Bush gave GM and Chrysler $13.4 billion in loans

Jstas

Came out of the $700 billion bailout for the financial industry. I think he would have promised more but he can't really give out any more from that pile of cash without Congressional approval.

ND13

Good news for my area. They just shut down MetalDyne today (bought from Chrysler 5 yrs ago) for however long. Cost several (high hundreds)hundred jobs and they AREN'T union workers drawing 95% of their pay while laid off, just $390 pre-tax.. TS Tech , which just opened recently is laying off people too, and they're a Japanese owned company that supplies parts for several automakers. including domestics, iirc.

markmarc

Glad to hear GWB's comments and decision.

I had an interesting conversation with my brother who is the finance/internet manager for a dodge dealership. He points out that the big three model is broken because 30% of sales are to rental agencies. Then a year later these cars are dumped on the used market, depressing the resale value, and since many rental cars are abused via hard driving they get the perception of having poorer build quality.

A second fact that I found interesting is that he has had no problem getting people financed. It is harder to get the loans from the big banks, but local smaller banks and credit unions are doing business as usual.

Airplay355

That idea about the rental agencies makes a lot of sense. I always see used car lots around here filled with domestic cars. I always thought it was just because people didn't want them and bought imports instead. I never thought it could just be because the used market is just being saturated with older domestic cars. Very interesting.

obieone

They better make DAMN good use of that $$$. They come back in couple of months, looking for another handout-FORGET about it!

ND13

markmarc wrote: »

Glad to hear GWB's comments and decision.

I had an interesting conversation with my brother who is the finance/internet manager for a dodge dealership. He points out that the big three model is broken because 30% of sales are to rental agencies. Then a year later these cars are dumped on the used market, depressing the resale value, and since many rental cars are abused via hard driving they get the perception of having poorer build quality.

A second fact that I found interesting is that he has had no problem getting people financed. It is harder to get the loans from the big banks, but local smaller banks and credit unions are doing business as usual.

The same thing happened to a couple of the foreign makers, mainly Nissan with Altimas and Sentras, so they have severely limited how many they will sell/lease to rental companies. 2005 Altimas were/are superb autos, but the used market was saturated with them after the rental companies were done with them. I know, I bought dozens of them for my lot for well under Black Book/KBB/Manheim/NADA trade values for no other reason than the market was saturated. You don't see Honda doing that, not much anyway and Toyota is slowly changing their fleet ideals, too.

I say, make the rental companies BUY the cars and have an agreement not to auction them or retail them, at the own lots(Budget Car sales/National Car sales, etc.), for x amount of time or miles. Some of those "program cars" aren't even 3-4 months old before they're back on the market.

hockeyboy

This is good news. It should carry them for a few months until the new President and congress take hold. At least Obama won't have to deal with 2 million unemployed a week before he takes office. Good for Bush.

venomclan

markmarc wrote: »

Glad to hear GWB's comments and decision.

I had an interesting conversation with my brother who is the finance/internet manager for a dodge dealership. He points out that the big three model is broken because 30% of sales are to rental agencies. Then a year later these cars are dumped on the used market, depressing the resale value, and since many rental cars are abused via hard driving they get the perception of having poorer build quality.

A second fact that I found interesting is that he has had no problem getting people financed. It is harder to get the loans from the big banks, but local smaller banks and credit unions are doing business as usual.

That is what happens when you have to pay a union regardless if they work or not. You overproduce to make some money, rather than lose. That killed them even more than the crazy wages and benefits.

PhantomOG

U.S.S.A here we come!

Jstas

Looks like I was a bit off.

Apparently it's about $17.4B now and another $4B next year when the rest of TARP gets dolled out by Congress.

http://www.autoblog.com/2008/12/19/breaking-bush-greenlights-14-7-billion-auto-rescue-bailout-pac/

obieone wrote: »

They better make DAMN good use of that $$$. They come back in couple of months, looking for another handout-FORGET about it!

Like you honestly have any bearing on any of it. What are you going to do? Go to Washington and Detroit and wag your finger in disapproval with a stern look on your face?

PhantomOG wrote:

U.S.S.A here we come!

That's a bit extreme.

PhantomOG

UAW took down its first target (the big 3)... next target? The US taxpayer.

BrettT1

I don't see the money saving them from the inevitable. They won't make enough changes to increase sales and what about the millions of cars they have already they can't sell?

Jstas

Ummm...the UAW IS the U.S. taxpayer.

PhantomOG

Jstas wrote: »

Ummm...the UAW IS the U.S. taxpayer.

That's funny. A group of people being paid by the U.S. gov't to sit around and NOT make cars that people are NOT buying... but hey, they pay taxes on their gov't check it so its OK?

Jstas

PhantomOG wrote: »

That's funny. A group of people being paid by the U.S. gov't to sit around and NOT make cars that people are NOT buying... but hey, they pay taxes on their gov't check it so its OK?

You're an idiot.

My post was meant to point out that the UAW is made up of American tax payers. If the UAW's next "target" is the American tax payer like you say then they are targeting themselves.

Beyond that. this money is coming from the $700B TARP fund which came from the Federal Reserve and it is a LOAN. YOUR taxes aren't funding it. Previous tax dollars from generations passed that were earmarked for the Reserve just for this kind of purpose are funding it. On top of that, if you read the terms of the funding allotment, the Reserve is gonna make a few bucks on it too.

But go ahead, keep living in blissful ignorance and spouting off sensationalist statements about things you clearly have very little understanding of. It's entertaining. It also makes me wish I didn't have a conscience so I could actually take advantage of people like you instead of just being an **** towards them because I can't suffer their ignorance gleefully.

PhantomOG

Blissful ignorance is believing that the money will be paid back (LOAN). When the LOAN isn't paid back we will ALL take a hit.

Jstas wrote: »

You're an idiot.

We have differing opinions. I'm not inclined to be childish and call you names for it. I'll let your decision to do so speak to your character.

PhantomOG

Jstas wrote: »

My post was meant to point out that the UAW is made up of American tax payers. If the UAW's next "target" is the American tax payer like you say then they are targeting themselves.

They were already targeting themselves by bringing the people who paid their checks to bankruptcy. At least now they have rest of the taxpayers picking up where their employer leaves off.

Jstas

:rolleyes:

dagame27

I myself, was not a big fan of the auto industry bailout. I just don't think that it will be much help. They are simply producing way too many cars, with entirely too many product lines. The UAW, while somewhat to blame, is not entirely responsible for their unprofitable situation. Cars are built well enough in today's age, that we do not have to replace them every few years. Yet, they are producing like there is no tomorrow. When a NEW car is bought in today's age, many times it is a luxury, not a necessity. I don't think many people buy American cars as a luxury (vette, and perhaps cadillac being the exception). I personally think that one of the big 3 is going to fall, despite the announced bailout.

PhantomOG

dagame27 wrote: »

I personally think that one of the big 3 is going to fall, despite the announced bailout.

Shh... having that opinion will get you labeled as an idiot around here. :rolleyes:

brettw22

There are 2 problems here......what to do to move existing inventory, and how to bring new cars to market that people are willing to buy.

I don't see how the loan does anything to significantly help either situation along, because if people don't like what they're making then the existing inventory is moot, and if the public wants more hybridish type of stuff, new car model/lines take years to bring to market....

I personally look at chevy as mostly junk with the exception being their trucks, the Vette, and Cadillac..........everything else is pretty bland......I wonder how much they'd get for selling off On*Star.........

comfortablycurt

Well this is good news. I shudder to think what would have happened if the big 3 had shut down. I personally know several people who work at the Chrysler plant in Belvidere, Illinois. They all would have been out of a job if this hadn't been pushed through.

I don't know if any of you have read GM's press release for the restructuring plans, but here it is if anyone wants to read it. It's a pretty long read but I like what I'm hearing so far though.

Robert Snell / The Detroit News
DETROIT -- General Motors Corp.'s plan asks Congress for up to $18 billion in emergency financial aid and, in return, offers to eliminate 30,000 jobs, shutter nine plants, reopen the United Auto Workers contract and either shrink, sell or possibly kill three additional brands.

The cuts range from symbolic -- ending corporate jet travel --to substantial -- closing 1,750 dealerships -- and are aimed at transforming one of America's largest and most storied companies into a leaner, profitable and more competitive automaker. Executives say the moves would make GM a viable company and help it survive the lowest per-capita sales level since World War II.

Chief Operating Officer Fritz Henderson said the automaker cannot continue to fund its operations unless it receives $4 billion this month.

Advertisement

"There isn't a Plan B," he said.

GM's 37-page plan outlines cuts that otherwise would have been accomplished by filing bankruptcy, which would carry a stigma that would scare away shoppers. Those cuts include paying CEO Rick Wagoner a $1 salary, selling Saab, shrinking the Pontiac brand and talking to dealers about the future of Saturn.

The plan also explains how the automaker would spend the money and repay taxpayers by 2012. The plan includes deep cuts to a company that is bleeding cash and has lost almost $73 billion in the last four years despite several restructuring attempts, the most recent of which was undermined by the Wall Street crisis, lack of credit, unemployment and low consumer confidence.

GM is asking for $18 billion in financing, which includes a $12 billion loan and a $6 billion revolving line of credit that would be tapped if the market worsens.

The automaker would make several withdrawals of the cash in coming months. GM needs $4 billion this month to pay its bills and would draw $4 billion more in January.

GM would make a $2 billion withdrawal in February or March for a total of $10 billion. The remaining $2 billion would help ensure GM has enough cash to pay its bills through the end of next year, assuming an annualized sales rate of 12 million units.

The $6 billion line of credit could be tapped if the U.S. auto industry worsens to an annualized rate of 10.5 million units.

The automaker supports working with an oversight board that would ensure GM's restructuring goals are met and that the taxpayers' investment is "fully protected," Henderson said. The government would get stock at a certain price and if the value increases; shares could be sold at a profit.

GM warned that without government aid it could have just $1 billion in the bank by January and be $1.9 billion in the red by February if auto sales remain depressed.

"Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy," GM wrote in its report to Congress.

GM's plan involves the following moves:

• Slashing hourly costs in North America by $3.6 billion in an attempt to make GM competitive with foreign automakers no later than 2012.

The move, which will involve negotiating with the United Auto Workers to change wages and GM's obligations to a UAW-run health-care trust fund, includes eliminating up to 30,000 hourly and salaried workers.

GM currently has 96,000 workers and the goal is to have 65,000 to 75,000 workers by 2012.

GM wants to replace hourly workers with lower-paid workers. GM negotiated a two-tier wage system with the UAW last year that pays new hires $15 an hour (instead of $28) with no pensions and dramatic cuts to their health care coverage.

The contract also created a UAW-run trust fund -- known as the Voluntary Employee Beneficiary Association, or VEBA -- to relieve automakers of their nonsalaried health care costs. GM will contribute about $34 billion, which would cut its health care costs by $3 billion a year, beginning in 2010.

Henderson did not provide specific concessions it may seek from the UAW.

"I would prefer not to get into details," he said. "We need to deal with things like levels of manpower and jobs security."

One possible area is the controversial jobs bank that pays workers even when they are laid off.

The number of workers in the program has been thinned under tougher time restrictions in the 2007 contract but the benefit is derided as a relic of a bygone age that erodes the automakers' ability to compete and something they can no longer afford. UAW President Ron Gettelfinger recently said GM has removed about 47,000 workers in recent years.

In July, GM. announced it had won permission from the UAW to delay $1.7 billion in VEBA payments owed this year and 2009. GM will make the payments in 2010, when the UAW assumes responsibility for the fund. GM will pay the $1.7 billion, plus accrued interest of 9 percent adding to the $5.3 billion already scheduled for 2010.

GM also said it must get new concessions from hourly workers.

"GM has made mistakes in the past -- in now-untenable provisions from prior collective bargaining agreements, and insufficient investment in smaller, more fuel-efficient vehicles for the U.S," the plan said. "Even so, GM still supplies one in five vehicles sold in the U.S. today. In fact, 66 million GM cars and trucks are on this country's roads today, 44 million more than Toyota."

By 2012, GM proposes slashing its structural costs to $23.2 billion, about a $7 billion reduction.

GM's plan involves closing nine plants by 2012, which would leave the automaker with 38 plants in North America.

• Reducing or eliminating four of its eight brands and cutting the number of dealers.

The plan involves exploring the sale of Saab, talking to dealers about the future of Saturn and shrinking the Pontiac brand to more of a niche offering.

"Pontiac will be more of a high-value performance brand, like Corvette to Chevrolet," said Mark LaNeve, GM's North American vice president of sales.

GM established the Pontiac division in 1926 and Saturn in 1985.

Henderson would not speculate about what might happen to the Saturn brand, sales of which are down 20.9 percent this year.

"We need to do something...because it's not been successful," he said.

GM previously said it was trying to sell the Hummer brand.

The moves would let GM focus on four core brands: Chevrolet, Cadillac, Buick and GMC, which account for 83 percent of the company's sales.

The moves also would leave GM with 40 different models in 2012, eight fewer than it has currently. That compares to 63 models five years ago.

GM's eight U.S. brands are the most among the domestic automakers, compared with four at Ford Motor Co. and three at Chrysler LLC. GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales.

GM has 1,071 outlets for Pontiac, 400 for Saturn and about 105 for Saab. GM has been trying to combine Cadillac/Hummer/Saab and Pontiac/Buick/GMC brands into consolidated dealerships that would benefit from greater sales and lower marketing costs.

By 2012, GM wants to eliminate 1,750 dealerships, particularly in metro and suburban areas. There are 6,450 dealers currently.

• Cutting executive compensation and eliminating its corporate aircraft fleet.

CEO Rick Wagoner will take a $1 salary next year, and GM is cutting the top four senior executives will see their cash compensation slashed 50 percent in 2009. Neither Wagoner nor top executives will receive bonuses this year or in 2009.

Wagoner already has seen his compensation cut in recent years and has not gotten a bonus in three of the last four years.

Wagoner had a $1.65 million salary in 2007 and has a $2.2 million salary this year. He took a 50 percent cut in pay in 2006, and his total compensation has been reduced sharply since he took the helm of GM in 2000.

GM announced it is closing its aircraft operations at Detroit Metropolitan Airport and getting rid of its airplanes --a thorny issue that drew scorn from lawmakers last month when Wagoner and CEOs from Ford Motor Co. and Chrysler LLC flew to Capitol Hill on corporate jets while asking for federal aid.

"Due to significant cutbacks over the past months, GM travel volume no longer justifies a dedicated corporate aircraft operation," the company said in a statement.

GM has given back two of its seven leased corporate jets, and is turning in two more -- and has sharply cut back on corporate travel.

The automaker is exploring options to transfer the remaining aircraft to another operator.

Instead of flying on corporate jets, GM executives and others will fly commercial or occasionally charter planes, Henderson said.

• Complying with the Energy Independence and Security Act of 2007, which was designed to improve fuel efficiency and cut dependence on foreign oil. GM outlined its current lineup of cars and crossover vehicles and plans to shift its portfolio towards producing even more of the fuel-efficient vehicles. For 2009, GM has 18 models in the U.S. that gets 30 mpg on the highway and that push towards more fuel-efficient vehicles will continue, Henderson said.

markmarc

I mentioned this idea in another thread on 12-13, I've mentioned the idea to several people and haven't found one who didn't think it was worthy.

Instead, how about giving a $25k gift check to every Iraq/Afghan veteran's family that could be redeemed for a vehicle, for each tour of duty. That would move cars off of lots, make money for dealers, and truly thank our veterans for their service. It wouldn't be enough overall, but it's a start.

treitz3

Go back to that post. There was one.

http://www.polkaudio.com/forums/showpost.php?p=963215&postcount=71

This is good news for America, not just the automakers. Way to go Mr. President!

comfortablycurt

markmarc wrote: »

I mentioned this idea in another thread on 12-13, I've mentioned the idea to several people and haven't found one who didn't think it was worthy.

Instead, how about giving a $25k gift check to every Iraq/Afghan veteran's family that could be redeemed for a vehicle, for each tour of duty. That would move cars off of lots, make money for dealers, and truly thank our veterans for their service. It wouldn't be enough overall, but it's a start.

That doesn't really help to stimulate the banks that are giving the loans to GM in the first place though. One of the biggest problems with the Big 3 is that they can't get financing to move all of these cars. That idea could work in theory...but in the long run I can't see it doing a whole lot.

MikeC78

markmarc wrote: »

I mentioned this idea in another thread on 12-13, I've mentioned the idea to several people and haven't found one who didn't think it was worthy.

Instead, how about giving a $25k gift check to every Iraq/Afghan veteran's family that could be redeemed for a vehicle, for each tour of duty. That would move cars off of lots, make money for dealers, and truly thank our veterans for their service. It wouldn't be enough overall, but it's a start.

:DI LOVE that idea!! That means I'd expect a gift check for $75k! I could only dream...

brettw22

markmarc wrote: »

I mentioned this idea in another thread on 12-13, I've mentioned the idea to several people and haven't found one who didn't think it was worthy.

Instead, how about giving a $25k gift check to every Iraq/Afghan veteran's family that could be redeemed for a vehicle, for each tour of duty. That would move cars off of lots, make money for dealers, and truly thank our veterans for their service. It wouldn't be enough overall, but it's a start.

The only problem with that is that the taxpayer would ultimately be the ones footing that bill.........I like the idea in principle, but overall it's a transfer of GM debt to the public.......(**** way to look at that I know......but still)

markmarc

comfortablycurt wrote: »

One of the biggest problems with the Big 3 is that they can't get financing to move all of these cars.

Comfortablycurt:
See post 3, paragraph 3.

PhantomOG

comfortablycurt wrote: »

One of the biggest problems with the Big 3 is that they can't get financing to move all of these cars.

Riiight... it has nothing to do with the fact that people are not buying cars in general in the current state of the economy and has nothing to do with the actual desirability of the cars themselves. :rolleyes:

LessisNevermore

PhantomOG wrote: »

Riiight... it has nothing to do with the fact that people are not buying cars in general in the current state of the economy and has nothing to do with the actual desirability of the cars themselves. :rolleyes:

Quick, name the top 2 selling vehicles in the US, for 2008.
http://www.reuters.com/article/economicNews/idUSN0340419320080303

PhantomOG wrote:

That's funny. A group of people being paid by the U.S. gov't to sit around and NOT make cars that people are NOT buying... but hey, they pay taxes on their gov't check it so its OK?

You have absolutely no clue wtf you are talking about. They get unemployment just like everyone else, the company payed the difference. That program has been suspended. If you're going to **** about something, for god's sake, do some reading first.

treitz3

markmarc wrote: »

A second fact that I found interesting is that he has had no problem getting people financed. It is harder to get the loans from the big banks, but local smaller banks and credit unions are doing business as usual.

My credit union has doubled it's size in the past 3 months and it was pretty dog-gone big to begin with. I have watched it's growth for over 20 years and I have never seen anything as unprecedented as this.