Autoblog

Christmas List 2010: Rattner's book to debut in time for next Christmas

Dan Roth — Fri, 18 Dec 2009 10:03:00 EST

Filed under: Etc., Government/Legal, Chrysler, GM, Earnings/Financials

Planning for the future is perhaps an alien concept to big business - even automakers, with their protracted product development cycles. Take a cue of what not to do from them, then, and start planning now for next Christmas. May we suggest that your 2010 wishlist starts with what's destined to be a hotly-anticipated tome: Steven Rattner's memoir of his spearheading the bailout of General Motors and Chrysler. Tentatively titled "Overhaul," the cloyingly-named book will tell the story of the quick-rinse bankruptcies Rattner presided over.

A fascinating piece that Rattner wrote for Fortune Magazine back in October gave us a glimpse of how riveting such a seemingly-dry subject can be. The book is on track for a debut in the fall of 2010, and might be even more interesting in a year depending on how Rattner's deals work out. The hardest part is going to be behaving well enough for an entire year so this thing gets stuffed in our stocking.

[Source: The Detroit News | Image: Neilson Barnard/Getty]

Christmas List 2010: Rattner's book to debut in time for next Christmas originally appeared on Autoblog on Fri, 18 Dec 2009 10:03:00 EST. Please see our terms for use of feeds.

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REPORT: Old Carco (read: "Bad Chrysler") to not repay $4B in TARP loans

Chris Shunk — Thu, 17 Dec 2009 11:31:00 EST

Filed under: Government/Legal, Chrysler, Earnings/Financials

Before Fiat and prior to bankruptcy, the old Chrysler, LLC needed $4 billion just to keep the doors open. The Bush Administration came through with the company-saving cash at the 11th hour, keeping the Pentastar solvent long enough to make it to bankruptcy court. Chrysler was reportedly given $15 billion in total aid, and it appears much of that money will be repaid through future payments and through incentives for Fiat to increase its stake in Chrysler from 20 percent to 35 percent. But that original $4 billion? Don't expect that money to come back any time soon - if ever.

The Detroit News reports that what's left of the old Chrysler LLC (which has been renamed Old Carco), has filed court papers saying that the $4 billion will likely never be repaid. New Chrysler is not legally responsible for that debt and Old Carco doesn't exactly have considerable assets. And the government isn't the only debt-holder that isn't going to get its cash. Many secured and unsecured creditors will be unlikely to see their cash, thought some $21 million in secured debt could be paid. Old Carco contains the bad assets not purchased by the new Chrysler when it exited bankruptcy in the spring. The sale of those bad assets, which includes plants, tooling and miscellaneous items like old company cars, will help pay back some of the money creditors lost.

Lawyers working on the bankruptcy case say it take years before the book is finally closed on Old Carco. One item that could help drag matters out is a $25 billion lawsuit Old Carco filed against former owner, Daimler.

[Source: The Detroit News | Image: Bill Pugliano/Getty]

REPORT: Old Carco (read: "Bad Chrysler") to not repay $4B in TARP loans originally appeared on Autoblog on Thu, 17 Dec 2009 11:31:00 EST. Please see our terms for use of feeds.

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REPORT: Fed predicts it will lose $30B on auto industry bailout

Chris Shunk — Thu, 10 Dec 2009 13:27:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

2009 isn't quite over yet, but we're pretty sure most automakers would rather forget that it ever happened. And while General Motors and Chrysler suffered the pain and humiliation of bankruptcy and workers lost thousands of jobs and many plants and dealerships closed, the good news is that the General and the Pentastar are now more fiscally healthy than they've been in ages. The bad news is that it cost U.S. taxpayers an estimated $82 billion to save what has been called hundreds of thousands of jobs.

The Detroit News is reporting that after wading through the wreckage of the auto bailout, the Obama Administration only expects to get back an estimated $52 billion of its original investment. That's horrible news, right? Not so, says Gene Sperling, the senior counsel to Treasury Secretary Timothy Geithner. He said the $30 billion estimate is better than the $44 billion the government thought it would lose a few months ago. And with the perceived stabilization of the auto industry, Sperling feels the numbers could improve.

The DetNews reports that President Obama stressed during a speech on the economy that while the bailout of the auto industry wasn't politically popular, it was absolutely necessary to save "hundreds of thousands of jobs." The president then added "these were not decisions that were popular or satisfying; these were decisions that were necessary."

There are signs that at least GM will start paying the government back $6.7 billion as early as the end of the year. Chairman and interim CEO Ed Whitacre has reportedly intimated that the company could pay the money back in one lump sum. And once the auto industry is in a little better shape, the government could recoup much more cash when the General goes public. For the moment, though, Uncle Sam (e.g. the U.S. taxpayers) still owns 61 percent of the new GM.

[Source: The Detroit News | Image: Saul Loeb/AFP/Getty]

REPORT: Fed predicts it will lose $30B on auto industry bailout originally appeared on Autoblog on Thu, 10 Dec 2009 13:27:00 EST. Please see our terms for use of feeds.

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Rattner recounts auto bailout, was "shocked" and "stunned" at condition of GM, Chrysler

Jonny Lieberman — Wed, 21 Oct 2009 15:20:00 EST

Filed under: Government/Legal, Hirings/Firings/Layoffs, Chrysler, GM

Steve Rattner is a man we admire but do not envy. Rattner, a former Wall Street banking type with zero experience in the automotive or manufacturing world, was tasked by President Obama with guiding General Motors and Chrysler through their restructuring efforts. Not a small job, by any means. Or one we would wish on our worst enemies. That said, it was a HUGE job, and huge jobs typically make for great stories. Rattner, in an article he penned himself for CNN's Money doesn't disappoint. At all. Allow us to tantalize you with some quotes:

When the Obama administration took office on Jan. 20, it inherited nothing in the auto area: no staff, no stacks of analyses, no plans of any kind. The Bush administration had decided in late December that GM and Chrysler were not going to go bankrupt on its watch and had shoveled $17.4 billion of TARP money into the companies to keep them afloat, but without any meaningful stab at restructuring them.

Oh snap! But really, that's not even the tip of the juicy iceberg. How about this apple, er, lack of apple:

When I asked our energetic young chief of staff, Haley Stevens, what we were going to give our visitors for lunch, she replied, "Nothing. Treasury has no budget for even bottles of water." It seemed harsh to expect our guests to go many hours without eating, so I gave Haley $100 and told her to go to a sandwich shop. That became our hospitality protocol.

Hungry for more? We haven't even scratched the surface, as our man Rattner is just getting warmed up. Here's one more for you about Rattner and friends first trip to Detroit:

What we didn't prepare for was the intense public interest in our visit to these hard-hit communities. Throngs of reporters awaited us at every stop while a news helicopter buzzed overhead. More peculiarly, the ensuing press coverage seemed wildly over-focused on our test drive of the Chevy Volt, as if the company's salvation rested on this one vehicle.

Don't tell Lutz. And hey, speaking of Maximum Bob and his pals, here's what Ratner has to say about Detroit Management:

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

And Mr. Rattner is just getting warmed up. Just wait 'till he gets to Wagoner. We implore you all to jump over to CNN to read the rest. Hat tip to chemistrusaz!

[Source: CNN Money | Photo by Chip Somodevilla/Getty]

Rattner recounts auto bailout, was "shocked" and "stunned" at condition of GM, Chrysler originally appeared on Autoblog on Wed, 21 Oct 2009 15:20:00 EST. Please see our terms for use of feeds.

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REPORT: General Motor still on track for 2010 IPO

Frank Filipponio — Mon, 28 Sep 2009 16:29:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

While defending the government bailout of America's auto industry, Herb Allison (above), the Treasury Department's assistant secretary for financial stability, said that a General Motors initial public offering is still a go for next year. While Allison still believes it was essential to safeguard the security of our financial system, he claims that the deal to bail out the auto industry has always been seen as a temporary situation:

"Our investments in the automobile industry and other companies that have received exceptional assistance are limited and temporary. Chrysler Financial has already repaid its assistance, and an initial public offering for GM is expected next year," Allison said.

According to The Detroit News, the Treasury is getting things in place to begin selling off their 60.8% equity stake in GM. It will take several years to divest themselves of GM stock, but the IPO should happen sometime in 2010. An initial public offering for Chrysler is still a ways off.

[Source: The Detroit News | Image: Mandel Ngan/AFP/Getty Images]

REPORT: General Motor still on track for 2010 IPO originally appeared on Autoblog on Mon, 28 Sep 2009 16:29:00 EST. Please see our terms for use of feeds.

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STUDY: Ford continues to find favor with consumers while GM, Chysler decline

Chris Shunk — Thu, 30 Jul 2009 07:58:00 EST

Filed under: Chrysler, Ford, GM

Bankruptcy may have put General Motors and Chrysler in a better financial position, but a report from Rasmussen shows that public opinion may have taken a big hit in the process. The survey, which was completed by 1,000 Americans in late July, shows that only 38% of Americans now have a favorable opinion of GM, down six points from May, and 21% of respondents have a very unfavorable view of the Detroit-based automaker. Chrysler now only has a 34% favorable rating, also down six points, while its very unfavorable rating has dipped to 23%.

The perils of GM and Chrysler are having the opposite affect on Ford, though, as the latest Rasmussen Report shows the public now has a 66% favorable opinion of Ford, with 22% now very favorable. The reason sited in the survey is the fact that the Blue Oval didn't require bailout money, along with avoiding a stint in bankruptcy court. For Ford, 46% of Americans surveyed are more likely to buy a car for avoiding government assistance, while only 17% say they are more likely to go GM now that the company is out of bankruptcy. While the report is good news to Ford, we'd point out that the significant swings in opinion from March to May to July shows that the public mood can shift quickly.

The bankruptcies of GM and Chrysler have certainly weighed down public opinion of the companies, but the attention the industry has received in the past year has helped the surveyed Americans place more value on the auto industry. 88% of those surveyed felt the auto industry is at least somewhat important to the economy, compared to only 49% back in March 2007. Hit the jump to review the complete Rasmussen Report.

[Source: Rasmussen Reports]

Continue reading STUDY: Ford continues to find favor with consumers while GM, Chysler decline

STUDY: Ford continues to find favor with consumers while GM, Chysler decline originally appeared on Autoblog on Thu, 30 Jul 2009 07:58:00 EST. Please see our terms for use of feeds.

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Auto Task Force says no more money for auto bailouts... probably

Chris Shunk — Thu, 11 Jun 2009 19:03:00 EST

Filed under: Government/Legal, Chrysler, GM

To date, the U.S. government has reportedly given General Motors, Chrysler, their financial institutions and various industry suppliers about $80 billion in taxpayer money, and Congress wants to know when we're going to get that money back. The Senate Banking, Housing and Urban Affairs Committee held a hearing with the Auto Task Force for the first time to discuss the state of the government loans, as well as whether or not taxpayers will ever be paid back.

According to task force senior adviser Ron Bloom, there is "a reasonable probability" that some or all of the money will be paid back, but he was by no means "highly confident" that the money would be returned to taxpayers. He does, though, see "reasonable scenarios where taxpayers get their money back."

Bloom was a bit more certain, however, about the prospects of the auto industry receiving still more money from the government. Bloom said that it was the Obama administration's "absolute intent" not to provide future funding to the bailed out automakers, but he followed that with "never say never." That's far from a guarantee, but it would appear that more money doesn't seem to be in the plans.

During his testimony, Bloom also reiterated that the administration was a "reluctant shareholder" in the automakers, and that the government intends to get out the car business as soon as possible. When Alabama senator Richard Shelby (R) pressed for a timeline for the government to exit GM ownership, Bloom admitted that there was "no specific target" set.

[Source: The Associated Press via MSNBC | Image: Chip Somodevilla/Getty]

Auto Task Force says no more money for auto bailouts... probably originally appeared on Autoblog on Thu, 11 Jun 2009 19:03:00 EST. Please see our terms for use of feeds.

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REPORT: Detroit execs grilled on dealer cuts by Congress, Henderson agrees to cough up closure list

Chris Shunk — Thu, 04 Jun 2009 13:28:00 EST

Filed under: Government/Legal, Chrysler, GM

When it comes to dealership closings, there is a big divide between what General Motors, Chrysler and President Obama's auto task force want and what dealers and Congress want. The bankrupt Detroit automakers say that closing dealerships will save money, streamline vehicle delivery, improve brand image, and improve the health of remaining retail stores.

Some members of Congress aren't so sure that dealer closings will cure much for GM and Chrysler, and the legislative branch brought Chrysler's Jim Press and GM's Fritz Henderson before the Senate Commerce Committee on Wednesday for yet another grilling. Broadly speaking, Congress tends to side with dealers because of the political influence of the dealer body, and because of the impact of dealership job losses in the districts/states that Congressmen and women serve.

According to The Wall Street Journal, committee chairman John D. Rockefeller (D-W. Va.) says that he doesn't "believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves with no real plan, with no real notice, with no real help." Mike Johanns (R-Neb.) added that he is introducing legislation that will force the Obama administration to require congressional approval to use TARP funds to obtain an equity stake in any company.

Press and Henderson told the dealers that they would need to ultimately close 3,400 dealerships. GM has so far announced 1,324 closings by the end of 2010, while Chrysler will shutter 789 retail stores by June 9. Over the course of the congressional proceedings, Automotive News notes that Henderson bowed to pressure to disclose the list of dealers GM is eliminating, although that list has not been made public yet.

Henderson calls bankruptcy "our last chance to get it right, to fix permanently those parts of the business that have diverted us from consistently building winning cars and trucks and the consumer experience to match." Dealers called the closings "hasty," and contend that the actions taken against them won't be nearly as effective as GM and Chrysler expect. Hat tip to Dave!

[Sources: Wall Street Journal; Automotive News - subs. req | Source Photo by Mark Wilson/Getty]

REPORT: Detroit execs grilled on dealer cuts by Congress, Henderson agrees to cough up closure list originally appeared on Autoblog on Thu, 04 Jun 2009 13:28:00 EST. Please see our terms for use of feeds.

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Officially, Official: GM files for Chapter 11 bankruptcy

Chris Paukert — Mon, 01 Jun 2009 09:26:00 EST

Filed under: Trends, Government/Legal, GM, Earnings/Financials

The die is cast: General Motors has filed for bankruptcy. As expected, the automotive giant filed for Chapter 11 bankruptcy protection this morning in a New York court, listing $82 billion in assets and $172 billion in debts.

As we told you earlier, the century-old company will gain extensive assistance from the U.S. government, the former chipping in $30 billion in financing (GM has already received over $19 billion), that latter of which is expected to work extensively with the automaker as it goes through bankruptcy proceedings that will see the company's assets split into "Good GM" and "Bad GM," the latter of which will be liquidated.

According to the Detroit Free Press, the Obama administration has said that it will manage its holdings in GM (the government gets a 60% stake) in a "hands-off" non-interference fashion, with no White House employees serving on the board or being employed by the automaker. However, Capitol Hill will get the chance to influence company proceedings, as it will vote on core issues of governance that include "selecting the company's board of directors and major corporate transactions." While that may not equate to day-to-day management decisions, the government will certainly have the ability to influence company plans through appointments and such decision-making processes.

You can read more about the filing and the ramifications at the link below.

[Source: Detroit Free Press | Image: Michael Heiman/Getty]

Officially, Official: GM files for Chapter 11 bankruptcy originally appeared on Autoblog on Mon, 01 Jun 2009 09:26:00 EST. Please see our terms for use of feeds.

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REPORT: Koenigsegg a finalist in bid to buy Saab

Chris Paukert — Fri, 29 May 2009 13:58:00 EST

Filed under: Europe, GM, Saab, Earnings/Financials, Rumormill

In a brief article on its website, the UK's Channel4 says that a Swedish newspaper, Dagens Industri, is reporting that supercar maker Koenigsegg is in the running to purchase either a stake in Saab, or the whole kit and caboodle.

According to the report, Koenigsegg is reportedly a front-runner to rescue the fellow Swedish automaker, with the other suitors being the Renco Group, a U.S. investment company, and the Italian automaker Fiat - the latter of which is being denied by both Fiat and Saab.

Automotive News has asked Saab to comment on the report, but spokeswoman Gunilla Gustavs declined, although she did say that the likely bankruptcy of parent company General Motors will not derail Saab's plans. Gustavs apparently did impart that GM plans to disclose a "preferred candidate" in the next few weeks.

If Christian von Koenigsegg and his band of merry men manage to get their hands on Saab, we can't help ourselves from wondering that with their expertise in supercars, perhaps they could bring the Aero X (above) to market. We can dream, can't we?

[Source: Channel4; Automotive News - subs. req.]

REPORT: Koenigsegg a finalist in bid to buy Saab originally appeared on Autoblog on Fri, 29 May 2009 13:58:00 EST. Please see our terms for use of feeds.

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Bloomberg says GM to file for Chapter 11 bankruptcy on Monday

Chris Paukert — Thu, 28 May 2009 16:02:00 EST

Filed under: Trends, Government/Legal, Earnings/Financials, Rumormill

Despite today's word of coming to terms with its major shareholders on a debt-for-equity swap, Bloomberg is reporting that General Motors will join Chrysler in filing for Chapter 11 bankruptcy on Monday. The move is widely expected, but the news agency is adding a bit of flesh to the story, suggesting that what promises to be the third-largest bankruptcy in U.S. history (after Lehman Bros. and Worldcom) will indeed result in the sale of most of the automaker's assets to a new company (likely the oft-discussed "Good GM"). GM's worldwide assets have been reported to be $91 billion against a total liability of $176.4 billion as of December 31.

A suggested location of the possible bankruptcy filing has not been disclosed. More details in the link below.

[Source: Bloomberg News | Image: Bill Pugliano/Getty]

Bloomberg says GM to file for Chapter 11 bankruptcy on Monday originally appeared on Autoblog on Thu, 28 May 2009 16:02:00 EST. Please see our terms for use of feeds.

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BREAKING: GM lurches toward bankruptcy as bondholder offer fails

Chris Paukert — Wed, 27 May 2009 08:58:00 EST

Filed under: Trends, Government/Legal, GM, Earnings/Financials

General Motors is teetering ever closer to the brink of bankruptcy today, as the automaker's exchange offer for its outstanding debt fell "substantially" short of the necessary take-rate. GM had offered some $27.2 billion of its unsecured public notes to its bondholders, but the offer expired at noon yesterday without having the minimum tender amount met. The U.S. Treasury Department had mandated that at least 90 percent of bondholders would have to agree to swap their shares for a 10 percent stake in the GM, but far too few failed to take GM up on its offer, effectively negating any swap at all under the conditions of the tender offer.

A number of major bondholders had originally countered with an offer to give up their stocks in exchange for a markedly larger stake in the company - 58 percent - but with the lion's share of the company already promised to the United Auto Workers' VEBA fund and to the U.S. government, the bondholder issue was widely expected to fail.

As a result, many are expecting GM to file for Chapter 11 bankruptcy by Monday, with The Detroit News reporting that GM's board of directors scheduled to meet earlier than that to discuss whatever options they may have left. Official GM press release after the jump.

[Sources: General Motors; The Detroit News | Image: Bill Pugliano/Getty]

Continue reading BREAKING: GM lurches toward bankruptcy as bondholder offer fails

BREAKING: GM lurches toward bankruptcy as bondholder offer fails originally appeared on Autoblog on Wed, 27 May 2009 08:58:00 EST. Please see our terms for use of feeds.

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BREAKING: Gov't. reportedly gearing up to push GM into bankruptcy as early as next week

Chris Paukert — Fri, 22 May 2009 12:58:00 EST

Filed under: Government/Legal, GM, Earnings/Financials, Rumormill

According to The Washington Post, the White House is readying General Motors for a bankruptcy filing that could come as early as the end of next week. According to the paper, the proceedings would likely grant GM nearly $30 billion in additional federal loans, bringing taxpayer investments into the company to almost $45 billion.

As reported earlier, the plan appears to be to give the government a 50%+ stake in The General, with the White House gaining the ability to name new board members, as it has with Chrysler, which is already in Chapter 11 status. The United Auto Workers VEBA health care fund is tipped to own nearly 40% of GM itself, a stake it would receive in exchange for giving up the $10+ billion it is already owed. That would only leave around 10% for the bondholders, who remain none too happy about the situation.

Full details available at the link below.

[Source: The Washington Post | Image: Bill Pugliano/Getty]

BREAKING: Gov't. reportedly gearing up to push GM into bankruptcy as early as next week originally appeared on Autoblog on Fri, 22 May 2009 12:58:00 EST. Please see our terms for use of feeds.

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Will GM consider moving its headquarters out of Detroit? [w/POLL]

Chris Paukert — Tue, 12 May 2009 13:20:00 EST

Filed under: GM, Earnings/Financials

Yesterday's media question-and-answer session with General Motors' CEO Fritz Henderson didn't reveal much in the way of actual news, but at least one question raised a few eyebrows: "Is GM considering moving its corporate headquarters?"

While that's an unlikely scenario, Henderson stopped short of denying the possibility, saying: We're looking at, frankly, everything within our business, but it's not like we have that queued up at the top of our list." Henderson also admitted: "We don't have any such plan... but if we did it would be motivated by business rationale, which would be cost, efficiency and speed."

So, where might GM defect to? Detroit Free Press scribe Tom Walsh suggests that Wilmington, Delaware (the city where GM is incorporated) could be a possibility, or even just down the road to Warren, MI near GM's Tech Center complex is located.

Admittedly, a move by GM out of its Renaissance Center headquarters remains unlikely, but Detroit's already skittish residents and politicians are already bristling on the city's airwaves at Henderson's less-than-firm response to the question. What do you think? Answer our poll below.

View Poll

[Source: The Detroit News | Image: Bill Pugliano/Getty]

Will GM consider moving its headquarters out of Detroit? [w/POLL] originally appeared on Autoblog on Tue, 12 May 2009 13:20:00 EST. Please see our terms for use of feeds.

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Chrysler reveals more facets of "We Build" campaign

Chris Shunk — Fri, 08 May 2009 10:28:00 EST

Filed under: Government/Legal, Marketing/Advertising, Chrysler

Click above to watch all five commercials after the jump

Chrysler sales have been abysmal throughout 2009, and with the uncertainty of bankruptcy, the short-term sales outlook is decidedly bad. To get the word out to its customers that the Pentastar is alive and well (except for its idled plants), Chrysler is launching a new campaign beginning May 11 that includes five different commercials. Two focus on Chrysler as a whole and mentions restructuring and the merger with Fiat. The other 30 second spots are product commercials for the Jeep Grand Cherokee, Dodge Grand Caravan and Chrysler Town & Country.

Marketing Vice President Steven Landry wants the the new campaign to "reinforce that it's business as usual and demonstrate a bright future ahead for Chrysler." The public has let it be known, however, that it isn't all that happy with business as usual, so the campaign, while solid, faces a decidedly uphill battle. At least the campaign's tagline,"We're building a new car company. Come see what we're building for you" is catchy. Hit the jump to watch the five Chrysler commercials and check out the photos from "We Build" in the gallery below.

Gallery: Chrysler "We Build" Campaign

[Source: Chrysler]

Continue reading Chrysler reveals more facets of "We Build" campaign

Chrysler reveals more facets of "We Build" campaign originally appeared on Autoblog on Fri, 08 May 2009 10:28:00 EST. Please see our terms for use of feeds.

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Survey: Ford's image gets a boost by nixing federal aid

Alex Nunez — Fri, 01 May 2009 19:02:00 EST

Filed under: Government/Legal, Ford

In what has to be one of the least surprising developments related to the auto industry, a newly-released survey finds that Americans' favorable view of Ford Motor Company has increased substantially since it became the sole member of the Detroit Three to abstain from taking federal funds.

Before the Capitol Hill Bailout Bonanza got going in earnest late last year, just 41% of Americans held the Blue Oval in a positive light. Now, after billions of taxpayer dollars have been spent keeping now-bankrupt Chrysler and soon-to-be (in all likelihood) bankrupt General Motors in business, FoMoCo's positive number has jumped up to 63%, according to a survey conducted by the Aloft Group last week.

However, that's not to say that those surveyed believe Ford's out of the woods: a mere 24 percent of the respondents think Ford doesn't need Uncle Sam to come to the rescue. Still, Ford's decision to mortgage everything on its own in a bid to stay alive has been a big PR success, and you can bet that Alan Mulally will instruct staffers to burn all the office furniture in Dearborn this winter before he looks to Capitol Hill for a penny in bailout dollars. In Detroit right now, the Scarlet Letter is "B."

[Source: The Detroit News]

Survey: Ford's image gets a boost by nixing federal aid originally appeared on Autoblog on Fri, 01 May 2009 19:02:00 EST. Please see our terms for use of feeds.

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AP: Chrysler definitely filing for bankruptcy after debt talks "crumbled overnight"

Chris Paukert — Thu, 30 Apr 2009 09:59:00 EST

Filed under: Government/Legal, Chrysler, Earnings/Financials, Fiat

Building on speculation that first leaked yesterday is word this morning that a pair of Obama administration officials have told The Associated Press that Chrysler will indeed file for bankruptcy. The decision was apparently reached after debtor negotiations with hedge funds "crumbled overnight."

If the AP's sources are correct, we assume that the Chapter 11 announcement will be made quickly - likely later today. According to the report, President Obama is slated to talk about the auto industry at noon, at which point we wouldn't be surprised to hear him break the news.

A bankruptcy filing by the Pentastar is not expected to rule out a merger with Fiat, or indeed, trigger the shuttering of the company. Officials close to the proceedings have already gone on record saying that a deal with the Italian automaker could happen inside or outside of bankruptcy, and that arrangement could be finalized as early as today.

[Source: The Associated Press | Image: Andrew Cutraro/AFP/Getty ]

AP: Chrysler definitely filing for bankruptcy after debt talks "crumbled overnight" originally appeared on Autoblog on Thu, 30 Apr 2009 09:59:00 EST. Please see our terms for use of feeds.

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REPORT: UAW's majority stake in Chrysler doesn't necessarily translate to control

Chris Shunk — Thu, 30 Apr 2009 09:25:00 EST

Filed under: Chrysler, UAW/Unions

The reworked contract between Chrysler and the United Auto Workers cedes 55% of Pentastar stock to the worker's retiree health care fund. That has lead to speculation that the UAW would have majority representation on the Chrysler board, but labor experts believe that won't be the case. University of California Berkeley labor professor Harley Shaiken insists that "equity stake doesn't translate into voting control." The 55% was given to the VEBA fund in lieu of the previously agreed upon cash payment. Since the only job of the VEBA is to ensure that the retiree health-care fund is properly funded, by rule, it cannot take ownership of the automaker. Though the UAW won't have majority representation, most expect the workers to receive at least one seat at the board.

Assuming that everything falls into place, the remaining owners of the new, leaner Chrysler will be Fiat at 35% and the government and lenders at a combined 10%. The changes made by the Pentastar over the past few months should equate to a healthier, more competitive Chrysler. But if things don't work out as planned (they rarely do) and Chrysler ultimately fails, retiree health car could end up being a thing of the past.

[Source: Detroit News Image Source: Bill Pugliano/Getty]

REPORT: UAW's majority stake in Chrysler doesn't necessarily translate to control originally appeared on Autoblog on Thu, 30 Apr 2009 09:25:00 EST. Please see our terms for use of feeds.

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DetNews columnist warns of the dangers of nationalizing GM

Jonathon Ramsey — Wed, 29 Apr 2009 16:00:00 EST

Filed under: Government/Legal, GM, UAW/Unions

Detroit News columnist Daniel Howes has penned a commentary on what he believes the "mind-numbing" future could be if the White House and the United Auto Workers end up with majority control of General Motors.

Howes fears that a government-and-UAW-controlled boardroom would end up an echo chamber, with both parties worried mainly about maintaining jobs and recouping their investments first. Those left on the outside - and poorer for it - would be the "short-changed" investors and "neutered" bondholders. Ford would also be left to deal with the repercussions of having the government as its next door competitor.

The scenario he paints could be considered slightly alarmist, and frankly, there's a nice hopscotch through American history of the government taking previously unheard of steps when dealing with labor and private enterprise. Howes is also presenting a scenario in which the government fails to execute efficient oversight of the company that it has repeatedly said it does not want to own, and he also lets those "wiped out" investors and "neutered" bondholders completely off the hook for responsibility for GM's current state. As a Ford representative said, "it's uncharted waters for us." That goes for the rest of the country as well... and we won't know the future's tale until it's told.

[Source: Detroit News]

DetNews columnist warns of the dangers of nationalizing GM originally appeared on Autoblog on Wed, 29 Apr 2009 16:00:00 EST. Please see our terms for use of feeds.

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REPORT: UAW agrees to ban strikes?(!)

Chris Paukert — Wed, 29 Apr 2009 14:00:00 EST

Filed under: Government/Legal, Chrysler, UAW/Unions

According to a post on The Detroit Bureau, a key stipulation in the tentative contract reached between the United Auto Workers and Chrysler is that the union's right to strike will be all but eliminated for at least the next few years.

As quoted in the story, Harley Shaiken, a labor relations specialist at UC-Berkeley, notes that the so-called "no strike" portion of the agreement was arrived at "in the context that it will take anywhere from three to five years for this company to recover." According to TDB, the provisos of the bridge loan means that a strike would be viewed as a default on the agreement, including any local strikes.

The same contract apparently calls for binding arbitration (instead of strikes) on financial issues for any contract arrived at in 2011, and the same arrangement will be in effect in 2015 if Chrysler still owes money to the Treasury Department.

The contract goes in front of the UAW's 28,000+ members for a vote today. Click on the link below for more details.

[Source: The Detroit Bureau | Source Image: Bill Pugliano/Getty]

REPORT: UAW agrees to ban strikes?(!) originally appeared on Autoblog on Wed, 29 Apr 2009 14:00:00 EST. Please see our terms for use of feeds.

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