Autoblog

Obama announces Chrysler bankruptcy, deal with Fiat; Nardelli out soon *UPDATED

Frank Filipponio — Thu, 30 Apr 2009 12:36:00 EST

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

President Obama has just concluded a televised press conference where he announced that Chrysler will indeed head into Chapter 11 bankruptcy proceedings almost immediately. As part of the same announcement, he noted that the Auburn Hills automaker has reached terms with Fiat and will be headed into a partnership agreement that will include a cash infusion and technology transfers. By some estimates, the restructuring is expected to take 30-to-60 days.

The announcement came after late-night talks with a small group of creditors broke off before a restructuring plan could be reached. During the conference, Obama took pains to note the sacrifice of many players, including some in the financial sector, but he openly chastized other hedge fund operators and speculators for holding out for more debt compensation, arguing that they were looking to make money on the taxpayer dollars.

Keeping an upbeat tone in his announcement, Obama also reassured Americans that they will be repaid in full before Fiat gets any stake in the automaker, and that GMAC has agreed to step in to provide loans for Chrysler vehicles. Canada is also pitching in to make it work, but the U.S. taxpayers will be on the hook for an additional $8 billion in aid. Obama also reiterated that the government will stand behind Chrysler and General Motors vehicle warranties, and he extolled Americans to purchase new vehicles from domestic automakers.

Finally, in related news, it is being reported that Chrysler CEO Bob Nardelli (whom Obama praised during the press conference) will exit the company after the bankruptcy filing is complete.

*UPDATE: A new Chrysler press release (posted after the jump) confirms that Nardelli will leave Chrysler after it emerges from bankruptcy:

He will return to Cerberus Capital Management LP as an advisor. "Now is an appropriate time to let others take the lead in the transformation of Chrysler with Fiat," said Nardelli. "I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance."

The Detroit Bureau's Ken Zino has excellent analysis of the announcement here.

More details and analysis on the way...

[Image: Bill Pugliano/Getty]

Continue reading Obama announces Chrysler bankruptcy, deal with Fiat; Nardelli out soon *UPDATED

Obama announces Chrysler bankruptcy, deal with Fiat; Nardelli out soon *UPDATED originally appeared on Autoblog on Thu, 30 Apr 2009 12:36:00 EST. Please see our terms for use of feeds.

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Autoblog Podcast #124

Dan Roth — Wed, 22 Apr 2009 16:15:00 EST

Filed under: Podcasts, Hybrid, China, Government/Legal, Chrysler, Toyota, Opinion/Editorial, Shanghai Motor Show

Click above for the Autoblog Podcast in iTunes, RSS or listen now!

Chris, Sam and Dan kick it again for Episode #124 of the Autoblog Podcast. This time, we touch on Toyota's competitive Prius price posturing, the Shanghai Motor Show, where Chinese automakers are finding their design footing, and Chrysler Financial's flap over executive compensation and government money. Some good questions from listeners landed in our inbox, so we hit on those, too, before wrapping it up. Thanks for listening, check out our Twitter feed, and don't forget our Podcast at autoblog dot com address for your feedback.

Follow the jump to subscribe to the Autoblog Podcast in iTunes, add the show to your RSS aggregator... or listen to it right now!

Continue reading Autoblog Podcast #124

Autoblog Podcast #124 originally appeared on Autoblog on Wed, 22 Apr 2009 16:15:00 EST. Please see our terms for use of feeds.

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Ford counting on the "B" word to score conquest sales

Jeremy Korzeniewski — Fri, 17 Apr 2009 10:57:00 EST

Filed under: Car Buying, SUV, Truck, Government/Legal, Crossover, Chrysler, Ford, GM, Earnings/Financials

Is that 'B' as in bankruptcy or 'B' as in bailout? Probably 'B' as in both. Regardless of the buzzword you choose to slap on the respective situations General Motors and Chrysler find themselves in, it's not good, and Ford realizes this fact just as clearly as the rest of us. In response, the Blue Oval has embarked on a new plan to pick up as much market share as possible.

In an internal memo sent to Ford dealers in New York, the automaker laid out a new incentive that would pay current owners of Dodge, Chrysler or Jeep vehicles an extra $1,000 - in addition to whatever Customer Cash, Bonus Cash and 0% APR is already available - to trade in their current rides for a new SUV, pickup or crossover from Ford.

As pointed out by Detroit News columnist Daniel Howes, this tactic is a bit of a slippery slope for Ford. Although the Dearborn-based automaker has yet to seek out or accept any financial assistance from the government, a bankruptcy at either General Motors or Chrysler could put a major dent in Ford's own perilous financial footing. Still, Ford will take all the sales it can get.

[Source: Detroit News]

Ford counting on the "B" word to score conquest sales originally appeared on Autoblog on Fri, 17 Apr 2009 10:57:00 EST. Please see our terms for use of feeds.

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Autoblog Podcast #121

Dan Roth — Wed, 01 Apr 2009 17:10:00 EST

Filed under: Podcasts, Government/Legal, Opinion/Editorial

Click above for the Autoblog Podcast in iTunes, RSS or listen now!

We reluctantly skipped last week's podcast, so it's only appropriate we're back with a vengeance this week. Alex Nunez makes a rare appearance, joining Chris and Dan, and bringing rapier wit and incisive analysis to the podcast party. We really meant to cover more subjects, but it was impossible to avoid jabbering on for an hour and a half about the situation with GM and Chrysler. We went on tangents, we occasionally talked over each other, and there's even a few chuckles thrown in for good measure. Thanks for listening, and as always, drop us a line at podcast at autoblog dot com, and hit our Twitter feed, too.

Follow the jump to subscribe to the Autoblog Podcast in iTunes, add the show to your RSS aggregator or listen to it right now!

Continue reading Autoblog Podcast #121

Autoblog Podcast #121 originally appeared on Autoblog on Wed, 01 Apr 2009 17:10:00 EST. Please see our terms for use of feeds.

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Gov't rejects automaker restructuring plans, new deadlines set

John Neff — Mon, 30 Mar 2009 12:25:00 EST

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]

Continue reading Gov't rejects automaker restructuring plans, new deadlines set

Gov't rejects automaker restructuring plans, new deadlines set originally appeared on Autoblog on Mon, 30 Mar 2009 12:25:00 EST. Please see our terms for use of feeds.

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REPORT: UAW backs Chrysler-Fiat partnership

Jonathon Ramsey — Fri, 20 Mar 2009 12:27:00 EST

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

According to The Detroit News, the United Auto Workers is giving its blessings to a potential Chrysler-Fiat tie-up. Chrysler honcho Bob Nardelli earlier pegged the possible union as a $10 billion bonanza for Chrysler, since the Pentastar would save money on developing a range of platforms, engines, and cars. The UAW's interest is, of course, the job savings: the partnership has been said to be worth 5,000 jobs that might otherwise be lost.

But with current timelines, the question is where Chrysler and the UAW will be by the time such a partnership gets to the next stage. Fiat expects to complete its due diligence of Chrysler by the end of this month. But by that time, Chrysler will need to have secured concessions from the UAW and bondholders in order to get additional money from the U.S. government. Whether it will get the concessions from both parties - and what the government will do when it comes time to write a check - are all things that remain to be seen.

[Source: The Detroit News]

REPORT: UAW backs Chrysler-Fiat partnership originally appeared on Autoblog on Fri, 20 Mar 2009 12:27:00 EST. Please see our terms for use of feeds.

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REPORT: GM bondholders could still spur Chrysler merger

Jonathon Ramsey — Wed, 25 Feb 2009 12:29:00 EST

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

It's the General Motors and Chrysler merger saga, take three. A few months ago, GM said "No can do" to the union, taking off its ring and walking out of church. Now GM's bondholders may be contemplating a shotgun wedding, forcing The General back to the altar over the debt-equity swap the automaker needs to conclude to have a chance at more government financing.

GM needs to shed $18 billion in unsecured public debt, but the bondholders have so far been complaining about the equity they're being offered. According to an outside analyst, if bondholders think a merged GM-Chrysler will save the combined company from $6 billion to $8 billion dollars, the bondholder might only agree to the debt-equity swap if GM merges with Chrysler. GM hasn't shared its exchange plan with the bondholders yet, so the stakeholders could change their minds once they have the information.

Of course, the problems with the merger possibility don't appear to be any different than they were last time, and while it might seem appealing to "collapse two problems into one," critics say that one combined problem could be a bigger hassle for the government than the two together. The merged company would still need funding, on top of which it would need billions to simply complete the merger. In short, this deal still doesn't look like it makes sense. Hat tip to Dan.

[Source: Financial Post]

REPORT: GM bondholders could still spur Chrysler merger originally appeared on Autoblog on Wed, 25 Feb 2009 12:29:00 EST. Please see our terms for use of feeds.

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Chrysler Canada gets slapped with $500 million tax bill

Dan Roth — Fri, 20 Feb 2009 17:58:00 EST

Filed under: Government/Legal, Chrysler, Canada

Just as Chrysler tries to hammer out a cash deal with Ottawa and Ontario for at least a billion dollars, the automaker's Canadian branch has been hit with a half-billion dollar tax reassessment. The Canada Revenue Agency has been trying to collect tax payments from Chrysler for years, after the agency adjusted the amount Chrysler owes on parts and vehicles that were shipped across the border. Canada Revenue wants $500 million to pay off abuses from "transfer pricing," which is a bit of voodoo between subsidiaries and the parent divisions of corporations -- a shell game with profits, essentially.

One problem with this tax bill is the time at which it's coming. Chrysler has pledged that any monies received as part of bailout negotiations would go to keeping the operations going, not to pay back taxes. Also, there's a treaty between Canada and the United States that allows Chrysler to ask for a break in the US when Canada turns up the wick on fiduciary obligations. The treaty states that authorities must be made aware of reassessments within six years of the disputed year, and since this issue stretches all the way back to 1996, Chrysler argues that the last reassessment, in 2005, deprives the company of the option of asking for a tax break because it's outside of the six year window. For now, the dispute will have to wait, as there may not be a Chrysler for much longer if things don't get sorted -- meaning a big, fat goose egg of a tax payment.

[Source: The Globe and Mail]

Chrysler Canada gets slapped with $500 million tax bill originally appeared on Autoblog on Fri, 20 Feb 2009 17:58:00 EST. Please see our terms for use of feeds.

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Chrysler gets first $4 billion from government

Sam Abuelsamid — Sat, 03 Jan 2009 13:02:00 EST

Filed under: Chrysler, Earnings/Financials

Two days after General Motors got its first installment of cash from the Treasury Department, Chrysler also closed on its loan. On Friday, Chrysler received a transfer of $4 billion to help tide it over while management tries to find a way to right the ship. CEO Bob Nardelli acknowledged the complex arrangements that had to be made with privately owned Chrysler. It's not known at this point exactly what arrangements were made as far as collateral and what the government would get from Cerberus in the event of a default by Chrysler. No doubt the comments will be heated on the Chrysler Blog.

[Source: Chrysler]

Continue reading Chrysler gets first $4 billion from government

Chrysler gets first $4 billion from government originally appeared on Autoblog on Sat, 03 Jan 2009 13:02:00 EST. Please see our terms for use of feeds.

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Chrysler plan to Congress requires $7 billion in loans to ward off death

Damon Lavrinc — Tue, 02 Dec 2008 17:00:00 EST

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

We've already seen GM and Ford issue their pleas for government loans, and now it's Chrysler's turn. The only privately-owned automaker of the three released a 13-page document outlining the aid it seeks from the Feds and how it plans on spending our hard-earned cash. If you want to read the full text, it's available after the jump. But the condensed version follows.

Chrysler is requesting a $7 billion "secured working capital bridge loan" by December 31st, citing the collapse of the light-duty vehicle market, the U.S. financial crisis and the global downturn in the economy as reasons it needs cash. It estimates by the end of the year it will only have $2.5 billion in working capital in the bank and that's not enough to keep the lights on through January.

The Cerberus crew is touting its partnerships, including those forged between Nissan, along with future plans to share platforms, components and "factory rationalization." It's also citing more employee cutbacks, an annual salary of $1 for CEO Bob Nardelli, and lack of bonuses for 2009 as steps the automaker has or is taking to keep costs at bay.

The section on "Providing Cars and Trucks People Want to Buy" covers plans to bring 24 major products to market between now and 2012, including a range of hybrid and electric vehicles covering "Neighborhood" EVs, City EVs, Range-extended EVs and a battery-powered EV. The latter will be assigned to government and business fleets for evaluations purposes in 2009, with sales supposedly beginning in 2010 and 500,000 examples being produced by 2013. For 2009, 73% of Dodge, Jeep and Chrysler vehicles will boast improved fuel economy over their current counterparts, some of which will be Flex-Fuel capable and the automaker is on target to offer 50% of its fleet in FFV guise by 2012.

There's no mention of consolidating, selling or killing brands, further employee cuts or the reduction of Chrysler's bloated dealer network. We get the impression that Nardelli and Cerberus are saying "We've done all we can, we just need some cash." But draw your own conclusions - if you dare - after the jump.

[Source: Chrysler]

Continue reading Chrysler plan to Congress requires $7 billion in loans to ward off death

Chrysler plan to Congress requires $7 billion in loans to ward off death originally appeared on Autoblog on Tue, 02 Dec 2008 17:00:00 EST. Please see our terms for use of feeds.

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Chrysler could be broke by New Year's, Nardelli would work for $1

Dan Roth — Wed, 19 Nov 2008 09:58:00 EST

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

Chrysler still makes cars? Apparently so, and CEO Bob Nardelli was on Capitol Hill yesterday with his colleagues from Ford and General Motors, warning that the Pentastar is in serious danger of exhausting its reserves by early 2009. Chrysler's share of the $25 billion in aid the automakers are asking for stands at $7 billion, though at the current rate, that money wouldn't last long, possibly about one fiscal quarter. Senators are concerned that the automakers will turn into a monetary black hole, but the Detroit CEOs are trying to plead the case that securing some federal help will make it easier to emerge out the other side of this downturn.

Nardelli did pledge to accept a $1 per year salary if it would help sway those with the purse strings. It would have been nice if he'd made that pledge to help his company and workforce, instead of it just being a token gesture to help him pick the pocket of the American taxpayer, but the $1 salary, which mimics what Lee Iacocca did during Chrysler's last near-failure, may play better than Alan Mulally's concern over a potential retention problem if the management is actually held accountable. Rick Wagoner divulged that he'd cut his salary by half. We think CEO salaries of a buck are fair - shoot, you can still afford a PT Cruiser on that pay.

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

Chrysler could be broke by New Year's, Nardelli would work for $1 originally appeared on Autoblog on Wed, 19 Nov 2008 09:58:00 EST. Please see our terms for use of feeds.

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Senator calls for 50-mpg mandate for Detroit to receive aid

Jonathon Ramsey — Mon, 17 Nov 2008 19:29:00 EST

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

"Thick and fast." That's the phrase that describes the opinions, pleas, advice, denunciations, and WTF? going on around the U.S. auto industry right now. Enter Congress, which is trying to figure out how to give Detroit automakers the $25 billion they were promised a few months ago. Congressmen are sounding off almost daily on what kinds of stipulations they want to attach to the loan/bailout/whatever you want to call it -- and that's just the ones who would vote for it at all.

Next up is Senator Bill Nelson, a Florida democrat, who wants U.S. automakers to achieve a fleet average of 50 mpg by 2020. Right now, the CAFE target is 35 mpg by 2020 -- a goal agreed upon only after a huge amount of jockeying in and out of Congress. Nelson asked, "Why should we be pouring taxpayer money into an automobile industry that has continued to resist higher miles per gallon, which has led us in part to the problems we're in?"

While that might sound like a great idea to some, it would cost a terrific sum of money to achieve. The Detroit Three need the money they're asking for just to get to Q2 of 2009, not to create a range of cars that would represent magnificent advances -- based on where we are right now -- in 11 years. There's a good chance nothing will be decided until the president-elect takes office, and by then, who knows what other requests Congress will have.

[Source: Automotive News - Sub. Req.]

Senator calls for 50-mpg mandate for Detroit to receive aid originally appeared on Autoblog on Mon, 17 Nov 2008 19:29:00 EST. Please see our terms for use of feeds.

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McCain has no plans for Detroit bailout

Jeremy Korzeniewski — Sun, 29 Jun 2008 18:15:00 EST

Filed under: Budget, Government/Legal, Green, Hirings/Firings/Layoffs, Plants/Manufacturing, Chrysler, Ford, GM, Earnings/Financials

Back in the late seventies and into early eighties, Chrysler had gotten itself into such horrid financial shape that the U.S. government decided to step in and fix the situation itself. Considering the sorry state of affairs that all three of the Detroit automakers find themselves in today, some may wonder if a government-funded bailout is in the cards. Not so much... at least according to John McCain. "Frankly I just don't see a scenario where the federal government would come in and bail out any industry in America today," says the Republican.

So, what plan does McCain have in store for the Detroit 3? More Chevrolet Cobalts and Pontiac G5s for one, as the Arizona Senator said the above words after touring the plant in Lordstown, Ohio where the GM compact cars are made and a where third shift has just been added. "I am convinced that what is being done at the Lordstown assembly plant is the future of the American auto industry," added McCain.

In more related good news for the U.S. automakers, McCain says he supports nationwide CO₂ standards and would oppose any state's individual plans -- California, we're looking at you. The Presidential hopeful also wants to see more fair-trade standards implemented with the other various auto-building nations and quicker violations for unfair practices. We await a response from the Democratic side.

[Sources: The Detroit News, Automotive News - sub. req'd]

McCain has no plans for Detroit bailout originally appeared on Autoblog on Sun, 29 Jun 2008 18:15:00 EST. Please see our terms for use of feeds.

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