Do we really want to have this debate again? You know, the one where Detroit’s defenders claim that federal “loans” are loans not bailout bucks? I guess so. After all, the MSM has been all about Ford being the only domestic not to receive a federal bailout. And now we hear that The Blue Oval Boys have landed a $5.9 billion dollar retooling loan from the Department of Energy. As expected. “Our business plan assumed about the amount we got,” FoMoCo CEO Alan Mulally told Reuters. “It’s very consistent with our plan.” Automotive News [sub] reports that Ford. Wants. More.
Update: According to the speaker of the influential CDU Economics Council, there will be no decision about the future of Opel before the 27 September national elections. “Nothing will be decided before the elections, because nobody in the government wants to lose face because of this,” a council member said to Automobilwoche [sub]. The Opel Trustee figures that the latest date for a final, signed contract is mid September. If nothing is signed by then, the government money has run out and Opel is bankrupt.
The GM/Opel/Magna/Sberbank/GAZ group grope is in trouble. The writings are on all walls.
Opel is hemorrhaging more than €5 million per day, the Westdeutsche Allgemeine has learned. Opel spokesfolk said, it’s “only” €2.8 million. By mid September, the €1.5 billion bridge loan, underwritten by the German government, will be used up. There won’t be more money—that has been made as clear as can be. Time and money are running out. Why is Opel burning so much cash despite brisk sales? The Opel Tech Center has 7000 highly paid engineers. They work(ed) for all of GM. Bankrupt GM stopped all payments.
In the meantime, talks between GM and Magna hit one snag after another. Read More >
I started TTAC’s General Motors Death Watch in the summer of ’05, after the automaker pulled tens of millions of dollars in advertising from the LA Times. GM was pissed at a Dan Neil Pontiac review that called for an executive cull. While I’d been predicting bankruptcy for The General long before that point, the automaker’s bully-boy tactics against this country’s finest carmudgeon was the final straw. GM was free to pull its ads. And I was free to start the Death Watch. The rest, as they say, is history. Only maybe not so fast.
This interview raises some important questions. Is it me or does Alex Taylor sound like Sgt. Friday? What editor thought he could get away with using B-roll of a union worker with a sign referring to a “Golden Shower?” What kind of company has a CEO who can go his entire life without anyone daring to correct his pronunciation of “hubris?” Why would the CEO of GM point out out that “every one” of the company’s surviving 34 nameplates has to be a winner? I mean, what are the odds? And what’s with this: “We’ve lost a part of the population but [sotto voce] it’s not that large.” No complacency here. No, sir.
We’ve said it before: both Chrysler and GM have been using GMAC as their “bag man”: withdrawing credit from dealers to kill them without messy political blowback. This despite the Small Business Administration’s new federal loan guarantee program for beleaguered car dealers. The Wall Street Journalreports that where the feds giveth, GMAC is still taking away. “GMAC LLC is suspending wholesale financing for certain Chrysler Group LLC dealers it considers to be too risky to lend to, GMAC and Chrysler confirmed Wednesday. The move could ultimately push more Chrysler dealers out of business and hurt the company’s ability to sell vehicles.” That last bit’s pretty funny—providing you’re not a Chrysler dealer. Anyway, the WSJ runs the numbers or at least tries . . .
Canada’s Derosiers Automotive Consultants had a think about the future of the North American new car market. You can read the results of their analysis here, for no money down, no money per month, for no months. To make a pretty pdf short, the Detroit Three still have “an inferior business model from most perspectives.” In fact, “[i]t is a huge leap of faith to believe that their strategy will work given historical precedent.” Uh-oh. “Unless the D-3 can turn around their market share losses then no amount of Government money can save all three of these companies. Best case is we end up with two Detroit based companies instead of three and there is a very real scenario where we end up with only one.” In other words, this could well be the most expensive game of musical chairs the Canadian and US government has ever played. OK, not ever. But in a long time.
The “hands off” Presidential Task Force on Automobiles has chosen Ed Whitacre Jr., formerly of Southwestern Bell, to become New GM’s New Chairman of the Board. The appointment is still go, despite Whitacre’s admission that “I know nothing about cars.” Anyone fearing for Whitacre’s ongoing ignorance of all things automotive can breathe a sigh of relief today, as the BOD jeffe told the San Antonio Business Journal that he has no intention of re-locating to Motown to oversee the men and women spending tens of billions of U.S. tax dollars to “reinvent” GM. “This is my city,” Whitacre told the local press. “I’m not moving.”
One of our Best and Brightest forwarded GM’s letter to the white collar workers targeted for elimination (by October), along with a pdf of the Retirement Package [download here]:
Dear U.S. Classified Salaried Employees:
On June 1, Fritz Henderson shared the company’s plans to reduce an additional 4,000 salaried employees from our U.S. workforce. This news was particularly difficult to hear, considering we had just undergone a significant staffing reduction in May. We can assure you that these organizational restructuring and reduction decisions were made after serious deliberation and necessitated by the unprecedented business realities facing GM.
The court battle over the formation of Treasury-funded Vehicle Acquisition Holdings, LLC (a.k.a. New GM) will soon be joined. On June 30, Federal Bankruptcy Judge Robert Gerber will begin to assess the range of challenges to the government’s plans. Bloomberg reveals the quadruple threat facing the General Motors “reinvention.”
What do you do if you’re an overlarge organization fighting a losing battle for market share in a down market, with high fixed costs and a stultified bureaucracy, facing more nimble competitors? If you’re Time magazine, you interview Chrysler-controlling Fiat CEO Sergio Marchionne. And if you’re Sergio facing a similar situation for Chrysler, you tell the troops that an Apple a day keeps the Sebrings away. “Since he took over as chief executive of Italy’s Fiat in 2004, the chain-smoking Canadian-Italian has used Apple as a model, focusing on the way Steve Jobs transformed it from an also-ran computer company into a global icon of cool. He encourages Fiat managers to take a close look at Apple’s branding prowess and even asks them to benchmark their activities against the company. His biggest success at Fiat is the 500 — a tiny, very cool 21st century version of a 52-year-old Italian icon once driven by movie stars such as Marcello Mastroianni and Sophia Loren — which Marchionne calls ‘our iPod.'”
The Freep reports that Chrysler will cancel a planned two-week furlough for workers this summer. “The company found savings in the [bankruptcy] process that rendered the furloughs unnecessary,” say Chrysler spokesfolks. “It’s another reason why it’s good news to have bankruptcy in our rear-view mirror.” The canceled furlough will cost $32 million. But is saving money during bankruptcy a reason to not save money outside of bankruptcy? Or is there still no sense of urgency to pay back those taxpayer “loans”?
When the Presidential Task Force on Automobiles (PTFOA) fired GM CEO Rick Wagoner, it should have ended any debate whether or not the Obama Administration was in complete control of the soon-to-be-nationalized American automaker. And yet the president and his minions continue to assert that the PTFOA’s ongoing interventions within GM’s administration jibe with their preposterous proclamations about a “hands-off” non-managment, management approach. Although the PTFOA left themselves a supertanker-sized loophole—we’ll only mess with “macro” decisions about GM’s corporate governance—evidence mounts that the 25-member government quango is, as the Brits would say, well in there mate. The latest proof of life arrives via our good friends at Autoline AfterHours. On John McElroy’s vidcast, GM’s VP of sales, service and marketing for North America offered fresh insight into the joys of federal ownership.
TTAC reader and marketing consultant John Charles of Stockholm, Sweden, was gracious enough to send us some more info on investor Mark Bishop, the man who would be king of Saab.
Hi, I read your very interesting piece on Mark Bishop and SAAB. However you (unintentionally, I imagine) missed out a few details. I have found out that Bishop was involved as President of the rather shady Quick Loan Funding. It is understandable that Bishop chooses not to mention his time at QLF in his CV.
Hmmm. One wonders about the veracity of LaNeve’s excuse for allowing “nearly” 60 dealers to avoid termination. Who created the “incorrect or inaccurately reported dealership financial data” upon which their second lease on life was—allegedly—based? Given that dealers fighting for their survival wouldn’t under-report their financial data, common sense suggestd GM’s auditors are responsible for the, dare I say it, mistake. So, how did GM screw it up for “nearly” 60 dealers? And surely that boner throws doubt on the rest of the dealer appraisals (view criteria here). Fuel for the fire for H.R. 2743. In short, GM is still run by the Gang That Couldn’t Shoot Straight. Make the jump for official dealer com from Dr. Death. [Thanks to you-know-who-you-are for the email.]
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