Auto Task Force

Auto Task Force Saved Chrysler-Now Fiat Takes Control

2009-06-12T08:25:00.000-07:00

Fiat takes the wheel at troubled Chrysler
The Associated Press

DETROIT — Italy’s Fiat is the new owner of most of Chrysler’s assets, closing a deal Wednesday that saves the troubled U.S. automaker from liquidation and places a new company in the hands of Fiat’s CEO.

The deal clears the way for a new, leaner Chrysler Group LLC to emerge from bankruptcy protection minus billions in debt, 789 underperforming dealerships and burdensome labour costs that nearly sank the storied automaker.

Fiat CEO Sergio Marchionne immediately was named CEO of the new company, which said in a statement that it would soon reopen Chrysler factories in the United States and Canada that were idled during the bankruptcy process, costing the automaker US$100 million per day.

The new company will focus on smaller vehicles, areas in which Chrysler was weak.

"Work is already under way on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler’s hallmark going forward," the new company said in a statement.

The Italian automaker won’t put any money into the deal but will give Chrysler billions of dollars worth of small car and engine technology.

"We intend to build on Chrysler’s culture of innovation and Fiat’s complementary technology and expertise to expand Chrysler’s product portfolio both in North America and overseas," Marchionne said in a statement.

The Chrysler restructuring involved billions of dollars in financial aid from the U.S., Canadian and Ontario governments as well as labour, pension and other cost concessions from the United Auto Workers and Canadian Auto Workers unions.

In Ottawa, Canadian Industry Minister Tony Clement welcomed the sale and emergence of Chrysler from bankruptcy restructuring "in a timely and efficient manner."

"The government of Canada is confident that we will see a competitive Chrysler Canada Inc. that will produce and sell Canadian-made cars and will continue to play an important role in the company’s North American operations," Clement said in a release.

"A restructured Chrysler is good news for the Canadian auto parts supply chain and for Canadian consumers. The company can now focus on producing top quality vehicles that consumers want.

"Moving forward, the government of Canada will continue to work toward strengthening our country’s auto industry, while exercising rigorous oversight over the use of taxpayer money."

The sale to Fiat SpA marks a victory for the Obama administration, which shepherded Chrysler into bankruptcy protection April 30 with the hope that the company would emerge in a matter of months with a new partner.

Marchionne immediately made management changes, including the appointment of vice-chairman and president Jim Press as deputy CEO and adviser to help with the management transition.

Press, formerly top U.S. executive for Toyota Motor Corp., joined Chrysler shortly after it was taken over in 2007 by private equity firm Cerberus Capital Management LP.

In a statement, Marchionne said the organization will be designed to give leaders broad control and increase the speed of decision making.

Chrysler CEO Bob Nardelli bid employees farewell in an email obtained by The Associated Press, while vice-chairman Tom LaSorda already has retired.

Marchionne, in an email to Chrysler employees Wednesday, expressed confidence that Fiat will be able to turn Chrysler around.

He wrote that he stepped into a similar situation five years ago at Fiat, which at the time was perceived as a failing, bureaucratic automaker that made low-quality cars.

Yet most of the people capable of remaking Fiat were there all the time, he wrote.

"We have remade Fiat into a profitable company that produces some of the most popular, reliable and environmentally friendly cars in the world," he wrote.

"We created a far more efficient company while investing heavily in our technologies and platforms. And, importantly, we created a culture where everyone is expected to lead. We can and will accomplish the same results here."

On Tuesday, Chrysler won its battle to erase its secured debt after the Supreme Court declined to rule on objections to the sale to Fiat from a trio of Indiana pension and construction funds.

The Indiana funds, which hold less than one per cent of Chrysler’s US$6.9 billion in secured debt, claimed the sale unfairly favours Chrysler’s unsecured stakeholders such as the union ahead of secured debtholders like themselves.

Supreme Court Justice Ruth Bader Ginsburg decided Monday to delay the sale while studying the appeals.

But on Tuesday, the court turned down the opponents’ last-ditch bid by declining a hearing on the appeals.

Also on Tuesday, Judge Arthur Gonzales approved Chrysler’s motion to terminate 789 of its dealer franchises, or about 25 per cent of its dealer base.

Many of those dealers closed their doors for good on Tuesday, though some will continue to sell used cars or other brands.

Chrysler has maintained that the closures are a necessary part of its plan to cut costs.

Press told a Senate committee that the poor performance of many of the dealers slated to lose franchises costs the company $1.5 billion in lost sales each year, along with $150 million in advertising and marketing costs and $33 million in administrative costs.

The dealers had argued that they cover their own costs and little would be gained by terminating their franchises.

Chrysler lawyers said the automaker would extend until Monday its program to help the affected dealers send any unsold vehicles to stores that will remain open.

Chrysler’s swift passage through about five weeks of bankruptcy proceedings was helped by the involvement of the Obama administration’s auto task force, which provided billions in financing and helped negotiate a deal with the company’s stakeholders.

Under the agreement brokered in the days leading up to Chrysler’s Chapter 11 filing, Fiat will receive up to a 35 per cent stake in the automaker in exchange for sharing the technology Chrysler needs to create smaller, more fuel-efficient vehicles.

The United Auto Workers union will get a 55 per cent stake that will be used to fund its retiree health care obligations, while the U.S. and Canadian governments will receive a combined 10 per cent stake.

Chrysler sale to Fiat appealed To The Supreme Court

2009-06-08T05:41:00.000-07:00

Indiana pension funds group asks Supreme Court to block deal

David Shepardson / Detroit News Washington Bureau

Washington -- Lawyers for a group of Indiana pension funds have filed a long-shot emergency appeal with the U.S. Supreme Court seeking to block a deal that would allow Chrysler LLC's emergence from bankruptcy, which could come as early as today.

The appeal came a day after a three-judge panel of the U.S. Court of Appeals in New York approved the sale of Chrysler's "good" assets from bankruptcy to form a new company, Chrysler Group LLC. That firm will be majority owned by a United Auto Workers' health care trust fund. Fiat SpA, which will own 20 percent, will be able to acquire another 15 percent of Chrysler by meeting three benchmarks and will not have to put up any money for its stake. Fiat's CEO Sergio Marchionne will be CEO of Chrysler as well.

In a 39-page appeal filed before midnight Saturday, lawyers for the pension funds wrote: "The negative economic consequences of permitting an unlawful sale to proceed may well over time dramatically outweigh Chrysler's short-term harm. The public is watching and needs to see that, particularly when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch."

The petition was referred to Justice Ruth Bader Ginsburg, who handles emergency appeals for the 2nd Circuit. She can rule on the matter herself or refer it to the entire Supreme Court. Five of the nine justices would need to vote to hear the appeal and extend a stay blocking Chrysler's sale. By late Sunday evening, the court had not yet ruled.

The Indiana funds hold $100 million of Chrysler's $6.9 billion in secured debt. The funds cover about 100,000 workers and retirees in Indiana.

The U.S. Appeals Court on Friday upheld a May 31 bankruptcy court ruling clearing the way for the sale of most of Chrysler's assets to a group including Fiat and the UAW's health care trust fund. The UAW fund will hold a 55 percent stake, while the U.S. and Canadian governments will hold 10 percent. Fiat has the right to withdraw from the deal if Chrysler hasn't exited bankruptcy by June 15.

The appeals court gave creditors until 4 p.m. today to convince the Supreme Court to hear the case. If not, Chrysler could close on its sale soon afterward.

Much of the Indiana pension funds' arguments against the sale rely on internal e-mails between Chrysler and members of the Obama auto task force, which showed the overarching role of the government in pushing Chrysler into bankruptcy and directing the carmaker's actions ahead of the filing.

Legal experts said the creditors have a high hurdle to vault, since the High Court accepts just a fraction of the cases it receives -- and even fewer emergency cases for review.

But the case would represent the first time the court could rule on the legality of the $700 billion Troubled Asset Relief Program, the Wall Street bailout fund that Congress approved last fall. The creditors have challenged the use of the funds for automakers.

The Treasury Department agreed to pay off secured creditors of Chrysler with $2 billion in cash for $6.9 billion in debt -- or about 29 cents on the dollar.

The Indiana funds purchased the debt at an average price of 43 cents on the dollar -- meaning they would lose roughly $13 million on their $42 million investment.

Dealers Fight Chrysler Franchise Cuts in Court

2009-06-05T06:07:00.000-07:00

NEW YORK, June 4 -- Eldon Palmer was preparing for a grand opening of his upgraded Chrysler dealership -- a $3.2 million project he pursued at the automaker's urging -- when the letter came.

In formal language that seemed to belie their 52-year business relationship, Chrysler informed Palmer that his Indiana dealership, along with another he runs, would be among the 789 dropped as the automaker seeks to emerge from bankruptcy as a new leaner, healthier company.

"We were ready to roll," said Palmer, recounting the millions he has spent over the past two years expanding his Chrysler brands and putting them under one roof in a new facility. He had done so, Palmer added, at the request of Chrysler, which was trying to establish a more efficient dealership network.

One after another, Chrysler dealers slated for closure took the witness stand Thursday in a federal bankruptcy courthouse in Lower Manhattan. Some openly wept.

Chrysler, which plans to emerge from bankruptcy as a new company led by Italian automaker Fiat, is seeking court approval to terminate agreements with roughly a quarter of its dealerships. Thursday's hearing is to be followed by oral arguments Tuesday, after which U.S. Bankruptcy Judge Arthur J. Gonzalez will rule.

Chrysler executives have said that whittling down a bloated dealer network was necessary to be more competitive with foreign manufacturers. The executives said the company used business criteria such as sales productivity and customer service satisfaction to determine which dealers to cut. Chrysler also wants to bring its three product lines -- Chrysler, Dodge and Jeep -- under one dealership roof.

During cross-examination by a Chrysler attorney, Palmer acknowledged that his dealership met a mere 37 percent of its sales target for 2008. "It was embarrassing," Palmer said, in part blaming the poor showing on the condition of the building he purchased, which he has since renovated. "It is a beautiful facility now.

Larry Crain, a dealer in Little Rock, told a similar story, saying he invested in expanding his product offering at the encouragement of Chrysler. And like many others, Robert Melvin, a Nevada dealer, testified that he bought more cars from the company in recent months at the request of executives as Chrysler, faced with plunging sales, tottered on the brink of bankruptcy with insufficient cash flow.

He received a rejection letter last month. To his dismay, Melvin added, he received a shipment of more cars from Chrysler last week.

Despite the dealers' pleas, bankruptcy experts said the dealers have an uphill legal battle. In bankruptcy proceedings, companies have more leverage to ignore state franchise laws that protect dealers. And even if the dealers succeed in preserving their dealership agreements, the nature of the Chrysler case complicates the dealers' battle.

Chrysler is seeking to sell most of its assets to a new company led by Fiat, but the dealer contracts are with the "old" Chrysler that is being liquidated.

"It's a long shot," said Scott Van Meter, managing director of LECG, a consulting firm.

Furthermore, in an opinion approving the sale this week, Judge Gonzalez noted that the underlying argument of many opposing the transaction is the desire to have the government protect every stakeholder from economic loss -- not just those that the government perceives as being essential to the survival of a successful new Chrysler.

"For example, any dealership rejection that is approved will cause hardship to the particular dealership involved but may well be necessary if New Chrysler is to survive," Gonzalez wrote.

Chrysler-Fiat Will become A Global Powerhouse

2009-05-07T03:37:00.000-07:00

J. Travis-Gm Chrysler News

As Fiat SpA CEO Sergio Marchionne is in the process of wrapping up the Fiat Chrysler deal, he is also working on purchasing GM Operations overseas, Saab, Opel(Saturn) and building a global network quickly.

If Fiat is going after GM-Opel operations, it may target some of GM's domestic brands like Saturn and Pontiac.Because the Opel vehicles and Saturn vehicles are on the same platform....?

The new Chrysler-Fiat line up of vehicle brands could be quit impressive:
Alfa Romeo,Fiat,Ferrari,Maserati,Jeep,Chrysler,Dodge,Saab,Opel(Saturn),Joint ventures with Kia,Mitsubishi,TaTa and Nissan.

By time the smoke clears Chrysler-Fiat will be larger than GM and only second in the World to Toyota! Which they could easily surpass Toyota if the auto markets pick up around the world.

I would guess Sergio believes in go big or go home.....

Chrysler expected to sell assets to Fiat

2009-05-02T04:39:00.000-07:00

NEW YORK – Chrysler LLC is expected to file a motion Saturday to sell substantially all of its assets to Italian automaker Fiat Group SpA, but the ailing automaker must still deal with creditors who refused to come to a deal to erase the company's debt.

Attorneys for Chrysler say eight plants will not be affected by the sale, including five that the automaker revealed it will shutter by the end of next year.

While Chrysler faced its first hearing Friday in Manhattan bankruptcy court, court documents showed the Big Three automaker planned to close plants in Michigan, Missouri, Ohio and Wisconsin that employ about 4,800 people. Chrysler said they will be offered jobs at other plants.

The company also announced President and Vice Chairman Tom LaSorda is retiring effective immediately.

Judge Arthur Gonzalez approved a series of motions at Friday's hearing, launching a chain of events designed to ensure Chrysler's bankruptcy process is the quick and "surgical" one the company and the U.S. government have promised.

But what could prove to be the case's biggest challenge still lies ahead. Chrysler must eventually deal with creditors who defied government pressure to wipe out the automaker's debt and might have helped the company avoid a bankruptcy filing in the first place.

Another hearing was scheduled for Monday, where Chrysler attorneys will ask Gonzalez to let the company start using $4.5 billion in loans from the U.S. and Canadian governments to keep operating under bankruptcy protection.

Chrysler, the nation's third-largest car manufacturer, filed for bankruptcy protection Thursday. The company plans to emerge in as little as 30 days as a leaner, more nimble company, with Fiat potentially becoming the majority owner.

In return, the federal government agreed to give Chrysler up to $8 billion in additional financing, on top of the $4 billion the company already has received.

Chrysler attorney Corinne Ball said that lawyers on Monday would ask to set a date for the first hearing on the sale of its assets to the "new Chrysler." In bankruptcy, assets are sold in a two-part process during which the court asks for competing bids. None are expected in Chrysler's case, since documents show the company already tried to form alliances with dozens of companies, including Nissan-Renault, Toyota, Honda, Volkswagen and even rival General Motors Corp.

Heidi Sorvino, bankruptcy partner at Smith, Gambrell & Russell LLP, said a sale could be completed in 30 to 60 days.

"I think the sale will happen quickly," she said. "The actual proceeding is going to take a long time."

Until the deal with Fiat closes, the automaker plans to idle all of its plants in the U.S. Chrysler's Canadian assembly plants also halted production Friday because of parts shortages stemming from the U.S. shutdown.

In court documents, Chrysler said it won't keep its Sterling Heights, Mich., plant that makes Chrysler Sebrings and Dodge Avengers, and the Conner Avenue plant in Detroit that makes Dodge Vipers. The St. Louis North plant that makes Dodge Ram pickups would also close.

Chrysler's Twinsburg, Ohio, parts stamping plant and Kenosha, Wis., engine plant will also be shuttered.

Two other plants that will be left out of the Fiat sale are the St. Louis South plant and an assembly plant in Newark, Del., that were idled last year. Another facility, Chrysler's Detroit Axle plant, is already scheduled to be replaced by a new factory near Port Huron, Mich.

The "new Chrysler" would lease the eight plants, then shutter them by December 2010.

"While some facilities may close, substantially all Chrysler employees will be offered employment with the new company," Chrysler spokeswoman Dianna Gutierrez said. "Employees currently located at a facility identified for disposition will be offered a position at one of the facilities sold to the new company."

Gonzalez approved Chrysler's motion to allow the automaker to pay $48.8 million in employee and contract worker pre-bankruptcy wages, benefits and businesses expenses. The motion also references an estimated $86 million in employee vacation benefits that it may not ultimately have to pay.

The judge also approved Chrysler's motions that will let it continue to honor its warranties and continue its current banking practices.

It's uncertain when Gonzalez will face objections from the creditors that hold $6.9 billion of the automaker's debt.

Four banks holding 70 percent of the debt agreed to a deal that would give the lenders 29 cents on the dollar. But a collection of hedge funds refused to budge, saying the deal was unfair because they deserve to recover more than other creditors like the United Auto Workers.

President Barack Obama on Thursday chastised the funds for seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles, including the Fiat deal and a cost-cutting pact that the UAW ratified this week.

Chrysler's bankruptcy filing is the latest step in a drastic reordering of the American auto industry, which has been crushed by higher fuel prices, the recession and customer tastes that are moving away from the gas-guzzling SUVs that were once big money makers.

The government already has sunk about $25 billion in aid into Chrysler and GM.

GM faces its own day of reckoning on June 1, a date the administration has set for it to come up with its own restructuring plan. GM has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.

Like at Chrysler, debt may be the stumbling block. GM has asked its unsecured bondholders to exchange $27 billion of debt for a 10 percent stake in the automaker. The creditors balked, saying that would leave them with just pennies on the dollar and that they deserve a majority stake if they give up their claims.

Chrysler is in court today for bankruptcy hearing

2009-05-01T06:54:00.000-07:00

DETROIT – Chrysler's first hearing in a New York courtroom Friday morning may offer the first clue as to whether a quick, "surgical" bankruptcy is possible. The nation's third-largest automaker filed for Chapter 11 bankruptcy protection Thursday with an ambitious plan to emerge in as little as 30 days as a leaner, more nimble company.

After months on government life support, Chrysler is pinning its future on a top-to-bottom reorganization and plans to build cleaner cars through an alliance with Italian automaker Fiat. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.

On Friday morning, bankruptcy court Judge Arthur Gonzalez is scheduled to hear the case's first motions, which typically will allow the company to continue paying workers and basic utility costs as it restructures.

Eventually, Gonzalez will have to sort out the key issue that made bankruptcy necessary: the creditors that hold $6.9 billion of the Chrysler's debt.

Four of the largest banks holding 70 percent of the debt agreed this week to a deal that would give them $2 billion. But a collection of hedge funds refused to budge, saying the deal was unfair and would only return a small fraction of their holdings.

President Barack Obama on Thursday chastised the funds for seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles. Along with the Fiat deal, Chrysler adopted a cost-cutting pact with the UAW this week.

"They were hoping that everybody else would make sacrifices and they would have to make none," Obama said. "I don't stand with those who held out when everybody else is making sacrifices."

One lender, OppenheimerFunds Inc., said it rejected the government offer because it "unfairly asked our fund shareholders to make financial sacrifices greater than the sacrifices being made by unsecured creditors."

The White House said Chrysler could come out of bankruptcy in 30 to 60 days. Under normal circumstances, it would be difficult to complete such a large bankruptcy so quickly.

But John Pottow, a University of Michigan professor who specializes in bankruptcy, said the government's level of involvement is much greater than in a typical corporate bankruptcy.

"If you have the president of the United States who wants something to happen, I think anything's possible in bankruptcy protection," he said.

In the meantime, Chrysler said it will close all of its plants starting Monday and they will remain closed until the company comes out of bankruptcy. At least three Detroit-area factories sent workers home Thursday after suppliers stopped shipping parts over fears they would not be paid.

"A lot of us are scared," said Steve Grabowski, 33, who has worked at a Warren, Mich., parts stamping plant for seven years and was sent home Thursday. "We knew something like this was going to happen, but we didn't think it would be so soon."

Chrysler CEO Robert Nardelli announced he would step down when the bankruptcy is complete and take a post as an adviser with Cerberus Capital Management LP, which will give up its 80 percent ownership of Chrysler under the automaker's plan. Vice Chairman Tom LaSorda, who once ran the company when it was owned by the German automaker Daimler, said he would retire.

Chrysler's bankruptcy filing is the latest step in a drastic reordering of the American auto industry, which has been crushed by higher fuel prices, the recession and customer tastes that are moving away from the gas-guzzling SUVs that were once big money makers.

The administration has sunk about $25 billion in aid into Chrysler and rival General Motors Corp.

GM faces its own day of reckoning on June 1, a date the administration has set for it to come up with its own restructuring plan. GM has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.

Like at Chrysler, debt may be the stumbling block. GM has asked its unsecured bondholders to exchange $27 billion of debt for a 10 percent stake in the automaker. The creditors balked, saying that would leave them with just pennies on the dollar and that they deserve a majority stake if they give up their claims.

When Chrysler emerges from bankruptcy, the United Auto Workers union will own 55 percent of the automaker and the U.S. government will own 8 percent. The Canadian and Ontario governments, which are also contributing financing, would share a 2 percent stake.

Under the deal, Chrysler would gain access to Fiat's expertise in small, fuel-efficient vehicles. The U.S. automaker eventually wants to build cars that could get up to 40 mpg, far more economical than its current fleet focused on minivans, Jeep SUVs and the Dodge Ram pickup.

In exchange, Fiat would initially get 20 percent of the company, but its share could rise to 35 percent if certain benchmarks are met, and Fiat said Thursday it could get an additional 16 percent by 2016 if Chrysler's U.S. government loans are fully repaid. Fiat would also gain access to the North American market through Chrysler factories and dealerships.

Fiat CEO Sergio Marchionne said he planned to spend time meeting Chrysler's employees and touring its plants over the next few weeks.

He said Fiat was preparing for Chrysler to "re-emerge quickly as a reliable and competitive automaker." Fiat also plans to reintroduce brands like Alfa Romeo in North American markets.

The Fiat deal and bankruptcy cap a disastrous time for Chrysler.

Chrysler lost $8 billion last year and its sales through March were down 46 percent compared with the year-earlier period, leading some auto industry analysts to question whether Chrysler can survive even in bankruptcy.

But company executives told reporters Thursday that Chrysler vehicles with Fiat's fuel-efficient technology should reach showrooms in 18 months.

Vice Chairman Jim Press said Chrysler has cut expenses to operate profitably at a lower sales volume, and he said it would be able to take advantage of Fiat's distribution network to sell more vehicles globally.

Chrysler's LaSorda said in court papers that the automaker started to think about potential alliances as early as fall 2006, when Chrysler was still owned by DaimlerChrysler AG.

In the spring of 2007, LaSorda began negotiations with Nissan-Renault that went through several iterations, and Chrysler also started talks with GM in June 2008. The two companies even studied how much could be saved through a combination, but by November the worsening U.S. economy forced GM to focus on its own liquidity problems.

LaSorda named a number of other carmakers that Chrysler approached, including Toyota Motor Corp., Volkswagen AG, India's Tata Motors, the Hyundai-Kia Automotive Group, Russia's GAZ, Mitsubishi and Honda Motor Co., as well as a number of Chinese automakers. He said it had also approached some suppliers and parts manufacturers.

Despite the turmoil with Chrysler and GM's looming deadline, Obama urged consumers to keep buying cars.

"If you are considering buying a car, I hope it will be an American car," he said.

Stephen Manning reported from Washington. Associated Press writers David N. Goodman in Warren, Mich., Kimberly S. Johnson in Detroit and Vinnee Tong in New York contributed to this report.

Auto Task Force-Obama To Announce-Chrysler to file for bankruptcy

2009-04-30T08:52:00.000-07:00

Chrysler to file for bankruptcy

WASHINGTON – Chrysler will file for bankruptcy after talks with a small group of creditors crumbled just a day before a government deadline for the automaker to come up with a restructuring plan, two administration officials said Thursday.

The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt, according to the officials, who spoke on condition of anonymity because the filing plans are not public. Clearing those debts was a needed step for Chrysler restructure by the Thursday night deadline.

Bankruptcy doesn't mean the nation's third largest automaker will shut down. And the privately-held Chrysler is expected to sign a partnership agreement with the Italian company Fiat as early as Thursday as part of its restructuring plan. A Chapter 11 bankruptcy filing would allow a judge to decide how much the company's creditors would get.

President Barack Obama is expected to discuss the nation's auto sector at noon Eastern.

The Treasury Department's auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation's automakers.

Along with the Fiat deal, the United Auto Workers ratified a cost-cutting pact Wednesday night. Treasury reached a deal earlier this week with four banks that hold the majority of Chrsyler's debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 percent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and were holding out for a better deal.

"While the administration was willing to give the holdout creditors a final opportunity to do the right thing, the agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," said one of the administration officials.

A third person briefed on Wednesday night's events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

When it files for bankruptcy, Chrysler would continue operating and Fiat would still sign on as a partner on Thursday, the people said. The government already has promised to back Chrysler's warranties in an effort to allay customers' fears that the automaker wouldn't be around to honor them.

President Barack Obama's auto task force in March rejected Chrysler's restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat. The company has borrowed $4 billion from the federal government and needs billions more to keep operating. President Obama said Wednesday night while the lender talks were still ongoing that he was "very hopeful" that deals can be worked out to keep Chrysler LLC a viable automaker, and more hopeful than he was a month ago that the company will stay in business.

The UAW agreement, which would take effect May 4, meets Treasury requirements for continued loans to Chrysler Corp., and includes commitments from Fiat to manufacture a new small car in one of Chrysler's U.S. facilities and to share key technology with Chrysler.

Meanwhile, the Fiat partnership means Chrysler CEO Robert Nardelli could be out of a job. In an April e-mail to employees, he said that if the deal is completed, Chrysler would be run by a new board appointed by the government and Fiat. The new board, Nardelli wrote, would pick a CEO "with Fiat's concurrence."

Sergio Marchionne, CEO of the Italian automaker, told reporters earlier this month that he could run Chrysler. Obama said Wednesday that Fiat's management "has actually done a good job transforming their industry."

Krisher reported from Detroit. Associated Press Writers Ben Feller in Washington, Colleen Barry in Milan, Italy, Kimberly S. Johnson in Detroit and David Eggert in Lansing, Michigan, contributed to this report.

Obama praises autoworkers,says Chrysler deal uncertain

2009-04-29T09:54:00.000-07:00

President Barack Obama said today he did not know whether a deal preventing a collapse of Chrysler LLC would be done before Thursday's deadline, and praised American autoworkers for their sacrifices to the industry's survival.

Speaking at a town hall meeting in Missouri marking his 100th day in office, Obama said his auto task force sent Chrysler and General Motors Corp. back to redo their business plans because their initial sustainability plans were not realistic. GM has until June 1 to deliver its new plan.

As for Chrysler: “We don’t know yet whether the deal is going to get done.”

Chrysler and the administration reached an agreement with large Chrysler debt holders to swap $6.9 billion in secured debt for $2 billion in cash. But 40-odd investment firms and hedge funds have to agree in unison to the swap, or the government will take Chrysler to bankruptcy court to force it into place.

Chrysler must also complete a deal with Fiat S.p.A., which appears close at hand.....More

Chrysler News-U.S. Reaches Deal With Chrysler Banks, Person Says

2009-04-28T09:07:00.000-07:00

By John Hughes

April 28 (Bloomberg) -- The U.S. has reached agreement with banks on terms to reduce debt of Chrysler LLC, according to a person with knowledge of the negotiations.

The banks’ representatives agreed to forgo $6.9 billion in debt in return for $2 billion in cash, said the person, who declined to be identified discussing the private talks. The deal is one of the steps Chrysler needed to avoid a bankruptcy after April 30.

Bankruptcy remains a possibility for Chrysler, the person said. All 46 banks involved need to ratify the terms, and it isn’t likely that all would, the person said. In that case, a quick, surgical type of bankruptcy may be needed to bring any dissenting banks into an agreement, the person said.

Chrysler, operating with $4 billion in U.S. loans, faces an April 30 deadline to restructure its costs or risk losing government support.

Shawn Morgan, a Chrysler spokeswoman, declined to comment.

Auto Task Force-GM to shed 23,000 jobs, kill Pontiac brand

2009-04-27T10:04:00.001-07:00

WASHINGTON – General Motors Corp. will cut an additional 7,000 to 8,000 factory jobs in the United States, kill the Pontiac brand and shed 2,600 dealers by 2010 under a revised business plan developed under the Obama administration's eye.

The plan, along with an offer to bondholders to exchange $27 billion in GM debt for about 10% of a reconstituted GM and a small amount of cash, makes clear that the automaker's fate over the next few weeks rests with President Barack Obama. His auto task force set the terms of the bond deal and the goal of having 90% of the debt exchanged, and the U.S. government would become GM's majority shareholder if the plan succeeds.

GM Chief Executive Officer Fritz Henderson warned today that should the exchange not meet the task force's target, GM would file for bankruptcy on or before June 1. To succeed, GM will need thousands of GM debtholders to agree -- from individuals to some of the largest investors in the world -- by May 26.

"It's not impossible, but it’s a tough task," Henderson said, adding: "If we were to materially fall short, we would fall into a bankruptcy process."

As part of the debt offer, GM said, the administration would consider converting 50% of its loans to the company into GM stock. Combined with a similar request to the UAW for converting half of the $20 billion owed to a retiree health-care trust to shares, the plan envisions the government owning at least 50% of a reconstituted GM and the union holding about 39%.

Obama's auto task force said in a statement today that GM’s offer was an “important step,” but noted that its concessions hinge on bondholders and the UAW agreeing as well.

“We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the president’s commitment to a strong, vibrant American auto industry,” the task force said.

The new plan Henderson unveiled would get GM to profits in a U.S. market of 10 million vehicles -- a far lower rate than GM imagined just a couple of months ago. Should the debt swap succeed, GM will cut its debt by $44 billion and its structural costs by 25% by 2010.

"The objective here is not to survive, the objective is to develop an operating plan that allows us to win," Henderson said.

The new job cuts bring the total number of hourly jobs eliminated under GM’s plan to 21,000 by 2010 and 23,000 by 2011. GM said additional cuts among salaried workers would be expected, but did not give a specific target. As it had indicated earlier this month, GM now plans to close 13 plants by 2010 and an additional five plants by 2012.

Henderson said the Pontiac brand would be closed by 2010, calling it an “extremely personal decision.” In addition to speeding up decisions on Saturn, Saab and Hummer, GM will be left with four brands – Chevrolet, Buick, GMC and Cadillac.

He said while talks continue on Saab and Hummer, there was no deal on the table yet for Saturn that would allow GM to keep building those models beyond this year.

GM said it now expects it will need $27 billion in total from the Treasury to withstand the recession, including the $15.4 billion it's already received. That includes $2.6 billion it will need this quarter and an additional $9 billion after that, some of which includes the cost of deeper job cuts and plant closings.

Henderson said dealers targeted for closing would begin hearing from GM in a matter of weeks. Dealers have been apprehensive about a GM bankruptcy, but it's not clear how quickly GM could close outlets given a bevy of state laws protecting dealers.

Through the cuts in brands and models, GM will shed 14 models through 2010, although the Chevrolet Volt electric car remains on track for a 2010 launch.

Fiat CEO: Cut Wages or No Chrysler Deal

2009-04-19T08:36:00.000-07:00

The Obama administration's attempt to shepherd a shotgun marriage between Chrysler and Fiat appears to be in serious trouble. Fiat CEO Sergio Marchionne is demanding major concessions from labor unions before agreeing to any deal — and is offering next to nothing in return.

Fiat is prepared to scrap the deal and look elsewhere for an international partner if the unions do not agree to match the lower labour costs of Japanese and German plants in the United States and Canada, Mr. Marchionne said in an exclusive interview with The Globe and Mail at the Italian auto maker's headquarters in Turin. “Absolutely we are prepared to walk. There is no doubt in my mind,” he said. “We cannot commit to this organization unless we see light at the end of the tunnel.”

Mr. Marchionne, 56, said Chrysler workers on both sides of the border have to end their sense of entitlement if the wrecked auto maker is to have any chance of repairing itself. “The minute you talk to me about historical entitlement in an organization that is technically bankrupt, it's a nonsensical discussion,” he said. “There is no wealth to be distributed.”

From Canada's Globe

GM, Chrysler in line for more federal aid from The Auto Task Force

2009-04-17T06:41:00.000-07:00

Chrysler in line for $500M more; GM weighs fate of Pontiac, GMC

Robert Snell and David Shepardson / The Detroit News

Washington -- The Obama auto task force is preparing to loan General Motors Corp. about $5 billion in additional federal short-term aid, and Chrysler LLC $500 million, an Obama administration official familiar with the matter said Thursday.

The disclosure assigns a dollar amount to the pledge of continued short-term support issued late last month by the administration, after it rejected GM's and Chrysler's restructuring plans and requests for up to $21.6 billion in additional assistance. The official said the decision was expected to be announced next week -- though the precise amounts were still the subject of talks between the government and the automakers.

The White House said Thursday night no decision had been made about how much either automaker will receive. "No decisions have been made on how much working capital GM and Chrysler will be getting," said spokeswoman Amy Brundage.....More

Chrysler Canada News-CAW

2009-04-16T12:05:00.000-07:00

Chrysler must slash labour costs to receive gov't funding: industry minister

TORONTO — Chrysler Canada must slash its labour costs to a level competitive with non-unionized plants in Canada, and the pattern established in an earlier deal reached between General Motors Canada and its union isn't good enough, says federal Industry Minister Tony Clement.

Chrysler has said it needs to reduce its hourly labour costs by $19 an hour to be competitive with Toyota and Honda plants in Canada, but the Canadian Auto Workers union has so far insisted that it will stick to the pattern set in its March labour agreement with GM - which reduces that company's costs by about $7 an hour.

But Clement said the CAW will have to give up more to protect Canadian jobs.

"The CAW has to recognize that in order for Chrysler to survive in this country, that Chrysler has to be competitive with the rest of the Canadian market," Clement said at a news conference in Toronto on Thursday.

"If everyone is saying - and they are saying - that Chrysler, in order to be competitive, has to go beyond the pattern in terms of cost reductions and cost competitiveness, I believe the CAW has to have regard for that," he added.

Chrysler has been given until April 30 to negotiate a partnership with Italian automaker Fiat and to reach deals with its workers, bondholders and other stakeholders in order to receive long-term bailout loans from governments in Canada and the U.S.

The company spent several days in intensive labour negotiations with the CAW at the end of March, but those broke off after governments rejected its original restructuring plans.

This week, Fiat CEO Sergio Marchionne said he will walk away from the proposed partnership - widely considered to be Chrysler's last chance to avoid bankruptcy and possibly liquidation - if Chrysler can't reduce its labour costs to a level competitive with German and Japanese assembly plants in both Canada and the United States.

The CAW and Chrysler will head back to the bargaining table Monday, and two people briefed on the United Auto Workers' negotiations told The Associated Press on Thursday the U.S. union has placed talks with General Motors (NYSE:GM) on the back burner as it tries to forge a concession agreement with Chrysler.

Clement said Thursday that if Chrysler is unable to reach a deal with the CAW - and therefore cement its alliance with Fiat - the Canadian government will not provide the company with the emergency loans it has been asking for.

"With April 30 looming very closely on the horizon, the CAW has to do its part," Clement said.

"I know this is difficult. I know this affects real workers and towns and cities across Ontario. This is not an easy thing, but the alternative is, there is no deal in place and if there's no deal in place there will not be long-term funding arrangements with the government of Canada."

The federal and Ontario governments have already lent $250 million to Chrysler Canada at the end of March so it could meet payroll and other immediate obligations. Clement said the government would also have the right to call that loan if a deal isn't reached.

"If you're asking whether I'm willing to funnel Canadian government money and taxpayer money when we do not have an acceptable plan on a go-forward basis, I cannot do that. I don't think that would be responsible," Clement said.

Clement has also said the earlier agreement reached between the CAW and GM doesn't meet the conditions of long-term government loans and has asked the two parties to cut labour costs further.

However, GM CEO Fritz Henderson said the deal does make the company cost competitive and the CAW has refused to re-enter negotiations.

Chrysler said it is working hard to meet the governments' conditions by the April 30 deadline.

"All parties have complete understanding that Chrysler must achieve the necessary concessions and restructuring targets that have been established," the company said in an emailed statement.

"As it moves through this process, the company believes it is important to keep all options open but Chrysler's goal is to reach a conclusion by April 30 that the government deems viable, given the guidelines that have been set."

Clement was in Toronto to unveil a $145-million program called Automotive Partnership Canada, which he said will jump-start the development of higher tech, more environmentally friendly cars.

The program, which was initially announced in the Conservative government's 2008 budget, is also designed to help the struggling auto sector conserve jobs and rebuild.

Clement said the investment will be used to stimulate research and development in alternative fuels, next-generation manufacturing, advanced power trains and lighter or more sustainable materials.

UAW focusing on talks with Chrysler

2009-04-16T11:58:00.000-07:00

DETROIT – The United Auto Workers union has placed concession talks with General Motors Corp. on the back burner as it tries to reach a deal with Chrysler LLC before an April 30 government deadline, two people briefed on the negotiations said Thursday.

The decision likely means that any deal with Chrysler will set the pattern for concessions granted to GM as both companies try to show the government they have cut costs enough to get more government loans.

The people, who spoke on condition of anonymity because the talks are private, said the union is focusing on Chrysler because its government deadline to cut labor costs and swap debt for equity is just two weeks away.

Chrysler also has to ink an alliance deal with Fiat Group SpA by April 30 to get more government aid. Without further help, Chrysler likely would be auctioned off in pieces under bankruptcy court supervision.

GM's government deadline is June 1, but the Obama administration said it will provide bankruptcy financing if the company can't successfully restructure outside of court.

GM spokeswoman Sherrie Childers Arb and UAW spokeswoman Christine Moroski would not comment on the negotiations. Chrysler spokeswoman Shawn Morgan would not comment beyond a statement that the company has a goal is to reach a conclusion by April 30.

The Canadian Auto Workers union has said that it plans to resume negotiations with Chrysler on Monday after Fiat CEO Sergio Marchionne said the Italian automaker will walk away from the proposed tie-up unless Chrysler's unions agree to major cost cuts.

Canadian Industry Minister Tony Clement said Thursday that the CAW must make significant concessions to ensure Chrysler survives. Without a deal in the next two weeks, the Canadian government will also shut down its support for the troubled automaker, Clement said.

Chrysler, GM and Ford Motor Co. all reached concession deals with the UAW in February to limit overtime, cut lump-sum cash bonuses and eliminate cost-of-living pay increases. The union also agreed to suspend the jobs bank in which laid-off workers are paid most of their wages.

Workers at Ford, which is not receiving government aid, ratified their deal, but the GM and Chrysler agreements were never presented to union members because they got hung up on funding for a union-run trust that will take over retiree health care expenses next year.

Then, the Obama administration said last month that the cuts outlined in GM and Chrysler's viability plans didn't go far enough, and the union would have to give up more. Just how much more has not been stated publicly.

GM has received $13.4 billion in government loans and may need more money this month as it tries to survive the worst auto sales downturn in 27 years. Chrysler has received $4 billion and may also need more funding to stay alive until its deadline.

The government said it will lend Chrysler up to $6 billion more if it completes a deal with Fiat and gains concessions from unions and debtholders.

But creditors that hold $6.9 billion in Chrysler debt — mostly banks and hedge funds — have rejected an offer from the Treasury Department to erase the debt for $1 billion. They are preparing a counteroffer that likely will include more cash and an equity stake in the company.

A committee representing the holders of $28 billion in GM bonds is awaiting an offer from the company that aims to slash its unsecured debt by at least two-thirds.

Associated Press Writer Rob Gillies in Toronto contributed to this report.

Fiat CEO: Concessions or no alliance with Chrysler

2009-04-15T07:06:00.000-07:00

The latest Chrysler News-

Santiago Esparza / The Detroit News

Fiat Group SpA CEO Sergio Marchionne is ready to walk away from a proposed alliance with beleaguered Chrysler LLC if the automaker's union workers do not agree to concessions that would put their pay on the same scale as workers at U.S. plants owned by foreign car companies.

In a story posted today on The Toronto Globe and Mail's Web site, Marchionne said not getting concessions from the UAW and CAW are a breaking point for talks.

"Absolutely we are prepared to walk," he said in the story. "There is no doubt in my mind. We cannot commit to this organization unless we see light at the end of the tunnel." ....More

Will The Auto Task Force Have A Sit On Chrysler's New Board?

2009-04-14T07:21:00.000-07:00

Chrysler and potential partner Fiat are discussing a new management and board for the U.S. automaker under a proposed alliance that could see Fiat take a stake in Chrysler, Automotive News reported on Monday.

Chrysler is racing to complete a partnership with the Italian automaker by April 30, with the Obama administration warning the alternative would be bankruptcy.

The two automakers are discussing a new seven-member board for Chrysler that would include representatives from Fiat and possibly President Barack Obama’s automotive task force overseeing the restructuring of the auto industry, Automotive News reported, citing sources close to the negotiations.

Chrysler's new deal-Different owners and Marchionne-led management team

2009-04-13T06:45:00.000-07:00

Article from the Automotive News-

Different owners, a new board of directors and maybe a Marchionne-led management team

TURIN, Italy — As Chrysler LLC negotiates an alliance with Fiat S.p.A. that would satisfy the Obama administration, sources say the companies are discussing a revised ownership structure, a new board and possibly a different management team for Chrysler.

Among the options being discussed is a direct role in Chrysler's operations for Fiat CEO Sergio Marchionne — possibly even the chief executive's job.

Sources close to the merger negotiations say that after completing the deal, the plan is to elect a seven-member Chrysler board that would include representatives from Fiat and possibly President Barack Obama's automotive task force.

But the companies face major obstacles in getting the deal done. The ownership of the future Chrysler is still subject to complex negotiations involving Cerberus Capital Management LP, Daimler AG, the UAW and the big banks that hold Chrysler's debt.

A person familiar with the negotiations said the new management structure would divide the roles of CEO and chairman between two executives. The job of Chrysler chairman would be held by an American, the source said.

Since 2007, Chrysler's chairman and CEO jobs have been held by Bob Nardelli, appointed by Cerberus.

On March 30, Obama gave Chrysler and Fiat until the end of April to prove their alliance is workable. The government then would grant Chrysler up to $6 billion in additional loans. Chrysler already has received $4 billion.

Obama impressed

Marchionne (mar-kee-OHN'-nay) — the energetic, chain-smoking architect of Fiat's turnaround — has led the Italian automaker since 2004. In his March 30 speech about the auto industry, Obama praised Marchionne and described Fiat as a company where "the current management team has executed an impressive turnaround."

Another source familiar with the negotiations said Obama's task force may even dictate that Marchionne be directly involved in running Chrysler.

It's unclear whether Marchionne would try to exert hands-on control of Chrysler in the style of Carlos Ghosn, the CEO of Renault and Nissan. But there is evidence that he might try. The 56-year-old executive already spends several days each month in the United States, usually at the offices of Fiat's Case New Holland subsidiary in suburban Chicago.

Every other Friday evening, Marchionne boards a chartered overnight flight, snatching a few hours of sleep and arriving Saturday morning in Chicago. After two days working in America, he catches the red-eye return flight on Sunday.

Marchionne, who speaks accent-free English, holds both Italian and Canadian citizenships and earned university degrees in Toronto and Windsor, Ontario. He spent a decade working in Canada.

Asked about possible changes, Chrysler spokesman Todd Goyer issued a statement: "Chrysler has no management changes to announce. The job of Chrysler's current management team is to get the company on a solid foundation moving forward."

Obstacles remain

Speaking last week at the New York auto show, Chrysler co-President Jim Press said he is optimistic that Fiat and Chrysler can meet the government's requirements and form an alliance.

But he cautioned that Chrysler is preparing for bankruptcy if the alliance does not work out. "We've got to be prepared to take care of the equity and the assets," he said.

Besides the negotiations over the ownership of the future automaker, Chrysler negotiators are in talks with UAW officials about reducing Chrysler's $10.6 billion obligation to the union's health care trust.

The Treasury Department also is negotiating with the major banks holding $6.9 billion in Chrysler debt, according to a Bloomberg News Service report. Bloomberg said the four largest lenders are JPMorgan Chase & Co., Citigroup, Goldman Sachs Group and Morgan Stanley.

Cerberus has offered to give up its stake in Chrysler. Cerberus Chairman Stephen Feinberg is involved in the negotiations. Cerberus also must iron out a dispute in its effort to acquire Daimler's 19.9 percent stake in Chrysler. Cerberus aims to consolidate its ownership as part of the overall plan to restructure the company.

Speaking at a shareholder meeting last week in Berlin, Daimler CEO Dieter Zetsche said Cerberus was making "unacceptable" demands in negotiations to acquire the remainder of Daimler's stake.

The two sides have been wrangling since November over a Cerberus request to acquire Daimler's stake. Daimler sold majority ownership of Chrysler to Cerberus in 2007.

Government Auto Task Force May Split Up Chrysler's Equity

2009-04-06T06:43:00.000-07:00

Instead of Cerberus Capital Management and Daimler AG holding 80.1% and 19.9%, respectively, of Chrysler LLC, there will be a larger cast.

Under the latest scenario proposed by the U.S. government, Fiat SpA will have the largest block of Chrysler, at 20%. The remaining 80% will be allocated among a variety of secured creditors that include at least five banks and U.S. taxpayers.

Cerberus and Daimler likely will hold much smaller stakes because they still hold loans that helped finance the August 2007 acquisition of the Auburn Hills-based automaker.

Even the UAW could end up owning a piece of the company.

"They are trying to trade debt for equity among the current creditors," said Tom Stallkamp, a former DaimlerChrysler vice chairman and president. He is now a partner in Ripplewood Holdings LLC, a private equity fund. "It's all based on how much of a haircut the debt holders will accept."

Coincidentally, those debt holders include some of the giant banks -- J.P. Morgan Chase, Citicorp, Morgan Stanley and Goldman Sachs -- that auto industry advocates argue have benefitted from a double standard in how they accounted for government loans.

Debt-for-equity talks
There are three levels of Chrysler debt secured by such assets as manufacturing plants, equipment, vehicles, parts and real estate. The first level, valued by Chrysler at $6.9 billion, was borrowed from the banks. The second is $2 billion borrowed from Daimler ($1.5 billion) and Cerberus ($500 million). The third is the $4.3 billion in government loans committed in December and January.

If Chrysler were to file for bankruptcy, the banks would be first in line to sell assets, followed by Cerberus and Daimler, and finally the federal government.

"This is the worst possible time to be selling an auto plant," said Shelly Lombard, a credit analyst with Gimme Credit in New York.

Chrysler, Fiat and President Barack Obama's auto task force are working hard to avoid that outcome. To succeed, they must secure breakthrough agreements with the banks and the UAW. Then, the task force has said it would release up to $6 billion more to fund Chrysler's operations.

Unlike GM, which is dealing primarily with bondholders, Chrysler's debt is owed to banks and the government. Some of the bank loans have been sold to hedge funds and other investors. "It's hard to know who bought what, even with bonds, and it's harder still with bank loans," Lombard said.

One of the banks likely will act as an agent for the hedge funds. Then, the task force leaders, Steven Rattner and Ron Bloom, will negotiate for a settlement that offers the banks a fraction of the loans' face value in exchange for shares in the new Chrysler.

Challenges ahead
Fiat so far has not offered cash and has said it will not assume any current debt to partner with Chrysler. While Chrysler has valued Fiat's vehicles and powertrain technology at $8 billion to $10 billion, that won't likely satisfy the banks.

"Fiat is in many ways a reasonable long-term solution," said Craig Fitzgerald of Plante & Moran. "The big question is will $6 billion more from taxpayers be enough to fund Chrysler's turnaround."

The challenge with the UAW is to find a non-cash method to cover half of $10.6 billion Chrysler owes in 2010 to the Voluntary Employee Beneficiary Association, or VEBA, trust fund. The trust was created to cover health care insurance for UAW retirees.

If Fiat doesn't offer cash or its own stock, Chrysler may offer the union stock in the new company. Such a deal would save $5.3 billion, which could be enough to satisfy Obama's demand for more concessions, and bring the UAW into partnership with banks, taxpayers, Cerberus and Fiat.....More

White House questions viability of GM, Chrysler

2009-03-30T08:47:00.001-07:00

WASHINGTON — President Barack Obama said Monday that neither General Motors nor Chrysler has proposed sweeping enough changes to justify further large federal bailouts, and demanded "painful concessions" from creditors, unions and others as their price for survival.

Obama also raised the possibility of a controlled bankruptcy to help either or both "restructure quickly and emerge stronger" — uttering the term that industry and union officials have warned repeatedly could lead to the collapse of an entire domestic industry.

With his words, Obama underscored the extent to which the government is now dictating terms to two of the country's iconic corporations — forcing the departure of Rick Wagoner as CEO of General Motors, and bluntly warning it may pull the plug on either or both companies.

The Bush administration late last year approved $17 billion in federal funds to help GM and Chrysler survive. It also demanded both companies submit restructuring plans that the Obama administration would review.

Even as he pronounced their effort unsatisfactory, the president said the administration will offer General Motors "adequate working capital" over the next 60 days to produce a reorganization plan acceptable to the administration.

He said Chrysler's situation is more perilous, and the government will give the company 30 days to overcome hurdles to a merger with Fiat, the Italian automaker. If they are successful "we will consider lending up to $6 billion to help their plan succeed," he said.

Obama spoke at the White House with the Big 3 standing at yet another crossroads. As the president noted, the industry has shed over 400,000 jobs in the past year as the recession took hold. Officials announced last week bailout funds would be made available to companies that supply the automakers, an attempt to keep them afloat.

Obama said he is committed to the survival of an auto industry — on terms that will allow it to compete internationally.

"But we also cannot continue to excuse poor decisions," he said. "And we cannot make the survival of our auto industry dependent on an unending flow of tax dollars."

Chrysler and Fiat must merge or Face Liquidation

2009-03-30T06:36:00.001-07:00

From The Ap
Chrysler and Fiat must merge to get more help for the Auto Task Force

Frustrated administration officials, speaking on condition of anonymity ahead of Obama's announcement, said Chrysler has been given a 30-day window to complete a proposed partnership with Italian automaker Fiat SpA. The government will offer up to $6 billion to the companies if they can negotiate a deal before time runs out. If a Chrysler-Fiat union cannot be completed, Washington plans to walk away, leaving Chrysler destined for a complete sell-off....More

Chrysler’s Nardelli Is Said to Have Been Allowed to Stay in Job

2009-03-30T06:28:00.001-07:00

March 30 (Bloomberg) -- Chrysler LLC Chief Executive Officer Robert Nardelli hasn’t been asked to step down ahead of today’s U.S. government announcement about plans for the automaker, people familiar with the discussions said.

General Motors Corp. CEO Rick Wagoner will leave at the request of the Obama administration, said the people, who asked not to be identified because the matter is private. The companies are surviving with a combined $17.4 billion in U.S. aid, $4 billion of which went to Chrysler.

Chrysler will be told today that it must complete a planned alliance with Italy’s Fiat SpA to gain access to small-car technology in exchange for giving up a 35 percent equity stake, according to a government official.

With the U.S. not seeking a management change, Nardelli, 60, will get a chance to continue efforts to return Chrysler to profit. Chrysler owner Cerberus Capital Management LP hired the former Home Depot Inc. CEO in August 2007 after buying 80 percent of the third-largest U.S. automaker.

Chrysler said it lost $8 billion in 2008 as the U.S. auto market sank to a 16-year low. The Auburn Hills, Michigan-based automaker’s domestic sales tumbled 55 percent in January and 44 percent in February and asked for $5 billion more in U.S. aid. Chrysler Corp., as it was known then, took out $1.2 billion in government-backed loans in 1980 and repaid the money in 1983.....More

Obama forces Wagoner out at GM

2009-03-30T06:02:00.000-07:00

Chrysler gets 30 days to complete Fiat deal, GM 60 days to restructure

Christine Tierney and David Shepardson / The Detroit News

In a dramatic development on the day before President Barack Obama was to unveil his plan for the auto industry, General Motors Corp. Chairman and CEO Rick Wagoner stepped down after the administration asked him to resign.

Obama has said he wants to help the U.S. auto industry and is offering GM and Chrysler LLC fresh short-term aid, but he faces mounting public opposition to industry bailouts.

"From the government's perspective, they had to show a visible form of sacrifice," said David Cole, chairman of the Center for Automotive Research in Ann Arbor and the son of a former GM president. "At one level I'm surprised, and at another level, not at all."

GM confirmed the management change just after midnight and Wagoner released a statement."Fritz Henderson is an excellent choice to be the next CEO of GM," Wagoner said. "Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts."

Henderson, 50, a GM veteran who has led the automaker's European and Chinese operations, has been carrying out the company's restructuring on a day-to-day basis and knows the leaders of Obama's auto task force.

GM also said that Kent Kresa, chairman emeritus of Northrop Grumman Corp., had been named interim non-executive chairman of the board of directors. Kresa became a GM director in 2003.

Wagoner, 56, was a GM lifer who became the company's CEO in 2000 and chairman in 2003.

Industry experts credit Wagoner with pushing through reforms and a landmark labor contract at the 100-year-old automaker, but he may have moved too slowly.

"If you can criticize Rick, it's that he was incremental by nature," said Jeremy Anwyl, chief executive officer for the automotive research site Edmunds.com. "Step by step they were moving forward but they ran out of time."

After losing $82 billion since 2004, GM is subsisting on federal loans as it struggles through one of the most perilous stretches in its history. It has received $13.4 billion from the government and sought up to $16.6 billion more.

The government said late Sunday it will provide GM with an unspecified amount of working capital over the next 60 days.

There will be no immediate management changes at Chrysler, which will receive aid for 30 days as it moves to conclude an alliance with Italy's Fiat SpA.

Obama is scheduled to publicly outline his strategy for the American auto industry today in Washington.

In his statement, Wagoner said he was asked to step down during a meeting Friday at the U.S. Treasury Department.

"I think the need for something symbolic was pretty strong, and this certainly qualifies," Anwyl said.

In its assessment of GM's restructuring plan submitted on Feb. 17, the task force concluded that the plan was not viable, that GM needed a change of leadership, including changing most of the directors on its board.

It also said GM's plans did not go far enough, and it still has too many nameplates. It also said that while the Chevrolet Volt extended-range electric vehicle looks promising, it will probably be too expensive to be commercially successful initially.

Wagoner, who had agreed to work for $1 a year, is barred from getting a golden parachute or a big severance package under the terms of the government's Troubled Asset Recovery Program.

Earlier on Sunday, on one of the morning news shows, Obama said he believed the U.S. auto sector could be restructured to become a successful industry.

"But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean and mean and competitive than it currently is," he said on CBS's "Face the Nation." "And that's going to mean a set of sacrifices from all parties -- management, labor, shareholders, creditors, suppliers, dealers." ...More

Obama and Auto Task Force Are Hands on with Industry Resructuring

2009-03-30T06:01:00.000-07:00

David Shepardson / Detroit News Washington Bureau

Washington -- The Obama administration will take a much more hands-on role in the restructuring of General Motors Corp. and Chrysler LLC, providing both with short-term aid but insisting on and overseeing immediate dramatic changes.

The administration has set strict timetables for GM and Chrysler to complete restructuring and if required changes are not made is likely to force the automakers into bankruptcy in the coming months.

The companies are likely to go even further in cutting staff and closing plants in order to prove their viability.

The administration's auto task force agreed to provide Chrysler with short-term aid for the next 30 days as the automaker works to complete a tie-up with Itay's Fiat SpA and said it would consider loaning the partnership up to $6 billion if a deal can be finalized.

But it warned that if Chrysler and Fiat cannot come to terms on a partnership, the Auburn Hills automaker would not get any more taxpayer money -- a move that would likely force the company's liquidation....more

Fiat CEO says Chrysler proposal will change with Auto Task Force decision

2009-03-28T06:22:00.000-07:00

Article From The Detroit Free Press

Fiat CEO says Chrysler proposal will change
Ownership stake may be adjusted

Fiat CEO Sergio Marchionne said a proposal for the Italian automaker to take a 35% stake in Chrysler will change in unspecified ways as the companies await a decision as early as Tuesday by President Barack Obama's auto task force that could determine whether the partnership moves forward....More

Obama's Auto Task Force Wants More Fuel Efficient Vehicles

2009-03-28T06:20:00.000-07:00

From The Detroit News

New fuel rules to cost autos $1.5B
Higher mileage standards for ailing automakers will increase new vehicle price tags $64 to $126.
David Shepardson / The Detroit News
WASHINGTON -- Stricter fuel economy standards outlined Friday by the federal government for the 2011 model year will cost struggling auto companies nearly $1.5 billion and boost the cost of passenger vehicles an average of $64 for cars and $126 for light trucks.

The National Highway Traffic Safety Administration said the additional vehicle cost will be recouped by buyers of pickups, SUVs and minivans, through fuel savings, in an average of 7.7 years. Passenger car buyers will recover that cost in an average of 4.4 years.

"These standards are important steps in the nation's quest to achieve energy independence and bring more fuel efficient vehicles to American families," said Transportation Secretary Ray LaHood.

The Corporate Average Fuel Economy rules set by the Obama administration pegged the 2011 passenger car standard at 30.2 miles per gallon and the light truck standard at 24.1 mpg.

Overall vehicle efficiency climbs to 27.3 mpg in the 2011 model year, up 8 percent over the 2010 model year....More

Obama and Auto Task Force Say there will be Major Restructuring coming to GM and Chrysler

2009-03-27T11:21:00.000-07:00

Obama on autos: Aid ahead but at a price

GM, Chrysler updating plans for revival

WASHINGTON -- Heading toward Monday's announcement of his plans to help Detroit's auto industry, President Barack Obama said Thursday that the carmakers would need to make painful changes to get more federal help.

I think it is appropriate for us to say, 'are there ways for us to provide help to the U.S. auto industry to get through this very difficult time?' " he said during an online question-and-answer session. "But the price is you've got to finally restructure to deal with these long-standing problems.
"That means that everybody's going to have to give a little bit -- shareholders, workers, creditors, suppliers, dealers -- everybody is going to have to recognize that the current model, economic model of the U.S. auto industry is unsustainable."

His task force is expected to unveil a framework Monday that sets new terms for General Motors Corp. and Chrysler LLC to get more federal help beyond the $17.4 billion in loans they already have.

While noting the credit crisis and a sales slump that may reach new lows in March, Obama also revived criticisms of the industry he made in a 2007 speech to the Detroit Economic Club. He chastised the car companies for mismanagement, and said they could not rely on gas-guzzling SUVs as their sole source of profits.

"If they're not willing to make the changes," he said, "then I'm not willing to have taxpayer money chase after bad money."

Meanwhile, GM and Chrysler are preparing updates to their turnaround plans in the face of ever-worsening U.S. sales.

On Thursday, two forecasters pegged March's auto sales at annual rates below 10 million vehicles, the worst-case scenarios envisioned by the automakers.

Lowering their sales and production forecasts would raise the chances of even-deeper cuts, following GM's announcement Thursday that about 7,500 UAW workers agreed to buyouts and early retirements.

Here's a look at where their turnaround plans stand:

Workers
Chrysler, GM

• The UAW tentatively has agreed to end the so-called jobs bank, which pays laid-off workers most of their regular pay. The union also has made other unannounced concessions. Talks continue on replacing some cash payments the companies were to make for what the union's retiree health care trust is owed with company stock....More

Auto Task Force Set to Back More Loans -- With Strings

2009-03-26T06:32:00.000-07:00

Latest Report on the Auto Task Force From The Wall Street Journal

By NEIL KING JR. and JOHN D. STOLL
President Barack Obama last month handed his auto-industry team a seemingly impossible task: to engineer the most complicated industrial restructuring ever attempted by the federal government, and to do it fast.

With almost no experience in the car business, the team's dozen core members have undergone a crash course in the myriad woes plaguing the U.S. auto industry. Within days, just over a month after setting to work, they'll begin announcing decisions.

Interviews with task-force members indicate that the administration doesn't want to let General Motors Corp. and Chrysler LLC slip into bankruptcy protection, a course advocated by some critics of the industry. Instead, the task force is expected to say that it sees viable futures for both GM and Chrysler, but only if there are sacrifices from their managements, unions and GM's bondholders. The team will also lay out a firm timeline for action.

The government is prepared to lend the companies more money. The two companies have requested $22 billion more -- including $9 billion for the second quarter. But the task force may not disburse new aid immediately, choosing instead to preserve that as leverage.

Hanging in the balance are the jobs of 140,000 GM and Chrysler employees, more than 10,000 dealerships across the country, and a large swath of the industrial base in the Midwest.

On Wednesday, the task force met with officials from Chrysler and Italy's Fiat SpA and indicated it is still interested in seeing the two companies form an alliance, as the companies have proposed, according to two people who attended the meeting.

It's clear the team is not yet ready to put forward a comprehensive fix. "It's a steep learning curve that they've been climbing, and there is still a lot to do," said Michigan Rep. Gary Peters, whose district in suburban Detroit houses hundreds of auto suppliers, a few days after meeting with the task force. "That's why I suspect they'll come out with some preliminary statements, and then get back to work."

In session after session in a warren of offices at the Treasury Department, the team has sat through tutorials on dealer financing, studied basic data and debated the future of U.S. car sales. They have spent days trying to understand the complexities of the hundreds of companies that supply the car companies with axles, seats and other parts......More

Auto Task Force Wants To See Viability

2009-03-24T12:09:00.000-07:00

From The Detroit Free Press

General Motors Corp. began white-collar layoffs today, telling about 160 workers at the Warren Technical Center that their last day will be April 1.

The move is just the beginning of GM’s plans to cut 3,400 salaried jobs in the United States this year. Worldwide, GM plans to cut 47,000 workers by the end of the year.

The job cuts are part of GM’s sweeping restructuring efforts to make the company viable....More

Bailout plan from Auto Task Force may be stricter than GM, Chrysler expected

2009-03-24T09:19:00.000-07:00

By Sharon Silke Carty, USA TODAY
DETROIT — The Treasury Department will announce this week a preliminary plan to help General Motors and Chrysler that sets goals and deadlines that could be more ambitious than the companies themselves have proposed, according to a Capitol Hill staffer briefed on the plan but who wished to remain anonymous because the proposal is not yet public.
Treasury's preliminary plan also could include a bridge loan to Chrysler that's less than the $5 billion the automaker wants, the staffer said. Treasury says details still are being finalized.

A more structured version of the plan will be detailed in April, when additional loan money could become available to the two troubled companies.

The Bush administration in December set a deadline of March 31 for the automakers to prove they would be viable with the help of emergency government loans. But since then, the car market has hit the skids, and both GM and Chrysler have said they need even more money to survive.

GM and Chrysler are operating on a combined $17.4 billion in government loans approved by the Bush administration. The two automakers have asked the Obama administration for another $21.6 billion and say they need it soon.

The president's auto task force is demanding that the car companies get significant concessions first.

GM bondholders are balking at swapping two-thirds of their GM debt for stakes in the company.

Bondholders warned the government this weekend that if they can't strike a deal with the automaker, the car company might be forced into bankruptcy. A group representing bondholders says many are not willing to take stock in place of bonds because they don't believe GM will be survive long enough to make the shares valuable.

That would result in "dire consequences for the company, the tens of thousands of hard-working Americans that GM employs and the economy as a whole," bondholder advisers from investment firm Houlihan Lokey wrote.

And although the United Auto Workers, which represents U.S. hourly workers, has agreed to concessions, the Canadian Auto Workers union hasn't reached an agreement with Chrysler.

Chrysler says that if it cannot get nearly $16 an hour in wage and benefit concessions from the CAW, as well as a guarantee of $2.3 billion in loans from Canadian governments and a break on a tax dispute with Ottawa, it might have to pull out of Canada, the Associated Press reported Monday.

Canada's the source of Chrysler's U.S.-market minivans and line of big sedans that includes the Chrysler 300 and Dodge Charger.

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US Auto Task Force Digs In For Long-Term Role

2009-03-21T02:52:00.000-07:00

Latest on the Auto Task Force!

WASHINGTON -(Dow Jones)- The Obama administration is digging in for a longer period of oversight of the auto industry than previously thought, recent actions indicate, reflecting the complexity of its task as well as the enormous political risks involved.

On Thursday, the Treasury Department sent auto-parts suppliers a $5 billion lifeline in a move the administration characterized as the "first piece" of its plans for the industry.

And though the department's auto task force has said to possibly expect an announcement next week on bailout requests by General Motors Corp. (GM) and Chrysler LLC, it has cautioned that any such announcement wouldn't be its final word on the sector.

Adding to the sense of a long-term engagement by the government, the Treasury's chief auto adviser said Friday those companies may need " considerably" more aid beyond their current requests of up to a combined $21.6 billion in new loans.

"It could be considerably higher, I won't deny that," the adviser, Steven Rattner, said on Bloomberg Television in an interview that was scheduled to air Friday.

Industry observers have been anticipating March 31 as a sort of D-Day for the industry, with the government releasing its findings on GM and Chrysler, including whether the companies should receive more aid or be pushed into bankruptcy court.

But a task force member, briefing reporters on condition of anonymity this week because he wasn't authorized to speak on the record, attempted to tamp down the expectation of a wholesale, one-shot bailout, instead suggesting a longer, more drawn-out process.

The adviser said the task force would continue to meet with stakeholders of GM and Chrysler - including bondholders, dealers, union leaders and company executives - and closely monitor the industry, with more action as circumstances dictate. Such an approach could differ from the government's last intervention in the sector - the 1979-80 bailout of Chrysler Corp. - and massive bank bailouts during the current economic crisis.

"I think the approach reflects the inherent complexity of this industry that's been built up over the last century," GM spokesman Greg Martin said, referring in part to an intertwined supplier network that serves both healthy and ailing auto makers as well as the dynamic between the union and companies dating back decades.

Rep. Candice Miller, R-Mich., said the task force appears to grasp the nuances of the industry's problems, an understanding that she said was missing in debates in Congress late last year.

The task force's deliberative approach fits into that understanding, she said.

"I don't think we should just be absolutely tied to a March 31 deadline, and I mentioned that" to task force members, said Miller, who along with other U.S. lawmakers met with the task force this week. "I'm not one that advocates we have to have everything determined by March 31. I'm glad that [they're] being very deliberative."

But the task force's approach also reflects the sensitivity to many interests needed to restructure the companies - a political balancing act that requires appeasing powerful groups, including the United Auto Workers, debt holders, dealers and the companies themselves.

Sage Eastman, an aide to Rep. Dave Camp, R-Mich., questioned whether the lengthy time involved in restructuring the industry is owing more to practical difficulties, "or is it that the solutions are politically difficult? .. Did the politics complicate the solutions.

"You could probably get a bunch of experts and economists around the table and say, 'Here's what it's going to look like,'" Eastman added. But taking many of those steps would be politically difficult.

Such difficulties were on display this week when the UAW's chief lobbyist sent a letter to U.S. lawmakers accusing bondholders and other lenders to GM and Chrysler of stalling a debt-swap deal needed to win more federal aid.

In the interview with Bloomberg TV, Rattner said bondholders needed to become more "constructive" in debt negotiations.

GM bondholders, Rattner said, "are looking to the government to help them solve their problem. The government cannot solve everybody's problems, and we need for the bondholders to become part of this in a constructive way."

GM has said it expects to reach deals with the bondholders and the UAW before March 31. Chrysler also has said it expects to have its final restructuring plan in place by then. The Treasury has the option to extend that deadline by one month under the terms of loans GM and Chrysler already have received.

In his interview, Rattner said he may impose a deadline on GM bondholders and the UAW to come up with deals on concessions. "Part of why there's a lack of appearance of movement is nobody wants to go first," he said.

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@ dowjones.com

Nardelli Tells Auto Task Force Chrysler Needs More Money

2009-03-18T13:38:00.000-07:00

Chrysler CEO Bob Nardelli called Tuesday for a second round of funding for the company's financial arm that would enable sales to customers who otherwise can't qualify for loans.

In an interview with CNBC, Nardelli also said Fiat would assume 35% of Chrysler's debt if the U.S. Treasury Department approves its proposed alliance with the Italian automaker.

Chrysler is operating with $4 billion in loans, and it's seeking $5 billion more.

But in the CNBC interview, Nardelli emphasized the effectiveness of a separate $1.5-billion loan the Treasury made to Chrysler Financial in January. Chrysler used that loan to subsidize zero-percent loans on new vehicles...More

Chrysler CEO encouraged by task force progress

2009-03-18T13:34:00.001-07:00

Chrysler LLC Chief Executive Bob Nardelli said Tuesday that he's encouraged by the focus of President Barack Obama's auto industry task force on job preservation, but he added that all options for Chrysler are still being considered.

Nardelli said during an appearance on cable network CNBC that the task force hasn't told him that a bankruptcy protection filing at Chrysler is out of the question.

"No they haven't said that," Nardelli said. "What they have said is that they're very intent on preserving, you know, 40,000 or 50,000 direct jobs."

Nardelli said it's crucial that Chrysler get some kind of an indication by March 31 as to if its request for $5 billion in federal aid will be granted, adding that the denial of the aid would be "devastating" for the automaker.

Steven Rattner, a top adviser to the task force, said in an interview with The Associated Press on Monday that the task force was trying to successfully restructure the auto makers during a difficult economic downturn....More

Barack Obama’s auto task force is open to auto aid!

2009-03-17T09:59:00.000-07:00

WASHINGTON—President Barack Obama’s auto task force is “open minded” about giving car companies additional aid and will use “all the resources” of the federal government to achieve agreements that avoid bankruptcy, said Steven Rattner, the US Treasury’s chief auto adviser.

US auto suppliers may get some aid, and the task force plans to meet a March 31 deadline for assessing General Motors Corp. and Chrysler Llc. viability, Rattner said in an interview. “We are open-minded about committing additional resources to ensuring a viable domestic car industry,” he said.

“We will bring all the resources of the government to bear on these various stakeholders and try to reach a fair compromise, a set of compromises,” Rattner said. He added, “Bankruptcy is not our goal nor a desirable outcome. Our goal is to end up with viable car companies.”

GM and Chrysler, surviving on $17.4 billion in US aid, have requested as much as $21.6 billion in additional government loans. Obama’s auto task force is assessing the automaker proposals as it recommends whether to supply additional aid or tip the car companies into bankruptcy.

“We’re not going to simply hand out dollar bills on Pennsylvania Avenue,” he said, adding that stakeholders might sense “the government will end up solving all problems, and it’s just not going to happen here.”

On Monday GM’s chief executive Richard Wagoner met with the task force in Washington, a person familiar with the matter said.

Wagoner also planned a session with German Economy Minister Karl-Theodor zu Guttenberg later that day, according to a statement released by the German Embassy. The meeting will be about GM and its European subsidiaries, including Opel, Ulrich Sante, a German Embassy spokesman, said in an interview.

Wagoner is being joined at the meetings by chief operating officer Fritz Henderson, according to the person, who requested anonymity because the sessions are private. The task force gathering was to discuss GM’s efforts to reduce costs and restore profit, said the person, who declined to be more specific.

Information was exchanged in the meeting, and no decisions were made, the person said.

Austan Goolsbee, an Obama task force member who was asked about the GM session on Bloomberg Television, said he wouldn’t talk about details of what happens in auto meetings.

“The President’s been totally clear that he’s committed to supporting American industry,” Goolsbee, a member of the White House Council of Economic Advisers, said in the interview. “Anybody who wants money from the US government, it’s got to be a bridge to somewhere, not a bridge to nowhere.”

Treasury Secretary Timothy Geithner and National Economic Council director Lawrence Summers lead the task force, which will help decide to supply more aid or tip the automaker into bankruptcy. (Bloomberg)...More
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Auto Task Force: Not Looking to Bankruptcy

2009-03-16T13:36:00.000-07:00

President Barack Obama's automotive task force is focused on solving the industry's problems outside of bankruptcy and will likely continue to provide funding long after a pending March 31 deadline, the group's lead adviser told the Detroit Free Press.

Bankruptcy is not our goal," Steven Rattner said in a the newspaper inteview published Monday. "I've been in and around bankruptcy for 26 years as part of my private-sector work. It is never a good outcome for any company, and it's never a first choice."

Rattner also said the panel was committed to meeting the March 31 deadlines specified in loan deals with General Motors(GM Quote - Cramer on GM - Stock Picks) and Chrysler, but decisions on further aid could come later.

"It's entirely possible, in fact I think it's more than likely, that what you will see is not a single announcement at a point in time that's the beginning of the end of our policy efforts for the auto industry, but rather a series of actions over perhaps a reasonably long period of time to solve this problem," he said.

Additionally, Rattner said the task force is seeking ways to help auto- company suppliers survive....More

Is GM Reacting To The Auto Task Force Visit-it doesn't need $2B

2009-03-12T08:58:00.000-07:00

GM says it doesn't need $2B from gov't in March

DETROIT – General Motors Corp.'s chief financial officer says the company will not need the $2 billion loan installment for March that it requested from the U.S. government in February.

CFO Ray Young said Thursday in an interview with The Associated Press that GM told the Obama administration it won't need the money so soon because its cost cuts are starting to take hold.

GM borrowed $13.4 billion from the government earlier this year. Last month, it said it would need up to an additional $16.6 billion to keep operating, including $2 billion in March and $2.6 billion in April.

Young would not say when the company will need more government loans or whether it would reduce its total financing request.

The Auto Task Force Invites Foreign Automaker Toyota For Talks!

2009-03-12T07:01:00.000-07:00

Great The Auto Task Force Is Meeting With The Foreign Auto Powerhouse Toyota! Lookout Tax Payers...Your Government Will Be Sending more tax dollars overseas!

Reported by MSNBC

Jim Lentz, President of Toyota Motor Sales in the US, will be meeting with the task force at the White House, reports MSNBC.

Both parties say that the meeting is to “talk” and “exchange views.” Whatever the reason, we find it more than appropriate. There is nothing wrong with meeting with the competition, so to speak, to find out more about the industry and help shape ideas that can make our domestic automakers more competitive.

Moreover, the panel is reaching out to all segments of the auto industry. They have been meeting with automakers, dealers, politicians and other auto industry leaders. We say kudos to that!

Auto Task Force Members Test Drive Chevy Volt

2009-03-11T06:13:00.000-07:00

Well What did the Auto Task Force Think? Has anyone seen an interview with the " Auto Task Force"?

Auto Task Force Members to Test Drive Chevy Volt

Task force members will begin their day with a tour of GM's sprawling tech center, followed by a tour of Chrysler's nearby Warren Truck plant, where the new Dodge Ram pickup is put together.

WASHINGTON -- Members of the Obama administration's autos task force will test drive the Chevrolet Volt rechargeable electric car and tour a Chrysler LLC pickup truck factory when they visit the Detroit area on Monday, an administration official said Sunday.

Task force members, led by Wall Street financier Steven Rattner and Steelworkers union official Ron Bloom, also will meet with United Auto Workers President Ron Gettelfinger and other top union officials, and they will sit down with senior General Motors Corp. and Chrysler executives, said the official, who asked not to be identified because the schedule has not been made public.

GM and Chrysler are living on $17.4 billion in government loans approved by the Bush administration last year, and they have asked for a total of $39 billion. Obama appointed the task force to review the automakers' viability plans and decide if they should get additional aid....More

Auto Task Force Meets With Fiat SpA Chief Executive Officer About Chrysler Deal

2009-03-11T06:09:00.001-07:00

Reported from Bloomberg.Com

Bloomberg-- U.S. Treasury advisers Ron Bloom and Steven Rattner spent most of a 2.5 hour meeting with Fiat SpA Chief Executive Officer Sergio Marchionne talking about his plan to take a 35 percent stake in Chrysler, a person briefed on the meeting said.

Members of Barack Obama’s auto task force are meeting with automakers, suppliers, debtholders, labor leaders and other stakeholders to determine whether they should give additional aid from the Troubled Asset Relief Program to help the industry. GM, Chrysler and their finance companies have already been granted $24.9 billion in TARP loans and are seeking as much as $21.6 billion more.

To contact the reporter on this story: Jeff Green in Detroit at jgreen16@bloomberg.net

Auto Task Force Views The New Dodge Ram Hybrid

2009-03-10T10:55:00.000-07:00

Word is the Auto Task Force got a chance to view the New Dodge Ram Hybrid. The All New Dodge Ram Gets great reviews and will be the First In Class Hybrid.

A Boston Herald Review of the Dodge Ram
Ewe will love the new Dodge Ram
Popular pickup truck gets long-anticipated redesign

With all of the bad news surrounding U.S. automakers these days, it’s good when models like the all-new 2009 Dodge Ram remind us that Detroit can still do some things right.

After all, the long-awaited new Ram (base price: $21,270) boasts the styling flair and innovation that have always distinguished the best vehicle designs from Dodge parent Chrysler.

To keep current Ram aficionados happy and win over new ones, Dodge made the 2009 Ram more useful and comfortable than ever.

I recently tested a near top-of-the-line Ram: A $45,520 Laramie Crew Cab with automatic transmission, rear-wheel drive and a 390-horsepower 5.7-liter Hemi V-8 engine. (Like most pickups, the Ram comes in a bewildering array of different cab sizes, bed lengths, etc.)

On the outside, the Ram combines bold styling with fuel-saving aerodynamic tweaks.

In front, the model’s bulging hood and forward-leaning grille are oddly reminiscent of the Chevrolet Corvette Mako Shark concept car.

In back, a flowing lip on the tailgate gives the pickup truck’s rear area a modern appearance.

Inside, the Ram’s interior is truly extraordinary. It’s packed with more features, room and comfort than you’d find in many upscale sedans.

For instance, my test Ram came standard with a heated steering wheel and heated/cooled front seats.

The model also included a great set of four storage bins: Two under the rear-seat floor and two built into the rear fenders.

Called “RamBoxes,” these optional bins ($1,895) are like saddlebags on a horse: They increase your ability to carry stuff by using previously wasted space.

The lockable, drainable fender RamBoxes provide 7.4 cubic feet of storage space - plenty of room for tools, fishing gear or up to 120 12-ounce cans on ice. (The two underfloor compartments can hold an additional 20 12-ounce cans between them.)

My test Ram also came with a great optional rear-seat entertainment system ($1,695) that offers a DVD screen and three channels of kid-friendly TV from Sirius.

On the road, the Ram is impressive.

Chrysler reworked the model’s famous Hemi V-8 engine to put out more power while burning less gas....More

The Auto Task Force Visited GM and Dodge Truck

2009-03-10T05:59:00.000-07:00

After the big visit by the Auto Task Force Yesterday, everyone is waiting for some response from the Presidential us auto task force.

Here is an article from Mlive on the Auto Task Force Visit.

Obama's auto task force scrutinizes GM, Chrysler operations
by Rick Haglund | Detroit Bureau

DETROIT -- Top members of President Barack Obama's automotive task force scrutinized operations of General Motors Corp. and Chrysler LLC as a March 31 deadline looms for the two automakers to prove viability.

At least four task force members were in Detroit on Monday, meeting privately with the automakers' executives and leaders of the United Auto Workers union.

"They're taking a deeper look at the auto companies and doing a lot of due diligence," said Stephanie Brinley, an auto analyst in the Southfield office of consultant AutoPacific. "The attempt is there. That's certainly a step in the right direction."

GM and Chrysler are being kept alive by $17.4 billion in federal loans. GM is asking for as much as $16.6 billion more, including $2 billion by March 31. Chrysler says it needs $5 billion by March 31 to stay in business.

The task force's visit was led by Steven Rattner, Obama's chief auto adviser, and Ron Bloom, a former investment banker who has served as an adviser to the United Steelworkers union.

They visited GM's technical center and a Chrysler truck plant in Warren. Task force members also drove several advanced propulsion vehicles, including the Chevrolet Volt electric extended-range car.

No details were released about any of the meetings with automaker executives.

"We believe today's visit provided a constructive glimpse of GM people, their passion for their work and the technology solutions that are behind the pages of our viability plan," GM said in a statement.

The visit comes as Republicans in Congress are ratcheting up opposition to more financial support for the ailing automakers.....More Mlive

Will The Auto Task Force Help Detroit?

2009-03-09T11:11:00.000-07:00

Well the March 31, 2009 Deadline is quickly approaching for Chrysler and General Motors. This is the dealine for the viability plans to be in place for the two automakers.

Today 03/09/09 President Obama's Auto task Force is visiting Detroit, they will be at The GM Tech Center and Warren Truck the Plant That builds the New Dodge Ram.

Most of us here in Michigan are wondering if the Auto Task Force is leaning toward helping the Big Three, well GM and Chrysler for now or is this just a show?
We shall soon see!

Auto task force to see industry close-up

2009-03-09T05:57:00.000-07:00

WASHINGTON -- The top advisers for President Barack Obama's auto task force will have a chance today to literally kick the tires on Detroit's struggling automakers before deciding how much federal aid they're worth.

The visit, spurred by invitations from the automakers, will cap two weeks of intensive research by the presidential task force into all aspects of the U.S. auto industry as it suffers the worst slump in four decades. After today's trip, the Obama administration has only days to address warnings from General Motors Corp. and Chrysler LLC of imminent bankruptcy and collapse without at least $7 billion in aid by the end of the month -- $5 billion for Chrysler and $2 billion for GM....More

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Obama auto task force to come to Detroit next week

2009-03-06T13:28:00.000-08:00

Article about Auto Task Force From The Detroit Free Press
WASHINGTON -- Leaders of President Barack Obama’s auto task force will travel to Detroit next week to meet with industry and labor officials worried about an imminent collapse of several companies absent federal aid.

An administration official said final details of the trip were still being worked out, but the task force visitors will include advisers Steven Rattner and Ron Bloom.

The task force has been conducting a string of meetings over the past two weeks to gather information and assess the depth of the problems facing the industry. General Motors Corp. and Chrysler LLC have said they need a total of $7 billion before the end of the month to avoid bankruptcy, and several suppliers are also on the brink.

Fiat Chief Executive Sergio Marchionne met with Rattner, Bloom and other members of the task force for two and a half hours today to discuss Fiat’s proposed alliance with Chrysler. Fiat has said it would take a 35% stake in Chrysler in return for sharing vehicle designs that could be used for several new Chrysler models.

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GM auditors raise the specter of Chapter 11

2009-03-05T07:37:00.000-08:00

DETROIT – General Motors Corp.'s auditors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan.

The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission.

"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for the accounting firm Deloitte & Touche LLP wrote in the report.

In pre-market trading, GM shares fell 18 percent from Wednesday's close, to $1.80.

GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008....More

GM loses pride of place as Chrysler pulls ahead

2009-03-04T12:58:00.000-08:00

During a month in which total industry sales fell 28%, Chrysler LLC toppled GM in February to become number one. It was the first time since 1949 that GM has been outsold by a rival, industry consultant Dennis DesRosiers said.

That year, GM design chief Harley Earl was perfecting the world's first cars with tail fins, inspired by Second World War fighter aircraft.

Ford Motor Co. also nudged past GM in February, which stood third with sales of 11,417, according to industry data released yesterday.

GM maintained its lead in overall sales in the year to date.

While the once-large gap between GM and its Detroit competitors is wiped away, foreign-based manufacturers also continue to close in on North America's home-grown automakers. Hyundai Motor Co., riding a weak Korean won that is allowing it to lower prices, tallied a 30% gain last month in Canada. It sold more cars than Honda Motor Co.' s main Honda brand.....More.....

Chrysler News-Cerberus defends not pumping more funds into Chrysler

2009-03-02T11:52:00.000-08:00

Stephen Feinberg-Founder of Cerberus Capital Management LLC

Private-equity fund responds to New York Times editorial

Chrissie Thompson
Automotive News
March 2, 2009 - 12:43 pm ET

Cerberus Capital Management LP wants more federal loans for Chrysler LLC in order to avoid "excessive risk-taking" that contributed to Wall Street's demise, Cerberus' COO said today in The New York Times.

Mark Neporent, COO of the private-equity fund that owns 80.1 percent of Chrysler, made the comments in a letter responding to a critical Times editorial last week.

The Times had said Chrysler's restructuring plan submitted Feb. 17 to the Treasury Department was "little more than an assurance that it has already cut costs and accomplished most of what it had to do." The newspaper questioned why Cerberus is not putting more money into Chrysler, as "private-equity funds like Cerberus are supposed to do."

Cerberus intends to protect its investors through rules that limit how much capital it can commit to an individual company, Neporent said in his letter.

"Why should these retirees, universities and charities, simply because they are represented by a private investment manager, be required to take additional risks or make additional investments, when GM or Ford shareholders are not?" he wrote.

Neporent said Cerberus had appointed a "world-class management team" that "has executed many of the hard operational fixes that other American car companies are only now addressing." He reiterated Cerberus' willingness to surrender its equity stake in Chrysler Automotive, convert debt to equity and put $2 billion in other Chrysler interests on a lower priority behind the government's loans.

The Times' editorial had called the 100,000-unit production cut Chrysler offered in its Treasury restructuring plan "paltry." The automaker would then have "capacity to make almost 1 million vehicles more than it will sell this year -- on the questionable assumption that demand, and its market share, will bounce back next year," the editorial said.

The Times suggested the government had good reasons to say no to Chrysler's request for $5 billion in federal loans in addition to the $4 billion it has already received.

"It seems the secretive private-equity fund is willing to gamble on Chrysler's survival with the taxpayer's dime, but not its own," the editorial said. "Saying no might even make Cerberus reconsider and put up some cash of its own."

Cerberus took control of Chrysler in August 2007, appointing former Home Depot CEO Bob Nardelli to the automaker's top position. Nardelli, who had a reputation as a tough cost-cutter, hired former Home Depot executive John Campi as purchasing chief. Campi has since resigned, but not before withholding bailout cash from now-liquidated Plastech Engineered Products Inc. and litigating with other suppliers.

Other changes have included the arrival of Toyota's Jim Press to run Chrysler's dealer and marketing operations and Nardelli's $1.5 billion overhaul of 400 fit-and-finish problems in Chrysler vehicles.

Presidential Task Force on the Auto Industry-GM, Chrysler need to build sought-after cars

2009-03-01T07:53:00.000-08:00

Article from The Detroit Free Press

If the Presidential Task Force on the Auto Industry wants to ensure the U.S. auto industry's success, it should make sure every plan that GM and Chrysler present answers one simple question:

Why are people going to buy this car?"

Get a good answer to that, and declare mission accomplished.

The task force must, of course, deal with a host of other issues. It will oversee concessions from labor, bondholders and car dealers. It has to help the automakers craft a plan to broaden product lines and simultaneously reduce their production capacity to profitable levels.

Those are remedial measures, however. They stanch the arterial bleeding, but do not save the patient.

Survival flows from long-term profitability, and that can only come from a model line rich with vehicles that people desire.

The calculus of desire is an immensely complicated equation, as anyone who's ever been on a date knows.

In the case of a vehicle, certain things are givens: safety, fuel economy, reliability. They are the equivalent of showing up for a date at the right time and place: You have to get them right, but that's just the start.

Does she make you laugh? Does he like the same music and movies you do? Does the way she thinks surprise and interest you? Does he listen when you talk? Do you keep looking because you keep finding new things to like?

Those, and more, are the elements of attraction, whether it's a dinner that lasts three hours or a car you commit to paying for over the next five years....More

Cerberus Debtor Named To Presidential Auto Task Force

2009-02-27T12:21:00.000-08:00

The Wall Street Journal is reporting that Steven “Steve” Rattner of Quadrangle Group will join the Presidential Task Force on Autos as an advisor to National Economic Council Director Lawrence Summers. Rattner has no publicly-known experience in the automotive industry, although as a former newspaper man and print media investor, he surely knows a thing or two about dying industries. Anyway, as we reported earlier, Rattner’s major qualification for the position (he was previously being considered for “car czar” before that position was merged into the PTFA) appears to be that he’s a major Obama fundraiser, and is married to the finance chair of the Democratic National Committee.

In fact, Michael Wolff “strongly implied” that the New York papers hushed up a DUI of Mrs Rattner’s. This trope led Gawker to infer that “it’s definitely possible (Obama) ruled out Rattner to save themselves some headaches,” when news broke that there would be no single czar.

Ironically almost everyone seems to have missed the real scandal with Rattner’s appointment to the PTFA. Rattner’s Quadrangle Group reportedly owes Cerberus Capital Management either $125m or the Maxim/Blender empire, a debt Chrysler owners Cerberus say is in default. And now Rattner will have a say in Chrysler’s fate. Conflict of interest much?

Report: $40B in bankruptcy aid sought for GM, Chrysler

2009-02-23T07:28:00.000-08:00

Is bankruptcy The Best Answer for GM, Chrysler's survival?

Outside advisers to the U.S. Treasury have started lining up the largest bankruptcy loan ever, talking with banks and other lenders about at least $40 billion in financing for General Motors and Chrysler in case the two automakers need it, the Wall Street Journal reports.

Administration officials said they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings, and that the latest efforts are "due diligence."

Initial discussions call for private banks to provide the financing, with the government guaranteeing or backstopping the loan. Lenders are reluctant to commit funding to GM or Chrysler for several reasons -- most are concerned they won't get all their money back. The government advisers also are looking at ways the Treasury could "prime" banks making the debtor-in-possession, or DIP, loans, so the government could be paid back before private creditors.

The estimated $40 billion in DIP financing that GM and Chrysler would need would be five times as large as the previous record for such financing, which is used to fund day-to-day operations while companies sort out their debt....More

Treasury mulls bankruptcy options for GM, Chrysler

2009-02-23T07:26:00.000-08:00

Obama administration says that all options - including bankruptcy - are being considered for the struggling automakers.

NEW YORK (Reuters) -- Outside advisers to the U.S. Treasury are lining up contingency financing options for General Motors Corp. and Chrysler LLC as part of a review of restructuring options for the automakers, a Treasury official said on Monday.

The official commented to Reuters after the Wall Street Journal reported that outside advisers to the Treasury were talking with lenders about financing of at least $40 billion for the car companies, in case the two automakers needed it.

People involved in talks with senior administration officials told the paper that the administration believes that the option of Chapter 11 filings by the two automakers needs to be seriously considered.

"Everything is on the table right now," one person involved in the matter told the paper, adding that President Barack Obama does not want to see more massive job losses in the auto industry.

The Treasury official told Reuters that the action is not an indication of future plans for the companies, but is aimed at ensuring all options are properly considered and made available.

The administration also does not want to anger the United Auto Workers union by appearing to push for bankruptcy, the Wall Street Journal report said, citing the person involved in the matter.

The initial discussions call for private banks to provide the financing known as a debtor-in-possession (DIP) loan with the government guaranteeing or backstopping the loan, the paper said.

In this scenario, some of the financing would be used to pay back the $17.4 billion the government lent GM (GM, Fortune 500) and Chrysler late last year, the paper said.

Treasury advisers are handling the effort and keeping GM and Chrysler informed of the steps through back-door channels, the paper said, citing people familiar with the matter.

Recently, government advisers have aggressively courted big lenders Citigroup Inc. (C, Fortune 500) and J.P. Morgan Chase & Co. (JPM, Fortune 500), which have also received government aid, to participate in any bankruptcy financing, the paper said, citing people familiar with the matter.

Last week, GM and Chrysler requested nearly $22 billion in U.S. government loans, on top of $17.4 billion received so far, and said they had reached tentative deals with the United Auto Workers union to reduce labor costs.

GM Chrysler Merger:Dragging GM and Chrysler to the altar

2009-02-21T06:28:00.000-08:00

The two embattled automakers say they can make it as stand alone companies, but government officials might decide the best solution is a merger.

NEW YORK (CNNMoney.com) -- Federal loans kept General Motors and Chrysler LLC out of bankruptcy in December.

Now as both companies try to prove they are worthy of keeping those loans -- and perhaps getting even more -- there are some who think the government might try to bring the two companies together in a corporate "arranged marriage."

Kimberly Rodriguez, head of the global auto practice at Grant Thornton Advisory Services, said that such a deal would make more sense for Chrysler than for GM (GM, Fortune 500), but that it also might be the best alternative for government officials trying to keep as many Chrysler workers and U.S. suppliers on the job as possible.

"It's a better option than Chrysler trying to survive as a stand alone company," she said. "It's not a great solution. But if your solution set is so imperfect, it's not a bad option."

One of the things that derailed merger talks between the two companies last fall was the fact that it would cost more money upfront to combine them than to try to go it alone. Closing excess factories and dealerships and combining operations would cost billions of dollars neither have right now..

Treasury has already loaned the two companies $17.4 billion and the two requested up to $21.6 billion more in the viability plans they submitted to the government earlier this week.

Rodriguez said she thinks the government will at least consider whether it would be better to loan them even more money so they can combine and emerge as a stronger company down the road.

"You have to decide how much money to throw at the thing," she said.

Plans acknowledge merger advantages
Federal officials charged with overseeing the bailout of General Motors and Chrysler LLC met as a group for the first time Friday to start weighing the turnaround plans.

Buried deep within those two 100-plus page plans was the suggestion that the companies might be best off if they were combined into one.

Chrysler went so far as to quote analyst estimates that such a combination could produce between $40 billion to $58 billion in improved profits for the two companies between now and 2016.

The Chrysler plan said that "there exists further benefits from U.S. consolidation but no clear action path with GM." Instead, the company is now focused on trying to complete an alliance it is studying with Italian automaker Fiat.

"We knew we would get asked questions about our earlier discussions related to proposed alliances, so we decided to be very upfront and put it all in the presentation," said Chrysler spokesman Stuart Schorr. But he acknowledged that conceptually, a deal with GM provided Chrysler the greatest cost savings.

GM also says in its plan that it is not pursuing any kind of combination with Chrysler. It also seemed more dismissive of the idea than Chrysler.

"The recent, rapid deterioration in economic conditions have made investment in the up-front costs associated with such consolidations an obviously lesser priority than addressing the immediate restructuring needs of General Motors," the company said in its plan.

But GM spokesman Tom Wilkinson said GM is interested in hearing suggestions from the federal auto task force for the best course for the company to pursue.

"I think there will be some great discussions there," he said. "We want to continue to have this be a constructive process for all concerned."

Both companies have announced plans to shrink further in response to the weaker U.S. auto sales outlook.

Chrysler laid out plans to cut about 3,000 addition U.S. workers, or about 6% of its remaining staff. GM said it plans to reduce its U.S. work force by about 20,000 workers this year, and close five additional plants by 2012, on top of the 12 it had already said it expected to shutter. Each have offered buyouts to all their remaining hourly staff.

And the smaller the two companies get, the easier it might be to combine them, said David Cole, chairman of the Center for Automotive Research.

"You're kind of setting it up to partner with somebody," said Cole.

Will Obama's Auto Task Force Merge GM and Chrysler?

2009-02-21T06:21:00.000-08:00

More talks of the GM and Chrysler Merger. When Chrysler submitted it's viability plan on Tue. 2/17/09 they suggested the best thing for Chrysler was to merge with GM.

GM and Chrysler have talked of working together for years and in November 07 the talks of full blown merger heated up.

Well they are at it again, now the question is "Will the Auto Task Force merge the two companies"?

If this goes down you will know it was all contrived months ago!!!

GM Chrysler Merger:Chrysler calls GM tie-up 'best option'

2009-02-19T09:41:00.000-08:00

Article from The Detroit Free Press-GM Chrysler Merger part of Chrysler's Viability Plan!

Chrysler LLC, which is pushing forward on an alliance with Italian automaker Fiat SpA, said it believes a partnership with General Motors Corp. is still the "best option for the U.S. auto industry."

The comments came in Chrysler's restructuring plan filed late Tuesday with the Obama administration.

In the plan, Chrysler, which has already received $4 billion in federal loans, details its restructuring efforts, which include the elimination of 3,000 jobs and three vehicle models, as well as its request for $5 billion more in federal loans.

But Chrysler's plan also points to consolidation among U.S. automakers as a way to sustain the industry.

GM., which received $13.4 billion in federal loans, did not express that sentiment in its restructuring plan filed Tuesday.

Sen. Bob Corker, R-Tenn., who has been a critic of the domestic auto industry, said it's clear that Chrysler's best option is to partner with another automaker.

"Whether it's with Fiat, or whether it makes sense to talk about GM, a merger is their best chance for survival," he said in an interview with the Free Press.

Chrysler hints at a "strong need for industry consolidation, as it notes a merger with GM would create more value than a standalone Chrysler or Fiat alliance," Barclays Capital analyst Brian Johnson said in a note to investors Wednesday.

The Auburn Hills automaker is clear that the savings from a GM-Chrysler partnership would be at least five times more than what a deal with Fiat would offer.

Chrysler has said that discussions about such a partnership, which gained steam last fall before the two automakers approached Congress for aid, were taken off the table by GM.

But as GM and Chrysler approach the government for more money, decisions about the future might not be in their hands alone. Johnson said he expects government aid will continue, "with perhaps the condition of a merger of Chrysler into GM."

However, Corker said it wasn't clear whether a GM-Chrysler pairing would make sense, given the need for GM to cut jobs, plants and brands.

"If you look at what GM is trying to do, which is simplify, does it make sense to add to it?" Corker said. "It's a question that needs to be asked in light of the changes that have occurred."

A merger between GM and Chrysler would generate at least $36 billion in cash and boost operating earnings by $40 billion, Chrysler said.

Savings would come from combining purchasing power, as well as operations for manufacturing, sales and marketing research and development and corporate staffs.

The prospect of a GM-Chrysler merger met criticism across the Midwest, where one study said the combination would cost 35,000 jobs, including as many as 25,000 jobs in Michigan alone.

Promoting a plan that would lead to thousands of job cuts could be a political landmine.

In its plans to the government Tuesday, GM said it plans to cut 47,000 jobs worldwide this year while Chrysler plans 3,000.

And the tally could rise if either automaker is forced to file for Chapter 11 protection.

"The prospect of losing 25,000 jobs in a consolidation between General Motors and Chrysler seemed outrageous in October. Right now, it seems like the best-case scenario," said Patrick Anderson, principal at the East Lansing-based Anderson Economic Group, which studied the potential merger. But Anderson said amid weak vehicle sales, it would be harder to realize all of the cost savings a merger would ordinarily deliver.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said a Chrysler-GM combination is unlikely. But as the market improves, the two companies could team up to reap at least a portion of the cost-savings a merger would have delivered.

"I'm not convinced that that's off the table forever," Cole said.

Contact JEWEL GOPWANI at 313-223-4550 or jgopwani@freepress.com. Free Press Business Writer Justin Hyde contributed.

Chrysler plan seeks $2 billion more in federal aid, will cut 3,000 more jobs

2009-02-18T06:49:00.000-08:00

Alisa Priddle / The Detroit News
Chrysler LLC wants an additional $2 billion in federal aid on top of the $4 billion received to date and the $3 billion it has requested but has not been granted.

In addition, the struggling Auburn Hills automaker also plans to cut its fixed costs by $700 million and eliminate another 3,000 jobs this year. The plan also would:

• Reduce one shift of manufacturing

Discontinue three vehicle models

• Take out 100,000 units of capacity

• Sell $300 million of additional non-earning assets

Chrysler said it also has suspended the 401(k) retirement plan match, as well as incentive bonuses, merit increases, and has retiree life-insurance benefits.

These are among the first details of the restructuring plan submitted to the government this evening in a document designed to show the automaker can become a sustainable, standalone company if it receives a total of $9 billion in bridge loans from the government.

And it can be even more profitable with a partnership with Fiat SpA, Chrysler said.

"We believe that Chrysler LLC will be viable based on the updated assumptions contained in this submission, and that an orderly restructuring outside of bankruptcy, together with the completion of our standalone viability plan, enhanced by a strategic alliance with Fiat, is the best option," said Chrysler chairman Robert Nardelli.

But deteriorating market conditions and lack of credit, resulting in Chrysler sales falling 30 percent in 2008 and 55 percent in January, has forced Chrysler to revise its U.S. annual sales forecast to 10.1 million units for this year and 10.8 million units for 2009-2012.

For Chrysler it represents a sales decline of approximately 720,000 units, (or an average 180,000 units per year) assuming a 10 percent market share. That translates to about $18 billion in lost revenue and a $3.6 billion decline in cash inflows during the four years.

Hence, the request for an additional $2 billion.

The plan promises 24 vehicle launches in 48 months and pursuit of electric technology to develop fuel-efficient, low-emission vehicles, including an electric-drive vehicle in 2010. New products include new versions of the Jeep Grand Cherokee, Dodge Charger, Dodge Durango and Chrysler 300 next year.

The Dodge Durango and Chrysler Aspen will not resume production and Chrysler PT Cruiser will be discontinued this summer. Those three nameplates join the already announced eliminations of the PT Cruiser convertible, Dodge Magnum, Chrysler Crossfire and Chrysler Pacifica. ...More

GM, Chrysler raise aid request by $21.6 billion,Viability plans

2009-02-18T06:44:00.000-08:00

GM, Chrysler raise aid request by $21.6 billion
Viability plans underscore worsening cash crisis

Christine Tierney and David Shepardson / The Detroit News

General Motors Corp. and Chrysler LLC asked Washington for as much as $21.6 billion more Tuesday to stave off bankruptcy, citing worsening economic conditions in new business plans that are likely to provoke fresh criticism of Detroit's embattled auto industry.

Their pleas for more aid, raising the tab for the auto industry's rescue above $40 billion -- which includes a $39 billion bailout for the two automakers plus requests from suppliers -- present a major challenge for the new administration of President Barack Obama. The government wants to help the domestic industry restructure but faces mounting bailout fatigue across the nation.

Yet since the government extended the first emergency loans in December, the already weak U.S. auto market has collapsed to its lowest level since the 1980s....More

Creative thinker joins Obama's auto task force

2009-02-17T04:36:00.000-08:00

WASHINGTON — Ron Bloom, a key adviser to President Barack Obama’s new auto industry task force, brings a combination of Wall Street savvy, ties to labor unions, and a penchant for out-of-the box solutions to the government-led restructuring of General Motors and Chrysler.

Bloom, 53, a former investment banker who has worked with the United Steelworkers union since 1996, will serve as a top adviser to Treasury Secretary Timothy Geithner as the Obama administration attempts to revamp two corporate giants living off billions in government loans.

General Motors and Chrysler are scheduled to submit road maps to viability today that show how they will repay $17.4 billion in promised government loans. The companies face a March 31 deadline to complete their plans, or else the government can pull the loans, essentially forcing bankruptcy.

Described as cerebral and blunt-talking, Bloom has been credited for taking creative approaches to managing the downsizing of the steel industry and creating a leaner operating structure. He also advised airline pilots in 1994 in the $4.9 billion employee buyout of UAL Corp., the parent company of United Airlines, and he worked with auto parts supplier Dana Holding Corp. to develop a health care trust fund.

“He’s not someone who brings just a conventional cookie-cutter approach. He’s going to force people to think about new ideas,” said Andy Kramer, a Washington attorney who has sat on the opposite side of the bargaining table from Bloom.

Forgoing a single “car czar,” the Obama administration chose to create a multi-agency panel led by Geithner and White House economic aide Lawrence Summers. Advising Geithner, Bloom will have the day-to-day task of working with automakers, their bondholders and labor unions to force concessions, reprising a similar role he played during the consolidation of the steel industry in the last decade.

A Harvard Business School graduate, Bloom served as a vice president with the Wall Street firm Lazard Ltd., focusing on the steel and airline industries. As a top aide to the steelworkers union’s president, he helped resolve a 10-month strike against the Wheeling-Pittsburgh Corp. in 1997, broker an agreement with Goodyear Tire in 2003, and facilitate Esmark’s successful tie-up with Wheeling-Pittsburgh in 2006.

Does auto task force trump a car czar?

2009-02-17T04:32:00.000-08:00

By James R. Healey, USA TODAY
From a "car czar" who could have micromanaged the foundering auto industry, for better or worse, Detroit automakers now will be delivered into the hands of a committee, the White House says.
The Presidential Task Force on Autos — its members not yet named — will consist of representatives of nine governmental agencies and the White House, and will be run by Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers.

TUESDAY DEADLINE: Time is up for GM, Chrysler to file restructuring plans

"The task force lets us use the experience of many people across government," spokesman Robert Gibbs said Monday. "I don't think that one (czar) vs. several people is a problem."

About the only thing such a committee could do is guide automakers "through bankruptcy or bankruptcy-like proceedings," says Barry Hirsch, professor of economics at Georgia State University. "It is too late for this comprehensive restructuring to take place through negotiation and voluntary agreement among the stakeholders."

General Motors (GM) and Chrysler, already living off government loans, must file plans Tuesday to show how they would remain viable if the government lends them billions of dollars more.

If the government gives the go-ahead, the committee overseeing the automakers' plans will have representatives from the departments of Treasury, Labor, Transportation, Commerce and Energy, as well as from the National Economic Council, the White House Office of Energy and Environment, the Council of Economic Advisers and the U.S. Environmental Protection Agency.

The Treasury secretary will oversee loan agreements.

When GM and Chrysler sought — and got — emergency federal loans late last year, Congress envisioned a powerful person called a car czar to ride herd on automakers' decisions. The czar would ensure that the interests of taxpayers are protected.

While there was some worry that so powerful an overseer could meddle in car companies' daily affairs, Detroit automakers agreed that a single, decisive official could be helpful.

No czar ever was named. Now, the size and makeup of the Obama administration's task force makes skeptics wonder if such a group can make the quick decisions Detroit needs to stay afloat, and can avoid politics and interagency turf wars....More

Chrysler and GM, UAW again seek concessions deal

2009-02-16T10:28:00.000-08:00

General Motors Corp., facing a Tuesday deadline to present a long-term viability plan, resumed negotiations with the UAW on Sunday afternoon after talks broke down Friday, the Free Press has learned.

The Detroit automaker is trying to get concessions from the UAW and debt holders as required under the terms of the $13.4-billion loan package approved by the U.S. Treasury Department in December. The deal calls on GM to get the stakeholders to voluntarily reduce the debt GM owes them. But the talks have been difficult, as the various stakeholders vie for a better deal, which would likely mean less favorable conditions for another party.

"This is probably going to go right down to the wire," a person briefed on the efforts said. The person did not want to be named because of the sensitive nature of the negotiations.

Talks between GM and the UAW broke down Friday when the UAW walked out, the source said. On Saturday, the union said it was rejecting the proposals from GM and Chrysler LLC, saying they were unfair to workers and favored bondholders.

Officials from the UAW and GM began talking again Sunday afternoon, though it was not clear at what level, the person said.

GM declined to comment Sunday, and a UAW spokesperson didn't respond to a request for comment.

Meanwhile, talks between the UAW and Chrysler also continue, the company said in a statement. "The company is working diligently on its viability plan and will submit it by its deadline on Feb. 17," Chrysler said.

Despite the back-and-forth between various stakeholders, White House senior adviser David Axelrod said during NBC's "Meet the Press" that GM and Chrysler's restructuring would require sacrifice from workers, executives and others.

He sidestepped questions about whether the industry could withstand a bankruptcy at GM. A person familiar with GM's negotiations with bondholders told the Free Press last week that bankruptcy remained a "very real risk."

The Wall Street Journal reported Saturday that GM will present two alternatives to the government Tuesday: one calling for billions more in rescue money, and the other calling for financial assistance as part of a bankruptcy filing....More

All options on the table for GM; automaker to resume talks with UAW

2009-02-15T11:28:00.000-08:00

Gordon Trowbridge / Detroit News Washington Bureau
WASHINGTON -- A top White House adviser on Sunday refused to rule out bankruptcy for General Motors Corp. as the deadline for GM and Chrysler LLC to submit restructuring plans to the government looms this week.

"We're going to need a restructuring of these companies," said David Axelrod, a senior adviser to President Obama, said on NBC's "Meet the Press." "How that restructuring comes about is going to have to be determined."

Meanwhile, GM and the United Auto Workers union are expected to resume negotiations Sunday afternoon on concessions as part of the automaker's restructuring plan.

The plan is a condition of the $13.4 billion federal loan package GM received in December and must outline how the company will return to competitiveness. The government has the option of recalling the loans and essentially forcing a bankruptcy by the end of March if Obama administration officials do not believe the company is making adequate progress. GM has already received $9.4 billion and is set to get the remaining $4 billion on Tuesday.

GM's board of directors will meet by teleconference on the President's Day holiday Monday to review the company's restructuring plan before it is submitted to the U.S. Treasury Department, GM spokesman Steve Harris said on Sunday.

The Detroit automaker's board has been meeting by phone three days a week recently to review the constantly evolving plan.

"It's just a last chance to explain things before it's submitted on the 17th," Harris said.

GM's plan is to outline more significant cost-cutting, including more plant closings, job cuts and expected sacrifices from bondholders and the UAW. GM told Congress in December it planned to cut at least 31,000 jobs and close 9 plants by 2012. The updated plan will outline a more detailed schedule of cuts, but GM isn't expected to announce any final agreements with bondholders or the UAW.

Negotiations between the UAW and GM are expected to resume Sunday afternoon, a source familiar with the situation said. The talks broke down late Friday after the UAW strongly objected to proposals that went beyond what the Treasury Department required in the loan terms over the amount of money GM will pay the union to fund a retiree health-care trust.

The loan terms target paying half of what's owed in cash and the other half in company stock. GM and the UAW agreed to shift responsibility for retiree health care to the union beginning in 2010 as part of a new contract negotiated in 2007.

Last week, GM announced it would cut another 10,000 salaried workers worldwide and institute temporary pay cuts of up to 10 percent for salaried employees.

Chrysler also will file a restructuring plan with the Treasury Department on Tuesday as part of its deal to receive $4 billion in emergency loans. Chrysler says it needs another $3 billion to survive beyond March 31, but has not yet won Treasury Department approval for the additional funds.

Axelrod's comments Sunday continued a pattern by the Obama administration of refusing to address the bankruptcy question directly, either to embrace it or to rule it out. In a roundtable discussion with The Detroit News and other regional newspapers last week, Obama also did not directly address bankruptcy.

Michigan lawmakers have forcefully opposed bankruptcy, saying the companies would be unlikely to emerge from bankruptcy because car buyers would refuse to consider products from a bankrupt company. Any bankruptcy would almost certainly still involve a massive federal financial commitment, because private capital markets are unlikely to provide the financing that would be necessary.

"We need an auto industry in this country," Axelrod said Sunday. "We have an interest in seeing the auto industry survive. But it's going to take a real restructuring."

Axelrod's comments came in response to questions about a Wall Street Journal report on Saturday that GM will offer two options when it files its federal restructuring plan on Tuesday: A continued infusion of federal aid to keep the company in business, or a government-financed bankruptcy. GM has declined to comment on the Journal's report.

GM and Chysler News:Union turns to Ford after GM and Chrysler talks stall

2009-02-15T11:21:00.000-08:00

SOUTHFIELD, Michigan: Ford Motor became the focus of United Automobile Workers union negotiations over the weekend after talks with General Motors and Chrysler stalled.

The union objected to GM and Chrysler proposals to modify a retiree health care fund that Alan Reuther, a UAW lobbyist, said went beyond the requirements of the U.S. Treasury loans that the two automakers were relying on to survive. The U.S. government requires signed preliminary labor agreements by Tuesday, though it has not said what the consequences would be for missing the deadline.

Ford was continuing to talk with the union, said a company spokesman, Mark Truby, who declined to characterize the talks.

Harley Shaiken, a labor professor for the University of California at Berkeley, said, "What this reflects is that the UAW has a better relationship with Ford and feels that an agreement that suits both sides can be reached and can then be spread to the other automakers."

The terms of the Dec. 19 loan agreements from the U.S. Treasury require GM and Chrysler to persuade the UAW to accept half of scheduled payments into a union-run retiree health care fund next year in equity instead of cash. The automakers are also seeking to eliminate supplemental unemployment pay and to change plant work rules to trim labor expenses.

Ford had said it expected to receive whatever concessions the UAW granted GM and Chrysler, and Ron Gettelfinger, the union's president, said last month that Ford would likely get similar concessions.

The GM and Chrysler proposals on the Voluntary Employee Beneficiary Association "contradict the explicit terms of the Treasury loan agreements, and would severely hurt retirees," Reuther said in an e-mail message. "These proposals are a non-starter as far as the UAW is concerned."

In GM's case, the union must sign off on a cash contribution of $10.2 billion to the fund instead of $20.4 billion, GM said last month. The UAW already agreed to accept reduced cash payments into the health care fund, which was established under the 2007 contract that let automakers pay new workers half as much as traditional union employees.

Gettelfinger said in 2007 that the union was confident the fund could pay the health care benefits of retirees for the next 80 years. He has said he is willing to make additional sacrifices to help the automakers avoid bankruptcy if auto executives, debt holders and others also sacrifice.

Lori McTavish, a Chrysler spokeswoman, and Tony Sapienza, a GM spokesman, declined to comment over the weekend on the status of the talks. Sapienza said Friday that GM was committed to meeting the Tuesday deadline. Chrysler, 80.1 percent of which is owned by Cerberus Capital Management, said it also planned to meet the deadline.

The automakers are also asking the union to end a 54-year-old benefit that ensures almost full pay during layoffs.

The so-called "supplemental unemployment benefit" gives laid-off workers most of their take-home wages. Automakers and the UAW were discussing the future of the program, said people with knowledge of the talks, who asked not to be identified because the negotiations were private. The UAW was not negotiating cuts in core wages or benefits, the people said.

If GM cannot win agreement from the UAW and creditors to reduce its debt, analysts say the administration of President Barack Obama will face a politically tough choice: either pump billions of dollars more into GM or steer it toward bankruptcy as some critics of the bailout have urged. Under Rick Wagoner, its chief executive, GM has resisted suggestions that it would be better able to restructure under a court-supervised bankruptcy. Wagoner has argued that consumers would shun GM cars and trucks if it were in bankruptcy, sending already weak sales into an irreversible tailspin.

Gettelfinger has balked at saddling retired workers with additional risk by taking devalued GM stock instead of cash. GM has received $9.4 billion from the U.S. government and has been pledged another $4 billion if it can show it can be viable at a time when U.S. auto sales are near 30-year lows.

A bankruptcy filing would allow GM to rework its contracts with creditors, the UAW, dealers and its suppliers. But it would also mean even steeper job losses. GM, Chrysler and Ford have cut 250,000 jobs since the start of the decade and are looking to cut more. GM and Chrysler are offering buyouts for most of their 91,000 UAW workers.

Chrysler has been given $4 billion in emergency financing from the U.S. Treasury and is seeking an additional $3 billion.

Bob Lutz GM's product czar to retire

2009-02-11T05:54:00.000-08:00

General Motor's Bob Lutz transitions to a role as a senior advisor after 46 years in the auto industry.

DETROIT (Reuters) -- General Motors Corp's vice chairman and product chief Bob Lutz will retire at the end of this year, ending an automotive career that spanned 46 years and included top jobs at all three Detroit carmakers.

Lutz, 76, will transition to a new role effective April 1, as vice chairman and senior adviser - providing input into GM's global design and key product initiatives - until his retirement at the end of 2009, the automaker said Monday.

Tom Stephens, currently GM's executive vice president of global powertrain and quality, will take over product development at GM.

Lutz was widely credited for the success of GM's more recent products, including the Chevy Malibu sedan and was the leading proponent for its Chevy Volt, an electric vehicle with a small, range-extending gasoline engine.

But at the same time, Lutz remained a controversial and outspoken figure, recently mocking global warming to a group of journalists.

A former U.S. Marine fighter pilot, Lutz began his automotive career in 1963 at GM (GM, Fortune 500). He then went on to work for BMW in Europe, served on Ford Motor Co.'s (F, Fortune 500) board and spent 12 years at Chrysler before rejoining GM in 2001.

A consummate showman, Lutz was famed in Detroit for flying his own helicopter and a collection of aircraft, sometimes to corporate events.

"Bob Lutz was already a legendary automotive product guy when he rejoined GM in 2001," GM Chief Executive Rick Wagoner said in a statement.

Lutz had previously said he wanted to see the Volt through to launch, which is not scheduled until late 2010.

The Volt, which travels 40 miles on pure electric power, represents GM's attempt to break a costly association with gas-guzzling SUVs like the Hummer line, which the automaker is seeking to sell under its restructuring plan....More

Chrysler News:French parts maker sues Chrysler for $110 million

2009-02-11T05:51:00.000-08:00

DETROIT, Feb 10 (Reuters) - French auto parts maker Faurecia SA (EPED.PA: Quote, Profile, Research) has sued Chrysler LLC for $110 million, saying the struggling U.S. automaker failed to pay engineering costs it owed when vehicle sales plunged.

Faurecia claims Chrysler did not reimburse it for the cost to develop and supply components related to four Chrysler vehicle programs including the Dodge Nitro SUV, according to the lawsuit, which was filed in a Michigan court on Monday.

Chrysler, owned by Cerberus Capital Management [CBS.UL], said the claim misrepresented the nature of the contract between the two companies.

"Faurecia has taken huge liberties in this lawsuit, grossly overstating alleged damages and totally absolving itself of any assumption of risk, contrary to our supply agreements with the company," Chrysler spokesman Mike Palese said in a statement.

The lawsuit by Faurecia is one of several disputes between Chrysler and its suppliers to become public in recent months and comes at a time when U.S. auto sales have tumbled to a 27-year low.

Falling vehicle sales and plant shutdowns by major automakers have added to the intense pressure faced by auto parts suppliers from tight credit conditions.

Faurecia supplies a range of parts for Chrysler including the instrument panel, door panels and seats for the Chrysler Sebring and Dodge Avenger sedans.

The company also supplies the exhaust systems for the Dodge Nitro SUV and Dodge Caliber hatchbacks.

Faurecia said sales of the Chrysler vehicles it supplies plunged far below the automaker's initial projection in 2008. Continued...

GM News:GM cuts 10,000 salaried jobs, trims employees' pay

2009-02-10T10:42:00.000-08:00

NEW YORK – General Motors Corp. is planning to slash another 10,000 salaried jobs this year, saying the cuts are unavoidable with a government restructuring deadline looming and industrywide sales in one of the worst downturns in history.

The Detroit-based automaker said Tuesday it will reduce its total number of white-collar workers by 14 percent to 63,000. About 3,400, or 12 percent, of GM's 29,500 salaried U.S. jobs will be eliminated.

Most of the company's remaining salaried employees will have their pay cut.

In its plan to Congress submitted late last year, GM said it would have to reduce both salaried and hourly positions so that the company could become viable for the long term. The company said it plans to reduce its total U.S. work force from 96,537 people in 2008 to between 65,000 and 75,000 in 2012, but it did not specify how many of the surviving jobs would be salaried or hourly.

GM Chief Executive Rick Wagoner, who was meeting with congressional leaders in Washington about global warming legislation, said Tuesday's announcement was "indicative of the kind of things we need to do to get this viability plan in shape and respond to these tough market conditions."

GM has dramatically downsized both its salaried and hourly work forces in recent years as the U.S. auto market has shrunk from an annual sales rate of around 16 million vehicles to 13.2 million last year.

Since 2000, GM's salaried work force has shrunk by 33 percent from its 2000 high of 44,000 people. At the same time, the number of hourly workers has plunged by more than half — to about 63,700 people at the end of last year from 133,000 in 2000.

Most of the cuts announced Tuesday are expected to take place by May 1. GM said the cuts will vary by global regions depending on staffing levels and market conditions.

The company's statement said there would be no buyout or early retirement packages as GM had offered in the past, but laid-off employees will get severance pay, benefit contributions and other assistance.

GM spokesman Tom Wilkinson would not say exactly where the U.S. cuts would come, but he said the automaker will continue to staff areas such as electric vehicle development that it expects to be important going forward.

"The goal is to put our people in the areas that are critical to our future success," Wilkinson said.

GM also said it will cut the pay of most of its salaried U.S. workers effective May 1. The pay cuts will be reevaluated at the end of the year, GM said.

The pay of U.S. executive employees will be cut by 10 percent, while other salaried workers will see cuts of 3 percent to 7 percent, GM said.

GM faces a Feb. 17 deadline to present a plan to the government showing the wounded automaker can become viable.

GM has received $9.4 billion from the Treasury Department and expects to get $4 billion more, but the government can demand repayment March 31 if it determines the company can't become viable.

The company is required to show the government it can achieve "positive net present value," which means that the present value of a company's expected net cash flows exceeds the initial investment in the company.

The loan terms also require bondholders to swap part of the company's debt for equity. The UAW also must make concessions that will reduce labor costs to the level of Japanese automakers' plants in the U.S.

Wagoner said Tuesday that talks with bondholders and the United Auto Workers union were ongoing and "there's good dialogue."

GM's plan also will include shuttering additional factories, according to people familiar with the plans.

GM has yet to announce its fourth-quarter and full-year 2008 financial results, but analysts expect the automaker's losses to total in the billions of dollars for both periods.

GM reported a $2.5 billion loss in the third quarter alone and said it burned through $6.9 billion in cash during that period, adding to urgent warnings that it would run out of cash without government aid.

Associated Press Writer Ken Thomas in Washington and AP Auto Writer Tom Krisher in Detroit contributed to this report.

Chrysler Bankruptcy News:Analysts Say Carmakers' plans need more time

2009-02-10T05:15:00.000-08:00

From Detnews.Com
March 31 deadline too soon to get bondholders on board with Chrysler, GM changes, they say.
Alisa Priddle and David Shepardson / The Detroit News
As General Motors Corp. and Chrysler LLC are scurrying to put the finishing touches on their restructuring plans due next Tuesday to the Treasury, finance and auto industry experts say submitting plans is one thing, but getting bondholders and all other parties involved in a massive restructuring to agree to those plans by the March 31 deadline seems unrealistic.

Meanwhile, GM CEO Rick Wagoner lobbies key lawmakers in Washington today to ease the way for GM's plan.

"I wouldn't be surprised if the timetable got extended, because clearly the original plan was a temporary fix," said Mark Oline, a Fitch Ratings analyst in Chicago. "It was going to be up to the new Congress and Administration to put in a longer-term solution."

Auto analysts and bankruptcy lawyers say the deadline set out in the federal bailout of the automakers is too ambitious to get bondholders on board in just a few more weeks. They say GM in particular needs an extension to avoid being forced into bankruptcy if it can't show progress on its assignment to cut $27.5 billion of unsecured debt down to about $9.2 billion by the end of March.

The concern centers around GM because the public company has many junk bonds and unsecured creditors, said Judy O'Neill, partner with Foley & Lardner LLP's Detroit office and an expert on Chapter 11 bankruptcy....More

GM, Chrysler may face bankruptcy over U.S. debt:From Bloomberg.Com

2009-02-10T05:03:00.000-08:00

GM, Chrysler may face bankruptcy over U.S. debt
MIKE RAMSEY AND TIFFANY KARY

Bloomberg News

February 10, 2009

General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4-billion (U.S.) in federal bailout loans, a course of action the auto makers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury's website. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called "debtor in possession" or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

"They are negotiating to see if they can reach an agreement," said Mr. Workman, a bankruptcy lawyer based in Washington. "If not, they are saying 'We are pretty darn sure that a bankruptcy judge will allow us,' " to be first in line for repayment.

The auto makers have dismissed calls to reorganize under bankruptcy protection, saying a Chapter 11 restructuring would scare away buyers and lead to liquidation. They are working toward a Feb. 17 deadline to show progress on a plan put in place as part of the U.S. loans received in December from the Troubled Asset Relief Program. The companies must reduce labour costs and show how they will repay the money by next month.

GM and Chrysler are already trying to restructure out of court by cutting labour costs, reducing debt levels and eliminating dealers. GM is in talks to pare $27.5-billion in unsecured debt to about $9.2-billion in a swap for equity.

The company said it plans to shutter dealers and reduce obligations to a union retiree health fund by half to $10.2-billion in a separate equity swap. Chrysler chief executive officer Robert Nardelli has said his company will also try to cut debt.

GM said yesterday it's in negotiations to take back portions of Delphi Corp., a parts supplier the auto maker separated from a decade ago, in order to maintain portions of its supply chain. GM said it's also considering more plant closings, job eliminations and pay cuts for administrative workers.

In its restructuring plan, GM will include pay cuts for salaried employees, people familiar with the plan said yesterday.

The pay cuts will be in addition to firings of thousands of salaried workers to cut expenses, said the people, who asked not to be identified because the plans haven't been announced. Some of the details may be revealed this week, the people said.

"This is the reality of what they have to deal with," said Pete Hastings, a fixed-income analyst at Morgan Keegan in Memphis, Tennessee. "At this point, it's about survival."

GM News:GM discusses partnership with China's FAW

2009-02-05T09:39:00.000-08:00

February 5, 2009 - 12:01 am ET

SHANGHAI (Reuters) -- General Motors is holding discussions with major Chinese automaker FAW Group to form a partnership for light commercial vehicles, a GM China spokesman said today.

The spokesman declined to specify the nature of the partnership but said the two parties had registered a name with the State Administration for Industry and Commerce.

"Joint venture is far from complete, but the registration of the name is just one of the processes. We still have a lot of work to do," he said when asked whether the partnership will lead to a full-fledged joint venture.

GM already makes light commercial vehicles in China in a three-way tie-up with SAIC Motor and Liuzhou Wuling Automobile.

It also operates a car manufacturing venture in Shanghai with SAIC, China's largest auto maker.

FAW, one China's three biggest automakers, operates car manufacturing ventures with Volkswagen AG and Toyota Motor Corp.

Chrysler News:Chrysler shutters 3 plants after brief reopening

2009-02-05T09:29:00.000-08:00

Bradford Wernle
Automotive News
February 5, 2009 - 12:01 am ET

DETROIT -- Chrysler LLC, hobbled by shrinking sales and soaring inventories, shut down three assembly plants Monday after reopening them two weeks ago.

Detroit-area factories that make the Chrysler Sebring and Dodge Avenger, Jeep Grand Cherokee and Commander, and Dodge Ram 1500 and Dakota had resumed production on Jan. 20 following an extended holiday shutdown.

"It's always about managing product and dealer inventory," Chrysler spokesman Dave Elshoff said. "If dealer inventory is high, we're not going to build on inventory."

He said Chrysler will assess reopening the plants on a week-to-week basis.

Chrysler, which posted a 55 percent decline in January sales, said it finished the month with 359,980 vehicles in stock, or a 151-day supply. That's more than twice the 60-day level considered normal.

Chrysler has been asking dealers to buy vehicles to help it stay solvent. The automaker has received a $4 billion loan from the U.S. Department of Treasury and says it needs $3 billion more to survive.

The company is also planning on an alliance with Italy's Fiat S.p.A. that would bring small, fuel-efficient cars to North America.

Most of the vehicles made at the three Michigan factories had sharper sales declines in January than the company itself. The plants, their products and January sales:

Sterling Heights Assembly -- Chrysler sold 1,943 Sebrings and 2,171 Avengers, down 79 percent and 70 percent, respectively.

Jefferson North Assembly -- Jeep sold 3,124 Jeep Grand Cherokees and 1,072 Commanders, down 60 percent and 71 percent, respectively.

Warren Truck -- Dodge sold 12,843 Ram pickups and 1,459 Dakotas, down 35 percent and 30 percent, respectively.

GM News:GM cutting 2,000 jobs in Michigan, Ohio

2009-01-26T09:58:00.000-08:00

Article from The Detroit News

NEW ORLEANS -- General Motors Corp. announced more production cuts and layoffs today because of weak demand affecting the U.S. auto industry.

The automaker is eliminating a shift at its Delta Township plant near Lansing and in Lordstown, Ohio, collectively affecting about 2,000 workers. It will temporarily idle production at 10 other plants across North America during the first or second quarter, GM spokesman Chris Lee said.

At GM's Delta Township plant near Lansing, about 1,200 workers will be laid off indefinitely March 30 after the automaker eliminates one shift. Workers, who produce the Buick Enclave, GMC Acadia and Saturn Outlook, will alternate on two shifts from Feb. 2 to March 27 before a shift is eliminated....More

GM News: Saturn could survive; Chrysler: We'll be viable by spring

2009-01-25T07:41:00.000-08:00

Robert Snell / The Detroit News
NEW ORLEANS -- General Motors Corp. said today the Saturn brand could survive a broad restructuring plan being developed that involves selling, shrinking or killing half of its eight brands.

All possibilities are being considered but the options will be narrowed next month when the cash-strapped automaker submits a restructuring plan to Congress, said Mark LaNeve, GM's vice president for North America sales, service and marketing, while talking to reporters during the National Automobile Dealers Association convention here.

"If we just wanted to shut it down, we could have announced that," he said. "Saturn may very well have a place" within GM....More

Chrysler Fiat News|Fiat CEO says Chrysler concessions needed for deal

2009-01-25T07:38:00.000-08:00

Fiat CEO says Chrysler concessions needed for deal

Fiat CEO Sergio Marchionne said he is optimistic that Chrysler can be turned around quickly. But Marchionne stressed that for the Fiat’s relationship with the Auburn Hills automaker to work, all of Chrysler’s stakeholders will have to make concessions....More

Chrysler News:U.S. $3 billion loan part of Chrysler-Fiat deal

2009-01-22T09:59:00.000-08:00

DETROIT (Reuters) – Chrysler LLC's deal with Fiat SpA (FIA.MI) depends on the U.S. automaker receiving an additional $3 billion emergency loan from the U.S. government, the company's product development chief said on Wednesday.

"I think that is part of the deal," Frank Klegon said when asked if the automaker needed the additional $3 billion for the Fiat deal to be completed. "That is part of the process. The expectation is that that is an important part of it."

Chrysler, which had asked for $7 billion, received $4 billion U.S. emergency loan on January 2. The automaker has said it is counting on getting the rest of the money to keep operating.

Klegon believed the $3 billion of additional government aid was part of a term sheet Chrysler had with Fiat on the alliance. Chrysler has been calling the request for additional support a second tranche, or the second half of the original $7 billion of aid it sought late last year.

Chrysler, owned by private equity firm Cerberus Capital Management, announced on Monday an alliance with Fiat that would give the Italian automaker a 35 percent stake in Chrysler in exchange for access to its technology and overseas markets.

Fiat would help Chrysler put together the restructuring plan Chrysler has to submit to the U.S. government by February 17.

Klegon said the U.S. Treasury had been alerted to the deal and he hoped it would approve of the agreement.

Klegon said discussions had been going on with Fiat on the product side for some time.

"I had no knowledge there was a bigger discussion going on," he said, adding the deal does not bar the automaker from other alliances.

Klegon said Chrysler's alliance with Nissan Motor Co Ltd (7201.T) that would provide small cars to Chrysler and large trucks to Nissan was still going forward, as was Chrysler's minivan production for Volkswagen AG (VOWG.DE).

Klegon did not know if Chrysler would keep all three brands, but, ultimately, that would not be the product development chief's call.

"Cerberus are the guys making the deals. They are the ones who at the end of the day negotiate with Fiat," he said. "We are obviously engaged as the operating side and the product side, but the actual deal is under Cerberus leadership."

Under the terms of the deal, which has to be approved by the U.S. government, Fiat would not pay cash for its stake in Chrysler.

Chrysler's sales tumbled 30 percent in 2008 and it ended the year with only $2 billion in cash and reliant on a government bailout to stay afloat.

Chrysler, which owns the Jeep, Dodge and Chrysler brands, is 80.1 percent owned by Cerberus, which paid $7.4 billion for its stake in 2007. Former Chrysler parent Daimler AG (DAIGn.DE) holds the rest of Chrysler and is looking to sell its stake.

Daimler has written down the value of its remaining 19.9 percent stake in Chrysler to zero.

Fiat has said it could raise its stake beyond the initial 35 percent, but that step would depend on the success of Chrysler's restructuring.

(Reporting by Poornima Gupta and David Bailey; Editing by Andre Grenon)

Will Congress Stop The Chrysler Fiat Merger? Mixed reviews in Congress for Fiat-Chrysler deal

2009-01-22T06:17:00.000-08:00

WASHINGTON – Fiat's proposed deal to take a 35 percent stake in Chrysler in exchange for access to a lineup of more fuel-efficient cars received mixed reviews in Congress on Wednesday, with one lawmaker suggesting it could raise questions among taxpayers.

Sen. Bob Corker, R-Tenn., said the proposed alliance involving Chrysler, whose majority owner is New York-based private equity firm Cerberus Capital Management LP, creates "an interesting dilemma for U.S. taxpayers" in which they would essentially finance a partnership between Chrysler and a foreign automaker.

The Bush administration gave Chrysler LLC a $4 billion loan earlier this month and the automaker's finance arm received a separate $1.5 billion infusion last week to expand its lending practices. Chrysler could receive another $3 billion in loans if the Obama administration approves a restructuring plan expected to be submitted in mid-February.

"Cerberus made a bad investment and in order for them to get that investment out of their portfolio of holdings, U.S. taxpayers have had to write an $8.5 billion check to Fiat," said Corker, who urged General Motors Corp. and Chrysler to seek concessions from unions and bondholders in exchange for government financing.

"For the U.S. taxpayer, they have to be scratching their head a little bit," he said.

Despite the concerns, Corker said the agreement could strengthen Chrysler's viability plan and be "the best thing that could happen with Chrysler."

Chrysler and Fiat Group SpA announced Tuesday a nonbinding agreement to establish a global strategic alliance that would help Chrysler bring badly needed small cars to its showrooms while helping the maker of Fiat, Lancia and Alfa Romeo vehicles re-enter the American market.

Analysts noted Fiat would not be required to provide cash in the deal, but its willingness to partner with Chrysler could provide assurances to Washington about the company's long-term prospects.

The agreement "will significantly improve the chances of Chrysler paying that money back," said Rebecca Lindland, an auto industry analyst with the consulting firm IHS Global Insight.

Lindland said the deal would could give Chrysler access to markets in Russia and Brazil and help the company develop smaller, fuel-efficient cars to compliment its truck lineup.

Sen. Tom Carper, D-Del., said the deal could raise concerns among lawmakers but he noted that Chrysler already shares technology with German automaker Daimler AG, which owns 19.9 percent of the company.

"The idea of a partnership, not an ownership situation, but a partnership which allows Chrysler to enjoy and receive some technology input in return for building small cars in this country .... that may be a good idea," Carper said.

Sen. Debbie Stabenow, D-Mich., said she had not received details from Chrysler, which employs thousands of workers in her home state. "The most important thing is how are they going to structure it and will we keep jobs in the United States?" she asked.

The alliance with Fiat would be included in a viability plan to the Treasury Department, which is due by Feb. 17, and could help the company convince the government to provide an additional $3 billion in loans.

"The nonbinding term sheet with Fiat is consistent with the U.S. Treasury's requirements," Chrysler said in statement late Wednesday. "Chrysler will seek U.S. Treasury approval for this transaction under its loan agreement, as well as customary regulatory approvals."

If Chrysler fails to achieve viability by March 31, the new Obama administration could call back the $4 billion in loans, essentially pushing the company into bankruptcy.

Fiat spokesman Gualberto Ranieri said the alliance was contingent upon regulatory approvals by the Treasury Department.

Chrysler product development chief Frank Klegon told reporters in Detroit at the Automotive News World Congress that he expected an additional $3 billion in government financing to be an important part of the process for the potential alliance.

AP Auto Writer Tom Krisher in Detroit and Associated Press Writer Ariel David in Rome contributed to this report.

Chrysler Fiat Merger

2009-01-21T05:38:00.000-08:00

From Forbes Jerry Flint

The announced deal between Chrysler and Fiat has benefits for both, but it is not a game changer--not yet.

The alignment between Fiat of Italy and Chrysler does not exactly save Chrysler, but it gives Fiat an entry into the U.S. In short, Fiat is to get 35% of Chrysler, will not pay any cash for the stake, and it will give Chrysler access to its technology.

Fiat (nyse: FIA - news - people ) had publicly said it wanted a production base in North America for its Alfa Romeo brand--and presumably the Fiat brand, too. Through its 35% interest that it is getting in Chrysler, it would presumably have access to a U.S. plant to build its cars.

The chief executive of Fiat, Sergio Marchionne, has also worried that his company was not big enough to survive in today's world. Marchionne was born in Italy in 1952 but built his early career in Canada and has dual Canadian and Italian citizenship. Chrysler has some Canadian plants, and the Canadian autoworkers union, separated from the American UAW, has been quite cooperative in working with the industry in recent years.

So at no cash cost, Fiat may have its production base on this continent. What about Chrysler? The company has been weak technically and does not have enough money to finance the kind of new vehicle programs that Chrysler needs to stay competitive in this market.

Fiat is strong in small cars and in their engines and transmissions, as well as in luxury cars and diesel engines. Getting the technology could be a huge help for Chrysler, but the American company will still need the money and ability to create new cars even with Fiat technology.

The alliance might help Chrysler if it needs to get more money from the American government in its battle to survive.

Chrysler's strength has been in sport utility vehicles, pickup trucks and minivans. We do not know Fiat's degree of interest in these businesses. Meanwhile, another foreign maker, Nissan (nasdaq: NSANY - news - people ) (which is part of the Renault/Nissan alliance) has an agreement with Chrysler whereby Nissan is to get a version of the Dodge Ram, a big pickup, and Nissan is to build small cars destined for Chrysler....More

Chrysler News:Chrysler and Fiat sign merger agreement

2009-01-20T05:16:00.000-08:00

Italian carmaker Fiat and US car concern Chrysler have signed an agreement to merge their companies, Chrysler disclosed.

Chrysler, at its Auburn Hills, Michigan headquarters, said that the agreement is still preliminary and not yet binding.

Further details were not immediately disclosed. Earlier on Tuesday, Fiat deputy chairman John Elkann said that the Turin-based carmaker is in talks with Chrysler amid reports of a possible purchase by the Italian company of a majority stake in the ailing US producer.

"It is no secret that we are talking. It has been a while that we are in talks," Elkann, a heir of the Agnelli family which controls Fiat, was quoted as saying by the ANSA news agency.

Elkann indicated more details on a possible deal would be available following a Fiat statement later on Tuesday and a meeting of the company's board scheduled for Thursday.

Earlier on Tuesday, Milan's Bourse announced trading in Fiat stocks had been suspended pending the statement's release.

The Wall Street Journal reported on Monday that Fiat was considering acquiring a 35 per cent ownership in Chrysler by mid-year as the first step towards the acquisition of a possible majority stake in the US company.

The deal would give Fiat long-sought access to the US market for its small and mid-sized cars, with the Fiat 500 and Alfa Romeo reported to be at the top of the list.

Under the deal, Fiat could build its own small cars in the US and use the Chrysler distribution network. In exchange, Chrysler would tap Fiat's expertise building small and medium-sized cars to advance its own plans for new, front-wheel-drive models with lower emissions.

As petrol prices soared and the economy stalled, sales of Chrysler's mostly large, fuel-inefficient cars and trucks fell 30 per cent in 2008.

With auto sales at a 27-year low, Chrysler has laid off tens of thousands of workers and had to beg for government rescue financing of $US5.5 billion ($A8.21 billion) just to stay afloat for the next few months.

The loan terms require Chrysler to deliver a credible survival strategy by March, and an alliance with Fiat would be a tangible new strategy.

Fiat, which exclusively makes small cars with narrow profit margins, is struggling to keep its own head above water in Europe's expensive labour market.

Chrysler News:Chrysler Says It Won't Sell Pieces of Company

2009-01-16T03:15:00.000-08:00

DETROIT -- Chrysler LLC on Wednesday shot down fresh speculation the auto maker is considering selling off pieces of its operations amid increasing concern about its ability to survive.

In a hastily organized conference call, Chrysler President Tom LaSorda said reports the company was in talks about selling its Jeep brand and other key assets are "absolutely false."

Chrysler is "going to be around for a long time," he said. "We are not going under."

Mr. LaSorda said he couldn't say if Chrysler's majority owner, Cerberus Capital Management LP, was considering selling the company as a whole.

It's time to buy back into American Vehicles!

GM UAW News On Concessions

2009-01-16T03:07:00.000-08:00

The latest news reported by Fox 2 Detroit:

GM will not ask the UAW for wages concessions.

Probably due to the fact that the last contract in 2007 included wages concessions. The new UAW assembly employees will earn around $14 dollars an hour.
Remember the new car czar will have to approve the companies plan. More than likely the czar will demand pay cuts.

Chrysler News:Jeep To Renault-Nissan and Magna is Cerbrus Selling off Chrysler?

2009-01-14T05:21:00.000-08:00

Another Chrysler sell off article!

Jeep To Renault-Nissan, Belvidere To Magna Steyr, PT Cruiser To China. Maybe

Chrysler has been - some say desperately - seeking to “sell key assets” for a while. The Nikkei (sub) now says that Chryler might be getting close. The usual “unnamed people with knowledge of the discussions” whispered that Chrysler is talking to Nissan-Renault and the Canadian auto supplier Magna. The topics of the discussion are the Jeep brand and Chrysler’s Belvidere plant. The Jeep brand would go to Renault-Nissan, Magna would take the plant.

The parties aren’t strangers.

Chrysler had announced an alliance with Nissan last April.

As for Magna, the interest probably stems from Magna’s subsidiary Magna Steyr, which is creating more and more auto contract manufacture business. Magna Steyr has produced the Chrysler Voyager from 2002 to 2007, and currently produces the Chrysler 300C, the Jeep Commander and Jeep Grand Cherokee. Magna was one of the bidders for Chrysler when it was sold by Daimler in 2007.

According to Reuters, Chrysler has been in talks with Chinese automakers Chery and Guangzhou Automobile Industry Group Co, to sell them the PT Cruiser “brand” and tooling.

Of course, nobody will officially confirm that anything is true. Reuters says that representatives of Chrysler, Cerberus, Magna, and Nissan declined to comment. A spokeswoman for Renault denied talks were under way.

Reuters say there is reason for secrecy and plausible deniability: Renault-Nissan is looking to see whether a deal to acquire Le Jeep would hurt access to U.S. government funding. Good thinking.

[For the uninitiated: an asset sale is when you sell what's owned by the company without selling the company-- and the liabilities that go with it.]

Chrysler News:Corker hopes Chrysler will merge

2009-01-14T05:15:00.000-08:00

Senator says GM's debt load is too high

Rick Kranz
Automotive News

DETROIT -- Tennessee U.S. Senator Robert Corker came to the Detroit auto show today and said Chrysler LLC needs to find a merger partner and General Motors is carrying too much debt.

Corker, a freshman Republican, emerged as a point man in the automotive debate after he and a group of Southern lawmakers blocked auto-bailout legislation last month.

Leading a throng of reporters on the floor of the show, Corker said he came to Detroit in response to a plea by Michigan Attorney General Mike Cox. Cox asked lawmakers to visit the show in a column published in Tuesday's Washington Post.

Corker's visit underscored the attention the industry has drawn as the U.S. economy reels from the longest recession since the early 1980s. At the end of 2008, U.S. auto sales had plunged to levels not seen since 1982.

In response to a reporter's question about Chrysler, Coker said the automaker's best chance of survival is with a partner.

"Chrysler probably needs to merge with somebody, not necessarily go away from the standpoint of existence,'' he said. "It appears to me based on what I have looked at that they have not invested in technology and those kind of things necessary to be a standalone.

"My hope is they will in fact merge and be a viable part of Michigan and our country."......More

Chrysler News:Chrysler 200c EV concept offers social networking capabilities

2009-01-11T14:35:00.000-08:00

The Chrysler 200c EV concept vehicle, revealed today at the North American International Auto Show in Detroit, would offer social networking capabilities that could wirelessly connect drivers to friends in other vehicles.

The vehicle's personalized profile system would interact with Web sites such as Facebook and Twitter, said Frank Klegon, Chrysler's executive vice president of product development. Passengers could surf the Internet, scroll through a library of songs or other media, and find traveling information.

Chrysler's vehicle would be able to travel 40 miles without using gasoline - the same fuel economy General Motors is promising with the Chevrolet Volt extended-range electric vehicle.

But the heavy emphasis on interior electronics and design illustrates an increasing focus in the industry on combining great design with alternative powertrain technology under the hood.

Klegon said the 200c EV would present a "seamless, harmonious link between the vehicle and the home or your office."...More

Hyundai Genesis, Ford F-150 named top vehicles

2009-01-11T14:29:00.000-08:00

Richard Truett
Automotive News
January 11, 2009

DETROIT -- The 2009 Hyundai Genesis today was named the North American Car of the Year by a panel of 50 of the nation's top automotive journalists. The redesigned 2009 Ford F-150 hauled away Truck of the Year honors

The Genesis defeated the Volkswagen Jetta TDI and Ford Flex. The F-150 came out on top over the redesigned Dodge Ram and Mercedes-Benz ML320 Bluetec.

The awards are given to the vehicles that get the most points by the panel of journalists. Each category had a total of 500 points this year, 10 points per judge.

"This award tells people that Hyundai maybe is a different car company than what they think," said John Krafcik, acting COO of Hyundai Motor America. "It signals that these guys have arrived."

The Genesis earned 189 points, just ahead of the Flex with 180 points. The Jetta TDI finished third with 131 points.

This was the third time Ford Motor Co.'s signature pickup truck has won the award. It also took the top honor in 1996 and 2004. This year, the F-150 took 259 points while the Ram garnered 167 and the ML320 Bluetec earned 74.

This year was the first time that two diesel-powered vehicles, the Jetta TDI and the ML320 Bluetec, made the list of finalists. It was also the first time a Korean vehicle, the Genesis, has been a finalist.

Voting started in September from a list of 14 new or substantially revamped cars and 12 new or redesigned pickups and SUVs. Cars that didn't make the final cut include the Dodge Challenger coupe, the Honda Fit and the Toyota Venza crossover. On the truck side, the Chevrolet Traverse, Volkswagen Tiguan and Subaru Forester didn't make the list of finalists.

UAW supporters rally outside Detroit Auto Show

2009-01-11T14:22:00.000-08:00

Louis Aguilar / The Detroit News
Dozens of United Auto Workers and their supporters are rallying outside the North American International Auto Show to defend their wages, which could be cut under current terms of the federal loans to General Motors Corp. and Chrysler LLC.

Carrying placards with such slogans as "I'm not a foreign auto worker", UAW workers like Tony Browning, a 34-year-Chrysler veteran, say many hourly workers will not accept deep wage cuts.

"This whole thing about we make so much more than foreign competitors is a lie," Browning said, who works on the line at Chrysler's Sterling Assembly plant. "We work damn hard for our money and I don't see a whole lot of people who are going to vote to cut our paychecks in half.".......More

Lauer Interviews GM's CEO, UAW President

2009-01-10T07:28:00.000-08:00

UAW, Automaker Contract Negotiations Set For Monday

DETROIT - TODAY Show's Matt Lauer interviewed General Motors Corp.'s CEO Rick Wagoner and United Auto Worker President Ron Gettlefinger at the GM Tech Center in Warren Thursday.

The interview came days before union and automaker leaders are scheduled to begin contract negotiations Monday as a required stipulation under Washington's billion-dollar bridge loan to the GM, Chrysler LLC and Ford Motor Company.

The $13.4 billion federal loan package granted to GM last month requires that the UAW make concessions and also demands that GM submit a restructuring plan to the government by March 31....More

The UAW Meltdown | The End Of The UAW

2009-01-10T07:03:00.000-08:00

We are looking at the end of the UAW, they can no longer strike against the auto companies and that was their only strength.

As the UAW GM Concession talks begin, the future grows bleaker for UAW members. We now know that Ron Gettelfinger cut a deal, he agreed to never strike again to get the auto rescue loans for GM and Chrysler.

If the UAW strikes all the rescue loan must be paid back to the government. Which means any of the money that would be used for retirees and benefits (VEBA) would be at risk. The UAW is locked in for the ride.

If this was a condition set by George Bush or the Treasury, why did Ron Gettelfinger agree and didn't inform the Union members?

If the Government and auto companies are going to dictate what the wages and benefits are going to be, why does the auto worker have to pay a union?

The transplant auto companies are paying more pre hour and they have medical benefits, Why should the UAW worker make less than the southern workers and less benefits?

The Government will be in partial control of the auto companies and the UAW has no bargaining power.

Why would the new age auto worker want to be in the UAW if he or she is only making $14 an hour with no pension???

Good Luck UAW Members!
J.E.
GMCHRYSLERNEWS

Big 3 pension gap grows

2009-01-10T07:01:00.000-08:00

Feds warn of risks in rising $41B shortfall
David Shepardson / Detroit News Washington Bureau
WASHINGTON -- The outgoing director of the U.S. Pension Benefit Guaranty Corp. warned Friday that Detroit's Big Three automakers face a $41 billion pension shortfall.

While the companies continue to meet government funding requirements, the situation raises concerns for the agency, which takes over pensions when companies fail, given the financial problems facing the struggling auto industry.

"We're not trying to tell people that the pension house is on fire," Charles E.F. Millard said in an interview. "The point is that in many ways this has a similar look to other situations, such as a Bethlehem Steel."

The pension corporation assumed the pensions of 95,000 people at Bethlehem Steel in 2002, when the company filed for bankruptcy, and ended up on the hook for $3.7 billion in pension costs. That plan was underfunded by $4.2 billion.

Millard said policymakers need "a clear understanding of the magnitude of the numbers and the risks" associated with the automakers.

In total, the Big Three pensions cover nearly 1.3 million people. If all three automakers were to collapse and turn their plans over to the pension corporation, the agency estimates it would pay out $13 billion of the $41 billion, because of limits set by Congress on how much the pension corporation can cover. The agency generally has a yearly cap of $54,000 in benefits for people who are 65.

A $13 billion payout would more than double the agency's $11 billion deficit.

"It is certainly possible that none of these companies ever files for bankruptcy," Millard said. "It is certainly possible that they all do." He said the risk to the agency "is significantly greater than it was six or seven months ago."

As of Nov. 30, the pension plans for hourly and salaried workers at General Motors Corp. had a combined deficit of $20 billion and Ford Motor Co. had an $11.7 billion deficit, according to Millard; Chrysler LLC had a $9.3 billion deficit as of Jan. 1. ...More

The UAW Can No Longer Strike! If So All Bailout Money is to be returned.

2009-01-09T06:04:00.000-08:00

GM, Chrysler's federal loan deals bar strikes

DETROIT – Provisions of General Motors' and Chrysler's $17.4 billion in federal loans automatically places them in default if union workers go on strike.

A General Motors Corp. filing this week with the Securities and Exchange Commission detailed the provision as part of its $13.4 billion in federal loans.

A person briefed on Chrysler LLC's $4 billion loan, who didn't want to be identified because the company is in talks with the United Auto Workers union about concessions, confirmed Thursday that the Chrysler deal also has a similar provision.

The UAW isn't a party to the deal and hasn't threatened a strike, its most potent weapon against the Detroit automakers.

The UAW and the automakers have a Feb. 17 deadline to agree to concessions to lower labor costs.

GM News:GM says China '08 sales up 6 pct but growth slows

2009-01-06T05:03:00.000-08:00

BEIJING – General Motors Corp. said Tuesday its sales in China rose 6 percent to 1.09 million vehicles in 2008, but growth slowed as consumers held back amid an economic downturn.

GM is looking to China's booming auto market to drive global sales growth as demand in North America and other developed markets slump. In 2007, the Detroit-based automaker's China sales, including joint ventures, rose 19 percent.

"A series of natural disasters and an increase in fuel prices earlier in the year exacerbated the impact of the global economic downturn in China," Kevin Wale, president of GM China, said in a statement.

GM is one of China's top automakers along with Germany's Volkswagen AG. Global producers have raced to open factories and tailor models for China, which has grown into the world's second-biggest vehicle market after the United States.

GM has been aggressive in China, setting up eight joint ventures, a vehicle development center in Shanghai and an alternative fuel research lab. Robert Socia, vice president of Shanghai GM, its passenger car joint venture, said in November the Chinese market is "very, very important to us."

The largest American carmaker says its new Cadillac CTS sedan was designed for China, with a bigger back seat because many buyers have chauffeurs. The company says it is working on five new models for China to be sold under its Buick and Chevrolet brands.

In its home U.S. market, GM sales of cars and light trucks fell 31 percent in December from the year earlier. Last month, Washington agreed to provide $17.4 billion in emergency, short-term loans for GM and fellow U.S. carmaker Chrysler LLC to help them survive the downturn.

China's auto sales, which grew in recent years at double-digit rates, have weakened as economic growth slowed. In November, sales of cars and light trucks plunged 13 percent from a year earlier, according to J.D. Power & Associates.

Analysts say China's total auto sales growth last year should be about 8 percent, down from 22 percent in 2007. GM says its expects passenger car sales to recover to about 10 percent growth in 2009.

Sales for GM's Chevrolet brand rose 15.7 percent in 2008, the company said.

Sales of the Wuling brand, made by SAIC-GM-Wuling, a three-way partnership with Shanghai Automotive Industries Corp. and Wuling Automobile Corp., rose 17.4 percent.

The Wuling Sunshine minivan was China's top-selling passenger vehicle in 2008, with 408,774 units sold. The company's top-selling passenger car was the Buick Excelle, with 175,417 units sold.

Shanghai GM sales were down in 2008 due to limited new model introductions. The company said it plans to renew its portfolio with two new Buicks, the Regal and Enclave, and the Chevrolet Cruze.

Ford Motor Co. says it will release 2008 China sales on Friday. Volkswagen data also are due out shortly.

China's young but ambitious domestic automakers also have seen the economic downturn erode strong sales growth.

Sales for Chery Automobile Co., the country's biggest domestic producer, were down 9 percent and those for No. 2 Geely Group Ltd. were flat in the 11 months through the end of November, according to J.D. Power.On the Net: General Motors Corp

Chrysler News:Automakers' U.S. Sales Tumbled In Dec.Chrysler Hit Hardest, With 53% Plunge

2009-01-06T04:58:00.000-08:00

Chrysler's U.S. sales plunged 53% from a year earlier in December and other top automakers' sales shrank more than 30%, as the industry finished off its worst year since 1992 on a low point.

Chrysler said Monday that it will offer additional discounts after sales sank to 89,813 vehicles last month. Ford's (NYSE:F - News) sales dropped 32% to 138,458 and GM's 31% to 220,030.

Toyota's sales plunged 37% from December 2007 to 141,949 vehicles, Honda's (NYSE:HMC - News) 35% to 86,085 and Nissan's 31% to 62,102.

Worries about rising unemployment, a deepening recession and the credit crunch have led consumers to put the brakes on auto purchases, driving Chrysler and GM to the brink of bankruptcy and likely sending Toyota to its first operating loss in 71 years.

"The main reason why we are where we are is because of consumer confidence," said Jesse Toprak, executive director of industry analysis for auto site Edmunds.com.

Consumer confidence fell to a record low in December, and jobless claims hit a 26-year high amid a recession that began in December 2007.

Also on Monday, Porsche said sales fell 25.5% in December to 2,154 vehicles, while Daimler's sales fell 23.5% to 20,848 vehicles.

Stocks opened lower on Monday and stayed there, reacting little to the expected plunge in auto sales. The Dow fell 0.9%, the S&P 500 lost 0.5% and the Nasdaq declined 0.3%....More

Auto Makers Close Books on Awful Year, Face More Ills

2009-01-06T04:56:00.000-08:00

By SHARON TERLEP and MATTHEW DOLAN
U.S. auto sales tumbled again in December, capping one of the worst years for the industry in decades and solidifying the view that more turmoil lies ahead in 2009.

For the month, sales of cars and light trucks fell 36% to 896,124 vehicles, according to Autodata Corp, a Woodcliff Lake, N.J., research firm. That is an improvement over both November and October; still, it was the fourth month in a row that sales failed to exceed one million vehicles.

For the full year, U.S. auto sales declined 18% to 13.24 million vehicles -- the lowest total since 1992, Autodata said.

Continuing the pattern of recent months, December's vehicle sales fell as cash-strapped Americans simply stayed away from dealerships or had difficulty securing auto loans. For many consumers, worries about losing their jobs and sinking home values trumped the year-end rebates and financing deals auto makers rolled out in the last few weeks...More

Toyota to suspend production for 11 days in Japan

2009-01-06T04:52:00.000-08:00

Shino Yuasa / Associated Press
TOKYO -- Toyota is suspending production at all 12 of its Japan plants for 11 days over February and March, a stoppage of unprecedented scale for the nation's top automaker as it grapples with shrinking global demand.

The last time Toyota Motor Corp. halted production at all its Japan plants was in August 1993, when demand plunged because of a rising yen, and that was for only one day, according to the company.

A global economic downturn has hammered the auto industry in Japan and elsewhere, forcing carmakers to cut staff, lower production and delay new models. Major automakers in the U.S. had teetered on the brink of collapse until securing a multibillion dollar government lifeline.

"We are coping with a slump in global sales," Toyota spokesman Hideaki Homma said Tuesday. "Demand in the world auto market is so depressed that every model is falling sharply in sales."

Toyota said last year that it was stopping production at its 12 domestic plants for three days in January. But it decided on additional closures because of the global downturn. Toyota will stop output for six days in February and five days in March, it said.

Of Toyota's domestic factories, four produce vehicles while the rest make engines and auto parts.

Overnight, Toyota reported that its U.S. sales in December were down 37 percent on year, a worse drop than Ford Motor Co.'s 32 percent drop and General Motor's 31 percent slide.

Toyota last year suspended production at its auto plants in Alabama, Indiana and Texas for three months, and shut down output for two days in December at all its North American vehicle factories including five in the United States, one in Canada and another in Mexico.

Chrysler LLC also shut down its plants for a month in December, longer than the usual two-week break, while GM has said it would shut down a plant in Thailand for up to two months.

Toyota is also struggling in its home market, which has been stagnant for years. The sales drop has worsened amid a global recession.

Sales of new vehicles in Japan fell to 3.2 million vehicles last year, the lowest in 34 years, the Japan Automobile Dealers Association said Monday.

Last month, Toyota said it was slipping into its first operating loss in 70 years, expecting 150 billion yen ($1.66 billion ) of operating losses for the fiscal year ending March 2009.

Toyota, which makes the Prius gas-electric hybrid and Camry sedan, expects 50 billion yen ($555 million) in net profit, down from 1.7 trillion yen earned the previous year.

Chrysler News:Chrysler finally gets $4 bn aid from US govt

2009-01-03T10:56:00.000-08:00

January 03, 2009

US auto major Chrysler on Friday said it has received four billion dollars as emergency loan from the government, a move to avert a collapse of the ailing automaker.

"Chrysler received an initial four billion dollar loan to help bridge the current financial crisis," the company said in a statement.

The amount is a part of the $13.4 billion lifeline approved by the US government for General Motors and Chrysler last month.

"This initial loan will allow the company to continue an orderly restructuring while pursuing our vision to build the fuel-efficient, high-quality cars and trucks," Chrysler chairman and chief executive Bob Nardelli said in the statement.

The loans to the auto makers would be provided under certain conditions, including a limitation on executive pay.

Moreover, US President George Bush had said that the companies have to come up with viable plans for restructuring by March 31, 2009.

The auto makers would be given "three months to get in place plans to get restructure which we believe they are capable of doing...," Bush had said.

The US President had pointed out that the entities have to pay back the loans if they fail to come up with restructuring plans.

Earlier, the US Treasury had thrown a $6 billion lifeline for GMAC, the finance arm of beleaguered carmaker General Motors.

GMAC is the major lender for General Motors's 6,500 dealers across the country.

Chrysler Faces Criticism for Full-Page 'Thank You America' Ads

2008-12-31T11:28:00.000-08:00

Chrysler is facing a backlash from taxpayers and conservative groups after the ailing auto company took out a series of full-page newspaper ads last week to thank Americans for "investing" in the company through the government's $17.4 billion auto industry bailout plan. The ads ran last week in several major daily newspapers, including USA Today, The Wall Street Journal and the Atlanta Journal-Constitution. More...

GMAC Gets $6 Billion From Treasury to Revive Lending

2008-12-30T06:46:00.000-08:00

Dec. 30 (Bloomberg) -- The U.S. Treasury committed $6 billion to support GMAC LLC, the financing arm of General Motors Corp., widening the government’s effort to keep the largest U.S. automaker out of bankruptcy.

The Treasury will purchase a $5 billion stake in GMAC and lend $1 billion to GM so the automaker can contribute to the lender’s reorganization as a bank holding company, according to a statement issued yesterday. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC.

The fresh capital will enable GMAC to expand lending to car buyers and help save GM. The automaker’s U.S. sales plunged 22 percent this year through November after GMAC ran short on cash and limited loans to people with only the best credit. The Treasury stepped in after Congress failed to pass an auto- industry bailout earlier this month.

“The relationship with GM is probably a key reason it’s being bailed out,” said Thomas Atteberry, who helps manage $3.5 billion in fixed-income assets at First Pacific Advisors in Los Angeles. “Philosophically, I’m not very happy about the fact that the government has to save an auto-finance company because management ran it into the ground.”

In a statement, GMAC said it “intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles.” The lender financed about 35 percent of GM’s retail customers last year.

New Rescue Program

“This is part of our strategy to position GMAC for long-term stability,” Toni Simonetti, a spokeswoman for GMAC, said about yesterday’s Treasury announcement. “The reason we’re doing this is so we can provide credit to consumers; we’ll put these funds to use right away.” More...

Autoworkers Union Keeps $6 Million Golf Course for Members at $33 Million Lakeside Retreat

2008-12-29T04:42:00.000-08:00

The United Auto Workers may be out of the hole now that President Bush has approved a $17 billion bailout of the U.S. auto industry, but the union isn't out of the bunker just yet.

Even as the industry struggles with massive losses, the UAW brass continue to own and operate a $33 million lakeside retreat in Michigan, complete with a $6.4 million designer golf course. And it's costing them millions each year....More

Mum Is the Word From GM and Chrysler-What is Next?

2008-12-28T06:09:00.000-08:00

Well the bailout drama is over for another week and there is no news coming from any of the Big Three. People have alot of questions and doubts,just about every plant for the Big Three are shut down. The big question is what plants will reopen and which will remain closed. GM and Chrysler have until March 31st to prove they can survive, which means cut,cut,cut...and still probably merge. 2009 will be a historical year for the American Automotive Companies. Who will survive? Who will Merge?

GMAC mum on whether it cleared bailout hurdle

2008-12-28T06:06:00.000-08:00

Kimberly S. Johnson / Associated Press

GRAND BLANC -- Even after a crucial deadline came and went, the financing arm of General Motors Corp. remained silent Saturday on whether it cleared a final hurdle to become a bank holding company and gain access to billions in federal bailout money.

Analysts have speculated that if GMAC Financial Services LLC doesn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to parent GM's own chances for survival.

GMAC had received the Federal Reserve's approval to become a bank holding company earlier in the week, but the approval was contingent on the ailing auto and home loan provider completing a complicated debt-for-equity exchange by 11:59 p.m. EST Friday. ...More

Toyota forecasts first operating loss as sales slump

2008-12-22T06:16:00.000-08:00

Automotive News

NAGOYA, Japan (Reuters) -- Toyota Motor Corp. forecast a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen while declaring an emergency unprecedented in its 70-year history.

The world's biggest automaker had been expected to issue its second profit warning in less than seven weeks after domestic rival Honda Motor Co. also cut its outlook again last week, but today's downward revision was bigger than analysts predicted.

"We are facing an unprecedented emergency," President Katsuaki Watanabe told a year-end news conference today. "This is a crisis unlike the crises of the past."

The forecast compounds the global automotive crisis and comes three days after General Motors and Chrysler LLC staved off bankruptcy through a U.S. pledge for $17.4 billion in emergency loans. Automakers around the world are caught in a sharp reversal of demand as the financial crisis spreads, squeezing credit and consumer sentiment.

Toyota cut its group operating forecast to a loss of 150 billion yen ($1.7 billion) for the year ending March 31, after shocking financial markets last month by slashing its group operating profit forecast by 1 trillion yen to 600 billion yen.

It made a record profit of 2.27 trillion yen last year....More

GM and Chrysler Will Get $13.4 Billion in U.S. Loans

2008-12-19T06:32:00.000-08:00

Dec. 19 (Bloomberg) -- General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan announced by President George W. Bush.

A bankruptcy is unlikely to work for the automakers at this time and can’t be allowed, Bush said at the White House.

“These are not ordinary circumstances,” Bush said. “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.”

The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February for a total of $17.4 billion in assistance, according to a statement from the Bush administration. The funds would allow GM and Chrysler to keep operating until March.

Winning the assistance is a reprieve for GM, the biggest U.S. automaker, and No. 3 Chrysler after they said they would run out of operating funds as soon as this month. Bush is stepping in after Senate Republicans’ refusal last week to take up a House-approved rescue raised the prospect of a company failure costing millions of jobs.
...More

Auto Rescue: Bush to Give Low-Interest Loans to Carmakers

2008-12-19T06:28:00.000-08:00

The White House has decided to come to the rescue of General Motors and Chrysler by providing them with $17.4 billion in low-interest loans to keep them afloat, ABC News has learned.

The money for the loans will come from the Troubled Asset Relief Program fund, signed into law this fall to bail out the financial industry. The president will provide $13.4 billion in short-term financing in December and January and plans to make another $4 billion available in February, provided it can reach into the second half of the $700 billion TARP fund to do so.

The deal also includes as a non-binding "target" a key provisions, including making work rules and wages competitive with workers at foreign car companies in the U.S.

Chrysler CEO Bob Nardelli issued a statement saying the company was grateful for the helping hand and that, "Chrysler is committed to meeting these requirements."

Pressure had been building for President Bush to act. Chrysler temporarily shut down all of its plants earlier this week to save money, and GM delayed construction on a new plant for the same reason. And House Speaker Nancy Pelosi urged Bush on Thursday to make a decision because the nation's weakened economy could not risk a massive wave of layoffs.

"This is a difficult time for a free-market person," Bush said Thursday. "Under ordinary circumstances, failed entities, failing entities should be allowed to fail. I have concluded these are not ordinary circumstances, for a lot of reasons... We got to the point where if a major institution were to fail, there is great likelihood that there'd be a ripple effect throughout the world, and the average person would be really hurt."

Treasury Secretary Henry Paulson told a business forum in New York Thursday night it was too risky to simply let the automakers fail.

"When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers… it would seem to be an imprudent risk to take," he said....More

Gm Chrysler merger-This is the End Of The Road For Chrysler

2008-12-18T03:18:00.000-08:00

GM Chrysler News reported this 2 months ago. The GM Chrysler Merger was and is a done deal! They just need some cash to buy out Daimler and then transfer the 49% of GMAC to Cerberus and GM will Get Chrysler's assets.

I find it amusing all these supposedly automotive experts are surprised that GM Chrysler is talking merger again. Both companies have told us 2 months ago they where going to merge. The only hold up was GM needed more cash! Well guess what, the money will be coming soon.

The auto rescue bridge loan was all part of the plan to facilitate the GM Chrysler Merger!

GM idled 22 factories and Chrysler idled 30,Sadly the workers at GM and Chrysler do not know that some of these plants will never open up again, Especially if the GM Chrysler Merger goes through.

GM Chrysler News-J.F.

Chrysler News-Chrysler to idle all plants!

2008-12-18T03:07:00.000-08:00

Carmaker moves to conserve cash, tightens lending to dealers

Alisa Priddle / The Detroit News

Chrysler LLC is shutting its North American production operations Friday for a month, the latest in a string of drastic cost-cutting measures it is making as it awaits word on emergency federal loans to prevent it from possibly having to file for bankruptcy.

The Auburn Hills automaker said the action is a response to a severe sales slump, tight credit and an urgent need to preserve cash. All 30 of the company's assembly, engine and transmission plants in the United States, Canada and Mexico will close at the end of their shifts Friday for at least 30 days, the company said.

Chrysler said people aren't buying vehicles because they can't get loans, but company dealers also have been hit by the tight credit market. Chrysler Financial has warned dealers that it may have to stop providing loans they need to stock their showrooms because dealers have been withdrawing too much money from an account used to fund the loans.

The production cuts come as Chrysler and General Motors Corp. seek up to $15 billion in emergency aid from the government to help them fund their operations for the rest of this year and into early 2009. Chrysler has asked for $7 billion in emergency loans and has warned that without the money, it could be forced to file for bankruptcy protection.

Chrysler's U.S. sales have slumped 27.7 percent this year and fell 47.1 percent in November, according to Autodata Corp.

"It's clear that the automakers are in a very fragile financial condition and they're taking steps to deal with it," White House spokeswoman Dana Perino said Wednesday. "We're aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way. As we've said, a disorderly collapse of the auto industry should be avoided."

Chrysler spokeswoman Shawn Morgan said the issues aren't unique to Chrysler, which continues to restructure and invest in future products...More...