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Old 14th November 2008, 08:30   #46
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Some more news related to rescue package.
Source : Democrats Propose $25B Cut of the $700B Bail Out Package for Big 3 - worldcarfans

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The CEOs of the Detroit 3 (General Motors, Ford and Chrysler), along with United Auto Workers President Ron Gettelfinger, will be going to Washington next week, hat in hand, and plea for a substantial bailout package.

The leading representatives of the American automotive industry will testify before the U.S. House Financial Services Committee chaired by Democratic House member Barney Frank. Their message will be simple -- help us or calamity awaits.

The Big 3 are asking for a bailout package in the form of 25 billion dollars in emergency loans to keep them afloat through next year, which will likely be one of the worst years the US automotive industry has seen since the Depression. All three Detroit automakers are burning through their cash reserves at an alarming rate as sales collapse in the US market. GM is burning about 2.3 billion a month right now. Ford lost 7.7 billion in the 3rd quarter of this year.

The Democratic Congress is warm to the idea of helping the industry. "A collapse of the American automobile industry would be the worst possible thing that could happen at a time when we are already weakened," Frank told Bloomberg TV, as quoted in a story in the Detroit News.

But the Treasury Secretary of the United States, Henry Paulson, has stuck to the Bush administrations position on the matter, which is that the automotive companies are not eligible for the bailout money since that 700 Billion dollar fund has been earmarked for financial institutions only.

The administration has continued to be skeptical of a bailout package for US automakers and it would be very difficult for the Democratic Congress to pass veto-proof legislation to help the automakers.

It was GM CEO Charles Wilson, who said back in 1955 , "What is good for GM is good for America."

It remains to be seen if the political leadership of the country believe that to be true today.
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Old 14th November 2008, 10:29   #47
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I am so angry at US govt using my tax money to fund Big 3 ( or should i say
Bug 3) and pretty sure they will again be in this mess in less than 3 yrs.
US should introduce universal healthcare for its citizens, then transfer all
GM retirees on that healthcare. Most of US problems have one root cause
common which is high cost of healthcare. u have to pay thru the nose
to be covered. Wish they fix it this time around.
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Old 14th November 2008, 18:15   #48
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Guys check out this link outlookbusiness.com : Toyota won, but maybe Toyota lost.....an interview with Lean Guru James Womack..you will find some very interesting inputs into Toyota's management style.
Anyway, I cut paste the relevant piece on the big three here:


Quote:
How do you think The Big Three US auto companies have shaped up in the last two decades? And what are they poised for?
The long-running drama of The Big Three versus the lean automakers (Toyota and Honda) is now in its final act in North America. Within the next year or two, the American auto companies will face a final crisis in writing down the mistakes of the past 40 years. This may mean bankruptcy and will surely mean new management/ownership.
However, once the debt overhang from past mistakes is addressed, the world will be amazed at how much the American companies have learned. They are now competitive with Toyota and Honda everywhere in the world outside of North America. If they can get over this last hurdle (of debt overhang and wrong product mix in North America), the world automobile industry will find a new equilibrium until it is disturbed by the next round of entrants. Tata? Maruti Suzuki? Mahindra? Who knows!
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Old 17th November 2008, 19:57   #49
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Well, a small update from my side.

GM went to the White House with a application for a bail out package of $80 bn some time back. They mentioned that in case this is not accepted, then they are ready to file bankrupcy (file under Chp 11 is what they term it).
Well, as no surprise to me, the application has been rejected by the white house couple of days back.

Also heard is that GM was behind Toyota for a merger which was rejected by Toyota. They had also approached Chrysler, but even this dint work out (as even Chrysler is in bad waters as well). Since both dint work out, they approached White House. Even this dint work out. Seems nothing's workingout well for GM.

So lets see when they file bankrupcy under chapter 11. Or whether they do file it. All GM car owners future A.S.S. at stake here. Plus, once its filed, GM cars would be available dirt cheap in the resale market (my guesses).


Lets wait and watch.

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Old 17th November 2008, 20:03   #50
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Oh boy! This is getting to be a good thriller!

I do hope they do not go totally out! Think of all the GM vehicle owners!

Wait and watch certainly isn't easy!
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Old 17th November 2008, 20:16   #51
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Quote:
Originally Posted by HappyWheels View Post
Oh boy! This is getting to be a good thriller!

I do hope they do not go totally out! Think of all the GM vehicle owners!

Wait and watch certainly isn't easy!
What happens once Bankrupcy is filed? Not sure really. My guesses are that the Liquidators appointed start selling all the assets to meet as much liabilities as possible and I dont think there is even a thought of continuing the operation.

Actually a very sad sight. They have come up with a lot of good cars and they have quite a few brand names under them. I would not like to see a company with such good products to go down under.

GM HAS TO come up with some arrangement with some company (merger or acquisition by some other company or something else). Or Maybe the liquidators just put up the company for sale (better for the car lovers).

The problem is that the size of GM is soooo large that there are hardly any other manufacturers out there who can afford to take over the company. Plus the given recession and the slack in the car sales is not allowing even prospective buyers to go for it.

Only time will answer all our queries.
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Old 17th November 2008, 20:16   #52
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I have not caught even an iota of this whole BIG 3 Automaker bankruptcy business.

However, I've a gut feeling, and strong one it is, that bankruptcy of GM would never happen, or US Govt. will not let that happen. Proposals will be made and will be rejected, there will be talks of bankruptcy and chapter 11, but after lot of give n' take, finally a solution will emerge to bail GM out.

Well, just a gut feeling! Don't ask for justification.
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Old 17th November 2008, 20:18   #53
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Let's not worry about GM vehicles in India. Huge corporates like GM are not designed to collapse like this. If loss making GM goes bankrupt in USA, the profit making GM SBUs elsewhere in the world are not affected, at least not financially. However, the GM customers in USA may have reasons to be worried.
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Old 17th November 2008, 20:40   #54
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Quote:
Originally Posted by Samurai View Post
Let's not worry about GM vehicles in India. Huge corporates like GM are not designed to collapse like this. If loss making GM goes bankrupt in USA, the profit making GM SBUs elsewhere in the world are not affected, at least not financially. However, the GM customers in USA may have reasons to be worried.
@ Samurai
I think GM is headed towards bankruptcy. Of course, technically, it is possible that the US govt. keeps GM operating on a 'limp' mode or drastically downsize it to a fraction of what it used to be. But i think it would be, effectively, a bankruptcy, nonetheless. Unless there is improvement in the credit markets, which seems unlikely, i guess this is inevitable.


Cheers
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Old 17th November 2008, 20:41   #55
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but if indivisual brands are bought by foreign manufacturers might give a new life ti the brands,imagine hummers with lexus lx470 engineering and quality,durability (i dont know about efficiency)
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Old 17th November 2008, 20:46   #56
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One more thing that comes to my mind is that the US Government purchases a lot of Hummers for its Military requirements. Hummer brand is owned by GM.
So a GM close down is not evident. Though, as pointed out by jagan0677, it will be operating in Limp mode. NO further R&D's, just pushing the current models with some add-ons, like Ford came up with Ikon Diesel and Fiat came up with Palio MJD. Thats the road ahead for GM. In India, it had anyways launched the ex-Daewoo products (and these are the ones which did well though).

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Old 17th November 2008, 20:50   #57
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Chapter 11 does not mean stopping of operations. In bad situations like this, it is basically a tactical step to keep your creditors away while working on a recovery plan. Recovery generally has to happen by way of injection of funds or merger or something like that though there are some rare cases where the company that filed under chapter 11 itself bounced back and recovered. Fundamentaly chapter 11 is a prototection from creditors sueing the company for non-payment.

Well basic point is that it does not spell doom for GM vehicles owners. But if GM owes you money or you have invested in GM, you will get affected.

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Old 17th November 2008, 21:37   #58
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Quote:
Originally Posted by Samurai View Post
Let's not worry about GM vehicles in India. Huge corporates like GM are not designed to collapse like this. If loss making GM goes bankrupt in USA, the profit making GM SBUs elsewhere in the world are not affected, at least not financially. However, the GM customers in USA may have reasons to be worried.
When Daewoo global was folding, its Indian part was doing really well and infact growing.
But, The Indian company was shut down just because of Korea.

So,we can't rule it out.
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Old 17th November 2008, 21:46   #59
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Quote:
Originally Posted by nitrous View Post
When Daewoo global was folding, its Indian part was doing really well and infact growing.
But, The Indian company was shut down just because of Korea.
It entirely depends on the corporate structure of the company. The Daewoo India unit was probably fully dependent on parent unit.
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Old 17th November 2008, 22:05   #60
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Bankrupcy procedure in the US is different from India or Korea.

Please read up on Delphi management declared bankrupcy and is emerging out of it. I dont think even a day of production was lost.

And how is Delphi India doing..business as usual.
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