GM News, New Models and Market Share

62vetteefp

Exactly. Cerebus is playing hardball with GM on the financing side. GM is putting out incentives to the dealers to go elsewhere since there are a whole bunch of good buyers that do not meet Cerberus requirements.

Hopefully GM can work this to their advantage and get Chrysler with the right conditions.

stever

More of the same news, but a pretty good summary and doomsday scenario for Michigan and a lot of dealers:
Worries grow as GM-Chrysler talks gain momentum (AP)

Straightline is linking to a story that says the deal could be done by the end of the month, and that several banks have been approached about funding the merger.

62vetteefp

It surely looks like something is going on but it is keeping very hushed internally.

dtownfb

Not sure why it OK for Chrysler to go but not OK to consolidate GM? Lots of jobs will be lost no matter what. I don't think the $11B cash will be enough for GM. I see a ton of lawsuits with this deal.
it is
I agree the valuable parts of Chrysler (minivan, RAM, jeep) but this is noguarantee that GM will make money off these vehicles. Plus you lose sales as these brands are damaged goods.

Either way US automaking as we know it is over.

circlew

They'll pick the best of both companies but with 10,000 dealers at the start of a merged GM/Chrysler, that won't be easy or pretty.

I'd stay far away from these cars for at least 3 -4 years....just like investing in Citibank or Bank of America.

Regards,
OW

tlong

It seems like a risky move. If it happens then a few years from now it will either be the move that saved GM, or the move that accelerated its demise. Too bad we can't know which in advance. Given that it is being considered at all tells us how bad the situation is at GM, since you don't take a huge risk which could kill the company unless you already have a high risk of death to begin with.

torque_r

"I'd stay far away from these cars for at least 3 -4 years"

I actually doubt Chrysler will still be alive after 3/4 years. It might be worse than we think. How so? Chrysler Corp's monthly sales are just a little over 100,000 in average right now. However, about half of these, if not more, go to fleet sales. Therefore, only 40,000 - 50,000 are sold to retails every month. That's less than the sales of the Ford F150 alone.

tlong

I'm wondering -- with GM looking to sell Hummer, how does that actually work? Since I understand the H2 is based upon pre-existing SUVs from GM (don't remember which one), how does a sale translate to the shared platform? Does this mean that the buyer now can sell a GM platform, GM engine, etc? Do they get the rights to manufacture those components at their own factories? So they essentially get the "intellectual property" of certain GM components and engines that are still being used in parallel at GM?

Just curious, as that seems a bit odd compared to selling product lines outright where the seller gives them up completely to the buyer.

dieselone

I'm sure GM would provide the components as needed.

BMW sold Land Rover to Ford and continued to supply BMW v8s/transmissions that were used in one of the Range Rover models were supplied for a while, maybe the whole time Ford owned Land Rover.

lemko

Is it Tata? I guess they own Jaguar.

stever

Yep.

And they just announced 200 job layoffs in the UK, where the company is based. link.

circlew

n recent days GM, its lenders, and Chrysler owner Cerberus Capital Management, have been trying to woo investors with a pitch about the transaction. That pitch touts a combined GM-Chrysler as delivering cost savings of up to $10 billion, an immediate boost in revenue and an increase in cash available to the merged firm. Outside money is needed to fund the cost-cutting -- especially buyouts and severance packages for tens of thousands of hourly and salaried employees. Those cuts could total as much as 40,000 jobs if a deal comes together, said people briefed on the talks. And GM is already burning more than $1 billion in cash each month.
[general motors headquarters] Getty Images

The General Motors Corporation world headquarters.

The United Auto Workers union has publicly questioned the deal but privately is studying its merits. GM is pitching the combination as a way to better ensure the continued funding of hundreds of thousands of UAW retiree pensions and health-care benefits. A new company would produce upward of $250 billion in annual revenue, while owning more than 30% of the U.S. market. It would also house an estimated $30 billion in cash, thus improving the company's credit rating and lowering the risk that either GM or Chrysler would have to seek bankruptcy protection over the next 15 months.

But several of the potential lenders remain unconvinced. Credit markets remain extremely tight, and a number of lenders are fearful of the complexity and scale of combining two industrial giants amid an economic downturn. If investors continue to shun the deal, its proponents could take their case to the U.S. government, arguing that a merger is vital to the survival of the nation's domestic auto industry. It is unclear at this point what role, if any, Washington might be willing to play. But GM, Cerberus and its banks aren't ruling out selling a stake in the new company to the federal government.

link title

The markets are helping keep SANITY!

Regards,
OW

dtownfb

Potentially 40,000 jobs lost.. and somehow this is supposed to be a good idea?

I guess GM is underestimating the cost to close all the dealerships; additional development costs to get whatever Chrysler vehicles that remain competitive with the market; the lost of sales due to uncertainty in the future of the brand. I just don't see how this will help GM with the turn around. Even with the Volt coming out in 2010 (maybe), it probably won't make a profit until the 1st model change over. Ask Toyota about the Prius and its profitability. Pickup and large SUVs sales are in the tank which is where they make the most money. How are they turning around these sales around?

You can't take two large companies that are both losing money, merge them and somehow make them profitable. GM is painting a very rosy picture of this scenario. It is going to be a blood bath and i hope the UAW digs in when negotiating buyouts.

aspesisteve

I see the big three as being decent cars to rent

maybe Hertz, National or Budget ought to buy into these train wrecked companies?....or do they have it easy buying their cars at a discount while Detroit loses money hand over fist.

I imagine in a Detroit board room it's more about exectutives wondering how they can get out with their golden parachute still in tact than it is about how to stop the bleeding. It's ironic that the executives that brought you the really bad cars of the 80's and 90's got out with huge severance packages while the latest execs who have made some decent improvements may end up with ...... :confuse:

circlew

It's ironic that the executives that brought you the really bad cars of the 80's and 90's got out with huge severance packages while the latest execs who have made some decent improvements may end up with .....

They need to get the money from somewhere. With stock options worthless, it's time to tap the Government, the only entity more insane than GM.

Regards,
OW

kernick

Potentially 40,000 jobs lost.. and somehow this is supposed to be a good idea?

Well if nothing is done, I see the Big 3 ALL going bankrupt in the next 2-3 years, as none of them have much hope in making any $ with the structure of their companies.

But instead of shuttering the plants and letting all the workers go, if GM and Chrysler swallowed their pride they may be able to sell those plants/operations to some other manufacturer. The U.S. consumer still needs to buy X-number of vehicles no matter who's name is on the trunk. So these 40,000 workers and the factories could start pumping out vehicles under new ownership (Toyota? Honda? Caterpillar? Boeing? GE? Microsoft? Warren Buffett?)

GM (Ford or Chrysler) wouldn't be able to get top-$ for the plants, but 25% (or something) is better than Nothing.

Otherwise I think your post is fairly close.

62vetteefp

GM is painting a very rosy picture of this scenario. It is going to be a blood bath and i hope the UAW digs in when negotiating buyouts.

Can you point me to ANY article where GM says anything about how rosy this will be? In fact any article that GM says anything about this other than, "we are always talking to other companies about ...." . They are saying nothing to anybody, including high ranking people inside the company. It's like the media knows everything, or at least are guessing, but the people inside really have no idea if this is happening or not or whatever.

kernick

It is going to be a blood bath and i hope the UAW digs in when negotiating buyouts.

The ship is sinking. You're rooting for the crew to get most of the valuables in their lifeboats, rather than the officers' lifeboats?

dtownfb

n recent days GM, its lenders, and Chrysler owner Cerberus Capital Management, have been trying to woo investors with a pitch about the transaction. That pitch touts a combined GM-Chrysler as delivering cost savings of up to $10 billion, an immediate boost in revenue and an increase in cash available to the merged firm. Outside money is needed to fund the cost-cutting -- especially buyouts and severance packages for tens of thousands of hourly and salaried employees. Those cuts could total as much as 40,000 jobs if a deal comes together, said people briefed on the talks. And GM is already burning more than $1 billion in cash each month.

Re-read the above and tell me GM is not painting a rosy picture. "Cost savings of up to $10 billion dollars" - please explain that one to me. "boost in revenue" - is this the $11 billion dollars that Cerebus has but is not investing in Chrysler. "Outside money..... to fund cost cutting" - Ummm, what about the $11 billion dollars??????

This could be speculation but most articles I have read site "unnamed sources close to the negotiations". Also the fact that GM is inquiring about financing doesn't help. Of course someone else could buy Chrysler like Tata or a Chinese company. Cerebus could simply buy GMAC. This accomplishes the same thing without all the carnage. Or maybe nothing happens and we all wasted two weeks talking about the issue.

dtownfb

Why reward bad management?

mattandi

Potentially 40,000 jobs lost.. and somehow this is supposed to be a good idea?

How many jobs are likely to be lost if the merger doesn't happen?

62vetteefp

That pitch touts a combined GM-Chrysler as delivering cost savings of up to $10 billion, an immediate boost in revenue and an increase in cash available to the merged firm.

This sounds good but not exactly a "rosy" picture. Negatives are the dealers and all the people put in the streets.

But that is what could happen and could save both GM and Chrysler if set up right. I have already said what I think should be done and the only addition that I have read is to use the old, Chrysler car midsize platfroms as daily rental.

Also I think another possibility is to put Chrysler/Dodge/Jeep in the GMC/Buick/Pontiac franchise and either replace Pontiac/Buick or merge together somehow with the best of all five. Hopefully come out with one/two names. Perhaps a whole new name for a entry premium division. Keep G8, Charger, 300, Challenger, minivan, new Lacrosse, Enclave, Solstice, Vibe. Pick ups are Rams, keep fullsize GMC SUV. Of course the Jeep brand could also be put in the same dealership franchise and all of a sudden it would be a pretty nice franchise at that with lots of good product.

There is some overlap in the performance area but they are so different from each other they will sell on thier own merits until they are replaced someday.

There are so many ways to make this work. Could also put something in with Saturn but I think that will not happen.

andre1969

It's a shame that they couldn't find a way to merge Chrysler and GM, and keep all the divisions, but find a way to do some cost savings by sharing some of the less noticeable components.

For example, take pickup trucks. Instead of just dropping the Ram, or making it a badge-engineered GM truck, they could try to make some of the less noticeable components interchangeable. For example, make the automatic transmission the same for Dodge and GM. Maybe have them use the same base engine. Pick either the GM 4.3 or the Chrysler 3.7, whichever is best, and dump the other. Perhaps do the same thing with the next-up engine, the base V-8. But then for halo engines, let Dodge have their Hemi, and let GM have their 6.0.

They could also share things like power window motors, a/c components, radiators, and so forth. Overall though, if you kept things like the body and interior different, the vehicles would have enough identity to warrant keeping them all around. But if they're just take a GM pickup and slap a crosshair on it, then maybe it's time to just dump the Ram.

I don't see a problem with some overlap, either. For instance, if a 300 and a Lucerne end up in the same showroom. Even though they're both full-sized cars, they're different enough to give the buyer a real choice. And if they're in the same showroom, and ultimately both produced by the same company, then the dealership and the company profit no matter which one the buyer chooses.

lemko

Think of the strange GM-Chrysler cars that would result of a merger:

Buick Special Edition
Buick Super Bee
Buick Roadmaster Runner
Cadillac Gran Coupe DeSoto
Pontiac Grand Ville Caravan
Pontiac GTXO

nippononly

that GM is talking about rebadging a Chrysler ANYTHING, except maybe the minivan. In every other area, I would assume the GM model is more reliable and better-built than the corresponding Chrysler model. And why dump the GMT900 trucks to go with the "all new Ram"? The Silverados are very solid competitors, and the Ram while it innovates a little in design is almost certain to be less reliable.

Dump everything at Chrysler except a few of the Jeeps and the minivan, and turn the Dodges into 100% rental, so that GM doesn't have to dilute the resale of its own brands any more. They could rebadge all GM products that are currently sold in high proportion to fleets as Dodges. Looks like it's the end of the Viper.....

sls002

The RWD Chrysler 300 platform is something GM does not have. I am not sure how it compares with the up coming zeta or global RWD platform. The point is that the Chrysler LX platform is in production while the zeta is not, except for the Camaro line.

plekto

- Keep the Jeeps. Duh move not to.
- Keep the RWD platforms. They need this for their sedans.
- Keep the Viper.
- Keep the Dodge trucks.

The rest of the stuff, it's crap nobody really wants. Toss it.

Then do the same paring down with Pontiac, Saab, Saturn, and so on.(might as well keep Buick since it's really only two vehicles any more - almost a special niche brand now, which is fine, really)

circlew

Let's see...Mercedes bought Chrysler and non of the good parts found their way onto US products. Mercedes quality actually improved after spinning off Chrysler.

GM will now adopt third-rate products, no? How can they improve an even bigger Battleship and make a profit? Not with the existing lines, that's for sure.

Expect huge cuts to all divisions. GM included. I agree this would happen under C11 for either C or GM anyway. The situation is really "Checkmate". It was the unwitting goal of a really, really bad business strategy mixed with historic market forces. As always, the workers will suffer the most.

When will this insanity end?

Regards,
OW

jae5

'62,

I agree with most of what you said, thought along the same lines. My other thoughts / issues are (comment if you like):

RWD platforms / vehicles:
With the 300/Charger/Challenger would there be a need for a G8?
How does Challenger fare against Camaro and an upcoming Pontiac Coupe?
How would this regulate the FWD models, would there still be a need for a Buick?
Corvette - Viper? SRT - SS?

Minivans:
Agreed, this would finally give GM a proper minivan, though I did like the Astro

Trucks:
They need to keep the Ram. I think this would help the case, maybe hurt, in that the Ram does offer a full-range right now, from everyday work truck up to fully-loaded luxo-barge. How would this pair with the Chevy and the GMC, Cummins diesel and the Duramax? And if the full-range is kept, which vehicle goes, Chevy or GMC and / or which options? And this in turn plays into the SUVs.
One thing not discussed is the Sprinter, do they keep this seeing as though GM is pretty much out of the Class 4 and up trucks.
And with Dakota, GM can finally put the awful Colorado/Canyon to bed.

Jeep:
This can slide right into Hummer's spot, with controlled cost and a broader, gas-friendly appeal.

Saturn:
Maybe this can take the place of the Sebring & the other mid-sizers from Dodge and Chrysler. So you gain those potential buyers. Or as stated, leave these to your fleets.

But on the other hand
With this paring up really make a difference in their futures, making for one strong company or accelerating their downfall? And as most of us know, consolidations hardly ever go smoothly - who goes in terms of personnel, locations, manufacturing, product. Then there's the integration of systems, ideals, personnel and the like.

With a pairing up, what of those that wouldn't buy a GM product or a product from anyone tied to GM, and vice versa? A coming together doesn't guarantee increased sales and savings.

What would this actually be, another supposed "merger of equals" or an actual one buys the other?

Cerberus just wants GMAC - how does this play into things?

Just a few thoughts.

dtownfb

True but a better option would be for Cerebus to sell the individual brands. Cerebus made a bad "investment" in buying Chrysler.

62vetteefp

The RWD Chrysler 300 platform is something GM does not have. I am not sure how it compares with the up coming zeta or global RWD platform. The point is that the Chrysler LX platform is in production while the zeta is not, except for the Camaro line.

G8 is a Zeta and kicks the 300 in the performance arena. The 300 is getting old and the Zetas are brand new.

dtownfb

Personally putting Chrysler vehicles on the same lot as GM vehicles is not a good idea. Chrysler has its own look and feel. I also think it will be harder to accomplish than you think. What about engine development? So many different platforms, is it realistic to think GM can support another rear wheel drive platform? What about a competitive small, fuel efficient car? This merger does not address this at all. That $11 billion dollars will go quicker than they think with buyouts and consolidation and development costs.

I'm not an economist or car expert but I can't make sense of this merger. The only part I understand is why Cerebus wants out of the car business. I think the merger is very short-sighted (surprise, this is GM of course) and masked GM real problem which is poor management and bad decision making. They have become a big, inefficient company. Now they want to add another inefficient company and run it with the same management. That look promising. :sick:

My solution: GM sells the remainder of GMAC and neogtiate lifting the recently established credit limits and negotiate preferential lending to GM dealers so they can sell some cars. Cerebus sells Chrysler to Nissan who they have already have established a partnership. Let Nissan worry about the consolidation and buyouts.

I could be wrong and will gladly admit it if I am (and will listen if I missed something). GM is looking at this merger for the wrong reason.

circlew

The merger is the lesser of two evils. Ford, GM and Chrysler are on the roulette wheel of bankruptcy. The merger just allows more control during the demolition process.

As Kerkorian (Tracinda Corp.) now knows, it's a bad bet to invest in US Auto. Take the money and run.

This fact makes potential investors of a merger less likely. The only hope left is the lender of last resort...aka us, the U.S. taxpayer at the end of the day.

Either way, we pay regardless of a merger or not.

Regards,
OW

sls002

At this point in time the zeta does not exist. The best we have is a Camaro which is still some time in the future. Holden does have some version of zeta, but they probably can't build everything GM needs for North America.

However, I can't see much point in GM taking over Chrysler. I really don't understand why this makes any sense. I do understand that Chrysler is for sale, but even so, its future seems to be a dead end.

writer

At the time Cerebus bought Chrysler there was a competing bid by a group headed by Stornach's Magna. Stornach has a successful business history in the automotive field. I believe that if he had won, he could have saved the company. Putting it bluntly, Cerebus was stupid to put in a counter-bid at all. They should have known that they did not have anyone who could turn the company around, and that their efforts almost ensured maximum loss.

circlew

Agreed. Same goes for Mercedes. Not a great business move. Now I know these guys are blinded by greed but in hindsight, these decisions look similar to a first year university business project.

The banking guys are smart because they had in the back of their minds that any real problems with the derivatives would be rescued by the dumb taxpayers anyway. The thing that backfired was that it turned into a global peek-ab-oo. Surprise! Everything is connected. Enjoy the trip down, geniuses!

Regards,
OW

iwant12

Well said, OW.

cooterbfd

OW,

I think where Mercedes REALLY screwed up was in not marrying the products better. Think about it, Mercedes has the better engineering, Chrysler has the better dealer network. They could've based Dodges and Chryslers loosely on Mercedes products ( much in the way they do in Europe with their lower priced fleet vehicles). Introduce the buying public to Mercedes THROUGH the Chrysler lineup. But they dropped the ball over there.

One way I could see a GM Chrysler merger working would be to pair Saturn and Jeep. In this way, you could drop the Outlook (now that we have the Traverse), give the Vue a Jeep facelift, and drop car based Jeeps (Compass). Now you have a dealer network that would truely be a full line of vehicles (except pickups), and you could increase the number of Saturn dealers through the Chrysler dealer network.

I'm not that high on the merger, as I see great creedence in the idea that Cerebus is hitting the panic button, and trying to leverage 100% of GMAC out of GM by shoving Chrysler down GM's throat, doing so by choking off GM's main source of financing with the 700 credit score policy and higher interest rates.

circlew

Agreed. That would be the reason Merc bought Chrysler in the first place but that never happened. Egos probably got in the way deep in the thick of things.

I also think the merger will be a fiasco. The good thing is GM at least is in the business but what's left of Chrysler looks very ominous to me since I do not have a clear view going forward. I just do not believe Chrysler has anything other than Jeep that will survive. That's a huge loss indeed.

Truly a disaster in the making one way or the other. The only bright side is a GM that is drastically leaner but that will take many more years of jettisoning the bad brands and costs related to failed strategies and infrastructure.

I pray for all the folks that are involved every night.

Regards,
OW

Regards,
OW

nippononly

will be the final nail in GM's coffin, I'm more convinced all the time.

One question: why can't GM just sell the remainder of GMAC for $11 billion in cash? Cerberus can keep Chrysler, it gets 100% of GMAC, and GM gets cash without taking on this staggering liability....

cooterbfd

1. GM wants it's share of GMAC

2. Cerebus wants OUT of Chrysler

imidazol97

I just can't see any Chrysler product that GM could add that would be something that would help sales for GM.

I just can't see GM getting locations of dealerships that would help their coverage. They already have too many stores. The Chrysler product stores are generally in the same areas as the GM stores. I am basing this on what I've seen in the Midwest east of the Mississippi.

plekto

Dodge has better trucks and that lovely Cummins diesel.

The Viper and the new Charger/Challenger are hot tickets. They are honestly better vehicles than the aging Corvette. Using parts and talent from both groups would make an affordable supercar a reality. It's something that GM and Dodge try to accomplish, but together they might be able to finally pull it off.

Jeep. Just the Wrangler/Wrangler XL. Dyna rear ends for GMC trucks?

The rest, yes - largely useless. But by buying out the company, they would also get Mopar, tons of Nascar and racing deals, patents... the list goes on and on.

AND they would keep some overseas company from getting ahold of those hundred years or so of R&D and work. That's also worth something.

nippononly

cooter: the remainder of GMAC is what GM will be giving up as part of this deal for Chrysler and its $11 billion, so if this deal is done it is not expecting to have any share in GMAC. (And who cares if Cerberus wants out of Chrysler? What a BONE-HEADED move it was for them to buy this automaker at death's door).

imidazol: exactly! Chrysler dealers will infringe on GM dealers all over the place - they are strong in the same regions.

plekto: why does everyone keep saying that Dodge trucks are better than GM trucks? The Ram has had a million problems in the last few years, including bad hardware that could cause wheels to fall off, all kinds of stuff. The new Silverado is by comparison a very good truck.

And if GM gets Chrysler, no WAY does the Viper program continue. Already, the future of the Corvette program is in doubt if you can believe what you read in Autoweek this week. And Charger/Challenger are dinosaur concepts (muscle cars in a $4 or at least $3.50 gas era) based on an aging platform. Better for GM to just finish the work it has started on its own RWD platform, and forget the Chrysler junk.

imidazol97

Thought-provoking response. I hadn't thought about the Cummins. I would probably not have picked Dodge trucks over GM/Ford but many would including a close friend of mine. He was just shopping a week ago but the salesman wasn't giving bargains for businesses with cash.

You can't change the Vette! :mad: But I see your point.

What about factories? Do they come complete with UAW worker contracts to suffer. GM/s just offering $170K buy outs to IUE workers at GM/Moraine as they close the truck plant. The workers there certainly deserve the bonus based on what I saw as they worked when I toured the plant last year, but those buy outs to close excess capacity get expensive.

tlong

I'm not that high on the merger, as I see great creedence in the idea that Cerebus is hitting the panic button, and trying to leverage 100% of GMAC out of GM by shoving Chrysler down GM's throat, doing so by choking off GM's main source of financing with the 700 credit score policy and higher interest rates.

I'd LIKE to believe that the merger would end up well, because I'd like to see GM succeed. But my gut is telling me this is not likely at all to go well, and that it might just prolong the inevitable. GM has not shown great talent in making complex acquisitions, and they've had so much distraction (unions, myriad divisions) that has kept them from focusing on superior product. I have a bad feeling about this....

andre1969

G8 is a Zeta and kicks the 300 in the performance arena. The 300 is getting old and the Zetas are brand new.

If given the choice, I'd take the G8 over a 300...and that's coming from a long-time Chrysler guy!

lemko

Yeah, especially the V-8 G8! There's a guy I see every morning on my way to work with a dark gray G8. It's a really sharp car! I don't know what the future for the 300 is, but the car is getting a bit long in the tooth.

dieselone

The problem with the G8 is that it's imported from Australia. I'd bet GM doesn't make a penny on them. Seems like a nice car though, to bad I've only seen two so far. I'm guessing GM is having a hard time moving the 30k or so they are importing. I wonder if those original production numbers are still legit?

lemko

The G8 is made by Holden which is a GM division.