Rick Wagoner Steps Down as GM Head.

[Formaldehyde]

They've fallen behind the rest of the world.

That is simply not true. The lack of customers and credit after the collapse of the economy is what has caused the vast majority of the recent problems in the US auto industry. It was not because they stopped manufacturing vehicles that Americans and others actually wanted to purchase - at least until gas went to $4 a gallon for a very short period of time. And they all manufacture much smaller and much more fuel-efficent vehicles which they sell in Europe and elsewhere where there was an actual demand until quite recently. It would likely be quite simple for them to sell these vehicles in the US since they already pass European safety tests. Ironcially, the only real issues are probably with US emissions requirements, or they would likely already be offered for sale in this country.

The only decent hope for them is the Volt, even though there are half a dozen EV's Americans could also buy at a lower price.

That is also not true. We are still a long way from making electric cars a reality instead of an overly expensive status symbol as they currently are:

http://wot.motortrend.com/6488328/g...s-35-years-away-from-true-viability/index.htm

Although the technology for electric vehicles is progressing rapidly, no country has the infrastructure to support them, according to Stefan Jacoby, CEO of Volkswagen America. Jacoby's comments essentially echo what his boss, VW Group Chairman Dr. Martin Winterkorn, recently outlined when he said electric vehicles are "very far away" from mass production.

"What would happen if 50 million new electric customers would plug their electric cars in an electric socket?" he said to Automotive News, "There is no country on earth that is really properly prepared for electric cars." He added it could take 35 years for electric vehicles to gain a significant global market share.

Jacoby offered efficient gasoline and diesel engines as an interim. "We have to live for a certain period with fossil fuel engines," he said, "The good news is that the existing engines can be dramatically optimized." Jacoby predicted these engines will reach 70 mpg within 10 years.

And let's not forget that most electricity is now generated by burning fossil fuels, so you are still consuming hydrocarbons while generating pollutants, albeit at a centralized location.

While I'm not familiar with the details of what Wagoner has been doing since accepting federal loans or exactly what caveats were attached in those offers, this smacks of yet another scapegoat being burned at the stake to pacify the angry mobs.

http://www.nytimes.com/2009/03/30/business/30wagoner.html?_r=1&ref=business

The United Automobile Workers union had no comment on Mr. Wagoner’s departure. But Michigan’s governor, Jennifer M. Granholm, echoed an fledgling sense in Detroit that Mr. Wagoner may be viewed as an auto industry martyr. Speaking on MSNBC, Gov. Granholm said Mr. Wagoner was a “sacrficial lamb.”

Like Mr. Smith, Mr. Wagoner aggressively expanded G.M.’s operations outside the United States. The company now sells 65 percent of its vehicles overseas, thanks to Mr. Wagoner’s push into markets like China, Russia and Latin America.

Only six months ago, Mr. Wagoner stood in front of hundreds of G.M. employees in the atrium of the company’s Detroit headquarters, celebrating the automaker’s 100th anniversary.

Dressed in a gray suit and a yellow, blue and white striped tie, Mr. Wagoner said: “So, what’s our assignment for today and tomorrow? Above all, it’s to demonstrate to the world that we are more than a 100-year-old company. We’re a company that’s ready to lead for 100 years to come.”

 

[mrt144]

What people are forgetting here is that bankruptcy does not mean liquidation. There may indeed be some job losses, but the company has a better chance of long term survival if it goes through Chapter 11 bankruptcy. It will give it the ability to get a lot of things done that they can not do outside of court protection (like debt restructuring).

But in no way does Chapter 11 mean mass layoffs and people out on the streets. If the situation is so dire that they have to go into Chapter 7 liquidation, chances are the company would not have survived anyway.

Just to reiterate: Bankruptcy does not automatically mean mass layoffs/much higher unemployment.

Even so, Chapter 11 may be just another stop for GM before it drives off a cliff forever.

 

[BSmith1068]

Even so, Chapter 11 may be just another stop for GM before it drives off a cliff forever.

True. But going into Chapter 11 does not automatically mean the mass layoffs people are talking about. GM may also still go over the cliff without Chapter 11...

It is better to go into Chapter 11 to try to fix things than to wait too long and have to go directly to Chapter 7.

 

[mrt144]

True. But going into Chapter 11 does not automatically mean the mass layoffs people are talking about. GM may also still go over the cliff without Chapter 11...

It is better to go into Chapter 11 to try to fix things than to wait too long and have to go directly to Chapter 7.

It'll be interesting to see what happens in this regard. Are the bond holders and creditors actually going to work with GM?

 

[BSmith1068]

It'll be interesting to see what happens in this regard. Are the bond holders and creditors actually going to work with GM?

No idea - but in Chapter 11, they would have to as it would be dictated by the judge overseeing the case. This is not a good position for them, so they would likely want to help GM avoid bankruptcy and do everything they could by working with GM. It still doesn't guarantee that GM will avoid bankruptcy, but it puts them in a better position with the judge if they worked in good faith to prevent it.

 

[mrt144]

No idea - but in Chapter 11, they would have to as it would be dictated by the judge overseeing the case. This is not a good position for them, so they would likely want to help GM avoid bankruptcy and do everything they could by working with GM. It still doesn't guarantee that GM will avoid bankruptcy, but it puts them in a better position with the judge if they worked in good faith to prevent it.

In the past 18 months, I haven't received any indication that anyone in the financial industry will work in good faith to make sure covenants are preserved. Why do it when the upshot of the payoff from the CDS market potentially beats the pants off long term debt?

 

[BSmith1068]

In the past 18 months, I haven't received any indication that anyone in the financial industry will work in good faith to make sure covenants are preserved. Why do it when the upshot of the payoff from the CDS market potentially beats the pants off long term debt?

Well – a lot has changed in that regard over the past 18 months. The CDS market is nothing like it was before. Ultimately someone owns GM’s long term debt, and it is going to be pretty hard to sell that debt to anyone else given the circumstances. If they don’t work in good faith, GM will likely be forced into Chapter 11 and they risk losing everything. It is still in their best interest to work with GM prior to Chapter 11. It doesn’t mean they will though!

 

[dutchfire]

Sell the viable parts to private companies and let the rest go bankrupt. There's no point in pumping money into a bottomless well.

 

[JerichoHill]

I don't see why GM and Chrysler can't just be allowed to fail.

Chrysler is. That's why they're not making any changes. It is clear that the gov't it cutting its strings. Chrysler's owners supposedly have a mound of cash they arent using to help it out.

 

[Formaldehyde]

Um, nope. The government decided they cannot stand on their own and should partner with another auto vendor:

http://blogs.usatoday.com/ondeadline/2009/03/chrysler-fiat-r.html

Chrysler says in a statement today that it has reached a partnership agreement with Fiat.

President Obama, in announcing his auto bailout plan today, gave Chrysler 30 days to finalize a deal with the Italian automaker as a prerequisite for receiving any federal funds.

Chrysler, in its statement, says that by providing the U.S. car company with product and platforms, technology cooperation and global distribution, Fiat "strengthens Chrysler's ability to create and preserve U.S. jobs; gives U.S. consumers more choices for environmentally advanced vehicles; gives its dealers more of the products they need to be successful; helps stabilize the supplier base; and allows Chrysler to pay back government loans sooner."

http://www.detnews.com/article/20090330/AUTO01/903300428/1361/Fiat+pleased+with+Obama+comments

Fiat SpA Chief Executive Sergio Marchionne said he was pleased Monday that the Obama administration viewed the Italian company as a good partner for Chrysler LLC and reaffirmed Fiat's commitment to conclude a deal with the Auburn Hills automaker.

"I would like to publicly thank President Obama, on behalf of the entire Fiat management team, for the kind words he used in referring to our work over the past five years and for his encouragement to finalize a sound alliance between Chrysler and Fiat," Marchionne said in a statement.

He said he was convinced that Fiat's fuel-efficient engine technology and small car platforms would help Chrysler to recover both financially and in the marketplace.

The two companies announced plans in January to form a global alliance, with Fiat offering to share technology and components in exchange for a 35 percent stake in Chrysler, which is majority owned by Cerberus Capital Management LP of New York.

 

[Bill3000]

Um, nope. The government decided they cannot stand on their own and should partner with another auto vendor:

http://blogs.usatoday.com/ondeadline/2009/03/chrysler-fiat-r.html

...you do realize that you're agreeing with him, right?

 

[JerichoHill]

...you do realize that you're agreeing with him, right?

Ya know, I was reading that going thinking that...

 

[.Shane.]

Personally I am looking forward to getting an Aptera next year Only 30k and get 300 mpg.

Are you really getting one?

 

[Formaldehyde]

Ya know, I was reading that going thinking that...

That's certainly not the way I interpret your comments.

You seem to be stating that the government is allowing Chrysler to fail because they won't make changes and the controlling company won't spend more of their own cash, instead of telling them they must join with another auto vendor, such as Fiat, in order to be eligible for more government loans, which they are actively doing.

Is that not the case?

 

[Bill3000]

You seem to be stating that the government is allowing Chrysler to fail because they won't make changes and the controlling company won't spend more of their own cash, instead of telling them they must join with another auto vendor, such as Fiat, in order to be eligible for more government loans, which they are actively doing.

Is that not the case?

It's both?

 

[Elta]

Are you really getting one?

If I get into the marines like I hope too and I test drive it, and it doesn't feel awkward. And I am confident I will get 150k miles out of it, then yes absolutely.


And yeah I'll take pics and stuff.

 

[.Shane.]

If I get into the marines like I hope too and I test drive it, and it doesn't feel awkward. And I am confident I will get 150k miles out of it, then yes absolutely.

Very cool, though, if you're not already on the wait list, it might be a while.

That said, the Tesla S looks pretty intriguing as well.

 

[BSmith1068]

How long until the outrage?

http://www.cnn.com/2009/US/03/30/gm.ceo.compensation/index.html

(CNN) -- General Motors' outgoing chief executive Rick Wagoner is eligible to receive more than $20 million in his retirement package, according to a filing with the Securities and Exchange Commission.

...

(not that I think the outrage would be justified...)

 

[mrt144]

How long until the outrage?

http://www.cnn.com/2009/US/03/30/gm.ceo.compensation/index.html



(not that I think the outrage would be justified...)

Hey, if it prevents him from ever working again, I am for it.

 

[Elta]

Very cool, though, if you're not already on the wait list, it might be a while.

That said, the Tesla S looks pretty intriguing as well.

If I can get it around 2011 - 12 then I'll be happy. I know that california residents get first dibs on it. My truck has 120k on it and it should last until around then.

The Telsa S looks pretty cool, not sure if I can afford it as of now though