Unnamed sources tell the New York Times that the Treasury has agreed “in principle” to protect UAW pensions and retiree health care when Chrysler files for C11 “as soon as next week.” Protect with what? Fifty percent new Chrysler stock and 50 percent new Chrysler profits. Or, uh, more Treasury money. Fiat, say the sources, will “complete its alliance” with (i.e., pick the carcass of) Chrysler during bankruptcy. The only loose thread for the sources who “were not authorized to discuss the case,” is the bondholder brigade which recently turned down the Treasury’s haircut offer. Which leads one to believe that this revelation comes from someone negotiating opposite Chrysler’s bondholders (the Treasury) as a none-to-subtle bargaining gambit. Jump, or we file.

Read More >

The Globe and Mail reports that the Canadian government is negotiating (with whom?) to provide $6 billion in post-bankruptcy financing to Chrysler and GM. It gets worse/better. The six bil represents a fixed percentage of a larger post-bankruptcy fund, currently under construction over at the US Treasury. That would be 15 percent. Which puts the size of the US fund at $40 billion. A pittance, apparently. “The companies had initially proposed that governments lend or guarantee a staggering $125 billion in bridge or long-term loans, but the number was whittled down over months of difficult negotiations led largely by Treasury officials in Washington. In recent weeks, sources said, talks shifted to a plan for the governments to provide financing and guarantees for debtor-in-possession, or DIP, loans. These are used for day-to-day operations while companies restructure their debt under the protection of court supervision.”

Huh? Is there anyone inside or outside of GM who seriously believes that all hell will break loose on or around June first, the federal deadline for the zombie automaker’s “restructuring”? At this point, GM planning for a summer production shutdown is roughly akin to a customer readying a garage charge point for his/her plug-in hybrid gas – electric Chevy Volt. This is the company that’s expected to kill somewhere between two and six brands. And yet, there it is, via The Detroit News: “General Motors Corp. is expected to announce Friday it’s cutting about 170,000 vehicles from its planned production this year, closing factories for as long as nine weeks this summer as the automaker works to dramatically toughen its restructuring plan before a June 1 government deadline.” Shouldn’t that be “melodramatically toughen”? If you want real drama, wait ’til the Presidential Task Force on Automobiles pulls the plug (or doubles down) on Chrysler. Then we’ll see whether or not an ocean of blood on the carpet is enough to convince GM’s stakeholders to let Uncle Sam add their scalp to his collection. I mean, take a haircut.

Automotive News [AN, sub] reports that GM won’t even try to make a $1b debt payment due on June 1st. The non-move virtually guarantees that the firm will enter bankruptcy protection. GM CFO Ray Young says the General is “hoping” for a successful debt-for-equity exchange with its bondholders. If that effort somehow fails (as every other GM debt-for-equity swap has so far), Young says GM will enter bankruptcy protection to reduce its unsecured debt load. My, we’ve come a long way from the Voldemort days, no? Meanwhile, AN also reveals that an Italian union official claims the Fiat-Chrysler deal is “90 percent complete.” In fact (or theory), it could be signed as soon as this afternoon—an assertion that Fiat has flatly denied.

Read More >

You thought you’ve heard it all? Now hear this: “The private equity firm Cerberus plans an engagement in a possible new European Opel concern,” the Düsseldorf, Germany, newspaper Rheinische Post writes, citing unnamed German government sources. If true, doesn’t Cerberus know how to say “uncle?” If not true, isn’t crack illegal, even in laissez-smoke Germany? According to the newspaper’s deep throats, the hellhound is interested in a chow-down of 25 percent of an independent Opel. Fiat would be part of the party, last week’s denials notwithstanding. According to the Rheinische Post, the prospective gang bang has been organized by Roland Berger. Roland Berger, the German consulting company, is in the employ of GM Europe. Roland Berger, the owner, has been hired by the German government to advise them in sticky Opel matters. He’s also on the Board of Directors of Fiat, says Der Spiegel. Conflict of interest? Never heard of it.

The Washington Post reports that Chrysler Financial turned down $750 million worth of federal loans to avoid executive pay limits. Surprised? Me neither. And that’s not a whole lot of money in the grand scheme of things ($1.5 billion already “loaned” to Chrysler Financial, $6 billion for GMAC, $7 billion for Chrysler, $17.4 billion for GM, $5.5 billion for suppliers). Anyway, the WaPo sure has its dander up. “In forgoing the loan, Chrysler Financial opted to use more expensive financing from private banks, adding to the burdens of the already fragile automaker and its financing company . . . The company’s decision comes amid a firestorm on Capitol Hill and elsewhere over the lavish pay of executives at companies being aided by government money. The uproar has made companies skittish about taking federal aid and hindered the Obama administration’s effort to revive lending by replenishing the coffers of the nation’s financial firms.” Ah. OK. So, NOT accepting federal support is bad. Welcome to Bailout Nation. And its media dupes, like Autoblog, who called ChryCo execs’ explanation (after the jump) “disingenuous.” Folks, the LESS taxpayer-funding in the US auto industry, the better. Period.

Read More >

The preparations for GM’s June 1 Chapter 11 filing continue apace. The Financial Times reports that the ailing American automaker wants [to use federal funds] to pay hundreds of “key” suppliers while it’s dividing itself into Michael (good) and Garth (bad) GM. The FT’s experts reckon The General will get permission to do so to maintain its status as a going concern, as the artist formerly known as the world’s most profitable corporation enters the court’s protection. (No mention was made of political considerations, but they’re there too.) But no matter how you slice it, this is gonna be a cluster-you-know-what of epic proportions. To wit: “A judge could also force GM to prove that individual suppliers would stop operating or shipping goods if they were not paid, rather than letting GM use the money as it sees fit. The critical vendor legal doctrine can be ‘subject to abuse and unfairness’, one attorney said. Roughly two-thirds of GM’s suppliers also sell parts to Ford or Chrysler, and some may be able to absorb late or reduced payments. ‘It’s a game of chicken,’ one attorney said. ‘How do you figure out which suppliers really will stop supplying tomorrow and which won’t?'”

It’s a hard knock life for a truth-telling autoblogger. On one hand we have auto-related websites sitting in the happy-clappy pews—whose main contribution to veracity is reprinting PR releases for dissection and pointing us towards source material. On the other hand, we have Automotive News—who can’t ask a proper follow-up question even when the news source simply repeats the only word spoken in Mel Brooks’ “Silent Movie.” And then we have the big boys: The Wall Street Journal, New York Times and Bloomberg. Distressingly, these behemoths have shown a remarkable willingness to cite unnamed sources as the basis for their reports on the Motown Meltdown. Not that anyone (but us) is keeping track but the resulting stories are usually misleading PR put-up jobs, that turn out to be dead wrong. The whole “sale of GM brands” story is a perfect example . . .

Read More >

Normally, the MSM “sells” whatever the automakers are selling. Something to do with advertising, perhaps. The autoblogosphere—no stranger to junketry and the press car gravy train—is not unfamiliar with this paradigm. You’d be forgiven for thinking that Chrysler’s incipient collapse would force both camps to at least mention the domestic’s forthcoming dissolution when hyping a new model. You know, “As Chrysler struggles to survive, the company has announced plans to produce an electric roadster, which has less chance of seeing the light of day than a Palestine Mole Rat.” To its credit, Autobloggreen almost goes there: “It looks like the Dodge Circuit EV may have won the ‘who wants to be the first electric Chrysler concept to go into production’ contest. Although they still haven’t officially made an announcement, Chrysler’s viability plan did list an ‘EV Roadster’ as part of their 2010 product line. Based on the lightweight Lotus Europa and using drivetrain parts pilfered from UQM . . . its 150 to 200 mile range is significantly higher than many other electric vehicles in the works and should add to its appeal . . . Since the Circuit will probably change somewhat as it makes the transition to a production vehicle, tell us in the comments section what you would like to see in the sales-floor version.” I’m thinking cupholders. You?

The general thrust of the General Motors Death Watch series—the American automaker is headed for bankruptcy—has been proven right. In all but the technical sense, GM is already bankrupt. It depends entirely on $19.8 billion worth of federal life support (a.k.a. “loans”) to survive. Until June 1. At which point the re-constituted American Leyland will need more federal “investment.” Same again? Sure! More to the point, it’s been over a year since I’ve seen a comment promising “See you at Death Watch 2345!” But I’ve made a lot of mistakes along the way. I was sure that bankrupt former GM parts supplier Delphi would be the final straw. Somehow, the zombie parts maker has kept sufficient distance from the former mothership to avoid delivering the killer blow (which Wagoner may have been snorting). Uh-oh, here’s comes another bullet! And here comes the Presidential Task Force on Automobiles (PTFOA), ’cause Uncle Sam’s favorite automaker can’t spend over $100 million without Steve Rattner’s say so.

Read More >

And if you believe that, you’ll believe GM’s Marketing Maven Mark LaNeve’s denial that the Presidential Task Force on Automobiles (PTFOA) is pressuring GM to axe GMC and Pontiac. “The strategy we laid out for you [in February] is still the strategy,” LaNeve, GM’s vice president of vehicle sales, service and marketing, said today in an interview with Automotive News. “Are we working it, tweaking it, examining every aspect of it? Yes, but nothing has changed with our strategy.” In fact, reports that “GMC is going away are just unfounded, unsubstantiated and untrue.” OK, so either Bloomberg‘s “people” got it wrong or LaNeve’s lying (gasp!). And here’s one from left field: maybe the PTFOA has cut LaNeve out of the loop. After all, they cut off his former boss at the knees. Given LaNeve’s part in the destruction of eight GM brands, and his assertion today that Buick and GMC are profitable—very profitable—what possible use does GM’s current masters have for such a spectacularly lousy manager?

As part of GM CEO Fritz Henderson’s “Deeper, Faster, Oh, Baby” plan to implement GM’s previous plan—only more quickly and, uh, dramatically—the General wants to slice 1700 franchised dealers from their roster. Automotive News [AN, sub] reports that a combination of a bad economy and the American automaker’s piss poor management [reading between the lines, paraphrasing, stating the obvious] has shuttered 200 GM dealers so far this year. Only 1500 more to go; you know, in Fritz’s ideal world. Which raises the question: how are they going to do that? “GM officials have told dealers that they would identify underperforming locations and could move to terminate franchise agreements by June 1, a dealer who had received such a notice said on Wednesday.” As AN correctly points out, you can’t just pull the plug on a franchised car dealer without providing them with financial compensation, or stand ready to fight hundreds of lawsuits in all 50 states.

Read More >

Saturn dealers, customers, managers, assembly workers, The Presidential Task Force on Automobiles, what’s left of General Motors and the mainstream media (MSM) would all like to believe there’s life after GM for the moribund “rethink” brand. A group of investors calling themselves Telesto Ventures has stepped forward to enable these champagne wishes and caviar dreams. Their plan: rebrand other people’s stuff and sell them as Saturns. It’s the same sort of plan that saw Americanized Opels in Saturn showrooms—that led to a 58 percent sales drop so far this year, compared to 2008’s miserable 188,004. (Toyota sold 158,884 Priora last year.) It was also a part of Cerberus’ original plan for the bankruptcy-bound Chrysler Corporation. Anyway, the MSM’s down with Saturn’s “rescue.” “While such a business model doesn’t exist today,’ the Detroit Free Press almost warns, ‘Telesto’s backers say the global overcapacity among automakers and the growing number of start-up firms in China and elsewhere would give the reformulated Saturn several possible sources of new vehicles.” Gullible much?

Read More >

“Shanghai car-maker SAIC makes approach for Vauxhall,” headlined London’s Telegraph over the weekend. Of course SAIC doesn’t want just the Vauxhall badge, they are interested in the whole Opel/Vauxhall enterprise. What looks like “Opel” through German eyes looks like “Vauxhall” to the British. It’s one and the same.

According to the Telegraph, “Shanghai-based SAIC has requested a sale document from General Motors (GM), the stricken US car-maker, which has warned that it may file for bankruptcy in an effort to ensure its survival. Commerzbank, the German banking group, is orchestrating the sale process on behalf of GM, which is to establish a new subsidiary comprising Vauxhall and Opel, the German car manufacturer. A new investor would be invited to acquire a controlling stake in the company, with GM potentially retaining a minority interest.”  Saab and Chevrolet Europe would not be part of the deal. More Chinese interests are lining up:
Read More >

Fair enough. At the congressional bailout hearings, Tennessee Senator Robert Corker gave Chrysler and GM CEOs major NSFW for running their business with all the efficiency of a federal agency. (And Corker should know.) We haven’t seen such public humiliation of powerful people since the Kefauver Committee raked the mob over the coals in 1950/51. Yes, well, who’s crying now? GM’s Spring Hill plant is on Corker’s patch; as we reported earlier it’s running at 24 percent of capacity (building the fourth Lambda platform Chevy Traverse). Corker knows the Presidential Task Force on Automobiles has the ex-Saturn plant in its sights; he’s claiming it makes rational business sense to keep Spring Hill open. Yeah, right. And good on the Detroit Free Press for not gloating. “This week, Sen. Bob Corker of Tennessee continued his campaign to keep Spring Hill open, saying if politics is left out of the equation by the Obama administration, as he hopes, the plant and its 3,000 workers should survive. The evidence to the contrary is significant . . .”

Read More >