GM Chrysler Want More More More

[Nomad]

NEW YORK (CNNMoney.com) -- General Motors and Chrysler LLC said Tuesday they could need an additional $21.6 billion in federal loans between them because of worsening demand for their cars and trucks.

The two firms, in documents submitted to the Treasury Department, also detailed plans to cut 50,000 jobs worldwide by the end of the year.GM said it plans to close five more plants in the next few years and confirmed it will drop some of its weaker brands.

When all is said and done,GM (GM, Fortune 500) said that by 2011 it could need a total of $30 billion, which includes the $13.4 billion in Treasury loans it has already received. In the near term, GM will most certainly need $9.1 billion in additional loans and could require another $7.5 billion in the next two years if auto sales don't improve.

Chrysler said it now needs a total of $9 billion, up from the $4 billion Treasury loan it received in December. Chrysler said it will need that money by March 31.

GM also accelerated its job cut plans, saying that it would eliminate 47,000 jobs over the course of 2009. The company said it would cut about 20,000 jobs in the United States, or about 22% of its remaining U.S. staff.

Previously, GM called for U.S. job cuts of between 20,000 to 30,000 workers, but it had stretched out those reductions through 2012.

The company said it plans to close five additional U.S. plants by 2012 --in addition to the 12 planned closings announced in December. Executives would not identify the plants that would be closed.

"Our plan is significantly more aggressive because it has to be," said GM Chairman Rick Wagoner.

Experts said that the request for additional dollars are not a surprise, given how bad auto sales have been since the December plea for help.

"The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com. "No automaker is viable under the current market conditions, and so far the spending package appears to spread money too thin to actually make much of a difference in any one area."

Some economists argued that the problems detailed in the plans show that GM and Chrysler are already failed companies.

"When consumers refuse to buy your product, that's the economy telling you you're bankrupt," said Rich Yamarone, director of research at Argus Research. "

But Yamarone said it may make sense to give them the money they need, even if it's good money after bad, because the battered U.S. economy can't weather the halt of operations at GM and Chrysler right now.

GM added it plans to phase out the Saturn brand by the middle of 2011 if it is unable to sell or spin-off the brand. GM is also looking to sell its Saab brand, and will look for help from the Swedish government to support Saab until a buyer is found.

Chrysler said it plans to cut about 3,000 jobs, or 6% of its workforce, and reduce capacity by another 100,000 vehicles this year as it tries to adjust to reduced demand. It also said it has won the concessions from the United Auto Workers union and its creditors that were demanded under terms of the loan from the Treasury Department.

The companies had a deadline of Tuesday to update the government on the status of their turnaround plans. The new plans highlighted a worsening forecast for sales, and more job cuts at the companies in the coming months.

Bankruptcy could be 'cataclysmic'

A newly-appointed auto panel will review both plans and determine by March 31 if GM and Chrysler can be viable in the long run. Specifically, the Treasury Department is looking for details about the progress of negotiations with creditors and the UAW.

White House spokesman Robert Gibbs issued a statement late Tuesday saying that the panel would be reviewing the plans and that "We appreciate the effort that these companies and their stakeholders have made."

The automakers' request for a $34 billion federal bailout in December fell short when Senate Republicans blocked passage of the request. The Democratic majorities in both houses of Congress have grown since then.

While both plans are more than 100 pages each, they have only limited details about the latest deals reached with the United Auto Workers union to shed costs, as well as about GM's efforts to shed much of its unsecured debt, as required under the terms of its existing loans.

GM is struggling under a $35 billion mountain of unsecured debt. It hopes to shed about two-thirds of that debt with a swap of debt for equity with its bond holders.

But the company was not able to reach a deal with the bond holders by Tuesday's deadline, although it did include a letter from their committee's financial and legal advisers saying that they are "prepared to recommend that the committee approve and support the bond exchange" proposed by GM.

If the federal panel looking at the plans rules either company is not viable, it could recall the outstanding loans, a move that would likely force them into bankruptcy. In a statement, Chrysler chairman Robert Nardelli said he believes additional federal help is the best course for both Chrysler and the battered U.S. economy.

"We believe the requested working capital loan is the least-costly alternative and will help provide an important stimulus to the U.S. economy and deliver positive results for American taxpayers," said Nardelli in the statement.

To that end, the companies also submitted an analysis of what would happen if it filed for bankruptcy. In a reorganization scenario, GM said it might need up to $100 billion in additional federal loans to finance their operations during a two-year reorganization. Chrysler said it would need up to $20 billion to $25 billion.

If it was forced to liquidate, Chrysler estimated there would be a loss of 2 million to 3 million jobs, resulting in a $150 billion reduction in federal tax revenue over three years.

Nardelli added that a Chrysler bankruptcy would have a "cataclysmic" impact on the auto parts supplier industry, which would affect operations and production at all automakers.

Sales forecast: From bad to worse

The other member of Detroit's so-called Big Three, Ford Motor (F, Fortune 500), requested a credit line of $9 billion from Congress in December.

But Ford said it would not to have to tap the line of credit unless conditions in the auto market and economy deteriorated more than expected.

Since then, demand for cars and trucks has gone from bad to worse, with January sales falling to their lowest level in 26 years. The automakers and industry experts have also slashed sales forecasts for 2009 and beyond.

Chrysler has been among the hardest hit in the industry though. Sales plunged 54% from year-earlier levels in December and January, and the company left most of its 12 North American assembly plants idled throughout January due to weak demand and excess inventory.

In addition to the job and production cuts, the company pledged to further lower costs by eliminating a manufacturing shift and discontinuing three models.

"We fully understand the need to adapt to significantly reduced annual U.S. sales," said Nardelli in Chrysler's statement.

The company now expects to industrywide U.S. sales this year of only 10.1 million vehicles, which would be a 40-year low. It believes sales from 2010 through 2012 will average only 10.8 million a year.

GM's U.S. sales forecast for 2009 is close to Chrysler's estimate - around 10.5 million cars and light trucks. But it is far more optimistic about a rebound in sales from 2010-2012.

Separately, UAW president Ron Gettelfinger said in a statement Tuesday that the union had "reached tentative understandings with Chrysler, Ford and General Motors on modifications to the 2007 national agreements."

Gettelfinger said "the changes will help these companies face the extraordinarily difficult economic climate in which they operate." But he declined to disclose specific terms of the tentative agreement and said that discussions were continuing. First Published: February 17, 2009: 4:48 PM ET

[Ally]

LET ALL THE EXECUTIVES DONATE THEIR SALERY UNTIL ITS SORTED,HOW DO U THINK THAT WOULD GO OVER.:yh_rotfl

[Ally]

Scrat;1138794 wrote: That sounds like a great idea to me Ally but it will go over like a ton of bricks.

As for GM let them die, just let them go. That's the way it's supposed to be.


Yeh its a shame scrat,I mean they have just been given tons of money wot the hell are they doin with it.:-5:-5:-5

[Ally]

Scrat;1138794 wrote: That sounds like a great idea to me Ally but it will go over like a ton of bricks.

As for GM let them die, just let them go. That's the way it's supposed to be.


I love ur little slogans Scrat they are both priceless.:yh_rotfl:yh_rotfl

[Peter Lake]

We have the same problem here in the UK. Whilst i can fully understand the government having to nationalise and bail out the the banks, i just can't see any help for the car manufacturers making much difference.

Here, British made cars are so over priced, the demand was never as it should be anyway. It is just far less costly to buy foriegn. That's the way most people see it here. Pouring money into the manufacturers is throwing good money after bad in my opinion. I am not an expert in finance but if they were not so keen on profit and slashed the price of British cars, maybe the industry could slowly recover. The government will bail them out only for them to continue to sell at inflated prices. Back to square one in five years time or less even.

[gmc]

Peter Lake;1138840 wrote: We have the same problem here in the UK. Whilst i can fully understand the government having to nationalise and bail out the the banks, i just can't see any help for the car manufacturers making much difference.

Here, British made cars are so over priced, the demand was never as it should be anyway. It is just far less costly to buy foriegn. That's the way most people see it here. Pouring money into the manufacturers is throwing good money after bad in my opinion. I am not an expert in finance but if they were not so keen on profit and slashed the price of British cars, maybe the industry could slowly recover. The government will bail them out only for them to continue to sell at inflated prices. Back to square one in five years time or less even.


The companies they want to help out are foreign owned. TATA bought jaguar for a song and are now asking for help BMW own mini you notice toyota and nissan aren't asking. Why should we bail out companies making expensive cars that nobody wants to buy just so they can keep making them? It's like British leyland all over again.

[Accountable]

"The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com.

[Oscar Namechange]

Accountable;1138899 wrote: "The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com.






This is the bit i don't get as with Britain. If the manufacturers continue to sell at inflated prices especially in these times, how can they stimulate car sales?

Surely the only way is for prices of cars to be cut to get folk to buy?

[gmc]

oscar;1138900 wrote: This is the bit i don't get as with Britain. If the manufacturers continue to sell at inflated prices especially in these times, how can they stimulate car sales?

Surely the only way is for prices of cars to be cut to get folk to buy?


You're making the mistake of assuming that anyone in government or the banks has any common sense. A range rover would have to come an awful lot before I would even think of buying one. Even then I can't think of any reason I want a 4x4

[Oscar Namechange]

gmc;1138954 wrote: You're making the mistake of assuming that anyone in government or the banks has any common sense. A range rover would have to come an awful lot before I would even think of buying one. Even then I can't think of any reason I want a 4x4
Although you are having a snidey dig at his Lovliness, this is the problem with such nonsense as 4X4's. The fuel consumption alone puts them out of reach of the average buyer. So even if they did cut profit and slashed prices, folk still wouldn't buy them because they are too expensive to run.

[Odie]

Ally;1138787 wrote: LET ALL THE EXECUTIVES DONATE THEIR SALERY UNTIL ITS SORTED,HOW DO U THINK THAT WOULD GO OVER.:yh_rotfl


something has to be done, our government is giving them billions and guess where its coming from?

homeowners tax's........going up another 4%.

yes, this is quite fair for me to pay for their debts!:-5:-5

[YZGI]

We need to quit giving the car manufacturers money. It would be better for the Government to buy up the over stocked cars from the manufacturers and then give them away to our soldiers who return from over seas action. The State would benefit from the personal property tax, the manufacturers would get an influx of cash and our service persons would benefit. At least we wouldn't be throwing it directly into the managements pockets.

[sunny104]

YZGI;1138984 wrote: We need to quit giving the car manufacturers money. It would be better for the Government to buy up the over stocked cars from the manufacturers and then give them away to our soldiers who return from over seas action. The State would benefit from the personal property tax, the manufacturers would get an influx of cash and our service persons would benefit. At least we wouldn't be throwing it directly into the managements pockets.


sounds good! :-6



YZGI for president!

[YZGI]

sunny104;1138989 wrote: sounds good! :-6





YZGI for president!
Finally, someone has come up with a good plan. Wait, I don't think I would like the hours. I hate to work after 5:00 pm.

[Oscar Namechange]

YZGI;1139000 wrote: Finally, someone has come up with a good plan. Wait, I don't think I would like the hours. I hate to work after 5:00 pm. Come to Britain..... Our prime Minister puts in around an hour :wah:

[gmc]

In Europe GM and ford make cars that more than hold their own with the competition i.e. BMW, Toyota, Nissan etc etc why can they do it there and not in the US even if it means importing more economical engines in the short term. It can't just be that all they make is SUV's surely?

[sunny104]

YZGI;1139000 wrote: Finally, someone has come up with a good plan. Wait, I don't think I would like the hours. I hate to work after 5:00 pm.


you'd be in charge, you'd make your own hours. Plus, you can invite Willie back to smoke some more pot on the roof.

[YZGI]

gmc;1139021 wrote: In Europe GM and ford make cars that more than hold their own with the competition i.e. BMW, Toyota, Nissan etc etc why can they do it there and not in the US even if it means importing more economical engines in the short term. It can't just be that all they make is SUV's surely?
Yes but here they don't. Honda, Toyota, Kia,and Hyandai make more efficient and affordable vehicles than our big 3. Kind of like the pharmaceutical companies. The pills we pay $100.00 a dose for get sold around the rest of the world for $5 bucks a dose. Drives me crazy.:-5

[YZGI]

sunny104;1139025 wrote: you'd be in charge, you'd make your own hours. Plus, you can invite Willie back to smoke some more pot on the roof.
Shhhh.

[Nomad]

Accountable;1138899 wrote: "The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com.






Thats a doozy aint it ?

[along-for-the-ride]

I say let the Oil Companies use their record profits to help the automobile industry. See the correlation between vehicles and fuel.

[Bryn Mawr]

along-for-the-ride;1139358 wrote: I say let the Oil Companies use their record profits to help the automobile industry. See the correlation between vehicles and fuel.


It's worse than that, the Oil companies have actively bought up many patents that would improve fuel efficiency and deliberately sat on them to prevent their exploitation - to me it is criminal.

[Galbally]

This is a very, very difficult question.

One the one hand I totally agree with the basic sentiment that the US Carmakers have simply been pursuing a business strategy that was fine when people had access to easy money and could afford these large, expensive inefficient vehicles, but those days are gone, easy credit is gone, the days of replacing your car every year are over, people will want small, efficient, cheap, reliable well-made cars from now on. Ones they can buy and service cheaply, will get at least 50 mpg, last at least 15 years without falling apart, and cost a whole lot less.

The companies are going to have to restructure their whole short-term, maximum profit strategy abruptly, build better cars, and give people what they need. The unions will have to accept that if people want jobs, they will have to take very large pay cuts. Just expecting the government to pay to have an American owned car industry as a status symbol is a waste of money. But having a good, healthy, innovative car industry would be a national asset, as would the engineering and technical skills that are required.

I don't know what the answers are, if GM and Ford go bankrupt then there are millions of jobs on the line, at the same time, America simply cannot afford to just use the government to prop up a business methodology that has failed, its the worst of both world, you have corporate socialism, that will just impoverish the tax payers in a deeply inequitous arrangement so that failed companies can survive. But if there is a way to save the industry somehow, and restructure it fundamentally, it would be good, but is that really realistic at this stage?

The consequences of GM going bankrupt are very serious indeed, but it may be inevitable, as tax payers can't take much more of this government largesse that bails out failure on a massive scale.

I dunno, these are horrendous economic times, I am glad I am not making these decisions right now. What a mess.

[BTS]

Accountable;1138899 wrote: "The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com.








You know a better tax cut on cars would be a good start in the right direction. Sheesh we (Albuquerque) just lost a large car dealership that closed down Albuquerque Dodge dealership shutting down - Forbes.com



Just think, what the effects of a higher tax cut would be, as opposed to a welfare check to the fat cats?

[Accountable]

Spending 3 trillion to create or save 3 million jobs. That's a million dollars a job. That stimulates something for me alright.

[BTS]

Accountable;1139765 wrote: Spending 3 trillion to create or save 3 million jobs. That's a million dollars a job. That stimulates something for me alright.











:yh_rotfl:yh_rotfl



ACC.............love the name of your pic...........:yh_rotfl



-gm-chrysler-want-more-more-more-bullshit_pile.jpg

[Accountable]

Scrat;1139913 wrote: Get the facts people, 3 trillion has not been spent. :yh_rotfl
I used current tense, as if that makes any difference at all to my point

[Nomad]

Accountable;1139765 wrote: Spending 3 trillion to create or save 3 million jobs. That's a million dollars a job. That stimulates something for me alright.





If its in your pants this thread is PG.

[gmc]

The thing is it actually damages those car manufacturers that already make cars that people want to buy. Honda and toyota now have to sell against subsidised product from the big three. What happens to the workers in their factories in the states when they start getting laid off as a result?

They're talking about doing a similar thing here. Keeping factories open to make cars nobody wants to buy. We've been down this road before in the seventies with british leyland and it was an unmitigated disaster. GM are trying to get the swedish govt to help out saab and the german govt Opel.

[Accountable]

Excellent points