Autoblog

Henrik Fisker bidding with Hong Kong tycoon to get his company back

Michael Harley — Mon, 27 May 2013 13:00:00 EST

Filed under: Hybrid, Earnings/Financials, Fisker, Luxury

Struggling to save Fisker Automotive from the of talons of bankruptcy, Henrik Fisker has teamed up with Hong Kong billionaire Richard Li to offer to purchase the company's outstanding U.S. Department of Energy's (DOE) advanced vehicles loan for just a fraction of its $171 million balance (the company was originally loaned $192 million, but $21 million was seized last month by the Energy Department).

According to Reuters, there are at least two different investor groups interested in the company, but the DOE loan must be addressed before the automaker can be revived. (Satisfying the federal loan helps make Fisker Automotive more attractive to potential buyers, but it still leaves outstanding debt to suppliers.) The DOE would sell the loan to cut its losses - against slim odds of the loan being repaid - even though it would be recovering only pennies on the dollar.

While the Fisker/Li group has reportedly offered to buy the loan for between $25 - $30 million, another group led by Chinese automaker Wanxiang Group and Bob Lutz have teamed up to offer to buy Fisker for $20 million in a prearranged bankruptcy. That second investor group is likely working a different angle: remember, it was Lutz who unveiled his Corvette ZR1-powered VL Automotive Destino at the Detroit Auto Show earlier this year.

Henrik Fisker bidding with Hong Kong tycoon to get his company back originally appeared on Autoblog on Mon, 27 May 2013 13:00:00 EST. Please see our terms for use of feeds.

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Court approves Suzuki bankruptcy plan

Zach Bowman — Fri, 05 Apr 2013 09:28:00 EST

Filed under: Government/Legal, Suzuki

Suzuki has won approval for its Chapter 11 plan to stop selling cars in the US and concentrate instead on the company's powersports products. Judge Scott C. Clarkson of the US Bankruptcy Court for the Central District of California approved the plan after the company's creditors agreed to the conditions.

Suzuki will now sell its motorcycle, ATV and marine divisions to the newly minted Suzuki Motor of America subsidiary under the Suzuki name. The new company will be wholly owned by Suzuki Motor Company. This is the final piece of the company's restructuring puzzle.

The company says it will now be able to grow its powersports businesses here in the US and also provide auto parts and service to current Suzuki owners through what's left of the company's dealer network. You can check out the brief press release on the bankruptcy plan below.

Continue reading Court approves Suzuki bankruptcy plan

Court approves Suzuki bankruptcy plan originally appeared on Autoblog on Fri, 05 Apr 2013 09:28:00 EST. Please see our terms for use of feeds.

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Suzuki ending auto sales in Canada, too

Jonathon Ramsey — Wed, 27 Mar 2013 09:52:00 EST

Filed under: Car Buying, Suzuki, Earnings/Financials, Canada

Suzuki of Japan has reportedly made the decision that almost everyone assumed it would make when it announced it was leaving the US market: when the 2014 model year concludes, it will no longer sell cars in Canada. With six employees overseeing its auto business in Canada and a dealer network that has shrunk to 55 outlets in the country, we can't say we're shocked.

At the time of the US announcement, however, the senior VP of sales and marketing in the automotive division of Suzuki Canada said it would be able to survive on its own because, among other reasons, Canadians prefer smaller, more fuel-efficient cars that fit the company's offerings. Five months later, after some time to think about a 30-percent drop in sales to open up 2013 instead of the 1.4-percent increase in sales that Suzuki Canada posted last year, things have evidently changed.

The Globe and Mail reports that as is in the US, Suzuki's motorcycle, ATV and marine divisions in Canada will remain.

Suzuki ending auto sales in Canada, too originally appeared on Autoblog on Wed, 27 Mar 2013 09:52:00 EST. Please see our terms for use of feeds.

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Suzuki demand in US rises after bankruptcy

George Kennedy — Wed, 26 Dec 2012 16:30:00 EST

Filed under: Car Buying, Hirings/Firings/Layoffs, Suzuki

Following word that Suzuki is ceasing car sales in America, it appears that demand for the Japanese automaker's wares have increased. According to The Detroit News, American Suzuki Motor Corp. will import an additional 2,500 vehicles to quench demand that has jumped since the company announced that it was filing for bankruptcy and ending sales in America.

Dealers recently informed their sales personnel that no more vehicles would be produced and that this was the final push. With heavy incentives and a seven-year warranty as value-adds, November sales for Suzuki rose in November some 22 percent, up to 2,224 vehicles. December sales also rose, but neither month's gains outweigh the long-term losses for the automaker. While Suzuki will sell roughly 22,000 cars this year in the US, it was selling about 120,000 annually before 2008.

As it stands, Suzuki will sell off the rest of its vehicle inventory, including the 2,500 additional units, and dealers will continue to provide parts an warranty work. With all of this negative news for the automaker, it's impressive to see an interest in Suzuki vehicles even with the imminent shuttering of its North American car sales.

Suzuki demand in US rises after bankruptcy originally appeared on Autoblog on Wed, 26 Dec 2012 16:30:00 EST. Please see our terms for use of feeds.

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American Suzuki Motors files chapter 11, will no longer sell cars in the United States

Jeremy Korzeniewski — Mon, 05 Nov 2012 19:39:00 EST

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

As much as we knew it was a possibility, we have to say that Suzuki's announcement this afternoon that it is filing chapter 11 bankruptcy proceedings caught us a bit off guard. American Suzuki Motor Corporation - the sole distributor of Suzuki automobiles in the United States - will realign its business to focus on motorcycles, ATVs and the marine market.

What does this mean in simple terms? In short, new Suzuki cars and trucks will no longer be sold by Suzuki in the United States once current supplies run out. Period.

Suzuki cites "low sales volumes, a limited number of models in its lineup, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental US and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the US market."

Motorcycles, ATVs and watercraft will not be affected. Current owners of Suzuki cars, trucks and sport utility vehicles will have their warranties honored, and parts will reportedly be made available. Suzuki will continue to sell automobiles in other countries, naturally, including its home market of Japan.

Read the complete announcement from Suzuki below, and check out this official website set up by Suzuki for current owners.

Continue reading American Suzuki Motors files chapter 11, will no longer sell cars in the United States

American Suzuki Motors files chapter 11, will no longer sell cars in the United States originally appeared on Autoblog on Mon, 05 Nov 2012 19:39:00 EST. Please see our terms for use of feeds.

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BMW suing Saab Automobile Parts for $3.2M

George Kennedy — Fri, 24 Aug 2012 18:41:00 EST

Filed under: Europe, Government/Legal, Plants/Manufacturing, BMW, Saab

Saab might be all but dead, but that's not stopping automakers that were once involved with the Swedish brand from attempting to reclaim losses. According to a Fox Business report, BMW has filed a 2.6 million Euro suit ($3.2 million USD) with a Swedish district court against Saab Automobile Parts for deliveries that went unpaid.

In 2012, Saab Automobile AB signed an agreement BMW that would see the German automaker deliver four-cylinder gas engines for its 9-3 range.

The suit also asserts that Saab ordered a large number of spare parts, and no payments were made to BMW. At the time, Saab was far from liquid, and filed for bankruptcy in December of last year.

Though Saab was left with assets that totaled $500 million, the Swedish automaker's debts amounted to $2 billion, a part of which include the unpaid BMW deliveries.

According to the report, Lennart Stahl, CEO of Saab Automobile Parts AB has said "Our lawyers will now go through the lawsuit carefully and see if anything new has been added before we decide hat to do." This only adds to the fallout from the Saab closure. Recently, Saab's owner, Spyker filed suit with General Motors for $3 billion, claiming that the U.S. automaker, through its leadership, played a large part in bankrupting the brand.

BMW suing Saab Automobile Parts for $3.2M originally appeared on Autoblog on Fri, 24 Aug 2012 18:41:00 EST. Please see our terms for use of feeds.

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Dealers trying to push Saab NA into bankruptcy

Jonathon Ramsey — Tue, 31 Jan 2012 14:31:00 EST

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

Saab North America acknowledged that the chances were exceptionally slim, but it hoped to avoid bankruptcy long enough to give another company a chance to buy it. Shortly after Saab NA appointed a third-party administrator, McTevia & Associates, it was decided there was no way to save the company short of liquidation, and on January 23, the administrator announced plans to file for Chapter 7 bankruptcy.

But Saab NA was beat to the filing by a group of 162 out of the 188 Saab dealers, who filed for involuntary Chapter 11 bankruptcy in Delaware. The dealers said last week they were going to file for Chapter 7, but instead chose Chapter 11 because of its lower costs and in case China's Youngman or Turkey's Brightwell Holding's bid for Saab NA's parent succeeds and they want to restart operations here. The document was filed in Delaware because the dealer body feels they'll get better hearing "further away from Detroit." Dealers also wanted the force of court orders to back up any decisions made, not that of a third-party administrator.

Underneath all the legal machinations, though, if estimates from Saab NA dealer attorney Leonard Bellavia are accurate, then the parties could emerge without getting financially kneecapped. When McTevia announced its plan to file, Bellavia suggested that Saab NA's liabilities were $10.5 million and assets at between $75 million and $125 million. With no more parts on the way and 2,400 cars on lots, McTevia had earlier said that the parts distribution business is "the only meaningful asset."

Dealers trying to push Saab NA into bankruptcy originally appeared on Autoblog on Tue, 31 Jan 2012 14:31:00 EST. Please see our terms for use of feeds.

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Report: UAW files suit against GM over $450M Delphi debt

Zach Bowman — Wed, 07 Apr 2010 13:32:00 EST

Filed under: Government/Legal, Plants/Manufacturing, GM, Earnings/Financials, UAW/Unions

Once again, General Motors has found itself in hot water with the United Auto Workers. Way back when in 2007, GM signed a deal with Delphi to provide a total of $450 million for the UAW's Voluntary Employee Beneficiary - a trust set up to provide for retiree benefits, especially health care. So far, GM hasn't been willing to hand over the dough, and the UAW has decided to take The General to court over the issue.

The Detroit Free Press is reporting that the lawsuit claims GM denied the UAW its cash when the union asked for it last November and has refused to make payments ever since. As part of the automaker's bankruptcy filings last year, the company assumed all of its contracts with the UAW, including this one.

Delphi has been feeling the pinch of the economic slowdown in a big way, and found itself in bankruptcy court in 2005. When that happened, the company asked for concessions from the UAW, and managed to negotiate a pay cut of up to $10 per hour as part of the deal. GM has since snapped up four Delphi divisions during 2009, and word has it the automaker is seeking even further concessions from the union.

So far, GM hasn't said word one about the lawsuit.

[Source: Detroit Free Press]

Report: UAW files suit against GM over $450M Delphi debt originally appeared on Autoblog on Wed, 07 Apr 2010 13:32:00 EST. Please see our terms for use of feeds.

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REPORT: New GM entitled to $16 billion in federal tax breaks courtesy of Old GM

Jonathon Ramsey — Tue, 04 Aug 2009 08:27:00 EST

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

Due to what appears to be a slight (additional) bending of the rules, the "new," post-bankruptcy General Motors has been allowed to carry the $16 billion net operating loss that was created by the "old" GM. That means that New GM will not have to pay taxes on its profits for a while, because the profits can be written off by the losses.

The issue is that the move, called a "tax-loss carry forward," isn't supposed to be available to the automaker. The tax code contains provisions that prohibit a profitable company from buying an unprofitable company for the sole purpose of claiming the unprofitable company's tax losses - and the type of bankruptcy GM went through should have precluded The General's ability to use the tax loss practice.

Except for the fact that GM was bought by the government, and since the government writes the tax code and collects said taxes, it can decide how it wants to handle the companies it owns. General Motors says the move will bolster its "cash position to the benefit of all parties." Critics, on the other hand, say that GM got a $16 billion unfair head start on Ford. Hat tip to Adrian.

[Source: The Wall Street Journal | Image: Jim Watson/AFP/Getty]

REPORT: New GM entitled to $16 billion in federal tax breaks courtesy of Old GM originally appeared on Autoblog on Tue, 04 Aug 2009 08:27:00 EST. Please see our terms for use of feeds.

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BREAKING: New GM drives out of bankruptcy this morning [*UPDATED]

Chris Shunk — Fri, 10 Jul 2009 08:50:00 EST

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

After a scant six weeks in bankruptcy court, General Motors is on its way out of Chapter 11. U.S. Bankruptcy Court Judge Robert Gerber approved the sale of GM's good assets to a new company lead by the U.S. and Canadian governments and the UAW healthcare fund, but gave vested parties four days to file an objection.

After two requests for a stay were denied on Tuesday and an accident victim's request was denied at the last minute on Thursday, all signs point to an exit from bankruptcy within a few days, and this morning, word from the Detroit News is that the company officially emerged from Chapter 11 at 6:30am this morning. CEO Fritz Henderson has called a 9 am press conference this morning, and one can only assume that he will declare the birth of "New GM."

GM has received $50 billion from the US government to keep the mega-corporation out of liquidation. For its troubles, Uncle Sam will receive a 60% stake in the new company. Canada, which pitched in $9 billion, will be 11.7% owners, while the UAW will receive 17.6%. Old GM will receive 10% of the new company to help creditors recoup some money. The "New GM" will be smaller in almost every way, with four fewer brands, a smaller presence in Europe, fewer employees, and a markedly more attractive balance sheet.

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

*UPDATE: Official press verbiage added after the jump, click here to watch GM's live 9am press conference.

Continue reading BREAKING: New GM drives out of bankruptcy this morning [*UPDATED]

BREAKING: New GM drives out of bankruptcy this morning [*UPDATED] originally appeared on Autoblog on Fri, 10 Jul 2009 08:50:00 EST. Please see our terms for use of feeds.

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REPORT: Federal bankruptcy court expected to rule on "New GM"

Chris Paukert — Tue, 30 Jun 2009 10:57:00 EST

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

According to Reuters, General Motors is on its way into bankruptcy court today in an effort to win approval and access to additional federal funding under its asset-split plan. The automaker filed for Chapter 11 protection just 30 days ago, but it will now go before Judge Robert Gerber to sell desirable assets (think: Chevrolet, Cadillac, GMC, Buick) to "New GM" and jettison various debts and negative assets by consigning them to "Old GM," which would be liquidated. If it succeeds in winning court approval, GM will receive billions in U.S. Treasury funding.

Before it can open the Fed's piggy bank, however, GM must weather challenges from bondholders and disgruntled consumers involved in certain types of product liability lawsuits. Industry watchdogs believe that both GM and the Obama administrations auto task force have learned from Chrysler's bankruptcy machinations, which could accelerate the process. For more details on today's proceedings, check out the link below. Thanks for the tip, Michael!

[Source: Reuters via Yahoo | Image: Michael Heiman/Getty]

REPORT: Federal bankruptcy court expected to rule on "New GM" originally appeared on Autoblog on Tue, 30 Jun 2009 10:57:00 EST. Please see our terms for use of feeds.

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Bankruptcy filing reportedly allows GM, Chrysler to shed hundreds of product liability lawsuits

Chris Shunk — Mon, 22 Jun 2009 14:27:00 EST

Filed under: Government/Legal, Chrysler, GM

Outside of bankruptcy, General Motors and Chrysler were no longer competitive enough to remain solvent. After Chapter 11 reorganization, the two automakers will have a clean financial statement and a whole lot fewer employees, plants, and dealers. Another area where the two automakers will receive a clean bill of health is product liability lawsuits, and the savings will be huge, The Detroit News reports. GM, for example, had $928 million in liability expenses (including court costs and lawyer fees) in 2008 and $1.1 billion in 2007.

The government has ruled that the new GM and Chrysler will not be held liable for vehicles sold by the old GM and Chrysler. Lawyers are still debating whether or not cars and trucks purchased after bankruptcy proceedings began will be covered, but anything before bankruptcy is apparently out of the picture. University of Michigan law professor and bankruptcy scholar John Pottow told the DetNews that GM lawyers gave him the impression that it was the government that was driving this issue:

"What's fascinating about this is that it is the government taking the hard line here, insisting that the new company should emerge free of those liabilities. It's the government actually thinking like hardheaded investors instead of taking the more predictable, more socialist line."

While the two companies' ledgers will look better without the threat of liability, the move is brutal for those who are awaiting trial or have already been awarded money but have yet to receive any funds. Those who have been permanently disabled as a result of alleged vehicle defects will now likely never receive a dime for their injuries. While pre-bankruptcy liabilities will be swept under the rug, GM and Chrysler will continue to cover all applicable warranties both pre- and post-bankruptcy.

In the meantime, attorneys general from a number of states aren't taking the matter lying down - eight separate states have filed objections to the provision in federal bankruptcy court on Friday.

[Source: The Detroit News]

Bankruptcy filing reportedly allows GM, Chrysler to shed hundreds of product liability lawsuits originally appeared on Autoblog on Mon, 22 Jun 2009 14:27:00 EST. Please see our terms for use of feeds.

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Putting It In Perspective: Largest bankruptcies in U.S. history displayed graphically

Chris Paukert — Fri, 12 Jun 2009 14:00:00 EST

Filed under: Trends, Chrysler, GM, Earnings/Financials

Click above to view Good Magazine's largest bankruptcies in U.S. history infographic

The benevolent-minded folks over at Good Magazine have commissioned infographic specialists Always With Honor to give us a little perspective on America's recent rash of bankruptcies. Using the 'sinking ship' metaphor to graphically show where the Chapter 11 filings of General Motors and Chrysler sit among the 20 biggest bankruptcies in U.S. history provides some interesting perspective on the ailments affecting America's auto industry and the economy at large.

Included in the graphic are high-profile filings like Lehman Brothers, Worldcom, and Enron, along with lesser-known companies like Calpine and General Growth Properties. Soberingly, Good notes that eight of the largest bankrutpcies in American history have come in the last two years.

Click on the image above to see the infographic in its entirety.

[Source: Good Magazine]

Putting It In Perspective: Largest bankruptcies in U.S. history displayed graphically originally appeared on Autoblog on Fri, 12 Jun 2009 14:00:00 EST. Please see our terms for use of feeds.

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REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named

Chris Paukert — Sun, 31 May 2009 23:29:00 EST

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

General Motors' bankruptcy endgame appears to be at hand, with word coming out that the automaker will indeed file for Chapter 11 protection early on Monday morning, which in turn is expected to trigger $30.1 billion in U.S. government loans. That funding will arrive on the heels of the $19.4 billion GM has already received since late last year, and Canada is expected to chip in an additional $9.5 billion. In exchange for that $30.1 billion in financing, Capitol Hill will receive a 60% share of GM, while Canada's investment will reportedly net it a 12% stake.

In related news, Automotive News is reporting that GM will appoint Al Koch to a newly created chief restructuring officer post. Koch, a corporate turnaround expert, has already been working with GM since January through his advisory firm, AlixPartners LLP. According to AN, Koch will oversee "bad" GM - that is, the liquidation of assets deemed to be dead weight in the drive to a leaner, more competitive GM (think: Hummer, Saturn, Saab, etc.). Recently minted GM CEO, Fritz Henderson, will continue to lead the corporation and, of course, all warranties will continue to be honored.

As part of the Chapter 11 bankruptcy proceedings, GM will see its stock-trading ticker removed from the Dow and S&P 500 on Monday, with those who have still been stubbornly holding on to stocks effectively losing everything.

President Obama will address the nation on GM's historic bankruptcy beginning at 11:55 a.m. EDT, with Fritz Henderson slated to address media members at around 12:15 p.m. in New York.

[Source: Automotive News - subs. req. | Image: Bill Pugliano/Getty]

REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named originally appeared on Autoblog on Sun, 31 May 2009 23:29:00 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: Visteon reportedly files for Chapter 11 bankruptcy

Chris Paukert — Thu, 28 May 2009 09:28:00 EST

Filed under: Trends, Government/Legal, Plants/Manufacturing, Ford, Earnings/Financials

According to Automotive News, Visteon Corp. has filed for Chapter 11 bankruptcy protection. The Michigan-based tier-1 supplier was spun off from the Ford Motor Company back in 2000, and it has struggled ever since. The filing took place in a Delaware courtroom, where the company has listed total assets of $4.58 billion and total debt of $5.3 million.

Visteon's struggles have been well documented, with its ballooning debt, falling sales (down by more than 50% in the first quarter of 2009 alone) resulting in a $681 million dollar loss last year. In fact, back in 2005, Visteon had to ask Ford to step in as part of an agreement that saw the Blue Oval agree to take ownership of all of the supplier's hourly employees who were United Auto Workers members, as well as most of the company's North American facilities.

Despite no longer technically being part of Ford, the Blue Oval is still Visteon's largest customer (accounting for around 31% of its sales last quarter), and according to AN, Visteon says that Ford is still committed to help the company with debtor-in-possession financing and future parts orders while the supplier undergoes restructuring.

[Source: Automotive News (subs. req.)| Image: Jonathan Ferrey/Getty]

BREAKING: Visteon reportedly files for Chapter 11 bankruptcy originally appeared on Autoblog on Thu, 28 May 2009 09:28:00 EST. Please see our terms for use of feeds.

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Speculation: Chrysler to cut loose 800 dealers on Thursday

Chris Shunk — Wed, 13 May 2009 19:01:00 EST

Filed under: Government/Legal, Chrysler

Chrysler has a lot of work to do in bankruptcy court to be eligible to receive another $6 billion in loans from the U.S. government. Among the many tasks requiring completion is the reduction of its dealer body. Chrysler hasn't set a timetable or announced how many dealers will be cut, but one lawyer claims to know the number and the date. Stephen Lerner from the law firm Squire Sanders reportedly said in a conference call that Chrysler is planning to cut 800 of its 3,200 dealers by Thursday of this week.

Chrysler calls the figure pure speculation, with spokeswoman Kathy Graham telling the Associated Press, "We do not have any finalized list as of this point in time." Few doubt that retail stores will be cut, though. The expected criteria for escaping the chopping block includes sales volume, profitability, available capital, strength of facilities and having all three Chrysler family brands. What hasn't been answered is whether dealers will be compensated for more than just existing inventory if the bankruptcy court agrees to tear up their franchise agreements.

We also don't know whether Stephen Lerner actually has any inside information regarding dealership closings. Squire Sanders is reportedly offering to represent any dealer that feels it could be on the closing list for $4,000. While that sounds like small change, the law firm could make millions if a large number of dealers participate in the suit. We'll find out tomorrow if Lerner is right.

[Source: MLive, Photo by Justin Sullivan/Getty]

Speculation: Chrysler to cut loose 800 dealers on Thursday originally appeared on Autoblog on Wed, 13 May 2009 19:01:00 EST. Please see our terms for use of feeds.

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REPORT: Obama administration slashes Chrysler ad budget by 50%

Chris Shunk — Tue, 12 May 2009 10:27:00 EST

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

Chrysler is nearly two weeks into its bankruptcy, and the Auburn Hills, Michigan-based automaker is already getting an idea of just how engaged the Obama administration plans to be in the process. Chrysler planned to spend $134 million dollars on advertising during its supposed nine weeks of bankruptcy, but the Auto Task Force has reportedly cut the figure in half. Judge Arthur Gonzalez wasn't even sure 50% spending was necessary, saying "idle plants, why market?" But the Task Force apparently says it recognizes that marketing is necessary during the bankruptcy to prevent the further erosion of the already battered Chrysler brand image.

Chrysler Marketing and Sales Vice President Steven Landry defended the decision to spend on advertising during the bankruptcy saying that the move "gives us the opportunity to reinforce that it's business as usual and demonstrate a bright future ahead for Chrysler." One commenter on Advertising Age took "business as usual" as a bad thing, as that mentality lead to "cars no one wanted to buy, zero innovation, outdated labor practices and a lot of taxpayer money thrown in to keep a sinking ship from going under."

Auto research site Edmunds.com told AdAge that the campaign appeared to be working for the first five days, saying interest on its consumer auto search site jumped by 15%. Interest in Chrysler vehicles dropped back to pre-bankruptcy levels after that, though. One dealer told AdAge that the only added interest appears to be from would-be buyers trying to "low ball" to see if dealers will take next to nothing just to liquify assets.

Chrysler's ad campaign during Chapter 11 consists of two corporate branding spots that touts Chrysler's wares and explains the Fiat situation. The other three spots are product ads for the Jeep Grand Cherokee, Dodge Grand Caravan, and Chrysler Town & Country.

[Source: Advertising Age]

REPORT: Obama administration slashes Chrysler ad budget by 50% originally appeared on Autoblog on Tue, 12 May 2009 10:27:00 EST. Please see our terms for use of feeds.

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Experts call GM bankruptcy 'almost inevitable' [w/POLL]

Chris Shunk — Mon, 11 May 2009 12:34:00 EST

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

To stave off bankruptcy, General Motors must rework its union contracts, drastically cut its capacity, workforce and dealer networks - and convince creditors to take 10 cents on the dollar on $27 billion in unsecured debt. In two months. That's a herculean task for any company, much less for a monolith the size of The General.

While GM is publicly working to avoid bankruptcy, some experts feel the largest of the Detroit automakers is simply lining up its creditors to expedite its Chapter 11 bankruptcy plans. In a new report by The Associated Press, the chorus of doubters is getting louder: "'I just don't see how it's possible, given all of the pieces,'" the AP quotes bankruptcy specialist Stephen J. Lubben, a professor at Seton Hall University School of Law.

For its part, the Auto Task Force and the Obama administration seem to think that a "surgical" bankruptcy could last only one to two months, a feat that many bankruptcy lawyers think is optimistic at best. One sticking point of negotiations with creditors is the apparenly disproportionate allocation of GM shares. The current plan is for the US government to receive 50%, while the UAW receives 39% to pay for retiree health care. That leaves just 1% for shareholders, and 10% for creditors. $27 billion doesn't seem to buy much these days. If creditors ultimately don't agree to the governments demands, though, bankruptcy is virtually guaranteed.

Bankruptcy could also make the most sense in dealing with GM's dealership problem. The General needs to cut thousands of retail stores; a move that will undoubtedly cost a fortune, especially outside of bankruptcy.

Others see the threat of bankruptcy as a ploy to make labor concessions and heavy bondholder concessions sound like a gift from above. GM can point to the situation with Chrysler as proof of how fast chapter 11 can happen, giving creditors plenty of reason to see things the General's way. With GM's deadline to meet the terms of the government's terms for financial assistance less than three weeks away, we'll know all too soon whether or not GM is bluffing.

View Poll

[Source: The Associated Press via Mlive | Image: Bill Pugliano/Getty]

Experts call GM bankruptcy 'almost inevitable' [w/POLL] originally appeared on Autoblog on Mon, 11 May 2009 12:34:00 EST. Please see our terms for use of feeds.

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