• Mar 30th 2009 at 12:25PM
  • 60
President Obama has just finished his press conference on the government's determination of the viability of General Motors and Chrysler, and the gist is that both automakers have failed to convince the feds that their business plans deserve further investment. Obama and his task force will give GM enough working capital to survive another 60 days and prove its viability, though no dollar amount was given. Chrysler, meanwhile, is being given another 30 days and working capital up to $6 billion to finalize a partnership deal with Fiat. If a deal can't be made and another partner is not found, Chrysler will get no more federal aid. Also, Fiat won't be allowed to take a majority stake in Chrysler until the automaker repays all the money it has borrowed from the government so far.

Perhaps the biggest news from the press conference is that the U.S. government will now fully back the warranties on vehicles sold by General Motors and Chrysler in the hopes that buyers will continue to consider their products amidst these tumultuous restructuring efforts. Also, the President has pledged to work with Congress to find funds to pay for a U.S.-version of the Cash for Clunkers program that has been so successful in Germany.

Follow the jump to take our poll and for official responses to the President's speech by both General Motors and Chrysler.

The Truth About Cars has also compiled all of the government's official documents on today's announcements.
[Photo by JIM WATSON/AFP/Getty]

Will the President's announcements today...
Help 413 (43.6%)
Hurt 292 (30.8%)
Change Nothing 242 (25.6%)


GM Statement on Auto Industry Restructuring

Today's announcement by President Obama begins a new era for the U.S. auto industry. It also marks a defining moment in the history of General Motors.

The U.S. Treasury will provide working financing capital for GM for 60 days while GM completes a more accelerated and aggressive restructuring to put the company on sound long-term financial footing. We understand the historic opportunity this presents, and we are fully committed to successfully completing the reinvention of GM.

As President Obama said today, the success of this reinvention is vital for GM, for the U.S. and global economies, and for the millions of employees, suppliers, dealers, retirees and others who depend on the company.

During the next 60 days, GM will address the tough issues to improve the long-term viability of the company, including the restructuring of the financial obligations to the bond holders, unions and other stakeholders. Our strong preference is to complete this restructuring out of court. However, GM will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process.

The men and women of GM, including our dealers, suppliers and other key partners, know what we must do to accomplish this task. We are fully committed to making this successful. We owe that to the GM community, to our customers, and to the U.S. taxpayers, who are providing support during this exceptionally challenging time.

Quotes attributable to Fritz Henderson, GM CEO

"The U.S. Treasury has said that it strongly believes that a substantial restructuring will lead to a viable GM. Over the next 60 days, we will work around the clock, with all parties, to meet the aggressive requirements that have been set by the Task Force, and to make the fundamental and lasting changes necessary to reinvent GM for the long-term."

"We have significant challenges ahead of us, and a very tight timeline. I am confident that the GM team will succeed, and that a stronger, healthier GM will play an important role in revitalizing America's economy and re-establishing its technology leadership and energy independence."

"The administration has made it clear that it expects GM to expand and accelerate its restructuring efforts. I want the American people to know that we understand and accept this guidance. The road is tough, but the ultimate goal – a leaner, stronger, viable GM – is one we share."

General Motors Corp. (NYSE: GM), one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 243,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

GM is the majority shareholder in GM Daewoo Auto & Technology Co. of South Korea, and has product, powertrain and purchasing collaborations with Suzuki Motor Corp. and Isuzu Motors Ltd. of Japan. GM also has advanced technology collaborations with Chrysler LLC, Daimler AG, BMW AG and Toyota Motor Corp. and vehicle manufacturing ventures with several automakers around the world, including Toyota, Suzuki, Shanghai Automotive Industry Corp. of China, AVTOVAZ of Russia and Renault SA of France.

Genuine GM Parts and accessories are sold under the GM, GM Performance Parts, GM Goodwrench and ACDelco brands through GM Service and Parts Operations, which supplies GM dealerships and distributors worldwide. GM engines and transmissions are marketed through GM Powertrain.


Nardelli responds to president's plans

Dear Employees,

Today's announcement by the Administration represents an important step forward on our path to viability. The Administration, U.S. Treasury and the President's Auto Task Force have recognized Chrysler's viability as an important part of the U.S. auto industry and overall economy, and have provided a critical vote of confidence in our alliance with Fiat S.p.A.

We are appreciative that the government has supported a global alliance with Fiat. By providing Chrysler with product and platforms, technology cooperation and global distribution, the alliance with Fiat strengthens our ability to create and preserve U.S. jobs; to give U.S. consumers more choices of environmentally advanced vehicles; to give our dealers more of the products they need to succeed; to help stabilize the supplier base; and to pay back government loans sooner.

While the Administration's findings released today recognize our progress in reducing structural costs and improving quality, the report also cites the challenges that continue to face Chrysler in the areas of scale, quality, product mix, manufacturing and geographic concentration. However, the important point is that the task force concludes that the Fiat alliance will go a long way toward addressing these concerns. Going forward, the Administration has committed to provide working capital for the next 30 days as we achieve the necessary stakeholder concessions, and further our restructuring efforts.

So while today's news is a step in the right direction, we need to continue to manage our business through the current downturn. We need everyone to focus on controlling costs while improving quality and customer satisfaction. There also is much work remaining to achieve required concessions from important constituents to reach the restructuring targets that the government has established.

In addition, as we add more exciting, fuel-efficient vehicles to our showrooms it will be important that our customers have access to credit. That's why we continue to advocate further government support for Chrysler Financial in order to make reasonable loans available to many more consumers.

I want to thank you for the hard work and dedication that you have given to Chrysler during the past 18 months. While we know our quality is not yet where it needs to be, our improvement is clearly evident in the 30 percent reduction in warranty claims over the last 12 months, and the fact that Chrysler reported the fewest safety recalls of any major manufacturer in 2008. We also have continued to advance important new vehicle programs such as the all-new Dodge Ram, the electric-drive vehicles under development by our ENVI organization and the all-new Jeep Grand Cherokee that we will showcase next week at the New York Auto Show. We have continued to improve the fuel economy of our lineup, with 73 percent of our 2009 models offering improved fuel efficiency compared with the previous year's models, and we are well positioned to meet the more stringent fuel economy requirements coming in 2011.

I want to personally assure you that Chrysler will operate "business as usual" over the next 30 days. While we recognize that we still have substantial hurdles to resolve, Chrysler is committed to working closely with Fiat, the Administration, U.S. Treasury and the Task Force over the next 30 days to secure the support of necessary stakeholders. If successful, the government will consider investing up to the additional $6 billion requested by Chrysler to help this partnership succeed.

Thanks again for your continued support as Chrysler continues to move forward on its path to viability.


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    • 1 Second Ago
      • 6 Years Ago
      wonder how you'd feel if you worked for GM or Chrysler....

      or if that was your house that was the moeny pit that the government is looking into supporting......

      but i guess you dont work for either of them, and your house isnt on the line, and you think this doesnt effect you. so to hell with them, right?
        • 6 Years Ago
        The government is not the solution.

        The government is actually part of the problem.

        They have legislated the housing and automotive industries both into a corner, and market forces have brought the consequences to bear.

        Banks, Mortgage takers, Auto Management, Unions, Health-care proprietors, Lawyers, all sorts of other people bear some responsibility, as well, but almost all of that can be traced back to legislation and regulation.

        If the government would get out of the way, there would be pain, but we would survive it and re-build. As long as the government pushes a bad, and increasingly tyrannical position, the market will not be able to correct properly.

        All those people you talk about... will still fall. And they, and everyone else with them, will fall harder than necessary, because the market is not allowed to find it's low tide, and then return to equilibrium.

        The more the government meddles, the worse it will be. And it quite possibly overcome and destroy the market. How will ANYONE recover then? There will be that much more infrastructure to rebuild.

        Are the crops going to be tilled under, and allowed to re-grow, or are the feilds going to be salted, so they will remain barren?

        • 6 Years Ago
        Man, you called it. Well said.
        • 6 Years Ago
        my praise aimed at thomas, not BoxerFanatic.
      • 6 Years Ago
      "...and the gist is that both automakers have failed to convince the feds that their business plans deserve further investment."

      If only Washington would apply the same scrutiny to everything _it_ is responsible for: schools, welfare, infrastructure, treasury, etc.

      It's absolutely precious to see seeing Bambi, Barney "I want their names!" Fwank , Dodder, Pelosilinni, Reed and company presiding over the "rescue" from the same disasters that they precipitated.
      • 6 Years Ago
      what about making it easier to sell foreign designed cars here in the us?

      if the fiat/chrysler deal goes through...

      fiat might need to redesign the bumpers, if we change the standards... there will be less cost for fiat/chrysler, and less time.

      but some greenies will cry out.. CARBON EMISSIONS!!!!

      if europe japan and us all follow the same emissions and safety standards, it would reduce development costs.
        • 6 Years Ago
        Yeah, but then California would bitch.
      • 6 Years Ago
      Doesn't anyone see this pointless money pit called GM and Chrysler? If they can't get their act together, let others do better.

      Stop holding on to obsolete car companies!
        • 6 Years Ago
        That is an ignorant One-Eyed way to look at this situation. Next time your kid catches a cold, just call the undertaker.
        • 6 Years Ago
        wonder how you'd feel if you worked for GM or Chrysler....

        or if that was your house that was the moeny pit that the government is looking into supporting......

        but i guess you dont work for either of them, and your house isnt on the line, and you think this doesnt effect you. so to hell with them, right?
        • 6 Years Ago
        @Mr. Oak:

        > That is an ignorant One-Eyed way to look at this situation. Next time your kid catches a cold, just call the undertaker.

        GM and Chrysler are not my "kids," they are essentially companies stealing my money. Backing nonviable companies is stupid IMO. This was a free economy, wasn't it? Let them go, others will come to fill the void.
        • 6 Years Ago

        So Toyota and Honda aren't backed by their respective governments??? In what parallel universe?
        • 6 Years Ago
        Honda isn't.
        • 6 Years Ago
        @Sektor, I find it interesting that you've lumped Ford in with Toyota and Honda. The problem with letting these two companies, GM & Chrysler, fail, is that there are about two hundred suppliers to Ford, Toyota, and Honda that they share with GM & Chrysler. Suppliers who are already hanging on by a thread, and many, if not most, will tank completely in a GM and/or Chrysler bankruptcy, even a government backed debtor-in-possession. The result is that no one is able to make cars until new suppliers are found and that takes so much time, that even marginally healthier companies become at risk of failure.

        This is all turning out to be a rough ride for everyone on this freaking merry-go-round.
        • 6 Years Ago
        My greatest beef with the bailouts is that fact that companies such as Ford, Toyota, Honda, etc. have to compete against govt-backed GM and Chrysler.
        • 6 Years Ago
        your mighty toyota also applied for government backed bailouts.....
      • 6 Years Ago
      We really NEED this auto manufacturing bailout. After all, people gotta have SOMEWHERE to live!!
      • 6 Years Ago
      you people think this is just going to be free money that the Gov't is handing out? theyre not stupid. theyre NOT going to support a non-viable company! thats what the article is about!!!! are you not reading what i'm reading?

      yes they screwed up. yes they could have put themselves out of business, but for the sake of the country and its people (who, last i checked our gov't represents) they are given a second chance to make things right.

      GM and Chrysler have done ALOT to cut costs, cut spending, and refocus their respective companies to try and make it through this. If they show that they are committed to the cause of saving themselves, i have no problem with the gov't helping them out.

      its not like their execs are taking multi million dollar bonuses or anything....
        • 6 Years Ago
        its true!

        without complete knowledge of a situation how can anyone form an educated opnion??

        thats the definition of an educated opnion.

        and i'd be willing to be the majority of the people who want to see GM and Chrysler crumble dont have complete knowledge of the situation.
        • 6 Years Ago
        "people dont always know whats best for them"

        • 6 Years Ago
        people dont always know whats best for them.

        kinda like how people dont want to save huge companies that have a profound impact on the state of the country.

        you may not be able to see how any of this effects you, but i guarantee that if either of those companies goes under you will be effected. and thousands more will be effected to a much higher degree.
        • 6 Years Ago
        > yes they screwed up. yes they could have put themselves out of business, but for the sake of the country and its people (who, last i checked our gov't represents) they are given a second chance to make things right.

        Last time I checked, "The People" was against the bailouts.
      • 6 Years Ago
      The TOTUS has spoken.
        • 6 Years Ago
        Well, at least unlike Bush, English is Obama's first language. And I do not miss Bush's charming combination of that deer in the headlights squint combined with dumbfounded arrogance...

        But like they say: "I know human being and fish can coexist peacefuly."


        "Too many OB-GYNs aren't able to practice their love with women all across this country."


        "There's an old saying in Tennessee. I know it's in Texas, probably in Tennessee, that says: "Fool me once...”
        ... shame on...
        Shame on you...
        If fooled, you can't get fooled again."
        • 6 Years Ago
        "Would that be the Tyrant of the United States or the Totalitarian of the United States. I realize there is little technical difference, I am just curious what your word choice was."

        At the rate we are going, you're not far off, but...

        TOTUS = Teleprompter of the United States

        The man can't complete simple sentence unless it is displayed on a teleprompter.
        • 6 Years Ago
        Rev: [bumbling Bush quote] [bumbling Bush quote2] [bumbling Bush quote3]

        Funny, you can't quote a bumbling Bambi quote, can you?

        It's not because they haven't happened [cough] "...57 states..." [cough] "...it was like the Special Olympics..." [cough] "...Israel is a strong friend of Israel's... " [cough]*

        It's because you're either ignoring them, the media you're consuming isn't reporting them, you're ignoring them, or - well - you're ignoring them.

        (* granted, he said most of those when he was away from his safety blank..., err, ... The Teleprompter)

        • 6 Years Ago
        Considering that GM and Chrysler are getting OUR money, IMO the president (representing the people) has the right to speak like this.
        • 6 Years Ago
        could be worse.

        he could fail to complete sentences despite the use of a teleprompter.
      • 6 Years Ago
      "It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts."

      ...because we've already promised those to Wall Street, the UAW, the state of California, Fanny Mae, Freddy Mac, and others.
      • 6 Years Ago
      GM and Chrysler are devalued companies, being saved by a devalued government of a devalued country.

      • 6 Years Ago
      Fox Business Just reported that the FIAT - Chrysler deal is DONE!!! Successfully completed.
        • 6 Years Ago
        It's not done until Obama says it's done.

        Doesn't really matter though. If anybody thinks that Fiat can save Chrysler your smoking some serious sh!t.
        • 6 Years Ago
        New Company will be: Fiat/Chrysler Global Initative. Cerberus appearently agreed to the deal.
      • 6 Years Ago
      If one bothers to read the actual reports, there's some interesting stuff in there. A big one - 34% of Chrysler's sales were to sub-prime or near sub-prime borrowers in 1Q08, so until credit gets *really* loose a lot of Chrysler's customers literally can't borrow to buy a new Chrysler. That, plus they called "BS" on Chrysler's plan to reduce incentives. Also they mention Chrysler's "quality gap" as making it "challenging to maintain pricing as projected."

      IOW it's Fiat or bankruptcy in 30 days.
      • 6 Years Ago
      thats why he said "would."

      as in "in the future we will lead the way..."

      lern2english kthnx
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