Saturn is dead. GM will make an official announcement within a week. http://www.gminsidenews.com/forums/f70/gmi-exclusive-saturn-reportedly-dead-75492/ GMI Exclusive: Saturn Reportedly Dead GMI Exclusive: Saturn Reportedly Dead We're hearing from sources that Saturn's death will be announced soon. www.gminsidenews.com February 16, 2009 By: Nsap Last week news broke that Saturn “could be dead within the week.” General Motors, who has received billions in federal loans from the U.S. government must report to the Administration tomorrow with a detailed business plan. Part of that business plan must include what GM plans to do with their buffet of brands. GM executives have made one thing quite clear in regards to their brand management plan: Chevrolet, Cadillac, GMC and Buick are going to be their “core brands” that get most of the attention. Executives claim that Pontiac will be reduced to a “niche brand” and the rest of the North American fleet will up for grabs. It’s already well known that Hummer is for sale and GM would desperately like to unload Saab, but what about Saturn? GMI has been told by sources very close to the situation that management and the Board of Directors have approved closing the Saturn brand as part of the plan for viability. Several options were considered for the brand, as evident with the influx of statements from various GM executives as of late about Saturn. One option was to merge the brand into the Pontiac, GMC, Buick sales channel (as GMI broke several months ago). GM also looked into selling the Saturn brand to their Chinese joint-venture in order to get the brand out of the GM umbrella. Ultimately it sounds as if Saturn is going the way of Oldsmobile. GMI was told that the brand will be phased out down to three products; Aura, Vue and Sky. The final plug will be pulled sometime in the 2012 era. We also do not expect any future product from the brand from now on. One of Saturn’s next flagship vehicles was supposed to launch this year; the 2010 Saturn Aura. That car was going to be a rebadged Opel Insignia for the North American market. Back in July, however, GMI broke news that the next-generation Aura had been placed on hold and was ultimately canceled. That alone led grave signs of the brand’s future. Back in 2005 GM announced a huge reinvestment into the Saturn division. Within 18 months the Saturn brand had an entirely different lineup; a larger one to boot. Initially sales rose steadily, but the brand never has met GM expectations for sales numbers. Due to Saturn’s relatively low dealership base (just over 400 dealers in the U.S.), the costs of closing the division will not likely hit numbers that the closing of Oldsmobile did. Other Brands GMI has also been updated on the status of the other “non-core” brands. The Hummer brand is expected to be sold. GM supposedly still has interested buyers; they are just in negotiations and awaiting the outcome of the federal loans. In regards to Saab, we’re told that if the Swedish government does not offer a bailout plan for the Saab division GM will morph the brand with Cadillac globally and eventually remove it from the division lineup. The “morph” process would be similar to how GM merged Daewoo and Chevrolet globally, which has been quite successful. If the Swedish government offers a bailout, GM will use that money to separate Saab from the rest of GM in order to make it more attractive to sell off as an asset sale. __________________
What's the point? Gas prices are down and Americans have stopped the buying spree of these types of cars. Besides, Toyota claims to lose money on hybrids. I'm all for hybrids, but they wont return Ford and GM to profitability.
I've actually got one pre-ordered when it hits the shelves in March. The car looks and seems promising.
GM, Chrysler file plans, ask for more money GM seeks $16.6 billion, Chrysler $5 billion, each would cut thousands of jobs The Associated Press updated 5:21 p.m. PT, Tues., Feb. 17, 2009 DETROIT - General Motors and Chrysler asked the government for an additional $14 billion in aid, a dramatic acknowledgment that conditions in the U.S. auto industry have grown significantly worse in just two months. GM presented a survival plan that also calls for cutting a total of 47,000 jobs globally and closing five more U.S. factories. That represents the largest work force reduction announced by a U.S. company in the economic downturn. Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models. Meanwhile, the United Auto Workers union said it has reached a tentative agreement with Chrysler, GM and Ford Motor Co. on modifications to labor contracts. Such concessions were also a condition of the government bailout. GM said it could need up to $30 billion from the Treasury Department, up from a previous estimate of $18 billion. That includes $13.4 billion previously allocated and $9.1 billion in new loans. The world's largest automaker said it could run out of money by March without new funds. GM's request includes a credit line of $7.5 billion to be used if the downturn in the auto industry is more pronounced than expected. But the automaker claimed it could be profitable in two years and fully repay its loans by 2017. Chrysler LLC requested $5 billion in new loans on top of the $4 billion it received in December. The company had said it might need an extra $3 billion. Both requests were part of restructuring plans the two automakers owed the government in exchange for earlier loans. Ford, which borrowed billions from private sources before credit markets tightened, has said it can make it through 2009 without government help. GM and Chrysler plan to reduce the number of models they offer to car buyers. GM on Tuesday raised the possibility its Saturn brand could be phased out. The restructuring plans must be vetted by the Obama administration's new autos task. In a sign the administration views the U.S. steel industry as a case study for revamping the auto industry, one of the task force's appointees played a key role in the reshaping of that industry earlier this decade. President Barack Obama's top spokesman told reporters aboard Air Force One on Tuesday that he wouldn't rule out bankruptcy for the Detroit automakers. The GM job cuts include 10,000 salaried and 37,000 blue-collar positions, amounting to 19 percent of its current global work force of 244,500. A total 26,000 of the cuts will come from outside the U.S. The cuts would take place by the end of this year. The new plan has the U.S. work force declining from about 92,000 hourly and salaried employees at year-end 2008 to 72,000 by 2012 — about a 20 percent cut. GM Chairman and CEO Rick Wagoner said the plan submitted Tuesday is more aggressive than the one presented to the government on Dec. 2 because the global economy and auto sales have deteriorated in the time that has passed since then. "Today's plan is significantly more aggressive because it has to be," Wagoner told reporters. "We have taken stronger actions, we needed to." Chrysler had 54,007 employees at the end of 2008, so Tuesday's cuts would equal about 6 percent. Auburn Hills, Mich.-based Chrysler said the economy and the market for new cars has deteriorated significantly since its initial request. Chrysler said it now projects that automakers will sell 10.1 million vehicles in the U.S. this year, the lowest level in four decades. Chrysler will eliminate the Dodge Aspen, Durango and Chrysler PT Cruiser, according to company president Jim Press. GM said it plans to sell or spin-off its Saturn brand. If those attempts are unsuccessful, GM will phase out the brand. GM is also evaluating options for a sale of its Hummer division and sought buyers for its Saab unit. Selling or eliminating those brands would leave GM to focus on Chevrolet, Cadillac, GMC and Buick, with Pontiac reduced to one or two models. Details were unveiled on a day when President Barack Obama signed into law a massive economic recovery plan. Signs that the recession is deepening were more immediate for investors, however, and they dumped stocks and pushed oil prices sharply lower. The UAW said discussions are continuing regarding the union-run trust fund that will take on retiree health care expenses starting next year. Under terms of the government loans, both Chrysler and GM are required to reach concessions with the UAW and debt holders. "The changes will help these companies face the extraordinarily difficult economic climate in which they operate," UAW President Ron Gettelfinger said in a statement released by the union. GM Chief Financial Officer Ray Young said the company hopes to exchange two-thirds of its roughly $28 billion in unsecured bond debt by the end of March. Bondholders, he said, signed a letter saying that they were making progress with the company. House Speaker Nancy Pelosi, D-Calif., said she was hopeful the plans would help lead to the "transformation of our domestic automobile industry into a viable, technologically advanced, and globally competitive manufacturing force." She said "Congress looks forward to working with the Obama Administration" to make the domestic auto sector competitive "while ensuring accountability to the taxpayers." © 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. URL: http://www.msnbc.msn.com/id/29243150/
18 billion is not enough. I doubt 30 is either when you are losing almost 3 billion a month. Just another way to keep taxpayers throwing money down a rat hole. First it's 7b (hey I've already got 7b invested, I need to give them more or I've wasted my 7b), then 18b -- now 30b. Do you really think that 30b will do it? I say keep cutting...
http://www.msnbc.msn.com/id/29525238 Concerns raised that GM will not survive Auditors doubtful about automaker’s ability to stay in business DETROIT - General Motors Corp.’s auditors have raised “substantial doubt” about the troubled automaker’s ability to continue operations, and the company said it may have to seek bankruptcy protection if it can’t execute a huge restructuring plan. The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission. “The corporation’s recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern,” auditors for the accounting firm Deloitte & Touche LLP wrote in the report. GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008. The company faces a March 31 deadline to have signed agreements of concessions from debtholders and the United Auto Workers union to show the government it can become viable again. On Feb. 17 it submitted the restructuring plan to the Treasury Department that includes laying off 47,000 workers worldwide by the end of the year and closing five more U.S. factories. GM said in its filing that its future depends on successfully executing the plan. “If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code,” the Detroit-based automaker said in the annual report. GM, the report said, is highly dependent on auto sales volume, which dropped rapidly last year. “There is no assurance that the global automobile market will recover or that it will not suffer a significant further downturn,” the company wrote. GM has said it wants to avoid bankruptcy protection because it would scare off customers. Car buyers, the company has said, would be reluctant to buy from an automaker in Chapter 11 due to fears that it wouldn’t be around long enough to honor warranties or make replacement parts. GM, in its viability plan submitted to the Treasury last month, said it explored three bankruptcy scenarios, all of which would cost the government more than $40 billion. Chief Operating Officer Fritz Henderson said at the time that the government would be the only place the company could get financing for a Chapter 11 reorganization, because the credit markets are frozen. The worst-case bankruptcy scenario would cost the government $100 billion, Henderson said, because revenue would severely drop due to a lack of sales. He said there is not a lot of research about whether people would buy cars from an automaker in bankruptcy protection, but “that which is there suggests that sales fall off a cliff.” GM warned last month that its auditors may raise the “going concern” doubts, and industry analysts said auditors’ statements may trigger clauses in some of GM’s loans, placing them in default. But the company said in its filing that it has received waivers of the clauses for its $4.5 billion secured revolving credit facility, a $1.5 billion term loan and a $125 million secured credit facility. “Consequently, we are not in default of our covenants,” the report said. “If we conclude that there is substantial doubt about our ability to continue as a going concern for the year ending Dec. 31, 2009, we will have to seek similar amendments or waivers at that time.” GM spokeswoman Julie Gibson said there is no clause in the terms of the government loans that places them in default if the auditors raise doubts about GM’s ability to keep operating. “That was not a condition of the loan. It’s not in the agreement,” she said.
http://business.theglobeandmail.com...311.wchryslerCanada0311/BNStory/Business/home Chrysler extorting Canada for $2.3BB more bailout money.
This is a joke right? While I am no fan of the GOP, thier position and stance on the auto bailout was the correct one. Incompetent management and the UAW union are what destroyed GM - management for lack of leadership in product strategy and development and the UAWs union for promoting the unsustainable cost structure. Anyone who thinks GM can be a viable company without massive govt. funding needs to read through GM's latest 10-K filing. Bankruptcy is the only viable option left for GM. The last year the Company was profitable was in 2004. At the end of 2009, it will be five straight years of large losses. During its years ending 2005, 2006, 2007, and 2008, GM lost 10.5B, 1.98B, 38.73B, 30.86B, respectively. That's a total of $82,070,000,000 in just four years. At the end of 2008, GM was technically insolvent, with its total liabilities far exceeding its assets. GM's worldwide vehicle sales have been steadly declining over the years as the Company loses market share. Total wordwide vehicle sales for 2006, 2007, and 2008 were 9.1M, 9.4M, and 8.3M (with the large drop in 2008 due to the economy giving out), respectively. In 2006 and 2007, credit was both cheap and readily available (ie: someone making 25K a year could roll up to Don Taylor Cadillac and get financing for a 65K Escalade. Yet even in those good times, GM was still not turning a profit. Fast forward to the present. GM will be lucky this year if it can sell 5.5M vehicles The sharp drop in demand that began in the 4th quarter of 2008 will likely persist well into 2010. Given this market, GM will not be able to cut its costs fast enough to match the drop in revenue. When GM pitched its viability plan to Congress in December 08, it assumed baseline worldwide sales of 6.9M vehicles for 2009- this being a 17% sales decline from the 8.3M vehicles GM sold in 2008. However, in the first two month of 2009, GM posted a 51.1% year-to-date decline when compared to the same two-month period in 2008. All of this leads to the cash flow problem. In 2008, GM had net operating and investing cash flows of -17.6B (ie: cash basically tossed into a open fire pit). At 1/1/09, GM had approx 13.95B of cash on hand. Of that total amount, $4B was cash received from the Fed Govt. in late 2008 (GM has since received an additional 9.4B to date in 2009). This year, GM has 15.75B in debt obligations becoming due. If you substract the additional $9.4B it received from the Fed Govt. this year, GM would be on the verge of bankruptcy, having to come uo with 1.8B in cash (and this does not take into account the expected negative cash flows stemming from it operating activities (ie: utilities, water, etc...). Due to these cash flow issues, it becomes obvious why GM is so desperate to sell Hummer, SAAB, etc... Yet, the brilliant Robert Wagner (CEO) never foresaw any of this. During the first two quarters of 2008 (recall, that GM borrowed 4B from the Feds at the end of 2008), GM paid out 283M in dividends on its common shares. Going further back to 2007 and 2006, GM paid out approx 1.1B in dividends on its common. This despite that the Company had lost $82,070,000,000 in the past four years. And with no sane bank willing to lend to GM given its highly leveraged position, you would think preserving cash at the Company would be somewhat of a priorty? The overused pharse of "Buy American" is no solution. For even if you buy a GM made vehicle, the incremental costs of producing that vehicle increase at a rate greater than the revenue generated from it. On GMs payroll were roughly 30,000 union members who sat around and got paid to do nothing. This on top of the generous pension and health benefit programs. Simply an unsustainable cost structure. Because of its union contracts, GM never had the money to invest in its facilities and factories. Lastly, too much is made about the gas guzzler SUVs and the hummer line. On average GM, sells approx 23k in hummers anually. Producing 23k hummers a year is not the main reason that GM has lost $82 billion in the last four years. Neither is quality a really big issue anymore. While quality was a major issue during the 80's and 90's, a GM made vehicle today is often more reliable than any European counterpart, and slightly below that of the TOP Japanese brands. Bankruptcy is the only solution to cleanse the Company. If it can't be reorganized under a structured Bankruptcy, then proceed to liquidation. People will lose their jobs, but in reality, jobs are being lost already under the restructuring plan.
Labor issue the main reason, but I agree with you that strategy, branding, and product image is what has caused the decline in market share. A perfect example of a gold mine opportunity for product placement and branding that all of the Big 3 had and botched - Rental Fleets. Since time and memorial, the Big 3 (GM, Chrysler, Ford) have dominated the US rental market. GM is basically the exclusive fleet provider for Avis (they only recently began renting Hyundai models). I am sure Chrysler and Ford are affliated with one of the others. Which two groups out of the general population do rental car agencies rely on for the bulk of their rentals? - business travelers and upper-middle class vactioners. Now think about how much money automobile manufactures spend on advertising to try to lure those same individuals into their dealerships to test drive one of their vehicles. And after they hit with the first media advertising blitz, another blitz occurs at the dealer. Take the Chevy Cobalt - Price Range 16,330 - 24,095. That is pretty big range between the low and high for a Cobalt. What makes up the difference: bigger turbocharged engine, bluetooth, electric keyless starter, pioneer 7 speaker sound system, sunroof, etc.... Now at the dealer, the demo they use for the test drive you can bet is the $24,095 model with all the bells and whistles. Now switch back to Avis. When you rent a Cobalt, you can bet your life savings that you get the $16,330. I rented a Cobalt in Vegas, and I found out in the snowy arizona mountains that the car didn't even have ABS brakes, which I figured would be requierd by law. By impression of that car was that it was a piece of crap. As a potential GM customer, I am basically paying GM a $100 dollars a day to test drive thier vehicle. It really costs GM nothing to include all the bells or whistles. Yet they offer that base $16,330 model. Marketing failure on a collosal scale.
Obama's tough negotiating causing these companies and unions to make concessions GM In a desperate bid to avoid bankruptcy, General Motors Monday launched a restructuring plan that would eliminate 2,600 dealers, 21,000 workers, $44 billion in debt and four brands, including Pontiac — while leaving the U.S. government owning at least half of the automaker. In addition, GM will accelerate the wind-down of its Hummer, Saturn and Saab brands, ceasing production by year’s end. Pontiac will be terminated after 2010. The automaker announced the sweeping moves as part of a revised business plan it is submitting to the Treasury Department, from which it is requesting $11.6 billion in loans on top of the $15.4 billion it has already received. The new plan is centered on a debt-for-equity offering GM is extending to holders of $27 billion in bonds. At least 90 percent of holders of outstanding bonds must accept, the company said, or it will file for bankruptcy by June. “The objective here is not to survive. The objective is to develop an operating plan that helps us win,” said Fritz Henderson, GM’s president and chief executive. This is the third restructuring plan filed by GM since December. This time, it plans to incorporate cuts sufficient to allow the company to break even in a market with industry sales as low as 10 million vehicles in the U.S. on an annual basis. Last year, 13.2 million cars and light trucks were sold in the U.S., but through the first quarter of this year, sales were on a 9.8-million-unit pace. Last month, the Treasury Department’s autos task force rejected GM’s previous restructuring plan, submitted on Feb. 17, saying it was insufficient in scope and reach. Instead, GM was given until June 1 to show the administration of President Barack Obama it has a sustainable business model or it would face being pushed into bankruptcy.
Chrysler STERLING HEIGHTS, Mich. — The United Auto Workers union will own 55 percent of a restructured Chrysler LLC and its retiree health care trust will get a seat on the board if union members vote to approve contract concessions this week. Chrysler stock could even be traded publicly again, as there are mechanisms for the UAW to sell shares to fund the health care trust. Factory-level union leaders voted unanimously Monday night to recommend approval of concessions that union President Ron Gettelfinger said would help keep the automaker out of bankruptcy. A summary of the revised Chrysler-UAW contract says that Italian automaker Fiat Group SpA eventually will own 35 percent of a restructured Chrysler, with the remaining 10 percent stake divided between the U.S. government and secured lenders, mostly banks and hedge funds. The Obama administration required that equity fund at least 50 percent of Chrysler's $10.6 billion obligation to a union-run trust that will take over retiree health care costs starting next year, according to the summary. It also said that under the agreement, workers will no longer get most of their pay if they are laid off. Instead, they will get supplemental pay from the company equal to 50 percent of their gross base pay. Union leaders say ratification votes across the nation should be finished by Wednesday. That's one day before Chrysler's government-imposed deadline to restructure or the government will cut off aid and send the company into liquidation. Chrysler is living on $4 billion in U.S. government loans and must win concessions from its unions, swap equity for debt and ink a partnership deal with Fiat. If Chrysler can pull the package together in time, the government has said it will loan a new Chrysler-Fiat partnership up to $6 billion more. Chrysler also could get $500 million to stay afloat through April.
About the only time I drive American cars is when I rent. The last two times I was down in Houston I got Chevy Cobalts which surprisingly weren't that bad. Of course I had good weather both times and no mountains but based on the experience I would consider a Cobalt if I was looking for a relatively inexpensive car.
GM Emerges From Bankruptcy At a news conference, CEO Fritz Henderson said the new GM will be faster and more responsive to customers than the old one and it will make money and repay government loans faster than required. Henderson said GM completed its 40-day stay under court supervision far faster than anyone thought it could. He also said it would repay about $50 billion in government loans ahead of a 2015 deadline. Henderson added that the company now will focus more on customers, including a partnership with eBay to test auctioning vehicles online. He said GM’s new focus will be “customers, cars and culture.” The new GM will also build more cars and trucks that consumers want and launch them faster than in the past, the CEO said. “We recognize that we’ve been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done,” he said. The new company arose Friday as the bulk of General Motors Corp.’s assets were transferred to a company controlled by the U.S. government. Henderson said the company would reduce its overall U.S. salaried employment by 20 percent by the end of 2009. He said management ranks will be cut by 35 percent, or 450 executives, including the elimination of its North American president position. Henderson said he will take responsibility for North American operations. He said Bob Lutz, a legendary industry executive, was “unretiring” to become a vice chairman responsible for all creative elements of products, marketing and customer relationships. Lutz had previously planned to retire at the end of the year after more than four decades in the auto business. The automaker is launching a “Tell Fritz” Web site to allow owners and the public to share their concerns with senior management and he planned to go out on the road every month, Henderson said. “We need to listen to the questions, ideas and the concerns of the people who matter the most,” Henderson said. The new company will focus on three top priorities, customers, cars and culture, Henderson said. If we don’t get this right, nothing else is going to work,” he said during a morning news conference at GM’s Downtown Detroit headquarters. “Business as usual is over at General Motors.” New Chairman Edward Whitacre Jr. said the 40-day period had been extremely challenging. “There have been a lot of long hours, there have been a shuttering of plants, there have been painful layoffs,” he said. Whitacre cited the “strong leadership” of Henderson and the management team, giving the CEO who replaced Rick Wagoner a vote of confidence. “We all want to win and we are going to win,” Whitacre said. The company’s logo will remain blue with white underlined GM letters. Henderson said GM has no plans to change the background color to green. “It’s not in my plans actually,” he said. GM has considered the change to represent its new environmental focus. Concessions made by the United Auto Workers union just before the company entered bankruptcy protection have brought GM’s labor costs down to where they are fully competitive with Toyota Motor Corp., Henderson said. Henderson also said the U.S. government has urged them to form a “world-class board” and has vowed that it would not get involved in day-to-day decisions. Steve Rattner, the head of the Obama administration’s auto task force, “wants the company to perform,” Henderson said. GM ranked as the top global automaker in terms of sales for 77 years before Japan’s Toyota Motor Corp. snatched its crown in 2008. The company sold nearly 8.4 million cars and trucks around the world in 2008, falling short of Toyota’s nearly 9 million. Once the largest corporation in America, GM held the top spot in the Fortune 500 ranking for 20 years before being pushed out of the top spot in 1973 by Exxon Mobil Corp. It reclaimed No. 1 status in 1985 and held it for another 15 years. Turning a profit will not be easy. GM has piled up losses and survives only because it expects to receive $50 billion in U.S. government loans. Without the loans, its executives have said the company would have been sold off in pieces. In addition to the U.S. government’s 61 percent controlling interest, the United Auto Workers union gets a 17.5 percent stake of the company through its retiree health care trust, and the Canadian government will control 11.7 percent. The remaining shares went to bondholders of the old company. The parts of GM not moving to the new company will become part of “old GM,” a collection of assets and liabilities that will be sold to pay creditors.
Cute. In the process of utterly fleecing the taxpayer (to basically subsidize the inevitable move of plant operations to China and Mexico), we also let GM off the hook for environmental cleanups. http://www.freep.com/article/20090807/BUSINESS01/908070382 There's more at the link...
who to believe ? U.S. Declares Bank and Auto Bailouts Over, and Profitable In all, through TARP and other efforts, taxpayers injected $426.35 billion into banks and auto companies. The sale of stock and interest payments brought in $441.7 billion. https://www.nytimes.com/2014/12/20/...f-bailouts-of-automakers-and-wall-street.html fwiw, this site, http://projects.propublica.org/bailout/, provides a breakdown of the bailouts, TARP plus FNMA and Freddie Mac total ouflow of cash $631.9B total inflow $728.5B
Both are true. The government made really substantial profits on the banks and took some losses on the automakers and made a net profit overall. This was as expected - TARP was originally designed for the banks and to be paid back. It got expanded to the automakers, but didn't have the same solid profit mechanics in place. That additional was largely to save about 1,000,000 jobs and stop a second wave of problems rippling through the economy. So you can look at it either that they bailed out the automakers or they spent the money to save a million employees. I believe they could have held the GM stock longer and ultimately come out better, but they wanted to cut their risk at the time and get out of being an owner of GM as soon as possible.
