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Keeping score on GM and Chrysler's demise
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While on the road this week in northern Michigan, I've been getting dribs and drabs about what's going on with the number two and the number three automakers. I got more static from the AM talk show hosts than any rain storm.
Only after I've gotten to relax in a hotel room and do a few searches with my laptop could I can make some sense out of the flurry of wire reports.
- GM and Chrysler had until the end of March to prove to the government that they are "viable". Not surprisingly, they aren't.
- GM's CEO was asked to resign over the weekend by the government and did so. He got no severance pay, but is allowed to keep his $20 million-plus retirement for his 30 years of service.
- GM will restructure aggressively, but may still go bankrupt. New plans for GM will take another 60 days.
- GM may shed Hummer soon.
- The future of Saturn, Buick, Pontiac, and GMC are in doubt . So far only Chevrolet and Cadillac seem to have a strong future.
- Chrysler will be forced to merge with Fiat, details to be worked out during April .
- If the government likes the Chrysler-Fiat deal, it will invest an additional $6 billion into it after 30 days.
- If Fiat takes on more than 55% of Chrysler, they will have to pay back the government money
- Cerberus, Chrysler's parent holding company, will lose its equity in the manufacturer , but gets to keep the financing arm Chrysler Financial. Cerberus already owns GMAC. Maybe they will merge?
- President Obama made a speech about not wanting the car companies to vanish, yet said that they need to stand on their own, even though more funds are being advanced by the government to keep these automakers in business.
- The federal government says it will honor GM and Chrysler warranties, but there is doubt what that really means.
Depending on the radio show, I heard that we are witnessing the end of capitalism or the dawn of a new era of cooperation between government and business for the benefit of American workers and a greener planet.
Regardless of what is said by the talking heads, expect fewer car models, more plant closures, lost jobs, and more government money. Also, don't look for new Oldsmobiles or Plymouths anytime soon.
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