The Truth About Cars » Bankrupt http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 04 Dec 2014 19:13:59 +0000 en-US hourly 1 http://wordpress.org/?v=4.0.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Bankrupt http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Delaware Bankruptcy Judge Approves Sale Of Fisker Automotive to China’s Wanxiang http://www.thetruthaboutcars.com/2014/02/delaware-bankruptcy-judge-approves-sale-of-fisker-automotive-to-chinas-wanxiang/ http://www.thetruthaboutcars.com/2014/02/delaware-bankruptcy-judge-approves-sale-of-fisker-automotive-to-chinas-wanxiang/#comments Tue, 18 Feb 2014 17:50:27 +0000 http://www.thetruthaboutcars.com/?p=745993 Last week, Rueters reported that Wanxiang, a Chinese parts supplier, had won the bankruptcy auction for Fisker Automotive. The bid was valued around $149.2 million. The deal comes to close after a bidding war between Wanxiang and Hybrid LLC — a group who includes Richard Li, a Fisker investor and Hong Kong billionaire. In November, Fisker […]

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Last week, Rueters reported that Wanxiang, a Chinese parts supplier, had won the bankruptcy auction for Fisker Automotive. The bid was valued around $149.2 million. The deal comes to close after a bidding war between Wanxiang and Hybrid LLC — a group who includes Richard Li, a Fisker investor and Hong Kong billionaire. In November, Fisker asked for Hybrid Technology LLC to purchase the bankrupt company for $25 million, but creditors objected the deal in November and brought Wanxiang into the case in December.

Today Delaware, U.S. Bankruptcy Judge Kevin Gross approved of the sale to Wanxiang. He stated that the auction “shows that a fair process is a good thing.”

The sale came after a 19 round biding war between Wanxiang and Hybrid Technology LLC, and includes the shuttered General Motors assembly plant that Fisker purchased in 2010. Bloomberg reports, “[the] offer includes $126.2 million in cash, plus equity and $8 million in assumed liabilities.”

Wanxiang also bought A123 Systems Inc. last year after its bankruptcy for $256.6 million. A123 produced the Fisker batteries, which Henrick Fisker attributed to the failure of Fisker after A123 went through bankruptcy in October of 2012, and exiting in March of 2013.

 

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Electric Car Maker Coda Goes Bankrupt http://www.thetruthaboutcars.com/2013/05/electric-car-maker-coda-goes-bankrupt/ http://www.thetruthaboutcars.com/2013/05/electric-car-maker-coda-goes-bankrupt/#comments Wed, 01 May 2013 11:56:14 +0000 http://www.thetruthaboutcars.com/?p=486918 Electric car startup Coda is the latest in a series of greenm dreams to go down the drain – and it won’t be the last. Coda filed for Chapter 11 bankruptcy protection today, writes Reuters,  “after selling just 100 of its all-electric sedans, another example of battery-powered vehicles’ failure to break into the mass market.” […]

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Electric car startup Coda is the latest in a series of greenm dreams to go down the drain – and it won’t be the last. Coda filed for Chapter 11 bankruptcy protection today, writes Reuters,  “after selling just 100 of its all-electric sedans, another example of battery-powered vehicles’ failure to break into the mass market.”

Coda launched its electric sedan in California a year ago. Based on a slider made in China, the car delivered a range of 125 miles on a single charge. For $37,250 MSRP, the few buyers received a no-frills car.

Coda had no shortage of money when it started. Coda raised $300 million in equity from backers “including Aeris Capital, Limited Brands Chief Executive Les Wexner, and former U.S. Treasury Secretary Henry Paulson,” Reuters says. Nevertheless, $300 million are not enough to develop a car, let alone a car company.

Coda applied for, but withdrew a request for $334 million in federal loans.

Electric cars are a hard sell, but Coda made its life even tougher: “Coda has two problems,” a leading executive of a Japanese OEM that is heavily invested in electric cars told me last year, “they are trying to sell EVs, and cars made in China.”

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Ur-turn: GM Not Going Bankrupt – For Now http://www.thetruthaboutcars.com/2012/08/ur-turn-gm-not-going-bankrupt-for-now/ http://www.thetruthaboutcars.com/2012/08/ur-turn-gm-not-going-bankrupt-for-now/#comments Sun, 19 Aug 2012 08:19:51 +0000 http://www.thetruthaboutcars.com/?p=457318 This time on Ur-turn, reader Erikstrawn weighs in on an issue that kept TTAC busy for years: Will GM go bankrupt?  After all those years, Forbes woke up to the issue and wrote a long article on same. While we are at it: Parts of the Forbes article was written with generous help from TTAC. […]

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This time on Ur-turn, reader Erikstrawn weighs in on an issue that kept TTAC busy for years: Will GM go bankrupt?  After all those years, Forbes woke up to the issue and wrote a long article on same.

While we are at it: Parts of the Forbes article was written with generous help from TTAC. What bedeviled the magazine to quote an article on Volkswagen’s Winterkorn checking a Hyundai at a motor show is anybody’s guess. While Forbes acknowledged TTAC as a source, the magazine did so without adding a link, which is considered both common and professional courtesy in the business. Also, the rather generous “quote” from a TTAC article was more generous than the formatting at Forbes made believe. Letters to Forbes were not returned. Both common and professional courtesy must run short at the magazine.

With that said, now it’s Ur-turn:

There’s a big argument online this last week over whether or not GM is really going bankrupt again, and it seems to have been started by a politically motivated piece on Forbes.com. I’ve been keeping an eye on GM’s situation, and I don’t think GM’s going bankrupt any time soon, but I think they eventually will if they don’t change what they’re doing.
GM’s stock price is almost 50% lower than during their IPO, and the government still owns about a quarter of it. GM is flush with cash, just issued a 5-year bond, and has made ready lines of credit. While that might make them feel more secure, being able to borrow lots of money and throw it around didn’t save them from bankruptcy the first time around. When Steve Rattner and the rest of the government salvage team got to GM, cash was being thrown at every problem with no accountability. Cash is the lifeblood of a company, but it’s not a foundation.

GM’s foundation should be built on a bread-and-butter car. If your best-selling car isn’t what you depend on to pay the bills, you’re in trouble. GM spent a lot of time and money to make the new Cadillac ATS competitive with the BMW 3-series and paid for a lot of press to proclaim it a BMW-beater, but they forgot that it’s a niche car with far fewer sales than their mid-sized family car, the Malibu. They cheaped out on the redesign of the Malibu by using an readily available global platform, which made it more cramped than the rest of the competition and positioned it too near the Cruze for the price. Then they botched the launch by releasing it 6 months early to avoid the launches of the new Accord and Fusion. If it were truly a great redesign, then why were they worried about the competition? They knew they’d cheaped out. To make matter worse, they didn’t have the new powertrain ready yet, so they threw in their old hybrid powertrain that gets worse gas mileage than the competitor’s non-hybrid powertrains. To throw even more fuel on the fire, they still had 6 months worth of 2012 Malibus to get rid of, so they discounted them, cutting their margins and slowing the launch of the new Malibu. This is their bread-and-butter car! As an automaker you have to get the bread-and-butter car right. Then you have the free cash to blow on a Cadillac ATS.

All of GM’s ”GM is not going bankrupt!” supporters keep pointing to the Cadillac ATS as a symbol of their capability to compete with BMW, the Chevy Corvette as a symbol of their capability to produce a world-class sports car on a budget, and the Chevy Volt as the most technologically advanced car in the world. The Cadillac ATS might be good, but it’s niche. The Corvette certainly lives up to the hype, but it’s niche. The Chevy Volt is well-hyped, but it’s not the most technologically advanced car in the world, it’s just well placed in the market, and it’s niche.

Tout all you want, but their money-maker isn’t a money-maker, and the stuff that is making money isn’t making enough to keep them afloat. The execs at GM know this, so they’re doing everything they can to keep up appearances and cover the losses. Fleet sales and rental car sales are up, which sounds good, but is detrimental to the brand image. GM is also under a lawsuit for packing dealer lots with profitable pickups and counting them as sales before they’re sold. If the trucks don’t sell, GM will have to discount them, cutting the profits on another bread-and-butter vehicle.
Which brings us to full-size trucks and SUVs. GM prides itself on being a leader in the full-size SUV market. in the pre-bankruptcy days, trucks and SUVs were a foundation of GM’s profitability. Then oil prices rose dramatically and crushed sales. Now the sales have returned and GM has once again built a leg of its foundation on the shifting sand of oil prices. Also, GM’s pickups are going through a redesign. If they botch the launch like they botched the Malibu it could spell disaster.

GM supporters also like to talk about how well GM is doing in China. GM is gaining market share in China, but not by selling American-market cars. Most of the market share there comes from a three-way venture, SAIC-GM-Wuling, making vehicles in China for the local market. The Chinese market is under heavy pressure right now, and although they hold a significant market share, they’re selling at a thin margin, and the American market cars that are selling are, again, niche vehicles.

Still, GM touts their rising market share in China. They struggle to maintain their market share in the US. They fire executives over losing market share in Europe. GM is still chasing market share over making profits, which is what drove them into bankruptcy the first time around. GM will only get a larger share of the market when they start making cars people want instead of making cars people will take if the discount is large enough.

The problem boils down to leadership. Dan Akerson is not a car guy, and he’s hiring and firing people, trying to find the right formula for leadership. When Opel Europe lost $100 million in a quarter, he fired their chief without having an adequate replacement. The losses in Europe were heavy, but they were heavy for every automaker except VW. Then there was the $600 million/6 year Manchester United marketing deal. GM fired its marketing director for arranging the deal, then signed the deal two days later. Compared with how GM was spending a total of around $500 million a year on marketing before the bankruptcy, you have to ask how could the marketing director arrange a $100 million per year marketing deal without the CEO knowing?

The buck stops with CEO Dan Ackerson. Does GM have anyone who would make a successful replacement, or will Ackerson himself finally study the competition?

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Über-Porsche Gemballa: Company Bankrupt, Boss Missing, Detectives in Johannesburg http://www.thetruthaboutcars.com/2010/02/uber-porsche-gemballa-company-bankrupt-boss-missing-detectives-in-johannesburg/ http://www.thetruthaboutcars.com/2010/02/uber-porsche-gemballa-company-bankrupt-boss-missing-detectives-in-johannesburg/#comments Tue, 23 Feb 2010 19:00:59 +0000 http://www.thetruthaboutcars.com/?p=346433 When I met Uwe Gemballa the first time, he looked like he could be the manager of the local strip club down the road: Shoulder long bleach blond hair, a flashy watch, a suit to match the watch, the shirt unbuttoned down to the chest. I then found out that he had brought a Porsche […]

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When I met Uwe Gemballa the first time, he looked like he could be the manager of the local strip club down the road: Shoulder long bleach blond hair, a flashy watch, a suit to match the watch, the shirt unbuttoned down to the chest. I then found out that he had brought a Porsche 911, that made upward of 750hp, to a friend of mine, to make it street legal. Gemballa had one of the hottest tuner shops in Germany. His mods to the Porsche Cayenne produced the fastest SUV in the world – at least that’s what Uwe told me. Last I heard from him was some two months ago. He wanted to import Gemballas to China, and could I help him? Then it became quiet. Now I know why.

Yesterday, Gemballa’s wife Christiane sent their lawyer to the court in Ludwigsburg, near Porsche’s Headquarters in Zuffenhausen, to declare GEMBALLA Automobiltechnik GmbH & Co. KG as insolvent, reports Das Autohaus. A spokesman of the court confirmed this today. Gemballa’s shop, it made around 25 units a year, is closed. Gemballa’s case is wide open.

Gemballa has not been heard from since February 8, 2010. He had flown from Dubai to Johannesburg, South Afrika. From Johannesburg, he called his wife. According to some records, he said he had an accident and needed a “larger sum of money.” According to Germany’s BILD-Zeitung, Gemballa had claimed he had been kidnapped, and Christl should transfer a million Euro immediately. Christiane declared Uwe as missing. She thinks he’s worth €10,000 – that’s the reward to whoever can give conclusive information of his whereabouts. Gemballa’s offices were searched by officials of the public prosecutor in Stuttgart, ostensibly to find traces of the man that had vanished.

According to information from Johannesburg, Uwe Gemballa was last seen with a fugitive from the Czech Republic. The billionaire had been sentenced to six years behind bars because of tax evasion. He also evaded the authorities and fled to South Africa. According to the not always reliable BILD, Gemballa was supposed to deliver him a tuned Ferrari, worth €2m. Supposedly, there was a down payment of €1m. “Were there complications with the deal?” surmised BILD. Or were there bigger problems? The market for hopped-up Porsches is not what it used to be.

“To find out whether he has been kidnapped, or whether he went into hiding on his own, this is the job of a detective of the BKA and one of the Police in Böblingen,” write the Stuttgarter Nachrichten today. The detectives have been dispatched to South Africa to work there with local police. The BKA (Bundeskriminalamt) is the German equivalent of the FBI.

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GM “Accelerates” $50m Payment to Delphi; Delphi Cuts Health Care http://www.thetruthaboutcars.com/2009/02/gm-accelerates-50m-to-delphi-delphi-cuts-health-care/ http://www.thetruthaboutcars.com/2009/02/gm-accelerates-50m-to-delphi-delphi-cuts-health-care/#comments Fri, 06 Feb 2009 13:51:46 +0000 http://www.thetruthaboutcars.com/?p=241362 If you’re familiar with Delphi—a former GM division with the words “bankrupt since October 10, 2005” over the door—then you’ll know that they’re a not-so-hidden cancer on GM cancerous corpse. Even as The General seeks to survive with a federal IV stuck in its metaphorical artery, it continues to peel off just enough cash—now your […]

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If you’re familiar with Delphi—a former GM division with the words “bankrupt since October 10, 2005” over the door—then you’ll know that they’re a not-so-hidden cancer on GM cancerous corpse. Even as The General seeks to survive with a federal IV stuck in its metaphorical artery, it continues to peel off just enough cash—now your cash—to keep the parts maker making parts. For vehicles no one’s buying; but that’s how the industry doesn’t roll these days. So, some bad news from the oracle then. First, GM’s told their pals at the SEC (accounting scandal forgotten) that they’re accelerating a $50m payment to Delphi. [NB: Delphi had asked GM for a $100m hurry-up.] Can you say running on fumes? Delphi can. “The Company believes the amendment and accelerated GM support will enable it to preserve available liquidity given the difficult economic environment, particularly in the global automotive industry,” Delphi said in a filing with their pals over at the federal bankruptcy court. Judge Robert Drain, no less. And the cutbacks keep on happening!

The Detroit News reports that both of Delphi’s remaining U.S.-based white collar workers are about—or in DetN-speak “may”—lose their health care benefits. Just joking. Some 10k workers face this grim prospect. As Warren Zevon says, it ain’t that funny at all. [Speaking of “shared sacrifice,” Delphi’s UAW workers are exempt from this one.] Here’s the skinny.

Troy-based Delphi Corp. sought permission Wednesday from a federal bankruptcy court in New York to cancel retiree health benefits for current and future salaried retirees, a move that it says would save the company $200 million from 2009 through 2011.

The auto parts supplier also sought to end post-retirement basic life insurance benefits for current and future retirees.

The moves would allow Delphi to reduce its balance sheet liabilities by $1.1 billion. About 15,000 salaried retirees with medical and insurance benefits would lose coverage. The company wants to end coverage “as soon as (it is able) after March 31.”

Can they do that? They can do that. We’ve got several insiders within Delphi. It’s bleak. Unless the company gets a turn at the multi-billion dollar federal bailout buffet, Chapter 7 is only a matter of time, and not much of it.

And yes, Delphi still makes enough parts for GM to stop GM making cars if they stop making them. Which doesn’t seem quite as terminal as before, what with Uncle Sugar keeping the cash flowing. Until and unless your legislators pull the plug on GM. And then the whole house of cards will come crashing down.

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