Detroit’s slow-mo meltdown has been rife with tipping points for years now. As bad decisions piled upon bad luck, we’ve seen the signs become increasingly ominous. The light at the end of the tunnel has become so faint now that each new misstep comes hard on the heels of the previous one, each taking on ever more existential significance. Perhaps though, we have reached a new low in the news coming out of GM today, as Automotive News [sub] reports that GM will delay incentive payments of $302.4m to its dealers for two weeks. If this decision was made based on GM’s liquidity crisis, it means that GM can’t come up with $300m until December 11: A stuffed stocking of not good. On the other hand, if it’s another twisted ploy to generate political support for a bailout, it’s some inspired stuff. Based on the letter (after the jump) sent by GM VP of Marketing Mark LaNeve, it’s looking like a little of both. After all, blackmail has always been a crime of desperation.
To All Dealers:
I am writing to you to update you on changes we are going to implement with regard to the incentive payment schedule.
As I discussed in the IDL last week, one of the biggest issues facing General Motors is our liquidity. That is the cash we have on hand to pay for our regular operating expenses.
In this cash crunch, we have examined every aspect of our business in an effort to improve cash flow, including our relationships with all of our key stakeholders, like suppliers, agencies, employees and dealers. In this regard, we are implementing minor changes to incentive payment timing. So, what does this mean for you? Basically we are delaying the payment of the incentives by two weeks. Here is the new schedule that will be in effect until further notice:
· Incentive applications previously scheduled to be paid on November 28th and December 4th will be delayed to December 11th and December 18th respectively. Please see the attached payment schedule.
· Weekly incentive payments will continue thereafter reflecting one week of dealer application activity. On average, payments will be made approximately 2 – 3 weeks after a valid dealer application has been processed by GM. Effectively this is a 2 week delay from the current schedule.
· As a result of this retiming you will not receive any incentive payments on November 28th and December 4th.
This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief. I need your continued help in talking to Congress. There are three things you need to ask your congressional delegation for:
· First, ask the government officials to approve a new $25 billion loan package to help us deal with our current liquidity crisis.
· Second, while the rules for the distinctly separate and already approved $25 billion loan package for investments in technology and enhanced fuel efficiency have been issued, we’d like to see that program move as fast as possible, so we need to encourage the government to minimize red tape and act on loan applications as quickly as they can.
· Third, the automotive industry needs some additional government support to stimulate retail sales, like making interest on car loans tax deductible, etc.
We’ve set up a website that will assist you in making your voice heard in Congress and to help spread the message. Please visit www.gmfactsandfiction.com. If you have not already done so, please call and e-mail your congressional representative.
This is a critical time for our industry, your dealership, and General Motors. Please continue to do what you do best, selling vehicles one customer at a time. Please make every effort to integrate your promotions with the recently announced Red Tag sales event.
Together we can work through this crisis. As always, thank you for all of your hard work and effort.
Good Selling.
Mark R. LaNeve
I’d say it’s a good time to call/email our congressional representatives and let them know why this is a bad idea.
UGH, reading all that has been reported on the bailout it disgusts me what GM is doing – I can only pray our government has enough sense to say NO ! This whole deal is an obvious SCAM/ Deception – that they are willing to say and do anything other than try and fix their own problems – BS artists-
I’ve never had a near death experience, certainly not as near to death as GM currently is, but shouldn’t the light at the end of the tunnel be growing brighter, closer, and more alluring with each day of more bad news?
There is no honor among thieves!
La Neve:
“First… [another $25 billion in no-strings loans]”
“Second… [so gimme the first $25 billion, already]”
“Third… [and then cash incentives from the government to buy our cars]”
What?! $50 billion isn’t enough? We also must induce the Feds to put cash on the hood of GM’s cars?! Oh, man… I wish I had a GM execs conscience… I’d be living an entirely different and decidedly more upscale lifestyle.
Love the line in the letter “we are asking the federal government for temporary relief” Temporary? $25 billion is temporary, to what? until GM files bankruptcy, until they seek another $25 billion? If a bailout from the federal government was such a good idea and without risk, there would be private money lined up to do it. Fact is, the taxpayers will never see it repaid.
Question: Do you suppose they are delaying the payments to delaers because they are going to file bankruptcy if the government handout is not made available this week? Why pay out the $300 million if BK is going to be filed?
May as well save the dough for something more important, like golden parachutes……..
It is temporary relief— they need the money so they can survive long enough to beg for more money.
More of the same.
Count on the delusional fatcats to use Every Turn of the Screw to wrench away from their fate.
Semi-blackbag-Merkel-begging, race-baiting, dealer-torturing, goat-sacrificing, dirty Freemasons all.
The schedule for next week is a guest spot on “ellen” for Rick, where he’ll smack a baby puppy in the face with a mudflap for each gambit that failed.
No technique will be off the table toward saving face for these Ostriches with Malignant Narcissistic Personality Disorder.
By the time they’ve played their last card GM/Det will have made even Darth Cheney blush.
-that is if there were enough Non-Alien Blood and an Actual Heart somewhere in there to produce a realistic Blushing-response.
My guess is that each and every move like this is a part of the scare tactics that seem to be GM’s strategy. I think the headline to the post sums it up best: GM is holding a gun to their dealers’ heads in effect saying, “Get off of your damn lazy asses and burn up those phone lines to your Congressmen! NOW!!!”
Tex
p.s. I hope Congress turned off their voicemail about the same time GM did……..
What a great idea. Now if GM goes bankrupt in the next 2 weeks they won’t have to make these incentive payments at all!
What about dealer’s liquidity? I hope they weren’t counting on that money to meet payroll.
How does any of the upper management for GM look in the mirror and like what they see? As they gaze into their mirror each of them should be ashamed and embarrassed, and then slap the person they are looking at. For beginners.
A recent conversation between 5 Canadian surgeons was overheard. It was about the best type of patient to operate on:
The surgeon from Ontario said that accountants were best because when you open them up everything in there is numbered.
The surgeon from Manitoba said electricians were best because they have everything colour coded.
The surgeon from Alberta preferred librarians because everything inside them was in alphabetical order.
The surgeon from B.C. said he preferred construction workers because they were very understanding if you had parts left over.
The surgeon from Newfoundland said that they were all wrong and that the best patients in surgery were without doubt, GM executives. Asked why he said, “They got no brains, no guts, no balls, no heart and no spine, besides their heads and their arses are interchangeable”~!
Mike Shedlock at Mish’s Global Economic Trend Analysis is organizing a write-in campaign to stop the bailout. You can get more information at http://globaleconomicanalysis.blogspot.com/2008/11/stop-auto-bailout-campaign.html
He organized a similar campaign during the $700B bailout of Wall Street that was highly effective, but unfortunately ultimately unsuccessful.
I miss when this site actually talked about cars.
I think a line was missing…
Fourth – Good luck making those floor plan payments to GMAC suckers valued dealers.
No technique will be off the table toward saving face for these Ostriches with Malignant Narcissistic Personality Disorder.
I know a little bit about NPD. People with it can be very high achievers so I’m not sure that applies to the executive suite at GM.
He organized a similar campaign during the $700B bailout of Wall Street that was highly effective, but unfortunately ultimately unsuccessful.
Ummm, “highly effective” and “ultimately unsuccessful” are mutually exclusive conditions.
“Together we can work through this crisis.”
LaNeve believes rape is a joint venture between the rapist and the victim.
Just a short while ago Rick Wagoner denied any risk of Chapter 11, and that GM was in dire need of cash. And now? Without even a word of regret, just as if it was natural to ask for, GM wants 25 bn USD just so, plus 25 bn for “modern technology”, plus incentives for their customers (a lot, due to the terrible situation). This is ridiculous.
How many GM executives does it take to screw in a lightbulb?
49
1 unscrew the old bulb.
Another to blame the UAW for screwing it in too tightly even though it was GM engineering that gave them the torque specs. Unfortunately, someone forgot to convert the specs to standard from metric since the lightbulb came from Opel… even though it was manufactured in Ohio, shipped to Germany, then shipped back in the trunk of a Saturn Astra.
A third to open a PO to Delphi for a taller ladder to put the new bulb in. The one used to remove the old bulb belonged to the Hummer division and had to be strapped on the roof of an H2 as a buyer incentive. Besides, installing new bulbs is the job of the warranty department and the old ladder belonged to marketing so they couldn’t use it anyway.
A fourth to realize that the bulb wasn’t actually burned out in the first place… the power was turned off because Accounts Payable was ordered to not pay the bills for 92 days in an effort to show more cash on hand at the end of the third quarter.
37 consultants to write “The Definitive Memorandum on the Exchange of Incandescent Lighting Materials” which pretty much regurgetated what everyone below an unclassified level already knew but leadership never bothered to ask about.
2 government relations employees to explain to Carl Levin that GM may not be able to turn the light back on without government help but that “we’re really on track to keep them after some short-term assistance.”
One CEO on the way to Bay Harbor in the corporate jet reading the report by the marketing VP about the successful bulb exchange.
“This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief. I need your continued help in talking to Congress. There are three things you need to ask your congressional delegation for:
· First, ask the government officials to approve a new $25 billion loan package to help us deal with our current liquidity crisis beg for cash along with us.
· Second, while the rules for the distinctly separate and already approved $25 billion loan package for investments in technology and enhanced fuel efficiency have been issued, we’d like to see that program move as fast as possible, so we need to encourage the government to minimize red tape and act on loan applications as quickly as they can don’t wait — start begging today.
· Third, the automotive industry needs some additional government support to stimulate retail sales, like making interest on car loans tax deductible, etc. keep begging no matter how much loot we get.“
I, for one, did follow Mr. LaNeve’s request and contacted my Congressional representatives about the proposed bailout of the auto industry. However, I don’t think he’d agree with what I told them.
So what the hell does the $25b DOE “loan” have to do with dealer revenue? The DOE funds are earmarked for plant upgrades for energy efficient vehicles. How does that help get money to the dealers by December? It doesn’t, unless GM is saying they plan to break the rules and use those funds for other things.
I kind of miss when GM made cars I lusted after, in my heart.
“Good selling”. LOL!!!
If I were a GM dealer, I’d close my doors for a week and hope my comrades do the same. Remind the GM brass where they would be without the dealers.
Conslaw: With two complete brands rather than 7 half-ass brands?
They are really doing the darnedest the screw everyone on their way out.
Oh please. The company is losing money at a record pace. You folks are acting like they’re a bunch of scrooges hoarding the ‘dealer’ wealth.
Truth is the management team is five years overdue for a replacement. You also have pension and medical costs that go as far away from the realm of reality as Mercury is from Pluto. Five divisions at the least that need to be shut down. State laws that force GM to keep a bloated money draining dealer network. A ‘holier than thou’ pseudo-intellectual media that gladly pisses on anything Detroit makes as either inferior or retro. And finally you got a bunch of union leaders who don’t understand the simple mathematics of what’s taking place and what they’re truly up against.
It will take government intervention to just give GM the legal right to confront these issues without losing the majority of their customer base… which will most certainly happen with a Chapter 11 filing.
As far as this ‘well they’re companies and they shouldn’t be subsidized’ line of reasoning. Let me give a few names. Nissan, VW, Mitsubishi, Toyota, Mazda, Kia, Hyundai, Renault and even GM already get subsidized by governments and will continue to have that support (with money, laws, and even government personnel) because they employ a massive number of highly intelligent people who happen to sell the most vital product of the modern age.
Perhaps we need to break up these companies and protect eight to ten automakers from outside competition as the Japanese did for decades on end.
Perhaps we need to effectively shut our markets entirely off from any real foreign presence as the Koreans already do.
Perhaps we may even need to employ ridiculous safety and emission standards, give more power to the unions, subsidize any engine technology that isn’t gas, and foot the bill for health care costs as the Europeans do.
Or maybe perhaps we can go for the MBA jugular and ship our entire industry to China while the executives, and to a far lesser extent the shareholders and consumers, enjoy the benefits of a cutthroat low wage world. Of course your kids won’t have the same opportunities and will most certainly inherit your debts. But of course there are oh so many ways to rationalize offshoring an entire industry until you realize that there are no highly skilled jobs that will come your way. Ever.
Except perhaps advertising and automotive journalism.
Long story short. If you want the Big 3 to win you have to give them the freedom and means to do it. Right now they’re in a cost bleeding vice that not even the great Houdini could find his way out of.
Being an asshole never solved any problem in this world. Trust me. I should know.
Isn’t 300mil about what RIR pulls down a week?
I don’t favor the “take it from the big boys” arguement, but a little volantary gift from Ricky Claus would probably help the attitude in the trenchs.
Shoot, he’s asking them to wait two weeks.
Just a thought.
Bunter
I’m with Steve Lang on this – If overseas automakers hadn’t received protectionist measures in their native markets, plus generous export and development subsidies – they’d be in the shoes as the Detroit 3. Luckily for them we’ve allowed them to play in one of the most open automobile markets in the world and a very large one at that.
Bunter – the golden parachute boys who are more comfortable with moving money around in circles, need to get off their collective butts and get some innovative products that will sell on the assembly line floor. A give back on executive salaries while tens of thousands face layoff would be a nice starting gesture.
Contrary to some opinions, the UAW isn’t the sole problem. They haven’t helped, but their power is declining and their slice of the pie is definitely shrinking.
The inconvenient truth is our economy is in a mess for reasons that go beyond the Detroit 3. In fact, it looks like we’re bringing down the rest of the planet with us.
If the economy continues to slide beyond next summer, both you and I will be guessing where our next pay check will come from. It is that serious.
I may be in the minority – but I’m willing to give our native companies a fighting shot at surviving the most severe economic downturn in my life time. The alternative is to do nothing, if you think that overseas transplants are the answer to our manufacturing needs.
In reply to the topic – My guess is that the auto industry won’t get a dime out of this lame duck session of Congress.
Isn’t it also true that of the two $25B amounts being offered (one approved, one sought) the former is to upgrade plants and is qualified for certain plants that includes GM, Ford, Chrysler, and (I believe) some Honda or Toyota plants that meet the requirement. While the latter is a new request from one (GM) or more domestic manufacturers.
The second $25B can’t be solely for GM, though, right? Do we know what share of each amount GM would be seeking? Is there any indication which other manufacturers will seek funds from the first pool? Do we have any indication which auto makers will seek funds from the second pool?
This is a constantly shifting story, and I think it bears more investigation to get to the truth.