GM filed for bankruptcy today. From now on, TTAC will chronicle GM’s fortunes under the series name bestowed upon post-C11 Chrysler: Zombie Watch. For there’s no doubt in my mind that GM will not recover from its federal stewardship to emerge, as Dan Neil puts it, “smaller, leaner, smarter and hungrier.” Sure, I’ll spot Dan smaller (obviously). Leaner? An efficient government-funded company is an oxymoron to rival military intelligence. Speaking of which, smarter? GM is as far from smart as Steven Hawking is from professional wresting. In fact, listening to GM CEO Fritz Henderson bleat to the press today, it struck me that the automaker is pulling a Mark Mothersbaugh: it’s de-evolving. Less obscurely, the company is actually getting stupider.
TTAC’s Google ranking on the whole GM bankruptcy deal has delivered unto us a few shout-outs from the MSM. Now that the C11 deed is done, public radio’s “The Takeaway” ’phoned this afternoon—to ask what they should ask GM marketing maven and dealer destroyer Mark LaNeve. Other than that, Al Jazeera. The Arab TV service called to arrange to interview about the collapse of the artist formerly known as the world’s largest automaker. I have mixed feelings about this. On one hand, I’m worried that the network might use my comments about GM’s epic fail, the federal government’s abandonment of free market principles and GM’s bleak future to fuel the fires of anti-Americanism. I am, believe it or not, a patriot. On the other hand, it is what it is. America’s greatest strength is our citizens’ freedom of speech. Of course, I would say that, wouldn’t I? What say you? Should I accept or decline this invitation to discuss the dark side of America’s corporate culture and centralized governance?
This from Fiat spokesfolks speaking with Automotive News [sub]. “The Fiat 500 — we see that, like the Mini[sic], as a sort of boutique car that we think we can sell in good numbers on the East and West coasts in the same way that Mini has been successful in the U.S.,” he tells AN. Interestingly though, the 500 will also be the only Fiat-badged vehicle in the new generation of Fiatsler products. But, says the Fiat source, “there is a misconception out there that Chrysler is going to build the Fiat Bravo, just stick a different badge on it. They will be Chrysler products. They will be specific to Chrysler. The vehicle architectures will be based on our stuff, and there will be some powertrains. The vehicles will be U.S. vehicles, designed for U.S. customers by a U.S. company.”
It might be a bad day for GM but it’s a much worse one for Toyota. Really. The days (really decades) of weak domestic manufacturers shooting themselves in the foot with bad design, poor assembly, and non-existent customer satisfaction in passenger cars are coming to an end. Toyota didn’t have to outrun the bear, it just had to stay ahead of GM, Ford, and Chrysler. Years of producing huge profits in North America hit the wall for Toyota in 2009, and they’re likely not to return. Ever. The game has now changed—and it’s not good for Toyota.
Our man on the ground has passed along a few documents from GM’s first day filings in bankruptcy court. And it seems that Fritz Henderson’s “Faster, Pussycat Kill! Kill! Kill!” strategy is for real. This looks to be one mother of a fast bankruptcy. As the sale agreement states, “Consumers must have confidence in GM’s products, i.e., that a new GM will exist in the future so that it can stand behind its products. It is in this context that the timing of the transformation of the assets, in connection with the approval of the sale, becomes critical.” The fact that GM is filing a sale agreement on its first day shows that speed is the critical factor. Even Chrysler’s relatively rapid sojourn in Chapter 11 didn’t start with a sale proposal on the first day. Debtor-In-Possession financing has been lined up as well (big hand for your US taxpayers), including an expected $950 million “wind-down” loan. The lawyer carve-out is also limited to $20 million. Hit the jump to find out how it all could go wrong (but probably won’t).
When I was a kid I wondered what it was like growing up in GM’s heyday of brilliant designs and well-defined brand delineations. I was a product of the 1980s, a time when emissions-choked Disco Iron and OPEC-induced minimalist boxes overshadowed yesteryear’s works of art. And what I learned from this generation is that General Motors is no stranger to progress, yet they never got over themselves to do the right thing.
Motor Trend has picked up on news that GM plans on building a B-segment replacement for its Aveo at a US-based, UAW plant. True to form, the new Fiesta competitor will not build on the rich legacy of goodwill accumulated by the Aveo. Probably because the Aveo was a repeat TTAC Ten Worst offender that built no such legacy of goodwill. And thus a new name is born: meet the Chevrolet Viva. MT figures Lake Orion, Michigan; Wilmington, Delaware; or Shreveport, Louisiana, could get the nod. “Building a Chevy Viva in a UAW plant will cost more than building the Aveo in South Korea,” figures MT. “It should be much more stylish and upmarket compared with the current Aveo. Chevy would have the advantage over Ford of a more ready supply of its competitor if the b-segment, fueled also by the coming Fiat 500 and a small Dodge, takes off in the next few years.” Count the assumptions there, folks. Meanwhile, with a Fiesta-Viva battle brewing, it seems that the automakers may be paying attention to the increases in Hispanic population in the US.
Dan Neil’s April 2005 review of the Pontiac G6 ended by calling for fresh blood at the top of GM. His comments triggered the GM advertising boycott that inspired TTAC’s General Motors Death Watch. As you might expect, the Pulitzer-prize winning carmudgeon has a few things to say about GM’s bankruptcy. But I bet you wouldn’t have guessed that GM’s most famous (and talented) nemesis would mark the occasion by suggesting that failing to fully support Al Gore’s bid for the U.S. presidency was the company’s ultimate undoing. No really. Writing in the LA Times, Neil claims that “by backing Gore, who had the support of organized labor, GM would have gained enormous goodwill with the United Auto Workers, goodwill it desperately needed as it attempted to downsize in the new century. Gore also argued for universal healthcare, a program that, had it become reality, might have relieved GM and the other domestic carmakers of that burden . . .
Advertising Age asked the same question of a brace of marketing experts, with predictably hilarious results. Early on, one Mad Man suggests revamping GM by introducing “a promotion that would transform General Motors into America’s first truly owner-owned company: The government issues anyone who purchases a new GM vehicle in the next 12 months 1,000 shares in General Motors stock. Then GM shareholders become people who are motivated to make both better products and a better company.” Seriously. As if the cure for GM’s woes were for marketing to wag the entire bankrupt dog. Anyway, check out the whole thing for a wild assortment of interesting ideas and pure, unadulterated crazy. Then riddle me this: how does GM take advantage of its new structure and piles of tax money while minimizing bailout backlash? Or does it? Can a government-owned firm be popular with the public under any circumstances?
TheDetroit Free Press is reporting that GM supplier Delphi will emerge from its three-year bankruptcy by selling itself to L.A.-based private equity firm Platinum Equity, for $3.6 billion. The bad news? Delphi will terminate its salaried pension plan, which covers 20,000 workers and retirees.The Pension Benefit Guaranty Corp will take over Delphi’s pensions, a move which will “cap the annual payments to $54,000 a year for salaried retirees age 65 years or older.” Delphi’s hourly retirement fund “will be addressed by GM.” Or not. Whichever.
“It’s not something we would bring up on our own, and we don’t know enough about the restructuring plan,” Toyota’s President Katsuaki Watanabe told a small group of reporters, one of them writing for Reuters. Ever so polite, they would never suggest something like that on their own. But . . . “If some talk about supporting GM comes up, we would like to consider it earnestly.” Fritz Henderson, two magic words: Tasukete kudasai. Help me, please.
One of our contacts at the sharp end reports that General Motors has suspended payments to its dealers for warranty costs until the federal bankruptcy court can approve said payouts. This despite the President’s assurance that Uncle Sam is backing-up customer claims, and a $361 million dollar payment to GM for same. Even though it’s clear that this is a bureaucratic snafu, it’s not the kind of bureaucratic SNAFU that GM can afford. I mean, you, as owner of 60 percent of the Government Motors.
What do you get for leaving Toyota and kneeling to Chrysler CEO Bob Nardelli? How does a townhouse in NYC at 178 East 64th Street sound to you? The New York Observer (“Nothing Sacred But The Truth”) reports that Jim Press decided to splurge on a $13.5 million four bedroom house in the Big Apple during his first month with the little C. The fringe benefit came complete with, “a grand marble foyer, an oak-floored living room with an antique wood-burning French fireplace, a full-floor master bedroom suite, a den with a wet bar and humidor, plus a finished basement with a gym and a 1,000-bottle, temperature-controlled wine cellar.” However now with the bankruptcy in full swing, Jimmy wants to unload his load. To the tune of $15.7 million. Oh wait! it’s NO LONGER FOR SALE. Sold! At 14,995,000! If only Press could have helped Chrysler make that kind of money.
President Obama has made his case for his government’s purchase of a restructured GM. We’re still working to get a full embed of the speech. Meanwhile, if you can forgo the rhetorical flourishes for a moment, check out Obama’s fact sheet on GM’s restructuring. The first subheading is “General Motors Restructuring: Shared Sacrifice.” Hit the jump for more details.
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