Episode 84 – Viability Plans Under Attack, Europe Cool To GM Request, GM & Chrysler Merger?

February 19th, 2009 at 11:11am

Runtime 5:45

GM bondholders are not happy with the company’s plan, saying it does not go far enough to cut costs. European governments react coolly to GM’s request for $6 billion in bailout money. Senator Bob Corker is telling GM it should consider merging with Chrysler. All that and more, plus a glimpse of what it’s like driving Tesla’s all-electric roadster.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. The viability plans are already under attack. European governments react coolly to GM’s request for money. And calls are coming up again to merge GM with Chrysler.

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

This is Autoline Daily for Thursday, February 19, 2009. And now, the news.

Yesterday they presented their viability plans and today the sniping is already underway. The Wall Street Journal reports that GM bondholders are not happy with the company’s plan (subscription required), saying it does not go far enough to cut costs, even though it gets rid of another 47,000 jobs. They want GM to become immediately competitive, not get there in 2012. And it sure sounds like the bondholders are gearing up for a big fight with the UAW for more concessions.

Meanwhile, over in Europe, governments there are reacting very coolly to GM’s request for $6 billion in bailout money. The Swedish government flat-out refused to put money into Saab, and GM warned it could go into reorganization as early as this month. And I think they mean bankruptcy by that. The Journal reports that labor leaders at Opel want the German government to nationalize Opel to save its jobs.

There Detroit News reports Senator Bob Corker of Tennessee is telling GM it should seriously consider merging with Chrysler. Even in its viability plan, Chrysler said its best scenario involves merging with GM but that GM took that proposal off the table. My guess is we’ll here a lot more about this in the coming weeks.

Speaking of its viability plan, Chrysler revealed the names of two Alfa Romeos that it will sell in its dealerships. AutoWeek reports the two cars will be called the Milano and Giulia, which could also be built in Chrysler plants.

And speaking of Alfa, Autoblog reports it will unveil an updated version of its 159 at the Geneva show. Little is known about this model beyond the rumors and handful of “leaked” photos. We’ll just have to wait a couple of weeks until the show starts.

Also debuting at the Geneva show is a brand new version of the Ford Ranger, that will be built in Thailand and arrive in European showrooms staring in April. No official word when or even if this compact pickup will make it to the Americas.

Coming up next, we’ll give you a glimpse of what it’s like driving Tesla’s all-electric roadster. We’ll be back right after this.

As we’ve already shown you, Tesla’s battery-powered sports car is a real GEM, no pun intended, but it has a huge price tag. In his final report, Autoline Daily west coast correspondent Isaac Bouchard fills us in on what it’s like behind the wheel of eco-friendly roadster.

Thanks for that, Isaac. I can’t wait to get a chance to drive it myself.

Anyway, that’s it for today’s top news in the global automotive industry, but before we go I want to remind you that we’re hosting another live webcast at noon today, Eastern Standard Time. Jump on over to our homepage, AutolineDetroit.tv, and tune in to the broadcast. For the first time ever you’ll be able to watch in real time as we tape Autoline Detroit. After the show is finished we’ll continue our discussion and you can ask questions and post comments. Again, that’s today starting at noon. Also, we’ll be posting the chat box a little early so you can interact with other participants before the live discussion starts.

That does it for today’s show, thanks for watching.

11 Comments to “Episode 84 – Viability Plans Under Attack, Europe Cool To GM Request, GM & Chrysler Merger?”

  1. Michael Says:

    Why should GM merge with Chrysler and bail out Cerebrus? The bankers made a bad buy and now the politicians want the taxpayers to foot the bill…again! If Cerebrus wants to give Chrysler to GM maybe GM and the government should consider it. No money should change hands.

  2. G.A.Branigan Says:

    I just don’t see GM and Chyrsler merging at all.It’s kinda like two alpha males…..that are blind.It’s no surprise that EU doesn’t want to throw good money after bad as far as GM is concerned….why would they?Who cares if SAAB goes under?Gm is still crying wolf (bankruptcy).Go,be done with it and let the workers find jobs elsewhere since there is no apparent end to the big two soap opera.Business’s come and go and GM will have to either get right…NOW,or go under.The UAW will never be the labor powerhouse(bullies) they once where either.Tough luck but nothing lasts forever when it comes to greed.There is nothing left to consume but themselves.

  3. Robert Says:

    Michael – we could take it a step further – why should GM bail out the US government and try to save jobs? The “public servants” in Washington seem to think they are doing the auto industry a favor.

    What would happen if GM declared chapter 7 and sent everyone home today – and paid no one?

    The sad fact is that Washington has ignored its responsibilities for decades – Social Security is a disaster – health care is a disaster – infrastructure is a disaster. There is no viable energy strategy.

    About all they seem to be able to do (besides look for scapegoats and dance around the issues while enjoying their junkets around the world) is protect us from the terrorist on the south of the (Detroit) river.

  4. Dan D Says:

    I don’t see what GM or anybody would gain from a GM-Chrysler merger. At the end of the day there are still too many brands, too many plants and too many dealers – and not enough customers to go around in the U.S. market.

    I also don’t believe in this pipe dream that FIAT is going to save Chrysler. FIAT would be better off hooking up with Saturn Distribution Corp.(!!!) as a low cost/fast start way to relaunch its products in the US from 2011, and I don’t mean using the Saturn brand to do it. Forget about getting tangled up with Chrysler and selling Alfas alongside Dodges. Chrysler will, sorry to say, have to go bankrupt in order to save the domestic industry as a whole.

    Maybe in that event GM could scoop up Jeep in the fire sale and plug it into the Buick sales channel instead of keeping GMC. When you think about it, it is laughable that GM considers GMC a core brand if it only intends to continue it as a Chevy truck clone to keep the sales per store numbers up at otherwise wobbly Buick dealers. If GM needs four brands, two of which are joined at the hip mid-market, then a better case could be made for Buick-Jeep.

    Whatever, don’t let Sen. Corker design the solution!

  5. Andy Says:

    Here is my GM scenario:

    GM should be streamlined down to Chevy, Pontiac, Cadillac, and GMC.
    Chevy will be the basic all-around sales leader. Pontiac will be the sportier company. Cadillac will be the luxury company. And GMC will be the truck division.

    Use unique models within each division. Make 1 good 4cyl, 6cyl, and 8 cylinder engine to be used in all divisions. (Eliminate MULTIPLE 4cyl,6cyl, and 8cyl engines).

    This would save GM billions.

  6. steve salis Says:

    John,

    I had to leave near the beggining of the web portion of the show but I would like to see it. Please make the web casts available. If they are available, then make them easier to find

  7. John McElroy Says:

    @Steve Salis

    The webcast is available in the Autoline Daily channel or in John’s Journal. Or just click here.

  8. Wayne Says:

    Hey John,

    Why don’t they put the bank executives out there in the media to show what their plans are? Maybe get one of the Merill Lynch directors on TV to talk about those 3.6 million in bonuses recently given to executives.

    Maybe the bankers should be put under the microscope every month to show how effective their plans are since they are getting so much money.

    I can’t believe that there is so much scrutiny on the auto makers plans. Is it their business model that got us into a global recession?

  9. G.A.Branigan Says:

    “NEW RULE”…..any company whether it’s an auto maker or a bank or anything else thats looking for taxpayer money,turn around,drop em,bend over and cough.A complete exam thank you very much.

  10. Kit Gerhart Says:

    The money the car companies are asking for as “bailouts” is trivial compared to what the banks are getting, and there are many more jobs involved. The Asian companies assemble a lot of cars in North America, but the fact remains that the “Detroit Three” have a lot higher local content than do the transplants. Local content equals jobs, and a lot of jobs.

    I agree that companies asking for guaranteed loans from the government should have a recovery plan, and I feel very strongly that Cerberus should not receive any taxpayer money for having made a bad investment. In the end, though, the North American based car companies, for all kinds of reasons should not be allowed to die. America without Ford and Chevrolet would be like London without Big Ben and St. Paul’s, or something like that, at least among car people who grew up in the 50′s and 60′s.

  11. Julius Lambert Says:

    Let Chrysler die on the vine.Take MBs share with it.The US Gov.is partially at fault for that TAKE OVER guised as a merger.With the future as bleak as it is we need two of the three to be healthy for the BATTLE.Drop the GMC line,a CHEVY with different clothes.Then Chevy #s will go head on with Ford #s.Can anyone imagine WHAT Ross Perot is thinking about this subject?25 years after his blow up it all is coming to a head.