So, What Is GM Up To With All That Cash?

Edward Niedermeyer
by Edward Niedermeyer
so what is gm up to with all that cash

OK, so the latest GM Fastlane PR exercise is actually entitled “What Is GM Doing With The Money?” Defensive much? Anyway, coming from Fastlane, there’s obviously no mention of giving Cadillacs away. Or throwing cash down the Delphi hole. Or paying Brazilian workers to sit on their hands. No, having received $13.4b, GM’s Steve Harris reveals that GM’s plan is to (wait for it) comply with the terms of the loan! In other words, “prove that we can repay the loan, achieve a positive net present value, and meet federal fuel efficiency and emission requirements, and manufacture advanced technology vehicles in the U.S. ” And with the federal money, GM is “making progress,” says Harris. How? By building concepts like the Cadillac Converj. And announcing vehicles like the 2010 Equinox (Saturn Vue cannibalism!) and the 2012 Spark and Orlando (which debut after the loan is due). Hallelujah! And though Harris mentions the UAW Job Bank shutdown and “discussion” of plans to reduce dealers by 400 per year, his effort to “do a better job of communicating our successes (and) how we will be changing going forward” leaves out all the interesting bits.

Dow Jones (via CNN Money) says that GM will announce more plant closures shortly as it finalizes its February 17 congressionally mandated viability plan. According to Dow’s anonymous sources, “GM’s plant-closing strategy is complicated by the fluid state of the auto maker’s product portfolio.” As in, no clear brand or product strategy seems to be offering a direction out of the current miasma. Instead, each product will be judged on its own merit, and decisions will be made from there. “The outcome of product decisions will determine which factories go as part of the latest downsizing,” says the GM source.

IHS Global Insight last week predicted that GM will slash North American production by 1 million cars and truck this year, a 30% reduction. GI Analyst Haig Stoddard expects GM will have to close one of the company’s full-sized truck plants (probably the Pontiac, MI factory) as well as a car assembly plant in Orion, MI, or in Oshawa, Canada. Stoddard also expects Ford to close two plants, and says Chrysler could close many more.

Meanwhile, the “product first, brand later” strategy is especially starting to annoy Saturn’s long-suffering dealers. The Freep reports that Saturn dealers are complaining about being “in the dark” about plans for the brand, despite recent meetings with GM brass. “The only thing that was possibly certain was that if they decide to discontinue this brand for whatever reason then it will probably live through its product cycle,” says George Nahas, a Florida Saturn dealer, who also dismisses the notion of a Chinese or Indian buyout of the brand. “What does Saturn have to sell? They don’t build their own engines, don’t build their own transmissions, their own sheet metal. It’s shared with others,” says Nahas.

And though GM’s Mark LaNeve says a decision on Saturn’s future is “not something we want to rush,” the dealers aren’t sitting still. A Denville, NJ dealer is suing GM and Saturn in hopes of forcing them to allow him to sell Kias on part of his Saturn dealership. “All I’m trying to do is survive and survival means having products on my shelf that people are going to buy,” said Stuart Lasser. “This is a very difficult thing for me to even go out and file a suit, but I really thought that we were so wronged on this thing, I really had no choice.” Lasser accuses GM of betraying Saturn’s philosophy of offering affordable cars, and says his application to sell Kias was twice denied by GM.

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2 of 8 comments
  • Catelu Catelu on Feb 07, 2009

    What kind of publicity is that? I mean, I know an X5 or a Q7 are better barges, but I'll still buy an Escalade because some sports guy got one for free? I think having to pay for something others get for free would rather frustrate one.

  • FromBrazil FromBrazil on Feb 08, 2009
    Or paying Brazilian workers to sit on their hands. Bogus. They're not using American money for that. For that they're using good ole Brazilian money. I thought the whole thing about the bailout being used to pay people in Brazil was thoroughly debunked. Correct you are. As said above its Brazilian baiout bucks they're using. And also using it to fire 1000 people from one of their plant in São Paulo BTW. And yet here, nobody (though the Union tried) has raised the nationalist bravado and called them on it. Go figure. Brazil in 2009 is more global in its money use than other countries!

  • Arthur Dailey Any vehicle with a continental hump, even if vestigial, gets a thumbs up from me.
  • KOKing Actually a place called Sector111 in Temecula, CA was importing them for sale in the US starting around 2012. A friend had a shop right next door, and I recall seeing the very first one the owner imported for himself, and would bring it out to promote at various local events. Also shows this thing's been around for a while.
  • KevinB A $300 fine for me would be an "ouch". For someone else it may mean the electric bill doesn't get paid and there won't be enough gas to get to work.
  • SCE to AUX Historically, the Land Cruiser sold ~3000 units annually in the US for its last 15 years, so the answer is no.
  • Theflyersfan Oh boy - the sequential manual transmission. Otherwise known as "Your 16 year old driving stick the first time is smoother" transmission. I know automakers were trying new things out around this time and seeing what would stick (hint: the dual clutches won out), but even in testing, the Toyota engineers should have said いいえ、ジャンクです。(No. It's a piece of junk.) Is this seller going to get $8500? Doubt it. Way too much interior work is needed and it just looks worn out in there. St. Petersburg - salt air year round can do some wonders under the cover as well. But the exterior still looks good which makes me thing it was garage kept. So, for $8,500 - no chance. But for maybe $5,500 to $6,000 and the buyer doesn't mind some extra work to clean up the interior, maybe a decent top down sun down fun car. Just hope the transmission holds up.