Autoblog http://www.autoblog.com Autoblog http://www.blogsmithmedia.com/www.autoblog.com/media/feedlogo.gif Autoblog http://www.autoblog.com en-us Copyright 2009 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Meet Brian Deese, the 31-year-old in charge of breaking up GM]]>http://www.autoblog.com/2009/06/05/meet-brian-deese-the-31-year-old-in-charge-of-breaking-up-gm/http://www.autoblog.com/2009/06/05/meet-brian-deese-the-31-year-old-in-charge-of-breaking-up-gm/http://www.autoblog.com/2009/06/05/meet-brian-deese-the-31-year-old-in-charge-of-breaking-up-gm/#commentsFiled under: ,



Many of us ABers being in our early- to mid-30s, we're less amazed that another of our ilk has risen to a decisive government position. We are, after all, a generation on the rise. The surprising part about Brian Deese's story is that he's been instrumental in shaping the Obama administration's moves to save General Motors, and this is his first official tour of duty in Washington. What qualifies a guy who hasn't even finished his Yale Law degree to steer President's automotive task force around? From what's been said about Mr. Deese, his quick ability to boil down the often competing economic and political aspects of any given issue.

Deese piped up in favor of Fiat's rescue of Chrysler, pointing out with a memo that a fire sale of the ailing automaker would send unforseen ripples out into the economy as a whole. Speaking out in such an influential manner is definitely unusual considering Deese doesn't appear to be an auto enthusiast or business propeller-head with his nose buried in studies and reports about the car industry. A childhood spent in the Boston suburb of Belmont, Massachusetts under the parentage of a college professor an an engineer, Deese did his undergraduate time at Middlebury College in Vermont before heading to Washington to work for Nancy Birdsall on international aid. A turn with former Clinton policy wonk Gene Sperling before the move to Yale, Hillary Clinton's bid for nomination brought Deese back to DC. With friends in Washington, Deese found himself hooked into the Obama team, and from there he's been running busily around our nation's capital.

If General Motors can successfully navigate Chapter 11, we'll all get to see just how well Brian Deese has done digesting the thorny chestnut that is saving our domestic auto industry.

[Source: The New York Times, Image: Maxhawkins - CC2.0]

Meet Brian Deese, the 31-year-old in charge of breaking up GM originally appeared on Autoblog on Fri, 05 Jun 2009 10:31:00 EST. Please see our terms for use of feeds.

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After two weeks of intense negotiations, General Motors Canada and the Canadian Auto Workers (CAW) union have reached a deal that will help the automaker cut costs, allowing it to meet the terms for additional government loans. Ken Lewenza, head of the CAW, said it was "a struggle" to reach a deal with GM, but he added that the union had done the best it could under the circumstances, saying: "we have protected most of our core benefits."

Wages, pensions and most benefits were preserved, although restructured in some instances. The union's pension rates will be frozen until 2015, for instance. The deal also keeps GM's plants in Oshawa, St. Catharines and Woodstock open for the foreseeable future. In total, it is believed that the new deal will result in $15 to $16 hourly wage savings on average. The announcement comes a day after the UAW reached a deal of its own with GM.

Although a different agreement was signed with the CAW in March, it had been rejected by the provincial and federal governments who wanted more cost-cutting to avoid bankruptcy. Although GM now appears to be heading in the same direction as Chrysler, hopefully there will be enough progress before the June 1 deadline to keep Chapter 11 a viable option. All told, the recent deals mean that 16 GM factories will close and an additional 21,000 hourly workers will be out of a job.

[Source: CTV]

REPORT: GM reaches deal with Canadian Auto Workers union originally appeared on Autoblog on Fri, 22 May 2009 15:58:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>canadian auto workersCanadianAutoWorkerscawgeneral motorsGeneralMotorsgmgm bailoutgm bankruptcyGmBailoutGmBankruptcyKen LewenzaKenLewenzauawFri, 22 May 2009 15:58:00 EST<![CDATA[REPORT: GM hedges bets, plans to miss $1B debt payment deadline]]>http://www.autoblog.com/2009/04/22/report-gm-hedges-bets-plans-to-miss-1b-debt-payment-deadline/http://www.autoblog.com/2009/04/22/report-gm-hedges-bets-plans-to-miss-1b-debt-payment-deadline/http://www.autoblog.com/2009/04/22/report-gm-hedges-bets-plans-to-miss-1b-debt-payment-deadline/#commentsFiled under: , ,



The familiar expression goes "Better the devil you know," meaning it's preferable to deal with the nasty things you don't like but are at least familiar with. General Motors, however, doesn't seem to think so. The troubled automaker appears more ready to take its chances with bankruptcy than continue to fight the weight of monumental debt and the demands of restructuring it.

GM has a $1 billion payment due on June 1, the same day as the government-imposed deadline for having its financial house cleaned up. The company's chief financial officer has just gone on record as saying that GM does not intend to make that payment. The General will attempt another round of debt-for-equity swaps (DFE) with its bondholders, and if it succeeds - and also succeeds in restructuring $20 billion in UAW healthcare obligations - it will get money from the government to continue without bankruptcy. If the DFE doesn't meets its goals, then GM is set to go into government-backed Chapter 11, court protection and what will likely be a nearly clean slate to restart its debt negotiations.

Last week, bondholders said they were preparing a response to GM's most recent offer. The automaker says that it will do what needs to be done "in court or out of court," which means that unless the bondholders' response is "Yes," bankruptcy is a fait accompli.

[Source: Wall Street Journal | Image: Bill Pugliano/Getty]

REPORT: GM hedges bets, plans to miss $1B debt payment deadline originally appeared on Autoblog on Wed, 22 Apr 2009 15:57:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bankruptcybondholdersearningsfinancialsgmgm bailoutgm bankruptcygm bondholdersgm bridge loanGmBailoutGmBankruptcyGmBondholdersGmBridgeLoangovernmentWed, 22 Apr 2009 15:57:00 EST<![CDATA[Ford counting on the "B" word to score conquest sales]]>http://www.autoblog.com/2009/04/17/ford-counting-on-the-b-word-to-score-conquest-sales/http://www.autoblog.com/2009/04/17/ford-counting-on-the-b-word-to-score-conquest-sales/http://www.autoblog.com/2009/04/17/ford-counting-on-the-b-word-to-score-conquest-sales/#commentsFiled under: , , , , , , , ,



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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When the president tells you to sharpen your pencil and improve your last-ditch survival effort, it's time to grab the big eraser. According to reports, General Motors may ditch its GMC and Pontiac brands to demonstrate just how serious it is. If the auto lines go, GM would be pared back to Chevrolet, Buick and Cadillac, a mere shadow of its former self, but the nameplates might become more clearly defined with the added breathing room. Ford's got its trifecta of Ford, Mercury and Lincoln, so GM would match that setup should it unload Pontiac and GMC in some way, as well as carry through with its ongoing process of shedding Saturn, Saab and Hummer.

While Pontiac actually has some unique offerings, GMC is rumored to stand a better chance of sticking around. It still wouldn't be cheap to do away with the brands. There are dealers who will not go quietly into the night, meaning GM will be looking at the possibility of finding a buyer for yet another piece of its puzzle. Of course, everyone's keeping mum about the possibility of life without Pontiac or GMC.

UPDATE: According to General Motors' sales chief Mark LaNeve, the automaker has no intentions of killing off Pontiac or GMC. LaNeve admits that GM is continuing to tweak its strategy, but reports that "GMC is going away are just unfounded, unsubstantiated and untrue."

[Source: Bloomberg]

REPORT: Pontiac and GMC may get axe... you knew this was coming originally appeared on Autoblog on Thu, 16 Apr 2009 09:27:00 EST. Please see our terms for use of feeds.

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Before we begin, let us state clearly that this is speculation by Karl Denninger at The Market Ticker. Examining the various stakeholders' interests in General Motors, Denninger has come up with a scenario that supposes GM's bondholders might actually want the automaker to file for bankruptcy.

The bondholders appear to be the biggest obstacle to restructuring. They're not allowing GM to reach its government-mandated target for debt reduction because they would lose much of their investment in the process. According to Denninger, however, the biggest and most savvy of those bondholders could get 100% of their investment back if GM files for bankruptcy. Those bondholders would have had their bonds backed by credit default swaps (CDS), which Denninger supposes would have been written in large part by insurance giant AIG. If that's the case, then we the taxpayers are on the hook to repay 100% of those bonds because the government has agreed to fulfill AIG's CDS collateral obligations.

Follow the jump for more.

Continue reading GM and AIG: Why bondholders might want bankruptcy

GM and AIG: Why bondholders might want bankruptcy originally appeared on Autoblog on Fri, 03 Apr 2009 11:29:00 EST. Please see our terms for use of feeds.

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Click above for high-res image gallery of the 2011 Chevy Volt

General Motors released an updated business plan to Congress on Wednesday, and one of the main points of interest surrounds the automaker's request of an additional $2.6 billion for the production of the Chevrolet Volt and two additional variants based on the same Voltec powertrain architecture.

The report doesn't spell out what the two new Volt-like models would be, but there's speculation a production model based on the Cadillac Converj concept (possibly as a 4-door sedan) might be in the works. Offering the Volt's high-tech and expensive powertrain at a Caddy-level price point makes plenty of sense as it would allow GM to subsidize the cost of its development and lower the price of production.

These funds would reportedly come from the Department of Energy's $25 billion Advanced Technology Vehicle Manufacturing Program and is separate from - and in addition to - the ongoing negotiations for bailout funds between General Motors, Chrysler and the U.S. government. The total amount GM has requested under the D.O.E. program now stands at $10.3 billion.


Gallery: 2011 Chevy Volt


[Source: Reuters]

GM asking Department of Energy for $2.6 billion to build hybrids? originally appeared on Autoblog on Thu, 02 Apr 2009 15:20:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bailoutChevroletChevychevy voltChevyVoltD.O.E.Department of EnergyDepartmentOfEnergydoe loandoe loansDoeLoanDoeLoansgm bailoutgm loangm loansGmBailoutGmLoanGmLoansgreengreen car fundgreen car loanGreenCarFundGreenCarLoanVoltThu, 02 Apr 2009 15:20:00 EST<![CDATA[STUDY: 76% of Americans believe economy can survive without GM]]>http://www.autoblog.com/2009/04/02/study-76-of-americans-believe-economy-can-survive-without-gm/http://www.autoblog.com/2009/04/02/study-76-of-americans-believe-economy-can-survive-without-gm/http://www.autoblog.com/2009/04/02/study-76-of-americans-believe-economy-can-survive-without-gm/#commentsFiled under: , ,



According to The Detroit Free Press, Rasmussen Reports called 1,000 people and asked them if they believed "the economy could recover without General Motors in business." The results were clear: 76% of respondents said "Yes, it can." The sentiment against any more taxpayer money being used to assist automakers was clear as well: 62% said neither GM nor Chrysler should receive any more loans.

Just as interestingly, the public appears to expect failure from one of the two companies: Fully 59% said that it was "very likely" or "somewhat likely" that GM or Chrysler will go out of business in the next few years.

Yet while the results of this survey are clear, it could be that the first question itself is slightly misleading: The economy could recover without a lot of companies, including AIG and Citibank. After all, you can't really kill an economy as long as there are people left to exchange goods and services, right? The real issue is whether people are prepared and willing to deal with the fallout from such companies going out of business.

[Source: Detroit Free Press]

STUDY: 76% of Americans believe economy can survive without GM originally appeared on Autoblog on Thu, 02 Apr 2009 12:59:00 EST. Please see our terms for use of feeds.

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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.

Read | Permalink | Email this | Comments]]>121autoblog podcasat 121autoblog podcastautoblog podcast 121AutoblogPodcasat121AutoblogPodcastAutoblogPodcast121bailoutchrysler bailoutChryslerBailoutgm bailoutgm chrysler bailoutgm takeoverGmBailoutGmChryslerBailoutGmTakeoverobama autoobama bailoutObamaAutoObamaBailoutpodcast 121Podcast121Wed, 01 Apr 2009 17:10:00 ESTAutoblog Podcast #121Autoblog90:00<![CDATA[Gov't rejects automaker restructuring plans, new deadlines set]]>http://www.autoblog.com/2009/03/30/govt-rejects-automaker-restructuring-plans-new-deadlines-set/http://www.autoblog.com/2009/03/30/govt-rejects-automaker-restructuring-plans-new-deadlines-set/http://www.autoblog.com/2009/03/30/govt-rejects-automaker-restructuring-plans-new-deadlines-set/#comments

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.

Permalink | Email this | Comments]]>auto bailoutAutoBailoutchrysler bailoutChryslerBailoutgm bailoutGmBailoutobamapresident obamaPresidentObamaMon, 30 Mar 2009 12:25:00 EST<![CDATA[Rumormill: Obama will set a deadline for GM and Chrysler to address issues or enter Chapter 11]]>http://www.autoblog.com/2009/03/29/rumormill-obama-will-set-a-deadline-for-gm-and-chrysler-to-addr/http://www.autoblog.com/2009/03/29/rumormill-obama-will-set-a-deadline-for-gm-and-chrysler-to-addr/http://www.autoblog.com/2009/03/29/rumormill-obama-will-set-a-deadline-for-gm-and-chrysler-to-addr/#commentsFiled under: , ,



GM and Chrysler have until Tuesday to complete the financial restructuring demanded by the government under the terms of the bridge loans. It is unlikely that they will make that target. The sticking point for GM is unwillingness on the part of bondholders to agree to what's being asked: GM needs to transform $27 billion of debt into liquidity, and that means a serious dilution of bondholder equity.

GM Inside News reports that, possibly as a move to prod bondholders, the Obama administration and the Auto Task Force will announce on Monday a deadline for GM and Chrysler to have their stakeholder agreements in order. If they have not met the terms of the loans after that new, hard deadline, they'll be put into a pre-packaged, government-backed Chapter 11 bankruptcy.

It goes on to say that if GM is placed into Chapter 11 then the government and the UAW would have the most voting power. The government's loans are asset-backed, and although the UAW VEBA obligation debt is unsecured, it forms 60% of GM's total unsecured debt. Bondholders would, in turn, get something close to bupkis, and it is hoped that the thought of "zero return" will earn more concessions.

[Source: GM Inside News]

Rumormill: Obama will set a deadline for GM and Chrysler to address issues or enter Chapter 11 originally appeared on Autoblog on Sun, 29 Mar 2009 14:45:00 EST. Please see our terms for use of feeds.

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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.

Read | Permalink | Email this | Comments]]>chrylserchrysler bailoutChryslerBailoutfinancialsgmgm bailoutgm chrysler mergerGmBailoutGmChryslerMergergovernmentmergermergersWed, 25 Feb 2009 12:29:00 EST<![CDATA[GM requests $16.6 billion more in Viability Plan, Saturn and Saab futures bleak]]>http://www.autoblog.com/2009/02/17/gm-viability-plan-requests-up-to-16-6-billion-more-govt-loans/http://www.autoblog.com/2009/02/17/gm-viability-plan-requests-up-to-16-6-billion-more-govt-loans/http://www.autoblog.com/2009/02/17/gm-viability-plan-requests-up-to-16-6-billion-more-govt-loans/#commentsFiled under: , , , , ,



General Motors has just revealed its Viability Plan that was due today to the U.S. Treasury Department under the loan agreement signed back on December 31, 2008. Just like Chrysler, GM is requesting more money than it was initially loaned due to domestic and global industry sales that were historically low in December and January. Today the company received the remainder of $13.4 billion in loans it was granted earlier, but is requesting an additional $16.6 billion to bring the total amount of money lent or available as a revolving line of credit to $30 billion.

The extra money is divided up into an immediate request for an extra $4.6 billion, another $4.5 billion to repay a revolving line of credit that's due in late 2011 and another $7.5 billion revolving line of credit if the industry experiences sales of 9.5 million units in 2009 and 11.5 million in 2010. On the plus side, GM expects to start repaying those loans in 2012 if things go according to plan.

The GM Viability Plan also addresses the fate of HUMMER, Saturn and Saab. The company says it expects to make a decision on whether to sell or phase out HUMMER by March 31. GM has also requested support from the Swedish government before it sells Saab, otherwise the quirky brand will be forced to file for bankruptcy protection in Sweden by the end of this month if an agreement isn't reached. As for Saturn, GM says it will phase out the brand at the end of its current life cycle, about three years from now. The only way Saturn might be saved is if its dealers or investors come up with a way to spin-off or sell it. Going forward, GM will mainly focus on its core brands of Chevrolet, Cadillac, Buick and GMC, while Pontiac will become a niche brand with fewer models.

Click here to download the complete GM Viability Plan in PDF format.

[Source: GM | Photo by Bill Pugliano/Getty]

Continue reading GM requests $16.6 billion more in Viability Plan, Saturn and Saab futures bleak

GM requests $16.6 billion more in Viability Plan, Saturn and Saab futures bleak originally appeared on Autoblog on Tue, 17 Feb 2009 19:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>breakinggm bailoutgm loansgm viability planGmBailoutGmLoansGmViabilityPlanTue, 17 Feb 2009 19:30:00 EST<![CDATA[REPORT: GM lobbying Congress for $7B in tax relief]]>http://www.autoblog.com/2009/02/02/report-gm-lobbying-congress-for-7b-in-tax-relief/http://www.autoblog.com/2009/02/02/report-gm-lobbying-congress-for-7b-in-tax-relief/http://www.autoblog.com/2009/02/02/report-gm-lobbying-congress-for-7b-in-tax-relief/#commentsFiled under: , , ,

Ask for a little help from the government, and the next thing you know you're asking for the government to protect you from the very help it's giving you. General Motors is restructuring its debt load by offering equity shares instead of cash to debt holders, namely the government and the UAW. The UAW transaction concerns the VEBA health care fund in that GM wants to pay its obligation to the fund with shares.

The issue is that this transaction is a debt-asset swap and comes with a distressed asset tax (DAT) of $7 billion. The DAT was codified in 1986 to prevent companies from buying money-losing companies just to avoid paying taxes. In GM's case, the debt-asset swap counts as corporate income, but GM can claim it's 2008 losses against that income, greatly reducing its tax bill.

If the tax isn't waived, GM will need to immediately return $7 billion of the money it was just given. It is talking to the Treasury Department, but so far it's been no dice. GM has been lobbying to have a waiver provision put in the economic stimulus bill currently being wrangled over in the Senate, yet there's also been no movement there, either. It's almost inconceivable that the government will demand GM pay the tax. It's equally hard to believe that this is even taking place.

[Source: Detroit News via Market Watch]

REPORT: GM lobbying Congress for $7B in tax relief originally appeared on Autoblog on Mon, 02 Feb 2009 10:59:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bridge loanBridgeLoanearningsfinancialsgmgm bailoutgm bridge loanGmBailoutGmBridgeLoangovernmenttaxuawMon, 02 Feb 2009 10:59:00 EST<![CDATA[Saab not long for the U.S. market, GM unsure of other brands' futures]]>http://www.autoblog.com/2009/02/02/saab-not-long-for-the-u-s-market-gm-unsure-of-other-brands-fut/http://www.autoblog.com/2009/02/02/saab-not-long-for-the-u-s-market-gm-unsure-of-other-brands-fut/http://www.autoblog.com/2009/02/02/saab-not-long-for-the-u-s-market-gm-unsure-of-other-brands-fut/#commentsFiled under: , , , , ,



Let's go ahead and get it out there: General Motors doesn't have a plan for Saab, Saturn, or HUMMER - it has a bunch of hopes, ideas and proposals. The best that GM can do with Saab is try to extricate the brand from its entangled web, which might make it more attractive to a buyer. That includes moving 9-3 and 9-5 production to Sweden and being "engaged with the Swedish government" on a plan for Saab's future. But GM has admitted that "Saab is not a U.S. strategy," and the code behind that statement is probably, "We get rid of or kill it."

GM's focus is on Chevrolet, Cadillac, Buick and GMC, and Pontiac "will shrink substantially." The other brands appear to be waiting out their death row sentences on appeal. Saturn, like Saab, is so entrenched in GM that an outside buyer is a remarkably dim prospect. Saturn production is funded until 2012 (for now), but unless GM finds a partner or folds it into the mothership, it would appear to have no future beyond then. HUMMER is living like a medieval leper, locked up in a shed outside the castle walls.

But let's also get this out there: there are two ways out of this impasse. One of them is to spend a lot of money assisting GM. The other is to let GM fail and spend a lot of money cleaning up after GM. (Remember our perspective on "a lot of money:" Citibank got $45 billion after a couple of phone calls and recently had to be asked by the Obama administration not to spend $50 million on a French corporate jet.)

In two weeks GM is supposed to "show that it is likely to achieve long-term profitability and has a positive net present value." Let's be honest: there is no way GM (nor Chrysler) can prove long term viability in the next 15 days. (Neither could many companies if they had to.) If GM's viability plan is rejected, the government could ask for its $13.4 billion dollars back, which would be the equivalent of taking GM out back and shooting it. And that would be the equivalent of emptying another ammo clip into the economy's slowly-beating heart. All of which is to say that we have no idea how this will play out, but we're pretty sure that this is only the beginning of the beginning.

[Source: Automotive News, sub req'd]

Saab not long for the U.S. market, GM unsure of other brands' futures originally appeared on Autoblog on Mon, 02 Feb 2009 10:29:00 EST. Please see our terms for use of feeds.

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Dealership rationalization was something General Motors was looking at well before the economy went pear-shaped. GM still has more than 6,300 dealerships in the U.S., and it is even more important now to start shedding some of that financial burden. That is why The General told dealers at the NADA conference that it plans to get rid of 1,600 dealerships by 2012.

GM's initial viability plan to Congress proposed an eventual reduction to 4,000 dealerships. No one knows yet, though, how GM plans to do that. GM said it will explain the dealer elimination plan in the follow-up viability plan it submits to Congress on February 17. Said one GM dealer, "They basically said, 'We're looking for strong dealers, and if you're not a strong dealer, you better evaluate your options."

GM did say that 400 dealers per year being shut isn't a firm number, simply a target. Nevertheless, dealers are none too happy. Some dealers say GM is using GMAC to force dealers out by setting capital requirements beyond a dealer's reach. GM says it has no intention of using GMAC in such a way. When the time comes, dealership liquidation will be be judged market by market, and based on a number of factors including age, location, volume, capitalization and customer satisfaction. While the plan will obviously save GM money in the long term and make it more efficient, in the short term it is going to cost GM a fortune to close 1,600 locations.

[Source: Automotive News, sub req'd, Photo by Justin Sullivan/Getty]

GM plans to trim 400 dealers per year until 2012 originally appeared on Autoblog on Mon, 26 Jan 2009 14:43:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bridge loanBridgeLoancongressdealerdealersdealershipdealershipsgmgm bailoutgm dealersgm dealershipsGmBailoutGmDealersGmDealershipsnadaMon, 26 Jan 2009 14:43:00 EST<![CDATA[Followup: GM receives second gov't loan installment of $5.4 billion ]]>http://www.autoblog.com/2009/01/22/followup-gm-receives-second-govt-loan-installment-of-5-4-bill/http://www.autoblog.com/2009/01/22/followup-gm-receives-second-govt-loan-installment-of-5-4-bill/http://www.autoblog.com/2009/01/22/followup-gm-receives-second-govt-loan-installment-of-5-4-bill/#commentsFiled under: , ,

Cue the angels! General Motors reports that it has received the second installment of the $13.4 billion government loan that it was promised by former President Bush late last month. Sure, it may have arrived a few days late, leading GM's coffer-keepers to anxiously check their mailboxes every few minutes, but it showed up with time to spare before The General ran out of funds to pay the bills on March 31st.

For those keeping track, GM's total draw from the bridge loan so far rings the taxpayers' registers to the tune of $9.4 billion, leaving $4B still to come at a later date. In order to keep the money, GM must go back to Congress by February 17th with a full progress report detailing how it is fairing in reducing its current $28 billion in debt.

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

Followup: GM receives second gov't loan installment of $5.4 billion originally appeared on Autoblog on Thu, 22 Jan 2009 15:28:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto bailoutAutoBailoutbailoutbridge loanBridgeLoangm bailoutgm bridge loanGmBailoutGmBridgeLoanThu, 22 Jan 2009 15:28:00 EST<![CDATA[REPORT: Dealers say bailout hasn't made for more GMAC loans]]>http://www.autoblog.com/2009/01/20/report-dealers-say-bailout-hasnt-made-for-more-gmac-loans/http://www.autoblog.com/2009/01/20/report-dealers-say-bailout-hasnt-made-for-more-gmac-loans/http://www.autoblog.com/2009/01/20/report-dealers-say-bailout-hasnt-made-for-more-gmac-loans/#commentsFiled under: , , ,

GM dealership handshake

Show me the money. With apologies to Cuba Gooding Jr., that is exactly what many General Motors dealers are saying to GMAC Financial Services.

Despite being given $5 billion from the U.S. Government last month, GMAC apparently hasn't loosened its purse strings enough for dealers' likings. Some, in fact, are reporting that GMAC keeps rejecting their credit applications. This is somewhat surprising because GMAC previously agreed to lower the necessary minimum credit score ratings from 700 to 621 for new vehicle loans, so presumably more requests should be going through. Dealers are frustrated and although some preferred dealers have seen loan rate reductions, others are saying that GMAC is still as much as 1.5 percent higher than the competition.

In response to this problem, dealers have come up with a wish list of sorts. They are asking that GMAC return to leasing, approve some sub-prime loans and cut interest rates for loans to dealers to help finance their inventory. Also of concern is the fact that customers are increasingly upside down on their trade-ins. As a direct result, these consumers are having trouble getting approved because GMAC requires bigger down payments than it once did.

[Source: Automotive News, sub. req.]

REPORT: Dealers say bailout hasn't made for more GMAC loans originally appeared on Autoblog on Tue, 20 Jan 2009 07:28:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bailoutdealer relationsDealerRelationsdealershipdealershipsdetroit 3detroit 3 bailoutdetroit threeDetroit3Detroit3BailoutDetroitThreefinancinggeneral motorsGeneralMotorsGMgm bailoutgmacGmBailoutTue, 20 Jan 2009 07:28:00 EST<![CDATA[Federal loan conditions: UAW can't strike against GM]]>http://www.autoblog.com/2009/01/09/federal-loan-conditions-uaw-cant-strike-against-gm/http://www.autoblog.com/2009/01/09/federal-loan-conditions-uaw-cant-strike-against-gm/http://www.autoblog.com/2009/01/09/federal-loan-conditions-uaw-cant-strike-against-gm/#commentsFiled under: , ,

Now that we've made it through the bailout hearings and the deal between GM and the U.S. Government has been settled (for now), we can start taking a closer look at the details. Oh, here's one: the Feds added one crucial condition to the GM bridge loans, and it was aimed squarely at the unions: no striking.

Besides accepting a reduction of wages and benefits for workers to bring them in line with what foreign-owned plant employees receive, the UAW will not be allowed to strike against the General as long as GM is receiving federal loans.

While the U.S. Treasury undoubtedly has a lot of conditions for the $13.4 billion in loans to GM, the details weren't fully disclosed until GM filed the documents with the SEC. Striking is one of the conditions that would cause a default on the loans, allowing the Treasury to recall the loans and force GM into bankruptcy. Yikes. GM will have until Dec. 29, 2011 to pay back the loan and the no-strike clause will remain in effect through September 2011.

[Source: Detroit Free Press]

Federal loan conditions: UAW can't strike against GM originally appeared on Autoblog on Fri, 09 Jan 2009 15:01:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bailoutgm bailoutGmBailoutuawunionsFri, 09 Jan 2009 15:01:00 EST<![CDATA[Opinion: What should happen to Saturn, Vauxhall and Opel during GM's reorganization?]]>http://www.autoblog.com/2009/01/05/what-will-happen-to-saturn-vauxhall-and-opel-during-gms-reorga/http://www.autoblog.com/2009/01/05/what-will-happen-to-saturn-vauxhall-and-opel-during-gms-reorga/http://www.autoblog.com/2009/01/05/what-will-happen-to-saturn-vauxhall-and-opel-during-gms-reorga/#commentsFiled under: , , , , , , ,



Amidst all the recent bailout talk, one question being asked is what role GM's Opel division will serve in a new-and-hopefully-improved General Motors. More succinctly, will Vauxhall and Saturn soldier on unchanged or will they simply fade into automotive landscape? Automotive News seems to think the question of Opel and how it relates to Vauxhall and Saturn is so important that it's worth devoting three separate editorials to the issue, with varying levels of clarity.

Continue reading Opinion: What should happen to Saturn, Vauxhall and Opel during GM's reorganization?

Opinion: What should happen to Saturn, Vauxhall and Opel during GM's reorganization? originally appeared on Autoblog on Mon, 05 Jan 2009 16:01:00 EST. Please see our terms for use of feeds.

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