Friday the 13^th was a bad day for GM Europe, and by extension Opel, Vauxhall, and Saab. Ministers of eleven European countries where GM has a presence met in Brussels to decide what to do about the ailing American automaker’s foreign empire. First, they listened to reports by Frederick “Fritz” Henderson, COO of GM, and Carl-Peter Forster, CEO of GM Europe. Then, they decided to do nothing. Even more disconcerting for GM, the ministers decided that no country should do anything to bailout GM unilaterally. “There will be no rescue measures on a national level without prior European coordination,” reports Automobilwoche [sub]. And as if this wasn’t bad enough . . .
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Folks, TTAC has serious competition. GM just issued a press statement, headlined “GM and Opel Launch Website to Support Fact-Based Discussion.” (As opposed to what? Faith-based?) The lead-in of the statement isn’t really conducive to getting to the main part, but in the interest of fact-based reporting, here it is: “The current need for bridge-financing for GM’s European operations is rooted in a catastrophic economic crisis, the worst of its kind in more than 70 years. Given the significance of the situation politically and for society, it’s only natural that rumor, speculation and urban myths should begin to circulate at this time. In addition to informed reporting based on fact there is also misinformation and repetition of statements that are clearly not based on fact.” Still with us?
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GM intends on increasing vehicle production in the second financial quarter, from 380k to 550k. I know: it’s a major WTF moment. There is no evidence whatsoever that the U.S. new car market is headed for recovery. If anything, the opposite is true, what with home foreclosures and unemployment rising like steam from a New York City manhole. Not to mention the headline of The Detroit News story wherein this information resides: “GM Dealers Balk at Ordering New Vehicles.” The article reports that GM’s orphaned HUMMER, Saturn and Saab dealers aren’t ordering any more vehicles (duh), and current inventory levels at the other stores are, to use the old Bentley power output description, “adequate.” No wonder GM spokesman Chris Lee said “that [production] number could be adjusted.” Still, you’d kind of hope GM PR could do better than that, what with more than a decade of spinning bad news into gold (for the executives anyway). And so they do . . .

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TTAC reader John writes:

I was perusing MSNBC a short while ago, and noticed something that I thought TTAC might like to post. Ford now has a market cap four times that of GM’s. (Ford’s is 4.9 billion, GM’s is down to just over 1 billion). Ford’s stock is also now worth more than GM’s, which isn’t surprising, but hasn’t really happened before.

As Ken Elias pointed out a while back, the beginning of the end will come when GM is de-listed from the Dow and then the stock exchange. As far as life-sustaining bailouts are concerned, March 31st is the drop-dead date. A pre-pack would take longer, so . . . I bet Ken a steak dinner GM will get their/your/our money. I don’t think I’ll be picking up the tab. For the dinner.

Automotive News reports that GM CEO Rick Wagoner tagged-along with 69 other working stiffs to hear President Barack Obama put his entire hope-and-change spiel in a single, pre-written sentence.

“We must build this recovery on a foundation that lasts — on a 21st Century infrastructure and a green economy with lower health care costs that creates millions of new jobs and new industries; on schools that prepare our children to compete and thrive; on businesses that are free to invest in the next big idea or breakthrough discovery,” Obama said in remarks released by the White House.

Uh-oh. Isn’t that whole “next big thing” thing the thing that allowed GM to avoid making the hard decisions that would have prevented its $30 gazillion dollar call on the public purse?

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Automotive News [sub] reports that GM spin-off supplier Delphi has received approval from bankruptcy court to cut benefits to 15k non-union retirees. The ruling will save Delphi an estimated $70M per year, improving the chances Delphi will end its nearly 3.5-year sojourn in Chapter 11 restructuring. GM has been helping generously towards that end, having offered to buy Delphi’s steering component business for an undisclosed sum and funneled hundreds of millions to its crucial supplier. Or quasi-independent division. Or whatever Delphi really is to GM. The full text of the order in question is here (pdf). It’s long, so check out a few highlights after the jump.

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Things are either rapidly falling apart for Chrysler in China. Or someone is tidying up for the rumored asset transfer to Beijing Auto. Place your bets.

Anyway, China’s Great Wall Motor has terminated its small-car joint venture project with Chrysler, Gasgoo reports. Why? “Due to changed situations,” said Great Wall’s president Wang Fengying.

Chrysler had signed a memorandum of understanding with Great Wall Motor in July 2008 to explore the viability of a long-term strategic relationship. The two companies have since developed an A-class car model that was scheduled to be produced by Great Wall and sold around the world as a rebadged Chrysler. What now?
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Volvo is a step closer to salvation, while Saab is a step closer to damnation.

According to Germany’s Handelsblatt, the European Investment Bank (EIB) has approved a €445M loan to Volvo, after the Swedish government gave a guarantee for 90 percent of the loan. This cash injection should buy Volvo some time to restructure and to pretty-up for a sale. According to Financial Times, Ford has begun seeking indicative bids for Volvo. The sale process is expected to last until late in the year. Three people involved in—or briefed on—the sale say Volvo has drawn tentative interest from at least three Chinese carmakers. Talks have also been held about forming a Swedish-led investor consortium amid concerns among some in Sweden’s motor industry about the possible leakage of intellectual property to China.

Totally different (downright ugly) picture at Saab.

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Or die trying given the late unpleasantness of all things economic. But the model that Euroda, a group of 4,000 Opel/Vauxhall dealers, is attempting is innovative enough to attract some attention. Under the arrangement, member dealers would donate €150 per vehicle sold over the next three years. Euroda would use the estimated €400m to buy a minority stake in Opel/Vauxhall, which cannot secure support from European governments without better long-term viability plans. Euroda seems to be acknowledging the symbolic nature of the effort, telling Automotive News [sub] that even taking a minority stake sends “a clear signal of support” to the government, worker and customer stakeholders.

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Developing. Actually, not.

Delphi and Visteon were spun off from GM and Ford respectively at the turn of the millennium, in hopes of cutting costs and improving efficiency. But rather than creating healthy, solid companies they could rely on as major suppliers, the Detroit OEMs used the spin-offs to dump unwanted assets, UAW workers and fixed-cost obligations on their new partners. And now GM and Ford are reaping the bitter harvest of their ill-advised spin-offs. Visteon, which has never turned a profit, just had its stock delisted last week after losing $663M in 2008. Delphi has been in Bankruptcy since October 2005, and, having lost $1.48B last year, it is barely surviving on cash infusions from the General, which really could have used the dough. And both suppliers are threatening to take down America’s two largest automakers.

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German newspaper Die Welt had reported on Saturday that GM and Opel seems to be preparing for insolvency at Opel, having hired three law firms with renowned insolvency experts. GM denies the report, writes Reuters. “This scenario is currently not on the agenda,” a GM Europe spokesman told Reuters on Sunday. Note the careful usage of “currently” and “agenda.”

Die Welt says GM Europe would be advised by Baker & McKenzie as well as Clifford Chance, while the management of Adam Opel GmbH had hired Heidelberg-based firm Wellensiek. GM doesn’t deny that they have hired counsel: A GM Europe spokesman said the company had hired the firms to assess the effect of potential restructuring measures. Meanwhile, there is growing outrage in Germany about the fact that Opel never paid tax in Germany because it transferred profits to its U.S. parent.
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GM’s Steve Harris is dancing all over the bankruptcy issue at GM’s Fastlane blog. Yesterday Haris was sounding resigned if still-delusional. “So, by now you’ve seen the news reports,” he wrote. “You know that auditors have said that there is substantial doubt about GM’s ability to survive as a ‘going concern’ through the end of the year. It’s certainly led to some scary headlines – some more accurate than others, of course.” But all scary. Yeah, believe it or not, we kind of saw it coming.

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The BBC reports that GM’s European division Opel has learned a valuable lesson from the German government. Insolvency law was “not set up for the destruction but for the preservation of economic assets,” German Interior Minister Wolfgang Schaeuble said after meeting with Opel leaders. “The public perception is that insolvency is associated with going bust or bankruptcy, but that is wrong. We must grasp that to survive such a crisis, modern insolvency rules are a better solution than the state taking a stake.” Hint, freaking, hint. And just why is the German government so jazzed about seeing Opel restructure on its own? Accoding to the Beeb, “media reports suggest that the German government was angry that the bail-out proposal—which asked for 3.3B euros ($4.16B)—was simply a glossy 217-page brochure which read like an advertisement, rather than presenting any viable business plan.” Sound familiar? Apparently German members of parliament were also shocked to learn that Opel doesn’t own its factories (GM does) or intellectual property. As in GM has hocked all of its Opel IP to the US government as security for its own bailout. Classy. Now, as the worm turns, even the Canadians are saying they don’t want to go through with the bailout if it’s a “waste of taxpayers’ money.”