GM has already announced that it’s trying to come up with no less than $5b in savings by the end of the calendar year. To assist these efforts, GM has put Jones Lang LaSalle in charge of 200m Euros worth of sell-offs and leasebacks. Together with its attempt to sell or lease its Renaissance Center headquarters, GM’s fire sale should bring in some $750m. Property Week reports that JLL’s portion of the sell-off will include non-manufacturing sites in Europe and the UK. On their selling block will be Saab’s properties in Gothenberg and Trollhatten, while Vauxhall’s Luton headquarters, GM’s headquarters in Dublin and other Chevy, GM, and Opel sites are said to be on the sale list. Including factories, GM is estimated to own some $43b in real estate around the globe.
Posts By: Edward Niedermeyer
Infowars has a story from the Latin American Herald Tribune that suggests GM could send bailout money to Brazil. The story quotes GM Brazil-Mercosur President Jaime Ardila as saying GM plans to invest $1 billion worth of American tax dollars in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market. “It wouldn’t be logical to withdraw the investment from where we’re growing, and our goal is to protect investments in emerging markets,” says Ardila. The money would be spent on a “complete the renovation of the line of products up to 2012.” This news comes on the heels of an announced $3.5b automaker stimulus by Brazil’s federal and Sao Paolo state governments. Of course, the whole plan banks on Congress approving an ammendment to the already-approved $25b retooling loan program. The Detroit CEOs have until December 2 to present congress with their plans for the $25b, and if those plans are approved Congress could remove all existing “strings” on the loan program. These strings currently require the funds to be spent on retooling American plants that are over 25 years old to build more fuel-efficient vehicles. So the question now is, will GM lie to congress and tell them that they won’t send taxpayer money to Brazil, or have they already lied to their Brazilian division? Or will congress simply look the other way? So many possibilities…
Maximum Bob Lutz was not invited to grovel testify before congress this week, for all of the obvious reasons. So Lutz earned his champagne and cigars the honest way this week: driving cars and blogging about it at Fastlane. Of course, that doesn’t mean Lutz doesn’t have an opinion about the bailout. He’s just strictly forbidden from saying anything besides “I am not going to comment here about any government loans or hearings or GM’s financial situation — just like I wouldn’t engage you in conversation about it if I ran into you in the produce aisle.” Wheh. There goes one recurring nightmare. Besides, as Lutz points out “we have other places online for that conversation, such as gmfactsandfiction.com.” And if that’s not Lutzy enough for you, just wait until he starts talking about the Volt he’s been driving!
In their best-case scenario, Ford and GM would already be waiting anxiously by the mailbox for their federal bailout checks. Instead, it’s back to the drawing board to try to come up with enough cash to survive until December 8. Plus they still have to convince Congress that they have some kind of plan to survive beyond waiting anxiously by said mailbox. Accordingly, GM and Ford are announcing another round of cut-and-shuffle. Ford will close its Chicago Taurus/TaurusX/Sable/MKS plant for the weeks of Dec. 15 and 22, and its Flat Rock, MI Mustang/Mazda6 plant for the week of Dec. 22. According to Automotive News [sub], “the only Ford assembly operations scheduled to run the week of Dec. 22 are a van plant in Avon Lake, Ohio, an F-150 pickup production line in Kansas City, Mo. and an F-150 plant in Dearborn, Mich.” Meanwhile, GM will close the Impala plant in Oshawa, Ont. and the Lordstown, OH Cobalt/G5 plant from Jan. 12 to Jan. 20. Automotive News [sub] reports that GM will also shut down its Orion Township, MI Malibu/G6 plant from Jan. 5 to Jan. 12. GM’s Kansas City, KS Aura/LaCrosse plant will be closed Dec. 23-Jan. 20, and a planned week of downtime there has been moved up to Jan. 12 from Jan. 26. The permanent closure of GM’s Oshawa, Ont. truck plant has also been moved up, from July to May 14.
“Built on a platform with a wheelbase of 100.4in, an overall length of 161.6in, an overall width of 70.3in and overall height of 63.4in, the Soul offers enough space for five adults with some space left for storage. The car rides on a fully independent front and twist-beam rear suspension system, with front MacPherson struts and coil springs. In the rear, the Soul suspension is sub-frame-mounted with a transverse torsion beam axle with trailing arms. To maximize space, the rear anti-roll stabilizer bar is mounted inside the torsion beam. The engine lineup will consist of a 120hp 1.6L unit and a 140hp 2.0L option. Fuel economy for both engines is estimated at 30mpg.”
GM has become the first Detroit firm to acknowledge the toxic fallout from what’s fast becoming known as Corporate Jet-Gate. Reuters (via Yahoo News) reports that GM will send back two of its leased corporate jets, after attracting widespread criticism for jetting to DC with begging bowls in hand. Actually, according to GM spokesfolks, GM decided to return the aircraft because of a “really aggressive cutback in travel.” Seriously? “There is a perception issue,” says GM’s Tom Wilkinson of CEO Rick Wagoner’s travel to Washington on a private jet. “We need to be very sensitive to that going forward.” What’s next? Alan Mulally’s Lexus?
We’ve been harping on the UAW for not making concessions either at this week’s congressional testimony or subsequent press conferences. After all, how is congress supposed to take your endorsement of a $25b bailout seriously when you are part of the problem and yet refuse to give up a single iota? Well, by passing the buck (for now), Congress has apparently convinced Detroit that it has to offer something, and the union boys are starting to understand that they have to be part of the solution. At least for PR purposes. The UAW’s controversial job bank program has been widely floated as a possible concession, and apparently Gettelfinger wants folks to know that GM isn’t paying his union brothers $77/hr to do nothing. “It’s not gone yet but it’s almost gone,” Gettelfinger tells the Detroit News. “We’re on the verge of eliminating that provision.” So, why does the DetN lede their story with “reports that the United Auto Workers union is in talks to dismantle the controversial jobs bank program are premature, according to people familiar with the situation”? (Read More…)
CNN Money Editor-at-Large Paul R Monica reckons GM is so Dow, I mean down, on its luck that it should be delisted from the Dow Jones Industrial Average. By Monica’s math, GM has a market cap of less than $2 billion, and its stock price has been treading water near $3. “Normally, when a blue-chip company sinks to such depths of despair,” writes Monica, “it gets tossed from the S&P 500. But not only is GM still a member of that index, it remains a component of the granddaddy of market barometers: the venerable Dow Jones Industrial average.” He reveals that Dow executive director John Prestbo is keeping a close eye on the General and any sign of a bankruptcy in the offing. “A company operating under bankruptcy protection is not on a level playing field,” says Prestbo. “What we try to do is make sure every company in the Dow is operating under the same kind of marketplace.”
“It’s gone,” said (an anonymous “high ranking Nissan executive”) when asked if launch control would return in 2010. “We just don’t want to deal with the warranty nightmare anymore. It’ll make the 2009 GT-R really special. It’ll be the only R35 with launch control.”
This week’s round of congressional testimony has forced our elected officials take sides on the auto industry, a topic that typically doesn’t often factor too heavily into national level grandstanding politicking. Detroit News Scribe Bryce G. Hoffman figures that the divisive issue of aid to automakers is creating a house divided… along the old Mason-Dixon line. The split is based on another legislative battle that hasn’t visited the corridors of power as often in recent years: anti-union “at will” employment laws. These laws are popular in many southern states which have used the lack of labor organization to attract transplant auto factories which have bring hundreds of jobs– and an ambivalence to Detroit’s self-made hell– to their sunny shores. And like much of Detroit’s newspapers’ coverage, Hoffman is taking his lead from UAW boss Ron Gettelfinger who blasted Alabama’s congressional delegation at a recent press conference. “Alabama paid $175,000 per employee to create those jobs there,” he said. “It just seems odd to us that we can help the financial institutions in this country — that we can offer incentives to our competitors to come here and compete against us — but at the same time we’re willing to walk away from an industry that is the backbone of our economy.” (Read More…)
Bloomberg reports that Obama’s transition team is exploring the possibility of prepackaged bankruptcies as a solution to the dire situation the Detroit Three find themselves in. According to an anonymous source, Obama’s team has already contacted at least one bankruptcy- law firm to say that Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so-called prepack. And as the worm turns on the idea of a bridge loan, a prepackaged bankruptcy seems to be about where the middle ground shakes out to. So is Obama leading to the middle? Not openly, at least not yet. “That’s not true,” a spokesman for Obama’s transition team tells Automotive News [sub] of the Bloomberg report. So then is the story that Obama’s not exploring all the options? Or he is, but doesn’t want it publicized? From the sound of things at recent congressional beggary testimony, none of the D3 are willing to consider the possibility of bankruptcy of any kind. But if the their turnaround plans, due to Congress by December 2, aren’t convincing enough there will be bankruptcies. And not neat, pretty prepacks. Time to face the strange?
In a press conference today, congressional leadership announced that it would not shut the door on a possible automaker bailout, giving the Detroit 3 until December 2 to come up with a plan to restructure their businesses. Which means the three stooges could be back in DC for an encore performance of their hit comedy routine “$25b, Please.” “The best way to proceed is to give them another opportunity to make their case, to the Congress and the American people,” says Senate Majority Leader Harry Reid (D-NV). “The key here is accountability and viability. That’s what we’re seeking. That’s not too much to ask.” Or is it? The compromise that was reached earlier today was nixed by Reid and Speaker of the House Nancy Pelosi (D-CA), not because it lacked accountability, but because it would likely have stripped efficiency retooling requirements from the already-appropriated $25b loan fund. So, instead Pelosi and Reid assigned an essay to Detroit’s CEOs entitled “how I would spend $25b to turn my company around.” The due date is December 2, and they must be typed and double-spaced. Don’t forget to show your work.
Liberal bomb-thrower and “Roger & Me” documentarian Michael Moore described his “mixed feelings” about a proposed Detroit bailout in a CNN interview with Larry King, accusing automakers of ignoring workers and customers. The Detroit News was apparently more than a little surprised by the revelation, kicking off its coverage of the interview with its most wounded tone, saying “If you thought a high-profile, avowed fan of the Michigan autoworker would leap at the chance to support the Big Three’s clamor for a Washington bailout, think again.” Of course, if you aren’t emotionaly invested in a bailout, quotes like “I don’t think these companies, with these management people, should be given a dime, because that’s just going to be money going up in smoke or off to other countries,” shouldn’t be too surprising. Actually, Moore’s comments aren’t particularly interesting or substantive, thanks in large part to King’s softball, ego-boosting questions. Oh yeah, and the fact that Moore knows more about courting media attention than the auto industry. We just really wanted to post another picture of Halle.
The Freep reports that Fitch is eying another credit downgrade for Chrysler LLC. Why? Where to begin? Chrysler CEO Bob Nardelli could have been too forthcoming in his House Financial Services Committee testimony. You know, the parts about being in “a very fragile position,” having only $6b, and having already drawn up bankruptcy plans. Or maybe it’s the JP Morgan report released yesterday that says “Proposed Chrysler assistance is slightly outsized in relation to its market position. It was suggested these amounts could compensate for the automakers’ likely FY2009 cash burns.” Or maybe it’s just based on the generally negative reaction to Detroit’s jet-by testimony. In any case, Fitch says that without “material federal assistance in the short term” the agency would review the current rating for potential downgrading to CC — which “indicates that default is probable” — from its current CCC rating. Oh yeah, and there’s also this little knife-twisting sentence: “the provision of federal assistance may not preclude a downgrade.” In fact, Fitch thinks some form of assistance is “probable.” After all, “Chrysler is dependent on the financial capacity and willingness of its suppliers to continue extending trade credit, as the company does not have sufficient resources to finance ongoing operations in the event that trade credit is curtailed.” Ouch.
Having stretched itself a bit thin buying up British luxury icons Jaguar and Land Rover, Tata Motors is working with what it has to get the revenue flowing. For those of you who haven’t checked out Jaguar’s portfolio recently, that means the XF. Specifically, Autoexpress reports that Tata has approved coupe and convertible versions of the sleek sedan for production. The coupe will target Audi’s A5, with the tight greenhouse and high-waistlined styling that large coupe buyers have come to expect. And with a price target set under the XF sedan’s $50k msrp, it will also be the ground floor for XF ownership. The convertible should top the XF range, but it won’t have the usual astronomical convertible premium. Well, at least not enough to bump up against the XK’s $80k sticker. The drop-top will sport a traditional folding cloth roof, and a shortened wheelbase for improved body rigidity. Engine choices will be unchanged, although the XFR’s supercharged 5.0 V8 could become an option when the coupe and convertible versions drop in 2010. Autoexpress is also reporting on the long-rumored F-type sportscar, supposedly aimed at Porsche’s Boxster/Cayman duo. If things go well, the F-type could be coming in 2012 based on a cut-down version of the next-generation XJ all-aluminum platform and sporting V8 power. Sounds good, but we’re not exactly holding our breath for this. Let’s see how the XF-stretching goes first.
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