Bailout Watch 226: GM to Congress: $4b in December or We're Dead [Plan Below]
As GM’s 41 percent November sales drop sinks into the public consciousness, The General’s generals have not-so-coincidentally released their not-secret bailout request. And here it is. Judging from the state of things, Rick Wagoner might need to fly to DC– before it’s too late. “General Motors said Tuesday it needs $4 billion in government loans this month and a total of $12 billion by late March to keep operating,” MSNBC reports. “Altogether, the auto giant is seeking up to $18 billion in government funding — including a $6 billion line of credit in case market conditions worsen.” Jeez, that doesn’t leave much for Ford or Chrysler! I make that $7b between them. A pittance really. Unless… they’re planning on asking for more. Could it be?
It could. Meanwhile, say goodbye to Pontiac, Saturn and Saab. BUT, exactly as our Ken Elias predicted, not until later: 2012. “General Motors Corp. would focus on 4 brands — Chevrolet, GMC, Buick and Cadillac. By 2012, the plan calls for 20,000 to 30,000 fewer workers, a reduction of nine facilities and 1,750 fewer dealers.”
It’s scary; Ken also predicted GM would tout a debt-for-equity swap… later. “GM will outline efforts to negotiate swapping some of the company’s debt for equity stakes in the automaker, either shares or warrants for them, said two people briefed on the company’s plan.”
The good news for GM? The MSM is swallowing the Curley defense (I’m a victim of coicumstance): “U.S. automakers are struggling to stay afloat heading into 2009 under the weight of an economic meltdown, the worst auto sales in decades and a tight credit market.”
Yeah, who could have predicted two months ago that GM CEO Rick Wagoner’s claim that his company had enough cash to last through 2009 was complete horseshit? Other than anyone who was paying attention.
More by Robert Farago
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@mic, World class? WORLD CLASS???? Really? I took a gamble on a 2006 Fusion SE. Liked the styling and the price (and I don't want to hear the arguement that I should have lower expectations from the Ford because I paid less than I would have for a Honda...BS). Two years later, the steering wheel is delaminating, the "chrome" trim on the door handles is bubbling up and the poorly press-fit window regulator insert is rubbing itself raw against the door panel, creating an oh-so-lovely squeek at any speed. They don't have the product, period. What they have, maybe, is a break in price points, but that doesn't allow a company to prosper when you have to place thousands of dollars on the hoods of each car to beg people to buy them. Sure, the Big 2.8 make great trucks, for the most part...but it was incredibly short-sighted of them to bank their entire profitability on them. Not everyone in America drives (or needs) a Suburban or F-150. The other end of the buying market that desired good smaller cars was almost completely ignored by GM, Ford and Chrysler (the Avenger? Really? Who decided that was a good car?). Say what you will, but my son drives a 1997 Toyota Tercel with nearly 200k on the odometer, and the interior build quality of that econobox is still in better shape than my much newer Fusion will ever be in. Do they deserve a bail-out? Doubt it...not with my tax money. Do they deserve to swallow the hard pill, file bankruptcy and reorganize themselves in order to come out on the other end as a viable company (or companies) that we can all be proud of? Absolutely.
Yeah, world class, really... Like the Chevy Malibu, Saturn Aura, Buick Enclave, Cadillac CTS, Chevy Silverado, Chevy Corvette. GM has won North American Car of the Year two years running. Truck of the Year in 2007. GM had 3 cars on the 2008 Car and Driver 10 Best list. 2 on the 2009 list. Motor Trend Car of the Year in 2008. Multiple Consumer Reports recommended buys. Is every product in the portfolio world class? No. Neither is any other manufacturer's. The new program launches in the last 3 years have all been world class in their segment. Period. Happy - GM has most definitely not been losing $2 billion a month for "the last few years". They are not asking for $16 billion by March - it's $12B. The cash burn will slow down because the plan calls out billions of dollars in additional structural cost reductions. The plan keeps GM operating and starting to pay back the loan in 2011 without any additional federal assistance even in the downside scenario of a 10.5 million unit market through 2009, increasing to 12.8 million in 2012. For perspective, the market was 16.5 million units in 2007. This is an extremely conservative estimate of the market rebound.