Saturn has a death warrant, Pontiac will not be a separate division, SAAB and Hummer for sale, more job cuts and plant closures, automakers need more money to survive.
DETROIT — The brand that was once hailed as an important part of the future of General Motors now will be part of its past.
G.M. said Tuesday that it would phase out its Saturn brand by 2012. It does not plan to develop any more new vehicles for Saturn, which began 19 years ago as an effort to attract owners of small Japanese cars.
G.M. also said it was considering its options for the Pontiac division. The Pontiac name, part of the car business since 1932, could remain on some models, but may no longer be a separate division. G.M. said Pontiac would be a “focused brand” with fewer models.
The disclosures by G.M., contained in a viability plan submitted to the government, means that G.M. plans to cut its brands in half, to four: Chevrolet, Cadillac, Buick and GMC.
It said last fall that it would try to find buyers for Hummer and Saab. On Tuesday, it said it would decide on Hummer’s fate by March 31.
But is four the right number?
After all, most of its big competitors, including Toyota, Honda and Chrysler, build their businesses around three brands or fewer in the United States. Ford is moving to shed its foreign brands and plans to focus primarily on three — Ford, Lincoln and Mercury.
“A volume brand and a premium brand can get the job done. Toyota has proven that,” said Karl Brauer, editor in chief of Edmunds.com, a Web site that offers car-buying advice. “Cadillac, Chevy, done.”
The more brands a carmaker has, the more it must spread money around to develop vehicles and market them.
As a result, “every brand suffers,” said A. Andrew Shapiro, a managing partner with the Casesa Shapiro Group. “No particular brand or brands can achieve the share of voice that they need.”
Its extensive brand lineup has long been G.M.’s primary weapon. Founded in 1908 by William C. Durant, who brought together a collection of car companies, G.M. made the concept of “a car for every purse and purpose” its strategy during the 1920s for retaining buyers from their first car to their last.
Brands were a crucial element in G.M.’s effort to thwart Ford, then the country’s biggest car company, whose founder joked that buyers could have any color they wanted, as long as it was black.
G.M.’s strategy paid off during its best years, when it controlled more than half the American car market. But it held only 22 percent of United States auto sales last year, with more than half of its share coming from a single division, Chevrolet.
G.M. found out last decade just how expensive it could be to unwind a brand. It spent more than $1 billion to buy out dealers at Oldsmobile, which built its last cars in 2004.
Rick Wagoner, G.M.’s chief executive, said the automaker had set aside money to buy out dealers, but declined to specify a figure. “We have reserves in our plan to facilitate that,” he said.
He cited the economic downturn as the reason G.M. was phasing out Saturn. “Frankly, the opportunity for any brand, and for our volume as a whole, just looks radically different,” he said. “It is unfortunate and it seems like a cruel twist of fate at a time when Saturn is loaded up with a fantastic product portfolio.”
In a letter sent Tuesday to Saturn dealers, G.M. said it would entertain a plan from Saturn dealers or other investors for a spinoff of the division to keep it operating. It said it would provide information to potential investors.
But it warned a spinoff would be “a difficult and complex task, and some of the issues that must be resolved include product sourcing, capitalization and financing issues,” G.M. said in the letter signed by Mark LeNeve, a G.M. vice president for North American sales, and Jill Lajdziak, the general manager of Saturn.
When Saturn was started in 1990, as a “different kind of car, a different kind of car company” aimed at owners of small Hondas and Toyotas, its small cars were immediate hits. But G.M. executives decided in the mid-1990s that they needed to support G.M.’s other brands over Saturn, which by then had cost $5 billion.
G.M. did not add any new vehicles to the Saturn lineup for five years, despite pleas from dealers for bigger vehicles. Earlier this decade, G.M. decided to start selling vehicles from its Opel division, with some design changes, as Saturns in the United States.
Saturn sold 188,004 vehicles in 2008, down 21.7 percent from the previous year. Its best-selling vehicle was the Saturn Vue, a small sport utility vehicle.
Strict franchise laws protect dealers across the country from seeing their operations shut down without advance notice.
G.M. dealers said they were led to believe that the company was committed to the division.
“G.M. is picking on Saturn,” said Sherrill Freeborough, who owns Saturn dealerships in Grand Ledge and Okemos, Mich. “I want G.M. to be successful but I don’t think that always happens the other way around.”
In 1992, when G.M. began discussing the end of Oldsmobile, the division sold 412,000 vehicles. Except for Chevrolet, none of G.M.’s current brands sold that many vehicles last year.
Mr. Shapiro, the analyst, said G.M. should have rethought its divisions in the 1980s, when a number of new brands appeared in the United States, including Acura, Lexus and Infiniti, the Japanese luxury brands, and the Korean makers Hyundai and Kia.
“There were always good short-term reasons for not doing something,” Mr. Shapiro said.
Ed Dena, a Pontiac dealer in Dinuba, Calif., said he would eventually have to focus on his other G.M. brands, including Chevrolet, Buick and GMC. “Of course we’re sad because Pontiac is an icon,” he said. “But right now, in this industry, nothing is a shock anymore.”
DETROIT — The price tag for bailing out General Motors and Chrysler jumped by another $14 billion Tuesday, to $39 billion, with the two automakers saying they would need the additional aid from the federal government to remain solvent.
In return, the two companies also promised to make further drastic cuts to all parts of their operations, in the hope that they can eventually strike a balance between their bloated cost structures and a dismal market for new car sales.
G.M., for example, said it would cut 47,000 more of its 244,000 workers worldwide; close five more plants in North America, leaving it with 33; and cut its lineup of brands in half, to just four: Chevrolet, Cadillac, GMC and Buick.
The Pontiac brand will have a much smaller role, if any, in G.M.’s future, and the company also said it would phase out its Saturn brand, which it once hoped would build small cars to counter the best of the Japanese brands.
G.M. also said it had made progress in discussions with the United Automobile Workers union and its bondholders to reduce its costs further.
The cash crisis will require fast action by the administration’s new cabinet-level Presidential Task Force on Autos, which is overseeing the reorganization of G.M. and Chrysler.
The deteriorating finances of the two companies present the Obama administration with two options, neither of them appealing.
It can provide the money in the hopes that the companies will stabilize, and no longer have to keep pushing workers into a growing pool of people without jobs. But there are no guarantees, as the Treasury Department learned on Tuesday when the automakers filed updates on their restructuring plans, that they might not be forced to come back again with requests for more money.
But if the federal government balks at the automakers’ requests, that would mean the two companies probably would have no choice but to file for bankruptcy protection, because they are losing hundreds of millions of dollars each month.
And the car companies said on Tuesday that the cost of a bankruptcy reorganization, with the government providing financing to help it through that process, would be far greater than their latest loan requests. Without such help, the companies would have to liquidate, creating staggering new job losses.
In a statement, the administration said Tuesday night that its task force would be reviewing the carmakers’ reports in coming days, adding that “more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies going forward.”
The third Detroit auto company, Ford Motor, has not received federal assistance and has no requests pending.
By March 31, the presidential task force is expected to rule on whether G.M. and Chrysler have restructured enough to be viable businesses for the long term.
Big questions remain, including whether G.M. and Chrysler, as well as Ford, will be able to cut their unionized labor costs to parity with foreign automakers, as was required in the original loan agreement from last December.
The companies have been in marathon negotiations with the United Automobile Workers on reducing costs, as well as determining how they will finance health care trusts for retired blue-collar workers and their surviving spouses.
G.M. is also pushing for a deal with its bondholders to help it reduce its debt to $9 billion, from $27 billion. The U.A.W. said on Tuesday it had reached “understandings” with the Detroit companies on modifications to their contracts. Ron Gettelfinger, the union’s president, said “discussions are continuing” regarding how to fund the health care trusts at each of the companies.
Rick Wagoner, G.M.’s chief executive, said there had been “good progress” in talks with both the union and bondholders.
On the concessions in the U.A.W. contract, he said, “the things that have been negotiated really take a big bite out of what needed to accomplish.”
G.M.’s restructuring plan extends to its global operations. It will cut 47,000 jobs worldwide by the end of this year. It also said it would close 14 plants in North America by 2012 — five more than were included in its Dec. 2 loan request.
Mr. Wagoner said on Tuesday that the revamping plan was “comprehensive, responsive and achievable,” and could help the company break even by 2010. Both G.M. and Chrysler said they expected to begin paying back their federal loans by 2012.
A bankruptcy filing, Mr. Wagoner said, would be a “highly risky and costly process.” G.M.’s president, Frederick Henderson, said the company would require as much as $100 billion in debtor-in-possession financing from the federal government if it filed for Chapter 11. Chrysler said it would need $25 billion if that step were required.
G.M. and Chrysler admitted that their current federal loans would be exhausted by March 31.
G.M. said Tuesday that it had increased its overall loan request from the government to a total of $30 billion, up from $18 billion.
The company has received $13.4 billion so far from Treasury, and the most recent installment — $4 billion — was turned over to G.M. on Tuesday.
But G.M. said that loan would not last long. Company officials said they hoped to receive another $2 billion loan in March and $2.6 billion in April. Beyond that, G.M. is asking for another $12 billion by 2011 — $7.5 billion in loans and $4.5 billion to pay off a credit facility that comes due.
Chrysler, which has received $4 billion in loans, also increased its overall request for funding. In December, it said it needed $3 billion more to survive 2009, but it raised that request to $5 billion.
The smallest of Detroit’s Big Three, Chrysler has drastically scaled back its operations since being acquired in 2007 by the private equity firm Cerberus Capital Management.
On Tuesday, Chrysler said it would cut another 3,000 jobs and discontinue three models — the Dodge Durango, P.T. Cruiser and Chrysler Aspen.
“Chrysler will be viable,” said the company’s chairman, Robert L. Nardelli. “An orderly restructuring outside of bankruptcy, together with the completion of our stand-alone viability plan and enhanced by a strategic alliance with Fiat, is the best option for Chrysler employees, our unions, dealers, suppliers, customers, and certainly the taxpayers.” The company is exploring a deal with Fiat to share products.
But Mr. Nardelli said Chrysler would have to consider liquidating itself in the event that it received no more federal aid.
G.M. executives sidestepped questions on Tuesday on whether they had been given any assurances by administration officials about additional loans. “They fully understood we would be coming in with additional requests,” said Ray Young, G.M.’s chief financial officer.
But the possibility exists of a negative political reaction to the administration’s pouring more taxpayers’ money into the companies, especially when they continue to operate at huge losses.
Somewhere in Florida a village is missing its idiot. He can be found in Washington D.C.
And another chapter is added to the case study of GM and what happens when a company does not evolve with the times. More and more older companies will continue to fail due to this. I feel bad for the impact this will have on the communities as a whole. The lost of the companies doesn't just effect the workers, it levels the education systems.
GM makes too much stuff. It has so many different cars, and divisions. Why did they ever need a Saturn, a Pontiac, a Hummer, a Chevy, and so on?
Companies that weren't do good for a long time are probably going to give in the towel. They probably were doing bad 5 years ago, but the news said poor economy, and they are probably going to go away. We knew Six Flags was doing bad awhile ago. It didn't just spring up that they were doing bad. At Blockbuster, I went in there many years ago, and it wasn't busy at all. It just makes sense.
There is way too much competition, and everything can't survive. I like about 40 something restaurants, & fast food places, and I dislike other food places like Culver's, Steak and Shake, Baker's Square, Outback Steakhouse, and White Castle.
Go to a mall, and see how many stores are in that particular mall even if there are some empty spots, and count the number of stores competing. For non-food stuff, the Internet is also competing.
I don't like stores, and or car companies go out of business, but there is too much stuff to buy just in general. Go to your grocery market, and look at how many brands of shampoo there are, drinks, or even pizza. It's amazing. At Woodfield, I counted just the A's, and B's of names of stuff they have in there, and there are around 37 places.
Everytime I go in Kmart, it's pretty empty. This hasn't just happened just when the economy went down. It's been empty in those stores for awhile. However, I went in TJ Maxx (just to see what's it's about), and that store was booming. The prices in there aren't that cheap either.
"I've been staring at the world, waiting. All the trouble and all the pain we're facing. Too much light to be livin' in the dark. Why waste time? We only got one life. Together we can be the CHANGE. So go and let your heart burn bright"
Ilovthevu' wrote:GM makes too much stuff. It has so many different cars, and divisions. Why did they ever need a Saturn, a Pontiac, a Hummer, a Chevy, and so on?
Companies that weren't do good for a long time are probably going to give in the towel. They probably were doing bad 5 years ago, but the news said poor economy, and they are probably going to go away. We knew Six Flags was doing bad awhile ago. It didn't just spring up that they were doing bad. At Blockbuster, I went in there many years ago, and it wasn't busy at all. It just makes sense.
There is way too much competition, and everything can't survive. I like about 40 something restaurants, & fast food places, and I dislike other food places like Culver's, Steak and Shake, Baker's Square, Outback Steakhouse, and White Castle.
Go to a mall, and see how many stores are in that particular mall even if there are some empty spots, and count the number of stores competing. For non-food stuff, the Internet is also competing.
I don't like stores, and or car companies go out of business, but there is too much stuff to buy just in general. Go to your grocery market, and look at how many brands of shampoo there are, drinks, or even pizza. It's amazing. At Woodfield, I counted just the A's, and B's of names of stuff they have in there, and there are around 37 places.
Everytime I go in Kmart, it's pretty empty. This hasn't just happened just when the economy went down. It's been empty in those stores for awhile. However, I went in TJ Maxx (just to see what's it's about), and that store was booming. The prices in there aren't that cheap either.
GM has not been doing well for 20 years now. They are still stuck in the glory of the 1950's and just kinda ridding the name.
Basically the whole problem is the business models go in cycles. in the 60's and 70's people went to department stores and general stores for most everything. Starting in the 1980's, every subject got it's own store in large cities. Want a model train, large person clothes or kitchen products, there was a store. Now, with the internet giving people the niche stuff they want without driving 2 hours to get there, the stores are dying.
Circuit City was something special when it opened because of the amount of media options it brought with it. The prices and service there were always awful, just not much competition. The lack of options just allowed the price and service to go unchecked. The digital age allowed someone in central ND to have the same ability to get an item someone in NYC has without driving the 3 hours to Circuit City. Those people that drove to the stores were a huge part of the customer base. Circuit City never exspect it to happen and had no reaction to it.
Look at Blockbuster as well. The store charges (here in Libertyville, IL) 7 bucks a PS2 rental. Most of the time, older games are cheaper to buy used then rent. They tried/trying to do a netflix service with in store returns, but you have to pay a "stocking" fee (aka our employees actually have to do their damn jobs) for each return you make. With this model, there is a reason the store is looking into turning into sales only (notice the amount of game systems and such you can buy in the store. They also were looking into buying Circuit City before it died.)
With food, most are ok. Where I live in suburbia in a nutshell. People love their restaurants and stores that are chains. Every single food place is packed all night of the week. Food allows the people to escape for life a relatively low price, meet a basic human need and allows them to socialize. Chains just give them a home like feeling in the place being familiar.
Yes the economy is in a rough way. But right now, it is cutting the fat off the countries business. The companies that are going under right now were not doing that well before the downturn. This happened in the 1990's, 1980's, 1970's...ect. While this time is worse then normal, it happens.
Bombshell! GM Performance Dead (For Now) By Brian Lohnes Posted 02/18/09 Automotive News is reporting that General Motors has killed off the GM Performance Division. This is crushing news to fans of domestic performance vehicles and the decision appears to have been made in order to appease the government.
Quoting directly from the AN piece by Jamie LaReau, “All high-performance projects are on indefinite hold," GM spokesman Vince Muniga said. "The engineers are moving into different areas of the organization, and they will work on Cadillacs, Buicks, Chevrolets and Pontiacs."
Outside of the obvious implications regarding the desirability of the GM product line, we think that this means no SS Camaro. This truly is a shocking and frightening development for everyone involved in the automotive hobby, whether you are a GM fan or not.
Again, quoting from the story in Automotive News, “Muniga said there are no plans for high-performance versions of upcoming cars.The move is in the spirit of GM's viability plan delivered to the U.S. Treasury Department on Tuesday. In the plan, GM said its future-product focus is on fuel- efficient cars and crossovers. It also pledged to increase its current offering of six hybrids to 14 by 2012 and to 26 by 2014. GM also boosted its request for federal aid by as much as $16.6 billion.”
‘The High Performance Vehicle Operations unit could be reinstated once GM regains its financial health, GM's Muniga said
I am F'N Speechless...
Somewhere in Florida a village is missing its idiot. He can be found in Washington D.C.
Bombshell! GM Performance Dead (For Now) By Brian Lohnes Posted 02/18/09 Automotive News is reporting that General Motors has killed off the GM Performance Division. This is crushing news to fans of domestic performance vehicles and the decision appears to have been made in order to appease the government.
Quoting directly from the AN piece by Jamie LaReau, “All high-performance projects are on indefinite hold," GM spokesman Vince Muniga said. "The engineers are moving into different areas of the organization, and they will work on Cadillacs, Buicks, Chevrolets and Pontiacs."
Outside of the obvious implications regarding the desirability of the GM product line, we think that this means no SS Camaro. This truly is a shocking and frightening development for everyone involved in the automotive hobby, whether you are a GM fan or not.
Again, quoting from the story in Automotive News, “Muniga said there are no plans for high-performance versions of upcoming cars.The move is in the spirit of GM's viability plan delivered to the U.S. Treasury Department on Tuesday. In the plan, GM said its future-product focus is on fuel- efficient cars and crossovers. It also pledged to increase its current offering of six hybrids to 14 by 2012 and to 26 by 2014. GM also boosted its request for federal aid by as much as $16.6 billion.”
‘The High Performance Vehicle Operations unit could be reinstated once GM regains its financial health, GM's Muniga said
I am F'N Speechless...
As a racing fan, it surprises me. From a business stand point, no surprise at all. There is a market for domestic performance, but the tuner market kinda hurt that.
monsterfan99 wrote:Look at Blockbuster as well. The store charges (here in Libertyville, IL) 7 bucks a PS2 rental. Most of the time, older games are cheaper to buy used then rent. They tried/trying to do a netflix service with in store returns, but you have to pay a "stocking" fee (aka our employees actually have to do their damn jobs) for each return you make. With this model, there is a reason the store is looking into turning into sales only (notice the amount of game systems and such you can buy in the store. They also were looking into buying Circuit City before it died.)
monsterfan99 wrote:Look at Blockbuster as well. The store charges (here in Libertyville, IL) 7 bucks a PS2 rental. Most of the time, older games are cheaper to buy used then rent. They tried/trying to do a netflix service with in store returns, but you have to pay a "stocking" fee (aka our employees actually have to do their damn jobs) for each return you make. With this model, there is a reason the store is looking into turning into sales only (notice the amount of game systems and such you can buy in the store. They also were looking into buying Circuit City before it died.)
Do you work at Blockbuster too?
Nope, just went in there a few times. Even tried once to charge me to use a gift card. I will never go there again after that. The rumors about the store were major financial news in Q4 last year.
My 88 Fiero is about to become an orphan. Year One may become the major source of parts for the Camaro, and I may have to surrender to AutoZone and the Chinese for parts for the Fiero...
GM: 'Substantial doubt' about survival NEW YORK (CNNMoney.com) -- General Motors Corp. said in a government filing Thursday that its accounting firm has found there is "substantial doubt" about the automaker's ability to survive.
The embattled automaker made the disclosure in a 480-page filing with the Securities & Exchange Commission.
GM has sustained large and continuing losses, while saying it needs additional federal loans to remain in business. Thursday's statement from the company's auditors presents another hurdle the automaker will have to clear as it makes the case that it deserve additional taxpayer support going forward.
The Obama administration, under the terms of the $13.4 billion in federal loans GM has already requested, must determine that the company's plans make it viable in the long run.
The government must determine that GM has a "positive net present value" or else demand repayment of the loans within 30 days - a development that would almost certainly plunge the company into bankruptcy and quite possibly force it out of business.
But the government has wide latitude in how it judges the company's net present value, based on assumptions it makes about future sales, car prices and costs for the company going forward. The administration clearly does not want to force the largest U.S. automaker into bankruptcy.
The GM filing disclosed that the Treasury already agreed to waive requirements that the automaker meet certain terms of the original loan agreement, including that it win agreement with creditors to convert two-thirds of its unsecured debt to equity by Feb. 17.
But even if the Obama administration continues to give support to GM (GM, Fortune 500) and rival Chrysler LLC, which has also received federal loans, Thursday's filing could create problems in its relations with suppliers and banks.
For example, concerns about GM's future could cause companies that supply it with parts start to demand cash on delivery from the cash-starved automaker, according to GM's filing.
While parts makers would be reluctant to damage their largest customer with such a demand, they may have no choice because of GM's filing. Those parts makers' own auditors and banks could use the doubts raised by GM's auditors to raise questions about their own future.
Privately held Chrysler does not have to file a year-end financial statement with the SEC. Last week,Ford Motor (F, Fortune 500) said its auditors have not substantial doubt about its future. Ford went into this auto crisis with a much stronger cash position than GM or Chrysler.
GM said Thursday auto sales, which have plunged more than 40% in recent months, must rebound by next year if it is to survive.
Meantime, GM also said it needs additional federal loans to stay in business.
GM received $13.4 billion so far, and it has asked for up to $16.6 billion more. In addition, it is seeking $7.7 billion in loans to convert production from light trucks to more fuel efficient cars under an Energy Department loan program.
"The failure to obtain sufficient funding from the U.S. government or governments outside the United States may require us to shrink or terminate operations or seek reorganization for certain subsidiaries outside the United States," the filing said.
"If we fail to obtain sufficient funding for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief under the U.S. Bankruptcy Code," GM added.
The economy is bad, and stores are closing, but can you remember all the stores, or restaurants from before that have closed? Here are the ones I can think of:
Venture Pharmor Handy Andy Builder's Square Courtesy Ame's Goldblatt's Wooworth's I thought there used to be a store called something like Waccamaw. Frank's Nursery and Crafts Sportsmart became Sports Authority Home Base Comp USA Cineplex Odeium (Movies) Lowe's ->AMC
Shoney's is still around but only in other states. For Sizzler, it's the same thing (only in other states) I don't know if IL had any Big Boys, but only in other states. There aren't many Checkers as there used to be.
Places have come and gone, but than they just added more to IL like Fry's, Lowe's, Meijer, Steak N Shake, Chipotle, CVS Pharmacy, Dick's Sporting Goods, Century Theaters, and others.
The point is that stuff gets replaced. There is too much saturation especially with the Internet now more than ever.
Someone was also talking about newspapers doing bad. Well, the news is ridiculously saturated too. Look at your tv guide, and you will see this:
CBS - 6 - 9 am counting The Early Show, 11 am, 5- 6:30 pm, 10 pm NBC - 6 - 9 am counting Today, 4:30 - 6:30 pm, 10 pm ABC - 6 -9 am counting Good Morning America, 11-12 pm, 4 - 6:30 pm, 10 pm CW - 5-9 am, 12-1pm, 5:30 pm, 9 - 10pm Fox - 6 - 10 am, 12 - 1 pm, 9 - 10 pm , 10 - 11 pm
Don't forget am radio, or even on fm radio, they have news stories. How about yahoo, or going online, and looking at news stories?
"I've been staring at the world, waiting. All the trouble and all the pain we're facing. Too much light to be livin' in the dark. Why waste time? We only got one life. Together we can be the CHANGE. So go and let your heart burn bright"
You know, about 2 years ago, I tried to actually find the nearest Shoney's to central IL. The closest one I could find was in the Nashville, TN area. I fully plan to hit one on every trip on the east coast and the south. There was a Big Boy's near the IN/IL border on the way to Indy from Danville 3 years ago (ate there and it wasn't bad.)
With the saturation of news on TV, are you really surprised? It is ultra cheap, gets good ratings and makes the network look good. The fluff news on the morning shows scores them big ratings. It's why TMZ is syndicated and 24/7 news channels are basically fluff channels when it comes to news. Case import, the headline on Yahoo.com last night. It was a story about Quinton "Rampage" Jackson of the UFC needing surgery and missing his next fight. Now I love the UFC and MMA in general and love the press that gets. However, there is no reason that should be the headlining story on any news media.
