AutoGuide News Blog
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.
Evidently, the third time wasn’t the charm for Think, the Norwegian manufacturer of small electric vehicles. The company has gone bust for the fourth time in its 20 year history. Think attempted to restructure, but was ultimately not successful.
“We needed some additional funding and although we had interested investors they were not able to come to table quickly enough,” Think spokesman James Andrews said to Automotive News Europe. Think will either be sold or have its assets liquidated.
Production of the Think City, the company’s sole model, was suspended in March. Just 1,043 were sold in 2010. Think was sold by Ford Motor Co in 2003 and has sold ever since. Think operates in North America, but its future is in doubt due to its reliance on the firm’s Norwegian operations.
[Source: Automotive News]
NJMP is one of the newest tracks in America, having opened its doors back in 2008. It currently has two road courses and a professional karting track. Future plans included adding a tri-oval and an off-road track.
Sadly it looks like those expansion plans might not get to mature, unless someone can step in to buy this facility and run it properly.
It’s not only the track that is suffering, as the real-estate market in Millville, NJ has been hit hard by the recession and many surrounding projects have been scrapped.
[Source: Axis of Oversteer]
BBS wheels are arguably one of the most famous brands in the automotive industry. Appearing on everything from Volkswagens to Formula 1 race cars, the high-quality German made rims have been a staple of both the “show” and “go” sides of the industry for decades. But reports out of Germany state that BBS filed for bankruptcy on December 30th.
This isn’t the first time that BBS has undergone financial turmoil. In 2007, the company also filed for bankruptcy, and managed to pull through. This time, it appears that the company’s precarious situation got the better of it, although partner company IG Metall was apparently planning a large investment in BBS just before the filing.
If you’ve ever driven on Interstate 95 north of Fort Lauderdale, you’ve doubtlessly seen Champion Motors in Pompano Beach, Florida, home of the world’s largest Porsche dealership. Unfortunately, the dealership also suffered a Chapter 11 bankruptcy earlier this year, and its recovery story in Portfolio magazine gives the layman an interesting look into how dealerships operate.
Dealerships must keep an inventory of cars, and use whats called floor-plan financing for this. Essentially, it’s a fancy name for a loan provided by the bank to cover the cost of buying inventory from the manufacturer. At the time, Champion was getting credit from VW Credit, due to Champion’s Audi franchise sharing real estate with the Porsche showroom.
However, VW Credit cut back the repayment time from 10 days after a vehicle’s sale to 3 days, a move that caused major headaches for Champion, as the cutback came in the middle of 2009′s economic downturn. Undoubtedly, the large and expensive inventory Champion must carry exacerbated the problem.
The Portfolio article explores what happens during the bankruptcy, but also details the various maneuvers used by Champion to shed their dead weight (in this case, an Audi franchise) and re-emerge as a leaner, more profitable business. The article also details how dealership financing works, an interesting topic for those who have overlapping interests in business and cars.
Earlier this week General Motors officially turned off the lights and locked the doors at its Boxwood Road assembly plant for the last time, marking the end of the line for the Pontiac Solstice and Saturn Sky.
The two vehicles (along with the Opel GT) were manufactured at the plant in Wilmington, Delaware, which is being closed as a part of GM’s restructuring process.
General Motors has decided to eliminate the Pontiac brand and sell Saturn to the Penske Automotive Group. The announcement to close the plant came on July 1st when GM filed for Chapter 11 bankruptcy protection. At the time GM gave short notice to plant workers saying the facility would be shuttered by the end of July.
GM spokesman John Raut said the final vehicle to roll off the assembly line was a silver Pontiac Solstice.
Automaker seeks return to former glory with restructured operations and reduced debtload
Today the sun rose on a New General Motors, a move which will also see the sun set on a lot of people’s careers. GM emerged from bankruptcy protection at 6:30 a.m. Eastern Time with news of a serious corporate restructuring plan that will take effect over the next few months.
Due to leadership (and in some cases arm-twisting) by the Obama Administration, the new GM, headed by CEO Fritz Henderson, is poised to return to its once-great status after shedding its debt and healthcare obligations by a massive $48 billion. Much of this comes as the UAW made serious concessions in accepting a new contract with the automaker. GM also hopes to significantly reduce its cash-burn after eliminating a third of it’s dealership network. Additionally, the automaker looks to profit from the sale of the Saturn, Saab and Hummer brands, as well as through selling-off much of its stake in its European operations, including Opel to Canadian autoparts manufacturer Magna International.
“Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers,” CEO Fritz Henderson said in a statement.
Henderson’s plan will see 6,000 (or 20 percent of) white-collar employees lose their jobs by October, with 35 percent of all executives being dismissed. Many executives will be cut from the company’s old Automotive Strategy Board and Automotive Product Board, a complex, multi-tiered system of management which will be axed in favor of a small committee that will meet weekly to make decisions about the future of the company.
Henderson says the move will cut those making the decisions at GM in half as the automaker focuses on its four key brands – Chevrolet, Buick, GMC and Cadillac.
Sales and Marketing will also no longer be under the leadership of one individual, as that part of the company is split. Sales will report directly to Henderson, who was unclear about what that meant for the current Sales & Marketing boss, Mark LaNeve. GM will also bring back veteran Bob Lutz to manage marketing, as well as design, brands and communications.
This will be a particularly vital role as GM looks to introduce a new line of vehicles into the marketplace to help re-brand the company. In total 10 new vehicles will launch in the U.S. in the next 18 months, with 17 overseas.
[Source: Automotive News]
Late Sunday a judge approved the sale of GM’s assets to a group comprised of the U.S. government, the UAW and the Canadian and Ontario governments under the name NGMCO, Inc. The decision will see GM exit bankruptcy court quickly with the ‘New GM’ assets going to NGMCO, while the ‘Old GM’ assets will be sold off to the highest bidder.
Judge Robert Gerber then placed a stay on the proceedings to for four days to hear objections or appeals, but as most of those have already been dealt with, GM is expected to reemerge as a new government-owner company by Thursday.
In a statement Judge Robert Gerber said that he would, “prevent the death of the patient on the operating table.”
Gerber pointed out the seriousness of the matter and the alternative, stating that, “The only alternative to an immediate sale is liquidation – a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates.”
The New GM will be majority owned by the U.S. government with a 60 percent stake in the automaker. The UAW will get 17.5 percent, while the Canadian and Ontario governments will get 12 percent.
In response to the news GM’s CEO Fritz Henderson released a statement saying that, “A healthy domestic auto industry remains vital to the global economy and we deeply appreciate the support the U.S., Canadian and Ontario governments and taxpayers have given GM, and the sacrifices that have been made by so many. This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades. Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.”
The Obama Administration’s auto task force has said that sale of GM back to the private sector could begin as early as next year.
[Source: Automotive News]
When the U.S. Supreme Court delayed the sale of Chrysler to Fiat yesterday it put the whole contract in jeopardy, giving the Italian automaker the opportunity to walk away if the sale isn’t approved by June 15th. Fiat CEO Sergio Marchionne has, however, confirmed his commitment to the purchase, saying that it would not deter him.
“We would never walk away,” he said in an interview with Bloomberg. “Never.”
Late Monday afternoon Supreme Court Justice Ruth Bader Ginsburg delayed the sale but did not make clear the intentions of the court. A group of Indiana pension funds have attempted to block the sale of Chrysler to a Fiat-run group (also comprised of the U.S. and Canadian governments) by alleging that the initial bankruptcy court acted contrary to the law by putting the needs of unsecured lenders ahead of secured ones (some of which include the pension funds).
The bankruptcy court’s decision was upheld by an appeals court and now the matter may go before the Supreme Court.
It is not guaranteed that the Supreme Court will heard the case but that is the speculation.
All we do know is that Fiat has an unwavering interest in the Chrysler brand and the U.S. market. This is likely due to Marchionne’s belief that in a post-recession auto industry there will be far fewer major players controlling significantly larger shares of the market.
[Source: Automotive News]
A U.S. Supreme Court judge has delayed the sale of Chrysler to a new Fiat-run company. The move by Justice Ruth Bader Ginsburg came just before a 4 p.m. deadline set by a New York appeals court would have seen the sale completed.
The statement by Justice Ginsburg was just one sentence and gave no mention if or when the Supreme Court would hear an appeal by several Indiana pension funds which are challenging the sale. Representatives of those pension funds have just lost an appeal and were said to be looking to take their challenge to the U.S. supreme court. The group is arguing that by permitting the sale of Chrysler to Fiat the bankruptcy court acted contrary to the law by putting unsecured lenders ahead of secured ones.
The Obama administration has pressured the Supreme Court against delaying the sale of Chrysler saying that such a move could have “grave consequences,” namely, the liquidation of Chrysler’s assets. If the sale of Chrysler to the Fiat-led group (which also includes the U.S. and Canadian governments) does not transpire by June 15, Fiat is able to walk away.
[Source: Automotive News]
Those 789 Chrysler, Dodge and Jeep dealers that were cut loose by Chrysler as a part of its bankruptcy and restructuring plan have until June 9th (next Tuesday) to part with their remaining inventory.
Because of the dealership contract that they signed, dealers aren’t allowed to sell off the cars once the contract expires. And because Chrysler is in bankruptcy protection, it doesn’t have to buy the cars back either.
Chrysler has said that it will help the 789 dealers move their inventory to the remaining Chrysler dealerships, but it won’t give any guarantees on the amount of money those dealerships will have to pay for the remaining vehicles. And considering the circumstances, the terminated dealers don’t exactly have much faith in their parent company right now.
As a result, dealerships are slashing prices. CNN visited Pohanka Chrysler-Dodge in Leesburg, Virginia, where the dealership has slashed prices on some models by as much as 40 percent. A brand new Dodge Nitro, which lists for $29,170 now has a sticker price of just $17,510.
Owner Ray O’Bryhim even says prices may get lower as the June 9th deadline approaches.
When Chrysler’s 789 dealers received noticication that their contracts would not be renewed, they had an inventory of roughly 44,000 cars.
Porsche has reportedly asked the German government for a $2.5 billion loan, adding to speculation that the automaker is in financial trouble.
Much of Porsche’s money problems stem from the company overextending itself in its failed bid to take over Volkswagen, a move that, if successful, would have added $10 billion to Porsche’s coffers. As a result of the unsuccessful attempt the automaker now has a $12 billion debt load.
Like any other automaker these days Porsche is struggling with decreased sales. Profits will likely be high enough to make interest payments on the company’s debt, but not enough to pay it off.
Then again, according to German magazine Der Spiegel Porsche apparently skirted bankruptcy in March for three days by securing a $978 billion loan from VW.
Porsche is also likely to see a spike in both sales and profits in the near future as the Panamera arrives in dealerships. Perhaps it will be the company’s savior, like the the Cayenne was back in 2002.
A day after filing for Chapter 11 bankruptcy protection, General Motors has announced it has found a buyer for its Hummer brand of SUVs. GM has not, however, named the party.
Earlier reports indicated that of the short-list of three potential buyers none of the companies were automakers. One is apparently a U.S. company and the two others are from overseas. The list apparently included wealthy individuals and private equity firms.
General Motors has also not revealed the deals of the sale, including just how much it got for the Hummer brand. The deal does give some hope to Hummer as the new company has plans to aggressively fund the development of future vehicles. The success of that plan would of course depend on if buyers return to their massive SUV buying ways once the recession subsides.
In 2008, 27,485 Hummers were sold in the U.S., down 51 percent from the year previous.
The good news in the interim is that the sale will save almost 3,000 jobs in manufacturing, engineering and at Hummer dealerships. GM will also continue to assemble the H3 and H3 SUT for the new company through 2010.
The deal is expected to be finalized by the third quarter of this year.
In the next several weeks GM is also expected to announce buyers (or at least lists of potential buyers) for Saab and Saturn.
[Source: Automotive News]
America's manufacturing engine runs out of gas
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]
As a government imposed June 1st bankruptcy deadline looms on the horizon, the UAW is reporting that it has reached a tentative agreement with General Motors and the U.S. Treasury.
The specifics of the agreement will not be made public until the contract is ratified, however, the UAW did say that changes have been made to the employees retiree health trust, referred to as the Voluntary Employee Beneficiary Association. It is not clear if the UAW has worked out a deal similar to the one with Chrysler that would see the union take control of a portion of the company.
Negotiations between the Canadian Auto Workers (CAW), GM and the Canadian Federal and Ontario Provincial governments have yet to result in an agreement.
As with Chrysler, a ratified contract would not necessarily mean that GM would avoid filing for Chapter 11 bankruptcy protection.
[Source: Automotive News]
General Motors will cut 1,124 dealerships loose by October of 2010. The struggling automaker on the verge of bankruptcy sent letters out to the dealerships last week as it searches for ways to reduce it’s current dealer network of 5,969 to just 3,600.
GM says it will not renew dealership agreements with the 1,124 companies when their contract renewal comes up in October of next year.
The dealerships being cut are considered to be poor performers and accounted for just 7 percent of GM’s U.S. sales last year.
Another 470 dealerships are also scheduled to be let go as GM parts with the Hummer, Saab and Saturn brands. An additional 35 stand-alone Pontiac dealerships will also be cut.
Those dealerships not already notified aren’t necessarily safe, however, as the remaining 4,300 stores is still 700 over the 3,600 cap.
The news of GM’s numerous dealership closings came just one day after Chrysler announced it would drop 789 U.S. dealerships.
[Source: Automotive News]
Days after General Motors announced it would cut it’s number of dealerships in the U.S. by 1,124, GM Canada is following suit. The number of Canadian GM dealerships being closed may sound much smaller at 292, however, with roughly 700 dealerships nationwide, the cuts represent a 42 percent dealership reduction.
GM Canada says the Sales & Service agreements it holds with the dealerships will not be renewed once they expire in October of 2010.
GM Canada says it focused on cutting dealerships in urban areas with higher populations, in an effort to continue to offer GM vehicles in rural communities as well. Considering the country’s large land mass and relatively small population, however, visiting a GM dealership after October 2010 may mean a much longer drive for some rural residents.
“The end result in Canada will be a more competitive dealer network with higher volumes, while continuing to maintain the strongest and broadest dealer network in the country better equipped to serve GM customers,” reads a GM Canada statement.
Official release after the jump:
Dealers to be notified today
According to the latest bankruptcy court filings by Chrysler, the company plans to cut 789 dealerships (one quarter of the current dealer network) in an effort to emerge as a financially viable company.
The company sent out overnight letters to the dealerships that will be eliminated.
As expected in bankruptcy, Chrysler will not buy-back the vehicles, tools or parts, but it will put the dealerships in touch with surviving dealers who can then work out a purchase.
Chrysler also plans to push ahead with a plan to put all of its brands under one roof. Currently 68 percent of dealerships carry Dodge, Chrysler and Jeep products, but after the 789 are closed, that number will rise to 80 percent.
There appears to be even more strategy involved as well as 345 of the dealerships being shut down (or roughly 44 percent) also sell vehicles from a competing brand.
Steven Landry, Chrysler’s VP of Sales, spoke optimistically about the future of the 789 dealerships, stating that 83 percent of the businesses sell more used cars than new and that half of them sell fewer than 100 cars per year. “The majority of these dealerships are going to continue on and prosper either selling used cars or other brands,” he said.
The 789 dealerships will receive a 23 business day court review of their individual situation.
[Source: Automotive News]
Resale values on Chrysler products like this Dodge Challenger SRT8 went up in smoke after the company filed for bankruptcy.
According to Automotive Leasing Guide, the resale value of a Chrysler vehicle dropped six percent in the week following the company’s Chapter 11 bankruptcy filing.
In just seven days the uncertainty about Chrysler’s future crept into the marketplace in a very real way, damaging the resale values for Chrysler, Dodge and Jeep products almost equally.
Prior to the bankruptcy filing a three-year old Chrysler was worth 34.8 percent of its original value. After the filing, that amount dropped to just 28.8 percent.
The value of a three-year old Dodge went from 37.3 percent to 31.2 percent and three-year old Jeep vehicles declined in value from 38.4 percent of the original purchase price to 32.4 percent.
The news isn’t good for those who recently purchased a Chrysler vehicle and as the declines are based on percentage they can take a significant toll on pricey models – like SUVs or the Challenger SRT8 pictured above.
In comparison, a three-year old Toyota retains 45.5 percent of its original value.
From start to finish, Chrysler’s bankruptcy proceedings could take as long as two years, according to a Bloomberg report. The article cites an administration official, and says that the initial period of 30 to 60 days for the “quick and surgical” process only refers to the period required to sell the major assets to a new company.
The remaining “bad assets” would then be divvied up by the courts to the remaining debt holders.
This may not be as big of a setback as it sounds at first, however, as the new Chrysler would no doubt be able to begin operations once it is able, which could turn out to be long before all of the court proceedings have concluded.
Currently Chrysler is still in bankruptcy court and the process does seem to be moving along swiftly as parties opposed to the merger have either withdrawn or been denied. It is not clear how much longer it will take to approve the sale of the “good assets” to the new company owned by Fiat, the UAW and the Canadian and U.S. governments
GM Vice Chair Bob Lutz Kisses a Saturn Astra. Recently he kissed-goodbye to all his stock in the company.
In a move that should probably be illegal (but isn’t) six General Motors executives recently sold off all their shares in the company. That’s right, those same guys who helped drive GM into bankruptcy traded in all their stocks when a trading window opened.
The move signifies that GM will most likely file for Chapter 11 and while it does seem unjust that these executives are permitted to jump ship, smart investors will see this as a sign. (You know what they say when the rats start to leave a ship).
GM’s Vice Chairman Bob Lutz (pictured above) sold off all of is 81,360 shares at $1.61 each, cashing in on $130, 969.60. The North American President of GM, Troy Clarke, dumped his 21,380 shares for just $1.45 each for a total of $31,001.
The remaining executives involved in the sell-off were VP Thomas Stephens, as well as Group VPs Gary Cowger, Carl-Peter Forster and Ralph Szygenda.
The move prompted the stocks to continue their slide, dropping 17 cents (or 11 percent) to just $1.44 by days end. In the past year GM’s stock value has declined by 92 percent.
General Motors is facing a June 1st restructuring deadline by the Obama administration or else the federal government will pull the funding plug on the automaker. As it stands a bankruptcy scenario seems unavoidable.
That's the value of 473,000 Chevy Aveos
General Motors has once again posted a massive quarterly loss, coming up short to the tune of $6 billion for Q1 of ’09. That is roughly the equivalent of the value of 473,000 Chevy Aveos.
The company burned through $10.2 billion during the period, lowering its cash reserves to $11.6 billion from $14.2 billion at the end of ’08. The difference was made up by loans from the Federal Government which amounted to $13.2 billion.
General Motors has now posted seven straight quarterly losses and in total has dropped into the red on an annual basis since 2004 – for a staggering total loss of $84 billion. For those keeping score that amounts to a loss roughly equivalent to the value of 1.3 million Escalades.
Naturally, North America accounted for the largest amount of the total loss with $3.2 billion in that region, while the smaller European market still posted a significant decline of $2 billion.
In Asia GM posted a relatively small $21 million loss, compared to a profit of $310 million the year earlier.
The only region to manage a profit was the Latin America, Africa and Middle East region, with $16 million in profits compared to $500 million in profits in Q1 of ’08.
The news continued to batter GM’s stock as shares dropped 10.3 percent yesterday to just $1.66. Those numbers are, however, somewhat irrelevant now as GM plans to offer up to 60 billion new shares in a reverse stock split that would help the company pay off its debt. That move would reduce GM’s stock value to less than 2 cents.
The only positive news out of Q1 is that the company’s efforts to reduce production have resulted in a decreased inventory of 105,000 vehicles, for a total of 767,000 vehicles.
Still with a June 1st bankruptcy deadline looming Chapter 11 is looking like a given.
[Source: Automotive News]
The Fiat Panda is just one of several cars that will be sold in the U.S. under the Chrysler/Fiat alliance. It will most likely be badged as a Jeep.
There has been plenty of speculation as to which Fiat vehicles will make it on to North American roads as a result of the merger with Chrysler, but thanks to bankruptcy filings, the mystery has been solved.
In total, it looks like five or six Fiat and Alfa Romeo models will make their way over, as well as two engines and one impressive transmission.
Robert Manzo, the executive director of Capstone Advisory Group LLC, a company that is working with Chrysler during the Chapter 11 filings, stated clearly that the vehicles are the Fiat 500 and Panda, the Grande Punto and Alfa MiTo as well as the C-Evo based sedan and Milano 940.
The Fiat 500 and and Panda will fit into the micro-car category, although the Panda isn’t exactly micro. As more of a compact crossover, it will likely be branded as an entry-level Jeep.
The Alfa Romeo MiTo, will come over as a sporty sub-compact, and the Fiat Grande Punto will be a sub-compact hatchback.
From left: Alfa Romeo MiTo and Fiat Grande Punto
The only thing that isn’t entirely clear is the talk of the C-EVO platform and the Milano 940. While these two vehicles would be more mid-sized, they may actually only be one vehicle. The C-EVO is a platform, expected to underpin the successor to Alfa’s 147 (likely the 149), whereas the Milano 940 is a concept car based on the platform. We expect to know more when Alfa brings new products to the Frankfurt Auto Show in September.
In terms of engines, the agreement would see two Fiat motors travel across the ocean. The first is a 3.0-liter diesel and the second is a 1.4-liter gasoline powerplant. The deal will also see a new state-of-the-art double-clutch transmission come over for use in many of these new models.
Or at least the major objections have been tossed out
Our team over at GMInsideNews is reporting that the judge overseeing the Chrysler bankruptcy proceedings has thrown out the arguments made by the hold-out bondholders. By removing the only objection to the process, the bankruptcy proceedings can now be fast-tracked and the Fiat merger can go ahead.
During President Obama’s press conference last week, when he announced that Chrysler would file for Chapter 11, it was made clear that the proceedings would be quick. Obama also spoke out against the group of bondholders who refused to accept the government’s cash-for-debt deal that would see the companies receive just a third of what they have lent Chrysler.
The group of bondholders, comprised of several hedge funds that hold just 10 percent of Chrysler’s debt, made the argument that as the major bondholders who had agreed to the government’s deal (including J.P. Morgan) had accepted bailout funds from the government, they should be excluded from the process.
That argument was reportedly thrown out this morning in what must be record time for a bankruptcy case. Yesterday Judge Arthur Gonzales sped up the process by threatening that the unnamed debt holders had to reveal themselves publicly – something they were uncomfortable doing as may had complained of death threats.
The next part of the process will be the sale of assets, which has essentially already been outlined by the parties involved in order to expedite the process. It is expected that the U.S. government will purchase the majority of the assets in order to set up the New Chrysler – which is reported to be called Chrysler Acquisition Corporation.
With the major objectors removed from the process, Chrysler could be out of bankruptcy court by the end of the month!
Apparently President Obama was not bluffing when he said the Chapter 11 proceedings would be “quick and surgical.” That seemed unlikely considering the parties involved and the how the legal system works, but President Obama and the legislative branch seem to have a willing partner in the Judicial branch and Judge Gonzales.
Executives spent two years talking to anyone who would listen about forging a partnership
Before Chrysler filed for Chapter 11 late last week the automaker explored every option, including selling the company to the Chinese and forging partnerships with any other manufacturer that expressed even a remote amount of interest.
In public bankruptcy filings, made at the U.S. Bankruptcy Court in New York, Chrysler’s co-president and vice-Chairman Tom LaSorda said that the company entertained offers from Chinese automakers Beijing Automotive Industry Holding Co., Tempo International Group, Hawtai Automobiles, and Chery Automotive Co.
“Chrysler sent letters to parties, primarily in China, whom we thought would be potentially interested in purchasing our assets,” LaSorda wrote. “Over the next two months, several companies… expressed interest in purchasing specific vehicles, powertrains, intellectual property rights, distribution channels and automotive brands.”
In the end, however, none of those companies were interested.
LaSorda also said that over the past two years Chrysler has courted practically every other automaker out there, searching for a partner. The list includes Nissan, General Motors, Volkswagen, Tata, Magna, GAZ, Hyundai, Honda and Toyota.
Many off the arrangements didn’t have a leg to stand on, however, the talks with Nissan were thorough and only ended when Nissan couldn’t secure the credit needed to buy in to Chrysler.
La Sorda finally writes that a partnership with Fiat is the “best outcome,” although that might be stretching the truth, as it seems Fiat is the only automaker in the world with interest in Chrysler.
The Chrysler/Fiat deal, which began back in March of 2008, is now before the bankruptcy court. Fiat didn’t put any money into Chrysler but will provide $8 to $10 billion in small car technology in exchange for a 20 percent stake in the company. Fiat can get 15 percent more if it meets three benchmarks that the U.S. government has imposed, including building a 40 mpg car. That car will be a Chrysler version of the Fiat 500.
[Source: Detroit News]