Episode 83 – GM & Chrysler Make More Cuts, UAW Concessions, Future Chrysler Product

February 18th, 2009 at 12:00pm

Runtime 6:54

GM and Chrysler are asking for billions more from the government. The UAW agreed to cuts at GM, Chrysler and Ford.  In the viability plan it submitted to Congress, Chrysler has pictures of what its next-generation 300 and Grand Cherokee will look like. All that and more, plus John answers viewer questions about automaker bankruptcies and electric vehicles in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. GM and Chrysler want billions more from the government. The UAW makes more concessions. And a sneak peek at some future Chrysler products.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, February 18, 2009. And now, the news.

GM presented its viability plan to the government last night and the details are brutal (full plans available for download here). It will lay off another 47,000 employees worldwide on top of all the cuts it’s already made. About 21,000 of those jobs will be cut in the U.S. That will come from closing another five manufacturing plants, as well as getting rid of the Hummer, Saturn and Saab brands and all the jobs that go with them. Pontiac will stay on as a niche brand. Astonishingly, GM even raised the specter that it may have to form partnerships with the German government and other European governments to make sure its European operations are sustainable. To pull this all off, GM is asking the U.S. government for $16.6 billion more than before, all because it now bases its plans on much lower sales forecasts for the industry.

Same goes for Chrysler. It’s asking for $2 billion more than before because of the collapse in the car market. The company says that in addition to the steps it’s taken it will reduce fixed costs by $700 million, cut another 3,000 people, take out 100,000 units of capacity, and sell $300 million in assets.

The UAW agreed to cuts at GM, Chrysler and Ford. The details are hazy because they have to be voted on by the membership before the union will discuss them. But my sources tell me it will reduce the number of skilled trades people in UAW plants, and the Wall Street Journal reports it will include lower supplemental unemployment benefits. The union is still arguing over taking stock for its VEBA payments.

Hidden deep in the viability plan it submitted to Congress (full plans available for download here), Chrysler had pictures of what its next-generation 300 and Grand Cherokee will look like. Autoblog is running these photos. The Grand Cherokee looks new and modern but the 300C looks like a mild facelift on a car that’s already been in the market for over 5 years.

You know, the sky may be falling everywhere else but not in Brazil. Nissan will eliminate 20,000 jobs globally by 2010, but WardsAuto.com reports the company will not be cutting anything from its operations in Brazil (subscription required). Two new products it has are the Frontier SUV in its joint venture plant with Renault and its flex-fuel Liniva MVP.

In other Nissan news, the company claims its electric vehicle due late next year will have a 100 mile range running on pure battery power. The car will seat five and will be about the same size as the Sentra or Versa and will be initially made in Japan but will also get built it at its Tennessee plant in the future. And in other EV news, Ford received $55 million in tax credits through the Michigan Advanced Battery Credits. The law is designed to encourage companies to invest in electric vehicle engineering and automotive battery research in Michigan. Earlier this year Ford announced it plans to bring four electric vehicles to market by 2012.

Coming up next, it’s time for You Said It!

And now it’s time for some of your feedback.

This is “You Said It!” Every day we get dozens of comments and questions from you, our viewers. “You Said It!” gives me a chance to respond.

Joe Brooks, from Accu-Shape Die Cutting, writes: “We have suffered 18 customer bankruptcies. My question to you is how can ANY of the automotive makers file for Chapter 11 since no one would likely “loan” them money in their current condition? If they could get that kind of financing, they would not have to go into bankruptcy in the first place.”

Good point Joe. But the Obama Administration has indicated it would provide what they call debtor-in-possession financing, if GM or Chrysler has to go into Chapter 11 to restructure.

Tom Geauvreau, from Windsor, Ontario, says: “I was a kinda amused about the Hofmeister Kink styling feature on BMW cars. Consider if you will the 1952 Nash Ambassador and later the 1956 “basket handle” AMC Rambler. I wouldn’t be willing to say that this design feature started with Nash, but at least it was earlier than BMW.”

Tom thanks for pointing that out. You’re right, that kink did not start with BMW, but I guess they get credit for sticking with it for nearly half a century.

Tim Achterhoff from RC Productions wrote in to say “As I was driving to work this morning in single digit Michigan temps, I wondered where the interior heat would come from in an electric car. Maybe a propane heater? I guess they don’t worry about those problems in California.”

Well Tom, it can get pretty cold in lots of places in California. But to answer your question, it will use an electric heater. But the beauty of it is you can warm up your plug-in while it’s still plugged in. That way the batteries don’t have to take a big hit to heat up the car. Same goes for the air conditioning.

Don’t forget that all this week you can enter for your chance to win the book Italdesign: Thirty Years on the Road by Luca Ciferri. All you have to do is sign-up for our free e-mail newsletter. I’ll be picking the winner Friday on “Autoline Daily” so sign-up today!

And remember that tomorrow we have our live webcast at noon discussing all the details about GM and Chrysler’s viability plans. You can join the discussion with my panel of experts tomorrow at noon eastern time, and 1700 hours GMT.

Thanks for watching, we’ll see you tomorrow.

21 Comments to “Episode 83 – GM & Chrysler Make More Cuts, UAW Concessions, Future Chrysler Product”

  1. Michael Says:

    Not fair to give a prize to a new subscriber, what about all of us who have been watching every day since you started? Why discriminate against us… :)

  2. Howard Remeta Says:

    Who on this planet didn’t know that GM and Chrysler were going to ask for more money after March 31 to stay in business? That was a given. They said that last November. Congress and the “Car Czar” people knew that from the start. I hope they don’t say they are surprised by GM and Chrysler asking for more money. This country needs GM and Chrysler. Let’s keep them afloat.

  3. Mike Dale Says:

    The interesting part to me is the presumption by GM&chrysler that sales will stay at the 10 million unit level for the forseeable future. We may be watching the unwinding of the “leasing” bubble. Three people at lunch today are due to hand back their lease vehicles over the next 2 months. All three will be buying “used” replacements as they don’t have the cash to buy new. There go three “new” sales. Leases have been propping up sales to unsustainable levels for for years.

  4. Alan Says:

    I am trying to support the US auto industry with their future vehicle component needs. Yet, they are moving all small car program development to the Asian or European offices. How are US suppliers suppose to support the US industry when US automotive Purchasing Offices have left the country?

  5. Tom Martin Says:

    I liked the look of the 200 Concept that Chrysler recently showed, and thought that the 300 would be similar. It’s not. In addition, the 300 does not appear to be any lighter.

    I own a 300M, so I was hoping for a smaller, lighter, sportier car to replace my 300M, but it looks like Chrysler has lost me as a future customer.

  6. Kit Gerhart Says:

    I looked throught GM’s plan, and for the most part it makes sense, but why GMC? Chevy has everthing GMC sells, except possibly the Denali trim level in their SUV’s. Even there, the Chevy LTZ trim level is similar, and if Denali is a somehow magical name, there could be a Tahoe and Suburban Denali to replace the LTZ’s.

    Wouldn’t it make more sense to drop GMC and sell what will be left of Pontiac at Chevy dealers, and then combine Buick and Cadillac? You would eliminate one group of dealers and the expense that goes with supporting them, but would still have North America well covered with sales and service outlets. Chevy has more than three times as many dealers as Toyota, and Cadillac has about 8 times as many dealers as Lexus, but Toyota is now selling more cars than GM. Maybe GM should check out what Toyota is doing with their smaller number of brands and dealers.

  7. John McElroy Says:

    @Michael

    Imprecise wording on our part. You do not have to be a new subscriber to win the prize. In fact, you just have to be a subscriber–period–and then correctly answer the trivia. Thanks for the opportunity to clarify.

  8. pedro Fernandez Says:

    John” do you foresee the day when the current dealership system would give way to manufacturers owned outlets? Where everyone there would work for the manufacturer, that would make cars more affordable and keep “bad dealers” from hurting the brand further

  9. Salvador G. Says:

    GM is firing workers, getting rid of brands and getting money from the goverment, are we sure their not in chapter 11 already??? Plus, how is it GM don’t ever seem to ask the European Union for a bailout?

    … And also, I thought John was going to show the cars Fiat will bring under their future Chrysler brand and not the 300.

  10. G.A.Branigan Says:

    Oh the angast continues.Please GM/Chyrsler go bankrupt,have a going out of business sale or something.Please put us out of your misery.In fact,we don’t need you.Law of survival of the fittest should apply to all.Banks,auto makers,etc.Unions….go to hell,every damn one of them.Trying to keep alive a concept that is as out of date as the big three CEO’s.I no longer care about any of the auto makers.If they really want to boost sales(financing not withstanding)bring in everyday people(ya know…the ones that buy the vehicles)and listen to what they want….for a change.I’d do it for free just so the working man would finally get what he/she wants.You have your heads so far up in the clouds you’ll never “get it”.

  11. pedro Fernandez Says:

    Right on Mr Branigan, I think you have expressed the feelings of the majority of Americans. Most of us have had to endure crappy American cars. My last 2 cars were built here by Toyota and were good beyond my expectations

  12. Andy Says:

    Lets see here….GM & Chrysler cannot pay their existing debts….so make the taxpayer loan them $30 BILLION+ and HOPE that they can pay it back?!?!?!
    If no bank or Venture Capitalist would touch GM/Chrysler with a stick….why stick it to the taxpayer???

  13. Paul Says:

    The government is going to need the billions it’s wasting on the car companies – “Big-3″ my Aunt Fannie – to bail out the starving citizens come this summer or at the very latest this winter.
    Just a little bit-o-history: In the nine months that preceded the 1929 crash, car sales fell by 30%. Sound familiar?

  14. Ron Patenaude Says:

    When I hear the bailout plans,I wonder what kind of sales pitch will the big three come up with to sell there less than average product to the consumer that will keep them rolling long after the money is gone.I have not purchased a north american vehicle since 99 and have spent less than 10 hours in a dealership since.Myself making a vehicle purchase is huge. This is why longevity and depenability is number one.I am a Class A Mechanic that worked in dealerships and heard all the horror stories from both sides.Good luck to the big three. Ron

  15. Kit Gerhart Says:

    Even on this forum, where one would presume that the posters are knowledgeable about today’s cars, we seem to have a lot of opinions based on “my grandfather’s Vega.” The cars built by the Detroit Three are good products, and in many cases, are also very good values. I have a three year old Malibu which has never been in the shop, except for oil changes, and the new Malibus are better. My Malibu is more comfortable for me than a same-year Camry, and it cost less than a similarly equipped Camry. Ford and Chrysler are also building good cars. Sure, according to Consumer Reports, Toyotas may be slightly more reliable on average than most other car brands, but there are no “bad” cars sold in the US any more.

  16. G.A.Branigan Says:

    I bought my first new car when I was 16 years old,I am now pushing 58.Wanna talk chevies? I just got rid of my 07 Colorado Z71 4X4.I had 6k miles on it.What a load of crap in plain english.It leaked so much the carpet was moldy,the battery would die once a week if I didn’t drive it and there was nothing wrong with the battery,(refer back to the water leaks).THEN while going down the hwy at 65 mph,it would self engage into 4 high.Want more? Brakes locked up right in my driveway and it had to be towed back to the dealership over 35 miles away.BUT…….I still,for whatever reason bought another american vehicle 3 weeks ago,a Jeep jk Wrangler.I hope it will be good,no,I pray it will be good.

  17. Mr. Bill Says:

    What a sad, sad situation we have here. I could sat a lot more. Ruffle a lot of feathers along the way. Ultimately, if we want to blame someone, I suggest we take a long, hard look in the mirror. Think long and hard before just reacting. This could have been prevented. It should never have happened at all. Remember, in this country, we are all a reflection of how we think and act. Have we done a good job as the stewards of our future?
    HMMMMMM?

  18. Andy Says:

    G.A.Branigan,
    Seems like you didn’t learn your lesson……

  19. Kit Gerhart Says:

    G. A.,

    I hope you have better luck with your Wrangler than you had with your Colorado.

    Everyone builds some “lemons,” and, unfortunately, dealers sometimes aren’t very good at fixing some things. I’ve had rain water leaks in a couple cars over the 40 years I’ve been buying cars, and I ended up having to find them myself.

    A friend recently had a tranmission failure at 40K miles in a Toyota Corolla, one of the statistically best cars on the market, so you can have problems, even with the “best.” I’ve had one Toyota which was completely trouble-free while I had it, but I’ve also had similar experiences with Chevys, Dodges, and even VW’s which are at the bottom of most “quality” rankings.

  20. Ed Kemmerer Says:

    John,

    With all this talk of electric vehicles and their range nobody seems to ask at what speed that range is good for. I am sure that if I drove their electric wonder at 70 mph on my daily commute on 696 it wouldn’t get half the range they are boasting about. Do you ever see a speed given for any of the range bragging?

    Ed

  21. G.A.branigan Says:

    Yeah Andy,I haven’t learned my lesson yet,LOL.I guess I’m being bonehead by buying american,but I am hopeful that it will be a good experience like my first Jeep was.
    Kit,there are indeed lemons in every auto manufacturer.It just seems that when it came to chevies,it was more then I was prepared to deal with.I never owned a Toyota yet,kinda don’t want to.I have owned 5 Subaru’s over the years and they are good,but they don’t fit in to my 4 wheel needs.
    On a positive note:this past august I bought my wife a 09 Ford Focus SEL.What a wonderful car.Very comfortable,very economical to run,and a delight to drive.I do wish Ford would have used a bit more sound insulation in the cabin.The quality is GREATLY improved too.I give it two thumbs up.