By on April 16, 2009

As TTAC’s Bailout Watch series heads for the initially improbable quingenta mark, it looks like the GM C11 naysayers are just about all nayed out. In his column, Detroit News Auto Editor Manny Lopez finally admits that a Chrysler/GM bankruptcy is . . . an option. Meanwhile, the self-styled AutoExtremist has thrown in the towel. In fact, Peter DeLorenzo now reckons GM is damaged beyond repair. A PR/marketing guy to the end, DeLorenzo has a solution: change GM’s name. “One hundred years of accomplishment and historic value to the American industrial fabric has been decimated in a matter of months. Once one of America’s corporate icons, GM has now been reduced to being a punchline for a running national joke, and this new car company will have to be unburdened of the GM name, pronto.” A matter of months? Clearly, DeLorenzo hasn’t been paying attention for the last decade or three.

GM isn’t the only one whose name is mud these days. Our neighbors to the north weren’t exactly thrilled when Chrysler told the Canadian Auto Workers to concede, the government to cough-up the bailout bucks or we’ll take our toys and go home. And now Ex-CEO Rick Wagoner stands accused of screwing GM’s Canadian subsidiary to secure taxpayer funding for his employer.

Bloomberg reports that “General Motors said it moved almost C$600 million ($495 million) from a Canadian unit to the U.S. [in March] as part of a deal with banks to strengthen U.S. operations and win government bailout money.”

Anyone remember when freshly-minted GM CEO Fritz Henderson announced the startling news that they didn’t have to draw down “extra” billions by the end of the month to keep the lights on? Apologists put it down to careful husbandry. Well, now we know the truth about GM’s sudden (if temporary) push away from the bailout buffet.

Of course, there’s the small matter of the bondholders left behind by GM’s run on the bank. And boy are THEY pissed.

Aurelius, Appaloosa and five other funds, who hold notes valued at 377 million pounds ($562 million), sued March 2 to have the money returned to the GM unit in Nova Scotia, which in 2003 issued the two series of notes.

The funds claim GM, the parent company, is either insolvent or on the brink of insolvency and knows it won’t be able to honor its obligation to the noteholders.

The parent company “has been or will be unjustly enriched at the expense” of Nova Scotia Finance and its creditors, the funds said.

See you in court? Hello? Chapter 11? Take a number and get in line, bud.

And join Pontiac and GMC dealers. Bloomberg also reports that “people familiar with the [federal] discussions” about GM’s train wreck say that the Pontiac and GMC may/will/might/could get the axe. This as GM’s “Savings Push Deepens.” It has to be asked: Fritz, do you like it like this?

GM’s spinmeisters responded to Bloomberg‘s Wild Ass Rumor with the kind of openness you’d expect from federal employees. “We are continuing to assess our global operations, brand portfolio and nameplates, and will take further actions to more aggressively restructure our business,” Renee Rashid-Merem, a GM spokeswoman, said yesterday. “It’s premature to comment on what those actions could entail.”

GM is talking muy macho for a company about to enter the Mother of All C11s. Ford, on the other hand, is talking softly and offering its dealers a big shtick.

The Detroit News curmudgeon Daniel Howes has finally broken radio silence to reveal that The Blue Oval Boyz have sent their dealers $1K in conquest cash with which to lure fleeing GM and Chrysler customers.

“Domestic intenders for Chrysler and GM have been defecting to Ford and Lincoln Mercury products in great numbers since the beginning of the year,” Amanda DeMouthe, marketing manager for Ford’s Boston, New York, Philadelphia and Washington regions, wrote dealers in an internal memo.

“And as media continues to speculate on the possibility of bankruptcy, those defections will surely continue. Please be sure your teams are aware of this new incentive. It is stackable with Customer Cash, Bonus Cash and 0% APR!”

You want domestic metal cheap? You know where to go. As Mr. Howes reminds us, it remains to be seen if FoMoCo can avoid the same fate awaiting General Motors at the hands of the feds. Meanwhile, everyone even remotely connected with Chrysler and GM is getting hammered, or is about to get hammered.

“Customers ask that question almost every day and they expect you to give the cars away because they say you’re in bankruptcy or soon will be,” New York Chrysler dealer Jonathan Grant tells our Mr. Howes. “This thing’s like a cloud that is hanging over us.”

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40 Comments on “Editorial: General Motors Death Watch 244: Let There Be Light...”


  • avatar

    Improbable half-century mark?

    Half millennium! Even more staggering.

    Canadians already are shirking Chrysler for threatening to leave Canada. Don’t be surprised if GM’s sales here suddenly tank, too.

  • avatar
    TTACtruebeliever

    Pick off the weak. Get a Traverse at 15K.

  • avatar
    gslippy

    When they’re down to Chevy and Cadillac, they should call it “Specific Motors”.

  • avatar
    toxicroach

    “Customers ask that question almost every day and they expect you to give the cars away because they say you’re in bankruptcy or soon will be,” New York Chrysler dealer Jonathan Grant tells our Mr. Howes. “This thing’s like a cloud that is hanging over us.”

    Well yeah, but mostly they heard the stories about how you could buy a Dodge Ram at 50% off six months ago and want the same deal.

  • avatar
    GS650G

    THe balloon is getting ready to pop. Lenders and bondholders are about to face reality.

  • avatar
    dougjp

    Surely the use of ” NSFW ” has finally run its lurid course, and can be buried along with other 4 letter short forms that used to be ways of saying “I’m a member of the internet elite!”, but now leave a “different” and not complimentary impression.

  • avatar
    MrDot

    I wondered when Ford would quit the united front nonsense and throw GM and Chrysler under the bus.

  • avatar
    Lumbergh21

    “One hundred years of accomplishment and historic value to the American industrial fabric has been decimated in a matter of months.”

    What world is Delorenzo livving in where GM has been decimated in a matter of months. The decline in GM began with the craptastic offerings of the mid-70′s on. It’s a testament to GM’s size and consumer loyalty that GM has hung on for this long. Of course, that same consumer loyalty that allowed them to hang on for so long also makes it that much more difficult to win customers back now that they are loyal to another brand.

  • avatar
    Seth L

    Lumbergh21-

    Welcome to Sweet Peet’s mind. I thought the exact same thing. He’s always railing about the perception gap, then goes and says GM is only now a damaged nameplate?

    Oh and 1700 dealerships are agout to go:

    http://www.reuters.com/article/ousiv/idUSTRE53F05Z20090416

    Where the hell are all these dealerships? That’s over 30 in every state, are they counting combined Pontic/GMC/Caddy dealers as multiples? The mind boggles.

  • avatar
    toxicroach

    “What world is Delorenzo livving in where GM has been decimated in a matter of months.”

    The world where GM has been making competitive products for 30 years, and the only reason any of this happened is because Consumer Reports hates America.

    Psychosis de Lorenzo, I ain’t even kidding. Hallucinations, delusional beliefs, irrational thinking. When it comes to GM, guys like Crazy Pete will fight to reject the reality that is slapping them in the face. They are like Hitler in his bunker, Soviets a football field away, raving about how some depleted engineering corp will rescue Berlin from the whole Soviet army. Pete will never, ever, admit that GM mostly dug its own grave. It will always be someone else’s fault; the public for not buying their products, TTAC for telling the truth, the media for not totally ignoring GM’s problems, the credit crisis, Obama, anyone but GM. It will never be GM’s fault to Crazy Pete and his ilk.

  • avatar
    menno

    As the resident Society of Automotive Historians guy around here, I can remind everyone that when Billy Durant (founder of Generous Motors in 1908) was kicked out of the company by the banksters (in 1910), he hired famed racing driver Louis Chevrolet and engineer Etienne Planche to produce four and six cylinder prototypes in a Detroit garage. Production started in 1911 at the Chevrolet Motor Company, and by 1918, Durant had made enough money that he managed to leverage Chevrolet stock enough to essentially TAKE GM BACK OVER. In one a sense, the Chevrolet Borg swallowed GM, but the GM name was used.

    So with that in mind, post-Chapter 11 for GM = Chevrolet Motor LLC as a logical name, with Buick Motor Division and Cadillac Motor Division both moved straight over as wholly owned subsidiaries; as well as Holden (Australia) through which GM owns their portion of the absolutely necessary to engineer cars GM-Daewoo (South Korean) as well as the partial ownership of GM-SAIC (China; 50%).

    Buh-bye to Pontiac; GMC; Saturn; Opel; Vauxhall; Hummer; and Saab.

    They’d be left as the “bad GM”. (i.e. the tattered and useless remnants) for Chapter 7.

    That’s my best guess as to what’ll go down.

    The only other known fact is that we taxpayers will be paying and paying and paying and paying and paying…..

    And that the public probably won’t be fooled and Chevrolet Motor LLC sales will fall by significant numbers while the other divisions’ sales essentially evaporate.

  • avatar
    geeber

    Lumbergh21: What world is Delorenzo livving in where GM has been decimated in a matter of months.

    He has lived in the Detroit area his whole life, and his dad was a high-level GM executive. What else would you expect?

    MrDot: I wondered when Ford would quit the united front nonsense and throw GM and Chrysler under the bus.

    I wondered that, too. But if Ford doesn’t go after them, Hyundai, Kia, Nissan, Honda and Toyota will.

    I remember reading that when GM phased out Oldsmobile, a surprisingly large percentage of Olds owners switched to Hyundai. There is no guarantee that those Chrysler and GM owners will stay with a Detroit-based car maker. Ford can’t take that for granted.

  • avatar
    scrubnick

    Dougjp: I totally agree. Can we please NSFW’ing stop this NSFW’ing NSFW? NSFW! But seriously, it needs to stop.

  • avatar
    toxicroach

    So to get that conquest cash, do I just claim I was seriously intending to buy a Camaro until I heard they had this conquest cash?

    How does that work?

  • avatar
    psarhjinian

    Didn’t I say GM was going to screw it’s Canadian ops to save it’s skin?

    Man, vindication never felt so, well, underwhelming and vaguely nauseating…

  • avatar
    John Horner

    The new name should be Chevrolet. Keep Cadillac as a subsidiary. It works for Toyota. It works for Honda. It works for Nissan.

    One of GM’s many problems over the years has been its fascination with the name. Multiple marketing programs to hype the GM logo were nothing but money thrown down the toilet bowl.

  • avatar
    thalter

    Can we retire the bailout watch? Really, the bailouts were months ago. At this point, we on to the bankruptcy countdown, or just back to the good old fashioned deathwatch.

  • avatar
    MikeyDee

    How many homes in Bloomfield Hills will be in foreclosure by the end of this year?

  • avatar
    toxicroach

    If you count each brand as a unique dealer, there is at least 5 GM dealerships in Columbia, Missouri (home about 100,000 people, half of which are college kids). It’s the biggest city for 200 miles in any direction.

    By my quick count there are 10 more GM dealerships (counting hybrids) within a 30 minute drive of the 5 in Columbia. So that’s 15 in the less populated part of Missouri. Even if you count each dealer as 1 despite how many brands it sells, we’re still looking at 8 or 9. Any town of 20,000 or more in Missouri probably has at least a Chevy dealer.

  • avatar
    Bunter1

    All personal please assume the Coporate Protection Position (fetal), brace for implosion.

    Bunter

  • avatar

    From the unintentional GM humor department.

    So I tried to go to http://GMBuyPower.com to check some local dealer inventory to see what sorts of deals there might be laying about.

    It redirected to this URL: http://www.gm.com/vehicles/?exist=false

    Give it a year and GM vehicles existence may well be false.

  • avatar
    Luther

    “which in 2003 issued the two series of notes”

    Didn’t GM issue a something-like $17B bond to cover retiree costs?…Not for R&D or production expansion but retiree benefits…People should have realized back then that GM was toast…Wouldn’t that issue at least ding ones survival instinct? I know some people who actually purchased those worthless chits claiming GM was “Too big to fail”…Same mentality that caused the bank failures/bailouts.

  • avatar
    f1guyus

    Lumbergh21 beat me to it. Anybody who thinks GM was “Decimated in a matter of months” has no business writing a column.

  • avatar
    86er

    Is GMC still the second-most profitable division of GM? Why then does GMC deserve to be in the “bad” part of GM’s divested assets?

    I know in the States Chevy is the preferred maker but GMC does very well here in Canada, although pertaining to the article it doesn’t appear that we count, despite being 20% of the N.A. market.

    I know we all hate rebadges here, but I would argue GMC is an example of “rebadging” done right.

  • avatar
    PeteMoran

    @ gslippy

    “Specific Motors” – brilliant.

  • avatar
    dean

    It would be interesting to know when those bondholders that are suing bought their notes. GM bonds have been rated junk for a long time know.

  • avatar
    Martin B

    Take a blank sheet of paper. Head it “reGen Motors.”

    Can we make it work?

    Expect sales of about two million, rising in later years. Well-established brand names and a comprehensive dealer network. So-so products, some good, some bad. And $100 Billion in debt.

    So that’s, uh, $50,000 per vehicle per year debt load. Let’s say we pay it off over 20 years, that’s $2,500 per vehicle margin required just to break even.

    Doable? I think so. Just. Provided the vehicles are attractive enough to command a premium.

    Are they good enough now? Don’t know, to be honest.

  • avatar
    Dave M.

    Pete will never, ever, admit that GM mostly dug its own grave….It will never be GM’s fault to Crazy Pete and his ilk.

    I have to disagree with this. While he has become more shrill in the last 6-9 months (perhaps from the indignation of the December begging sessions, while Wall St. got lots more $$ with minimal effort), Peter has always been on the forefront of “how GM has to change and how I would change it”. For 10 years now he has said too many brands, too many models, too many dealers.

    Yes, growing up and having worked himself in the GM culture, the cold reality of the automotive landscape that we’ve known for some time (decades) on the coasts are a pure shock to his system. And I think some of the recent “America hates us” bile he’s been spewing is ultimately deep disgust at Detroit for working itself into this corner.

    You can read back through his archives. Amazing stuff, and LONG before anyone else appeared on the web Autoextremist was THE Wednesday morning read for the industry.

    I do miss the old Peter though….

  • avatar
    FreedMike

    I agree with getting rid of Saturn and Buick, but not so fast on European GM brands and GMC / Pontiac.

    1) Other manufacturers are able to develop cars in Europe and adapt them for American sale, spreading development costs over a larger product spectrum. That makes perfect business sense. The European operations are also the source of ALL of GM’s compact and midsize FWD platforms. Dumping GM Europe would be a MASSIVE blunder.

    2) Yes, GMC is a redundant product with Chevy Trucks, but here’s the problem: the second best selling GM vehicle in 2008 was the GMC pickup line. You don’t axe products that are selling.

    I say keep GMC and Pontiac, and dump Buick. Have Pontiac focus on niche performance, urban chic, and pare GMC’s product line down to performance-oriented and luxury pickups.

    Dump Buick, and leave the entry-lux market to Cadillac, where it should be.

  • avatar
    Strippo

    No matter what they do at this point, it’s hard for me to imagine the existence of a thriving VM* dealer network five years from now. When GM goes C11, Ford can follow suit, explaining that GM’s workout would put Ford at a huge competitive disadvantage. Because Ford would only be screwing over creditors and not burdening taxpayers (in the short run, anyway), Ford possibly gets a pass relative to GM. It will be perceived as a “technical” bankruptcy for Ford – a legit Ch. 11 – and not the real deal GM is going through (never mind that Ford is far from out of the woods; perception is reality). For GM, letting the cash burn get this far and then still putting off the inevitable BK filing through the use of bailout bucks was nothing short of suicidal.

    *Vestigial Motors

  • avatar
    ConejoZing

    “’One hundred years of accomplishment and historic value to the American industrial fabric has been decimated in a matter of months. Once one of America’s corporate icons, GM has now been reduced to being a punchline for a running national joke, and this new car company will have to be unburdened of the GM name, pronto.’ A matter of months? Clearly, DeLorenzo hasn’t been paying attention for the last decade or three.”

    That’s sad lol.

  • avatar
    tpandw

    One picky thing from a former teacher. I know that ‘decimate’ has fairly recently come to mean ‘destroyed or nearly.’ In fact, it means ‘reduce by 10 percent.’ I realize that this is a losing battle, but somebody has to fight it. To the subject at hand, however, it’s hard for me to see how GM can survive outside of C11 and only then if there’s a complete change in management. The current group are not bad people, I’m sure, but they’re so mired in the way they’ve done it for generations that there’s no hope for them to change. Somebody competent needs to look at the entire brand line-up solely to determine what’s likely to be viable and what’s not. Just because Buick, Pontiac, and GMC have been around for a long time is no reason they need to stay. For instance, we live in a condominium complex in which many, although not all residents are retired. There are lots of Buicks here, none owned by anyone under 70. That tells me that continuing the brand in this country is a waste of resources.

  • avatar
    psarhjinian

    Yes, GMC is a redundant product with Chevy Trucks, but here’s the problem: the second best selling GM vehicle in 2008 was the GMC pickup line. You don’t axe products that are selling.

    Two clarifications to that:
    * If you axed GMC but still made the same product equally available as a Chevy, would it matter? Would GMC buyers really defect to Ford, Dodge or Toyota? Really? Are there a statistically significant number of buyers with cash (not guys who buy second-hand, but new buyers) who would abandon GMC for a non-GM make?
    * Best-selling and profitable are not interchangeable terms. Could you realize more profits, even at a smaller volume, by rationalizing the lineup.

    Put it this way: Ford sells a lot of F-150s without having to rebrand it** as another truck with a slightly different grille and feature content, and it sells better than either the Sierra or Silverado. So do most other makes

    Only GM has this pathological need to rebrand, and he only reason the Sierra (or cars and trucks like it) exists is to give GMC dealers something to sell (which is moot, as they’re not selling them) and for GM to spread the costs across more platforms (again moot, because GM isn’t selling them at a profit anyways, and the overhead is killing them).

    Fewer dealers and slimmer marketing would help all involved: dealers (after some attrition) wouldn’t be suffering margin loss from intracompany competition, and GM wouldn’t have to spend millions on maintaining S&M resources for brands that don’t sell, or if they sell, don’t generate profit.

    GMC (and Pontiac and Buick) made sense when GM had enough volume and marketshare to make it useful, and they passed the “useful” point a long time ago. About the only GM divisions that made any sense were Saturn and Saab, because (before they were borged) they offered something that Chevy and Cadillac didn’t, much like Scion and Lexus are meant to snare buyers who aren’t going to buy a Toyota. GMC/Pontiac/Buick are useless dead ends even if they are marginally profitable, because those same profits would be more effective at Cadillac and Chevy.

    ** Yes, I know about the Blackwood/MKT. It’s not germaine to this point because, frankly, it doesn’t sell.

  • avatar
    86er

    * If you axed GMC but still made the same product equally available as a Chevy, would it matter? Would GMC buyers really defect to Ford, Dodge or Toyota? Really? Are there a statistically significant number of buyers with cash (not guys who buy second-hand, but new buyers) who would abandon GMC for a non-GM make?

    Probably the real question is that when that GMC owner is ready to buy a new one, will his/her dealership still be there?

  • avatar
    Strippo

    I know that ‘decimate’ has fairly recently come to mean ‘destroyed or nearly.’ In fact, it means ‘reduce by 10 percent.’

    Incredible.

  • avatar
    fincar1

    We old farts know that there was a time when GMC trucks and even pickups were different from Chevys. The GMC modification of the old stovebolt Chevy 6 was the real thing for hop-up enthusiasts who liked the six-in-a-row configuration. Then there were the V6 truck engines that found their way into the pickups in the 1960-65 or so timeframe. The GMC’s – at least 53 or so and earlier – had completely different instrument panels. But starting in the mid-60′s, all the differences except for cosmetic ones went away, and nostalgia plus the need to supply the already-existing GMC dealers with pickups to sell were the only reasons to continue a GMC brand.

    In fact, nostalgia seems the main reason for General Motors’ continued existence as a company. It’s one thing to remember the good GM cars we’ve had in the past; quite another to try to keep this enormous infrastructure viable in spite of its lack of relevance to today’s market conditions.

  • avatar
    ihatetrees

    dean:
    It would be interesting to know when those bondholders that are suing bought their notes. GM bonds have been rated junk for a long time know.

    Well, given the number of AA rated firms that have gone tango-uniform recently, the Big 3 bond rating agencies’ credibility is suspect. Although, it’d be interesting to see a breakdown of bond defaults by rating.

    Everyone who knew the car business knew GM had troubles brewing. So called sophisticated investors like Appoloosa (who are about to get shivved) gambled and lost.

  • avatar
    "scarey"

    How about “Generic Motors” ? ;-)

  • avatar
    Accords

    Ive read all of the comments and agree with the great majority of them…

    Id just like to know..
    If a tree falls.. and there is no one around..

    Who will give a shit..

    I dont see a point for GM to make HALF of what they do. I mean anyone could sit down and pull apart the Chevy, Buick, Caddy and GMC brand.. an dsee massive redundancy… all across the board.

    Changing a name.. only means they are giving business to advertisers and printers.. to get the new name out..

    But a name.. wont change whats the inherant. problem.

    I wish theyd figure out.. the name is not only DAMAGED.. beyond repair, that changing a name.. wont mean much at all. Since they still have to sell allof the G.M branded vehicles.

  • avatar
    Jim Cherry

    It’s interesting to read the comments and see how, in some cases, people’s emotional investment in this once great company colors their attitude towards its current troubles.
    I might be guilty of this too, but if one reads enough about Detroit’s problems, all roads seem to lead back to bad management being the cancer that’s killing this patient.
    I’ve written about how and why that happened at http://www.examiner.com/x-6882-LA-Classic-Cars-Examiner


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