GM Provides Global Business Update at Auto Analyst Event
Mark LaNeve, Vice President, GM North American Vehicle Sales, Service and Marketing
01/15/2009
To All General Motors Dealers:
General Motors provided an update to financial analysts today on the company’s restructuring efforts included in the viability plan that was submitted to the federal government last month. Rick Wagoner and Fritz Henderson told the group that GM is on track and making progress toward meeting its goals. Given the ongoing weakness in the automotive markets, they also explained that GM has adopted a more conservative U.S. industry volume assumption of 10.5 million units for 2009. The original baseline projections for 2009 were for a 12 million unit U.S. market. Rick and Fritz also said that we would continue to refine the plan in response to changing market conditions.
Regarding General Motors’ brands and dealers, the plans have not changed from the original submission. Hummer and Saab are under external review, while Saturn is being reviewed internally by a team that includes dealer representatives via the Franchise Operating Team. Product discussion in the plan focuses primarily on GM’s core brands: Chevrolet, Cadillac, Buick and GMC, with Pontiac as a specialty, focused brand. Also unchanged from the original submission is the projection that GM will have 4,700 dealers in the year 2012. As we have in the past, we will continue to work together with you personally as we move through this difficult, yet necessary dealer network re-sizing. Today’s update also provided the analysts information on the progress being made by GMAC and its ability to return to sub-vented financing.
While the update from Rick and Fritz on the GM’s progress is encouraging, we still have a lot of work to do. As we refine and implement GM’s viability plan, we plan to be as transparent with you as possible regarding our progress and will continue to keep you updated.
As these plans continue to be refined, we can’t forget that ultimately, it is the customer who will bring back this company. That’s why our dealers will play a key role throughout this turn-around. We are planning for the company’s long-term viability, and you can help us all get there by doing what you do best every day: sell great cars, trucks and crossovers and continue to satisfy customers.
Thank you for your support.
Attached you will find the General Motors news release from today’s analyst meeting.
Mark LaNeve
Vice President
GM North American Vehicle Sales, Service and Marketing
____________________________________________________
GM Press Release:
GM Provides Global Business Update at Auto Analyst Event
o Company on track toward meeting viability plan targets
o Liquidity planning industry volume assumptions lowered in face of economic uncertainty
DETROIT – General Motors today provided an update on company restructuring efforts included in the viability plan submitted to the federal government last month, and announced more conservative industry volume planning assumptions to ensure the viability plan is successful even in the most challenging of markets.
The updates were part of a comprehensive review of GM’s global business by Rick Wagoner, chairman and CEO; Fritz Henderson, president and COO; and Ray Young, executive vice president and CFO; at the Deutsche Bank 2009 Auto Analysts Conference in Detroit.
Their remarks focused on the global financial, operational and product portfolio actions GM is taking to restructure its business for greater competitiveness and long-term viability.
“We are on track to accomplish the requirements of the Viability Plan,” Wagoner stated. “We know we have a lot of work in front of us, but we are already working closely with many key stakeholders. The GM team is 100 percent dedicated to achieving the goals of our plan.”
In light of the ongoing uncertainty of global market conditions, GM is adopting more conservative industry volume assumptions than those presented to Congress. For liquidity and viability planning purposes, GM will assume 2009 U.S. total vehicle sales of 10.5 million units and global sales of 57.5 million units. The initial plan included a downside scenario of 10.5 million U.S. sales in 2009, with a baseline scenario of 12 million sales. GM also revised downwards its assessment of global industry volume assumptions for 2010-2012 for liquidity planning purposes.
GM said that lowering the assumptions on U.S. and global industry volumes will drive tougher operational decisions that will result in a more robust viability plan, one that better positions the company for long-term growth as the auto market recovers. GM said it would continue to refine its plan in response to changing market conditions.
GM’s detailed Restructuring Plan for Long-Term Viability was presented to Congress on December 2, 2008, and it formed the basis for the loan agreement with the U.S. Treasury signed on December 19. An updated plan is due to the Presidential designee on February 17, 2009.
Rick Wagoner and Fritz Henderson told the group that GM is on track and making progress toward meeting its goals.
When you never state exactly what those goals are, you will always meet them.
I had to go find an example of what “sub-vented” meant:
For example, imagine that you were going to lease a car that is worth $20,000 and has a residual value of $5,000 after four years. Over the four-year period the car is expected to depreciate by $15,000, which would make your monthly payments $312.50 ($15,000/48) – we assume no cost of borrowing for simplicity sake. The car manufacturer could offer a subvented lease on the car by increasing the residual value to $7,500, which would decrease your monthly payment to $260.42 ($12,500/48).
Wow, it’s like making money!
Today’s update also provided the analysts information on the progress being made by GMAC and its ability to return to sub-vented financing.
My God, there’s a HUGE opportunity for a Freudian typo there.
WTF is “sub-vented”????
EDIT: JG’s post wasn’t there when I started reading the page. (GMAC can GUARANTEE you end up-side-down!)
Call me when they get to 9.5M 2009 gross sales or less.
Keep increasing the residual value until the numbers finally pencil (sub-vented financing)??? Ok, that works for me. Call me when the ‘vette of my choice residual is 75% of the leased value after 4 years.
Rick and Fritz, I take back all those bad things I’ve thought and said this past 5 years or so.
Also unchanged from the original submission is the projection that GM will have 4,700 dealers in the year 2012.
(Ed: But if more of you get swept away with the tide… all the better. It keeps our hands [legally] clean.)
Gosh, that’s a reassuring report. GM is “on track” and “adopting more conservative industry volume assumptions.” It is “working closely with many key stakeholders” and “conducting reviews.” GM will “continue to refine its plan” because it is “100 percent dedicated.”
Actual cost-saving or revenue-growing achievements? Don’t ask. But we’re doing oodles of planning and having meetings night and day!
To paraphrase General Electric’s slogan, “Process is our only product.”
“Hummer and Saab are under external review, while Saturn is being reviewed…”
Seems familiar, doesn’t it? I know where we saw this before ….
Greg: But Delta’s already on probation.
Dean Wormer: They are? Well, as of this moment, they’re on DOUBLE SECRET PROBATION!
@ JG :
“I had to go find an example of what “sub-vented” meant:
For example, imagine that you were going to lease a car that is worth $20,000 and has a residual value of $5,000 after four years. Over the four-year period the car is expected to depreciate by $15,000, which would make your monthly payments $312.50 ($15,000/48) – we assume no cost of borrowing for simplicity sake. The car manufacturer could offer a subvented lease on the car by increasing the residual value to $7,500, which would decrease your monthly payment to $260.42 ($12,500/48).
Wow, it’s like making money!”
So to continue your example but changing the residual value to a more reasonable inflated residual value of 56%, GMAC (and thus our taxdollars) receives about $6272+ $440 interest + $9600 actual residual value = $16312 for a $20K car with at most $1K profit margin. You’re right, its like making money…at the federal reserve.
“GM’s core brands: Chevrolet, Cadillac, Buick and GMC, with Pontiac as a specialty, focused brand.”
They are already backsliding. A couple of days ago Pontiac was not on the list. And what do they mean specialty focused? The unique products Pontiac has are the G* and the Toyota Matrix.
And for G–‘s sake, why GMC? It re-badges and competes with Chevrolet. What is the d— point.
I smiled when I got to the folksy, “Rick and Fritz also said….”.
Just two good old boys, never meanin’ no harm…Fightin’ the system like two modern-day Robin Hoods.
“Just two good old boys, never meanin’ no harm…Fightin’ the system like two modern-day Robin Hoods”
…more like the Dukes of Hazards!
The larger of the two local GM dealerships is broke and closing later this month. Everything must go.
The owner has been in the vehicle sales business here since I was a boy (30+ years) and has owned Ford and Toyota dealerships in the past. Rumor is he’s now flat broke, and GM is refusing to pay the rebates and incentives promised.
“sell great cars, trucks and crossovers and continue to satisfy customers.”
I guess the great cars, trucks and crossovers could come from the dealers’ used car lots, but I was unaware that they had started to satisfy their customers.
Did I miss something?
“Rick and Fritz”…..
how ’bout…..”Frick and Fratz”
GM must know that a strucutured bankrupcy is in the works. They can’t get from where they are without the courts. The unions will never voluntarily give up and the local franchise laws will make it too expensive to trash entire brands as they once did with olds. If all of their other debt goes by by with the bankrupcy then I guess we the peoople own GM. Congress can then give tax credits if you buy a new “yankee doodle” car from USGM instead of some foreign “evil empire” car.