Chrysler’s Ongoing Saga Of Greed
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- Image via CrunchBase
Original story by Nick Bunkley and Edmund L. Andrews, NYTimes
Chrysler’s lending arm will not get an additional $750 million loan from the federal government after some executives declined to go along with its restrictions on pay, a person with direct knowledge of the matter said Monday.
This person, who spoke on condition of anonymity because talks on the matter are private, said the Treasury Department withdrew its offer to further aid Chrysler Financial because some of its 25 top executives would not agree to compensation waivers.
Chrysler Financial, which already has received $1.5 billion in aid, denied that executive compensation was related to a decision last week to seek additional funding from private lenders rather than the Treasury.
The Washington Post first reported on its Web site Monday that Chrysler Financial executives rejected compensation limits that would have been tied to a new loan.
The funding for Chrysler Financial is not part of the $4 billion that Chrysler has received from the government since December. The Treasury is expected to announce more aid for Chrysler and General Motors on Tuesday.
G.M.’s chief executive, Fritz Henderson, said last week that the company would soon need $4.6 billion, on top of the $13.4 billion it has borrowed already, to help it survive the second quarter.
The Obama administration’s auto industry task force gave Chrysler until the end of this month to form an alliance with the Italian automaker Fiat or risk having to liquidate itself under bankruptcy protection.
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GM’s Bailout Strategy
Original article by Todd Lassa
GM presented its interim revitalization plan to Washington on February 17, revised downward from 12.5- to 13-million in the December 2 plan, forecasting break-even based on 11.5- to 12-million U.S. sales per year.
Hummer is done by next year if GM hasn’t signed a deal to sell it. Saab will be cut loose by January 1, 2010, and so the Swedish brand has filed for Chapter 11 bankruptcy. And unless its 400 dealers come forth with a plan for Saturn, that brand will join Oldsmobile in GM’s Graveyard of Divisions.
GM will cut its North American nameplate lineup from 48 down to 36 by 2012. Hummer (H2, H3), Saab (9-3, 9-5, 9-7x), and Saturn (Astra, Aura, Vue, Outlook, Sky) account for 10 of those 12 cuts. The Envoy makes 11, and the Pontiac G5 probably makes 12. The G6 sedan is likely dead, though the coupe and convertible versions do qualify as niche vehicles. The Buick Lucerne, Cadillac DTS, and STS all are likely to go away for a couple years until they’re replaced with a new full-size Buick and a converged DTS/STS.
GM also plans to:
- Reduce workforce by 47,000 globally, including 10,000 white collar (3,400 U.S. white collar)
- Close 14 North American factories by 2012, five more than in the December 2 plan
- Reduce U.S. dealers from 6,200 currently to 4,700 in 2012 and 4,100 in 2014
- Seek to convert bondholder debt and funding to autoworkers’ retirement health care funds into GM stock
- Seek up to $30 billion in federal loan guarantees, including funding already received, with repayment expected from 2012 to 2017
Saab is looking for funding, and plans to reemerge as an independent, Trollhättan-based automaker by the end of May. Saturn dealers were looking to find a buyer of their own, but the lesson we’ve learned in the last year is that we need less automotive capacity and fewer brands. Someone has got to go.
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