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Official: Saturn is Dead, Pontiac is a Ghost

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Official: Saturn is Dead, Pontiac is a Ghost
Is that the sound of GM executives putting on their flame-retardant jumpsuits?
Link to original Article @ Jalopnik

Our sources tell us GM's viability plan set to be released at 5:00PM will kill the Saturn brand by 2011. Pontiac will also go away as a division. But the nameplate will sorta live on.

So basically, what we've heard is the brand meant to compete against the foreign brands is dead — Saturn goes away in 2011. There will be no new products for Saturn and Saturn dealers are getting a video from Mark LeNeve at 5:00 PM to inform them. We're thinking Mark should cut a check to send with it. As far as Pontiac, it goes away as a division. The nameplate will live on on some vehicles — but we've got no idea what "niche products" they're talking about. More coming shortly.

smallchevy: Here is the full WSJ Article

General Motors Corp. and Chrysler LLC told the federal government they need at least $21.6 billion more combined in bailout loans to put them on the road to recovery, and outlined possible scenarios if either auto maker should have to file for bankruptcy protection.

Both GM and Chrysler, in the recovery plans submitted Tuesday to the U.S. Treasury, argue that bankruptcy would be more costly and drawn out than government-funded restructurings.

GM said it might need as much as $100 billion in financing from the government if it were to go through the traditional bankruptcy process. Rick Wagoner, GM's chairman and chief executive, said the bankruptcy scenarios are "risky" and "costly" and would only be pursued as a last resort.

Chrysler's plan said the company would likely have to file for Chapter 11 protection if it doesn't get additional loans from the government and concessions from unions, creditors and dealers. It said it would need $24 billion in financing if the company were to file for bankruptcy. But company officials said in a conference call that they believe a Chapter 11 filing is "not necessary" for Chrysler's survival.

The submission of the recovery plans was required under terms of the U.S. loans the auto makers received in early January. The plans, however, described only a relatively few major new restructuring steps they plan to take to cut costs and downsize their operations.

GM said it now plans to phase out its Hummer brand this year and Saturn in 2011 if no alternatives arise. Earlier, it said it was trying to sell Hummer and was re-evaluating the future of Saturn. The company also is scaling back Pontiac and trying to sell Saab, its Swedish brand.

GM also said it will shut five more factories on top of the closures it had already planned. In addition, it plans to eliminate thousands of dealerships and slash 47,000 jobs this year around the world.

Chrysler said it will trim production capacity by 100,000 vehicles, a modest reduction for a company that has several more plants than it needs.

A spokesman for President Barack Obama, Robert Gibbs, said in a statement that the administration appreciates the effort by the auto makers. But he added that "more will be required from everyone involved -- creditors, suppliers, dealers, labor and auto executives themselves -- to ensure the viability of these companies."

In particular, new opposition to further aid for Chrysler seemed to be building on Capitol Hill. In an interview Tuesday, Sen. Judd Gregg (R., N.H.) said no more taxpayer money should be given to Chrysler until its majority owner, private-equity firm Cerberus Capital Management LP, agrees to inject more funds into it.

Cerberus said in a statement that it can't put additional investments into Chrysler because agreements with its investors limit how much it can commit to any single investment. The statement added Cerberus has agreed to forego any Chrysler profits before the government loans are repaid.

Rep. Ed Perlmutter (D., Colo.) also called for both Chrysler and Cerberus up open their books to taxpayers. As a private company, Chrysler doesn't file public earnings reports.

So far, GM has received $13.4 billion in U.S. loans; its plan said the company needs a total of $30 billion in aid, or $16.6 billion more than it has now. GM also said it needs at least $7.7 billion in loans from the Department of Energy to develop fuel-efficient technology.

Chrysler has received $4 billion in loans and said it needs $5 billion more.

In one sign of progress, GM, Chrysler and Ford Motor Co. reached tentative agreements Tuesday with the United Auto Workers union on a range of labor cost reductions. Among them are changes in work rules and cuts in so-called substitute pay, which supplements laid-off workers' unemployment benefits, a person familiar with the matter said.

Basic wage levels of auto workers, which are seen as generally equivalent to workers at foreign-owned auto plants in the U.S., remain unchanged, this person said.

But the union and the auto makers remained at odds over the largest sticking point: new terms for how the car companies will put billions of dollars into trust funds to cover the cost of health care for retired union workers. The auto makers want to pay a portion of their cash obligation to the funds with stock instead. The funds are known as VEBAs, or voluntary employee beneficiary associations.

"The UAW is withholding the terms of the tentative understanding pending completion of the VEBA discussions and ratification of the agreements," the union said in a statement. Coming to agreement on revamping the VEBAs is a requirement of the U.S. loans.

With the release of its updated viability plan, GM now must focus on the task of convincing key stakeholders to make considerable concessions. That process has been under way for several weeks but has not yielded substantive results.

On Sunday, GM received a letter from its bondholder committee outlining its framework for restructuring $29 billion in company debt by swapping debt for stock. "This framework is consistent with the government's objective in the U.S. Department of the Treasury's term loan of substantially de-leveraging GM but also provides that bondholders must receive fair and equitable treatment vis-a-vis other GM stakeholders," the letter said.

Several bondholders, however, say they have not yet been contacted and many are reluctant to embrace a debt-for-equity swap. "I can assure you, we are not being represented," one bondholder said.

Yet even if GM can reduce its public debt to $9 billion through an exchange, it will carry a far heavier burden, as much as $39 billion, than it currently does now if it receives the additional federal loans it is seeking.

Tuesday's announcement signals GM's management has softened it view on a possible bankruptcy filing. In the past Mr. Wagoner has insisted bankruptcy was not an option for the company. But in the recovery plan the company described two alternative scenarios in addition to a traditional filing.

The plan says a "pre-packaged" bankruptcy, in which new terms with unions, suppliers and creditors are hammered out in advance, might require only $30 billion in debtor-in-possession financing. In another scenario known as a "cram-down" bankruptcy, GM could try to restructure its debt over the objections of creditors.

GM's loan request includes $4.6 billion it hopes to draw down in March and April. That would bring the loan total to $18 billion, which is the amount GM initially requested in December. Additionally, GM is asking for a $7.5 billion line of credit that could be drawn under a downside scenario and to defer repayment of a $4.5 credit line due in 2011.

Under the plan submitted Tuesday, GM said it can break even once U.S. vehicle sales hit a seasonally adjusted rate of 11.5 to 12 million car and truck sales.

In a related development, Saturn dealers hope to spin off Saturn from GM into a new company, said Dan Januska, owner of Saturn of Scottsdale in Arizona. Mr. Januska, who is on the Saturn Dealer Council, said Saturn dealers would be open to selling vehicles made by Indian or Chinese makers that would be sold as Saturns.

GM Saturn spokesman Steve Janisse declined to comment

Chrysler's request for an additional $5 billion in loans is more than expected. In the past several weeks Chrysler had said it would seek $3 billion in additional aid. Its restructuring plan also said the company's two owners, Cerberus and Daimler AG, have agreed to convert $2 billion in loans to the company into stock to ease the auto maker's debt.

But Chrysler outlined few other major restructuring measures. While it said it would reduce its manufacturing capacity by 100,000 vehicles a year, that wouldn't be significant in light of its production capacity of 2.5 million vehicles at its 12 assembly plants in North America. The company's projections imply it is on track to sell slightly more than one million vehicles in the U.S. this year.

Chrysler vowed to launch 24 new vehicles in the next 48 months, but it's unclear what new vehicles Chrysler has in its pipeline. Several engineers who have left the company said they departed because they were concerned about cutbacks in development of new models. Suppliers working with Chrysler have also said they have halted or significantly slowed work on future Chrysler vehicles.

Some of the new models could come from Fiat SpA, the Italian auto maker that has a tentative alliance with Chrysler.

Kimberly Rodriguez, an auto consultant at Grant Thornton LLP, said she found Chrysler's plan "underwhelming," adding, "There just has to be more. They really have to call out the final solution. They have bitten around the corners." The Fiat alliance, she added, "is not going to be enough" to ensure Chrysler's survival.

GM's recovery plan is also the latest in a series of restructuring moves implemented by Mr. Wagoner since taking the company's helm in 2000. In his first year in office, he killed the Oldsmobile division.

But Mr. Wagoner was able to avoid a deep overhaul until 2005, when a combination of escalating labor costs and a decline in sales of profitable sport-utility vehicles collided to bring the company to a $10.4 billion loss. In late 2005, Mr. Wagoner announced tens of thousands of job cuts, several plant closings and health-care concessions with the UAW.

The plan was to put GM on solid ground by late in the decade. But a steady loss in market share, along with several strategic missteps, deepened GM's losses, forcing more than 50,000 job cuts in the U.S. and the sale of all nonstrategic assets.
Edited by Dodgefan
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Rather than start a new thread, here's another article. Pontiac isn't mentioned but Hummer is.


GM needs up to $30 billion in aid to avoid failure

DETROIT (Reuters) – General Motors Corp said on Tuesday it could need a total of up to $30 billion in U.S. government aid -- more than doubling its original aid -- and would run out of cash as soon as March without new federal funding.

The request for additional aid from the top U.S. automaker came in a restructuring plan GM submitted to U.S. officials on Tuesday.

The GM restructuring plan of more than 100 pages was posted on the U.S. Treasury Web site.

The request came on the same afternoon that No. 3 U.S. automaker Chrysler requested an additional $5 billion from the current $4 billion in U.S. government aid, saying it expected the brutal downturn in the U.S. market to run another three years.

GM also said it had not reached deals with bondholders and its major union to reduce some $47 billion in debt but would work to reach those agreements by the end of March.

In response to signs of a prolonged slump in demand for new cars and trucks, the automaker also said it would step up cost-cutting, reducing its global workforce by 47,000 jobs this year and cutting five additional U.S. plants by 2012.

In addition, GM said it would cut its U.S. workforce by another 20,000 jobs by 2012 with most of those reductions coming earlier.

GM has been kept afloat since the start of the year with $13.4 billion in loans from the U.S. Treasury. Its expanded aid request for up to $30 billion includes a $7.5 billion credit line in the event that the autos market remains depressed.

Critics of the bailout of GM and its smaller rival Chrysler LLC have urged the government to consider financing a court-supervised restructuring for the two ailing automakers in bankruptcy.

GM said its own analysis of the costs and risks of a bankruptcy filing would require more than $100 billion in financing that could have to be provided by the U.S. government.

GM requested an unprecedented U.S. government bailout in December and had pegged its funding need then at up to $18 billion.

But the automaker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.

GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter.

(Editing by Matthew Lewis)

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that's sort of what I was thinking. 30 billion is a rather devastating figure, moreso than any financial institution on which our very well being lies upon. the whole bankruptcy financing card may be their idea of an ace up thier sleeve....it'll cost more to let us go bankrupt than to help us. i just don't see that flying over very well. I thought they've have to ask for more money, but when you put the figure together and it's 30 billion...., it just sounds like a lot of money. i don't think this will fly with the various groups of our govt.

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The only way Saturn would live on as a spin off is if the a MFG form China bought them and made them in their own image.

Saturn would provide a dealer network but at what cost?

The problem is Saturn is tied to GM to close and few people are willing to pay GM's price for the dealers. Unless they can work out some agreement Satuyrn will die.

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The Senate will never allow a 30 billion dollar bailout.

I have no idea what this will mean in the end - but it can't be good.

that's sort of what I was thinking. 30 billion is a rather devastating figure, moreso than any financial institution on which our very well being lies upon. the whole bankruptcy financing card may be their idea of an ace up thier sleeve....it'll cost more to let us go bankrupt than to help us. i just don't see that flying over very well. I thought they've have to ask for more money, but when you put the figure together and it's 30 billion...., it just sounds like a lot of money. i don't think this will fly with the various groups of our govt.

It says a total of 30B which includes the 13.4B which they have already received. So 16.6B more.

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that's sort of what I was thinking. 30 billion is a rather devastating figure, moreso than any financial institution on which our very well being lies upon. the whole bankruptcy financing card may be their idea of an ace up thier sleeve....it'll cost more to let us go bankrupt than to help us. i just don't see that flying over very well. I thought they've have to ask for more money, but when you put the figure together and it's 30 billion...., it just sounds like a lot of money. i don't think this will fly with the various groups of our govt.

30 billion does seem like alot, but considering the $85 billion the government is putting into garbage like AIG... it's not much for a company that is much more significant.

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Porkulous package previous version was $925B, current bill plus interest is a minimum of $1.5 TRILLION, and that's just to start; who's going to blink at a mere $30B... or more accurately; $16B more ??? Few of these guys (& gals) have any earthly idea where the brake is.

Well, that pair of asshats Corker and Shelby will have a field day with this...

They'd rather bury the domestics as completely as possible.

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In the interest of getting the thread organized, I'm going to combine YJ's initial post and smallchevy's post of the new article, since this is the thread that the Front Page will be linked to. Just so you guys know.


YJ, we can't always be glued in front of the computer 24/7 sometimes we have to, you know, work (my case), and can't be here to update the millisecond the news comes out. :wink:

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The 30 Billion is still a conservative number. GM's new worst-case forecast is still rosier than the current reality predicted by many industry experts. They are also expecting to get concessions on VEBA and from the bond holders that they are unlikely to get. Now we hear that the pension which was previously well funded is $12.7 Billion behind.

Plus much of this is based on the Q3 numbers and "for some reason" they haven't released Q4 yet. Who knows what surprises lurk in there?

Now we know their plan is to continue to cut jobs, brands, and models. It seems like the US taxpayer is paying GM to do the things they could have done for "free" (or very little) under C11, but the end results are going to be largely the same.

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