DETROIT — After a yearlong free fall in the American car market, the decline of sales slowed in June, offering hope to automakers that the bottom has been reached and more shoppers may slowly start returning to showrooms soon.
Still, sales were down 7.1 percent from May, which generally is a stronger sales month.
Overall, automakers sold 859,847 vehicles in June, a 28 percent drop from the same month last year, according to Autodata Corp.
Sales declines slowed for four of the six major carmakers, with Ford Motor Co. reporting the smallest drop of 10.7 percent. For many months, Ford and other companies have been reporting year-over-year declines of 40 percent or more.
Even Chrysler, which emerged from bankruptcy protection early in June, saw its decline shrink.
Analysts say that’s among the signs that the auto industry’s slump that began with $4 per gallon gasoline last summer could be leveling off.
"It is unlikely things will get any worse,” said Jesse Toprak, executive director of industry analysis for Edmunds.com.
The slowly improving economy and government incentives of up to $4,500 to trade in inefficient clunkers for new vehicles could lead to modest improvements in the second half of the year, he said.
In anticipation of heightened traffic at dealers and higher sales later this year, Ford has increased its production order by 25,000 vehicles for the third quarter.
"We’re making steady progress,” Jim Farley, Ford’s vice president of marketing, said in a statement. "We remain grounded, however, given challenging industry and economic conditions.”
And while Chrysler’s sales results were dismal — only 68,297 cars and trucks, many sold because of incentives of more than $4,800 per car.
"At a time when they are emerging from bankruptcy and trying to reinvent themselves, it is not a huge surprise,” Toprak said.
Affordability and rising fuel prices — from $2.28 per gallon in May to $2.64 in June — boosted sales of sales of compact cars, some hybrids and larger crossover vehicles.
Sales of fuel-efficient hybrid vehicles that run on gasoline and electricity were mixed.
Analysts had speculated that June sales, when adjusted for seasonal variances and multiplied to calculate an annual selling rate, would exceed 10 million for the first time this year.
But sales once again fell just shy of that mark at 9.7 million for June. That’s a huge reduction from more than 16 million as recently as 2007.
by the associated press
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Showing posts with label Chrysler. Show all posts
Showing posts with label Chrysler. Show all posts
Thursday, July 2, 2009
Monday, June 29, 2009
Car sales are up for June
DEARBORN, Mich. (AP) — Citing better-than-expected sales and traffic at dealerships, Ford Motor Co. said Monday it plans to increase third-quarter production by 25,000 units — marking the automaker's second production hike in recent weeks.
Ford spokesman Mark Truby said that will bring total quarterly production to 485,000 units, a year-over-year increase of 16 percent or 67,000 units. Last month the company said it would raise third-quarter production by 42,000 units.
The boost affects all models of Ford, Lincoln, Mercury vehicles, with more emphasis being placed on Mustangs, pickup trucks and the Ford Focus compact car, Truby said.
"We had pretty well lowered production in recent quarters to meet demand," Truby said. "Now as we're seeing market share increases and showroom activity, we're ramping up production to meet that demand."
The increase comes as Ford's top sales analyst, George Pipas, said the company's June sales were "good" compared with the overall industry. The Dearborn, Mich.-based automaker could see a year-over-year decline of 10 to 20 percent, which could be the lowest among all major automakers, he said.
"This will be our lowest decline of this year," Pipas added.
Automakers, which are due to report June U.S. sales on Wednesday, have seen sales fall 37 percent over the first five months of the year. Pipas said U.S. auto sales may have halted their month-to-month declines in June and could be down less than 30 percent for the first time since September of last year.
As bad as it sounds, a decline of less than 30 percent could be a welcome relief, as automakers and suppliers have trimmed production and other costs to adjust to lower consumer sales.
"The important takeaway is that we're not going backward, we're not slipping back," said Pipas during a sales preview talk with reporters. "It suggests the worst is behind us, not just the economy, but we may have seen the low point for the year."
Pipas said individual regions of the country are showing sales improvements compared with June 2008, another sign that the auto market has bottomed out and is recovering. While sales in the Great Lakes states are improving, they're still slow in California and Florida, two areas hit hard by the decline in the housing market, Pipas said.
Pipas joined other industry analysts in predicting that June sales could surpass a 10 million seasonally-adjusted annual selling rate for the first time this year.
Last week J.D. Power and Associates predicted that automakers would sell 914,400 vehicles in June, 26 percent less than in June of last year and 1 percent lower than the 924,064 sold in May.
Pipas said May typically is a stronger sales month than June, but he was unsure if this June would surpass May figures.
He said federal "cash for clunkers" legislation recently signed into law could boost sales later in the year, and noted that consumer confidence is improving, suggesting that the worst is over with the economy and auto sales.
Shares for Ford rose 3 percent, or 17 cents, to close Monday at $5.78.
by the associated press
Ford spokesman Mark Truby said that will bring total quarterly production to 485,000 units, a year-over-year increase of 16 percent or 67,000 units. Last month the company said it would raise third-quarter production by 42,000 units.
The boost affects all models of Ford, Lincoln, Mercury vehicles, with more emphasis being placed on Mustangs, pickup trucks and the Ford Focus compact car, Truby said.
"We had pretty well lowered production in recent quarters to meet demand," Truby said. "Now as we're seeing market share increases and showroom activity, we're ramping up production to meet that demand."
The increase comes as Ford's top sales analyst, George Pipas, said the company's June sales were "good" compared with the overall industry. The Dearborn, Mich.-based automaker could see a year-over-year decline of 10 to 20 percent, which could be the lowest among all major automakers, he said.
"This will be our lowest decline of this year," Pipas added.
Automakers, which are due to report June U.S. sales on Wednesday, have seen sales fall 37 percent over the first five months of the year. Pipas said U.S. auto sales may have halted their month-to-month declines in June and could be down less than 30 percent for the first time since September of last year.
As bad as it sounds, a decline of less than 30 percent could be a welcome relief, as automakers and suppliers have trimmed production and other costs to adjust to lower consumer sales.
"The important takeaway is that we're not going backward, we're not slipping back," said Pipas during a sales preview talk with reporters. "It suggests the worst is behind us, not just the economy, but we may have seen the low point for the year."
Pipas said individual regions of the country are showing sales improvements compared with June 2008, another sign that the auto market has bottomed out and is recovering. While sales in the Great Lakes states are improving, they're still slow in California and Florida, two areas hit hard by the decline in the housing market, Pipas said.
Pipas joined other industry analysts in predicting that June sales could surpass a 10 million seasonally-adjusted annual selling rate for the first time this year.
Last week J.D. Power and Associates predicted that automakers would sell 914,400 vehicles in June, 26 percent less than in June of last year and 1 percent lower than the 924,064 sold in May.
Pipas said May typically is a stronger sales month than June, but he was unsure if this June would surpass May figures.
He said federal "cash for clunkers" legislation recently signed into law could boost sales later in the year, and noted that consumer confidence is improving, suggesting that the worst is over with the economy and auto sales.
Shares for Ford rose 3 percent, or 17 cents, to close Monday at $5.78.
by the associated press
GM and Chrysler's bankruptcy
A summary of developments in the Chapter 11 bankruptcy cases of General Motors Corp. and Chrysler LLC:
GENERAL MOTORS — DAY 29
WHERE DOES IT STAND?: Monday marked Detroit-based GM's 29th day under court protection.
GM said Monday it's ending its joint venture with Toyota Motor Corp. at a Fremont, Calif., manufacturing plant as it continues to shrink its operations under bankruptcy protection.
GM said it was unable to reach an agreement with Toyota about a new product plan at the facility. The plant, called New United Motor Manufacturing Inc., or Nummi, currently produces the Pontiac Vibe for GM and the Corolla and Tacoma for Toyota.
GM announced it was phasing out the Pontiac brand earlier this year. The facility will cease production of GM vehicles in August, the company said.
Late last week, the automaker said in court filings that it has agreed to take on responsibility for future product liability claims.
In a concession to consumer groups and state officials who had threatened to block the sale because of product liability concerns, the new company will now assume responsibility for future claims involving vehicles made by the old company.
Consumers with pending cases against the automaker or who haven't filed suit yet in connection with a past incident, will still need to seek damages from the old company where there will likely be nothing left to pay their claims.
WHAT'S NEXT?: A hearing on GM's plan to sell its assets to a new government-controlled company and emerge from Chapter 11 is scheduled for Tuesday. GM CEO Fritz Henderson is expected to testify.
CHRYSLER
WHERE DOES IT STAND?: Auburn Hills, Mich.-based Chrysler Group LLC emerged from Chapter 11 earlier this month after a new company was created by the sale of most of the automaker's assets to a group led by Italy's Fiat Group SpA.
WHAT'S NEXT?: Chrysler assets not sold to Fiat, including eight plants, remain under Chapter 11 protection. Hearings to decide what to do with these so-called bad assets and to settle claims by the company's creditors will continue. The next hearing is scheduled for Tuesday.
by the associated press
GENERAL MOTORS — DAY 29
WHERE DOES IT STAND?: Monday marked Detroit-based GM's 29th day under court protection.
GM said Monday it's ending its joint venture with Toyota Motor Corp. at a Fremont, Calif., manufacturing plant as it continues to shrink its operations under bankruptcy protection.
GM said it was unable to reach an agreement with Toyota about a new product plan at the facility. The plant, called New United Motor Manufacturing Inc., or Nummi, currently produces the Pontiac Vibe for GM and the Corolla and Tacoma for Toyota.
GM announced it was phasing out the Pontiac brand earlier this year. The facility will cease production of GM vehicles in August, the company said.
Late last week, the automaker said in court filings that it has agreed to take on responsibility for future product liability claims.
In a concession to consumer groups and state officials who had threatened to block the sale because of product liability concerns, the new company will now assume responsibility for future claims involving vehicles made by the old company.
Consumers with pending cases against the automaker or who haven't filed suit yet in connection with a past incident, will still need to seek damages from the old company where there will likely be nothing left to pay their claims.
WHAT'S NEXT?: A hearing on GM's plan to sell its assets to a new government-controlled company and emerge from Chapter 11 is scheduled for Tuesday. GM CEO Fritz Henderson is expected to testify.
CHRYSLER
WHERE DOES IT STAND?: Auburn Hills, Mich.-based Chrysler Group LLC emerged from Chapter 11 earlier this month after a new company was created by the sale of most of the automaker's assets to a group led by Italy's Fiat Group SpA.
WHAT'S NEXT?: Chrysler assets not sold to Fiat, including eight plants, remain under Chapter 11 protection. Hearings to decide what to do with these so-called bad assets and to settle claims by the company's creditors will continue. The next hearing is scheduled for Tuesday.
by the associated press
Saturday, June 13, 2009
Chrysler and GM executives defend decision to close local dealers
WASHINGTON — Under withering criticism in Congress, General Motors and Chrysler executives on Friday called the closings of hundreds of dealerships painful steps needed to right-size the auto giants. Down-on-their-luck dealers said the moves would needlessly devastate their local economies and livelihoods.
"Many dealers and the communities they serve frankly feel blind-sided,” said Rep. Greg Walden, R-Ore.
GM CEO Fritz Henderson told a House panel the dealer cuts were "quite painful” but necessary to save over 200,000 jobs at GM’s remaining dealers.
"In essence, this is our last chance,” Henderson told the House Energy and Commerce Committee’s oversight and investigations subcommittee.
Carmakers criticized
Chrysler Deputy CEO Jim Press said the cuts were part of the shared sacrifices by the United Auto Workers union, bondholders and others needed to avoid liquidation.
"Going through bankruptcy was not our choice,” said Press, who along with Henderson and the other witnesses were required to raise their right hands and testify under oath.
But the committee heard from shutout dealers such as Frank Blankenbecker III of Waxahachie, Texas, whose voice cracked as he recalled the hard work of his father, a World War II veteran, to build their family business.
"I am glad that he is not alive to witness this travesty. To have risked his life for a country that would do what they are doing would destroy him,” he said.
The carmakers’ explanations won few converts from House members, who wagged their fingers at the executives and questioned their motivations.
Many of the dealers, they argued, had been profitable and received little warning or opportunity to plead their cases.
"There’s something wrong with a business model that basically says, ‘In order to survive, we’ve got to crush our local dealers,’” said Rep. Peter Welch, D-Vt.
Rep. Mike Burgess, R-Texas, confronted Henderson about GM’s decision to maintain a parts distribution center in the district of Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee. Frank had urged Henderson to keep the facility open.
"What is the number I need to call? Is it 1-800 Car Czar?” Burgess asked. "I have a nagging suspicion that there is a political calculation.”
Closing plans released
The committee released a GM document that, for the first time, provided a state-by-state list of 1,323 dealerships the automaker plans to wind down. Pennsylvania had the most with 90, followed by Ohio with 79, Illinois with 66 and California with 65. Alaska was the only state spared. GM has declined to release the name of individual dealerships.
Dealers said the closings put 100,000 jobs at risk and charged the companies with failing to be transparent about how they reached their decisions.
Many dealers said their stores had been performing well despite the economic downturn.
by the associated press
"Many dealers and the communities they serve frankly feel blind-sided,” said Rep. Greg Walden, R-Ore.
GM CEO Fritz Henderson told a House panel the dealer cuts were "quite painful” but necessary to save over 200,000 jobs at GM’s remaining dealers.
"In essence, this is our last chance,” Henderson told the House Energy and Commerce Committee’s oversight and investigations subcommittee.
Carmakers criticized
Chrysler Deputy CEO Jim Press said the cuts were part of the shared sacrifices by the United Auto Workers union, bondholders and others needed to avoid liquidation.
"Going through bankruptcy was not our choice,” said Press, who along with Henderson and the other witnesses were required to raise their right hands and testify under oath.
But the committee heard from shutout dealers such as Frank Blankenbecker III of Waxahachie, Texas, whose voice cracked as he recalled the hard work of his father, a World War II veteran, to build their family business.
"I am glad that he is not alive to witness this travesty. To have risked his life for a country that would do what they are doing would destroy him,” he said.
The carmakers’ explanations won few converts from House members, who wagged their fingers at the executives and questioned their motivations.
Many of the dealers, they argued, had been profitable and received little warning or opportunity to plead their cases.
"There’s something wrong with a business model that basically says, ‘In order to survive, we’ve got to crush our local dealers,’” said Rep. Peter Welch, D-Vt.
Rep. Mike Burgess, R-Texas, confronted Henderson about GM’s decision to maintain a parts distribution center in the district of Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee. Frank had urged Henderson to keep the facility open.
"What is the number I need to call? Is it 1-800 Car Czar?” Burgess asked. "I have a nagging suspicion that there is a political calculation.”
Closing plans released
The committee released a GM document that, for the first time, provided a state-by-state list of 1,323 dealerships the automaker plans to wind down. Pennsylvania had the most with 90, followed by Ohio with 79, Illinois with 66 and California with 65. Alaska was the only state spared. GM has declined to release the name of individual dealerships.
Dealers said the closings put 100,000 jobs at risk and charged the companies with failing to be transparent about how they reached their decisions.
Many dealers said their stores had been performing well despite the economic downturn.
by the associated press
Wednesday, June 10, 2009
Parking clunkers
WASHINGTON — With auto sales in the doldrums, the House considered a plan Tuesday to provide vouchers of up to $4,500 for consumers who turn in their gas-guzzling cars and trucks for more fuel-efficient vehicles.
The House proposal, set for a floor vote Tuesday, was aimed at boosting car sales during a bleak period for the auto industry and increasing the nation’s fleet of cars that get more miles to the gallon.
"Stimulating sales is the only way to get the auto industry back on its feet,” said Rep. Donald Manzullo, R-Ill.
General Motors Corp. and Chrysler LLC have received billions of dollars in government aid and the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34 percent lower than a year ago.
Funding plans
The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing some environmental benefits.
Opponents said the bill failed to include incentives for used vehicles and represented an artificial incentive for the industry.
"It’s defying the laws of economics and saying we can manufacture enough of a demand to keep the auto industry afloat,” said Rep. Jeff Flake, R-Ariz.
Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the "cash for clunkers” program, which aims to generate about 1 million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.
Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle.
Owners of sport utility vehicles, pickups or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle.
Rep. Betty Sutton, D-Ohio, the bill’s chief sponsor, said the bill showed that "the multiple goals of helping consumers purchase more fuel-efficient vehicles, improving our environment and boosting auto sales can be achieved.”
Sen. Debbie Stabenow, D-Mich., has backed a similar version in the Senate, which has the support of automakers and their unions.
The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.
by the associated press
The House proposal, set for a floor vote Tuesday, was aimed at boosting car sales during a bleak period for the auto industry and increasing the nation’s fleet of cars that get more miles to the gallon.
"Stimulating sales is the only way to get the auto industry back on its feet,” said Rep. Donald Manzullo, R-Ill.
General Motors Corp. and Chrysler LLC have received billions of dollars in government aid and the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34 percent lower than a year ago.
Funding plans
The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing some environmental benefits.
Opponents said the bill failed to include incentives for used vehicles and represented an artificial incentive for the industry.
"It’s defying the laws of economics and saying we can manufacture enough of a demand to keep the auto industry afloat,” said Rep. Jeff Flake, R-Ariz.
Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the "cash for clunkers” program, which aims to generate about 1 million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.
Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle.
Owners of sport utility vehicles, pickups or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle.
Rep. Betty Sutton, D-Ohio, the bill’s chief sponsor, said the bill showed that "the multiple goals of helping consumers purchase more fuel-efficient vehicles, improving our environment and boosting auto sales can be achieved.”
Sen. Debbie Stabenow, D-Mich., has backed a similar version in the Senate, which has the support of automakers and their unions.
The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.
by the associated press
Chrysler’s sale Justices gives Ok
WASHINGTON — The Supreme Court on Tuesday cleared the way for Chrysler LLC’s sale to Fiat, turning down a bid by opponents that included consumer groups and three Indiana pension plans.
The court rejected a plea to block the sale of most of Chrysler’s assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court’s intervention could have scuttled the sale.
A federal appeals court in New York had approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene.
Justice Ruth Bader Ginsburg ordered a temporary delay just before a 4 p.m. deadline Monday. A little more than 24 hours later, the court freed the automakers to complete their agreement.
The opponents include three Indiana pension plans, consumer groups and individuals with product-related lawsuits.
The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
"The applicants have not carried that burden,” the court said.
Chrysler has been working to complete the sale of its assets to Fiat before a June 15 deadline.
Some dealers fading
Earlier Tuesday, Chrysler returned to bankruptcy court to get approval to end 789 dealer franchises.
More than 25 attorneys representing hundreds of dealers from across the country opposed Chrysler’s request, arguing that little would be gained by ending the franchises. The company said the move was a necessary part of its plan to cut costs and quickly emerge from Chapter 11 bankruptcy.
Many of the dealers were selling the last cars on their lots and preparing to shut their doors for good at the end of the day.
Also Tuesday, attorneys said Chrysler will extend until Monday its program to help the affected dealers send any unsold vehicles to other dealerships.
by the associated press
The court rejected a plea to block the sale of most of Chrysler’s assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court’s intervention could have scuttled the sale.
A federal appeals court in New York had approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene.
Justice Ruth Bader Ginsburg ordered a temporary delay just before a 4 p.m. deadline Monday. A little more than 24 hours later, the court freed the automakers to complete their agreement.
The opponents include three Indiana pension plans, consumer groups and individuals with product-related lawsuits.
The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
"The applicants have not carried that burden,” the court said.
Chrysler has been working to complete the sale of its assets to Fiat before a June 15 deadline.
Some dealers fading
Earlier Tuesday, Chrysler returned to bankruptcy court to get approval to end 789 dealer franchises.
More than 25 attorneys representing hundreds of dealers from across the country opposed Chrysler’s request, arguing that little would be gained by ending the franchises. The company said the move was a necessary part of its plan to cut costs and quickly emerge from Chapter 11 bankruptcy.
Many of the dealers were selling the last cars on their lots and preparing to shut their doors for good at the end of the day.
Also Tuesday, attorneys said Chrysler will extend until Monday its program to help the affected dealers send any unsold vehicles to other dealerships.
by the associated press
Tuesday, June 9, 2009
Chrysler Running Out Of Cash
DETROIT (Dow Jones)--Chrysler LLC is poised to run out of money by July 4 if it fails to complete the sale of its assets to Italian auto maker Fiat SpA (FIATY), a deal that has been delayed owing to opposition from lenders.
A budget, filed with a New York bankruptcy court in early May, shows the auto maker burning through its $4.1 billion in debtor-in-possession financing and $400 million in cash collateral by the end of the week of June 29 as it pays employees and suppliers, and maintains its plants.
The budget for Chrysler, which filed for Chapter 11 protection on April 30, took into account that most of the auto maker's production plants would be idled during the bankruptcy process and the salaried work force would take up to two weeks of unpaid vacation.
If the sale doesn't happen by early July, Chrysler would likely be forced to make even deeper cuts and turn to the Obama administration for more help, even as the government has said it won't provide further assistance. Without additional aid, Chrysler would face liquidation, and the economy would be saddled with tens of thousands of job losses.
The fate of Chrysler was thrown into limbo Monday when the U.S. Supreme Court delayed the sale of the U.S. auto maker's assets to Fiat at the request of several Indiana pension funds and consumer groups that oppose the transaction. Should the high court maintain the stay it issued on Monday, the sale process could be delayed for weeks.
Chrysler declined to comment Tuesday on what its options might be if the sale is delayed. In a filing at the Supreme Court Tuesday, the company said "every day past June 15 increases the risk that Chrysler's business will not be able to restart successfully."
Fiat has the option of walking away from the deal on June 15. Following the news from the Supreme Court, Fiat Chief Executive Sergio Marchionne said his company wouldn't walk away from its deal to buy Chrysler even if the June 15 deadline is missed.
However, in a filing of its own Tuesday at the Supreme Court, Fiat said if the sale isn't completed soon, "there can be no assurance that a replacement transaction could be structured and agreed that would preserve any aspect of Chrysler as a going concern."
Fiat has no plans to infuse Chrysler with cash during the bankruptcy process, and the Obama administration said at the time of the Chapter 11 filing that it wouldn't provide more funding as Chrysler wasn't viable without a partner.
A White House official on Monday downplayed the significance of the latest development, calling it "an administrative extension designed to allow sufficient time for the Court to make a determination on the merits of the request for a stay."
Some experts think the government, which has staked its credibility on getting Chrysler and General Motors Corp. (GMGMQ) quickly through bankruptcy, would have no choice but to provide additional assistance.
"I think the government will give them another $1 billion to keep them going, but keep them on a short leash," said Richard Tilton, a bankruptcy attorney who participated in Chrysler's 1970's restructuring. "What alternative do they have?"
More aid for Chrysler would touch off a firestorm from lawmakers and the public, as well as cast more doubt on the Obama administration's ability to steer GM through a similar "quick" bankruptcy process. GM filed for bankruptcy on June 1.
The government has already injected almost $9 billion in emergency funding into Chrysler since late last year, and more than $20 billion into GM.
Wall Street Journal
A budget, filed with a New York bankruptcy court in early May, shows the auto maker burning through its $4.1 billion in debtor-in-possession financing and $400 million in cash collateral by the end of the week of June 29 as it pays employees and suppliers, and maintains its plants.
The budget for Chrysler, which filed for Chapter 11 protection on April 30, took into account that most of the auto maker's production plants would be idled during the bankruptcy process and the salaried work force would take up to two weeks of unpaid vacation.
If the sale doesn't happen by early July, Chrysler would likely be forced to make even deeper cuts and turn to the Obama administration for more help, even as the government has said it won't provide further assistance. Without additional aid, Chrysler would face liquidation, and the economy would be saddled with tens of thousands of job losses.
The fate of Chrysler was thrown into limbo Monday when the U.S. Supreme Court delayed the sale of the U.S. auto maker's assets to Fiat at the request of several Indiana pension funds and consumer groups that oppose the transaction. Should the high court maintain the stay it issued on Monday, the sale process could be delayed for weeks.
Chrysler declined to comment Tuesday on what its options might be if the sale is delayed. In a filing at the Supreme Court Tuesday, the company said "every day past June 15 increases the risk that Chrysler's business will not be able to restart successfully."
Fiat has the option of walking away from the deal on June 15. Following the news from the Supreme Court, Fiat Chief Executive Sergio Marchionne said his company wouldn't walk away from its deal to buy Chrysler even if the June 15 deadline is missed.
However, in a filing of its own Tuesday at the Supreme Court, Fiat said if the sale isn't completed soon, "there can be no assurance that a replacement transaction could be structured and agreed that would preserve any aspect of Chrysler as a going concern."
Fiat has no plans to infuse Chrysler with cash during the bankruptcy process, and the Obama administration said at the time of the Chapter 11 filing that it wouldn't provide more funding as Chrysler wasn't viable without a partner.
A White House official on Monday downplayed the significance of the latest development, calling it "an administrative extension designed to allow sufficient time for the Court to make a determination on the merits of the request for a stay."
Some experts think the government, which has staked its credibility on getting Chrysler and General Motors Corp. (GMGMQ) quickly through bankruptcy, would have no choice but to provide additional assistance.
"I think the government will give them another $1 billion to keep them going, but keep them on a short leash," said Richard Tilton, a bankruptcy attorney who participated in Chrysler's 1970's restructuring. "What alternative do they have?"
More aid for Chrysler would touch off a firestorm from lawmakers and the public, as well as cast more doubt on the Obama administration's ability to steer GM through a similar "quick" bankruptcy process. GM filed for bankruptcy on June 1.
The government has already injected almost $9 billion in emergency funding into Chrysler since late last year, and more than $20 billion into GM.
Wall Street Journal
Monday, June 8, 2009
GM, Chrysler fewer dealers
Both General Motors Corp. and Chrysler LLC have announced plans to dramatically reduce their networks of thousands of dealers, saying that the moves are needed to cut costs as part of their restructuring efforts.
But the dealers argue that they don't cost the automakers much of anything — in fact, they make money for the companies, they say — and that the termination of the nearly 2,000 franchises between the two automakers could result in the shuttering of many of the businesses and the elimination of thousands of jobs.
Also, if the dealers are forced to close, cities around the country could be left with empty buildings, vacant lots and possibly hundreds of thousands of dollars in lost tax revenues.
All of which raises the questions: Just how much do dealerships actually cost their respective automakers? And what other incentives do the companies have to pare back their dealer bases?
Here are some questions and answers about why the automakers are ending their franchise agreements with so many dealers.
Q: What exactly are Chrysler and GM doing?
A: As part of its Chapter 11 proceedings, Auburn Hills, Mich.-based Chrysler released a list of the 789 dealers for which it plans to terminate franchise agreements.
The affected dealers, which account for about 25 percent of the company's dealer base, have until Tuesday to sell off their inventory. After that, they won't be able to offer Chrysler-sponsored financing and other sales incentives, making it tough for them to compete with other dealerships without dramatically slashing their prices.
The move still needs the approval of the judge overseeing Chrysler's bankruptcy case, which could also come on Tuesday.
Meanwhile, Detroit-based GM plans to drop about 1,100, or 20 percent, of its dealers when their contracts end late next year, but the automaker has declined to reveal which dealers were chosen.
The move is part of GM's plan to cut about 40 percent of its 6,000-dealer network by the end of 2010. Besides the 1,110 dealership cuts, the company will shed about 500 dealerships that market the Saturn and Hummer brands, which the company has reached deals to sell, along with the Saab brand, which GM also plans to phase out or sell.
And when the surviving dealers' contracts are up in late 2010, GM will cut still more by not offering renewals to about 10 percent of the dealers that are left.
Q: What's keeping the automakers from just closing the dealerships immediately?
A: Contrary to what a lot of people think, GM and Chrysler don't own the dealerships that sell their cars and trucks. The dealerships are franchises owned by independent companies or business people who sign a contract with an automaker to market their vehicles.
The dealers pay for the vehicles up front with a loan from either an automaker financing arm or an independent bank. Dealers also pay for things like local advertising, along with tools and parts for their repair shops.
Normally, dealers are protected by strict state franchise laws that make it tough for automakers to terminate franchise agreements without showing significant cause.
Q: Why is it so important for the automakers to cut dealers?
A: Both Chrysler and GM claim that having such a large dealer base results in extra costs for them that they need to cut in order to be competitive in today's global automotive market.
Jim Press, Chrysler's vice chairman and president, testified before a Senate committee last week that the poor performance of many of the dealers the automaker wants to eliminate costs the company $1.5 billion in lost sales each year, along with $150 million in advertising and marketing costs and $33 million in administrative costs.
Press also attributed product engineering and development costs of $1.4 billion over four years to the dealers in question.
GM and Chrysler also have argued that they need healthy dealer bases in order to be successful. Chrysler has said that most of the dealers it wants to eliminate are either unprofitable, don't carry all three brands of Chrysler vehicles, or are located too close to another Chrysler dealer.
Given the steep drop in U.S. new vehicle demand in the past year, along with the increase in competition from overseas automakers, there just are too few sales to go around, the automakers say.
And if dealers are struggling to stay afloat, they can't afford to make needed investments in their dealerships or provide the kind of service customers demand, which could reflect badly on an automaker and make it harder for the company to compete against its rivals, the automakers say.
While the dealers agree that's true, they say market forces and individual decisions by dealers should be allowed to dictate who goes out of business.
Q: Is there anything the dealers can do to fight this?
A: A group representing about 300 of the affected Chrysler dealers, along with several individual dealers, have filed objections to the automaker's plan in bankruptcy court.
A hearing on Chrysler's motion to terminate the agreements began Thursday with testimony from about a dozen dealers slated to lose their franchises. It's expected to continue on Tuesday with arguments from both sides.
U.S. Judge Arthur Gonzalez is expected to rule in favor of Chrysler. The judge noted at the beginning of Thursday's hearing that the automaker has a "strong argument" for the termination of the franchises.
The GM dealers slated to lose their franchises have a few more options. The automaker announced its plans to terminate the franchises before it filed for Chapter 11 on June 1, but has said it doesn't plan to speed up the process now that it's operating under court oversight.
The GM dealers have the option of filing an internal appeal with the automaker or could fight their termination in court.
Q: Are all the dealers losing their franchises going to shut down?
A: No. Many of the affected dealers plan to stay open selling used cars and operating their body shops. Some of them also carry other automaker brands that aren't affected by the decisions of Chrysler and GM.
But many dealers have also said that they can't stay in business selling just used cars and will be forced to completely shut down. In addition, some cities prohibit dealers from selling used cars unless they sell new ones as well, forcing them to close those operations too.
The National Automobile Dealers Association, an industry group, says the GM and Chrysler cuts combined could wipe out 100,000 jobs.
by the associated press
But the dealers argue that they don't cost the automakers much of anything — in fact, they make money for the companies, they say — and that the termination of the nearly 2,000 franchises between the two automakers could result in the shuttering of many of the businesses and the elimination of thousands of jobs.
Also, if the dealers are forced to close, cities around the country could be left with empty buildings, vacant lots and possibly hundreds of thousands of dollars in lost tax revenues.
All of which raises the questions: Just how much do dealerships actually cost their respective automakers? And what other incentives do the companies have to pare back their dealer bases?
Here are some questions and answers about why the automakers are ending their franchise agreements with so many dealers.
Q: What exactly are Chrysler and GM doing?
A: As part of its Chapter 11 proceedings, Auburn Hills, Mich.-based Chrysler released a list of the 789 dealers for which it plans to terminate franchise agreements.
The affected dealers, which account for about 25 percent of the company's dealer base, have until Tuesday to sell off their inventory. After that, they won't be able to offer Chrysler-sponsored financing and other sales incentives, making it tough for them to compete with other dealerships without dramatically slashing their prices.
The move still needs the approval of the judge overseeing Chrysler's bankruptcy case, which could also come on Tuesday.
Meanwhile, Detroit-based GM plans to drop about 1,100, or 20 percent, of its dealers when their contracts end late next year, but the automaker has declined to reveal which dealers were chosen.
The move is part of GM's plan to cut about 40 percent of its 6,000-dealer network by the end of 2010. Besides the 1,110 dealership cuts, the company will shed about 500 dealerships that market the Saturn and Hummer brands, which the company has reached deals to sell, along with the Saab brand, which GM also plans to phase out or sell.
And when the surviving dealers' contracts are up in late 2010, GM will cut still more by not offering renewals to about 10 percent of the dealers that are left.
Q: What's keeping the automakers from just closing the dealerships immediately?
A: Contrary to what a lot of people think, GM and Chrysler don't own the dealerships that sell their cars and trucks. The dealerships are franchises owned by independent companies or business people who sign a contract with an automaker to market their vehicles.
The dealers pay for the vehicles up front with a loan from either an automaker financing arm or an independent bank. Dealers also pay for things like local advertising, along with tools and parts for their repair shops.
Normally, dealers are protected by strict state franchise laws that make it tough for automakers to terminate franchise agreements without showing significant cause.
Q: Why is it so important for the automakers to cut dealers?
A: Both Chrysler and GM claim that having such a large dealer base results in extra costs for them that they need to cut in order to be competitive in today's global automotive market.
Jim Press, Chrysler's vice chairman and president, testified before a Senate committee last week that the poor performance of many of the dealers the automaker wants to eliminate costs the company $1.5 billion in lost sales each year, along with $150 million in advertising and marketing costs and $33 million in administrative costs.
Press also attributed product engineering and development costs of $1.4 billion over four years to the dealers in question.
GM and Chrysler also have argued that they need healthy dealer bases in order to be successful. Chrysler has said that most of the dealers it wants to eliminate are either unprofitable, don't carry all three brands of Chrysler vehicles, or are located too close to another Chrysler dealer.
Given the steep drop in U.S. new vehicle demand in the past year, along with the increase in competition from overseas automakers, there just are too few sales to go around, the automakers say.
And if dealers are struggling to stay afloat, they can't afford to make needed investments in their dealerships or provide the kind of service customers demand, which could reflect badly on an automaker and make it harder for the company to compete against its rivals, the automakers say.
While the dealers agree that's true, they say market forces and individual decisions by dealers should be allowed to dictate who goes out of business.
Q: Is there anything the dealers can do to fight this?
A: A group representing about 300 of the affected Chrysler dealers, along with several individual dealers, have filed objections to the automaker's plan in bankruptcy court.
A hearing on Chrysler's motion to terminate the agreements began Thursday with testimony from about a dozen dealers slated to lose their franchises. It's expected to continue on Tuesday with arguments from both sides.
U.S. Judge Arthur Gonzalez is expected to rule in favor of Chrysler. The judge noted at the beginning of Thursday's hearing that the automaker has a "strong argument" for the termination of the franchises.
The GM dealers slated to lose their franchises have a few more options. The automaker announced its plans to terminate the franchises before it filed for Chapter 11 on June 1, but has said it doesn't plan to speed up the process now that it's operating under court oversight.
The GM dealers have the option of filing an internal appeal with the automaker or could fight their termination in court.
Q: Are all the dealers losing their franchises going to shut down?
A: No. Many of the affected dealers plan to stay open selling used cars and operating their body shops. Some of them also carry other automaker brands that aren't affected by the decisions of Chrysler and GM.
But many dealers have also said that they can't stay in business selling just used cars and will be forced to completely shut down. In addition, some cities prohibit dealers from selling used cars unless they sell new ones as well, forcing them to close those operations too.
The National Automobile Dealers Association, an industry group, says the GM and Chrysler cuts combined could wipe out 100,000 jobs.
by the associated press
Delay Of Chrysler Sale
WASHINGTON (Dow Jones)--Auto-industry allies on Capitol Hill stepped up pressure Monday on a group of Indiana pension funds to drop their opposition to the sale of most of Chrysler LLC's assets to Fiat SpA (FIATY), after the Supreme Court agreed to delay the sale. But a Republican lawmaker defended the group's right to argue its case before the court.
Rep. John Dingell, D-Mich., warned that a delay of the deal could lead to Chrysler's liquidation, costing thousands of jobs and millions of dollars in lost tax revenue for auto-manufacturing states. He called on the Indiana pensions funds to "come to their senses."
"By refusing to make the relatively small sacrifices that would avert a calamity, the pension funds will instead create a great catastrophe, which is the same kind of shortsighted thinking that got us into the Great Depression," Dingell said in a statement. "Make no mistake: If these pension funds can't see past their own pain, they threaten to create a kind of agony for their state and the nation that is difficult for most people to imagine or condone."
Rep. Gary Peters, D-Mich., whose district includes Chrysler's headquarters, warned Indiana would lose millions of dollars in tax revenue and 4,000 jobs if Chrysler is liquidated.
"It is quite clear that Indiana's case is not in the best interest of the people of Indiana," Peters said in a statement. "Other stakeholders, including other secured lenders and Chrysler's auto workers, accepted shared sacrifice because they recognized their interest was better served keeping Chrysler alive rather than forcing liquidation. Why the officials who decided to take their objections all the way to the Supreme Court can't recognize this is beyond me."
Rep. Candice Miller, R-Mich., said she was "very disappointed" by the stay and "mystified why these litigants continue to pursue their case." She added, "It is my sincere hope that Justice Ginsburg or the full court will issue a ruling expeditiously that will allow Chrysler to emerge from bankruptcy and end this process."
But Rep. Jeb Hensarling, R-Tex., who has criticized the Obama administration's bailout of GM and Chrysler as an improper use of taxpayer money, praised the Supreme Court's move. He said the case raises fundamental questions about due process, equal protection under the law and the possible misuse of financial-rescue funds on auto makers, and that those questions must be resolved before the sale goes through.
"The smallest bondholder in GM who may be part of the Indiana pension funds - they deserve their day in court," Hensarling said in an interview with Dow Jones Newswires. "This is about their retirement. This is about their children's future, and they shouldn't be browbeaten by the administration, the UAW" and company executives, he said.
A White House spokeswoman declined to comment shortly after the ruling.
from the wall street journal
Rep. John Dingell, D-Mich., warned that a delay of the deal could lead to Chrysler's liquidation, costing thousands of jobs and millions of dollars in lost tax revenue for auto-manufacturing states. He called on the Indiana pensions funds to "come to their senses."
"By refusing to make the relatively small sacrifices that would avert a calamity, the pension funds will instead create a great catastrophe, which is the same kind of shortsighted thinking that got us into the Great Depression," Dingell said in a statement. "Make no mistake: If these pension funds can't see past their own pain, they threaten to create a kind of agony for their state and the nation that is difficult for most people to imagine or condone."
Rep. Gary Peters, D-Mich., whose district includes Chrysler's headquarters, warned Indiana would lose millions of dollars in tax revenue and 4,000 jobs if Chrysler is liquidated.
"It is quite clear that Indiana's case is not in the best interest of the people of Indiana," Peters said in a statement. "Other stakeholders, including other secured lenders and Chrysler's auto workers, accepted shared sacrifice because they recognized their interest was better served keeping Chrysler alive rather than forcing liquidation. Why the officials who decided to take their objections all the way to the Supreme Court can't recognize this is beyond me."
Rep. Candice Miller, R-Mich., said she was "very disappointed" by the stay and "mystified why these litigants continue to pursue their case." She added, "It is my sincere hope that Justice Ginsburg or the full court will issue a ruling expeditiously that will allow Chrysler to emerge from bankruptcy and end this process."
But Rep. Jeb Hensarling, R-Tex., who has criticized the Obama administration's bailout of GM and Chrysler as an improper use of taxpayer money, praised the Supreme Court's move. He said the case raises fundamental questions about due process, equal protection under the law and the possible misuse of financial-rescue funds on auto makers, and that those questions must be resolved before the sale goes through.
"The smallest bondholder in GM who may be part of the Indiana pension funds - they deserve their day in court," Hensarling said in an interview with Dow Jones Newswires. "This is about their retirement. This is about their children's future, and they shouldn't be browbeaten by the administration, the UAW" and company executives, he said.
A White House spokeswoman declined to comment shortly after the ruling.
from the wall street journal
Saturday, June 6, 2009
Chrysler sale
NEW YORK — A U.S. appeals court conditionally approved Chrysler’s sale of most of its assets to Italy’s Fiat on Friday, but is keeping the deal on hold until Monday to allow an appeal to the nation’s highest court.
The U.S. Court of Appeals for the 2nd Circuit said it will continue to delay the sale until 3 p.m. Monday, unless the U.S. Supreme Court intervenes. The three-judge appeals court was expected to release a written ruling later Friday.
Thomas Lauria, an attorney representing the trio of Indiana state pension and construction funds that appealed the sale, said his clients will keep pressing their objections.
"We will be going to the Supreme Court to see if we can get some time to get this case considered by them,” Lauria said after the hearing.
The argument
Chrysler said in a statement, "We’re pleased with the court’s decision and appreciate the court’s recognition of the need for a swift conclusion to the process so we can quickly start becoming a new car company.”
The court heard arguments from attorneys representing Chrysler LLC, Fiat Group SpA and the Indiana funds.
The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund claim the deal unfairly favors the interests of the company’s unsecured stakeholders ahead of those of secured debtholders.
The funds also challenged the constitutionality of the Treasury Department’s use of Troubled Asset Relief Program, or TARP, funds to supply Chrysler’s bankruptcy protection financing. They say the Treasury did so without congressional authority.
The Treasury Department, meanwhile, said it was "extremely gratified” that the appeals court upheld the sale.
Late Tuesday, the appeals court halted the sale pending the Indiana state funds’ appeal. Chrysler had hoped to close the sale by the end of this week.
U.S. Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler’s case, approved the sale on Sunday. He ruled that the funds do not have the standing to challenge the use of TARP money because they will receive their fair share of the $2 billion set aside for secured debtholders, which is more than they would receive if Chrysler is liquidated.
by the associated press
The U.S. Court of Appeals for the 2nd Circuit said it will continue to delay the sale until 3 p.m. Monday, unless the U.S. Supreme Court intervenes. The three-judge appeals court was expected to release a written ruling later Friday.
Thomas Lauria, an attorney representing the trio of Indiana state pension and construction funds that appealed the sale, said his clients will keep pressing their objections.
"We will be going to the Supreme Court to see if we can get some time to get this case considered by them,” Lauria said after the hearing.
The argument
Chrysler said in a statement, "We’re pleased with the court’s decision and appreciate the court’s recognition of the need for a swift conclusion to the process so we can quickly start becoming a new car company.”
The court heard arguments from attorneys representing Chrysler LLC, Fiat Group SpA and the Indiana funds.
The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund claim the deal unfairly favors the interests of the company’s unsecured stakeholders ahead of those of secured debtholders.
The funds also challenged the constitutionality of the Treasury Department’s use of Troubled Asset Relief Program, or TARP, funds to supply Chrysler’s bankruptcy protection financing. They say the Treasury did so without congressional authority.
The Treasury Department, meanwhile, said it was "extremely gratified” that the appeals court upheld the sale.
Late Tuesday, the appeals court halted the sale pending the Indiana state funds’ appeal. Chrysler had hoped to close the sale by the end of this week.
U.S. Judge Arthur Gonzalez, the bankruptcy judge overseeing Chrysler’s case, approved the sale on Sunday. He ruled that the funds do not have the standing to challenge the use of TARP money because they will receive their fair share of the $2 billion set aside for secured debtholders, which is more than they would receive if Chrysler is liquidated.
by the associated press
Friday, June 5, 2009
Question about Chrysler’s plan
NEW YORK — A parade of Chrysler dealers scheduled to lose their franchises took the stand Thursday in the automaker’s bankruptcy protection case, one choking back tears, as they touted their sales and service records and questioned how they were chosen for termination.
Just under 20 dealers were sworn in at the beginning of the day, but only about 14 testified, and no Chrysler officials took the stand. Arguments on the motion are scheduled for Tuesday.
It was unclear when U.S. Judge Arthur Gonzalez will rule on Chrysler’s motion to cancel the dealerships’ franchise agreements, or how this will effect Chrysler’s plans to sever ties with them.
James Tarbox broke down while testifying about learning that the franchises for his pair of dealerships in Rhode Island and Massachusetts were included on Chrysler’s list of the 789 it plans to terminate.
"I thought there must be a mistake,” he said choking back tears.
Auburn Hills, Mich.-based Chrysler claims that it needs to reduce its dealer base by about 25 percent to a leaner network of about 2,400 dealers in order to emerge from Chapter 11 bankruptcy protection.
But the dealers argue that they don’t cost the automaker anything. They say that if Gonzalez approves Chrysler’s motion, hundreds of dealerships will be shuttered.
A group representing about 300 dealers have filed an objection. They also earlier opposed Chrysler’s sale to Fiat, saying it was tied to the plan
Arguments before the U.S. Court of Appeals for the Second Circuit are scheduled for today.
by the associated press
Just under 20 dealers were sworn in at the beginning of the day, but only about 14 testified, and no Chrysler officials took the stand. Arguments on the motion are scheduled for Tuesday.
It was unclear when U.S. Judge Arthur Gonzalez will rule on Chrysler’s motion to cancel the dealerships’ franchise agreements, or how this will effect Chrysler’s plans to sever ties with them.
James Tarbox broke down while testifying about learning that the franchises for his pair of dealerships in Rhode Island and Massachusetts were included on Chrysler’s list of the 789 it plans to terminate.
"I thought there must be a mistake,” he said choking back tears.
Auburn Hills, Mich.-based Chrysler claims that it needs to reduce its dealer base by about 25 percent to a leaner network of about 2,400 dealers in order to emerge from Chapter 11 bankruptcy protection.
But the dealers argue that they don’t cost the automaker anything. They say that if Gonzalez approves Chrysler’s motion, hundreds of dealerships will be shuttered.
A group representing about 300 dealers have filed an objection. They also earlier opposed Chrysler’s sale to Fiat, saying it was tied to the plan
Arguments before the U.S. Court of Appeals for the Second Circuit are scheduled for today.
by the associated press
Saturday, May 30, 2009
Judge could to rule by Monday whether Chrysler can sell assets
NEW YORK — A bankruptcy judge says he will rule by Monday on whether Chrysler can sell most of the company to a group headed by Italy’s Fiat.
U.S. Judge Arthur Gonzalez heard 11 hours of testimony and arguments Friday following marathon sessions the two previous days.
Chrysler says the only way it can avoid liquidation is through a deal where it would sell most of its assets to a group lead by Fiat Group SpA and create a new company.
But attorneys for a trio of Indiana state pension and construction funds opposed the sale, saying that Chrysler’s secured debtholders deserve more than the $2 billion that was offered for their $6.9 billion in debt.
If Gonzalez approves the sale, the funds are expected to appeal.
by the associated press
U.S. Judge Arthur Gonzalez heard 11 hours of testimony and arguments Friday following marathon sessions the two previous days.
Chrysler says the only way it can avoid liquidation is through a deal where it would sell most of its assets to a group lead by Fiat Group SpA and create a new company.
But attorneys for a trio of Indiana state pension and construction funds opposed the sale, saying that Chrysler’s secured debtholders deserve more than the $2 billion that was offered for their $6.9 billion in debt.
If Gonzalez approves the sale, the funds are expected to appeal.
by the associated press
Wednesday, May 13, 2009
Chrysler plans to fire 800
Chrysler LLC plans to fire up to 800 of its 3,200 dealers Thursday, a lawyer seeking to represent the dealers said on a conference call Tuesday. Stephen Lerner, told dealers that the automaker plans to reject franchise agreements. Chrysler spokeswoman Kathy Graham said the 800 number was just speculation.
from the wire
from the wire
Thursday, May 7, 2009
Chrysler unveils incentives to kick sales
NEW YORK — Chrysler said Wednesday it is offering up to $6,000 of incentives on its 2009 cars and trucks as it races to emerge from bankruptcy protection and counter a prolonged U.S. sales slump.
The new incentives — which come off prices negotiated with dealers — are Chrysler LLC’s latest push to keep customers coming into its showrooms.
The incentives replace a promotion launched in January that included so-called employee pricing plus rebates and zero percent financing.
Over the weekend, the company launched an advertising campaign that included full-page ads running in newspapers across the country, proclaiming it is "building a new car company.”
The No. 3 U.S. automaker filed for Chapter 11 bankruptcy last week and is trying to complete a sale of most of the company’s assets to Italian automaker Fiat Group SpA.
Chrysler hopes to emerge from bankruptcy in 30 to 60 days and is working to allay consumer fears that its cars won’t be backed by warranties.
All of its factories have been idled.
About the incentives
Chrysler said the incentives, which begin Wednesday, are aimed at reducing the bottom-line price of the car. They include $4,000 in cash, $1,000 for current Chrysler vehicle owners, and up to $1,000 for financing through participating credit unions.
With all the incentives, a 2009 Jeep Grand Cherokee would carry a sticker price of $25,230 instead of $31,320 — a discount of 19 percent. A Chrysler 300C would run $31,885 instead of $37,885, which is a 16 percent reduction.
Not all models qualify for the full $4,000 cash back, spokeswoman Kathy Graham said.
Chrysler’s sales are down 46 percent for the first four months of the year. The automaker has been subsisting on $4 billion in government loans. It filed for bankruptcy protection on Thursday after a handful of its creditors refused to accept a government-brokered deal that would have reduced the automaker’s secured debt.
Many in the industry have said consumers would be reluctant to buy a car from an automaker in bankruptcy protection because of anxiety that their warranties would not be honored if the company goes out of business.
Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, said an incentive program that offers enough of a deal might help soothe consumers’ concerns about Chrysler’s future.
"Consumers are under distress too,” he said. "If a car is a really great deal, people are going to put aside the risk.”
Chrysler last week said its lending arm, Chrysler Financial, would no longer provide vehicle financing. General Motors Corp.’s lending arm, GMAC LLC, is taking over its business, along with third-party banks and credit unions.
Meanwhile, President Barack Obama said last week that Chrysler warranties would be backed by the U.S. government.
by the associated press
The new incentives — which come off prices negotiated with dealers — are Chrysler LLC’s latest push to keep customers coming into its showrooms.
The incentives replace a promotion launched in January that included so-called employee pricing plus rebates and zero percent financing.
Over the weekend, the company launched an advertising campaign that included full-page ads running in newspapers across the country, proclaiming it is "building a new car company.”
The No. 3 U.S. automaker filed for Chapter 11 bankruptcy last week and is trying to complete a sale of most of the company’s assets to Italian automaker Fiat Group SpA.
Chrysler hopes to emerge from bankruptcy in 30 to 60 days and is working to allay consumer fears that its cars won’t be backed by warranties.
All of its factories have been idled.
About the incentives
Chrysler said the incentives, which begin Wednesday, are aimed at reducing the bottom-line price of the car. They include $4,000 in cash, $1,000 for current Chrysler vehicle owners, and up to $1,000 for financing through participating credit unions.
With all the incentives, a 2009 Jeep Grand Cherokee would carry a sticker price of $25,230 instead of $31,320 — a discount of 19 percent. A Chrysler 300C would run $31,885 instead of $37,885, which is a 16 percent reduction.
Not all models qualify for the full $4,000 cash back, spokeswoman Kathy Graham said.
Chrysler’s sales are down 46 percent for the first four months of the year. The automaker has been subsisting on $4 billion in government loans. It filed for bankruptcy protection on Thursday after a handful of its creditors refused to accept a government-brokered deal that would have reduced the automaker’s secured debt.
Many in the industry have said consumers would be reluctant to buy a car from an automaker in bankruptcy protection because of anxiety that their warranties would not be honored if the company goes out of business.
Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, said an incentive program that offers enough of a deal might help soothe consumers’ concerns about Chrysler’s future.
"Consumers are under distress too,” he said. "If a car is a really great deal, people are going to put aside the risk.”
Chrysler last week said its lending arm, Chrysler Financial, would no longer provide vehicle financing. General Motors Corp.’s lending arm, GMAC LLC, is taking over its business, along with third-party banks and credit unions.
Meanwhile, President Barack Obama said last week that Chrysler warranties would be backed by the U.S. government.
by the associated press
Wednesday, May 6, 2009
GM Eyes Chrysler, on Union deals
WASHINGTON — General Motors Corp. Chief Executive Fritz Henderson said Tuesday some elements of a labor agreement between the United Auto Workers and Chrysler LLC could benefit GM as it tries to stave off bankruptcy.
Henderson told reporters he was ready to resume bargaining with the union. The concessions sought by GM likely will be similar to those reached with Chrysler last week.
The Chrysler labor deal calls for the UAW to take a 55 percent stake in a new Chrysler in exchange for $6 billion of the $10.6 billion the company must pay into a union-run trust that will take over retiree health care expenses starting next year. The union’s stake in GM is expected to be just under 40 percent.
The UAW, in a letter to U.S. senators on Tuesday, said it objected to GM’s most recent plan that calls for closing 16 manufacturing facilities and cutting 21,000 jobs because it would shift manufacturing to Mexico, South Korea, Japan and China.
"GM should not be taking taxpayers’ money simply to finance the outsourcing of jobs to other countries,” wrote UAW legislative director Alan Reuther.
Henderson said he would try to find common ground with the UAW at the bargaining table.
"We need to be open to what their concerns are. At the same time our goal is to make sure that General Motors is viable and competitive,” he said.
Henderson briefed members of Congress on GM’s work to avoid bankruptcy and restructure the company hard hit by recession and the steep drop in auto sales. GM has been living on $15.4 billion in U.S. government loans and faces a June 1 deadline to finish restructuring or be forced into Chapter 11 bankruptcy protection.
Chrysler filed for bankruptcy protection last week. It could end up with Italy’s Fiat Group SpA as the majority owner.
Henderson said the two companies face different circumstances but GM was watching the proceedings closely.
by the associated press
Henderson told reporters he was ready to resume bargaining with the union. The concessions sought by GM likely will be similar to those reached with Chrysler last week.
The Chrysler labor deal calls for the UAW to take a 55 percent stake in a new Chrysler in exchange for $6 billion of the $10.6 billion the company must pay into a union-run trust that will take over retiree health care expenses starting next year. The union’s stake in GM is expected to be just under 40 percent.
The UAW, in a letter to U.S. senators on Tuesday, said it objected to GM’s most recent plan that calls for closing 16 manufacturing facilities and cutting 21,000 jobs because it would shift manufacturing to Mexico, South Korea, Japan and China.
"GM should not be taking taxpayers’ money simply to finance the outsourcing of jobs to other countries,” wrote UAW legislative director Alan Reuther.
Henderson said he would try to find common ground with the UAW at the bargaining table.
"We need to be open to what their concerns are. At the same time our goal is to make sure that General Motors is viable and competitive,” he said.
Henderson briefed members of Congress on GM’s work to avoid bankruptcy and restructure the company hard hit by recession and the steep drop in auto sales. GM has been living on $15.4 billion in U.S. government loans and faces a June 1 deadline to finish restructuring or be forced into Chapter 11 bankruptcy protection.
Chrysler filed for bankruptcy protection last week. It could end up with Italy’s Fiat Group SpA as the majority owner.
Henderson said the two companies face different circumstances but GM was watching the proceedings closely.
by the associated press
Judge gives tells Chrysler , to start selling its assets to Fiat
NEW YORK — The judge overseeing Chrysler’s Chapter 11 proceedings says the automaker can start taking steps toward selling the vast majority of its assets to Italy’s Fiat.
Judge Arthur Gonzales says the procedures proposed by Chrysler’s lawyers represent a "clear and orderly process.”
Attorneys for Auburn Hills, Mich.-based Chrysler LLC argued that the automaker had essentially been up for sale for most of the last two years and a speedy sale was needed in order to preserve the value of the company’s assets.
But those representing a dissident group of Chrysler lenders said more time was needed for other potential buyers to do the research they needed to make an appropriate offer
The group said the proposed sale process is designed to prevent competitive bidding.
Meanwhile, Gonzales ruled that the identities of the group’s members do not need to be sealed, despite the group’s lead attorney saying that death threats were made against some of them.
On Monday, the same group of lenders objected to a Chrysler motion to allow the company to access $4.5 billion in bankruptcy financing, saying that it was too closely tied to the proposed sale.
Tom Lauria, an attorney for the lenders group, argued that the identities of the group’s members should be sealed by the court because some had received threats after having been singled out Thursday by President Barack Obama as the cause of Chrysler’s bankruptcy.
But Robert Hamilton, an attorney for Chrysler, said those threats only amounted to four or five "rants” on a newspaper Web site.
"Anyone who has an understanding of the kind of rants on these kinds of message boards would never take them seriously,” Hamilton said.
The group refused a deal that would amount to 29 cents on the dollar to dissolve what they’re owed and go with the government’s restructuring plan.
by the associated press
Judge Arthur Gonzales says the procedures proposed by Chrysler’s lawyers represent a "clear and orderly process.”
Attorneys for Auburn Hills, Mich.-based Chrysler LLC argued that the automaker had essentially been up for sale for most of the last two years and a speedy sale was needed in order to preserve the value of the company’s assets.
But those representing a dissident group of Chrysler lenders said more time was needed for other potential buyers to do the research they needed to make an appropriate offer
The group said the proposed sale process is designed to prevent competitive bidding.
Meanwhile, Gonzales ruled that the identities of the group’s members do not need to be sealed, despite the group’s lead attorney saying that death threats were made against some of them.
On Monday, the same group of lenders objected to a Chrysler motion to allow the company to access $4.5 billion in bankruptcy financing, saying that it was too closely tied to the proposed sale.
Tom Lauria, an attorney for the lenders group, argued that the identities of the group’s members should be sealed by the court because some had received threats after having been singled out Thursday by President Barack Obama as the cause of Chrysler’s bankruptcy.
But Robert Hamilton, an attorney for Chrysler, said those threats only amounted to four or five "rants” on a newspaper Web site.
"Anyone who has an understanding of the kind of rants on these kinds of message boards would never take them seriously,” Hamilton said.
The group refused a deal that would amount to 29 cents on the dollar to dissolve what they’re owed and go with the government’s restructuring plan.
by the associated press
Tuesday, May 5, 2009
Fiat wants to make Chrysler into a Powerhouse
MILAN — Fiat is trying to build a global automaking powerhouse out of parts scavenged from broken-down General Motors and Chrysler.
The Italian automaker struck a deal last week that could eventually give it a controlling interest in Chrysler, but its ambitions are bigger than that: Now it is negotiating to buy GM’s main European unit, which includes the Opel and Vauxhall brands.
Fiat Group CEO Sergio Marchionne’s grand plan is for Fiat to spin off the resulting automaker, which he said would be big enough to compete with the mightiest of car companies, with capacity to turn out some 5.5 million vehicles a year.
Fiat could become the fifth- or sixth-largest automaker in the world if it can complete its deals with Chrysler and GM, said Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide, an industry consulting firm in Northville, Mich.
Fiat is considered a smaller, regional player, ranking 10th worldwide in cars and trucks produced.
Looks at second spot
Fiat’s aim eventually is become the world’s No. 2 automaker, behind Japan’s Toyota, according to Germany’s economics minister, who met with Marchionne on Monday in Berlin.
But there are lots of questions about whether Marchionne can pull it off.
The plan is audacious, not the least because Marchionne is hoping to execute it without putting down a cent. Fiat is hoping to take advantage of the crisis in the auto industry by obtaining billions in loan guarantees from the U.S., Canada and various European governments.
"We’re in the middle of an automotive yard sale,” Robinet said. Marchionne has "gone to a yard sale and picked up the really good stuff.”
Fiat’s deal to take a big piece of Chrysler could not only save Chrysler, it would give Fiat access to the huge North American market.
And by buying GM’s main European operations, Fiat could cut its production and development costs through economies of scale and gain expertise in building midsize and larger cars. Fiat, the maker of Fiats, Alfa Romeos and Ferraris, specializes in small cars.
Marchionne made the rounds in Berlin on Monday, seeking to persuade German Chancellor Angela Merkel and her economics and finance ministers that Fiat can save many of the 25,000 jobs at Germany’s Opel, not to mention its supplier network. GM employs some 54,000 in Europe, including at Sweden Saab and Britain’s Vauxhall. It is not clear whether Saab would be part of a deal with Fiat.
by the associated press
The Italian automaker struck a deal last week that could eventually give it a controlling interest in Chrysler, but its ambitions are bigger than that: Now it is negotiating to buy GM’s main European unit, which includes the Opel and Vauxhall brands.
Fiat Group CEO Sergio Marchionne’s grand plan is for Fiat to spin off the resulting automaker, which he said would be big enough to compete with the mightiest of car companies, with capacity to turn out some 5.5 million vehicles a year.
Fiat could become the fifth- or sixth-largest automaker in the world if it can complete its deals with Chrysler and GM, said Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide, an industry consulting firm in Northville, Mich.
Fiat is considered a smaller, regional player, ranking 10th worldwide in cars and trucks produced.
Looks at second spot
Fiat’s aim eventually is become the world’s No. 2 automaker, behind Japan’s Toyota, according to Germany’s economics minister, who met with Marchionne on Monday in Berlin.
But there are lots of questions about whether Marchionne can pull it off.
The plan is audacious, not the least because Marchionne is hoping to execute it without putting down a cent. Fiat is hoping to take advantage of the crisis in the auto industry by obtaining billions in loan guarantees from the U.S., Canada and various European governments.
"We’re in the middle of an automotive yard sale,” Robinet said. Marchionne has "gone to a yard sale and picked up the really good stuff.”
Fiat’s deal to take a big piece of Chrysler could not only save Chrysler, it would give Fiat access to the huge North American market.
And by buying GM’s main European operations, Fiat could cut its production and development costs through economies of scale and gain expertise in building midsize and larger cars. Fiat, the maker of Fiats, Alfa Romeos and Ferraris, specializes in small cars.
Marchionne made the rounds in Berlin on Monday, seeking to persuade German Chancellor Angela Merkel and her economics and finance ministers that Fiat can save many of the 25,000 jobs at Germany’s Opel, not to mention its supplier network. GM employs some 54,000 in Europe, including at Sweden Saab and Britain’s Vauxhall. It is not clear whether Saab would be part of a deal with Fiat.
by the associated press
UAW says it will sell its Chrysler Stock
STERLING HEIGHTS, Mich. — The United Auto Workers union has no intention of keeping its 55 percent stake in the new Chrysler and will sell the shares to fund a trust that will take over retiree health care costs next year, the union’s president said Monday.
Speaking to reporters at a news conference in suburban Detroit, Ron Gettelfinger said the trust, called a voluntary employees beneficiary association, will struggle at first.
The is starting with $1.5 billion from an exist- ing company health care trust, and will get $300 million from the company next year.
Gettelfinger said that critics who think the union is getting a better deal than Chrysler’s secured debtholders are wrong because the UAW is taking a big risk with Chrysler stock funding the trust.
The stock is worthless today, he said.
Benefits may be cut
Some of Chrysler’s creditors, however, are objecting to the deal in bankruptcy court.
After the automaker and Treasury couldn’t come to an agreement with certain debtholders, Chrysler filed for bankruptcy protection Thursday and is trying to emerge in 30 to 60 days as a stronger company that could eventually end up being majority owned by Italy’s Fiat Group SpA.
Gettelfinger said the union made concessions in 2007 and this year that have helped, although he would not place a specific number on how much the concessions are worth.
"It is billions and billions of dollars in relief to the corporation from the standpoint of cash flow,” Gettelfinger said.
While he said he is confident in the trust’s funding, Gettelfinger warned that VEBA will be "on life support” initially.
Benefits have been cut and could be further reduced, he said.
by the associated press
Speaking to reporters at a news conference in suburban Detroit, Ron Gettelfinger said the trust, called a voluntary employees beneficiary association, will struggle at first.
The is starting with $1.5 billion from an exist- ing company health care trust, and will get $300 million from the company next year.
Gettelfinger said that critics who think the union is getting a better deal than Chrysler’s secured debtholders are wrong because the UAW is taking a big risk with Chrysler stock funding the trust.
The stock is worthless today, he said.
Benefits may be cut
Some of Chrysler’s creditors, however, are objecting to the deal in bankruptcy court.
After the automaker and Treasury couldn’t come to an agreement with certain debtholders, Chrysler filed for bankruptcy protection Thursday and is trying to emerge in 30 to 60 days as a stronger company that could eventually end up being majority owned by Italy’s Fiat Group SpA.
Gettelfinger said the union made concessions in 2007 and this year that have helped, although he would not place a specific number on how much the concessions are worth.
"It is billions and billions of dollars in relief to the corporation from the standpoint of cash flow,” Gettelfinger said.
While he said he is confident in the trust’s funding, Gettelfinger warned that VEBA will be "on life support” initially.
Benefits have been cut and could be further reduced, he said.
by the associated press
Monday, May 4, 2009
Chrysler hopes troubles buyers , will be happy with Government backs warranties
HOUSTON — The stalwart. The bargain-hunter. The skeptic.
As Chrysler dealers across America try to sell vehicles with the auto manufacturer in bankruptcy, they’re meeting different types of customers: loyalists who aren’t fazed by the troubles, those seeking the best deal in a bad economy, and some who are willing to look, but aren’t sold on the company’s prospects.
"People hear the word bankruptcy and it makes them nervous,” said Richard Engel, a Chrysler dealer in Wyckoff, N.J. "We just hope it doesn’t scare too many people away.”
Chrysler, the nation’s third-largest automaker behind General Motors and Ford, filed for Chapter 11 bankruptcy protection Thursday after months of surviving on government loans. The company hopes to emerge in as little as 30 days, allied with Italian automaker Fiat to build leaner, cleaner cars.
Some customers who spoke to the Associated Press in recent days said they were encouraged by President Barack Obama’s pledge that the government will back warranties issued by Chrysler.
Others say the government’s backing is a plus, but that survival will be tough in today’s market.
It’s hard to say, yet, if the bankruptcy will slow Chrysler’s sales even more, or if bargain-hungry drivers will see the company’s straits as an opportunity. Some dealers said they saw better-than-average traffic over the weekend, while others said it was slow.
Chrysler — whose brands include Jeep and Dodge — has used cash rebates, zero-percent financing to attract buyers.
For some, a good deal on a new car trumped the possibility that Chrysler may not survive.
Rebecca Jeffries wasn’t looking to buy when she went for an oil change Friday at Day’s Baum Boulevard Dodge-Chrysler-Jeep in Pittsburgh.
She has always loved the looks of Chrysler’s Crossfire convertible, but the $40,000-plus tab was out of her price range. When a sales representative made her a deal for $27,900, she said so long to her Sebring sedan and drove off in a new silver sports car.
Cody Nelson, a Pittsburgh dentist at a Chrysler Town and Country minivan Saturday, said dealing with any kind of company in bankruptcy is nerve-racking. Nelson, 30, was at Three Rivers Chrysler-Jeep-Dodge to compare prices but admitted, "I’m not sold on Chrysler.”
by the associated press
As Chrysler dealers across America try to sell vehicles with the auto manufacturer in bankruptcy, they’re meeting different types of customers: loyalists who aren’t fazed by the troubles, those seeking the best deal in a bad economy, and some who are willing to look, but aren’t sold on the company’s prospects.
"People hear the word bankruptcy and it makes them nervous,” said Richard Engel, a Chrysler dealer in Wyckoff, N.J. "We just hope it doesn’t scare too many people away.”
Chrysler, the nation’s third-largest automaker behind General Motors and Ford, filed for Chapter 11 bankruptcy protection Thursday after months of surviving on government loans. The company hopes to emerge in as little as 30 days, allied with Italian automaker Fiat to build leaner, cleaner cars.
Some customers who spoke to the Associated Press in recent days said they were encouraged by President Barack Obama’s pledge that the government will back warranties issued by Chrysler.
Others say the government’s backing is a plus, but that survival will be tough in today’s market.
It’s hard to say, yet, if the bankruptcy will slow Chrysler’s sales even more, or if bargain-hungry drivers will see the company’s straits as an opportunity. Some dealers said they saw better-than-average traffic over the weekend, while others said it was slow.
Chrysler — whose brands include Jeep and Dodge — has used cash rebates, zero-percent financing to attract buyers.
For some, a good deal on a new car trumped the possibility that Chrysler may not survive.
Rebecca Jeffries wasn’t looking to buy when she went for an oil change Friday at Day’s Baum Boulevard Dodge-Chrysler-Jeep in Pittsburgh.
She has always loved the looks of Chrysler’s Crossfire convertible, but the $40,000-plus tab was out of her price range. When a sales representative made her a deal for $27,900, she said so long to her Sebring sedan and drove off in a new silver sports car.
Cody Nelson, a Pittsburgh dentist at a Chrysler Town and Country minivan Saturday, said dealing with any kind of company in bankruptcy is nerve-racking. Nelson, 30, was at Three Rivers Chrysler-Jeep-Dodge to compare prices but admitted, "I’m not sold on Chrysler.”
by the associated press
Sunday, May 3, 2009
Fiat, new company with GM Europe, Chrysler
ROME (AP) — Fiat Group SpA confirmed Sunday that it is in talks to buy most of General Motors Corp.'s European operations, taking another step toward creating a global automotive powerhouse.
Fiat also said it is evaluating the possible spinoff of its auto business to form the core of a new company.
Fiat Group Automobiles includes the Fiat, Alfa Romeo and Ferrari brands. In addition, Fiat is in the process of acquiring U.S. automaker Chrysler LLC without putting up any cash.
The new auto company, which according to Fiat would have $105 billion in annual revenue, would put the Italian automaker in markets where it has little or no presence, including North America, traditionally the largest market in the world.
"They're going to be a global powerhouse, I guess. Who would have thought?" asked Erich Merkle, an independent auto industry analyst in Grand Rapids, Mich. "They seem to be on a buying binge right now, looking for cheap and distressed assets like Chrysler and Opel."
The Chrysler deal, which must still be approved by a U.S. bankruptcy court, would be in exchange for giving Chrysler access to Fiat's small-car and engine technology. Chrysler cars and trucks also would be sold by Fiat through its global distribution network.
The deals would make Fiat a big global player, but that might not be the best thing for the Italian automaker, which might be overreaching with the acquisitions, said Merkle.
"This is a lot to take on, quite honestly," Merkle said. "When you start looking at Chrysler, it'll make them a very large automaker, but we've seen that large isn't necessarily indicative of success."
It will take years, Merkle said, for Fiat to gain any synergies by globalizing design, engineering and manufacturing operations with Chrysler and the GM units.
The Fiat statement was issued on the eve of a meeting in Berlin between Fiat CEO Sergio Marchionne and the German economy and foreign ministers to discuss Fiat's offer for GM's German unit, Opel.
GM Europe also includes the British company Vauxhall and the Swedish carmaker Saab. Saab may not be included in the deal, however. The company is being reorganized under Swedish law and is likely to be separated from the rest of GM's European operations.
GM Europe spokesman Frank Klaas said the company has several possible investors, which he wouldn't identify, but said, "we are in very good negotiations with them."
GM also makes and sells small Chevrolet-badged cars in Europe that are designed in South Korea by the company's Daewoo unit, and it's unlikely to sell that because that would be GM's only remaining foothold in Europe, Merkle said.
General Motors has been trying to find investors for its noncore and unprofitable assets as part of a restructuring in which it has received $15.4 billion in aid from the U.S. government to avert collapse.
Opel has said it needs $4.3 billion to get through the economic crisis. The German government has said it doesn't foresee giving direct state aid. Chancellor Angela Merkel has suggested the government could help an Opel investor with loan guarantees.
Fiat said that over the next few weeks, Marchionne will be looking "to assess the viability of a merger of the activities of Fiat Group Automobiles (including the interest in Chrysler) and General Motors Europe into a new company."
"As part of this process, the group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe."
In an interview Sunday with Corriere della Sera, Fiat Chairman Luca Cordero di Montezemolo called GM's Opel an "ideal partner" and a possible takeover by Fiat an "extraordinary opportunity."
Fiat is not the only suitor for Opel, however. Last week, Canadian car parts maker Magna International Inc. presented German Economy Minister Karl-Theodor zu Guttenberg with what the minister called a "rough concept for a commitment with Opel."
Guttenberg has said the German government would wait to determine its role in any full or partial Opel sale until after the U.S. government had weighed in.
Fiat, meanwhile, has pressed ahead with a takeover of Chrysler. Chrysler is seeking to sell substantially all of its assets to Fiat, but must gain approval from a New York bankruptcy court.
In addition to Fiat Group Automobiles, the Fiat Group also includes its agricultural vehicles branch CNH and its Iveco trucking unit, as well as a media arm.
by the associated press
Fiat also said it is evaluating the possible spinoff of its auto business to form the core of a new company.
Fiat Group Automobiles includes the Fiat, Alfa Romeo and Ferrari brands. In addition, Fiat is in the process of acquiring U.S. automaker Chrysler LLC without putting up any cash.
The new auto company, which according to Fiat would have $105 billion in annual revenue, would put the Italian automaker in markets where it has little or no presence, including North America, traditionally the largest market in the world.
"They're going to be a global powerhouse, I guess. Who would have thought?" asked Erich Merkle, an independent auto industry analyst in Grand Rapids, Mich. "They seem to be on a buying binge right now, looking for cheap and distressed assets like Chrysler and Opel."
The Chrysler deal, which must still be approved by a U.S. bankruptcy court, would be in exchange for giving Chrysler access to Fiat's small-car and engine technology. Chrysler cars and trucks also would be sold by Fiat through its global distribution network.
The deals would make Fiat a big global player, but that might not be the best thing for the Italian automaker, which might be overreaching with the acquisitions, said Merkle.
"This is a lot to take on, quite honestly," Merkle said. "When you start looking at Chrysler, it'll make them a very large automaker, but we've seen that large isn't necessarily indicative of success."
It will take years, Merkle said, for Fiat to gain any synergies by globalizing design, engineering and manufacturing operations with Chrysler and the GM units.
The Fiat statement was issued on the eve of a meeting in Berlin between Fiat CEO Sergio Marchionne and the German economy and foreign ministers to discuss Fiat's offer for GM's German unit, Opel.
GM Europe also includes the British company Vauxhall and the Swedish carmaker Saab. Saab may not be included in the deal, however. The company is being reorganized under Swedish law and is likely to be separated from the rest of GM's European operations.
GM Europe spokesman Frank Klaas said the company has several possible investors, which he wouldn't identify, but said, "we are in very good negotiations with them."
GM also makes and sells small Chevrolet-badged cars in Europe that are designed in South Korea by the company's Daewoo unit, and it's unlikely to sell that because that would be GM's only remaining foothold in Europe, Merkle said.
General Motors has been trying to find investors for its noncore and unprofitable assets as part of a restructuring in which it has received $15.4 billion in aid from the U.S. government to avert collapse.
Opel has said it needs $4.3 billion to get through the economic crisis. The German government has said it doesn't foresee giving direct state aid. Chancellor Angela Merkel has suggested the government could help an Opel investor with loan guarantees.
Fiat said that over the next few weeks, Marchionne will be looking "to assess the viability of a merger of the activities of Fiat Group Automobiles (including the interest in Chrysler) and General Motors Europe into a new company."
"As part of this process, the group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe."
In an interview Sunday with Corriere della Sera, Fiat Chairman Luca Cordero di Montezemolo called GM's Opel an "ideal partner" and a possible takeover by Fiat an "extraordinary opportunity."
Fiat is not the only suitor for Opel, however. Last week, Canadian car parts maker Magna International Inc. presented German Economy Minister Karl-Theodor zu Guttenberg with what the minister called a "rough concept for a commitment with Opel."
Guttenberg has said the German government would wait to determine its role in any full or partial Opel sale until after the U.S. government had weighed in.
Fiat, meanwhile, has pressed ahead with a takeover of Chrysler. Chrysler is seeking to sell substantially all of its assets to Fiat, but must gain approval from a New York bankruptcy court.
In addition to Fiat Group Automobiles, the Fiat Group also includes its agricultural vehicles branch CNH and its Iveco trucking unit, as well as a media arm.
by the associated press
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