Jalopnik: Bankruptcy

Report: GM, Chrysler Consider Bankruptcy For Federal Bailout Loan

Ray Wert — Thu, 04 Dec 2008 08:40:00 EST

The CEOs of the not-so-Big Three made it to DC for committee hearings beginning today at 10:00 AM. According to Bloomberg's sources, GM and Chrysler execs are considering a pre-arranged bankruptcy (which we've already said is a good thing) as a last-resort of getting a multibillion-dollar government loan.

This flies directly in the face of GM CEO Rick Wagoner's past comments that a bankruptcy would mean liquidation because customers would refuse to buy cars from a company that might not be able to back warranties or supply parts. Our sources, whether from inside the General or from the outside, have given us similar arguments in the past.

That hasn't stopped staff for three members of Congress, who've asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the industry without liquidation.

But it's not just the congressional committees at work here. According to another source, a representative of Obama’s team contacted at least one bankruptcy-law firm to say Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so-called prepack, according to this person.

But don't expect anything on this to come out of this week's hearings as we're also told

"Negotiations are splintered among small groups, making it unlikely a proposed solution such as bankruptcy would emerge until next week at the earliest..."

We'll obviously continue to be all over this story like a fat kid on cake. Stay tuned throughout the day to our "Carpocalypse Now" tag today as we bring you the latest news from D.C.

[Bloomberg]

Grading The Not-So-Big Three's "Bailout" Plans

Ray Wert — Wed, 03 Dec 2008 10:00:00 EST

We spent the night reading the the not-so-Big Three's business plans presented yesterday to Congress and after we graded them below, we've one huge question. Given the Carpocalypse, what's with the overwhelmingly optimistic sales projections for the next three years?

The biggest factor into how well a cash loan will work with the automakers will be the number of total auto sales in the United States. If an automaker makes the right projections they should be able to figure out how much money they'll need to get them through this downturn. So how did they each do in their projections? Let's take a look and grade them. Here are the sale projections from the three automakers:

Ford

U.S. Total Vehicle Sales Projections (Slightly Improved Rate / Current Rate / Worse Rate)
2009: 12.5 / 11.0 / 10.5 million units
2010: 14.5 / 12.5 / 11.0 million units
2011: 15.5 / 14.0 / 12.0 million units
Analysis: Yesterday on CNBC, we said we were unimpressed with Ford's submitted business plan because we were concerned the results were overly optimistic after a quick skim and seeing only the "slightly improved" projection, thinking that there was no way the U.S. market would hit those numbers. Our first and snap response was "they'll need to dip into the line of credit they're asking for." Then we had a chance to read through the rest of the automaker's massive filing. We saw they'd not only created a "slightly improved" projection, but also a "current rate" and "carpocalypse now rate" projection. In those sub-sections, Ford frankly admits the automaker will not only need $9 billion in loans, they'll need up to $13 billion. While we still think the 2010 numbers are overly optimistic, we salute them for being honest and after seeing Chrysler's gameplans, we're of the opinion they really may be the U.S. automaker in the best position.
Grade: B+

GM

U.S. Total Vehicle Sales Projections (Slightly Improved Rate / Current Rates / Worse Rate)
2009: 12.0 / 12.0 / 10.5 million units
2010: 14.0 / 13.5 / 11.5 million units
2011: 15.5 / 14.5 / 12.0 million units
2012: 16.2 / 15.0 / 12.8 million units
Analysis: GM goes the extra step of providing a magic fun world of 2012 with a peaches and cream annual sales projection of over 16 million. Apparently in 2012, we're going to party like it's 2006. But whatever, the big number discrepancy between GM and the other two (well, Ford really), is their projection for 2010. 13.5 million units is a lot of vehicles to be selling without a serious boost in hiring in this country, something not expected until mid-2010 at the latest. Also, we're not sure GM's taking into consideration the increased longevity of their own products. With increased quality comes increased time owners will keep their vehicles. We think Ford's numbers for 2010 are much more reasonable and frankly, we're concerned about the numbers of people at the RenCen who may be wearing rose-colored glasses.
Grade: C-

Chrysler

U.S. Total Vehicle Sales Projections
2009: "lower than normal"
2010: Inc.
2011: Inc.
Analysis: If this were a real homework assignment, we'd award Chrysler with an incomplete and send them straight to detention. Hopefully there, they'd come up with something that resembles real work rather than something they scrawled in their notebook in the back of the bus on the way to school. UPDATE: A better analogy from the comments below — "It's like...an open book test...writing an essay where each automaker's allowed to bring whatever books they wanted with them into the test. Chrysler brought crayons and a coloring book."
Grade: Inc.

Photo Credit: Christopher Furlong / Getty Images News

CNBC's Jim Cramer: "What's Good For GM Is Still Good For America"

Ray Wert — Fri, 14 Nov 2008 18:45:00 EST

The red rubber bull-biting bald man by the name of Jim Cramer had a mouthful to say about the Motor City today — making clear his belief that if Motown gets showed D.C.'s checkbook, then we've seen the lows of this financial downturn. I tend to agree. Right now, according to Cramer, the issue isn't anymore whether you think GM deserves or doesn't deserve to be saved, it's whether you're alright with massive unemployment and an economic downturn taking this nation further into the murky unknown depths. Sounds to us like someone thinks people need to buy some "Save GM" t-shirts. That sentiment's shared by Keith Crain's Automotive News, where we saw an opinion piece today the likes we've never seen — essentially refuting an idea I'd held up until the past week, that Chapter 11 could allow for reorganization. The Op-Ed's entitled "The cost of GM's death," and you can hit the jump for the excerpts.

Let's be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success.

No, even if GM could get debtor-in-possession financing to keep the lights on (which it can't), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.

GM's 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM's 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.

But that's not all. Here comes the call to action:

The taxpayer needs protection and an upside. GM's top management may need to go. Government-as-shareholder deserves a big voice. Those details can be worked out.
The Detroit 3 CEOs and UAW President Ron Gettelfinger had better tell two critical congressional hearings next week what sacrifices they are prepared to make.

But the stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing — now.

What? Buying a t-shirt won't help? [Automotive News, CNBC]

GM Will Go Bankrupt: Why That May Actually Be Good For The General

Ray Wert — Fri, 10 Oct 2008 08:30:00 EDT

I'm not the first person to say it. After yesterday's 31% drop in the price per share, news outlets talking to the right people this morning are already saying it, albeit fecklessly, like thus: "Will GM declare bankruptcy?" All I'm doing is removing the question mark. The pundits saying "bankruptcy is not an option" are completely ignorant of the facts, living in an alternate reality or parroting the GM PR public line (a line I don't begrudge GM for pushing given the need to be positive or else face a rush for the hills), because let's be clear here — if the marketplace for credit does not change in the next year, bankruptcy is not only an option, it's the only option. Yes, GM will be forced to declare bankruptcy. Although yesterday's drop in share price had more to do with the release of the short-selling ban on GM stock than anything else, it's indicative of the bigger picture. It's the same one facing every major company in the United States today, and every consumer looking to buy a house or a car — an inability to get a loan. For GM, those loans are what they'll need to go about doing business on a day-to-day basis and it's a problem that looks to not be fixing itself anytime soon. But the "b-word" may not be a curse word for the General. In fact, it could potentially be one of the best things to happen to the automaker in years. Here's why and how.

For the first time in the history of the company, the crisis isn't product. It's clear GM's figured out the need to design and build high quality, fuel efficient and attractively-designed vehicles. Not only have they realized the need to do it, they're actually doing it. Even the most jaded auto enthusiasts, journalists and industry analysts with even the slightest clue have to admit they've stepped up their game in the past few years. But, that won't stop bankruptcy at GM — just like it isn't stopping bankruptcy at their dealerships, as the recent failure of Bill Heard Chevrolet showed us last month.

Although the automaker has the cash to go about doing business right now, we've been told in the past the company needs $11 billion in working capital on hand at all times to remain in business. Right now, they've apparently got somewhere around $20 billion. With a "burn rate" (god, we SO didn't miss that term from the dot-com bubble) averaging over $1 billion a month (and a greater spend in recent months thanks to increasingly lower auto sales) and an inability to raise more cash (other than whatever minor deals they can come up with like refinancing buildings like their Renaissance Center HQ in downtown Detroit), the automaker will hit that $11 billion mark pretty darn quick. When that happens, there's no more crazy deals they'll be able to come up with to avoid declaring bankruptcy.

What's that you ask — what about the $25 billion in Federal loan guarantees? GM's cut of that pie will give them a few billion, yes, but nobody's expecting that money to hit the General's accounts until sometime next year and anyway, they may not even make it that far.

What about the open markets? Well, S&P just made it much more difficult yesterday, claiming it was reviewing GM for further long-term credit downgrades — ratings that already indicate their bonds are below investment grade. So don't expect help to come from the capitalist-loving marketplace.

So what happens when they hit that wall and actually have to throw down the B-word? Nobody knows for sure, and anyone who claims they do is full of more bull than Bank of America after swallowing up Merrill. But, one thing's clear — any form of court-mandated reorganization allows GM to reevaluate all sorts of deals — like the one recently signed with the UAW, with suppliers and most importantly, with creditors seeking repayment on the $43 billion in debt and $80 billion in other liabilities on the books at the General — potentially allowing the automaker to wipe some of that out. More importantly, just like the airlines, it'll give them the time to continue selling their ever-better vehicle lineup. True, many folks may be scared of buying vehicles from a company that's declared bankruptcy but of course, that didn't stop people from piling into Northwest planes after the airline did the same. And that's where they and we, have got some hope.

Bill Heard, Nations Top-Selling Chain Of Chevy Dealerships, Goes Out Of Business

Wes Siler — Thu, 25 Sep 2008 13:00:00 EDT

Bill Heard Enterprises is closing its remaining 13 car dealerships. The country’s top selling Chevy dealer group, Heard blames "adverse economic conditions, high gasoline prices and our traditional product mix.” However, Heard has come under significant legal scrutiny in the past few years, leading us to believe that more than market economics were at work in the shutdown. A closer look after the jump.

According to Automotive News, Bill Heard Enterprises is facing these charges in Georgia:

The Georgia Governor's Office of Consumer Affairs says Bill Heard Enterprises has continued to attempt to deceive consumers since the company and state agency went to court in May 2007. Here are some of the new allegations, filed Aug. 22.
• Heard's Town Center dealership in Kennesaw, Ga., lied to third-party lenders about customers' incomes to increase the likelihood that the vehicles would be financed.
• Bill Heard's flagship Chevrolet store in Columbus, Ga., forged consumers' signatures on agreements without their knowledge or permission.
• Town Center inflated the loaned value of vehicles by telling third-party lenders the vehicles carried extra features and options that they did not — an illegal practice known as "power booking."
• In September 2007, Heard subsidiary Tom Jumper Chevrolet sent a direct mail advertisement informing recipients they might receive financing at interest rates as low as 3.9 percent. The ad went only to people with low credit scores who were unlikely to qualify for such terms.

Other legal charges stem from the company’s dealerships using misleading advertisements to warn customers of non-existent recalls, urging them to visit dealers for a voluntary “safety inspection.” Additionally, on August 22nd, GMAC Financial Services discontinued its line of credit to the company citing a “financial matter.” This adversely affected the company’s ability to finance stock on its showroom floors.

2,700 employees will loose their jobs as a result of the closure, though GM is looking at potentially rolling some of the dealerships into other chains nearby. [via DetNews]

Chrysler Plays Chicken with Parts Supplier, Parts Supplier Loses

Matthew DeBord — Tue, 05 Feb 2008 13:15:00 EST

Ah, the weird, weird world of supply chains, Motown business practices and secretive private equity maneuverings. Yesterday, Plastech Engineered Products Inc., Chrysler's main supplier of parts, filed for bankruptcy. Chrysler, owned by private-equity firm Cerberus Capital Management, sued to obtain the toolings necessary to create the parts, but as of today, that action hasn't been resolved. Meanwhile, Chrysler has given more than 10,000 workers a little time off (with more to come today). The Freep has the best take on this story, which has naturally encouraged speculation on the interwebs that Cerberus is attempting a decisive coup de grace, simultaneously whacking a supplier that had become a cash drain and giving itself an excuse for a brief production slowdown to clear some unsold inventory. The actual story might not be quite so dark, but it certainly doesn't look good for Plastech.

The salient point in the Freep story is as follows: "The lost production won't hurt dealers for a while. Of the eight models affected on Monday, only two tend to sell in less than the industry average of 60 days of vehicles." Chryslerberus ain't exactly clearing off dealer lots at the moment, but they're not in completely dire straights, either, in terms of unsold vehcicles. AP reports that, according to Ward's, Chrysler currently has a 75-day reservoir of product. But AP also reports that Cerberus had been running thin on parts, presumably to instill a just-in-time approach on the assembly lines, and when Plastech couldn't keep up, Chrysler pulled the plug.

Industry observers have noted that Plastech has been a basket case for years. The company has benefited from clubby Detroit bailouts in the past, but its bottom line hasn't improved. It probably hasn't helped that Plastech has been engaged in making stuff out of, you know, plastic, and that "plasticky" is one of the main knocks against U.S. car interiors.

It looks like Cerberus seized an opportunity to play by Wall Street rules and take step one to shift its supply chain to less pricey realms. As the Freep reports, taking Plastech's toolings would effectively crush the supplier, as it would be competitively neutered. Chapter 11, one assumes, provides some protection in this area. Cerberus, no doubt, will argue in court that it owns the equipment and must secure it in order to stay in business.

Ford and GM are still buying parts from Plastech.

Updates to come as the story moves.

Plastech files for bankruptcy, Chrysler idles plants [Freep]

Unique Performance Files for Bankruptcy

Matt Hardigree — Thu, 29 Nov 2007 15:15:00 EST

We sort of wish we hadn't called this, but AutoWeek is reporting that Unique Performance filed for Chapter 7 bankruptcy protection on November 12th, less than a week after being raided by the fuzz for title-washing and other crimes. This means the company has no plans to rebuild itself and, worse, owes between $1 and $100 million dollars with no listed assets!

This is horrible news for anyone waiting for a new car or, at least, hoping to get their deposit back. This development leaves some questions remaining, like what's going to happen to the seized cars and what, if any charges will be filed. There are also some new questions this raises, namely who does the company owe money to besides those who put deposits down for new cars? [AutoWeek]

The bankruptcy bill for Delphi will top $200 ...

Ray Wert — Wed, 11 Jul 2007 07:00:00 EDT

The bankruptcy bill for Delphi will top $200 million and may go as high as $300 million. [Detroit News]

TVR in the Terlet?

Davey G. Johnson — Tue, 02 Jan 2007 16:45:00 EST

Ooh 'eck. Things aren't looking so rosy in Blackpool right now. Blackpool Automotive, the arm of TVR which owns the factory where the sports cars are built has gone into receivership and no employees of the company are being allowed on the premises. According to a statement on TVR's site, "Our plans include appointing expert partners and outsourcing to more advanced facilities, which will ultimately mean a better product for everyone, both here in the domestic market and internationally." Does this mean we'll finally see Clarkson's long-dreamed-of TVR Spetsnaz? – Davey G. Johnson

TVR Future in Doubt — Again [The Car Connection]

Related:
TVR Hooks Up With Bertone [Internal]

Breaking! Delphi Gets $3.4 Billion As A Little Something To Keep It Going Through The Show

Ray Wert — Mon, 18 Dec 2006 09:25:00 EST

Well, it looks as though the saga of whether auto parts supplier Delphi will drag the General underwater into the inky abyss is getting a bit of a reprieve today. That reprieve is coming to the tune of $3.4 billion in stock buybacks of the broke n' busted auto supplier from Appaloosa Management LP, Cerberus Capital Management LP, Harbringer Capital Partners Master Fund I (no LP!), Merrill Lynch and YouAndUs Securities, LLC. The five companies, in a show of throwing good money after bad, appear to be in support of the Delphi plan to re-emerge from bankruptcy during the second quarter of 2007 and you know, start paying back the money it owes to the banks currently providing a hot capital injection. – Ray Wert

Delphi accepts $3.4 billion in financing from group of investors [Freep]

Breaking! Collins & Aikman Submits Chapter 11 Bankruptcy Reorganization Plan

Ray Wert — Thu, 31 Aug 2006 09:48:23 EDT

The once-beleaguered auto supplier and current stunner of automotive supplier industry critics, Collins & Aikman, released a gameplan for bankruptcy reorganization that should allow them a way out of its current Chapter 11 status. Although confirmation of the plan still is subject to a bunch of conditions — like entering into agreements with customers, modification of some labor-related obligations, resolution of ongoing government investigations, pulling a large rabbit out of a hat and of course...court approval — hey, at least it's a start.

Collins & Aikman files bankruptcy reorganization plan [Detroit News]

Related:
Thar's Gold In Them Thar Suppliers! [internal]

Breaking! Delphi Drops $2.6 Billion During The First Half Of 2006

Ray Wert — Tue, 15 Aug 2006 11:59:17 EDT

Embattled auto supplier Delphi's released the first half numbers and — who would have guessed it — they're awash in red ink. Yup, they're drowning in it — losing $2.6 billion during the first half of the year. But just like Delphi's baby-daddy, General Motors, the majority of those losses are associated with its attrition program. That'd be the more than 12,000 hourly UAW and IUEW workers who've taken the early-retirement plan. But that only accounts for $1.9 billion of the loss. Delphi's well-heeled, well-salaried and well-bonused execs still need to explain why the bankrupt company lost $700 million with revenue only up $100 million or so from the $13.9 billion it made in the first half of 2005.

Delphi loses $2.6 billion in 1st half [Freep]

Broke? GM Fires Multibillion-Dollar Claim Against Delphi

Ray Wert — Tue, 08 Aug 2006 09:00:03 EDT

It's been a while and we hadn't heard from Delphi recently...we were wondering what those guys have been up to. We found out when late yesterday, broke-as-a-joke auto supplier Delphi said the General made a "multibillion-dollar" demand for payments. That's not so good for Delphi considering it's kinda been relying on GM's help to carry out its bankruptcy reorganization. It's also interesting...

...because folks at Delphi are saying they have their own claim to file against the General, and Delphi's creditors have estimated GM's debt to Delphi a in the "billions of dollars" and are complaining Delphi hasn't been working hard enough to try to get payment from the General. So we've got a lawsuit by the worlds biggest automaker against the worlds biggest brokest auto supplier, and threats of a counter-suit. Sounds like a regular day in the American auto industry to us.

General Motors files multibillion-dollar claim against Delphi [MarketWatch]

Breaking! Bankruptcy Judge Rewards Delphi Execs For Being Bankrupt

Ray Wert — Wed, 19 Jul 2006 17:05:12 EDT

Somehow we don't think this is going to make things any easier during union negotiations. A federal bankruptcy court approved today a multi-million dollar bonus plan for Delphi senior executives. That's right — the court decided 467 executives of a bankrupt auto supplier needed bonuses — as long as they acheive earnings targets in the second half of the year. This is after they approved similar bonueses for the same executives for hitting performance goals in the first half of this year. Those bonuses were estimated at around $38 million. So — two questions. Is keeping your job when you've sent your company down the crapper no longer the incentive folks need, and where' the similar bonus plan for the blue-collar workers? Oh wait, Delphi's cut most of those jobs. By the way — anyone want to send us a copy of that list of 467 execs — just send it over to tips@jalopnik.com.

Court approves bonuses for Delphi execs [Detroit News]

Related:
Delphi to Court: Let Us Eat Cake! [internal]

Breaking...And Obvious! Unions Dislike Delphi Management Over Bonuses

Ray Wert — Wed, 12 Jul 2006 19:30:00 EDT

The International Union of Electronic Workers-Communications Workers of America (~~NAMBLA~~ IUEW-CWA) is bitching and moaning (for rather reasonable reasons, we might add) in a filing today in the Delphi bankruptcy hearing over a $60 million-a-year bonus program for Delphi executives at a time when the bankrupt auto parts supplier has just offered attrition programs to its union workforce. This also comes as the company reported a $2.4 billion loss for 2005 yesterday afternoon in a very much delayed annual report. We already know how Delphi management's going to justify this — it'll be the same old "you need to pay competitive salaries to get good people" argument we've heard in the past. And every time, we find it more and more funny for management folks to say this when they're talking about their bonuses — but later in the day they'll be the first folks to go after the unions for pay cuts. Wethinks maybe there's a flaw in logic somewhere around here.

Union objects to Delphi bonus program for executives [internal]

Annual Report Rollback! Delphi Releases Numbers, Cuts Losses In Half

Ray Wert — Wed, 12 Jul 2006 09:53:04 EDT

Although until yesterday, they were months behind in releasing an annual or quarterly report — they're finally able to tell the world they're doing...a bit better. Despite reporting a $2.4 billion loss, and reporting a warning they may be forced to sell or liquidate assets if the supplier can't work through problems in the bankruptcy courts — it's still only half as bad as last year. We guess that means investors and employees who own stock should only be half as worried they'll never see a single dime.

Delphi cuts loss in half to $2.4 billion [Freep]

Related:
More on Delphi [internal]

Breaking! Delphi Judge Says "Meh!" To GM Request For Adjournment

Ray Wert — Wed, 24 May 2006 16:42:54 EDT

Just as quickly as the motion was placed in front of U.S. Bankruptcy Judge Robert Drain...just as quickly it was smacked down — like some crazy judicial game of whack-a-mole. Well, those thoughts of Delphi and UAW leadership sitting around for a quick tea n' crumpets and coming to a equitable solution were fun, weren't they?

Delphi judge dismisses GM delay request [Freep]

Breaking! Poppa Bear Steps In For The Hug-Out; GM Asks Judge For 60-Day Adjournment In Delphi Proceedings

Ray Wert — Wed, 24 May 2006 12:50:25 EDT

GM's totally looking for the hug-out to make Pivens proud on this whole Delphi/UAW contract situation. Lawyers from the RenCen today have asked bankruptcy court judge Robert Drain to adjourn the hearings for 60 days to give Delphi and the UAW some time to try to come to an amicable resolution to the dispute over little stuff like pay and benefits and jobs.

GM asks Delphi judge to adjourn hearings [MSN Money]

Related:
More on Delphi [internal]

GM Calls In The Wolf: AlixPartners Drops In To Clean Up Blood And Guts; Ward Off Bankruptcy

Ray Wert — Thu, 18 May 2006 12:53:40 EDT

The Wolf: Strip. / Jules: All the way? / The Wolf: To your bare ass. / Vincent: Is this necessary? / The Wolf: You know what you guys look like? / Jules: What? / The Wolf: Like a couple of guys who just blew off somebody's head.

Whether or not GM likes it, hiring Jay Alix and AlixPartners to help with "a broad range of accounting, financial
reporting and related matters" never sounds good — especially given the firm's other noted clients: KMart, WorldCom, Dana Automotive and Enron. In fact, it's kinda their niche industry. Since the 80's the firm's pioneered the art of of making bankrupt companies not-bankrupt and stemming the tide of problems before they reach the critical mass of bankruptcy. That means this move's made one thing clear — if a company requires AlixPartners it needs the love only AlixPartners can give — and that means for the first time, all protests to the contrary, GM is internally confronting the possibility of Chapter 11. And a cold shiver just went up our spine — followed soon after by a very...very...wet fart.

Breaking! Twenty-One Delphi UAW Locals Vote To Authorize Strike -- Apocalypse Now? Soon?

Ray Wert — Tue, 16 May 2006 14:57:13 EDT

Hoo-boy, this is totally no good thing — expected, yes — but still no good thing. Twenty-one UAW union locals voted by a 95% margin authorizing their leaders to call a strike if Delphi goes all unilateral, making changes to labor agreements without working with the UAW first. So what does this mean? Well, it means the ground war continues — because this doesn't mean a strike is certain, it just means the leadership can strike if they feel like it. Not like that makes us feel any less jittery for Delphi or GM.

Delphi UAW workers vote to authorize strike [Freep]

Related:
More on Delphi [internal]

GM Puts On Rose-Colored Glasses; Hands In Front Of Eyes, Thinks You Can't See It Anymore

Ray Wert — Mon, 15 May 2006 08:46:11 EDT

Delphi's in bankruptcy court and simultaneously planning on dropping a few million on executive bonuses. The UAW's going to authorize a strike, like, yesterday. Negotiations between the two have basically stalled with the two acting like arguing sibling's — all the while GM's sitting over in the back seat — teetering between profitability and the deep, dark cavern of bankruptcy. So how odd was it to see Fritz Henderson, GM's Chief Teeterer...err...Chief Financial Officer, telling a group of auto analysts in New York last week he was "optimistic that Delphi would reach a negotiated settlement with its unions before the end of the summer?" Guess we're glad to see someone's feeling optimistic.

GM Brass Predict Delphi Settlement [The Car Connection]
General Motors Death Watch 73: Running on Empty [The Truth About Cars]

Related:
More on Delphi [internal]

The Dog Ate Our 10Q: Delphi Delays First Quarter Earnings Report

Ray Wert — Thu, 11 May 2006 22:41:32 EDT

Delphi's kinda like that kid in class who never seems to be able to get his math homework in on time, with assignment after assignment piling up on top of each other. One day, the kid finds himself with a seemingly insurmountable mountain of homework and missed assignments to do. And then he's gotta choose — do all of them in a week-long orgy of work or run off with his buddy Visteon to smoke a joint and eventually drop out of school, wandering aimlessly through life from one dead-beat OEM to another? And to think, this decision coulda been averted if only the parents had realized little Delphi had a learning disability. They totally could have called Sylvan Learning Centers and then gotten the little auto supplier some Ritalin. Oh, we see — it was a single parent household — in that case, GM maybe should have provided a bit more care and affection. Maybe then they would have gotten their accounting straight and not missed providing fiscal year end and quarterly audited statements to the SEC. Now they'll just be out on the street.

Breaking news: Delphi to delay 1st-quarter earnings report [Freep]

Related:
Delphi to Court: Let Us Eat Cake! [internal]

Delphi to Court: Let Us Eat Cake!

Ray Wert — Thu, 11 May 2006 14:32:31 EDT

Our friends at GotDetroit got the right idea on the Delphi bankruptcy court hearings — pointing out the lunacy inherent in the two arguments made by Delphi and their customer/friend International Truck and Engine. We'll let Will over there explain:

"Delphi Corp. customer begs court to not allow Delphi to shut down the American auto industry...begging results in pay bonus for Delphi (non-union) white collar types."

To be fair, Delphi admits their white-collar employees are paid under the average industry wage levels — but that made sense to us because Delphi's profits are kinda under the average industry profit levels.

Coffee Jottings: Delphi executives to start simply spitting on blue collar workers [GotDetroit]

Mike Austin Fears Traffic, Not Zombies

Davey G. Johnson — Thu, 30 Mar 2006 05:31:52 EST

Mike Austin once told us that he envies us because we can work pantsless if we want. (Note, we are currently wearing pants. Y'all can stop salivating. Or cowering. Whichever.) We envy Austin's access to junkets, expense accounts and the freshest iron. But the boy's got something cooking besides conning Alterman to letting him work sans trou — he's decided that it would be in his own best interests if GM would just kick the bucket already. Benefits? Shorter lunch lines, less traffic, less pollution, less speedtraps. The one downside? Zombies. Possibly lots of zombies.

Hurry Up and Die [mph]

Forbes on Fitch on Ford: Whose Credibility is Really at Stake?

Davey G. Johnson — Thu, 16 Mar 2006 16:06:37 EST

Forbes' Richard Lehmann takes on Fitch's downgrade of Ford's credit rating from BB+ to BB, noting that in the post-Enron era, the credit agencies are doing everything they can to restore investors' faith, including forecasting futures that Lehmann seems to think may be akin to reading tea leaves, given the variables at hand. He points out that at the current rate, Ford could continue losing money for a decade and still survive. The analysis is too in-depth to fully outline here. We recommend checking the link; it's at the very least a light lunch for thought.

Fitch's Ford Rating: Dumb and Late [Forbes]

Related:
Mark Fields Drinks from the Bonus Cup at Ford [Internal]

The Truth About the GM Death Watch: What's Good for GM...

Davey G. Johnson — Fri, 03 Mar 2006 17:42:47 EST

Farago takes a stab at hootin' 'n' hollerin' for a GM bankruptcy to save the American auto industry, noting that in its latest SEC filing, Ford noted "adverse effects from the bankruptcy or insolvency of a major competitor" as a threat to their bottom line. Why? Because a massive bankruptcy filing, much like the stroke that felled Lenin leading to Stalin's ignominious reign, would leave Ford as the main game in town, sinking under the pressures of heavy union contracts, possibly pulling the Blue Oval down with it. And who will lead the people then? Why it just might be a smaller, leaner GM. Hope y'all got a mofo of a Five Year Plan, Fords.

General Motors Death Watch 60: Bankruptcy is Good for the Soul [The Truth About Cars]

Dana Files for Bankruptcy

Davey G. Johnson — Fri, 03 Mar 2006 16:20:13 EST

First Tower, then Delphi, and now Dana. The supplier has filed for bankruptcy protection. Interestingly enough their overseas operations are making money and aren't affected. Needless to say, having another supplier to the big three in the toilet doesn't bode well for the domestics.

Dana Files for Bankruptcy Protection [Yahoo! Finanace]

Related:
Supplies! The Truth About the GM Death Watch [Internal]

Think Goes Bust

Davey G. Johnson — Tue, 28 Feb 2006 19:47:46 EST

Back when electric cars were seen as a possibly viable method of ameliorating pollution in urban and retirement-home environments, Ford brought over some li'l 'lectric beasties from Scandanavia. It owned a company called Think, which like eight of you may recall. It later divested itself of the electron-motivated Norwegian concern, and the new owners found themselves fighting a losing battle. And now they're bankrupt.

Norway's tiny electric car maker Think Nordic declared bankrupt [WLNS]

Related:
A New Electric Supercar: The Wrightspeed EV [Internal]

Supplies! The Truth About the GM Death Watch

Davey G. Johnson — Thu, 23 Feb 2006 22:13:38 EST

Remember in the "Weird Al" Yankovic vehicle UHF when Gedde Watanabe and his posse of karate students are hiding in a supply-closet when the baddies open the door and the martial-arts experts all yell "Supplies!" and proceed to mop the floor with their thuggish, clueless asses? Yeah, cheap joke, but that's kinda what might be about to happen to GM right about now. Farago's got the take over at TTAC.

General Motors Death Watch 58: Supply Side Economics [The Truth About Cars]

Related:
More Death Watch than you can shake a polecat with rigor mortis at.

Deustche Bank: Sell Deine GM!

Davey G. Johnson — Wed, 08 Feb 2006 21:42:20 EST

Man, poor GM just can't catch a break these days. They slash salaries, cut dividends, install a York on the board and the biggies still keep callin' "Sell!" This time it's Deutsche Bank makin' the mandatin', and we're not talking about flirtation between adult humans with penises, we're talkin' bout a sell recommendation from one of the larger financial institutions in the world. Still, Bear Stearns analyst Peter Nesvold calls near-term bankruptcy unlikely. You pays your money and takes your choice, puts your York in place, praise the Lord and pass out the machetes, we s'pose.

GM Shares Drop on Deutsche Bank Rating [Yahoo News via Heart of Darko]

General Motors Death Watch 55: My Kingdom for a Horse [The Truth About Cars]

GM Halves Dividend, Cuts Exec Salaries [Internal]

GM Halves Dividend, Cuts Exec Salaries

Davey G. Johnson — Tue, 07 Feb 2006 13:57:57 EST

Okay, so with the volume of e-mail we've been receiving on the subject, we'd be remiss to report this tiny tidbit of news, but then again, most of all y'all who'd actually care probably know by now. Here 'tis anyway: GM has chopped its dividend as well as Rick Wagoner's salary in half, slashed other exec salaries by 30% (including Lutz's), frozen retiree benefits at 2006 levels, and essentially tied a tourniquet around its own neck. The trick is, will the company stop bleeding before it stops breathing? Stay tuned.

General Motors to halve dividend [Internal]

Hello, Jerry (Hello, New Man): Kerkorian s Guy Gets GM Board Seat [Internal]

Fortune Deconstructs GM's Problems

Davey G. Johnson — Mon, 06 Feb 2006 14:38:12 EST

Seven years ago, a friend of ours wrote one of our favorite political punk songs of all time, featuring the line, "Now I'm a happy voter/Freewheelin' like General Motors." At the time, we were DIY'ing it through the tech boom, but today, in light of the political and economic state the nation's in, we're sure he had no idea how prescient he'd be in predicting that everything was gonna go from freewheel to mad coaster brake action. Carol Loomis of Fortune has just laid out one of the most sympathetic and extensive takedowns of GM we've ever read, even if some of her rhetoric paints her as a no-apologies free-market type. Oh, the rogue's march.

The Tragedy of General Motors [CNN/Money]

Related:
Delphi Loses $1.1 Billion in a Month [Internal]

Delphi Loses $1.1 Billion in a Month

Davey G. Johnson — Wed, 01 Feb 2006 20:32:11 EST

Holy crap. We've lost money in our time. A lot of money. Money spent on women who strung us along and eventually broke our hearts. Money spent on bad CDs we were talked into buying. Money spent on speeding and/or parking tickets. Money spent on wasteful excesses of electricity, gasoline, alcohol and tobacco. But we can be pretty sure we've never lost 1.1 billion dollars in our life, much less a month. But you wanna know who did? That's right, kids. Delphi did.

Bankrupt Delphi loses $1.1 billion in December [Detroit News]

Related:
Delphi in Snarl Over Corporate Jets [Internal]

GM Credit Downgraded, S&P Says Bankruptcy Not Out of the Question

Mike Spinelli — Tue, 13 Dec 2005 11:31:16 EST

A GM spokesperson reiterated the company's intention not to declare bankruptcy amid another credit rating cut by Standard & Poor's. S&P also released a statement yesterday indicating a bankruptcy by General Motors Corp. isn't "far-fetched," as it slashed GM's rating to an even junkier BB-. With its credit score looking more and more like a wardrobe order from a Russ Meyer movie, GM will have to rely solely on its cash reserves to fund its turnaround strategy, whatever in the heck that is.

GM bankruptcy isn't far-fetched , S&P says [MSNBC]

Delphi in Snarl Over Corporate Jets

Davey G. Johnson — Thu, 08 Dec 2005 19:32:17 EST

Bank of America isn't pleased with bankrupt Delphi, saying that the ailing parts-supplier hasn't made its last two lease payments on two private jets and is asking for a court order requiring prompt payment. Delphi, in the meantime, asserts that it needs the jets, as it has facilities in remote areas not serviced by commercial air carriers. Hey, Delphi, don't you supposedly make parts for things called cars? We're just askin'.

Delphi creditors fight for payments [Detroit News]

Related:
Cash-Strapped GM Buys Gulfstream Jets [Internal]

Ugly, Fat Belgian Bastards Refuse to Let American Cars into Country

Davey G. Johnson — Tue, 29 Nov 2005 15:10:25 EST

Oh man. We'd literally been waiting for the better part of two decades for the Belgians to do something mean so we could bust out that classic Python ref. Flemish-speakin' dealers selling American cars are teetering at the edge of the Insolvent Sea because government officials refuse to recognize US safety certification, insisting that European certificates be issued. The cars can be imported via Germany, but that tacks on an extra 3,000 euros to the price tag. Interestingly enough, vehicles of Japanese and Korean origin as well as cars other cars hailing from non-EU nations don't face the same restrictions. Dealers are calling it anti-American. Government officials are calling it "responsible." You make the call.

No Yankee Cars: The Anti-American Road Show [Canada Daily]

Related:
Ford to Produce the SAV Concept for Europe [Internal]

Autoextremist Chews on GM's Cuts, Throws Us a Bone

Davey G. Johnson — Wed, 23 Nov 2005 17:16:48 EST

Yesterday we got all crossed up and mistook Sweet Peet D.'s rant from last week for this week's. Of course, he posts on Wednesdays, not Tuesdays, but this whole holiday thing has us all confused. So today we were anxiously awaiting the ex-adman's words on the whole GM situation. Surprise, surprise, Peter essentially echoed Robert Farago's ~~Didionesque~~ Yeatsian take on the General's current situation, saying that it's gonna blow up before it gets any better. Plus, he busted out with a "notgonnahappen.com." Booya!

GM makes its move, but is it too little, too late? [Autoextremist]

Delphi, Unions Still Yelling at Each Other

Davey G. Johnson — Mon, 21 Nov 2005 20:00:06 EST

While a couple of buyers have emerged for pieces of bankrupt auto supplier Delphi, including two Indian companies interested in the company's steering-gear unit, the UAW and the Delphi's management are still arguing about who was overpaid and who's responsible for the demise of the former GM unit, with United Auto Workers chieftain Ron Gettlifinger noting that it would take an average line worker nearly 190 years of labor to earn what "Some People Call Me Maurice" "Steve" Miller made in his first six months at the helm of Delphi. We don't predict an end to this one until the judges step in, and we're betting it's on Delphi's terms.

Unions Say Delphi s Miller Wrong [The Car Connection]

Wagoner to GM Employees: 'Dudes, Chill! We're Not Goin' Bankrupt!"

Davey G. Johnson — Mon, 21 Nov 2005 19:41:14 EST

The rumors have become so rampant over at the Ren Center that the man Sweet Peet D. calls "The Rick" sent out an internal memo late last week to the General's soldiers that the company will not go bankrupt, callling the company's balance sheet "robust" and noting the automaker's $19 bil in cash reserves. But with GM's total stock value hovering right around $15 billion, the General's nevertheless looking pretty green around the gills. Take it away, Mister Farago...

GM Not Looking at Bankruptcy, Internal Memo Insists [Inside Line]

Related:
GM Stock Hits 23-Year Low [Internal]

Black October: We Knew Si Newhouse Was Involved Somehow!

Davey G. Johnson — Mon, 14 Nov 2005 18:27:05 EST

First they fire our man Krucoff and now it comes out that the meeting of the Delphi board that led to the bankruptcy declaration took place in Cond Nast's very own building. Suddenly, we're feeling very, very bad about buying the latest issue of Vanity Fair for the Kate Moss post-coke story and the previously-unpublished photographs of Princess Diana. The Detroit News has the full story. Meanwhile, we're gonna go listen to Government Issue.

Black October: How one month changed the course of the auto industry [Detroit News]