- New GM
- New GM: Part of General Motors' reorganization in Chapter 11 bankruptcy will be the creation a fresh company being called New GM. This entity will essentially buy up all of the current company's good assets and leave most of its crushing debt behind.
After New GM emerges from bankruptcy in an estimated 60 to 90 days, its task will be to implement a government-approved viability plan that includes achieving competitive labor costs, increasing its share of U.S. manufacturing, lowering structural costs by further reducing the size of its workforce, shrinking its dealer network and continuing to develop new fuel efficient products.
Success will be measured by New GM's ability to break even at a total U.S. industry volume of just 10 million vehicles. (Photo by Mario Tama/Getty Images)
Four Core Brands
- Four Core Brands
- Four Core Brands: Only half of GM's current portfolio of eight brands are considered to be assets good enough to be passed on to New GM. They include Chevrolet, Cadillac, Buick and GMC. The rest, which includes Hummer, Saab, Saturn and Pontiac, will be left behind in Old GM to be sold off or shut down.
More Made In the USA
- More Made In the USA
- More Made In the USA: Part of GM's viability plan is to begin producing more cars in the U.S. than it has in the past. To achieve this, the company has announced that it will build an unnamed future small car in the U.S. at a yet-to-be-named idled assembly plant and stamping facility. The retooled facilities will be able to produce up to 160,000 annually, and according to President Obama, this will help GM increase its share of U.S. production for the first time in three decades.
- Government Motors
- Government Motors: You'll be hearing the phrase "Government Motors" a lot going forward, and that's because the U.S. government, and by extension we the tax payers, will own 60.8% of New GM at the outset. The governments of Canada and Ontario will own about 11.7%. The UAW's VEBA trust for retiree healthcare benefits will trade the $20 billion it was owed for a 17.5% stake, and bondholders will exchange some $27 billion in owed debt for the remaining 10%.
Despite owning a majority stake in New GM, the U.S. government has stated that it does not intend to control the day-to-day operations of the company, so don't expect the Obama administration to be picking out fabric patterns for the Chevrolet Malibu's seats. It will, however, practice oversight to ensure that New GM is working towards achieving the goals laid out in its viability plan. Aside from that, Obama has classified the government's role as a reluctant shareholder that will sell its equity in New GM as soon as that's practical.
What's This Gonna Cost Us?
- What's This Gonna Cost Us?
- What's This Gonna Cost Us?: The U.S. government has already given GM about $20 billion dollars in loans since late last year. The giving isn't over, however, as the government will provide another $33 billion in loans and debtor-in-possession financing to keep the company going during bankruptcy proceedings, which are estimated to last between 60 and 90 days. Despite coughing up over $50 billion, the U.S. government has agreed to reduce New GM's liability to just $6.7 billion. The only other compensation that the government will receive is whatever it can make from selling its 60% stake when the time is right.
What the UAW Gave Up
- What the UAW Gave Up
- What the UAW Gave Up: The biggest sacrifice made by the United Auto Workers on GM's road to Chapter 11 bankruptcy filing was exchanging money owed to its VEBA trust for equity in the company. Back in 2007, GM agreed to pay some $20 billion into a UAW-run VEBA trust that would assume responsibility for retiree health care going forward. Times have changed - radically - since then, and GM found itself unable to make its first payments into the trust. Realizing something was better than nothing, the UAW have agreed to exchange the $20 billion for a 17.5% stake in New GM. Like the U.S. government, which will own 60.8% of the automaker after bankruptcy, the UAW will likely sell its stake in New GM as soon as that's practical. Otherwise, the UAW has had to accept less pay, less jobs and more plant closings to ensure the job security of as many of its members as possible under the current circumstances. (Photo by Bill Pugliano/Getty Images)
Dealers Out The Door
- Dealers Out The Door
- Dealers Out The Door: GM announced in its April 27 viability plan that it would reduce its dealer network from 6,246 to 3,605 by 2010. Part of the plan was phasing out 1,100 underperforming dealerships by the end of this year. With Chapter 11 bankruptcy financing, however, the number of GM dealers being phased out by the end of this year has grown to 2,100. Most of the dealerships being phased out, however, are either underperforming or selling Hummer, Saab, Saturn or Pontiac vehicles only. (Photo by MARK RALSTON/AFP/Getty Images)
Warranty In Effect
- Warranty In Effect
- Warranty In Effect: If you buy a new GM vehicle during the company's restructuring, including one from Hummer, Saab, Saturn and Pontiac - none of which will not be a part of GM after it emerges from bankruptcy - your vehicle warranty will still be honored for its entire duration. GM has filed a "first day" motion in bankruptcy court to ensure it can honor all customer obligations during its restructuring period, and even if the worst happened and GM were liquidated, the government's Warranty Support Program ensures your warranty would still be honored by a third-party auto-service provider. (Photo by Tim Boyle/Getty Images)
Euro Got Its Own Thing
- Euro Got Its Own Thing
- Euro Got Its Own Thing: GM Europe is not affected by the mothership filing for Chapter 11 bankruptcy. That's because the German government has agreed to provide the subsidiary a 1.5 billion euro bridge loan to keep it going while a partnership with Magna International is finalized. Therefore, it's business as usual while the partnership with Magna is being worked on, after which GM will likely retain a minority stake in GM Europe, which includes both its Opel and Vauxhall brands. (Photo by GEOFF ROBINS/AFP/Getty Images)
- Volt Unaffected
- Volt Unaffected: The most anticipated new product in GM's current pipeline is the Chevrolet Volt, a series plug-in hybrid that can go 40 miles on electricity alone before a range-extending gas engine kicks in to recharge the batteries. Many were worried that the Volt's expensive development process would be abandoned to save money during the automaker's restructuring period, but GM has confirmed that the Volt is still on track for a late 2010 debut.