GM Adding New Dealerships, Frustrating Old Ones
When Chrysler and GM underwent restructuring earlier this year, they took the opportunity to thin out their dealer networks. As you might recall, that resulted in substantial consternation among dealers, lobbying groups, and elected officials. But while threats of litigation and offers of mediation still hang in the air, there may be a glimmer of hope on the horizon -- at least for some of GM's eliminated dealers.
In late September, General Motors sent out a batch of RFPs -- requests for dealership proposals in markets where GM hopes to beef up its presence. While the RFPs weren't sent exclusively to terminated or shuttered GM dealers, it's clear that at least a dozen of those folks were on the list. However, it's also clear that other entities -- perhaps other dealers, perhaps various entrepreneurs -- have also been invited to apply. Of the proposals submitted to GM so far, three have been accepted.
This is a pretty dicey move for GM. For the better part of a year, General Motors has insisted that it's working to become more streamlined, more efficient; a major element of its restructuring plan has involved reducing the company's dealership network from 6,000 to 3,600 outlets.
Now, there's no problem in GM reassessing those numbers, and it's encouraging to hear that General Motors might be able to accommodate more dealerships than originally thought. (Perhaps the expansion is rooted in General Motors' new-found stability, which is currently just a rumor, but might be confirmed next Monday, when CEO Fritz Henderson reveals GM's third quarter financials.) However, if GM is planning to expand rather than contract, the company would be wise to give existing dealers some sort of right of first refusal. On the marketing and corporate relations front, that would indicate that GM is working in good faith, which in turn could ease the ire of terminated dealers and obviate some major legal fees.
However, that doesn't appear to be what's happening. Based on the information at hand, we have to assume that General Motors' dealer terminations included not only duplicative and underperforming outlets, but also those that the company simply didn't like. That's not surprising -- in fact, we rather suspected it -- but the latter dealerships are likely to get vocal if new dealers in their area are rolled into the GM network while they're left standing in the cold.
[Freep]
This story originally appeared at The Car Connection
GM Prepared To File For Bankruptcy
In a regulatory filing to the Treasury Department Yesterday, General Motors admitted for the first time to Obama's Auto Task Force that it is seriously considering Chapter 11 bankruptcy protection. The filing stated Chapter 11 would be considered if GM cannot successfully complete an out-of-court restructuring.
Within the filing was a progress report that stayed on-message with GM's consistent claims that an out-of-court restructuring is preferable and holds the "highest value outcome" for both its customers and the U.S. economy.
GM said its decisions were helped by the government's recent pledge to back vehicle warranties and not allow bankruptcy court proceedings to drag out interminably. The company's February 17 plan was criticized as insufficient; President Obama warned that GM would have to take swift action to reduce its swollen $63 billion debt in order to avoid bankruptcy protection.
GM's new CEO Fritz Henderson conceded that bankruptcy is looking more and more possible unless his company can come to agreements with bondholders and the UAW, neither of which have been eager to make concessions.
[source: New York Times]
This story originally appeared at The Car Connection
GM CEO Rick Wagoner Claims Bankruptcy = Liquidation
First GM was anti-bankruptcy because they said it would tarnish their image beyond repair. But this morning at a breakfast in D.C., CEO Rick Wagoner sounded the full Chapter 7 alarm. He claimed that filing for Chapter 11 bankruptcy protection would ultimately push the auto giant into liquidation.
Instead, Wagoner is urging is an out-of-court restructuring, which he claims would accomplish nearly everything that would a bankruptcy filing while avoiding scared customers and enormous expenses (haven't we heard that last part before?).
The terms of the proposed restructuring were detailed by GM bondholder advisers. They've got their work cut out for them trying to find a middle ground between Obama's autos task force, GM bondholders, UAW workers, and GM itself.
Wagoner dropped the Chapter 7 warning at a breakfast hosted by the Christian Science Monitor, who publish "an independent daily newspaper providing context and clarity on national and international news."
Do you agree with Wagoner claim that Chapter 11 = Chapter 7, or is this a scare tactic from a sick patient who refuses to swallow some really nasty medicine?
[source: Breitbart]
This story originally appeared at The Car Connection
Link Love From The Car Connection: Hot Art Cars, Lame Holograms, And The iChange Did It
Welcome to Tuesday, ladies and gents. With the industry hearings in D.C., it's bound to be a very busy day, but here are a few lighthearted links to distract you from all the grisliness:
- We just hope the cars remain crash-free -- Tech outfit Hughes Telematics has seen the future, and it looks a lot like the iPhone App Store. Starting in 2010, the company will offer a range of add-on programs for its navigation hardware--downloadable apps to track mileage, start your car on chilly mornings, and take photos of would-be thieves. No word yet on whether the company is leaning toward iFart technology or upstart PullMyFinger. Stay tuned for the blowout. [NYTimes via AutoMotto]
- Blinged-out -- Love art cars but can't make it to LA or NYC for the exhibitions we mentioned last week? Well, DRB has posted a few shots of other notable vehicles to tide you over. FYI, that floppy disk sedan has the guys in the server room swooning (though that might just be the heat from the servers). [DarkRoastedBlend]
- Yeah, we said "balls" -- Remember Ron Bloom, the Jedi Master of failed industry we mentioned yesterday in conjunction with Obama's new auto task force? Well, the WSJ pulled up an interesting quote from the guy at a 2006 conference, in which he described his approach to corporate restructuring as "'dentist-chair bargaining,' in which the patient 'grabs the dentist by the b -- and says, "Now let's not hurt each other."'" That takes some balls--which we can say, even if WSJ doesn't have the cojones to. [WSJ]
- Speaking of a certain task force -- No one would claim that Obama's task-force approach to the auto industry is ideal. However, it takes a special breed to go the extra mile and call the committee a "politburo". Not only is that a weak analogy, it's also a prize-winning version of 50s-era red-baiting. Next up: a sock hop, followed by a rally for the re-launch of the House Un-American Activities Committee. How retro. [TheDetroitBureau]
- Ladytron 2009 -- John King isn't the only King of Holograms: an Australian outfit just put together a holographic virtual assistant for an Audi dealership "to facilitate enhanced communication and customer experience". Frankly, it's a little reminiscent of certain lame robots we could mention. We'll give it an "A" for effort, but a "C" for general creepiness. [Autoblog]
- The iChange ups the Apple love -- We posted about Rinspeed's iChange electric car a couple of months back, and we were, to be fair, a little skeptical--not about whether designer Frank M. Rinderknecht could bring his 1-2-3 seat concept to fruition, but whether Rinspeed could overcome the dated "i" motif and clunky "Yes, we can" press release. Apparently, our pessimism was misplaced, 'cause here's a clip of the car in action. Please note the also-featured iPhone or iPod Touch. Oh yes, they did. [WorldCarFans]
This story originally appeared at The Car Connection
White House Hints at "Orderly Way to Do Bankruptcies"
This morning White House spokeswoman Dana Perino claimed that the Bush administration is very close to a decision on how to prevent further disaster to the Big Three who represent a significant portion of the flailing U.S. economy. Whether the decision will steer away from -- or toward -- bankruptcy is uncertain, but Perino mentioned the "soft landing" afforded by an orderly bankruptcy, claiming, "I think that's what we would be talking about."
Specifically, this might mean financial aid to assist automakers in a sort of managed bankruptcy. At least, that is one of the options on the table. But Perino said not to expect a final decision today.
Bush weighed in on the fix that domestic automakers find themselves in, claiming that under normal circumstances "bankruptcy court is the best way to work through credit and debt and restructuring." But he underscored the fact that the current situation is anything but a normal circumstance and claimed he did not want to dump a major catastrophe into President-Elect Obama's lap on his first day of office.--Colin Mathews
[source: Detroit News]
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This story originally appeared at The Car Connection
