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The AutoGuide News Blog is your source for breaking stories from the auto industry. Delivering news immediately, the AutoGuide Blog is constantly updated with the latest information, photos and video from manufacturers, auto shows, the aftermarket and professional racing.
 |  Aug 19 2012, 12:01 PM

Recently we reported that the auto bailout cost had increased to $25 billion, mostly due to General Motors‘ plummeting stock price. Things could, however, get worse for GM before they get any better – if they get any better.

Continue Reading…

 |  Aug 14 2012, 9:24 PM

The auto bailout has been debated time and time again, on whether it was worth American taxpayers’ money, despite saving a million jobs. A recent poll found that the majority of Americans still opposed the auto bailout, and a recent report that the cost has now been increased to $25 billion doesn’t help its cause.

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 |  Feb 23 2012, 4:32 PM

Election season is upon us and that means one thing, more mudslinging than a figure-eight demolition derby.

The auto industry bailout will certainly near the top of the many contentious issues Republican candidates vying for their party nomination will latch into. That desperate move by the government between 2008 and 2009 is still sparking hot debates and dividing opinion, though overall sentiment is still negative according to a new Gallup poll.

It found that 51 percent of those surveyed still disapprove of the $85 billion rescue effort, with only 44 percent saying they approve of the decision.

As might be expected, that division grows when examined between political parties. Republicans showed 73 percent opposition to the bailout while 63 percent of Democrats supported it.

Sentiments are, however, improving over the general opinion displayed in 2009 when the branding iron was still hot and tax dollars spent on saving big business felt closer and more real.

Three years later, the U.S. treasury could still lose money on the bailout if GM stocks fail to recover, but it seems that some of the public who were quick to cry out have forgotten or become complacent.

Still, the issue around supporting Chrysler and GM is one that the Republicans are likely to leverage against Obama during this year’s race when the number might slide back toward more negative territory.

How do you feel about the bailout? Tell us in the comments section or find us on Twitter.

[Source: The Detroit Bureau]

 |  Jul 21 2011, 4:37 PM

Italian automaker Fiat purchased the U.S government’s remaining holdings in Chrysler today. Fiat paid $560 million to the Treasury Department for the government’s 98,000 shares.

Fiat has run Chrysler since the American automaker emerged from bankruptcy protection in June 2009. The U.S government provided a total of $12.5 billion to Chrysler with the funds coming from the government’s $700 billion bank bailout fund. $11.2 billion has been repaid to the Treasury and Chrysler repaid $5.1 billion in loans from the government in May. The Treasury has stated that it likely won’t recover the remaining $1.3 billion. With Fiat’s payment to the government, the Italian automaker now has 52 percent ownership of Chrysler. Fiat will likely own 57 percent of Chrysler before the end of 2011 when Chrysler begins producing a 40 mpg small car in the U.S.

U.S. Assistant Secretary for Financial Stability Tim Massad released this statement: “With today’s closing, the US government has exited its investment in Chrysler at least six years earlier than expected. This is a major accomplishment and further evidence of the success of the Administration’s actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.”

[Source: Washington Post]

 |  Jun 09 2011, 2:52 PM

General Motors CEO Dan Akerson is looking forward to the day when he can relax on his yacht, sipping Mai Tais on the deck…and knowing full well that the federal government has finally sold its stake in GM, and has completely divulged itself from the company as it did with Chrysler.

But it’s still a long way until the government can recoup its shares from taxpayers, acknowledged Akerson. GM has technically already repaid its debt to the Treasury Department: the $50 billion it received in 2009 came in the form of equity stakes, which were held by the Department. But according to a recent report by the White House National Economic Council, the government will have to write off about $14 billion of the $80 billion total bailout—money that was supplied by taxpaying Americans.

GM’s executives are “doing our level best” to recover this amount, said Akerson. The company has made five consecutive quarterly profits and managed to earn $4.7 billion last year, and if things go well the Treasury can sell its shares as soon as August.

[Source: New York Times]

 

 |  Jun 02 2011, 2:48 PM

A statement released today by the White House seemed to take credit for the resurgence of the American auto industry, with President Obama’s bailout plan credited as the driving force behind it.

“When President Obama took office, the American automobile industry was on the brink of collapse,” said the National Economic Council, in a prepared statement. ”Two years later, the American auto industry is mounting a comeback.” The statement comes as the 2012 Presidential election looms closer, and the statement went on to claim that 400,000 jobs in 2008 were lost, and the number could have been closer to 1 million if no action was taken.

The report was released on the two year anniversary of General Motors’ bailout. The Big Three domestic automakers have all reported profits in the first quarter of 2011, but taxpayers are still expected to be on the hook for billions of dollars in losses. The United States treasury is expected to write down as much as 20 percent of the bailout as losses.

[Source: Automotive News]

 |  May 20 2011, 7:35 AM

Two years after a government bailout and rescue by Italian automaker Fiat and Chrysler has announced detailed plans to repay its government loans.

A new $3 billion term loan, combined with $3.2 billion in bonds and a $1.3 billion hand out from Fiat will be used to pay off the $7.5 billion it borrowed from the U.S and Canadian governments to stay afloat during the recession.

The refinancing arrangement is expected to be completed on May 24th.

Under the control of Fiat, in just two short years Chrysler has introduced several all new models (including the 300, Jeep Grand Cherokee and Dodge Durango), while delivering significant updates on nearly every other product it offers.

 |  Apr 27 2011, 5:33 PM

Chrysler is preparing to pay back $6.6 billion on government loans, but the company will do so not from its own cash but by re-financing existing debt.

Current terms of the government loans have Chrysler paying 12 percent interest per year. While Chrysler would not be out of debt, they would theoretically free themselves from the high interest rates and no longer owe money to both the Canadian and U.S. governments. An official announcement regarding the re-financing is expected later today.

[Source: USA Today]

 |  Jan 03 2011, 3:44 PM

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Fiat is looking to up their stake in Chrysler from 20 percent to over 50 percent, according to reports in the Detroit News. Fiat was awarded a 20 percent stake in the company as part of Chrysler’s bankruptcy proceedings in 2009, and can increase its ownership as it passes a series of milestones. Marchionne also hinted that a Chrysler IPO may come in the second half of 2010.

The company can own another 15 percent upon building engines in North America, marketing an American made car that can hit 40 mpg and meets sales targets for export markets. Paying back government loans before 2013 will also give the company an option to another 16 percent of Chrysler.

[Source: Detroit News]

 |  Nov 26 2010, 3:35 PM

Steven Rattner, the man appointed by President Obama to oversee the auto industry bailout, claims that internal GM documents that were analyzed in the early days of the bailout pegged the cost of producing a Chevrolet Volt at $40,000 per car.

“At least in the early years, each Volt would cost around $40,000 to manufacture (development costs not included),” said Rattner. While GM declined to comment on the actual cost of the Volt’s production, Rattner said that he supported the move, since it meant a qualitative advantage for General Motors in the area of alternative fuel vehicles.

The Volt retails for $41,000 before government subsidies, which leaves little profit for GM, although the company arguably derives significant indirect benefits from marketing the vehicle.

[Source: New York Times]

 |  Nov 18 2010, 3:09 PM

General Motors long awaited IPO began trading on Thursday, and was up approximately $2 as of 12 noon, Thursday. Listed at $33 a share, the stock price quickly climbed to $35 a share, as GM’s CEO Dan Akerson rang the opening bell at the New York Stock Exchange.

IPO’s are often volatile, with new startup Tesla Motors stock price dipping to around $15 over the summer, and now trading at over $30. The original GM stock was once one of the world’s most popular stocks before GM was forced into bankruptcy in 2009. With the IPO, the United States Treasury was able to unload 75% of their shares and recoup $12 billion of taxpayer money. GM stock would need to rise to $41 a share for the government to break even on its bailout.

[Source: Left Lane News]

 |  Nov 16 2010, 12:47 PM

Steve Rattner, who oversaw President Obama’s auto industry bailout, told Bloomberg News that GM’s Initial Public Offering share price was undervalued.

“There is definitely a greater level of confidence in the ability of the carmakers to perform,” Rattner said at an Automotive Press Association event in Detroit. “That’s because of the profit numbers.”

According to Bloomberg sources, GM is expecting to be able to sell shares for over $30 each, with Rattner claiming that $35 to $40 a share is expected.

Rattner also criticised GM’s managment structure, stating that the roles of CEO and President must be separated, as GM’s rotation of four CEOs in 18 months reflected poorly on the company.

[Source: Bloomberg]

 |  Oct 28 2010, 5:05 PM

General Motors will buy $2.1 billion worth of preferred stock as part of a move to pay off its $49.5 billion in federal bailout loans.  GM will also launch a series of measures to reduce its debt by $11 billion.

GM will make contributions to the UAW pension fund, to the tune of $6 billion, and secure a $5 billion line of credit from a series of banks, which should help reduce its total debt obligations by a total of $11 billion.

“These actions will bring down our leverage by $11 billion by reducing debt and improving our pension funding position,” GM CFO Chris Liddell said in a statement.

[Source: Automotive News]

 |  Apr 20 2010, 8:20 AM

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General Motors CEO Ed Whitacre is expected to announce today that the automaker has already paid off all of its $6.7 billion in loans to the U.S. and Canadian governments. Back in November, GM announced it would begin paying back the loans and today Whitacre is scheduled to make the announcement that the remaining $5.8 billion has now been returned to the taxpayers that supported the American auto giant when it was in trouble.

A press conference is set for later today at GM’s Fairfax, Kan. assembly plant, where Whitacre is also expected to announce the expansion of production facilities there. Currently the plant builds the Chevrolet Malibu and Buick LaCrosse.

This payback is, however, just a small potion of the almost $50 billion in taxpayer dollars used to support GM through its bankruptcy. As a result of that, the U.S. government still holds a 61 percent stake in the automaker. This news, however, is a sign that GM’s recovery is happening more quickly than expected. The U.S. Treasury had said it would agree to sell off its shares in GM once the debut is reduced to $3 billion – so expect an announcement of that nature to follow.

[Source: AutoNews]

 |  Nov 27 2009, 11:44 AM

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Earlier this week General Motors produced its last Pontiac for the U.S. market, ending the brand’s 82 year run. The final vehicle to roll off the assembly line at 12:45 p.m. on Wednesday, November 25th at the Orion Township plant was a rather unspectacular white G6 sedan which is scheduled to be sold to a fleet. It’s hardly the sort of send-off one might expect for a brand that has produced such memorable legends as the GTO and Firebird.

There was no pomp and circumstance as the last 100 vehicles rolled off the line and no GM executive was on hand.

The Pontiac brand was highlighted for elimination on April 27, as a part of General Motors’ viability plan. GM agreed to kill-off Pontiac and try and find buyers for Saab, Saturn and Hummer in exchange for a bailout by the U.S. and Canadian governments. To date, both the Saab and Saturn deals have fallen through, leading to the scheduled elimination of Saturn with the same fate likely for Saab. The sale of Hummer to Chinese heavy machinery company Sichuan Tengzhon is still pending.

Watching the Pontiac brand come to an end isn’t an unfamiliar event for may of the plant workers, as many of them were building Oldsmobiles when GM decided to retire than brand in 2000. For workers there is a glimmer of hope as GM has announced that in 18 months it will begin producing a new small car at the same facility.

In the mean time, the plant will stay open as it wraps up final production of the Pontiac G3 Wave, which is sold in Canada.

Since the brand’s inception in 1926 it is estimated to have sold as many as 41 million cars.

[Source: TheDetroitNews]

General Motors Bankruptcy Official

America's manufacturing engine runs out of gas

 |  Jun 01 2009, 7:54 AM

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While President Obama and General Motors CEO Fritz Henderson are both expected to hold press conferences today, officially GM has already filed for Chapter 11 Bankruptcy Protection.

Once the world’s largest automaker and a symbol of the success of free market economics, GM is now a symbol of failure. In the 1950s it employed over 500,000 people and produced more than half of all the vehicles sold in the United States. Now it also holds the dubious title of the world’s third-largest bankruptcy – and the largest bankruptcy for a manufacturing company.

General Motors, backed by yet another government loan from the U.S. Treasury is expected to get the same fast-tracked bankruptcy proceedings as the smaller U.S. automaker Chrysler – which filed for Chapter 11 just one month ago and which already appears to be emerging. Just yesterday a judge approved the sale of Chrysler’s assets to a group comprised of Fiat, the U.S. government and the UAW. The Chrysler Chapter 11 proceedings were seen by many as a practice for the much larger General Motors corporation.

As a part of the Chapter 11 filing GM will receive $30 billion from the Obama administration, giving it a 60 percent stake in the once-great automaker. The Canadian government will take a 12 percent stake by providing an additonal $9.5 billion, while the UAW gets a 17.5 percent share and bondholders get 10 percent.

The Chapter 11 proceedings are expected to take anywhere from 60 to 90 days but the future of General Motors is anything but certain. In the short term the automaker will most likely push ahead, but the big question mark is if it can become financially viable and build cars that people want to buy – something which is further complicated by the government’s involvement.

While the Obama Administration was reluctant to get involved it almost had no choice as without government help both General Motors and Chrysler were doomed to failure – at a time when the U.S. economy already has enough troubles. But now that the government is involved it doesn’t appear to be willing to part with its economic engine. Even when GM and Chrysler emerge from bankruptcy, the government’s Autos Task Force will continue to be involved in the future of both companies.

With a 60 percent stake in General Motors and a political agenda, will the Obama Administration work with GM and Chrysler to ensure both companies build cars people want – or build cars it wants people to want?

Only time will tell.

[Source: Automotive News]

 |  Apr 27 2009, 11:59 PM

 

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Less than a day after the UAW, Chrysler and Fiat agreed upon the terms of a contract that would keep the struggling U.S. automaker afloat, details of the agreement have surfaced in which the union will take a controlling share in Chrysler.

At first it seemed almost too good to be true that all sides had reached an agreement without the need for decreased wages. Instead the agreement stipulated that Chrysler would significantly reduce its participation in the employee retirement program.

The agreement came just days after a similar agreement had been reach between Chrysler Canada and the Canadian Auto Workers union – an agreement that was ratified the same day Chrysler and the UAW put together the current proposal.

Now word has leaked that in exchange for Chrysler’s reduced payments to the company’s retirement plan, the company had to essentially hand itself over to the union. In total, the UAW will get a 55 percent stake in the planed Chrysler-Fiat partnership, with Fiat initially taking a 20 percent share, with up to 35 percent ownership possible if certain conditions are met. 

The agreement now has to go before Chrysler’s 26,000 workers, with voting on Wednesday in order to ratify the agreement ahead of the government’s end-of-month bankruptcy deadline. If the deal is reached and Fiat signs on, the Federal Treasury will provide Chrysler (or should we say the UAW) with $6 billion to keep the automaker afloat.

Meanwhile, one other major player (which has been incredibly quiet during this ordeal) has agreed to remove itself from the situation. Daimler will shed its 20 percent stake in Chrysler and rethink ever working with a U.S. automaker again.

[Source: Automotive News]

 |  Mar 30 2009, 11:09 AM
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Photo Courtesy whitehouse.gov

While President Barak Obama’s press conference on what his administration is doing to solve the crisis in the U.S. auto industry focused mostly on helping out General Motors and Chrysler, he did give brief mention of a few initiatives aimed at jump-starting car sales at the consumer level.

Two main programs were discussed, including a scrappage program and tax deductions.

President Obama said that he will be looking into ways to see if there is any money to set aside in a fund to create a scrappage plan. While no specifics were given as to the details of the plan, usually these programs give consumers a significant rebate on the purchase of a new car when they trade in or “scrap” their old car. Often cars must be close to 10 years of age to qualify.

A similar program was launched in Germany several months ago with resounding success, boosting car sales by 21 percent in February over the previous period a year earlier. President Obama said that such a plan in the United States could increase car sales by as much as 100,000 units in 2009.

It is not clear if the scrappage plan would apply to just GM and Chrysler products, or to any vehicle manufactured within the United States, or to any vehicle at all.

The second incentive would allow for tax paid on a new car to be deducted from one’s income tax. This program is further developed as President Obama said his administration has already begun working with the IRS. A specific time frame has also been given that would seen the tax deduction apply to any vehicle purchased between February 16th and December 31st of this year.

The scrappage plan, once it goes into effect, would be retroactive as of today.

 |  Mar 29 2009, 5:43 PM

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General Motors CEO Rick Wagoner will be stepping down as the head of the deeply troubled American auto giant by the end of the month – this according to several reports including CNBC and GMInsideNews.

Wagoner apparently did not come to the decision on his own and while he was not “forced” he was apparently asked to abdicate the General Motors throne by senior White House officials. GM’s Vice President, Fritz Henderson is expected to take over the helm of the company (We don’t envy him).

Wagoner took up the position of CFO at GM in 1992, becoming executive vice president in 1994. In 2000 he continued to move up the corporate ladder, taking a new position as president and chief operating officer, adding chairman to that long list of titles in 2003.

During Wagoner’s reign, GM’s shares have taken a catastrophic hit, dropping from a high of $60 to a low of $1.27 – a loss of roughly 98 percent.

 

[Source: GMinsideNews]

 |  Mar 28 2009, 10:26 AM

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According to the reliable folks over at GMInsideNews, on Monday the Obama Administration will announce a bankruptcy deadline for both General Motors and Chrysler. 

It has been rumored that the government will release more details about its aid for the U.S. auto industry on Monday, but now it appears the announcement will include this strong-arm measure by the feds. The “brankruptcy deadline” will be a specific date by which both companies will have to have their finances in order. For General Motors this means a date by which it will have its ongoing issues with the United Auto Workers and bondholders resolved. If the companies cannot comply with the request of the Auto Task Force it will force both U.S. auto giants into a “pre-packaged” Chapter 11 bankruptcy filing.

 

[Source: GMInsideNews]

 |  Mar 11 2009, 11:39 AM

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Ford Canada is asking the Canadian government to put in place a vehicle scrappage plan like the one currently in effect in Germany.

Ford Canada CEO David Mondragon told a parliamentary committee that Ford isn’t looking for a bailout and instead suggested a plan that would include $350 million ($270 million U.S.) for a scrappage plan. The way the plan would work would be for the government to give cash incentives for people who trade in their old cars and purchase new ones.

Mondragon’s suggested solution would include an incentive value of $3,500 ($2,700 U.S.), for consumers to use against the price of a new car when they traded in their old one. The deal would apply to any car 11-years-old or older.

With 35 percent of cars on Canadian roads over 11-years-old, this could account for as many as 100,000 car sales.

In Germany, the rule applies to cars 9-years-old or older and so far has been a resounding success. While February sales in the U.S. continued to tumble, car sales in Germany for the month were actually up  21 percent over the same period the year before.

[Source: The Globe and Mail]

 |  Mar 11 2009, 11:05 AM

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General Motors has announced that it is putting a hold on a plan to bring a new 4.5-liter V8 diesel engine to market. The new engine would have been used in the light-duty Silverado and Sierra pickup trucks and estimates have it rated at anywhere from the mid-20s to the high-20s in miles per gallon. This would even be a significant improvement over GM’s current Silverado and Sierra hybrids, which get 21 mpg city and 22 highway.

The move is just one of many tough choices GM has had to make to cut costs ahead of a U.S. government decision to see if the struggling automaker will get an additional $16.6 billion in bailout funds.

What makes this pill even harder to swallow is that the new engine is just a year away from being ready for production – which would take place at GM’s Tonawanda, N.Y. plant.

As for the engine itself, it has a unique cylinder head design that eliminates intake and exhaust manifolds. The lightweight block also has “advanced castings” for the crankshaft-bearing journals and oil system.

GM secured several new patents in the design of the 4.5-liter diesel engine and it apparently is both as smooth and as quiet as a gasoline engine. With most of the ground-work already complete, General Motors has stated that it would be willing to work with another company on bringing the new diesel V8 to market if there were any reasonable offers.

[Source: AutoNews]

GM to Spin-Off Opel & Vauxhall Brands

GM Europe asks for $4.18 billion

 |  Feb 27 2009, 1:59 PM

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General Motors has just announced that it’s European operations, including brands Opel and Vauxhall will split-off from GM.

The deal would see anywhere from 25 to 50 percent of of GM Europe sold off to private investors, however, GM would continue to hold a majority stake in the company. (Call us crazy, but who would want to invest in a company that was still controlled by the same people who drove it into the ground)?

The news comes a day after thousands of Opel workers in the city of Ruesselsheim protested and asked that Opel split off from GM after 80 years of ownership by the U.S. company.

GM Europe is asking for $4.18 billion from European governments in loans to facilitate its restructuring efforts that would see the company profitable by 2011.

The German government, however, isn’t jumping at the chance. Economy Minister Karl-Theodor zu Guttenberg asked that GM first take very other measure possible before the German government would even consider a bailout. Zu Guttenberg even hinted that were the German government to get involved it would most likely like a say in where the money goes and what the restructuring plan would look like. GM Europe, after all, has plants in Germany, Belgium and the U.K.

[Source: AutoNews]

 |  Feb 26 2009, 10:23 AM

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General Motors has just released its fourth quarter “earnings” and they are anything but. GM posted a net loss of $9.6 billion, with an operating loss of $5.9 billion.

The loss is the sixth consecutive quarterly loss by the struggling automaker, and is considerably worse than the $1.5 billion the company lost in Q4 last year.

GM has a cash reserve of $14 billion, including the $4 billion it has already received from the U.S. Treasury, however, at the current rate of loss all those fund will be depleted by Q4 of 2009. It goes without saying then that the additional $16.6 billion GM has requested is much needed to keep the company afloat.

GM posted loss in all four of its sales regions with the largest loss in North America, which accounts for $2.1 billion of the $5.9 billion deficit. GM Europe posted a $956 million loss (four times as bad as the Q4 loss in ’07), while GM Asia Pacific declined by $879 million and the remaining Latin America, Africa and Middle East regions lost $154 million – down from an actual revenue the year before.

CEO Rick Wagoner had this to say: “2008 was an extremely difficult year for the U.S. and global auto markets. We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions.”

Wagoner will meet with Obama’s task force,  headed by U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers, later today.

Over the past year General Motors has seen its stock value decrease by 89 percent.

[Source: AutoNews]