GM had promised to have a decision by the end of March on whether it would sell or fold HUMMER. They missed that deadline along with other key targets set by the White House-appointed Presidential Task Force on Automobiles (PTFOA). Not that there wasn’t interest in the aptly named pornography-on-wheels. GM simply, well, blew it.
At the New York Auto Show, Susan Docherty, GM’s North America vice president for Buick-Pontiac-GMC, attempted to defend GM’s portfolio (she should have a word with Sisyphus on that task). The Detroit Free Press reports that Docherty put GM’s brand strategy (or lack thereof) into perspective during the intro for the hideous GMC Terrain (which, absent bankruptcy, would bring GM’s five-passenger SUV total to . . . in all this excitement, I’ve kinda lost track). She said Chevy and Cadillac are global brands; and there are US buyers who want something in between mass market and high end. “There are customers out there who are not interested in a volume brand but also don’t want to pay for a luxury product,” she said. Yes way. “In its marketing-speak, the Equinox ‘blends function and style into a very sporty, yet upscale compact crossover,’ while the Terrain is ‘an appealing choice for existing traditional SUV customers.'” Both of them?
Reuters would have us believe that it has “sources” close to GM’s federally mandated sale of its boat anchor brand: HUMMER. “Three bidders remain for General Motors Corp’s Hummer [sic] brand, two sources with knowledge of the matter said, adding that current offers range from $100 million to $200 million in cash, in addition to other commitments. None of the bidders are automakers. One bidder is from the United States and the other two are from overseas, the sources said, adding that the bidders include private equity and wealthy individuals.” Folks, let history be our guide.
According to Reuters, GM “is in intense and earnest preparations for a possible bankruptcy filing.” Meanwhile, GM’s joint venture partner in China, SAIC, is making preparations of its own. They might just buy Buick before it goes to hell in the GM hand basket. The matter has received added urgency by a note from Moody’s Investor Service that the agency reckons there’s a 70 percent risk of bankruptcy for Detroit’s three automakers given the difficulty of restructuring out of court.
When GM CEO Roger Smith wanted to create a different kind of car company (like he didn’t have several already), he commissioned a Saturn factory in Spring Hill, TN. For a short time, the factory, the brand, the model they built, the dealers who sold them and the customers who bought them all lived happily ever after. And then the GM borg assimilated Saturn. At first, they neglected it. Then they gutted it like a fish. Then they stocked dealers with a bunch of unloved German-style imports, built somewhere other than the Volunteer State. And now, that pioneering Saturn factory builds GM’s fourth badge-engineered Lambda platform. The Chevy Traverse is not doing well, saleswise. In fact, LSJ.com reports that the TN factory producing these unloved CUVs is currently operating at 24 percent of capacity. That’s after the General spent, wait for it, $690 million re-equipping the plant for the task. And remember what we said about politics informing GM’s business decisions? Check this out . . .
Ad Age only lists GM and Chrysler’s ad spend for all of ’08, before the ailing American automakers bellied-up to the federal bailout buffet. But the writing’s on the wall for a number of media who depend on the two teat sucklers for ad cash. The carmakers’ $3B ’08 combined ad spend has already been slashed. When Chrysler and GM go Tango Uniform, well, there’s a black hole out there with their name on it. At risk ’08 ad bucks: Car and Driver ($20.6M from GM), Automobile ($15.4M from GM), Motor Trend ($6.1M from Chrysler). If you’re wondering why the buff books’ reviewers treat GM and Chrysler products with kid gloves, I’ve just shown you the money. And here’s a pdf charting the ch-ch-ch-changes from 2007 to 2008, in terms of the two automakers’ percentage of the buff books’ total ad take [NB: ’07 was a very good year, for small town dealers, with perfume in their hair, until they came undone.] Steve Parr, president of Source Interlink Media, is non-plussed, allegedly.
In the pigs-will-fly department, newly installed GM CEO Fritz Henderson told the Financial Times that “private investors are interested acquiring a stake in Opel.” Wow. Really? We know that there are a number of people who’ve expressed interest, amongst them such unlikely prospects as some Opel dealers and the workers council. But do they have the wherewithal, the money, and the blessing of the German government, which would have to guarantee a large chunk of the loans needed, and seems to be more reluctant to do so as the days go by?
Now that President Obama’s played a short clip of “Dr. Strangelove; or How I Learned to Stop Worrying and Love a GM Chapter 11” at his auto-related press conference, GM’s remaining stockholders have cottoned on to the inevitability of a GM Chapter 11. As TTAC’s Ken Elias predicted many moons ago, it’s only a question of time before the New York Stock Exchange de-lists GM. When Wagoner resigned and Obama opined, the zombie automaker’s share price began its final glide path. The stock plunged 25 percent on Monday and 28 percent on Tuesday. Yesterday, the price hit $1.58—before rebounding to $1.93, off 1 cent for the session. No surprise there. When the feds pull the plug, the stock will be worth precisely $0. The LA Times reveals the reason GM’s stocks are still publicly traded, by anyone. “Long-time GM shareholders may well figure there’s no point in selling now. If the stock becomes worthless, they can write it off for tax purposes at that point. Until then, it’s just a lottery ticket with extremely low odds of a payoff.”
Delphi is the former GM parts division. It had been spun off, only to go into bankruptcy not much later. Delphi also was amongst the first to embark on an aggressive “source in China” policy. Large chunks of Delphi’s production were moved to China. Large chunks of Made-in-America cars were actually Made-in-China. Now, China buys large chunks of Delphi. Possibly all of it.
According to the Freep, two Chinese companies and the Beijing government banded together to buy Delphi Corp.’s brakes and suspension business. The Chinese auto supplier Tempo Group will acquire a 24 percent stake, China’s Capital Iron & Steel Co. will purchase a 51 percent stake, and the Beijing government will own the remaining 25 percent. They will form a new Chinese company called Beijing West Industries Co. Ltd., based in Beijing. Delphi needs the money:
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If it wasn’t clear before, it is now: GM will use the next 60 days to prepare itself for a Chapter 11 filing. Freshly-minted CEO Fritz Henderson told a suited and booted press Detroit press corps that he wouldn’t have taken the job from Rick Wagoner if he wasn’t prepared to do “whatever it takes” to return GM to profitability. Henderson spoke of his distaste for “messy” bankruptcies, but indicated his willingness to be the new broom. (Dream on, Fritz.) Meanwhile, despite repeated requests by the friendly press flacks, Henderson refused to be drawn out on how much GM will draw out of the taxpayer’s purse while it gets ready to file Chapter 11. He skated over the point faster than a duck landing on a frozen pond, saying that GM might scarf the $2 billion that it didn’t take this month, or the $2.6 billion it requested for April, or both. At the beginning of the conference, Fritz touted GM’s new “Total Confidence” program. TC is designed to protect GM buyers from losing their wheels after they lose their job, and insulate them from [some] negative equity at trade-in time. It doesn’t, however, protect TTAC’s Best and Brightests’ finely honed sensibilities by the unintentionally humorous irony implicit in the program’s name. If you know what I mean.
GM CEO Rick Wagoner promised to reveal the fate of the HUMMER brand today. Old Sparky was warmed-up and everything. Of course, that was before the President of the United States fired Wagoner’s ass. And so the maker of pseudo-military SUVs will spend its eleventh month on death row—sorry, “under strategic review.” Automotive News [sub] reports that GM will now postpone a decision “for a few weeks as it works to complete a sale.” No, they don’t mean “a” sale; they mean the sale of the entire brand. Wait! Does that mean . . . ?
“Our efforts to sell Hummer are proceeding, and there are several parties interested — and I would say really interested — in the brand,” Troy Clarke, GM’s president of North America, said during a call to dealers today. “We’re still very much in the process, although that process is maturing.”
WTH is a “maturing sales process”? Does GM have a buyer for the world’s most politically incorrect automotive brand or not?
So, where does DC vs. Detroit leave Opel, Vauxhall et al.? The “private intelligence agency” Stratfor [very expensive sub] summed it up most succinctly: “Add to this the complexity of Opel, a German car maker owned by GM, which Germany wants the United States to bail out but which the United States wants nothing to do with, and the fundamental problem is clear: While both Germany and the United States have a common interest in moving past the crisis, Germany and the United States have very different approaches to the problem.”
Germany’s approach: Do nothing.
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On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I “step aside” as CEO of GM, and so I have.
Fritz Henderson is an excellent choice to be the next CEO of GM. Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy, and support among GM’ers worldwide to succeed. I wish him well, and I stand ready to support him, and interim Non-Executive Chairman Kent Kresa, in every way possible.
The New York Times reports that GM CEO Rick Wagoner has resigned his position with the ailing American automaker. Wagoner will tender his resignation ahead of President Obama’s statement at 11 a.m. today regarding the next round of bailout bucks for the zombie automaker. “As recently as March 18, Mr. Wagoner said in an interview that he had no indication that his job was in jeopardy because of the task force.” The PTFOA has directed that Wagoner’s hand-picked successor and current COO Fritz Henderson assume the top slot—temporarily. Word has it that Steve Rattner, the head of the Presidential Task Force on Autos, initiated Wagoner’s long-overdue defenestration. [General Motors Death Watch below.]
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