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Post by Enigma » Tue Mar 31, 2009 8:38 am

After posting a 30B loss last year and then burning through 10B in tax payer dollars from December 2008 at least they have sacked the CEO... its a start I guess!

Eventually they may let the 'free market' sort this out...

GM, Chrysler face bailout ultimatum
The automakers must make drastic changes or be forced into bankruptcy, Obama says.
By Jim Puzzanghera
March 31, 2009
Reporting from Washington -- Declaring that the country had reached the end of the road with Detroit's automakers, President Obama on Monday mapped a new course for bailed-out General Motors Corp. and Chrysler in a series of moves designed to force the hands of workers, creditors and others with a stake in the companies.

Obama, using the threat of bankruptcy as a weapon, vowed to transform the U.S. auto industry by pushing GM and Chrysler to make major changes in exchange for billions in additional taxpayer money they need to survive.

The tactic, including the administration's ousting over the weekend of GM Chairman and Chief Executive Rick Wagoner, puts the government in the extraordinary position of dictating the ongoing policies of major, largely unregulated firms.

Administration officials said a quick, government-led bankruptcy would be a last resort. But if it comes to that, they said, the court process could be used to separate the companies' good assets from the bad. The good assets would form stand-alone companies to survive or be sold; the bad assets would be purged.

Obama also said he would seek ways to encourage consumers to buy new cars, sounding like a TV pitchman by promising that the government would guarantee the warranties of GM and Chrysler vehicles even as the companies teeter on the edge of bankruptcy.

"Your warranty will be safe," Obama said in televised remarks. "In fact, it will be safer than it's ever been, because starting today, the United States government will stand behind your warranty."

He also said he was exploring ways to provide tax credits or vouchers for people who trade in older gas guzzlers for new cars, a "cash for clunkers" program that has been used in California and abroad.

And the Internal Revenue Service on Monday began touting a tax break introduced last month that allows some car buyers to deduct from their income taxes the sales and excise taxes on purchases made by the end of the year.

All the moves were designed to save the industry by forcing major changes on two of Detroit's Big Three. Ford Motor Co. has not sought federal aid.

"Year after year, decade after decade, we've seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us," Obama said. "Well, we've reached the end of that road."

News of the government's actions helped send the stock market tumbling Monday. The Dow Jones industrial average fell 254 points, or 3.2%.

In Michigan, some workers have long seen cataclysmic changes coming.

"Things started going to gunnybags in the early 1980s. It has been a long rough road since then," said Dave Tattman, who runs GM's sprawling Powertrain plant in Ypsilanti, Mich., west of Detroit.

"General Motors and the United Auto Workers built the middle class in this country," Tattman said. "At the end of the day, I have every confidence that GM will continue."

In Southern California, auto dealers and customers acknowledged that the government had to follow through with its rescue.

"Clearly, we need to go to the next chapter. Dealers realize that the model of the past doesn't work," said Leo Bunnin, who owns four GM dealerships in Ventura County.

John Dains, a Santa Monica computer programmer looking at a new Dodge Challenger at Alhambra Chrysler Jeep Dodge, doesn't believe the government should be involved in private companies.

"But since we're so far in, they may as well follow through and back up the companies," he said. "You can't stop halfway. . . . The horse has already left the barn."

U.S. officials threatened a government-backed bankruptcy for GM if workers and major holders of nearly $28 billion in the company's bonds didn't make more concessions over the next two months. Workers have given up some pay, but bondholders have been more recalcitrant.

And now an ad hoc committee of debt holders wants a say in reorganizing GM.

"We have been very disappointed that the government and the company have had virtually no real dialogue with bondholders while designing the proposed restructuring plan," the bondholders said in a statement.

Privately held Chrysler, though, faces a different fate.

The administration is forcing Chrysler into the arms of Italian automaker Fiat after the president's auto task force determined that Chrysler was not viable as a stand-alone company. Chrysler and Fiat already have what they call a framework for an agreement, but there has been little movement reported in several months.

"We cannot, and must not, and we will not let our auto industry simply vanish," Obama said.

But, he added, its survival can't depend "on an unending flow of taxpayer dollars."

"These companies -- and this industry -- must ultimately stand on their own, not as wards of the state," he said.

The administration took the first step by ousting Wagoner, a move some in Congress had long argued for.

Wagoner won't get a severance package, but he is eligible for $23 million in pension and other benefits for his 32 years at the company.

But Wagoner's dismissal didn't sit well with some Michigan Democrats. Gov. Jennifer Granholm called Wagoner a "sacrificial lamb," and Sen. Carl Levin said Obama told him Sunday night that "this kind of change was necessary to signal to the public there was going to be a real effort here to make a fresh start."

"The decision to ask Rick Wagoner to resign is a very sad moment for those of us who are deeply involved in supporting this industry," Levin said.

But he added that Obama's other announcements made it "a very positive day for the American automobile industry."

All of Obama's announcements were intertwined, reflecting the complicated political and business implications.

Wagoner was pushed out to demonstrate to the public that the White House was serious about forcing change on the automakers. The administration raised the prospect of bankruptcy to force bondholders and the UAW to make new concessions.

And, while talking openly about bankruptcy, Obama also had to assure potential car buyers that their warranties would be honored if the companies disappeared.

"Any further federal money going to the automobile industry without a conspicuous symbol of atonement would have been politically indefensible," said Ross Baker, a political scientist at Rutgers University. "The symbol was Rick Wagoner's job."

In a message to GM employees Monday, Wagoner said he agreed to the administration's request Friday to step aside and called his replacement as CEO, longtime GM executive Fritz Henderson, "an excellent choice."

"GM is a great company with a storied history. Ignore the doubters, because I know it is also a company with a great future," Wagoner told them.

Obama said the decision was "not meant as a condemnation" of Wagoner, but was done because the company needs a "new vision and new direction."

Some Republicans, however, were alarmed at the decision to oust the head of a private company, even one that has received government bailout money. GM and its financing arm have received a total of about $19.3 billion. Chrysler and its financing arm have received about $5.5 billion.

"This is a remarkable move by the federal government -- I think unprecedented in the history of this country," said Sen. John McCain (R-Ariz.). "What does this signal send to other corporations and financial institutions about whether the federal government will fire them as well?"

Sen. Bob Corker (R-Tenn.) said the Wagoner firing was designed to shift attention from the lack of progress Obama's auto task force has made in forcing the restructuring of GM and Chrysler.

"The White House woke up and realized it was going to be an embarrassing moment because nothing really had occurred," he said. "I think that's what set off the Wagoner firing, to save face there."

But with a deadline today to determine the viability of both companies or call for repayment of the loans, the administration navigated a middle path.

It gave Chrysler 30 days to work out a deal with Fiat or another partner. Obama said GM's restructuring plan wasn't "strong enough" but that GM could become viable. The White House offered the company 60 days and "adequate working capital" to produce a better restructuring plan. Officials would not say how much money that would be.

"Let me be clear -- the United States government has no interest in running GM," Obama said. "What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company." ... full.story
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Post by danielmid » Tue Mar 31, 2009 2:49 pm

Greeeaaaaattt. Just what I want my tax money going towards, someone else's car.

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Post by Sarge_II » Tue Mar 31, 2009 3:58 pm

danielmid wrote:Greeeaaaaattt. Just what I want my tax money going towards, someone else's car. ... ulus-Bonus.

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Post by Enigma » Mon Jun 01, 2009 12:07 pm

GM just days away from bankruptcy

By Kim Landers for AM

Troubled car giant General Motors has moved closer to filing one of the largest and most far reaching bankruptcies in US history.

The company's battle to restructure has been dealt a blow, with investors refusing to exchange their debt for company shares.

GM's board meets this week and the 100-year-old company is expected to file for bankruptcy within days.

Keith Crosato is a GM worker who has already been laid off.

"No, I don't think there's going to be a choice. I'm here to hear what they have to say, but I think they're going to go into bankruptcy," he said.

Analysts agree it seems inevitable.

John Pottow is a professor of law, specialising in bankruptcy, at the University of Michigan. He says GM has run out of options.

"Lawyers don't like to bet, but I would bet on it," he said.

"I think some people misunderstand, and think 'Oh, isn't this terrible, now they're going to have to file for bankruptcy'.

"They were planning on doing this for quite some time."

Already propped up by $US25 billion in Government loans, the Obama administration says GM will only get more money if it submits to massive restructuring.

"In bankruptcy, General Motors will be able to complete with greater speed its restructuring plan that is already afoot, and that includes such changes as scrapping its moribund brands, selling off some of its non-core assets - like those European Opel and Vauxhall brands - and closing its bloated dealer distribution network in the United States," Professor Pottow said.

GM's restructuring has hit a hurdle because its bondholders have rejected its request to forego the $US34 billion they are owed in exchange for 10 per cent of stock.

The bankruptcy filing could leave the US Government owning up to 70 per cent of America's biggest car maker, prompting some to dub the car giant 'Government Motors'.

"It's unprecedented to have the government standing in a 70 per cent ownership position. Really, it's an effective nationalisation of General Motors," Professor Pottow said.

General Motors lost its place as the world's number one carmaker to Toyota last year.

GM shares have lost more than 60 per cent this year and if it files for bankruptcy the car company will be removed from the Dow Jones Industrial Average.
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Post by Enigma » Mon Jun 01, 2009 12:09 pm

This sounds something like ..... British Leyland in 1975!

Lets hope GM does better than Leyland.
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Post by Knightmare » Tue Jun 02, 2009 3:53 am

And here's the most screwed up part.

The government had no problem at all giving the banking system 800 BILLION dollars, with no strings attached in any way, shape or form.

But now General Motors, who's only crime was building the vehicles that the American people actually WANTED TO BUY, is being forced into bankruptcy because the auto industry needs to be " transformed ".

How utterly ridiculous.
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Post by Enigma » Wed Jun 03, 2009 10:14 am

Yep, its good to be a Bankster!
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Post by MzSnowleopard » Thu Jun 04, 2009 12:15 am

anyone else having that old sense of De'ja Moo?
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Post by Labbie » Fri Jun 05, 2009 8:18 pm

Penske Buys Saturn

General Motors Corp. has struck a tentative deal to sell its Saturn brand to former race car driver and auto dealer Roger Penske.

Penske, who owns the Penske Automotive Group dealership chain, told reporters on Friday that he plans to offer all 350 Saturn dealerships new franchise agreements. He says Saturn's 13,000 employees will stay on with the company for at least the immediate future. He declined to name the price for the deal.

Penske says GM will continue to produce Saturn vehicles, though he is in discussions with manufacturers worldwide about building the vehicles going forward.
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Post by Enigma » Sat Jun 06, 2009 12:41 am

General Motors declares bankruptcy – the biggest manufacturing collapse in US history

Andrew Clark in New York, Tuesday 2 June 2009 01.20 BST

• Obama warns of sacrifices needed to build a leaner carmaker
• Judge to rule on future of 235,000 GM employees worldwide

America's biggest carmaker, General Motors, declared itself bankrupt today in a legal filing at a federal courthouse in downtown Manhattan, kicking off the biggest industrial insolvency in US history.

GM filed for Chapter 11 protection against its creditors' demands at 8am local time after racking up losses of $81bn (£50bn) over four years, putting a veteran bankruptcy judge, Robert Gerber, in charge of the future of 235,000 employees worldwide.

Full article at ... chapter-11
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Post by Labbie » Mon Jun 22, 2009 3:21 pm

Iacocca urges fast loan repayments

DETROIT – Former Chrysler CEO Lee Iacocca has some advice for the people who are running his old company, and those who will lead the new General Motors: Get the government out of your business as soon as possible.

Iacocca, a slick pitchman who became an American hero in the early 1980s when he used over a $1 billion in government loan guarantees to rescue the nearly defunct Chrysler, said in a rare interview with The Associated Press that government intervention was strong motivation to repay the loan early.

"They're on you day and night. Their oversight is just too extreme," said Iacocca, who is promoting a new limited-edition customized Iacocca Ford Mustang. "That's why our 10-year loan, we paid it back in three years. We couldn't stand the government. The bureaucracy kills you."

Now Chrysler and GM, in the midst of a brutal recession and the worst auto sales slump in a quarter-century, each are receiving billions in government loans. Chrysler exited bankruptcy protection in 42 days, while General Motors Corp. remains in Chapter 11.

Already, the Treasury Department's auto task force, which is overseeing the automakers, has forced out both companies' chief executives and is remaking their boards. It engineered Fiat's takeover of Chrysler, which came with a shake-up of top management.

Iacocca, now 84 and living in Bel Air, Calif., seemed appalled that the government is once again involved in Chrysler's business, but he said without taxpayer money, Chrysler and GM could have collapsed and caused a nationwide unemployment disaster with thousands of additional jobs lost.

He's optimistic that Detroit automakers can rebound and said he has faith that Fiat Group SpA CEO Sergio Marchionne will rescue Chrysler. He said he's also impressed with how Ford Motor Co.'s leadership has kept America's No. 2 automaker free of government loans.

Iacocca said he would invest in Chrysler now if he could, as well as Ford, but he's apprehensive about GM's future.

"GM's got more serious problems," he said. "They're just big. They're huge. They've got many more problems than Chrysler has with just sheer size."

Iacocca, who was fired by Henry Ford II in 1978, took over Chrysler under circumstances very similar to today's. The company made big, inefficient cars at a time when prices spiked due to the Arab Oil Embargo, and it was unprepared when consumers wanted more thrifty vehicles.

In his 2007 book "Where Have All the Leaders Gone," Iacocca said Chrysler had only $1 million in cash and was facing a $200 million payroll. Similarly, late last year, Chrysler's chief financial officer said it couldn't pay its bills without government help.

Iacocca, though, rolled out new products including smaller, more-efficient K-Car sedans, and went on television to challenge viewers. "If you can find a better car, buy it," was his famous line in Chrysler's ads.

Although he doesn't know Marchionne, he said the Italian CEO may have the charisma to pull off a similar feat. Former Toyota executive Jim Press, now Marchionne's top lieutenant, also has been an impressive salesman, Iacocca said.

Iacocca, who introduced the Mustang for Ford at the 1964 World's Fair in New York, said he has contracted with custom car builder Gaffoglio Family Metalcrafters to reshape a 2009 model into a sleek fastback. They'll build 45 of them in the Mustang's 45th year, all silver.

Although the car is unmistakably a Mustang, it has unique wheels, racing brakes and suspension, and the interior has been reshaped to include Iacocca's signature in gold on the dashboard. The car, with a full Ford warranty, will sell for around $60,000 starting in July, only at a Los Angeles-area Ford dealership. There's only one option, a supercharged 4.6-liter V-8 that pushes the horsepower to 400 — 80 more than the standard engine.

Despite higher gas prices and increased government fuel economy standards, Iacocca said Mustang is still Ford's most recognizable model, with potential for big sales.

He suggests that Chrysler continue to stick with its best-known vehicles: minivans, Jeeps, the Ram pickup and larger sedans like the Challenger and 300. Fiat, he said, can fill in the smaller end of the lineup with its designs and efficient engines.

Although he likes Marchionne, Iacocca said a marriage to Fiat still faces challenges, including somehow navigating through what he predicts will be another year of recession.

"It's not a slam dunk," he cautioned. "You'll have a cultural clash of some kind in different languages. But they'll bring people together and hopefully it will work. They have become a pretty good company under this guy Marchionne."

In the recent telephone interview, Iacocca said the company, when it entered bankruptcy protection, had to take two company cars from him that he had received when he retired. Later, though, it lent him two Chrysler 300C sedans.

He said he wouldn't have done anything differently while running Chrysler from 1978 to 1992 to help it better compete against the Japanese.

Japan, he said, has advantages over the Detroit automakers, especially with its home country closing its market to foreign competitors.

"I can't answer you and say there's one thing that could have made our problem easier," he said. "They build small cars with fuel efficiency. We were building big cars without fuel efficiency. We were never ready for more than $1 or $2 gas. And we sure as hell weren't ready for a 40 percent drop in car and truck sales, all in one shot."

He's unapologetic for Chrysler selling hundreds of thousands of SUVs led by the Jeep brand, saying the company was merely responding to the market.

"The people wanted them," Iacocca said. "They felt strong in them. They felt like they were driving a tank. They felt safe. You try to follow the market."

His advice for Marchionne and new GM CEO Fritz Henderson as they try to weather one of the darkest periods in American automotive history?

"Take care of our customers," Iacocca said. "That's the only solid thing you have."
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Post by Dark Angel » Tue Jun 23, 2009 11:07 am

Well it's funny how the rats come to the surface when the ship goes down.

This guy used to make something like $500-$1000 every minute when he was the CEO of Chrysler durring it's heyday and eventually put it on the path it was on.

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Post by Enigma » Sun Jul 12, 2009 9:48 am

GM exits bankruptcy
Fri Jul 10, 2009 7:20pm EDT

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - A new General Motors emerged from bankruptcy protection on Friday -- far more quickly than most industry watchers had expected -- as a leaner automaker pledging to win back American consumers and pay back taxpayers.

A whirlwind 40-day bankruptcy for GM concluded with the closing of a deal that sold key operations to a new company majority-owned by the U.S. Treasury.

The development, which follows a similar fast-track reorganization of Chrysler, represented a victory for the Obama administration and its commitment to save jobs and prevent a liquidation of the largest U.S. automaker.

At the same time, the U.S. government has taken on substantial new risks as a 60 percent owner of the new GM with a $50 billion equity investment and $10 billion in debt and perpetual preferred shares.

Analysts said the government intervention had given GM a new chance and sharply lower operating costs, but left management facing deep challenges given the weak economy and GM's long-running slide in market share.

"I wouldn't really call it a new GM, it is just a smaller GM. That would be more of an apt description. They still have a lot of hurdles to jump," said Mirko Mikelic, portfolio manager at Fifth Third Bank. "Right now, they are in a survival mode."

Chief Executive Fritz Henderson said the new company would shed layers of management, make decisions faster and shed the bureaucracy that critics say contributed to the failure of the 100-year-old automaker.

The company's white-collar workforce will be cut by more than 20 percent by eliminating 6,000 jobs. Executive ranks will be cut 35 percent.


"The bottom line is that business as usual -- and as we have had it until today -- is over," Henderson told reporters at GM's Detroit headquarters. "Everyone associated with GM must be prepared to change -- and fast."

Bankruptcy slashed GM's debt and healthcare obligations and brought down labor costs to be on par with Japanese competitors led by Toyota Motor Corp.

The new GM will have slashed its debt and healthcare obligations by $48 billion, dropped almost 40 percent of the dealers from an unprofitable network and moved to sell laggard brands such as Saab, Saturn and Hummer.

Analysts said that gives GM a chance to deliver on its commitment to launch more fuel-efficient cars and to focus its resources on fewer brands, models and dealerships.

"The challenge in the future is how to approach a marketplace that has been burned by GM," said Pete Hastings, a fixed-income analyst at Morgan Keegan.

While key assets and the Chevrolet, Cadillac, Buick and GMC brands were sold out of bankruptcy to form the new General Motors Company, other assets, including shuttered factories, remain in bankruptcy for a liquidation process.

That old GM, which will become Motors Liquidation Co, is expected to stay in bankruptcy for years.

Bondholders, who had been owed $27 billion, could eventually receive a 10 percent stake in the new GM.

The U.S. Treasury will own 60.8 percent and 11.7 percent will be owned by the governments of Canada and Ontario. A retiree trust fund affiliated with the United Auto Workers union will hold 17.5 percent.

GM will start to pay back its debt to the U.S. Treasury, which it owes by 2015, as soon as possible, Chief Financial Officer Ray Young told Reuters Television in an interview.

The automaker plans an initial public offering as soon as 2010 and could use some of the proceeds from that stock sale to repay government debt, Young said.


Henderson, who took over as CEO when predecessor Rick Wagoner was ousted by the Obama administration at the end of March, said the company would be run by a single executive committee, cutting the number of top decision-makers in half.

He also said key decision-makers would meet weekly, a practice adopted by Ford Motor Co CEO Alan Mulally that he has credited with speeding that automaker's turnaround.

GM also eliminated the North American executive team overseeing operations in its troubled home market, which had caused the automaker to lose more than $80 billion since 2005.

Nick Reilly, who has headed Asian operations, will take control of GM's international operations based in Shanghai, a recognition of the growing importance of China at a time when GM is selling its European unit, Opel.

Bob Lutz, 77, GM's outspoken and high-profile former product chief, agreed to stay in a new position with responsibility for marketing, communications and a continued role in vehicle design.

Barclays Capital analyst Brian Johnson said Henderson's maneuvers in part dismantled organizational forms that were a hallmark of Wagoner's tenure.

"The organizational steps GM announced are, in the context of the GM culture, relatively significant, even as they appear inscrutable to outsiders," Johnson said.

GM's exit from bankruptcy in 40 days followed a path blazed by Chrysler that culminated in an asset sale that gave control of the smaller automaker to Italy's Fiat SpA.

Ford has avoided seeking emergency U.S. government loans. Ford shares closed up 1.6 percent at $5.72 on Friday. The stock has nearly tripled since hitting a low in early February.

(Reporting by Kevin Krolicki; additional reporting by Caroline Humer and Jui Chakravorty Das; editing by Patrick Fitzgibbons, Lisa Von Ahn and Matthew Lewis) ... 10?sp=true
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