2008-12-02

Automakers bring different strategies, needs

Today was quite interesting and telling when it comes to the current states of GM, Ford, and Chrysler.  
First the bad news.  The bailout goes way above the initial $25B, it could easily top $40B.

Chrysler: Want something around $7-8B.  No real plans other than that.  There are some vague mentions of electric vehicles, but Chrysler's bottom line is that its bottom line is quite bad.  It will only have $2.5B at the end of the year.  They feel if they do not receive the loan by Jan 1, they may go under.  Their CEO, Robert Nardelli, supposedly already makes $1* a year.

GM: Want up to $18B, but at least $12B, with $4B by the end of the year.  GM wants to kill Saab, Saturn, and possibly Pontiac, though Pontiac may be refocused as a "performance brand", whatever that means.  Cheap, fast cars?  I agree with dumping all three.  Saab is kind of interesting, but nobody buys them.  Saturn was interesting until a few years ago when GM closed the TN plant and turned Saturn into copies of other vehicles.  GM's plan also calls for dealer reductions, $1* a year pay to Rick Wagoner, and UAW renegotiations.  And how exactly can they renegotiate with the UAW when they have all that cash?

Ford: Ford is asking for access to a $9B loan that they hope not to use.  They predict a return to profitability in 2011, although a long recession or a bankruptcy by GM or Chrysler would hurt them and could turn that $9B maybe into a $14B bailout.  At least they seem to be willing to go it on their own.  They plan to convert many of their truck/SUV factories to make small cars.  They plan on cutting their dealer network, and also raising their fuel economies by up to 36% in a few years.  If they take the assistance, their CEO Alan Mulally will take a $1* salary.

*Plus stock options

1 comment:

Anonymous said...

I hope everything balances out. If Chrysler and GM don't have real plans, then they shouldn't receive anything and should go under.