Episode 112 – GM Gets New Deadline, Chrysler Must Partner Up, Part of Delphi Sold

March 31st, 2009 at 12:00pm

Runtime 7:00

President Obama is giving GM another 60 days to come up with a viable plan. Chrysler gets 30 days to try and partner up with another car company. A Chinese company is buying Delphi’s brake and suspension business. All that and more, plus the latest update about everything that’s happening with GM.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. GM gets another 60 days to come up with a viability plan. Chrysler gets 30 days to finalize a deal with Fiat. And a Chinese company is buying part of Delphi.

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

This is Autoline Daily for Tuesday, March 31, 2009. And now, the news.

Yesterday the President’s Task Force released its reports on GM and Chrysler called the “Determination of Viability Summary.” In the eyes of the Task Force, GM did not move fast enough and did not meet the government’s loan requirements: it did not come up with a competitive labor agreement, did not renegotiate its VEBA payments, and did not come to an agreement with its bond holders. Now, President Obama is giving GM another 60 days to come up with a viable plan, but even GM’s new CEO Fritz Henderson admits this may have to get settled in court.

The Task Force also determined that Chrysler could not survive unless it partners with another car company. If it does so then Chrysler can survive, and the President gave Chrysler 30 days to come up with a deal. If it fails to do so, the government will not give Chrysler any more money, presumably forcing it to go out of business. And today is the day Chrysler says the Canadian Auto Workers union must come up with more concessions or it will announce it’s pulling its manufacturing operations out of Canada.

Delphi is selling its brake and suspension business to the Beijing West Industries Company. The Detroit Free Press reports the Chinese parts supplier will pay Delphi $100 million which gets it operations in the United States, Mexico, Poland, India and China, as well as the rights to 750 patents.

Chinese company BYD shocked the automotive world when it introduced a plug-in electric vehicle back in December. Now, according to Gasgoo.com, the company is in talks with an American and two European automakers about supplying its lithium-ion batteries to them. No word on who they are. The company is considering supplying the same battery used in the recently introduced F3DM plug-in electric.

Ford announced it will build an electric version of its Transit Connect van. And according to Ward’s, Smith Electric Vehicles will build it in Kansas City, Missouri (subscription required). Smith will invest $10 million to build the vans at an overhaul base at Kansas City International Airport. Production of the battery powered Transit Connect will start next year at the plant.

And speaking of Ford, an auto parts supplier in Pennsylvania is suing over Ford’s advertising tag line “We Speak Car” it’s using in Fusion ads. According to the AP, Frank’s Auto Supply filed for a trademark of the slogan on Thursday and has used it in advertising since 2003. The name of the company’s website is also wespeakcar.com. The supplier wants a judge to force Ford to stop using the slogan and is also seeking an unspecified amount in damages.

Today we were going to show you a little more about the new Lexus RX, but with everything that’s happening with GM, we’re going to get the latest update from Jeff Gilbert of WWJ Newsradio 950. We’ll be back right after this.

And that’s it for today’s top news in the global automotive industry. But don’t forget that this Thursday night at 7 PM Eastern Time, or 24:00 GMT, we’ll be going live with Autoline After Hours. I’ll be back with Peter DeLorenzo from Autoextremist and with PR veteran Jason Vines talking about the big changes going on at General Motors. John Neff from Autoblog will also Skype his way into the discussion, so join us again Thursday night for a real insider’s view on the latest news.

Thanks for watching, we’ll see you tomorrow.

27 Comments to “Episode 112 – GM Gets New Deadline, Chrysler Must Partner Up, Part of Delphi Sold”

  1. Dan Clemons Says:

    What Jeff meant to say is GM shareholders could lose all their money if GM goes into bankruptcy. Upon liquidation, debtors get paid first followed by preferred shareholders followed by common shareholders.

    Second point is that the judge can strike down all UAW contracts. It is possible that GM could come out of bankruptcy without a UAW contract. The judge would give the UAW a chance to negotiate but it has to meet the courts approval.

    Bankruptcy is what GM needs to solve all of its problems.

  2. Andy Says:

    I feel so sorry for Wagoner….he walked away with about 23 MILLION….I wonder if it came from the taxpayers??

  3. James Thompson Says:

    Why can’t the CAW in Canada understand that most average working people in Canada believe
    that the autoworkers are paid too much for what they do. The product for years was un reliable that arrogant attiude still available each time
    the union membership is interviewed.
    The subsidies the canadian goverment has given is mind boggling, the threats from chrysler is a real joke. Consumer reports tells the storey why so many have given up on the Detroit three.

  4. Kit Gerhart Says:

    Since the government is now going to somehow guarantee GM’s warranties, bankruptcy is not quite the “sure killer” of the company that it once was. Still, it seems like there are better options than bankruptcy.

    Maybe the 60 day ultimatum will convince those running the company to “get real” about what GM should be. Why not kind of emulate the most successful car company in the world which is Toyota. That would mean having two main “divisions,” which for GM would be Chevy and Cadillac. Chevy dealers could sell what is left of Pontiac, and Cadillac dealers could sell Buick. They could give away Hummmer to anyone who might want it, and possibly get a contract with the new owner to build some vehicle for a few years. GMC should go away; it is almost completely redundant with Chevy trucks. Saturn’s one really unique product, Astra, could be sold as as a Chevy if they plan to continue selling Astra in the US.

    If Obama can make any progress toward “Medicare for everyone,” the benefits which are now a major part of the UAW contracts would be moot, putting GM labor expenses more in line with the transplants.

  5. Ricky Bobby Says:

    Again I ask where is it said that Chrysler “will pull out of Canada”? I’m not disputing it, I’d just like to see where they actually said it.

    Hopefully this comment won’t get deleted like my last one, for asking the same question.

  6. Ricky Bobby Says:

    Oops sorry Autoline, my last comment wasn’t deleted.

    My bad

  7. G.A.Branigan Says:

    Playing devils advocate:GM will fall right into BK even if given another 6 months…period.GM is THE master of the dept of redundency dept.AND the uaw will continue to cry saying they’ve done everything they could have done bla bla bla…just like GM management.Flame away……

  8. craigerzgt Says:

    @ Ricky Bobby:

    It’s been in the Canadian news for a while, with Ken Lewenza on the TV crying about how they can’t give any more concessions. Here’s a link:

    http://business.theglobeandmail.com/servlet/story/RTGAM.20090311.wchryslerCanada0311/BNStory/Business/?page=rss&id=RTGAM.20090311.wchryslerCanada0311

    The point should be made that Chrysler isn’t pulling out of Canada, just their manufacturing presence. I believe it to be understood that Chrysler would still sell vehicles here, and for good reason: they were the best-selling make just recently (month of February I think?). It would defy logic if they stopped selling cars in Canada with that kind of news.

    I just watched the first episode of Autoline: After Hours last night and I thought it was great. I really enjoy the work you and your team do John, and good idea with the weekly sit-down and talk about the industry. I’m looking forward to watching live this coming up Thursday.

  9. craigerzgt Says:

    Chrysler’s sales status in Canada was in fact for the month of February:

    http://www.canadiandriver.com/news_2008/03/04/080304-1.htm

  10. Denis Says:

    John here is an idea…A few restaurants lately have removed prices from the menu and you pay what you can or think it was worth. Maybe the automakers should try this. Maybe this will move the metal. Besides the taxpayer now own all the cars and trucks sitting around anyways!

  11. Kit Gerhart Says:

    If Canadians have the same “buy local” mentality as those south of the border, I’d think it would hurt Chrysler’s sales in Canada a lot if they closed their manufacturing there, given that their key products, minivans and rear-drive cars, are built in Canada.

  12. Dan Clemons Says:

    As I asked yesterday, will the UAW save GM? I now think the answer is no. Bondholders are not going to walk away leaving GM debt free either. I as a debt holder would rather see GM liquidated. I do not want to own GM stock either under any circumstances.

  13. Rick Rufty Says:

    I am very concerned that the president of the U.S. can fire a CEO of an American company. Is this the beginning of absolute socialism?

  14. pedro Fernandez Says:

    Call me a pesimist, but the way I see it, in a few years we’re gonna see Chinese cars made with purchased technology from former American suppliers, and we’re going to regret what’s happening now, and we’re gonna be pointing fingers at this one and that one. These cars will probably look like American cars, but of course they won’t be built in America by Americans. Just look at the Chinese car in today’s report, it looks just like the previous Corolla, these people copy anything with no shame at all.

  15. Salvador G. Says:

    Thanks for pointing out the obvious Pedro :)
    I’m surprise we don’t see NASCAR out of China, so far.

    What I would like to know if FIAT is gettin cold feet, I understand their getting a cut from their deal with Chrysler.

  16. pedro Fernandez Says:

    John:in your opinion, does FIAT have anything to gain, besides being able to sell their cars over here, by merging with Chrysler? I mean, I don’t see a demand for any Chrysler products in Europe, besides couldn’t FIAT sell their cars here if they are any good?

  17. G.A.Branigan Says:

    Hey Pedro,I don’t see a demand for too many chrysler products here in the usa either.Jeep is doing okay,not sure about the dodge rams but they usually do pretty good and thats it.I think the new challenger is an expensive flop and a dollar late and a dollar short.Kinda in the same boat as the new camaro.As for the rest of the chrysler lineup…….pure junk and the world knows it.

  18. Michael Says:

    Why would an American car manufacturing company buy LI batteries from a Chinese company. Why don’t they invest in the technology to be built in this country? We need to change the balance in the economy from consumer consumption being 70% of GDP to a much larger percentage of manufacturing and production. Consumption never built a great country production provides the real wealth in the economy.

  19. UP Guy Says:

    Seems odd that many of the above comments put Ford in the same place as GM and Chrysler. A few years ago Ford fired its CEO Jac Nassar and replaced him with an outsider — Alan Mulally. Ford quality is on par with Honda and Toyota. Ford has not taken and does not want a tax payer loan. The new Fusion hybird gets better mpg than any Toyota or Honda model. And the Ford F-Series, a big truck that Obama says the public doesn’t want to buy, is the best selling vehicle in the country! Let’s add that Ford has recently converted $11 billion in debt and has a contract with the UAW that puts them on par with the Japanese transplants. According to Ford CEO Mulally Ford has won all of the concessions it needs from labor and investors to weather the industry’s crisis — even if car and truck sales continue to decline.

  20. John Says:

    Pedro,

    you are correct. China is not our friend. China is playing a long term game of chess with the U.S. and every move they make is toward their goal of destroying the U.S., first economically, then by force.

    We are watching economic warfare with this sale of these patents and technology. It won’t be the last. Watch Volvo, Saturn, Hummer etc.

    The Chinese will take this technology , add cheap slave labor, keep their currency devalued, and sell the auto parts and autos in the U.S. cheap to destroy the U.S. manufacturing ability.

    Look at how the communist Chinese are using techonogy to disable U.S. aircraft carriers ability with their “China’s carrier killer”.

    http://www.lowyinterpreter.org/post/2008/08/US-reacts-to-China%27s-carrier-killer.aspx

    Stop buying communist Chinese products.

    Don’t trust the commies.

  21. Kit Gerhart Says:

    G.A.Branigan,

    Chrysler minivans are still among the best, especially the interior and amenities. The power trains are not the most modern, but they get the job done.

    Also, the 300 and Charger are bargains compared to their competition, and Challenger is a worthy competitor for Mustang. I agree that the “mainstream” front driver Chryslers like Avenger and Sebring are not that good, but even in that group of cars, most people wouldn’t appreciate the difference between those cars and the “best in class” of mid-size front drive cars.

  22. craigerzgt Says:

    @ pedro:

    FIAT does have something to gain by selling their FIATs and Alfas here, with the dealer network and the established nameplate of Chrysler or Dodge. If FIAT were to enter the market on their own, they’d have to develop an entire dealer network across the United States/North America, and then start marketing like crazy to get the FIAT/Alfa name out there for people to be aware of and then buy. With merging with Chrysler, all they have to do is slap a Chrysler/Dodge badge on the hood and ship it off to existing dealer network. Most customers wouldn’t know the difference anyway, and it’s way more cost-effective and easier to do for FIAT.

  23. Chris Says:

    GM & Chrysler will both survive this depression. It may not be in the form they are now but shedding the unions be a lifesaver.

  24. G.A.Branigan Says:

    @Kit..I forgot completely about the minivans.As for the challenger being a worthy competitor for the mustang,I would have to ask which one.The only challenger that I have seen was over 45K.A mustang GT goes for around 29K.I don’t know the price for the shelby gt 500,maybe that is the one you meant,although that wouldn’t be close either with the shelby at around 500 hp.Not sure what the challenger is rated at.I am not sure about the 300 and the charger being bargains,maybe they are now,not when they came out though,very spendy and it seemed their popularity quickly faded.

  25. M St.John Says:

    Rather than give GM and Chrysler money why not
    give each buyer of a high mpg car from them a
    $10,000 credit on their taxes! They couldn’t
    make them fast enough. Results!! high mpg cars
    on the road and money for actually making cars
    flowing to GM and Chrysler. Oh yeh, save the tax
    payers 10 billion dollars too !!!

  26. Kit Gerhart Says:

    G.A.,

    The first Challengers were the very pricey SRT-8 variety you mention, but there are now SE and R/T versions on the market at ~23K and 31K respectively. They would compare favorably with Mustang in performance and they look great, but I suspect Mustangs are better quality.

    Whether Charger and 300 are bargains depends upon your perspective. As a basic “tranportation appliance,” they are not bargains, but as a high-powered rear drive car based on a Mercedes-Benz platform, albeit an old one, the Charger R/T and 300C are bargains. It depends on how you look at it.

  27. don norris Says:

    hi,
    john what sets me off is when china can buy delphi and get it’s 750 patens…..i can see them taking over and then reselling off and of course, when they sell off, allow these ideas to go the next purchaser and never think of using the said technology……man how did we get to this point…don