By on December 2, 2008

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.

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50 Comments on “Bailout Watch 226: GM to Congress: $4b in December or We’re Dead [Plan Below]...”


  • avatar
    AG

    I thought Winter in Michigan felt a little colder than usual this year…

  • avatar
    Bunter1

    GM sales in Nov-155K
    Production number for the month was over 245k.
    Oops.

    Everyone on this site already knew that they needed cash this month.

    Is Rick “The Accountant” Wagner “math challenged”.

    I have noticed in recent years that GMs production cuts always seem to mimic the year they just had with little or no anticipation of the obvious downward trend. Read the charts Rick.

    Or is it to late.

    Gives us tax-payers hope of C11 pre-Obama.

    Bunter

  • avatar
    Mark MacInnis

    Robert, you could have put a picture clipped from “Blazing Saddles” where Cleavon Little’s character puts a gun to is own head….except thatRed Ink Rick, who 2 months ago was crowing about having enough liquidity to last until 2010….is now holding a gun at Congress’ head with dire threats of GM’s demise.

    My question for Rick would be: If things are this bad, how is handing over the money going to do anything except delay the inevitable…..

  • avatar
    autonut

    I would like to remind everyone that 2-3 weeks ago GM payed 300 mils for commie (I mean Russian, belonging to former KGB colonels)auto factory.

  • avatar
    Banger

    Killing Saturn, but not Buick? Dumb.

    The Astra and Aura are the only two GM cars that really excite me or my wife. The Buicks are good looking cars for when we hit middle age or retirement, but the engineers need to understand they ought to be more efficient with each successive new model, not less, as has unfortunately been the case when you look at the 2000-2005 cars with the 3800 V6 versus the new Buicks with same powerplant.

    In fact, being that there are several areas underserved for Saturn (but readily served by Toyota, Honda, Nissan, et. al.), I’d go so far as to say they might consider transforming some of the dearth of Pontiac/Buick/GMC dealers into Saturn dealers and award Chevy dealers with new Buick franchises. Cutting dealers is definitely a good idea, but I know I, for one, would like to see a few Saturn dealers somewhere other than metropolitan areas– all of which are 80-100 miles away from my family.

  • avatar
    seabrjim

    Need more money to build in Brazil. Dumb taxpayers.

  • avatar
    Jerome10

    Ok, now I’m starting to get very skeptical this thing WILL happen (I would have bet it was in the bag) but now even I’m starting to think this thing maybe SHOULDN’T happen. The job losses are gonna be awful, but whereas before I was maybe hopeful this money would get GM (I’m not as uptight about lending Ford the money) over the hump, this sales report, and the $4b THIS MONTH with another $8B by March make it crystal clear its getting worse at the Ren Cen. By the time we hit March, its gonna be an additional $10-$12B, not $8B.

    I’m sorry. Its gonna suck. I might lose my job (supplier to mostly Japanese companies). I know a lot of family members who will be hurting. I was born in Michigan. I still have friends and family in SE MI and Western MI. Its already been scary and brutal in Michigan for at least 5 years. Whats left of Metro Detroit will all end up like the city itself. The economy is gonna take an even huger dump. But I think C11 is the only option now. Otherwise its gonna be a money pit. Maybe the banks will be money pits too, I don’t know, and I wish they never got theirs and I wish they went bankrupt too…at least that would have been fair. But I can’t see how ANYTHING but C11 will solve GM’s problems enough to allow them to come back at least kinda healthy.

    It might be the day of reckoning in America (pensions gone, health care gone, high wage middle class jobs gone), but all I know is we can’t just throw this kind of money away. The gov can’t create wealth by spending it the way it is. Wealth comes from the other direction. What the gov is doing is just making the inevitable (when it finally fully arrives) that much worse. What is happening now is un-American. I’m ok with helping people/companies who are struggling, but this is a lost cause. Cut the losses (my money), stop turning America into a socialist nation, and lets get on. No matter how bad its gonna suck. Sometimes things can’t get better until they get really bad.

    Then get ready for a bankrupt goverment who continues to think more spending is the answer, and enjoy your lower wages, higher health care costs, and massively increased taxes that will result from all this….if you can find a job. The fact is, we don’t have the money, we’re spending way too much, they want to spend even more, while we all make less and they take in less. The last thing the gov will do is slit its own throat to save the rest of us. I’m real excited for my 50% income tax of a lower wage (that will really increase our standard of living eh?), my 20% sales taxes, and everything else.

    I feel a little revolution bubbling inside. Things get bad enough you never know….

  • avatar
    Stingray

    I bet the loan will be waaaay more than 25B… I see it near 100.

  • avatar
    autoemployeefornow

    The auto companies borrowed money all the time in the past except that now no sane lender will continue to do so. Couple that with bad timing, poor decisions, and questionable upper management and there is not a soul on Earth that is willing to lend them money. So they go the government and threaten to fire employees and close factories if they don’t get the money they want/need to stay open. The govenment says sure here you go, $25 billion to split among you …. but wait ….. how are you going to pay us back? Well you know, we’ll sell cars and layoff employees and close plants, that type of stuff. The government says prove it, put it in writing. So they make up a story and send it to the government.

    What a load of crap!!

    It’s never going to work for $25 billion. It will be over $100 billion by the time the auto companies recover.

    Maybe.

  • avatar
    26theone

    So they need 12B. CBSMarketWatch says GM has 266,000 employees. So if each employee donates $45 they get 12B. If the employees believe in “the plan” why wouldnt they be willing to kick in some $$?

  • avatar
    Mr. Sparky

    Attention Bankruptcy Attorneys!

    Do you want an exciting opportunity to liquidate reorganize a Fortune 500 company?

    Do you like the stability of government funded operations?

    Do you want to work with an incompetent innovative management team?

    Do you like a challenge?

    Send your information to:

    Rick Wagner, CEO
    100 Renaissance Ctr
    Detroit, MI 48243

    Fruit baskets and gifts appreciated!

  • avatar

    I still stand that I do not want my tax money to pay for this mess! I’d have bought a GM if I wanted to support them, but I didn’t. I’d like to see my tax money fix the roads in my neighborhood and so on. Oh wait, they raised the damn tolls again to do that…

    This sucks.

  • avatar
    no_slushbox

    “$4b in December or We’re* Dead”

    *The management, directors, M.I.A. shareholders, overpaid UAW workers (that threw new workers under the bus in return for almost no concessions by current workers) and parasitic dealers.

    GM, on the other hand, has a chance to be reborn.

    26theone:

    I think you used $12 million, not billion. It would be $45,112.78 per employee. That’s a big sacrifice; that’s another nice boat or new Corvette for a UAW worker.

  • avatar
    toxicroach

    Slush beat me to it.

  • avatar
    Jerome10

    26theone:

    Double check your math ;) 266,000 * $45 is about 12 million dollars. Try $45,000….

  • avatar
    jkross22

    1750 fewer dealers? That’s it?

    If Toyota can make millions with 1500 or so dealers, what does GM need with 5200? Shouldn’t they be targeting, say, I don’t know, 1500?

  • avatar
    mikey

    Somebody please what is MSM?

    Gee I was ready to cough the 45$.
    The 45k is gonna be a little harder to come up with..

  • avatar
    autoemployeefornow

    Sorry 26theone:

    You f*cked up, you trusted me doesn’t work on this blog.

  • avatar
    toxicroach

    MSM= Main Stream Media— TV networks, newspapers.

  • avatar
    26theone

    True too many zeros in the billions. Well if the execs put up at least a million each then it might make it easier. Even put up 30 or 40% of what they are asking should be required.

  • avatar
    Mark MacInnis

    Also, I would ask Rick: If we couldn’t believe him when he said they had the cash to last to 2010, why should we believe him when he says they won’t last until January?

    As a beancounter myself, when I ask my team for financial forecasts, I ask for three cases: Likely sales forecast, 10% worse than forecast, and 20% worse than forecast. The cardinal sin for financial people is to over-promise and under-deliver to a forecast or plan. I supposedly don’t have Red-Ink’s educational background, or experience, he makes as much each business day as I do roughly in a year….but how come I know that and he doesn’t?

  • avatar
    tulsa_97sr5

    If 12 billion could really turn GM around the Warren Buffet types would be all over it. With a market cap under 3bil, and another 12 to turn them back into the GM of old or heck even into the Honda of today and you are looking at more than doubling your investment.

  • avatar
    Mr. Sparky

    “If 12 billion could really turn GM around the Warren Buffet types would be all over it.”

    Ask Cerberus how well their “cheap” car company turned out for them:)

  • avatar
    tulsa_97sr5

    Mr. Sparky :

    Ask Cerberus how well their “cheap” car company turned out for them:)

    yes yes yes exactly. everyone but DC is too smart to talk to these guys about their um, bridge loans. Like Robert and others here have said, if there was money to be made from Chrysler Cerebus would be making the investments themselves. They are smart enough to not flush any of their own money on a company they own, why would anyone else give them a dime?

  • avatar
    Point Given

    4 billion right meow. Yes, time to play the meow game in washington because you already look like an idiot so you might as well go ahead and reinforce the image.

    18 billion isn’t going to accomplish much of anything with that kind of cash burn.

    Remember last year when you had 22+ billion lying around and said things were rosy for the indefinate future?….So 18 billion is suppose to solve the problem…18 billion covers what, like 6 months at current burn rates…..or has it accelerated to 4 billion a month….how can you be planning for one hell of a sales pickup next year?

    Unrealistic plans, hopeful delusions…. same old same old at GM. As this site has chronicled this was a long time coming, and even at the end it’s the same as always.

    Time to pull the pin, hang your head, get your stuff into a box and PFO.

    Accept that you are going to chapter 11. start planning.

    Do something, anything different than what you’ve been doing in the past.

  • avatar
    eh_political

    @tulsa_97sr5:

    Good point. What’s worse is whomever does manage to impose austerity, force a cramdown and rationalize dealerships will be ripped mercilessly from all sides for their trouble. Doesn’t sound like something politicians would have a stomach for, any more than Buffet types.

    Any bailout outside of ch11 will be propping up rather than putting the domestics on a sound footing.

    What a mess. It’s like a bizarre game of chicken.

  • avatar
    luscious

    Don’t worry people…we have a SOLUTION:

    Just THINK, a modern, ELECTRIC, vehicle designed by a hack bunch of dedicated automotive engineers, teamed up with Aircraft and Satellite engineers/designers from Hughes Aircraft. Seriously folks, you know about Lockheed-Martin’s “Skunkworks”, right?…the home of the SR-71 and other KICK-ASS vehicles? Well, we have an EQUALLY dedicated small group of WORLD-CLASS Engineers and Scientists. They ****WANT*** to SUCCEED!!!! IT’S IN THEIR BLOOD! They LOVE THIS SHIT!!

    Just LOOK at the lines! Just LOOK at the *WORLD CLASS* TECHNOLOGY under the hood!! And if you don’t believe me when I say this is Hot SHIT…JUST ASK THE people who once LEASED IT:

    http://en.wikipedia.org/wiki/General_Motors_EV1

    http://www.carsareevil.com/images/gm_ev1.jpg

    General Motors, you are a World-Class UTTER DISGRACE!!!

    (sorry for the bold shouting, but G-D people!!!! )

    No amount of MONEY is going to solve this sorry company’s problems.

    NONE.

  • avatar
    ronin

    What little blips they’ve made in sales numbers over the past couple three years have come from red tags. This is a clue.

    The clue is that the cars cost too much. Price them down down down and people will CAN buy.

    All our tax money going to them is an attempt to help prop up the artificially high prices, themselves driven by the easy credit of recent years. These price points are now unsustainable.

    Why does congress want to keep prices high? They are doing the same things to house lenders, trying to keep house prices high.

    It’s all a futile effort. None of the trillions already squandered have done squat to make people buy. They will continue to squander trillions and nobody will buy.

    The natural way of things is an oversupply should lead to slashing of prices. Car companies think they are immune to this.

    Or maybe their own costs are too high? Same deal- their costs will come down when nobody buys.

    For some reason their product people think their MSRPs are a ruling from high. They are ignoring the market. The market says no.

    The company implodes, costs are reduced, and then MAYBE they can stay around to sell cars again.

    Until then, people can hold off buying new cars a lot longer than the carmakers welfare queens can crank out cars to sit on lots.

  • avatar
    micpl30

    26theone :

    “So they need 12B. CBSMarketWatch says GM has 266,000 employees. So if each employee donates $45 they get 12B. If the employees believe in “the plan” why wouldnt they be willing to kick in some $$?”

    GM has 96,000 employees in the US.

  • avatar
    luscious

    This is the source of GM’s “problems”:

    http://video.google.com/videosearch?q=who+killed+the+electric+car&www_google_domain=www.google.com&hl=en&emb=0&aq=0&oq=who+kill#

    Rick, maybe you can watch this on your jet trip to D.C….seeing as you have plenty of time to get your act together.

    You’re not even worth the $1/yr you so “humbly” proffer the American public.

  • avatar
    micpl30

    So Ronin, what do you think will happen to car prices when half the competition is gone?

    Clearly there’s oversupply. But the Big3 going under certainly isn’t going to lower prices.

  • avatar
    ronin

    What he needs to do NOW is to go to $1, bailout or not. What the UAW needs to NOW is to figure out how to reduce, not dangle it out as a ‘maybe’ something they ‘might consider’ if taxpayers are forced to pay them.

    Until then they are only yapping, not doing.

    Do extreme measures now to make a point, and be willing to live with it. Otherwise, they look wishy washy, unengaged, uncommited. They look like they are trying to run a number on the taxpayers for a maybe kind of hint hint promise. Which only underscores that they deserve nothing, having earned nothing, having shown nothing of earnestness to their own cause.

  • avatar
    Happy_Endings

    GM needs at least $40B just to get through 2009. And despite what GM says about the so called cost savings that start in 2010, they’ll need more to get through 2010, 2011, 2012, … . If I said they need at least $100B in total, would you say I’m over estimating or under estimating?

  • avatar
    pnnyj

    “$4b in December or We’re Dead”

    This dramatically shows what happens when you try to ignore economic gravity.

    Wagoner and his cronies have tried to ignore gravity by not filing for Chapter 11. Now it seems that they will finally and truly avoid the Chapter 11 filing… by being forced into Chapter 7.

  • avatar
    mel23

    I’m sorry to say I agree that GM is a lost cause. Under Wagoner it’s BEEN a lost cause. The stock holders deserve to lose every cent.

    But what these guys are asking for is spare change compared to what the financials have gotten with no end in sight and few strings attached. Where is the outrage with that? Somehow it’s more mysterious thus generates less heat is all I can figure. Google what Meredith Whitney has to say about what’s gone on and is going on and what’s coming in the financial sector. At least pissing away a few $ billion with the car companies will provide some paychecks to tens of thousands and produce something tangible. What happens to the billions and then more billions that’s disappeared down the financial rat holes?

    I don’t think the vast majority of people here have any clue about what’s coming. Fascinating to watch/hear the talking heads babble about the daily moves of the stock market. After yesterday’s DISASTROUS news and market plunge, it was up this morning. Why? The ‘word’ was that it was due to speculation that the Feds would take more steps to help the economy. Like Paulson has a clue. He’s gotta have TARP then he won’t use it again then he does. And we think Wagoner is a dunce.

  • avatar
    Ken Elias

    GM’s got a plan, and that’s about it. A lot of stuff needs to happen to make it work – like getting bondholders to take equity for debt, the UAW to push back the VEBA payment and get rid of the JOBS Bank, and – oh yeah – convince Americans that GM’s got great cars.

    If I was Congress, I’d tell Rick W. to come back once he’s got all the pieces in place, not just a document about his “plans.” Come to think of it, why didn’t he do all these things years ago??

  • avatar
    micpl30

    “GM needs at least $40B just to get through 2009. And despite what GM says about the so called cost savings that start in 2010, they’ll need more to get through 2010, 2011, 2012, … . If I said they need at least $100B in total, would you say I’m over estimating or under estimating?”

    Way overestimating.

    GM needs a loan of up to $16 billion to return to profitabilty. A loan only needed because of an implosion of the worldwide automotive market, brought on through no fault of GM’s. A loan which will protect the jobs of millions of Americans, keep the economy from sliding further into disarray, prevent the loss of billions in tax revenues, protect US taxpayers from assuming billions in pension liabilities, and maintains strategically important domestic manufacturing capability. A loan which GM will start to repay by 2011.

    The company is dramatically downsized and has cut structural costs by 23% since 2005. The company is producing many world class products, recognized by the press and the auto buying public, in markets all over the globe. The company sells more cars than any other on the planet, even though other governments effectively close their markets to outsiders and unfairly manipulate their currency, and our own government subsidizes the foreign competition. The company is THE leader in fuel efficient choices, including the segment leader in the heart of the US market, the Malibu, which beats the Camry. The company is innovating cutting edge technology, like the two mode hybrid transmission. The plan detailed today cuts costs further, reducing plants, brands, models, and reduces headcount another 20%+.

    These are facts. Yes, GM is burdened by some remnants and bad decisions of the past – not something that should be unexpected from a 100 year old company. Those burdens are recognized, and were being dealt with. A car market worse than anything seen in the last 50 years derailed those efforts and has put an American industrial icon on the brink of extinction.

    I can’t understand why anyone that calls themselves a car enthusiast would want to see the Big3 go out of business under these conditions…

  • avatar

    micpl30 :

    Someone’s been quaffing some pre-mixed Kool-Aid…

    Perhaps you’d like to peruse TTAC’s previous coverage of this slow-motion train wreck before parroting GM PR talking points.

    Perhaps, indeed apparently, not.

  • avatar
    dwford

    Just a skim through this “plan” shows GM to be a totally bankrupt company. They need $10b in the next 3 months just to prevent bankruptcy! None of that money will go to fix ANYTHING! What will be so different in March?

    This document is all maybes, approximations, kind ofs, deferments, and all put off until 2012. This is no plan, just a threat of bankruptcy couched in corporate BS.

    I say force the bankruptcy, and have a plan to keep the suppliers from going under and killing everyone else.

    What a joke.

    …ok, now to read Chrysler’s plan..

  • avatar
    micpl30

    Farago – I’ve followed TTAC’s tiresome, one sided, uninformed coverage for some time now.

    Funny how anyone that has a dissenting opinion is a “kool-aid drinker”, “insane”, or “hates” you, or TTAC. You know, like me, Padgett, Neff, Delorenzo, etc…

    The Big3 will get the money, because in the end, the companies are viable with what amounts to a minimal amount of financial assistance from the government (compared to the TRILLIONS of dollars of bailout money and guarantees being given to the financial industry, without oversight, a plan for use of the money, or any expectation of repayment) and they’re just too big a part of the mainstreet US economic landscape to allow to fail.

    And you personally should be glad they will, mate. An automotive market with fewer, blander choices doesn’t leave much for an automotive website to write about, now does it….

  • avatar
    tesla deathwatcher

    Carmaking is not banking. Whether you agree with the bailout of the financial companies or not (I don’t), saying we should bail out the carmakers because we bailed out the bankers makes no sense.

    The banks we bailed out have viable business plans. With capital to lend, they can make a return on that capital. While there is a risk that some (or in a very worst case all) of the capital will be lost, that is a risk that many felt we had to take.

    Farago’s point is that GM’s business plan makes no sense. We learned here in Silicon Valley long ago that putting new money into bankrupt, cash-burning companies is too risky to consider. It won’t save the company. And the investor loses its shirt.

    No one in Congress has the business experience to be judging the viability of a business plan. Especially people like Nancy Pelosi, Harry Reid and Barney Frank. If it were their money they were investing, I’d not object. But it’s not. It’s my money, and yours.

    Look at Warren Buffett, Carl Icahn and Mitt Romney. Do they see any viable business here? If they did, the carmakers wouldn’t be begging in Washington. You need to be able to make money to survive. Smart investors know that a company cannot use investments to fund operations for long.

    GM’s revenues are over $100 billion a year. Someone can make a business out of that. Frank Stronach at Magna had his eye on Chrysler at one point. Rather than piss away $25 billion or more to fund dying companies for a few more months of life, let’s pull the plug now. If they can survive, great. If they can’t, let’s mourn them and move on.

  • avatar
    50merc

    I urge the B&B to read the entire plan, including the appendices. It has many fascinating details, such as the degree to which fears of GM bankruptcy have cost it sales, and that Wagoner’s actual compensation was 13% of the amount reported in proxy statements.

    Also, it does include two forecasts, one based on best guesses as to the economy, and the other on “the bottom falls out.”

    Certainly, the plan is GM’s argument it needs and deserves a lot of help. You may think the scenario it describes is too little, too slow. But you just may come away feeling less hostile toward a federal bailout.

  • avatar
    rj

    Why would GMC be one of the surviving brands? I can’t think of a brand more unnecessary than GMC, unless Chevrolet stops making trucks.

  • avatar

    This reminds me of that Saturday Night Live sketch where the guy says something like, “Well, we’re gonna ask you for $3B, and then in March of 2009, we’ll ask you for another $5B; following that in July…”

  • avatar

    micpl30:

    I’m sorry you feel the need to post anonymously. Unlike Autoblog, we have strict anti-flaming rules here. You are free to disagree with our posts or commentators without fear of being called an asshole or similar. By the same token, unlike AutoExtremist, we have a comments section. Marty? Marty blew a gasket when I called for the carconnection to declare sponsorship of junkets and provision of press cars.

    In fact, I don’t whip-out the Kool-Aid reference lightly. Your previous post echoes the automakers’ pre-prepared bailout talking points exactly. To me, that’s an indication that you’re not thinking, how do I put this, independently.

    Now to the meat of the matter…

    You’ve made me realize that I haven’t addressed the pro-bailout moral relativism argument sufficiently. The banking industry is more important to the American economy than three poorly-run carmakers, and two wrongs don’t make a right. Done.

    As for “too big to fail,” I think it’s time we corrected that statement. At best the D2.8 are too big to be allowed to fail. Which is not true. As I and others have argued here, C11 would be better for the domestics than a bailout (I suggest you take the time to read and refute these pieces.)

    Finally, it is my fervent wish that the American auto industry reinvents itself, recovers and thrives. Hate the sin, not the sinner. And in that sense, I’d be happy to share a glass of Coppola chard with you (whoever you are), Padgett, Neff, Delorenzo and anyone else who shares my love of all things automotive.

    And if you wish to submit a pro-bailout editorial, please contact me at robert.farago@hotmail.com.

  • avatar
    micpl30

    I only have time for a quick reply here, but a quick comment on the banking industry comparison.

    What plan is it that they submitted? There was none. No hearings, no plans. Plus it’s a bailout, with no mention of repayment, and on the order of 20 times what the auto industry is asking for. Oh, and it also hasn’t improved anything yet.

    And how can you toss around the term “mismanagement” at the auto industry, and not apply the same term to Wall Street? The whole thing came tumbling down because of an incredibly misguided endeavours into credit default swaps, largely on mortgage backed securities. We’re talking in the tens of trillions of dollars, meanwhile drawing salaries in the tens, even hundreds of millions of dollars.

  • avatar

    micpl30 :

    Sorry you were so rushed. I would be interested to get your take on the other points I raised. Perhaps when you have more time…

    Reading your last comment, are you saying that two wrongs DO make a right? If time is of the essence, a simple yes/no will suffice.

  • avatar
    Happy_Endings

    GM needs a loan of up to $16 billion to return to profitabilty. A loan only needed because of an implosion of the worldwide automotive market, brought on through no fault of GM’s. A loan which will protect the jobs of millions of Americans, keep the economy from sliding further into disarray, prevent the loss of billions in tax revenues, protect US taxpayers from assuming billions in pension liabilities, and maintains strategically important domestic manufacturing capability. A loan which GM will start to repay by 2011.

    GM has been losing $2B a month for the last few years and recently has seen that figure grow to $3B a month. They don’t have enough money to make it until the end of the year, that’s why they’re asking for $4B now and another $12B to get to March, but they aren’t saying how much they need after that date. What can happen on April 1, 2009 (hmm, that day is significant for some reason) that all the sudden they don’t need anymore money from the taxpayers? Is the economy all the sudden going to turn around on that day, but they’re not telling anyone else? No, the logical conclusion is they’ll ask for even more money. They’ll need another $12B a quarter through 2009, which equates to $48B total for the year. Will things magically change on January 1, 2010? They’ll get some cost savings from the UAW starting that date, but will it be around $50B per year? The economy will eventually get better and they’ll may eventually see real savings from the UAW, but that will take time. During that time, they’ll need more money. Maybe (hopefully) not $50B a year, but it will be a significant amount.

  • avatar
    threeer

    @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.

  • avatar
    micpl30

    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.


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