GM considers Chapter 11

[Glocksman]

As for GM paying the dealers what happens if the dealer simply goes out of business? Is GM still on the lease to offer some equivalent of severance?

My understanding is limited but I believe that if the dealer goes out of business because of GM, they do owe him some kind of severance.
From what I've read, the dealers are powerful politically in their states.
This is why dealer franchise laws are wildly skewed in favor of the dealer over the manufacturer.
This is also why it's illegal in most states to simply purchase a car directly from the manufacturer.

[Bounty]

No English-language sources yet, but the German government has been contacting countries with GM plants with a tentative proposal to take over Opel from GM and run it as an independent automaker. I guess the plan is to take control of the plants - and the IIRC 25k people they employ - before GM itself decides to close them.

[Glocksman]

No English-language sources yet, but the German government has been contacting countries with GM plants with a tentative proposal to take over Opel from GM and run it as an independent automaker. I guess the plan is to take control of the plants - and the IIRC 25k people they employ - before GM itself decides to close them.

Take over as in a voluntary buyout, or take over as in mandatory nationalization?
If it's involuntary, look for a huge diplomatic fracas between the German and US governments.

[Bounty]

Take over as in a voluntary buyout, or take over as in mandatory nationalization?

Voluntary buyout, of course. Nationalization of a foreign company would be madness.

[Ma Deuce]

http://www.bloomberg.com/apps/news?pid= ... er=germany

Feb. 18 (Bloomberg) -- General Motors Corp. said it’s determined to keep its Opel unit, Europe’s third-biggest carmaker, even as politicians clamor for a spinoff from the U.S. company to safeguard 55,000 jobs in the region.

GM would contemplate selling a stake in the division or allowing it to seek a partner, but still regards it as the company’s “core business in Europe,” regional president Carl-Peter Forster said in a statement today. Detroit-based GM said it aims to cut $1.2 billion from European labor costs and is considering options that include plant closures.

European solvency issues must be resolved by March 31, GM said last night in a report to the U.S. Treasury. While the company resolved to end financial support for Swedish brand Saab by Jan. 1 and warned that the unit may be put into bankruptcy this month, it says Ruesselsheim, Germany-based Opel and U.K. brand Vauxhall are integral to operations.

“Our agenda is to make sure that Opel in Europe is viable for the long term,” said Denis Chick, a spokesman for GM at Vauxhall’s headquarters in Luton, England. “There are no spinoff discussions.”

GM shares in Germany were trading up 5 percent at the equivalent of $2.29 as of 1:28 p.m. local time. They fell 13 percent to $2.18 in the U.S. prior to the company’s filing, which undertakes to eliminate 47,000 jobs worldwide while seeking $16.6 billion in new Treasury loans.

Talks are under way with governments in Germany, the U.K., Spain and Sweden about aid for European operations, according to GM, which said last night it’s seeking $6 billion in grants from overseas governments by 2010. Opel plants in Antwerp, Belgium, and Bochum, Germany, have been earmarked for closure and another in Eisenach, Germany, may be sold, a person familiar with the company’s plans said yesterday.

Spinoff Push

Germany’s federal government and four states are willing to invest as much as 2 billion euros ($2.5 billion) in Opel if GM decides on a spinoff, Christian Weisbrich, deputy chairman of the Christian Democratic Union party in the North Rhine- Westphalia state parliament, said yesterday.

GM’s European Employee Forum had said on Feb. 16 that the envisaged restructuring plan would “finish off” Opel within two years and that a sale was the only feasible option for preserving jobs.

Unions modified their position today, with works council chairman Klaus Franz signing up to a joint statement with Forster that listed partnerships, alliances and equity stakes as options for Opel while stressing its status as integral to GM.

‘Bright Future’

“Employee representatives and GM-Opel management are fully convinced that Opel/Vauxhall has a bright future due to its successful product portfolio, provided that the financial framework can be successfully set up,” the statement said.

Forster said he’s optimistic that Opel will revive once markets recover. Including Vauxhall and ranking Peugeot and Citroen as separate brands, the unit trails only Volkswagen AG and Ford Motor Co. in Europe. Car sales in the region fell 27 percent in January to the lowest in two decades after the economy contracted the most in 13 years in the fourth quarter.

“GM Europe has one of the strongest product lineups it’s ever had,” Forster said, with Opel and Vauxhall recently introducing the Insignia mid-sized sedan and the U.S.-based Chevrolet unit due to role out the Cruze compact and Spark minicar there over the next 18 months.

‘Same Boat’

“It’s very difficult to separate Opel and GM,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “They’re in the same boat.”

Labeling the restructuring plan “very disappointing,” Dudenhoeffer said there is “no evidence in GM’s concept that they’re serious about breaking with their sins of the past.”

Kris Peeters, leader of Belgium’s Flemish region, where the Antwerp plant is located, said he can envisage contributing capital to a purely European Opel, news agency Belga quoted him as saying today. He indicated that there had been contacts with German leaders regarding a possible Opel project, Belga said.

The German government is waiting for GM to provide details of its plans for Europe before commenting on what public funds may be made available for a rescue, Finance Minister Peer Steinbrueck told journalists in Berlin today. He said he’d be skeptical about buying a stake.

Germany needs to see a “business concept for the future” before making any commitments, Thomas Steg, a spokesman for Chancellor Angela Merkel, said today in a Berlin news conference. Talks are under way and the government expects to receive more detailed plans in the next couple of weeks, he said, reiterating that loan guarantees remain state’s preferred instrument for giving assistance.

As expected, GM is not going to let go of Opel willingly, as it's simply too integrated with the rest of the corporation: Many of GMNA's cars share parts and chassis designs with Opel, and the company's R&D facilities are an integral part of GM's global product development operations. That, and Opel is actually one of the most viable parts of GM so from a business standpoint it would be utterly foolish to divest them right now. I expect some kind of compromise to be reached on this matter, possibly including the option of equity stakes mentioned in the article.

[Bounty]

I expect some kind of compromise to be reached on this matter, possibly including the option of equity stakes mentioned in the article.

Trouble is that I don't see Germany sinking money into a company that might siphon that money off to the US to keep GM afloat. They'd need guarantees that Opel won't go down with GM and that the injections go toward keeping the European plants running; is there even room for a compromise like that?

[Dahak]

Given the current discussions, I don't see a chance for them to sink money into Opel if there's a possibility it gets sucked to Detroit.

[Ma Deuce]

Trouble is that I don't see Germany sinking money into a company that might siphon that money off to the US to keep GM afloat. They'd need guarantees that Opel won't go down with GM and that the injections go toward keeping the European plants running; is there even room for a compromise like that?

I'm sure there's some way to ensure that the aid funds are actually spent on Opel rather than the rest of the company. If a compromise can't be reached, then I expect GM will forgo financial aid to Opel rather than spinning them off.

[Thanas]

Trouble is that I don't see Germany sinking money into a company that might siphon that money off to the US to keep GM afloat. They'd need guarantees that Opel won't go down with GM and that the injections go toward keeping the European plants running; is there even room for a compromise like that?

I'm sure there's some way to ensure that the aid funds are actually spent on Opel rather than the rest of the company. If a compromise can't be reached, then I expect GM will forgo financial aid to Opel rather than spinning them off.

Which way would that be? The German government is quite unwilling to sink any more money into GM, especially since the GM plants were subsidized already. Also, would you trust GM not to siphon the money away anyway?

[Ma Deuce]

Which way would that be? The German government is quite unwilling to sink any more money into GM, especially since the GM plants were subsidized already.

Like I said, if an agreement can't be reached that doesn't let GM keep Opel, then they'll withdraw their request for aid from the German government, since there's no realistic way to extracate Opel from the rest of GM in the short term, so I thnk that's what most likely will happen.

Also, would you trust GM not to siphon the money away anyway?

To be brutally honest, no I would not, because that's what I'd do in their position if I thought I could get away with it.

[Stark]

So if GM is going to die, will they close the Opel plants and sack everyone (and then sell the plant I guess) or will they just implode and the Germans buy the plant off the liquidators? How does the end of such a huge and complex business occur?

[Crayz9000]

For all those talking about how Pontiac and Saturn owners will be hosed, there's one big fact that is being forgotten here: GM has not used different drivetrains since the early 1980s when they centralized drivetrain development. One of the strengths of buying GM has always been that even if a model went out of production, parts for that model were shared across the entire product lineup and so you could take a part from a Buick and slap it into a Chevy without trouble.

It's the trim pieces that you'll have trouble getting, but those were expensive to start with and if there's a market, there should be aftermarket suppliers for a while anyway.

[Glocksman]

For all those talking about how Pontiac and Saturn owners will be hosed, there's one big fact that is being forgotten here: GM has not used different drivetrains since the early 1980s when they centralized drivetrain development. One of the strengths of buying GM has always been that even if a model went out of production, parts for that model were shared across the entire product lineup and so you could take a part from a Buick and slap it into a Chevy without trouble.

It's the trim pieces that you'll have trouble getting, but those were expensive to start with and if there's a market, there should be aftermarket suppliers for a while anyway.

The only GM North America brands that don't use shared drivetrain parts with the rest of GM are Cadillac, at least for most of the engines, maybe some Saturn vehicles, and the Chevy Corvette, which is in a class practically by itself*.
Transmissions probably are interchangeable but I'm not certain.

*The Cadillac XLR shares a lot of Corvette parts and is in fact built at the same Bowling Green plant the Corvette is.
Also the CTS-V uses a Corvette engine.

If I had the bank balance to afford one, I'd buy a 2009 CTS-V before I'd buy a Lexus, Infiniti, or even a Mercedes.

[Crayz9000]

For all those talking about how Pontiac and Saturn owners will be hosed, there's one big fact that is being forgotten here: GM has not used different drivetrains since the early 1980s when they centralized drivetrain development. One of the strengths of buying GM has always been that even if a model went out of production, parts for that model were shared across the entire product lineup and so you could take a part from a Buick and slap it into a Chevy without trouble.

It's the trim pieces that you'll have trouble getting, but those were expensive to start with and if there's a market, there should be aftermarket suppliers for a while anyway.

The only GM North America brands that don't use shared drivetrain parts with the rest of GM are Cadillac, at least for most of the engines, maybe some Saturn vehicles, and the Chevy Corvette, which is in a class practically by itself*.
Transmissions probably are interchangeable but I'm not certain.

*The Cadillac XLR shares a lot of Corvette parts and is in fact built at the same Bowling Green plant the Corvette is.
Also the CTS-V uses a Corvette engine.

If I had the bank balance to afford one, I'd buy a 2009 CTS-V before I'd buy a Lexus, Infiniti, or even a Mercedes.

The Corvette engine is an LS series engine. The ZR-1 excepted, the only difference between a mainline Corvette LS engine and an LS2 used in a car such as the Camaro are some power boosting enhancements (such as slightly different heads, IIRC), the exhaust flow system, and a "batwing" oil pan to allow the engine to be mounted closer to the ground. Other than that, people have taken Corvette engines, put normal oil pans on them, and dropped them into Camaros without much difficulty.

I actually took a complete set of seats out of a ~1999 Camaro and swapped them into my 1986 Camaro. The bolt patterns are identical, I only had to replace the wiring harness connector to get it to work. They're much more comfortable as well.

The 3800 V6 is another engine that wound up being used in almost every GM model until it was finally discontinued. It was based on the 1960s 3.8 V6 that was sold to Chrysler and then bought back in the 1980s and used in the Turbo Trans Am in turbocharged form, and in most of the midsize cars such as the Chevy Malibu and Buick Century. They stopped using it for a few years in the mid 1980s due to emissions reasons while they figured out how to convert it to fuel injection, and then reintroduced it as the 3800 in the early 1990s. It stayed in that form right up to last year.

As far as transmissions, I'm not sure what they're doing for FWD transmissions. Historically GM has partnered with Borg-Warner for its passenger car and pickup truck transmissions, and I don't see why they would have stopped that. However, for anything RWD, they have the 4L/6L line (the 4 and 6 referring to how many speeds it has). This line is a direct descendant of the 3 speed Turbo-Hydramatic 350 and 400. The 4L60 was one of the first of that line and came out in the early 90s on the F-bodies. The 4L80 was descended from the Turbo 400 and used on the truck models. As far as the heavier trucks go, they use Allison 6-speed automatics in them.

If GM kills Pontiac, that will be a sad day for auto enthusiasts as it would completely dash the hope of ever getting a Firebird again. I also wonder what they're going to do with the Solstice, as that was only being shared across Pontiac and Saturn (so far) and is a fairly popular vehicle as far as 2 seat roadsters go.

[Glocksman]

I'll be damned.
I though GM had finally adopted an overhead cam engine for the 'Vette.
My bad.

[Phantasee]

The Solstice shouldn't be too hard to change into a Chevy model, nah? Just slap on the badge for the next few model years until you can get around to changing the styling a bit, but the insides will be the same, more or less. No reason to throw out a popular model just because its sisters suck, let it move in with the cousisn.

[Ma Deuce]

So if GM is going to die, will they close the Opel plants and sack everyone (and then sell the plant I guess) or will they just implode and the Germans buy the plant off the liquidators? How does the end of such a huge and complex business occur?

When a large corporation like GM files for Chapter 7 (or equivalent), that doesn't necessarily mean all their employees are sacked right then and there. After the company files, it continues to operate until the court-appointed bankruptcy trustee liquidates their assets, and then it's usually up to the new owners whether those assets keep operating or not. My guess for Opel is that they would be sold off in one piece, because however integrated they are with their parent, they're still a subsidiary company, not simply a brand or division. However, the process of suddenly ripping Opel out of the rest of GM's infrastructure would be very messy, and the company would not survive it without significant external investment: At that point you may see the German government nationalize them. I doubt much of GM's North American assets would be so lucky though.

[Stark]

Is that a political thing, or economic? Do you think the NA operation isn't as profitable? In many of these threads you guys have emphasised the importance of the car industry to America, so would the government really let it collapse in this way? Or do you think GM's competitors would buy it (although I don't believe they're in very good shape either)?

[Ma Deuce]

As far as transmissions, I'm not sure what they're doing for FWD transmissions. Historically GM has partnered with Borg-Warner for its passenger car and pickup truck transmissions, and I don't see why they would have stopped that. However, for anything RWD, they have the 4L/6L line (the 4 and 6 referring to how many speeds it has). This line is a direct descendant of the 3 speed Turbo-Hydramatic 350 and 400. The 4L60 was one of the first of that line and came out in the early 90s on the F-bodies. The 4L80 was descended from the Turbo 400 and used on the truck models. As far as the heavier trucks go, they use Allison 6-speed automatics in them.

GM sources their manual transmissions from Borg Warner, Aisin and one or two other suppliers, however their automatics (excepting the Allison models and their new FWD 6-speeds, which were jointly developed with Ford) are all developed in-house. In fact, GM has been a long-time automatic transmission supplier to BMW, and most automatic 1-series models, along with the lower-end RWD and all AWD 3-Series models use GM automatics (other models use ZF transmissions). On more than one occasion have I gotten a kick out of pointing out to a BMW owner that their car actually uses a GM transmission. .

I though GM had finally adopted an overhead cam engine for the 'Vette.

They did at one point. You're probably thinking of the 1990-'95 Corvette C4 ZR-1, which used a Lotus-designed 5.7L DOHC V8 that made 385-405 hp, depending on the year. That engine was dropped with the introduction of the C5.

The Solstice shouldn't be too hard to change into a Chevy model, nah? Just slap on the badge for the next few model years until you can get around to changing the styling a bit, but the insides will be the same, more or less. No reason to throw out a popular model just because its sisters suck, let it move in with the cousisn.

Although they are rather different cars, with the state of the auto market and all automakers looking to pare down their lineups, I don't think there's much room for both the Solstice and the Camaro in Chevy's lineup, especially since both models share a similar price range.

[KrauserKrauser]

I for one hope that Germany doesn't go for the nationalizing plan as that is easy to use as an excuse for international protectionism here in the US. I can already imagine the screeching that would cause on the radio.

At that point the claims of "They stull ur jerbs!" would be coming from a bunch of people if the UAW got with GM to attack that move by Germany.

[Ma Deuce]

Is that a political thing, or economic? Do you think the NA operation isn't as profitable? In many of these threads you guys have emphasised the importance of the car industry to America, so would the government really let it collapse in this way? Or do you think GM's competitors would buy it (although I don't believe they're in very good shape either)?

It's a bit of both: GMNA has indeed been less profitable, because it's massive pension liabilities are what's been dragging down the rest of the company. While these liabilities would be gone with bankruptcy, they may still cause GMNA's physical assets to be seen as a "poison pill" to potential buyers. Secondly, I do not know how willing or able even the Democrats would be to nationalizing the company's assets if it went into Chapter 7, especially considering the Republicans would fight it tooth and nail, and as we saw in the Stimulus bill, they still have the numbers in the Senate to hold up legislation they don't like (plus there are West Coast democrats who voted against the auto bailout in December, who may also vote against nationalization). So while nationalization of GMNA is a possibility in the event of liquidation, I would not hold my breath that it will be successfully carried out.

If it's left to private buyers, a few plants may keep operating under new management, but I expect they would mainly interested in GM's IPs: This would especially be the case in the event nationalization is not successfully carried out, as an industry collapse would take a large chunk of the larger economy with it and depress the auto market even further, so many of these plants would simply no longer have a reason for being even under new ownership.

[andrewgpaul]

How integrated are Opel and Vauxhall? I'd expect, if European jobs have to go, it'll be Vauxhall that gets the shaft, not Opel, since it's cheaper to fire Brits than Germans, IIRC.

On a less important note, my 2001 Astra has an interesting mix of GM-, Vauxhall- and Opel-branded parts in it. Also, if GM go tits-up, it might be easier to find knackered ones in the scrappies - took me 4 goes to find replacement roof trims, the last time; the damn things don't get chucked away often enough, it seems.

[Ma Deuce]

How integrated are Opel and Vauxhall?

For all practical purposes, Vauxhall is part of Opel (even though technically it is a separate subsidiary like Opel itself), as virtually all it's current models are nothing more than right-hand-drive Opels. Vauxhall's plant even produces Opel-badged cars for export to other RHD markets.

I'd expect, if European jobs have to go, it'll be Vauxhall that gets the shaft, not Opel, since it's cheaper to fire Brits than Germans, IIRC.

Well they already closed the Luton plant years ago, though for the near future the remaining plant at Ellesmere Port (which is running on two shifts since 2006) appears safe from the axe. There really isn't that much left they can cut without closing the last Vauxhall plant entirely, and given the number of European workers they're planning to lay off, at least some of the cuts will have to come from Germany.

[Crayz9000]

As far as transmissions, I'm not sure what they're doing for FWD transmissions. Historically GM has partnered with Borg-Warner for its passenger car and pickup truck transmissions, and I don't see why they would have stopped that. However, for anything RWD, they have the 4L/6L line (the 4 and 6 referring to how many speeds it has). This line is a direct descendant of the 3 speed Turbo-Hydramatic 350 and 400. The 4L60 was one of the first of that line and came out in the early 90s on the F-bodies. The 4L80 was descended from the Turbo 400 and used on the truck models. As far as the heavier trucks go, they use Allison 6-speed automatics in them.

GM sources their manual transmissions from Borg Warner, Aisin and one or two other suppliers, however their automatics (excepting the Allison models and their new FWD 6-speeds, which were jointly developed with Ford) are all developed in-house. In fact, GM has been a long-time automatic transmission supplier to BMW, and most automatic 1-series models, along with the lower-end RWD and all AWD 3-Series models use GM automatics (other models use ZF transmissions). On more than one occasion have I gotten a kick out of pointing out to a BMW owner that their car actually uses a GM transmission. .

D'oh, my mistake. I knew what I was saying didn't sound quite right.

On a sidetrack, one of the random thoughts that occurred to me was the idea of taking a Tahoe Hybrid drivetrain and dropping it in a Camaro. Presto, a hybrid Camaro that can smoke most ricers and would probably get better mileage!

[Ma Deuce]

On a sidetrack, one of the random thoughts that occurred to me was the idea of taking a Tahoe Hybrid drivetrain and dropping it in a Camaro. Presto, a hybrid Camaro that can smoke most ricers and would probably get better mileage!

That idea has been brought up before, and the official word from GM is that it's "doable". They don't have any firm plans for a Camaro hybrid, but they're not ruling it out either: So maybe in a few years, if GM is still around.