The Wall Street Journal reports that the usual unnamed “top executives” are saying GM is warming to the idea of bankruptcy after all. “The change in thinking, combined with the disclosure Thursday that GM’s auditor has raised ‘substantial doubt’ about the car maker’s ability to keep going, appears to move GM closer to the possibility it will file for reorganization.” Something about staring at the hangman’s noose brings a new clarity of thought to the fore. The journal’s new owner seems to have brought a bit of dry British humor to the biz: “The increased threat of bankruptcy could prod bondholders into making concessions, since these investors are said to believe a bankruptcy reorganization could harm their holdings, according to a person familiar with their thinking.” Wow, those bond manipulating masters of the universe sure are smart!

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A message to the troops from GM’s VP of sales and marketing for GM North America:

Today’s submission of our annual report has generated a significant amount of media speculation about GM. Specifically, the media are covering the auditor’s language about whether or not we are a ‘going concern.’

Let me be clear — neither is this “new” news, nor does it change our viability plan to succeed.

For months we have explained the need to restructure and recapitalize our business for the long-term. As dealers, you are integral to that long-term success. Dialogue with the Auto Task Force team in Washington is ongoing, and we remain focused on implementing our viability plan.

So, here’s what I’d ask of each of you: Stay focused on the business, not the media hysteria. Reassure your customers that we are here for the long haul and that we’ve overcome challenges many times before in our 100 year history. Also remind customers that we deeply appreciate their business and support. For new customers, take a few extra minutes to show them the great GM cars and trucks we offer, and demonstrate our commitment to the best service in the industry.

As always, we are very appreciative of your support and welcome your continued comments.

The statement we are using in response to media questions is attached for your reference.

Mark LaNeve

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Saturn spokesman Steve Janisse must rue the day Automotive News [AN, sub] picked-up the phone. Hey, Steve! Wassup with the whole selling the brand thing? How’s that going anyway? “There is interest from investors in doing a spinoff, and there are other entities interested in just buying it.” So far, so spinmeisterly. And then, the gotcha (sans quotes) “He said he does not know whether the interested parties are other automakers.” So, are we to believe that GM’s got buyers for Saturn but doesn’t want to tell Janisse? I don’t think so. Anyway, AN reveals that GM’s spending lots of taxpayer money to hire someone to find a mark willing to rethink the idea of losing billions of dollars in the car biz. “GM has hired Steve Girsky, formerly senior auto analyst for Morgan Stanley, to help advise on any possible Saturn deals … ‘He has extensive knowledge of the financial side of the equation and so he’s helping evaluate the different options,’ Janisse said. ‘But he’s also there to build the business plans for the options.'” Good luck with that.

GM CFO Fritz Henderson and Euro-CEO Carl-Peter Forster have confirmed TTAC’s recent, union-fed suspicions that Vauxhall’s UK factory is facing extinction. The Daily Express reports that Fritz and Pete are using the same extortion tactics on the UK and European governments that proved so . . . lucrative in the U.S.

GM Europe’s chief operating officer Fritz Henderson said that governments across Europe, including the British, should step in immediately with cash to prevent the loss of 300,000 jobs. Mr Henderson said GM Europe needed a £2.9 billion injection to stave off collapse and finance the separation of Vauxhall and Opel from the beleaguered parent company. GM Europe’s chief executive Carl-Peter Forster said the closure of Vauxhall’s plants in Luton and Ellesmere Port on Merseyside would have to be considered if there was no support forthcoming from the Government.

“The next step would be the complete closure. Obviously that’s what we try and avoid. But if we don’t get support from the Government we will have to close down.”

Please. Don’t get to worrying about Rick Wagoner’s finances. First of all, Rick still made $5.4 million in ’08, the year that GM threw itself at the mercy of the US taxpayer (in their own arrogant, extortionist kinda way). And, as we reported some three years ago, GM’s CEO has a bankruptcy-proof pension. So when the artist formerly known as the world’s largest automaker finally sinks into the abyss of its own making, Rick’s OK. That’s assuming Wagoner hasn’t pissed away the $100 million+ he’s banked since ascending to the top rungs of the only company for which he’s ever worked. Meanwhile, in any case, what’s wrong with this juxtaposition [via Bloomberg]: “Wagoner’s [2007] compensation included a salary of $2.1 million and he wasn’t paid a bonus, the Detroit-based automaker said in a regulatory filing today. The largest U.S. automaker lost $30.9 billion last year, the second biggest shortfall in the company’s 100-year history.” Verecundia afflictus.

GM’s auditors have looked at the books and made their determination: “our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern.” The filing with the SEC is refreshingly blunt, in a carefully coded way. “Sales volumes may decline more severely or take longer to recover than we expect . . . and if they do, our results of operations and financial condition and the success of the Viability Plan will be materially adversely affected.” I wonder how many billions of dollars lie between the terms “affected,” “adversely affected” and “materially adversely affected.” The Detroit News finally makes the transition from cheerleader to smokin’ hot crime scene investigator—at least for this piece.

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No, you are not hallucinating. Germany’s February car sales are out. Bottles of champagne will soon follow. Unbelievably, German cars sales rose in February by 21 percent. This is what the Verband der Automobilindustrie (VDA) told Automobilwoche [sub]. 278.000 units were moved. “These are the highest February sales numbers in the last ten years, ” VDA-President Matthias Wissmann said at the Geneva auto show. “For the first time in six months, registrations are growing. We expect that domestic sales of the complete first quarter will be above prior year numbers,” Wissmann said. It’s getting even better, much better:
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Think bankruptcy might be an option worth exploring for General Motors? Worried that the Volt might have been a tad too ambitious? Clearly you must be sick in the head. Reasonable people just don’t think that way. After all, why listen to bankruptcy lawyers and university researchers when you can get the truth straight from GM. You think those eggheads know more about GM than GM? Think about it. And while you’re suspending your disbelief, head down to GM’s Fastlane blog. You’ll get your facts straightened out faster than you can say “Stockholm Syndrome.”

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Toyota Financial Services has requested a $2B loan from the Japan Bank for International Cooperation, a government-backed lending institution. TFS says it needs the money to cover the higher cost of borrowing in the US. According to Automotive News [sub], “Toyota may be the first of a string of Japanese companies with high credit ratings to turn to state-backed loans prior to the closing of books for the business year at the end of March.” Toyota’s “implied” credit rating based on credit-default swaps is considerably lower than its current Moody’s rating, as fears grow about liquidity problems across the automotive industry. The money will come from a $5B fund established by the Japanese government to provide liquidity for firms which operate abroad. These funds are said to come from Japan’s $1T+ in foreign cash reserves, the world’s second-largest foreign currency reserves after China. Nissan and Mitsubishi have also said they will apply for loans from this fund.

That ain’t me talkin’ (no, no, no, it ain’t me, babe). The headline comes straight to you from CNNMoney, with a little help from Chris Isidore—a reporter who literally laughed down the phone a year or so ago when I suggested GM would go Tango Uniform. So, from what industry could Mr. Isidore find anyone with a shred of credibility—without a bust of Lenin on their desk—who’d argue to nationalize GM (other than the people who’ve already done it)? Rail!

Larry Kaufman, a former rail executive and consultant, argued in a railroad industry newsletter Monday that the U.S. Railway Association, the special government agency set up in 1974 to deal with bankrupt railroads, is a good model for saving the U.S. auto industry…

Kaufman suggested that a special government agency would help the companies continue to sell cars while they reorganize because it would assure consumers that the companies and their warranties were not about to disappear.

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Dear God, will no one pull the plug on this company? I know the Obama administration needs to wait until March 31st to appear as if they’ve fully contemplated all the options. But even for me, a professional General Motors Death Watcher, charting the final dissolution of what was once the world’s largest automaker has become a painful pursuit. The breakup of the global empire. The raiding of the pension fund. The kow-towing to politicians. Automotive News [sub] gives us a way-point, reminding us that GM’s epic cash conflagration is getting worse, not better. 

In a conference call last week, CFO Ray Young said GM’s cash burn this year would be less than last year, which it put at $19.2 billion — but admitted the cash burn in 2009 would be “front-loaded.”

Translation: The short-term bleeding will continue. It will be hard in this quarter for GM to reduce its cash-burn much below the $5.2 billion consumed in the last three months of 2008. 

All this while GM inventory piles up, everywhere. The post-jump run-down is sobering stuff. One hopes.

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I could write a book about Detroit’s decline. It’s a complex story of greed, arrogance, intransigence, incompetence, ignorance and more greed. Hopefully, a book reviewer wouldn’t boil it down to “Detroit built gas guzzlers when everyone wanted alternative energy cars.” That’s a misleading simplification that takes us to the wrong morality play: Motown as mustache twirling planet killer faces well-deserved comeuppance at the hands of kindler, gentler foreign car companies. In fact, Detroit built plenty of higher mileage vehicles (just not many good ones) and spent billions (many of them yours) exploring alt-power vehicles. Their product lineup conformed to all US fuel economy legislation (unlike several fine-paying foreign manufacturers). In terms of self-destruction: production efficiency, labor relations, reliability and branding are far more significant. But the big, stupid, insensitive greedy planet-killer meme is more politically effective. Just ask the president’s chief of staff Rahm Emanuel . . .

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Sunday? Sunday! That’s the day The Detroit Free Press chose to tell the world that GM’s recent accounts contain a time bomb: the revelation that the company raided—sorry, “borrowed from”—its employee pension fund to buy out United Auto Workers employees and pay into their health care fund. Even though we’ve become used to gigantic numbers, the sums involved are staggering. “Details are emerging about how General Motors Corp.’s U.S. pension funds went from a $20-billion surplus at the end of 2007 to a $12.4-billion deficit 12 months later.” I make that a $32.4-billion swing. It’s also approximately $11.4 billion more than GM’s CFO estimated its pension deficit, as declared in The General’s December pre-bailout report.

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What do you do when you’re out of time? Get rid of all your clocks! GM has already taken the humiliating measure of cutting clock maintenance from the RenCen budget, and Chrysler is now following suit. William Wolf of Chrysler Paint, Pilot and Facility Operations notes over at Chrysler Blog that “every little bit helps.” But Wolf wasn’t satisfied with the mere $10K in savings that cutting clocks yielded. Eliminating rooftop parking to save plowing costs will save over $300K, while halving the number of fluorescent bulbs at the Auburn Hills Chrysler Technical Center will yield $400K. And despite the bitter Michigan winter, Chrysler has dropped the temperature at the CTC by four degrees, saving $70K annually. And yet, somehow, not everyone’s happy.

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General Motors has finally announced their fourth quarter results and its terminal. The ailing American automaker’s cash burn was a staggering $6.2 billion. That might have a little something to do with the fact that GM’s revenues shrank by 34.2 percent, from $46.8 billion to $30.8 billion. Q4 operating loss: $5.9B. Net loss: $9.6B (compared to a not inconsequential $1.5B a year previous). For those of you keeping score, today’s results mark GM’s fourth year without booking a profit and the second largest loss in GM’s entire history. Reacting to the carnage, the man at the helm recycled a press release from somewhere in the middle of this slide into bankruptcy. “2008 was an extremely difficult year for the U.S. and global auto markets,” CEO Rick Wagoner said in a statement. “We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions.” At GM, restructuring actions accelerate you. Nose first. Pro forma mea minimus culpa filed, Red Ink Rick is headed to DC with his well-worn begging bowl . . .

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