Cartoon: Chevy Volt

Cartoon: Thanksgiving, Bailouts, and Rescues

GM's New Logo

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General Motors Commercial (SPOOF)

General Motors Files for Bankruptcy Protection

The bankruptcy is likely to lead to major changes and job cuts at the battered automaker. But President Obama and GM CEO Fritz Henderson both promised that a more viable GM will emerge from bankruptcy.

In the end, even $19.4 billion in federal help wasn't enough to keep the nation's largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization.

Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company...

More than 650,000 retirees and their family members who depend on the company for health insurance will experience cutbacks in their coverage, although their pension benefits are unaffected for now.

Investors in $27 billion worth of GM bonds, including mutual funds and thousands of individual investors, will end up with new stock in a reorganized GM worth a fraction of their original investment...

The company already lost the global sales title to Toyota last year, and it could soon fall behind Toyota and possibly Ford in the U.S. as well.

read the CNN article

Peter Schiff on the Economy and Inflation

Greg Mankiw on Chrylser and General Motors

Is it any surprise that Chrysler and GM are now in the process of going out of business?... Their bankruptcy should perhaps be viewed as a success of the market system.
Greg Mankiw

Cartoon: Obama and General Motors

Jay Leno on Obama and GM's Wagoner

According to the government, GM's Rick Wagoner was forced to resign because of poor performance. That’s embarrassing. You run an organization that loses billions of dollars and then get fired by a guy who heads up an organization that loses trillions of dollars.
~Jay Leno

General Motors, Wagoner, Obama, and Fascism

Dave Henderson writes:

He has already, in less than 100 days, moved the U.S. economy further towards fascism. Sean Hannity and other critics keep criticizing Obama for his socialist leanings. But the more accurate term for many of his measures, especially in the financial markets and the auto market, is fascism.

President Obama shouldn't get all the blame. Former President Bush took us a big step in that direction with his bailout. But when a President actually fires the president of a major company and decides to change the terms of that company's warranty on its products, that President has taken a major step.

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Obama on warranties:

It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can -- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe.

In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warrantee.

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Nationalize General Motors?

Perhaps the best way to fix the troubled auto industry is to treat it like a financial firm and have the government take it over.

There's been a lot of talk about nationalizing banks, but relatively little discussion about having the government take control of embattled automakers General Motors (GM, Fortune 500) and Chrysler LLC.

But some veterans of the government-coordinated rescue of six freight railroads back in the 1970's are arguing that nationalization can work with an industrial firm and might be the best course for the government to follow now.

Larry Kaufman, a former rail executive and consultant, argued in a railroad industry newsletter Monday that the U.S. Railway Association, the special government agency set up in 1974 to deal with bankrupt railroads, is a good model for saving the U.S. auto industry.

read the CNN story

Cartoon: General Motors Bailout

General Motors: $9.6 Billion Loss in 4th Quarter

General Motors posted a $9.6 billion net loss in the fourth quarter, a period in which its sales plunged and it needed a federal bailout to avoid filing for bankruptcy.

The company also disclosed that its auto operations burned through $5.2 billion in cash during the last three months of the year. The company ended the quarter with cash of $14 billion.If not for the $4 billion federal loan it received in the quarter's closing days, GM's cash level would have fallen below the $11 billion to $14 billion in cash the company has said it needs to continue operations...

Overall revenue at GM plunged 34% to $30.8 billion, significantly worse than the Thomson-Reuters forecast of $35.1 billion.

For the full year, GM reported a net loss of $30.9 billion. The automaker has posted net losses of $82 billion over the past four years as its U.S. sales and market share plunged and it closed plants and slashed staff in an unsuccessful effort to stem losses.

read the CNN story

My thoughts: Let them fail.

General Motors

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Cartoon: General Motors

General Motors

from Carpe Diem

Gas Prices and Vehicle Choices

General Motors announced plans Tuesday to shut four pickup and SUV plants, saying high fuel prices have produced a rapid and permanent change in consumer preferences away from the truck models on which it has depended.

At a news conference in Wilmington, Del., GM Chairman and CEO Rick Wagoner also unveiled plans to produce more fuel efficient vehicles

Wagoner also said GM is looking at possibly selling its Hummer brand, the large SUV based on military vehicles.

read the CNN story

My thoughts: It was only a matter of time before gas prices caused to a change in vehicle buys patterns.

GM Offers Buyout to 74,000 Workers

General Motors posted better-than-expected financial results for the latest quarter, but indicated that its efforts to shave costs are not behind it as the automaker offered lucrative buyouts to 74,000 employees - its entire U.S. hourly workforce.

The company reported improved fourth-quarter results from its overseas auto operations, which helped to balance out continued losses at its North American plants. But problems at finance unit GMAC, of which it still owns 49%, coupled with large charges taken in the third quarter related to tax credits, left GM with a company record $38.7 billion net loss for 2007...

But the latest range of offers to the remaining 74,000 GM workers represented by the United Auto Workers union is designed to allow the company to save money by paying new workers significantly less in pay and benefits than its current workforce, rather than lead to the large reduction in staffing sought in previous buyout packages...

About 46,000 of the GM employees are eligible to retire today and they can take pension incentives worth between $45,000 to $62,500 to retire. In addition there are inducements for those who are five years from retirement to leave early and receive benefits.

Those who leave and agree to sever all ties with the company - including giving up lucrative pension and health care coverage - will receive a lump sum of $140,000 if they have 10 years of service, or $70,000 for those with less than 10 years.

read the CNN story

Toyota Catches General Motors

After more than seven decades as the world's biggest automaker, General Motors Corp. now has to share the title with Toyota Motor Corp., at least until the Japanese giant offers further clarity on its 2007 sales totals.

GM said Wednesday that worldwide sales rose 3% to 9,369,524 million cars and trucks in 2007 -- the second-best global sales total in company history.

Toyota earlier this month posted sales of 9.37 million, but hasn't given a final number down to the last vehicle sold. It may never release that figure.

"[Toyota's] consistent practice in years past has been to report out to two decimal places only," company spokesman Mike Michels said. "It is unlikely that this will change. It would seem that the so-called sales race is a tie."

read the full story

It was a good run for GM.

Government Regulation: CAFE Standards

New fuel efficiency requirements imposed by Congress will add, on average, $6,000 to the price of GM vehicles sold in the United States, the automaker's vice chairman and product chief said on Tuesday.

Congress passed a new energy law in December 2007 that requires automakers to increase fuel economy across the industry to 35 miles per gallon by 2020 -- up 40 percent from current levels...

"We probably have to take a lot of weight out of the vehicles. We will have to use some premium materials like more aluminum, more magnesium," Lutz said. "Which gets you the weight savings but drives the cost up."

read the article

Another nail in the coffin of Detroit.