Saturn and Saab, though, but Saturn needs to be more specialized. Outlook and Vue? Eww. Why not put a real Euro-spin on Saturn? Seems they've only done it half-assed so far. And sell Hummer for sure, or spin it off, or kill it - whatever.

      I also share the sentiment that I hope those who buy imports lose their jobs first. It's like American karma.
      • 6 Years Ago
      You know GM, Ford, and Chrysler still haven't been given the money.

      There is still hope they won't get it either. Pretty ridiculous how our government needs to help an already failed Pontiac/Chevy brand. Let them die, and someone else can take over and build competitive vehicles.




      • 6 Years Ago
      I agree with the bailout, but also agree the UAW needs to take paycuts/concessions to make sure the big 3 survive long term. I am a buy American type, but honestly, I am not being flag-waving, I just feel that you need manufacturing in the US to keep everyone else working (Policeman, doctors, teachers, retail, etc, are important jobs, but you need a manufacturing base to support everyone). I am also sick of people saying the big three don't build cars people want and quality is crap. Until gas prices went up, everyone wanted SUV's and GM sold plenty and guess what? Honda/Toyota, etc. scrambled to build the same type vehicles to compete (Toyota Sequoia, Nissan Armada, etc.).

      The quality is equivalent (plus or minus slightly depending on brands) to Japanese cars. Look at the statistics - some idiots still assume any foreign car is better quality than US. Fact is Buick/Caddy/Mercury have scored in the top ten with Honda/Toyota in the past 5 years and also fact is that Nissan, Mitsubishi, and Subaru (and Europe models like VW) are consistently in the mid to bottom of quality ratings most times. So really a Nissan or Subaru or VW or Audi will inevitably be outranked in quality by many American models, but the big three are still living with their past. If people actually read the latest statistics, they would realize this. Go out and test drive an American car and see how they nice they are - the people that say they are crap or not what people want are just parrotting the newspeople and have not actually test driven anything recently - get a backbone and get your own opinion by actually looking at what is offered nowadays. Flag waving aside, I like American cars because they have some style and quality to boot. If I wanted a bland vanilla box on 4 wheels, I would be driving a Honda or Toyota.
      • 6 Years Ago
      What matters here is the ability to appeal to consumers, nothing else.

      Kill GMC no matter what.
      Keep Buick in China only.
      Kill Saturn but make Chevy more like Saturn. They are both essentially just competent, vanilla cars anyway-- not reaching different audiences.
      Do not kill Pontiac, but niche brand is okay. It worked for BMW way back.
      Agree sell Hummer and Saab.
      Make Corvette its own brand.

      That leaves them with:

      Chevrolet (solid value; absorbs Saturn; includes trucks, imports, and cutting-edge alternative fuels)
      Cadillac (luxe & performance)
      Pontiac (non-luxe performance)
      Corvette (expand the lineup a la Porsche)

        • 6 Years Ago
        "Chevrolet (solid value; absorbs Saturn; includes trucks, imports, and cutting-edge alternative fuels)
        Cadillac (luxe & performance)
        Pontiac (non-luxe performance)
        Corvette (expand the lineup a la Porsche)"

        This lineup leaves the perfect reason for Buick: lux & value (non-performance based). Perfect Lexus competitor, and plays the upmarket to Chevy where Cadillac plays the upmarket to Pontiac.
      • 6 Years Ago
      I believe the Government should grant low interest loans to the auto industry. They are bailing out the banks so people can resturcture their loans and keep their homes. Auto industry collapse will impact thousands of jobs all over the country as suppliers lose orders and lay off people. So all these auto industry folks who just got their home loans indexed to be affordable will not have any income to pay their new "affordable" loans. Catch 22. That said, the new Camero is being built in Canada. The Buick Lacrosse, Chevrolet Equinox, Chevrolet Impala,
      Chevrolet Monte Carlo, Chevrolet Silverado, Chrysler 300,
      Chrysler Pacifica, Chrysler Town & Country, Dodge Charger,
      Dodge Caravan/Grand Caravan, Ford Crown Victoria, Ford Freestar, GMC Sierra, Mercury Grand Marquis, Mercury Monterey, Pontiac Grand Prix, and Pontiac Torrent are built in Canada. There are others. Additionally, lots of GM and Ford models are built in Mexico. Why?
      • 6 Years Ago
      They need to restructure. I do, however, think they're going about it in the wrong way. Saturn, I believe, needs to stay because they are the only GM brand selling efficient, modern vehicles as its primary purpose. Chevy and GMC should be merged because the basically sell the same product. A Pontiac Saab merger might not be a bad idea, either. The rest of the plan looks okay.
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