GM is months away from bankruptcy. EDIT : Files for Chapter 11

[prasadee]

Originally Posted by aaggoswami

To me it looks like US government surely has something bigger for these three automakers. The US government wont let them die like this.

The way the CEOs of the big 3 went to Washington in their private jets with a begging bowl, getting $30+ million in salaries, they should not expect mych from tax payers. "First get govt. salaries, before you ask for govt. money". If I were a cartoonist, I would draw a cartoon of these big 3 getting kicked out of whitehouse.

-Prasadee

[Meer]

Saving all 3 may be too much for the govt.. I think Obama will do similar to what bush did by rescuing AIG but letting Lehman fall..

My personal opinion is that these companies had already lost the plot to their more smart and lean Jap competitors and the methodical germans.. and even without this downturn, they were already in a deep mess..

[Superleggera]

Originally Posted by prasadee

The way the CEOs of the big 3 went to Washington in their private jets with a begging bowl, getting $30+ million in salaries, they should not expect mych from tax payers. "First get govt. salaries, before you ask for govt. money". If I were a cartoonist, I would draw a cartoon of these big 3 getting kicked out of whitehouse.

-Prasadee

Rick Wangor of GM gets $8.9 M as his total Annual compensation and Alan Mulally's compensation is about $12 M this year.

From CNN Money
What's really killing Detroit - Fat executive paychecks (6) - CNNMoney.com

[furobiker]

Originally Posted by Superleggera

Rick Wangor of GM gets $8.9 M as his total Annual compensation and Alan Mulally's compensation is about $12 M this year.

From CNN Money
What's really killing Detroit - Fat executive paychecks (6) - CNNMoney.com

These compensations are killing all major companies. Lehman had over 100 million USD to pay even after it declared bankruptcy!

[aaggoswami]

The survival plan is ready for the big three in US.
Source :
Big Three ready survival plan for Congress - worldcarfans

Article :

Congress is standing there, arms crossed, tapping its foot with an expectant and demanding look on its face.

US automakers were given a second chance at survival last week when Congress delayed a vote on a 25 billion dollar bailout for the industry until December and demanded to see detailed restructuring plans from the Big 3 before putting the matter to a vote.

Congress has set a deadline of December 2nd for submittal of the plans and will hold further Congressional hearings that week to weigh the automakers' proposals.

Congress is expecting lots of details. It is demanding a 12 page summary of their restructuring plans, that is to be made public, as well as a document of roughly 100 pages detailing the entire plan. This document will include aspects of their business that are to remain confidential but must outline how each of the automakers will use its share of the bailout and set itself back on the path to profitability.

The Detroit 3, Ford, GM and Chrysler, burned through almost 18 billion in cash just in the third quarter of this year. GM and Chrysler are in dire need of operating capital in order to continue functioning.

Ford is in somewhat better shape financially. But all 3 automakers face a gloomy 2009 with sales falling off sharply. October sales for GM were down 45 percent compared to the same period last year.

[jagan0677]

Originally Posted by Meer

Saving all 3 may be too much for the govt.. I think Obama will do similar to what bush did by rescuing AIG but letting Lehman fall..

My personal opinion is that these companies had already lost the plot to their more smart and lean Jap competitors and the methodical germans.. and even without this downturn, they were already in a deep mess..

Bush, Bernanke and Paulson have realised the effect of letting a Lehmann sink. I dont think Obama will prefer the option of letting even one of the Big 3 sink. Now that US taxpayer money is flowing freely to plug all balance sheet holes, i guess they will use the same source to prop up the BIg 3, too.

Cheers

[aaggoswami]

Ford is going to sell Volvo now.
I hope toyota picks it up and plonks in the 2.5D in Camry.

Source :
Officially Confirmed: Ford Considers Selling Volvo - worldcarfans

Article:

Cash strapped Ford has announced plans that it intends to re-evaluate their relationship with Volvo, which in non-PR speak translates into a possible sale of the brand. If the company were to sell Volvo, it would mark the end of the last remaining member of the company's once strong Premier Automotive Group which included Land Rover, Aston Martin, and Jaguar.

Given the downturn of the global economy and strong declines in sales, especially in the last three months, Ford considered the review of Volvo brand necessary. Ford's CEO, Alan Mulally, stated that "Volvo is a strong global brand with a proud heritage of safety and environmental responsibility and has launched an aggressive plan to right-size its operations and improve its financial results. As we conduct this review, we are committed to making the best decision for both Ford and Volvo going forward."

Volvo currently features a fresh product lineup that includes the new XC60 and recent redesigns of the XC70, V70 and S80. The company is scheduled to show a new S60 concept at the North American International Auto Show and has also announced plans to introduce seven low-emission models in 2009.

Ford stated that the review could take several months to complete and for now Volvo operations will continue as planned.

[aaggoswami]

A few news about the restructuring.

1) GM
Source :
General Motors Unveils Restructuring Plan - worldcarfans

Article :

GM has submitted its restructuring plans to the US Congress and has made a summary publicly available on its press site.

GM has not committed to outright eliminating any brands like Saturn or Pontiac - something many analysts say it must do in order to survive. It has said it will "focus" on "four core brands" - Chevrolet, Cadillac, GMC and Buick.

But GM is claiming that it is looking for a buyer for Saab and has put the Hummer brand up for sale. Pontiac will be shrunk to a few niche products and GM is "exploring alternatives" for the Saturn brand - hinting that the brand may just be axed.

GM, like Ford, has also said it will accelerate the development of greener cars and highlighted the Chevy Volt, which can go 40 miles solely on electric power and is scheduled to go into production in 2010, as one of the models it is staking its future on.

The company will also cut costs by reducing production and its work force and working with the UAW to revise labor agreements and get further concessions on compensation from its workers.

GM says it needs 12 billion US dollars to see it through 2009, based on a domestic market of 12 million vehicle sales in the US. The company claims it will need an additional 6 billion if market conditions are worse than that and sales fall to around 10.5 million.

According to the plan, GM will pay back the loans in 2012 and will be profitable after restructuring, predicated on a US market of 12 to 13 million vehicles. The US market over the last several years has hovered at around 17 million units, but vehicle sales have fallen off precipitously over the last year. GM's domestic sales fell 45 percent in October over the same month last year. For November, they were down more than 41 percent.

But it remains to be seen whether this plan will be enough for GM to secure any federal funds. Some lawmakers in the US are skeptical of an auto industry bailout and question whether GM or the other Big 3 are really willing to do what it takes to become competitive businesses again. "Throwing good money after bad" has become one of the most frequently utilized expressions on Capitol Hill these days.

2) Ford.
Ford has focused more on electric vehicles.

Source :
Ford places electric vehicles as center piece of turnaround plan - worldcarfans

Article :

Ford Motor presented a crisis plan centered around electric vehicles to the U.S. Congress on Tuesday. Details of the plan include the all-electric fleet vans for 2010, and an all-electric sedan by 2011. The "Vehicle Electrification Plan" will be formally introduced to the public at the North American International Auto Show in Detroit. Ford claims to be working with an anonymous battery maker and electric powertrain manufacturer to reduce the cost of those products.

Ford, Chrysler, and GM will reappear in D.C. this week to try to get bailout funding from the U.S. Government. So far, America has attempted to rescue it, and indeed the global economy, by handing out $3 trillion to banks and corporations. Some estimates have the United States willing to hand out up to $7 trillion.

The Big 3 automakers were shown the door in their previous attempt to get a piece of the bailout pie. Company CEOs say they deserve funding from the government because, despite years of declining sales, they provide employment for nearly 500,000 people. Critics deride the automakers' attempts because they have seemingly made little effort to change their business models or improve their products since the oil crisis of the 1970s.

Also included in the Ford plan is an increase in fuel economy across-the-board, with a capital investment of $14 billion. Their target is a 36% improvement on 2005 efficiency figures by 2015.

Ford is seen as being in the best position to return to profitability, according to cNet. They are requesting $9 billion in low cost loans from Washington, but expect to be profitable again by 2011.

3) Ford, GM and Chrysler CEO ready to work for $1 per day.
Source :
Ford CEO Mulally Driving to Washington DC in Escape Hybrid - worldcarfans

Article :

Ford CEO Alan Mulally will make a 9 hour drive from Detroit to Washington, D.C. in order to make a second plea for aid in Congressional testimony this week.

Last month, the Big 3 CEO's of the US automotive industry, representing Ford, GM and Chrysler, were roundly criticized for each taking their own company jet to the nation's capital to plead for aid for the ailing industry. Lawmakers did not have the votes to pass a bailout measure then but did give the industry a second chance to make it's case again this week.

But Congressional leaders, even those friendly to a bailout for the industry, are demanding detailed restructuring plans from the automakers as a pre-condition to government help. The industry is asking for 25 billion dollars in low-cost loans that they say they need to keep operating through 2009 and avoid a collapse.

As part of their restructuring plans that will be submitted to Congress today, the CEOs of both Ford and GM will say that they'll work for 1 dollar a year if they get the bailout money.

Chrysler CEO Robert Nardelli said in Congressional testimony last month that he would be willing to work for 1 dollar a year if that would help the company secure a bailout.

As the industry scrambles to satisfy lawmakers' demands, even the UAW, the union that represents US auto workers, has said it is willing to re-open contracts with the automakers and make concessions needed to keep the industry viable.

Ford is also promising to speed up the introduction of green vehicles, including new hybrid models and full electric cars and vans as part its restructuring plan.

Ford has also stated that it is considering giving up its five corporate jets.

[VIPER_SRT]

The new bailout amount has gone up to 33 Billion. GM wants more now 18 Billion. The main problem is Auto Unions. They have a big baggage for retirees, there health Insurance coverage for life and too much salaries. I think they are getting rid of there Jets which is good but that wont solve the problem. They had a similar problem back in 70's but no action. It took more than 10 yrs for Hyundai to gain public trust in US for their build quality. I'm not sure if GM is going to survive that long given the current economy.

I guess Bankruptcy would be good on one side so that they will restructure the whole and come back with a new start but again on the other side lots of people will loose their jobs and will be worse for the economy since they all will file for unemployment insurance and other benefits. Bottom line, the tax payers will loose their money for management screw ups.

[deep_bang]

Originally Posted by prasadee

The way the CEOs of the big 3 went to Washington in their private jets with a begging bowl, getting $30+ million in salaries, they should not expect mych from tax payers. "First get govt. salaries, before you ask for govt. money". If I were a cartoonist, I would draw a cartoon of these big 3 getting kicked out of whitehouse.

-Prasadee

I heard that that second time they went to washington, the CEO's are going by hybrid cars...

[VIPER_SRT]

Originally Posted by deep_bang

I heard that that second time they went to washington, the CEO's are going by hybrid cars...

Very true and they already arrived. I guess that publicity stunt wont work since the bill wont pass according to CNN poll. I guess its time the Big 3's should retire or come back with what customers want. Ford can still survive without the Fed money but GM and Chrysler wont. This is the best time to buy cars in the US market. Car manufacturers are giving discounts upto 30% off. In Florida a dealer has put up a board "Buy one get one free" (came on CNN). BMW has 0.9% APR for almost all the models. RangeRovers have 0% APR on their models except few like 3.9% for M series). I've no clue how the big 3's are going to survive this market.

[aaggoswami]

Some more news:

1) GM and Chrysler are considering Bankruptcy as last resort.
Source :
GM and Chrysler considering bankruptcy as a last resort - worldcarfans

Article :

Executives at GM and Chrysler have each held private discussions on a possible pre-arranged bankruptcy for their companies. The two automakers are said to be considering the option as a measure of last resort to secure badly needed funding from the US government.

The automakers would much rather get the bailout without having to resort to bankruptcy, fearing a bankruptcy will completely drive away their customers. But lawmakers in the US Congress, and the current Bush administration, have shown themselves very skeptical of a bailout for the US auto industry and have demanded to see detailed restructuring plans from each automaker as a condition for aid.

GM is very quickly running out of cash. CEO Rick Wagoner told the Congress in testimony today that his company needs 4 billion dollars before the end of the month and another 4 billion in January just to stay afloat. Chrysler is also in dire need of cash. Ford is fairing the best of the three. It has asked for a 9 billion US dollar line of credit as its part of the bailout package but says it may not need to tap it, depending on market conditions in 2009.

But Ford CEO Alan Mulally says the industry desperately needs the bailout and that if GM collapses, it may take down his company too.

"The collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises," Mulally said in Congressional testimony today, as reported by Bloomberg.

But many Republican lawmakers remain opposed to a bailout.

Alabama Senator Richard Shelby said the automakers' plans were not serious and had "few concrete details."

"If you made this presentation to get a bank loan I suspect that any sensible banker would summarily reject your request," Shelby said, as quoted in the Bloomberg story.

In other testimony, chief economist of Economy.com, a Moody's Corp. website, Mark Zandi, said that automakers would need a lot more than the 34 billion on the table right now. "They would ultimately need 75 billion (US) to $125 billion to avoid this fate [of collapse]," Zandi told the Congressional panel.

2) Surprising that Public Opposes automakers bailout as per poll by CNN.

Source :
Public opposes auto bailout by 60 percent in CNN poll - worldcarfans

Article:

US automakers hoping for government aid stand a better chance winning over lawmakers than the American public.

In a poll conducted earlier this week by CNN, 61 percent of respondents were opposed to a bailout for the ailing US auto industry.

The CEO's of the Big 3 were roundly criticized last month for arriving in Washington to ask for a bailout each in their own corporate jet. Even Democratic lawmakers sympathetic to their cause have chastised Big 3 management and have demanded that the industry do more to prove they will capably restructure their companies and use the bailout money wisely.

On Tuesday, the companies presented their restructuring plans to the Congress and are now asking for a 34 billion dollar package, instead of the previous 25 billion they were pleading for just last month. They claim worsening market conditions has led them to bleed cash much faster.

November sales figures were dismal across the board and hit Japanese automakers just as hard as the domestic brands. Nissan suffered a 42 percent drop in sales compared to November of 2007. For Toyota, it was almost 34 percent. GM and Chrysler fell precipitously at 40 and 47 percent, respectively. Ford faired the best at 30 percent, while US car sales as a whole were down 33 percent for the month.

The American public, along with a majority of Republicans in Congress and the Bush administration, oppose a bailout, but the consequences could be worse than they believe. Alan Mulally, CEO of Ford, has said his company may not need a bailout, but that if GM collapses it may lead to a domino effect in the industry and take out suppliers and ultimately take his company down too.

3) Wagoner Heading to Bailout hearing in Volt.

Source:
Wagoner Heading to Bailout Hearing in Chevy Volt Prototype - worldcarfans

Article:

After last months public relations nightmare where CEO's from the big three took private jets to Washington DC to ask for a 25 billion dollar government loan package, General Motor's CEO Rick Wagoner has decided to forgo the first class accommodations for a Chevy Volt mule.

The mule will be outfitted with the body of a Chevy Cruze but it will be equipped with the powertrain from the highly anticipated Chevy Volt. GM hopes this will send an important message to members of Capital Hill, stating in essence that a key part of the company's turn around plan will be based on new vehicles that will feature advanced technologies and improved fuel economy.

During GM's presentation the company will showcase the technology behind the Volt in an effort to explain to the Senators that the company's viability will be based on new energy saving technologies. With GM's plan to cut costs and focus on four core brands, the company is hoping Congress will approve their request for $18 billion in government loans.

4) Ford is selling Volve for $6 Billion. I sincerely hope Toyota buys it.

Source :
Ford Puts 6 Billion Dollar PriceTag on Volvo - worldcarfans

Article :

Ford is looking to unload Volvo and has put a 6 billion US dollar price tag on the Swedish automaker. Ford is using JPMorgan Chase & Co. as an adviser on a possible sale.

The Big 3 Detroit automakers are making a bid to the US government for a 34 billion dollar bailout and each automaker is taking steps to demonstrate they are serious about restructuring their companies and cutting their losses. Volvo has not been a profitable part of Ford's business and lost over 450 million dollars in the third quarter of this year. Ford is asking for a 9 billion line of credit as its part of the bailout package.

Ford bought Volvo for 6.4 billion US in 1999 but may not get the 6 billion it is asking for it today. These are tough times in the automotive world and it may be difficult to find a buyer. Earlier this year Ford had discussions with Renault on a possible sale of Volvo to the French car maker, but ultimately Renault wasn't interested. Other European car makers such as VW already have their own partnerships with premium or luxury brands and therefore would have little interest in buying Volvo.

Asian automakers are another avenue for Ford - companies such as SAIC Motor Corp., China's largest car maker, or Hyundai of Korea. Another possibility is purchase by an equity group interested in buying a name-brand company on the cheap.

The Swedish government is also considering providing aid to its two domestic brands, Saab and Volvo, both in trouble because of their parent companies, GM and Ford, respectively. The government may consider putting together a deal for the Wallenberg family, who control Sweden's Investor AB, to make a bid for either car maker. It is unlikely the government of Sweden is interested in directly buying either Volvo or Saab.

[aaggoswami]

Senators are pushing for GM and Chrysler merger. As we know out of the big three, Ford is the one to be in best condition. It has asked for $ 9billion and also that it might not use it. This shows that Ford is in good condition as compared to the other two. So now Senators are pushing for GM-Chrysler merger.

Source : Senators Pushing for GM Chrysler Merger - worldcarfans

Article :

General Motors and Chrysler may really end up merging. This possibility was raised at the Senate hearings where both companies' CEOs were asked if a condition for lending them money was that they merge their companies. Both said they would consider it.

"I'd be very willing to look at it seriously," GM CEO Rick Wagoner said.
"If such a move meant receiving money to save Chrysler," CEO Bob Nardelli said, "I would do it."

Senators continued to have conversations with the two leaders: "I'd like to see that happen," said Senator Bob Corker of a merger. "Our country cannot really deal with three separate US automakers."

Another Senator Robert Bennett had broached the merger idea because Nardelli had even said such a thing could save up to US$10 billion a year. The grilling went on from Corker who felt Cerberus was just hoarding its vast cash reserves: "Cerberus owns 80% [Daimler still owns 20%] of this company and has cash," continued Corker, "lots of cash -- that they are unwilling to put into this company...It troubles me a little bit knowing that basically all we're really doing is providing a little capital for y'all to hang around long enough to get married".

Corker mentioned a conversation he'd had with a Chrysler board member who assured him Cerberus was not about to invest any more money into the entity than the US$7.4 billion already planted in August 2007 when they took over from DaimlerChrysler.

Nardelli denied these allegations, saying everyone who works at Chrysler was working very hard to keep the company going and that a sale wasn't on his mind each time he woke up in the morning.

[amit]

Everyone seems to be saying that Ford will probably survive even without the bailout but wouldn't it be affected if GM and Chrysler fall? If GM falls, they will start giving crazy discounts on their cars to collect whatever money they can to repay their creditors and this will obviously hit Ford sales hard which may result in their fall too wouldn't it?

On the other hand, it may be possible that buyers would rather buy a car of a company that's still surviving rather then pay very little to buy a car that they will find difficult to service, repair and sell in a couple of months. If that logic wins, Ford may not get hit that hard by GM's fall.

[aaggoswami]

Originally Posted by amit

Everyone seems to be saying that Ford will probably survive even without the bailout but wouldn't it be affected if GM and Chrysler fall? If GM falls, they will start giving crazy discounts on their cars to collect whatever money they can to repay their creditors and this will obviously hit Ford sales hard which may result in their fall too wouldn't it?

On the other hand, it may be possible that buyers would rather buy a car of a company that's still surviving rather then pay very little to buy a car that they will find difficult to service, repair and sell in a couple of months. If that logic wins, Ford may not get hit that hard by GM's fall.

If GM and Chrysler fall, then Ford will also suffer. The reason is that there is around 80% overlap in suppliers. Also there are many dealers who have dealerships for all the three automakers. So in any case Ford will be affected. Ford is almost as much value as GM in US market, so they can do marketing and survive. But the real issue will be behind the scene.
I hope Ford makes it through. And in Europe also Ford has quite a hold that GM also has through Opel, but Chrysler lacks this.

EDIT : Source : http://www.team-bhp.com/forum/1080340-post102.html (GM is months away from bankruptcy. EDIT : Files for Chapter 11)

But Ford CEO Alan Mulally says the industry desperately needs the bailout and that if GM collapses, it may take down his company too.

"The collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises," Mulally said in Congressional testimony today, as reported by Bloomberg.