• Apr 12, 2010
There's $77 billion owed to the pension plans contributed to by auto industry manufacturers and partner companies and we're to assume that at least seven billion of that is owed by Ford to the UAW's Voluntary Employment Benefit Association. The way Ford is going, it looks likely to pay that off without needing unsavory assistance. When it comes to General Motors' and Chrysler's obligations over the next five years, though, the Government Accountability Office has warned that Uncle Sam still needs to keep a close eye on whether both automaker's debts will be paid on time.
GM has $12.2 billion in pension liabilities, while Chrysler has $2.62 billion due merely to keep up with obligations over the next five years. Even though they came out of bankruptcy and trimmed their workforces, both are still on the hook for to pay white- and blue-collar pensions. The GAO's concern is whether they will be profitable enough in the next five years to keep up with those payments. If not, the hook gets transferred to the government to the order of $14.5 billion.

GM appears to be slowly turning its ship, but we're still in the dark about Chrysler. However, we know the Pentastar has big plans and one figures Marchionne didn't buy the company just to go bust. That means that at the moment, this is only bell-ringing on the part of the GAO. But don't take your eyes off the ball, guys.

[Source: New York Times]


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    • 1 Second Ago
  • 5 Comments
      • 4 Years Ago
      Ima still gonna buy a Lexus. Especially with the Caddy dealer's attitude toward price on the CTS-V.

      GM can sell cars or sell attitude. Not both.
        • 4 Years Ago
        Wait a second, you are considering a CTS-V vs. a Lexus?

        I didn't know those two were ever cross shopped. Talk about two opposite vehicles. The CTS-V is a performance machine while Lexii (sp?) are reliable, efficient and boring appliances.
        • 4 Years Ago
        It's one of the key reasons the German and Japanese brands typically do better at sales, they have tighter controls over the dealership franchises.
      • 4 Years Ago
      the NYT actually has a better article than the newsflash mentioned here...

      http://www.nytimes.com/2010/04/07/business/07cars.html?scp=4&sq=gm&st=cse

      Included in that article:
      "If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone....

      ...“In the event that the companies do not return to profitability in a reasonable time frame, Treasury officials said that they will consider all commercial options for disposing of Treasury’s equity, including forcing the companies into liquidation,” the report said....

      ...In addition, the report said the government’s interests as a shareholder of G.M. and Chrysler could clash with those of pension participants and beneficiaries. “For example, Treasury could decide to sell its equity stake at a time when it would maximize its return on investment, but when the companies’ pension plans were still at risk,” the report said."


        • 4 Years Ago
        ""If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees."

        The government doesn't pay for anything.

        If either company's plan must be terminated, taxpayers like you and me - the vast majority of whom do not have any kind of pension plan beyond a 401K we paid for ourselves - will pay for these retirees' platinum benefits.

        The only thing the government is chipping in is a gun to your head in case you had ideas of saving for your own retirement instead.