Autoblog

REPORT: January's Detroit Auto Show to be loaded up with political VIPs

Chris Shunk — Tue, 17 Nov 2009 15:58:00 EST

Filed under: Detroit Auto Show, Government/Legal, Chrysler, GM

After General Motors and Chrysler required a combined $80 billion in government assistance to keep their doors open, many speculated that Uncle Sam would want to keep a hand in the carmaking cookie jar. While it is debatable how much control (a lot) the White House and Congress have over the Detroit automakers, it certainly appears that our politicians have taken a keen interest in the nation's auto industry.

One sign that our government is keeping an eye on our investment is the overwhelming amount of interest Washington is reportedly taking in the 2010 North American International Auto Show. The Detroit Free Press is reporting that Congress, the Department of Transportation and other agencies are making so many requests for access to the press days of the show that special gray and silver government badges are being created just for them. NAIAS Chairman Doug Fox says more than twice the politicians and government agencies have requested to attend the show than last year, and we're guessing the queries will continue to pour in as the show draws nearer. There is also speculation that President Obama may himself attend the show, though the White House isn't likely to confirm or deny that until much closer to the actual event.

On one hand, it's nice to see that Washington has finally decided to pay attention to the auto industry, but we can't help but wonder what what the value add is of joining the scrum during press days. We're thinking most of the politicians and government officials can learn all they need to know about the show from Autoblog, save a few million dollars, and perhaps avoid some time in the frozen tundra that is Detroit in January.

[Source: Detroit Free Press | Image: Stan Honda/AFP/Getty]

REPORT: January's Detroit Auto Show to be loaded up with political VIPs originally appeared on Autoblog on Tue, 17 Nov 2009 15:58:00 EST. Please see our terms for use of feeds.

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Empire Strikes Back: White House calls out Edmunds on Clunkers story, Edmunds responds

Chris Shunk — Fri, 30 Oct 2009 13:31:00 EST

Filed under: Car Buying, Government/Legal

The facts in the case of the White House versus Edmunds are essentially indisputable - but they are open for interpretation. The federal government's $3 billion Cash for Clunkers program generated 690,000 sales by providing $3,500 and $4,500 vouchers to car buyers who turned in their eligible car or truck in exchange for a more fuel efficient ride. From here on in, Edmunds and the White House seem to be at considerable odds.

Edmunds recently claimed that its statistical analysis shows that only 125,000 of the nearly 700,000 vehicles purchased under C4C were sales that wouldn't have come in 2009 if it weren't for the much ballyhooed government program. And since the program cost $3 billion to implement, Edmunds came to the conclusion that each incremental sale achieved by C4C cost taxpayers $24,000 per vehicle. As you might imagine, the White House has a problem with that.

The White House starts its quite literally otherworldly retort by noting that that motor vehicle sales increased America's overall economic growth in the third quarter by 1.7%. That's the industry's largest contribution to that metric in over a decade. The WH blog post then states that Edmunds is ignoring the assertion that overall car sales were also positively affected by the Clunkers program above and beyond the 690,000 C4C units sold. To add insult to assault, the White House accuses Edmunds of covering auto sales on Mars.

While the government doesn't have hard facts here, anecdotal evidence certainly shows that August's seasonally adjusted annual rate (SAAR) of 14 million cars and trucks sold means there were considerably more sales generated by C4C than the 125,000 number would suggest. The WH blog also notes that analysts from Global Insight and Moody's suggest that there has been little payback from the Clunkers program.

The White House also states that C4C will have benefits beyond the third quarter, as production has been bumped at Chrysler, General Motors, Ford and Honda in the fourth quarter. That should mean that GDP will get still another big shot in the arm from the auto industry. The White House then goes on to add that C4C generated 70,000 jobs. We're tempted to call shenanigans on that one, especially considering that divvying up $3 billion between 70,000 jobs only comes out to $42,857 per - and that doesn't account for the actual cars themselves.

Edmunds CEO Jeremy Anwyl took time to respond to the suddenly hostile situation, arguing that government subsidy programs are always expensive when looked at on a per-unit basis. Edmunds adds that it is strictly working with the facts to come up with the $24,000 per vehicle number, and that anecdotal evidence like indirect sales isn't based on concrete data.

[Sources: White House Blogs; Edmunds Auto Observer | Image: Gabriel Bouys/Getty]

Empire Strikes Back: White House calls out Edmunds on Clunkers story, Edmunds responds originally appeared on Autoblog on Fri, 30 Oct 2009 13:31:00 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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BREAKING: Gov't. reportedly gearing up to push GM into bankruptcy as early as next week

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

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

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

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

Full details available at the link below.

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

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

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GM future hinges on success of new debt-for-equity swap offers

Chris Paukert — Mon, 27 Apr 2009 10:49:00 EST

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

In addition to announcing the shuttering of Pontiac, General Motors has put forth a new offer to its bondholders to exchange $27 billion in claims for equity in the struggling automaker.

As part of the plan, GM is offering its bondholders a 10% equity stake in the company, but worryingly, if 90 percent of GM's stockholders don't make good on the exchange by June 1, the U.S. Treasury will almost assuredly push GM toward bankruptcy. In the language of GM's press release, the company would "expect to seek bankruptcy relief if the exchange offers are not consummated."

And it isn't just the shareholders that are being called to action - the success of the bond-exchange offer also hinges upon the Voluntary Employee Beneficiary Association (VEBA) health-care fund, whose controllers must also agree to swap at least 50% of its equity claims in order to make the plan work.

Finally, the U.S. Treasury must agree to exchange 50% its own loans - thought to be about $10 billion - for stock in the company. Together, the U.S. government and VEBA would then own around 89 percent of GM's stock post- debt-for-equity swap, with the outstanding one percent being held by GM's current common shareholders (10% bondholders + 89% VEBA/US Treasury + 1% = 100%).

Given that a debt-for-equity swap is widely considered to be unattractive to most bondholders (something that GM CEO Fritz Henderson stopped just short of confirming in today's press conference), The General seems to be well along the road to bankruptcy... and picking up steam.

Official press release posted after the jump.

[Source: General Motors | Image: Bill Pugliano/Getty]

Continue reading GM future hinges on success of new debt-for-equity swap offers

GM future hinges on success of new debt-for-equity swap offers originally appeared on Autoblog on Mon, 27 Apr 2009 10:49:00 EST. Please see our terms for use of feeds.

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BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package

Chris Paukert — Fri, 19 Dec 2008 09:32:00 EST

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

President George W. Bush will doubtlessly be remembered for many things things, but his parting legacy may yet be his eleventh-hour pledge of $17.4 billion in low-interest loans to General Motors and Chrysler (Ford Motor Company has said it does not require relief at this time).

The funding will reportedly come from the Troubled Asset Relief Program (TARP), the financial industry bailout package signed off on this fall. Up front, the White House will earmark $17.4 billion in short-term financing for December and January, and in February, another $4 billion will be disbursed, provided it can draw the funds from the second half of TARP's $700 billion.

More details are doubtlessly coming, but the bridge loans appear to hinge largely on whether General Motors and Chrysler are deemed "viable" enterprises by the government. In the terms of the agreement, that means that the automakers must prove whether they have a "positive net present value, taking into account all current and future costs, and can fully repay the government loan." There's no word yet on how they will prove said viability, but we expect to learn more soon. In the meantime, expect for both General Motors and Chrysler to stick to their previous production suspension announcements.

Politico has more specifics on the bailout here.

UPDATE: Press releases from General Motors, Ford and Chrysler have been added after the jump.

[Sources: ABC NEWS, Politico, Photo by Brendan Hoffman/Getty]

Continue reading BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package

BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package originally appeared on Autoblog on Fri, 19 Dec 2008 09:32:00 EST. Please see our terms for use of feeds.

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Bush looking into 'Orderly Bankruptcy' for Detroit, as opposed to...?

Damon Lavrinc — Thu, 18 Dec 2008 14:03:00 EST

Filed under: Government/Legal, Chrysler, GM

The House of Bush told reporters this morning that the administration is looking into an "orderly" bankruptcy for General Motors and Chrysler that would be part of an overall rescue package. One possible plan is to give the two automakers enough cash to make it through the next few months (essentially the bailout funds that GM and Chrysler pleaded for in front of Congress) and after that time a federal overseer would sit down with the executives and other interested parties to discuss filing for Chapter 11.

White House spokesperson Dana Perino said during the press conference that "...the president is not going to allow a disorderly collapse of the companies... [it] would be something very chaotic that is a shock to a system. There's an orderly way to do bankruptcies that provides for more of a soft landing." Perino quickly added that no final decision has been made.

The plan would likely include major banks providing debtor-in-possession financing for GM and Chrysler (Ford isn't part of the plan), and would require serious concessions from the UAW, stakeholders, suppliers and investment banks.

[Source: New York Times]

Bush looking into 'Orderly Bankruptcy' for Detroit, as opposed to...? originally appeared on Autoblog on Thu, 18 Dec 2008 14:03:00 EST. Please see our terms for use of feeds.

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WaPo/ABC News: 55% of Americans against auto bailout; Levin says possible deal tomorrow

Alex Nunez — Tue, 16 Dec 2008 14:29:00 EST

Filed under: Government/Legal, Earnings/Financials

55% of Americans are against a federal bailout of U.S. automakers. This, according to a Washington Post/ABC News poll of 1,003 randomly-selected adults nationwide that was conducted by phone last week between December 11 and 14 (we didn't get a call, did you?). 42% of those polled express support for the measure, which died in the Senate late last Thursday night. The poll results show that respondents place 75% of the blame for the current crisis facing Detroit on the shoulders of management, with 22% blaming the economy. On the question of whether automaker bankruptcy filings would be good, bad or make no difference in the economy, the majority (43%) feel that bankruptcy proceedings would have no effect. 34% feel it would be bad, and 17% of those polled believe that it would be a good thing for the broader economy.

In related news, an announcement on a new White House-backed bailout deal for GM and Chrysler using money from Hank Paulson's magic TARP slush fund could come tomorrow, according to Senator Carl Levin, the Michigan Democrat. Levin hopes/believes that whatever deal comes out of the current negotiations will be in line with the original, failed package brokered between President Bush and House Democrats. Republican Senator Bob Corker of Tennessee, whose Senate compromise deal fell apart when the UAW walked away from the table, is pressing the White House to impose "tougher" conditions on all involved parties as part of any potential agreement. However this pans out (last week's events should serve as a reminder that regardless of what's reported, a deal is not a "lock"), expect roughly half the population to be plenty ticked off once the smoke clears.

[Sources: The Washington Post, Reuters]

WaPo/ABC News: 55% of Americans against auto bailout; Levin says possible deal tomorrow originally appeared on Autoblog on Tue, 16 Dec 2008 14:29:00 EST. Please see our terms for use of feeds.

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DOW opens down sharply, President reconsiders tapping TARP funds

John Neff — Fri, 12 Dec 2008 09:54:00 EST

Filed under: Government/Legal, Earnings/Financials

9:30 AM EST has come and gone and the Dow Jones Industrial Average has officially begun its trading day. As expected, the index dropped sharply after the opening bell, which was rung today by singer/actress Mandy Moore. Ms. Moore watched as before sound waves from the bell hit the other side of the room, the Dow had fallen from 8,565 points to 8,348, or about 217 points. At the moment it's back up above 8,400 points, but who knows where we'll go from there.

We've been watching cable news all morning, and it was revealed about 20 minutes before the Dow opened today that the White House was reconsidering its stance against tapping the Troubled Asset Relief Fund for troubled U.S. automakers. While we haven't heard anything official from the administration yet, pundits say it does have the power to redistribute some of the $700 billion earmarked for financial institutions to aid automakers. Before the Senate shot down an Auto Rescue/Bailout Bill last night, the White House had refused to consider tapping TARP to save General Motors and Chrysler from imminent bankruptcy. Now it seems all three automakers could file for Chapter 11 before Bush leaves office in January unless the administration acts quickly.

UPDATE: Of the $350 billion available in the first round of TARP fund distribution, $335 billion has already been handed out to financial institutions. That conveniently leaves about $15 billion, which is almost exactly the amount General Motors and Chrysler require to stave off immediate bankruptcy. Still no official word from the White House, other than that it's reconsidering the use of TARP money to aid automakers after the Senate's failure to pass a rescue/bailout bill last night.

[Source: AOL Money and Finance, MSNBC]

DOW opens down sharply, President reconsiders tapping TARP funds originally appeared on Autoblog on Fri, 12 Dec 2008 09:54:00 EST. Please see our terms for use of feeds.

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Auto Rescue/Bailout Bill ready to go, GOP could still block in Senate

John Neff — Wed, 10 Dec 2008 10:58:00 EST

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

Rescue, bailout, whatever you want to call it, the bill that would shovel about $15 billion in gov't loans to General Motors and Chrysler is being finalized as we speak. The stumbling block between Congressional Democrats and the White House has been the breadth of power that will be given to a Bush-appointed Car Czar and whether or not automakers will be able to continue their legal fight against the state of California, 17 other states and the EPA over stricter emissions standards.

It appears as if Democrats have conceded to the White House that the Car Czar will be given the power to force either GM or Chrysler into bankruptcy if they're unable to get additional concessions from the UAW and creditors on their own. Likewise, the administration also appears successful in getting Democrats to drop language in the bill that would force any automaker accepting government loans to drop their lawsuits against nearly 18 states pushing for stricter emissions standards.

The bill could be voted on in the House of Representatives as early as today, though may not be voted on in the Senate for several days until Democrats are certain they have the 60 votes required to block a filibuster by Republican senators who oppose it.

Stay tuned folks, as this thing is far from a done deal despite Democrats and the White House coming to an agreement. Senate Republicans now hold the fate of the Detroit 3 in their hands, and we'll know the outcome when the Rescue/Bailout bill hits the Senate floor.

[Source: The Detroit Free Press, Photo by Brendan Hoffman/Getty]

Auto Rescue/Bailout Bill ready to go, GOP could still block in Senate originally appeared on Autoblog on Wed, 10 Dec 2008 10:58:00 EST. Please see our terms for use of feeds.

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Meeting of the Minds: Big Three and Bush to talk on Tuesday

John Neff — Thu, 09 Nov 2006 19:58:00 EST

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

Bill Ford, Rick Wagoner and Tom LaSorda have been twiddling their thumbs since May waiting for the White House to confirm a date for the Detroit trio to meet with George Bush, the D.C. decider. Tentative times have come and gone, and as each one passed, the perception that the current administration cares little about the challenges facing domestic automakers continued to grow. In reality, those challenges that include health care costs and the price of imported raw materials like steel, just didn't make for good pre-election prattle.

Not a day after the midterm elections have passed, the White House has announced that George Bush will meet with Ford, Wagoner and LaSorda next Tuesday. No additional details were given about what time the meeting would take place or if an agenda of talking points had been set.

Most of us on the Autoblog team are apolitical when it comes to cars, but since the Republicans have lost control over both houses of Congress, we can't help but wonder if Detroit should instead sit down for a chat with someone like N ancy Pelosi (D - CA), the presumptive Speaker of the House, or Harry Reid (D - NV), the soon-to-be leader of the Senate's majority.

BTW - if you'd like to talk politics in the comments, feel free. Keep it civil, though, or we'll be forced to turn the comments off.

[Source: The Detroit Free Press]

Meeting of the Minds: Big Three and Bush to talk on Tuesday originally appeared on Autoblog on Thu, 09 Nov 2006 19:58:00 EST. Please see our terms for use of feeds.

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