GM’s viability plan: More loans possible; Bankruptcy last resort
02/17/2009, 7:16 PM
By Drew Johnson
General Motors submitted its viability plan to the U.S. government on Tuesday, with all the details released publicly at the same time. GM’s viability plan is more widespread than originally thought – extending through 2014 – and calls for additional government loans up to $13 billion, depending on economic factors.
Job cuts
In a bid to make the company profitable within the next 24 months, GM will cut another 10,000 white collar jobs worldwide. The details of the job cuts have yet to be announced, but they will undoubtedly be linked to some of GM’s lame duck brands.
General Motors’ updated viability plan also includes the closings of 14 production plants, up five from the company’s December plans.
The UAW has agreed to more concessions, with the latest round focusing on work rule cost cuts.
Dealer reductions
In order to make the company leaner and more agile, GM’s viability plan calls for a significant reduction in its dealer base. GM’s current network of 6,200 dealers will be reduced to just 4,700 by 2012, with that figure dwindling to 4,100 dealers by 2014.
Fewer brands
It’s no secret that some of GM’s brands have been on the chopping block, but the latest plan details what to expect in the coming months and years. GM’s Hummer brand will be sold or phased out by March 31st, with Saab facing an equally uncertain future. GM says it is working closely with the Swedish government to come up with a solution for the Saab brand, but has yet to come up with a concrete solution. GM is actively searching for a Saab buyer, but hasn’t ruled out an independent status and bankruptcy for the Swedish brand.
GM’s Saturn brand is essentially a lame duck, with no future products planned for the automaker’s youngest brand. GM will entertain any offers to purchase Saturn’s distribution network, but will phase out the brand by 2011 if no agreements are reached.
Additionally, GM will offer just 36 vehicle models by 2012, four less than originally outlined.
Up to $13 billion more needed
GM has already received $17.4 billion in government loans, but says it needs more in the wake of collapsing auto sales. GM’s viability plan requested an extra $5.1 billion in loans – totaling $22.5 billion – with the possibility of more loan requests in the future. If new car sales total 9.5 million units in 2009 and 11.5 million units in 2011, GM would require another $7.5 billion, for a total of $30 billion in government loans. If things continue to worsen, GM would need further government funding in 2013 and 2014.
However, if things go according to plan, GM plans to begin paying back its loans by 2012.
Bankruptcy
Although GM sees bankruptcy as a “highly risky and very costly” option, GM CEO Rick Wagoner says the company has not completely ruled it out as a “potential option”. However, Wagoner also added that bankruptcy would be the automaker’s “last resort”.
GM says it is unable to arrange financing to pull off Chapter 11 restructuring from a private lender. As such, the government would have to act in this role, or the company would be forced to shut down. Even if the government agreed to finance the a Chapter 11 bankruptcy, GM contends it would cost between $50 and $100 billion, which is considerably more than the loans it says it needs to stay out of bankruptcy. GM argues sales would suffer under bankruptcy, possibly to the point of no return.



02/17, 7:20 PM
posted by:
iluvamcars
Chevy/Buick/Cadillac/GMC. Good, but replace GMC with Pontiac.
02/17, 7:20 PM
posted by:
gugy
It’s time to let these companies die or get out this hole by themselves.
Seriously, they will not stop asking for more bailouts.
I want to be bailout too. If that’s the case.
Please government, pay for my home and food.
02/17, 7:27 PM
posted by:
iluvamcars
It will be like this probably.
CHEVY
Spark
Aveo
Cruze
Volt
Orlando
Malibu
Impala
Camaro
Corvette
Equinox
Traverse
Tahoe/Suburban
Colorado successor
Silverado
Express
two Opel models
BUICK
small sedan
Lacrosse
Enclave
CADILLAC
3-Series fighter
CTS
DT7
SRX
Escalade
Converj
GMC
Terrain
Acadia
Yukon
Canyon successor
Sierra
Savana
PONTIAC
Vibe
G8
Solstice
02/17, 7:27 PM
posted by:
Copperbottoms
It’s too bad… if people were buying cars at all this would be alot easier all around.
02/17, 7:28 PM
posted by:
iluvamcars
Shut up Gugy.
02/17, 7:44 PM
posted by:
typesblkura
GM is like a virus
02/17, 7:46 PM
posted by:
TomF
The nameplate consolidation doesn’t go far enough. I don’t understand why Chevy needs the Traverse AND the Equinox, or the Spark AND the Cruze AND the Orlando AND the Pontiac Vibe. Or what “two Opel models” can possibly add to the list above.
02/17, 7:53 PM
posted by:
Lariat Luxury Locomotive Liner No.3
GM, and Chrysler, are now simply Titanic II & III. I’d rather study the wreckage, and not repeat the mistakes, than to keep bailing while the ships are beyond repair.
02/17, 8:09 PM
posted by:
gugy
iluvamcars
same to you fag.
hahahahaha
02/17, 8:12 PM
posted by:
Need more oil for GM is an idiot
With all the money the goverment wasted on car companies they couldve helped its own citizens instead.
02/17, 8:19 PM
posted by:
andy
what about all the money they dumped into the TARP
02/17, 8:20 PM
posted by:
johnnycanuck
The pharmaceutical companies are going to have to change their classifications for pain relievers: Regular, Extra Strength and General Motors.
02/17, 8:27 PM
posted by:
ManualorDeath
GM should get rid of the Buick, GMC, Pontiac & Saturn nameplates. Keep Chevy and Cadillac
02/17, 8:40 PM
posted by:
Mutant@DCX
Shore up the pension fund first and foremost GM.
Then you can blow smoke up everybodies @SS @LL you want thereafter.
02/17, 8:52 PM
posted by:
DrFill
Manualor is right
Get back to basics
Chevy and Caddy are your core
Painted themselves into a corner with the UAW and franchise agreements
DrFill
02/17, 9:09 PM
posted by:
DB9
Nice market action today wouldn’t y’all agree;-) Do I hear Dow at 6000 and S&P at 600? Anyone? Hmm… As bad as it is now…it ain’t over yet…not by a stretch! Funny thing, some are making money off of all this…;-) Same thing happened “back in the day” when bankers were jumping out of windows and Sloan stepped into help out Durant. Rick, I know you Love nostalgia…remember Willi & Alfi;-) Amazing how everything comes full circle? I think you and Bob need some entertainment after being locked up with Givehimthefinger all last night and into the wee hours…
DB9
PS. Kick back and chillax a little;-)http://www.youtube.com/watch?v=aRhW_vBDlTM
PS. to the PS. Hmmm… Gold in a deflationary environment seems counterintuitive or…? Maybe there is a plan… Oh how the plot thickens…
02/17, 9:10 PM
posted by:
Veda
I agree that this is going to be a neverending cycle. They’ll just keep asking for more loans if the economy doesn’t recover fast enough which in my view it’ll only get worse in a year or so. It’ll be funny if they get an additional 100% loan but then filed chapter 11.
02/17, 9:13 PM
posted by:
Borat
In total tin the first part of this year we shall shell 30 billions. Then in the second part as much. Next year probably more, because they have to do some bonuses, sorry special projects and GM Car Putz will become consultant with his own agency and stuff and will cost 50-150 millions vs. miserly 20 they paying him now (don’t shake your heads and look at salary – he gets stocks and bonuses and options and you can’t fly 2 choppers for mere 1.3 mills a year). This shall continue till 2011 or maybe 2012. Then congressmen/women will say “They fooled us: their cars suck and nobody buying them”. But first goes 30 billions and some more by the second half of this year.
02/17, 9:18 PM
posted by:
idrinorbarsaku
all of you who keep on saying that they should all die and go bankrupt are clear moronic idiots and have no clue about what the key products the US has that keeps everything running. The US will be doomed if such a thing happens. GM and Ford are the glue that brings in jobs in the US and keeps other companies running. If gm and chrysler plants closed, 2,000,000 people will loose their jobs. That doesn’t even count the millions of others that have a jobs that are related to GM and Ford. This problem is bigger than most of you brainless idiots can comprehend!
02/17, 10:00 PM
posted by:
02VortecAVALANCHE
I just made so adjustments to iluvamcars list.
It will be like this probably.
CHEVY
Spark
Aveo
Cruze
Volt
Orlando
Malibu
Impala (maybe will be droped or replaced by the malibu)
Camaro
Corvette
Equinox (no dont think so will not make it next year)
Traverse
Tahoe/Suburban
Colorado successor (it will be the colorado or the cayon not both.)
Silverado
Express
two Opel models
BUICK (can you say BYE!)
small sedan
Lacrosse
Enclave
CADILLAC
3-Series fighter
CTS
DT7
SRX
Escalade
Converj
GMC
Terrain
Acadia
Yukon (get rid of it! Just make more options on the Tahoe or people could buy the escalade.)
Canyon successor (will be either the canyon or the colorado not both.)
Sierra (get rid of. Put more options for the silverado and drop)
Savana
PONTIAC (Bye pontiac!)
Vibe
G8
Solstice (only car to keep put a chevy emblem on it and call it a sunfire or keep the solstice name.
02/17, 10:16 PM
posted by:
idrinorbarsaku
-the impala has too many sales to be dropped/replaced for the malinu which is a completely different kind of car
-the new equinox is one of the only chevy cars that people are attracted to. So that’s not possible, especially considering how much money has already gone into its redesign.
-I think gmc and buick need to be axed! every car that gmc has already can be found at chevy!!! carry over some buick models into both chevy and caddy. Enclave should go to caddy. We need to see an actual lacrosse to see where it will fit in better, but it looks like it would fit in with caddy. Keep buick’s possible large vehicles in chevy and don’t put to much in them…keep the prices low.
-Pontiac need to disappear asap!
-I think the solstice needs dropped and the Sky needs to be turned into a chevette! this makes sense since the sky sells better than the solstice..
02/17, 10:24 PM
posted by:
bauer100
dont yall act like you didnt see this coming. you knew it since December.
02/17, 10:48 PM
posted by:
Veda
You know I was just thinking, even if GM finally makes products that people want to buy, in this economy is it really wise for the gov to stimulate people to buy cars using money they don’t have? I mean most of the new car buyers use credit and loans. How many people nowadays are making $ securely? Before it was real estate, later cars?
02/18, 12:15 AM
posted by:
Need Mo Betta oil for GM
umm bankruptcy doesn’t mean they disspear over night?
you know a ton of airlines went backrupt several years back and they seem stronger than before.
idrinorbarsaku : shut up and drive my GM made cars.
02/18, 2:19 AM
posted by:
The Stig
GM needs more? What a surprise.
02/18, 8:12 AM
posted by:
Bankruptcy2009
As my name implies if lowly GM is to survive my namesake Bankruptcy may be the only option for GM.
And once again Need for More Brains at GM. GM right now is Begging to stay alive right now ok. So your claiming GM is doing great is Pure crap. Asking for $30 Billion in Loans, Getting Rid of SAAB, SATURN, and most certainly PONTIAC, BUICK, And GMC before its over with. The Only SHOT GM has is Keep Chevy and Cadillac and that’s it. Everything I just mentioned is just a Rebadged Chevy. Shuttering 5 More Factories could be more like all if no Bailout money is given, to Lose more than 25% of their Global Workforce, Losing more than 50,000 more jobs, Taking 10 Years time to Repay loan if given. That is obscene in real world terms. Since when does it take 10 years to pay off your new car??
We’ll see NFMOGM if GM Survives. Chrysler on the other hand has always had pretty good product and least braggadoshished of the big three. Chrysler problem is management that has taken over always sold the company out. And Ford’s only real problem has been the controlling family has not know what they were doing. But Ford has seemed to have gotten some things right in terms of product, bringing the right management in, and securing itself financially in this economic Downturn.
Ford Motor Company and the American Road. Its a Beautiful Thing! GO America. and Go Ford.
Taurus SHO its SHO Time!
02/18, 8:21 AM
posted by:
oldraven
Gugy, everybody is asking for government loans, not just the Detroit 3. This is no longer unique to the US domestic automakers.
02/18, 8:41 AM
posted by:
ricky_b
This is downright scary. How can you really justify keeping the clowns (senior management) at GM around. These guys have been in the industry for years and have been in the current position for a while. They got excessively greedy when time were ripe and were ill prepared in risk-planning for situations like this. Didn’t they learn from the oil crises in the 70’s and 80’s?
People criticized Ford initially for hiring Mulally because he was a Boeing exec and knew nothing about cars. Maybe that’s why he’s gotten Ford in a better position in the short time he’s been there… because he focused on customers, the market and the business… no “inbred” history to taint his judgement.
Having said that, I currently own a VW and love it. I like the design and handling that German cars have, that’s why I wanted it. GM and Ford must have heard that from customers because you see them starting to globalize with the Euro platforms. If they do the right job and don’t muck it up like they have in the past, I would gladly take one for a test drive for serious consideration on my next car purchase. We’ll see what happens.
02/18, 9:08 AM
posted by:
fan
well, why do those wiseguys monkey around with big and not-so-big words? gm already IS bankrupt; their living on a loan already! and not a too shabby one at that… how many billions?
repeat: GM is RUNNING ON OTHER PEOPLES MONEY ALREADY…
02/18, 9:13 AM
posted by:
idrinorbarsaku
Need Mo Betta oil for GM,
tell gm to build a car that is worthy of my money and i will drive it!
02/18, 9:16 AM
posted by:
idrinorbarsaku
going into bankruptcy is a safe thing to do when the economy is ok. Going into bankruptcy while the economy is this bad and spending has slowed down makes it hard to get out of successfully. Circuit City is one example.
02/18, 9:21 AM
posted by:
idrinorbarsaku
like you don’t live off of a loan?? everone is living off someone elses money! and I’m no exceptions. I just added 59k in loans to my name just last saturday for school. Who gives me the money for that? Big companies do! which are similar to GM who put back millions of dollars to their community. think outside the box before getting all pissed off about them “taking your money”, because you wont even know the difference!
02/18, 10:18 AM
posted by:
Need more oil for GM
What’s good for General Motors is good for America
02/18, 11:50 AM
posted by:
Need more oil for GM is an idiot
So america is going bankrupt? Everyone would rather drive a german car.
02/18, 4:58 PM
posted by:
Kallen33125
idrinorbarsaku, borat, and gugy, all shut the hell uo! the only good idrinorbarsaku said is 4 others 2 stop saying 2 let GM die–i agree with him there cuz all the ppl who say that about GM, are stupid! GM cannot and will not die!!!
02/18, 6:10 PM
posted by:
NRG
I just got this from AP. It’s no wonder that the Big 3 are in trouble. Their laid-off workers receive supplemental pay besides collecting unemployment benefits. WTF. Spoiled SOBs. I hope I never run into an auto worker complaining about this. Unions have outworn their purpose here in the U.S.
AP sources: UAW deal cuts bonuses, some raises
Base wages for UAW workers will remain the same, but the deal limits supplemental pay that laid-off workers receive while they collect unemployment benefits, said the people, who spoke on condition of anonymity because union members have not been told about the terms.
02/19, 11:28 AM
posted by:
Bankruptcy2009
NRG its true that Union workers are paid well and some that are greedy and lazy but you can’t lump all UAW and other Unions employees as unworthy of their pay Why? IF you did their would quickly become only two classes in this country Rich and POOR. and NO middle class.
As it is most decent jobs that are out there the wealthy have them and the middle class is usually on the outside looking in. Because of a simple sick Philosophy that the wealthy in this country have used and taught their selfish followers and that is. Its called Use Use Use and dump their employees. You sir are nothing but cattle or a side of beef to the average private company.Your just a number. Unless you know someone or you own the business. But I will tell you this for your own good. Unions are a GREAT THING. Without them the Wealthy would run amuck beating down the middle class into the poor class and that about sums it up. There is pretty much no hope for middle class americans when they get a 4 year College or University degree and can’t find a decent employment. All they can get sir is Underemployed work from Private compannies and the maximum they can hope to recieve is LESS THAN $30,000 a year. I know I speak from experience. I have a college or rather University Degree and I have been there and done that. I have fought in the job trenches for years. I think you are one of those that either has lost hope and your already poor,or has it good in your current profession, and or your one of the wealthy Billionaire Bankers on Wall Street that were bailedout using taxpayer money just to say they have more money than Bill Gates.
The Average American Worker makes some where in the 40K range. Sir A union Employee can make more a register Nurse can make even more. Non College professions. And many college Grads are taking jobs in the low to mid 20’s to me and anyone else reading this realizes that is nothing more than slave labor.
If you think its fair that the Wealthiest in this country should have all the money and everyone else nothing well then I think its time we round you and them up and send everyone of you to Prison as the Crooks you all are.
02/19, 11:37 AM
posted by:
Bankruptcy2009
I say this NRG Union employees should have a skills test as they do in the private sector to determine their level of responsibility and skills to the work needed to be done. But many many Private companies all they have are slave labor wages ok and nothing but.
If your trying to raise a family you need an income of at least close to six figures and above.