May 27th, 2009 at 12:00pm
GM was not able to get enough bond holders to agree to swap their bonds for stock. General Motors plans to take back five Delphi plants. The German government will decide today which bidder it prefers Opel to partner with. All that and more, plus John answers viewer questions in the “You Said It!” segment.
Transcript and Story Links after the jump . . .
Here are today’s top headlines. GM fails to bring bondholders on board. It is also going to take back five Delphi plants. And Opel learns today who its new owner will be.
Up next, we’ll be back with the news behind the headlines.
This is Autoline Daily for Wednesday, May 27, 2009. And now, the news.
GM was not able to get enough bond holders to agree to swap their bonds for stock. The U.S. Treasury had told GM that if it could get 90 percent of debt holders to agree to that swap, it would NOT force the company into bankruptcy. But we know that many bondholders bought insurance on their bonds and would get all of their investment back if GM went into bankruptcy. And so that looks like exactly what is going to happen.
Meanwhile, the AP reports that the UAW will now only get 17.5 percent of GM’s common stock, down from the 30 percent it was originally supposed to get. But it sounds like a lot of horse trading went on. The union will get a warrant that could give it another 2.5 percent. It will also get $6.5 billion in preferred shares that pay a 9 percent return, and a $2.5 billion note, and a seat on GM’s board of directors.
As part of a tentative deal with the UAW, General Motors plans to take back five Delphi plants. According to the Detroit Free Press, the plants would operate under Delphi union rules but would be considered part of GM. GM would take back a steering, a thermal systems, an electronics and safety and two powertrain facilities. Delphi has been trying to emerge from bankruptcy since 2005 and has a bankruptcy hearing this Friday regarding changes to the plan.
The German government will decide today which bidder it prefers Opel to partner up with. According to Reuters, the government is considering bids from Fiat, Magna, RHJ International and Chinese company Beijing Auto also emerged as a late bidder. GM will make the final decision but German aid for Opel hinges on who GM picks. There is a proposal to give 1.5 billion euros or $2.1 billion in aid but it depends on the investor’s proposal and whether or not Opel can be separated from GM, which is what the German government prefers.
Reuters reports that yesterday three Chinese companies announced they were merging to form an auto parts supplier. The new organization would have a target sales level of 100 billion Yuan or about $15 billion by 2012. Recently China has been encouraging its steel and automotive industries to consolidate so they can better compete with foreign companies.
Yesterday Taiwan announced that it launched a new electric car research consortium. Gasgoo.com reports that the organization aims to leverage the country’s IT industry to capture a 3-percent share of the global electric vehicle market.
Who would have guessed it would become so popular when it was introduced three decades ago? Soon, the Little Tykes Cozy Coupe will take its place in automotive history. TheNewsLeader.com reports that on June 6, the red and yellow toy car is being inducted into the Crawford Auto and Aviation Museum in Cleveland. Over the years, the Cozy Coupe gave countless kids their first experience behind the wheel while its interior gave new meaning to the term plasticky. Here’s to another 30 years!
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!” where I get a chance to respond to some of your questions and comments here on the show, and of course, I try to answer some of them on the website.
“Do you think these electronic fuel economy readouts are any more accurate than they used to be? I’m skeptical.”
Ron, when you measure the old way of dividing the gallons you used into the miles you drove, remember that most odometers are not perfectly accurate. And how much gas did you really use? That can be difficult to measure accurately, too. So I think the electronic readouts are reasonably reliable.
Could you enlighten us as to the “corporate” structure that will be adhered to under the new CAFE regs? Will it be necessary to be under one corporate roof, such as the GM divisions (Chevy, Cadillac, Buick, GMC), or will it be allowed to be based on ownership of stock as in VW, Audi, Porsche?”
Duke, it’s done by the corporate group. So all of GM’s divisions are averaged together. Same goes for VW, Audi, Bentley and Lamborghini. They all get lumped together, too.
“What kind of shape are the rest of the European car companies in? We’ve all heard a lot about GM, Chrysler, Toyota, Honda, Ford, but what about BMW, Mercedes, VW, and Fiat?”
Frank, so far this year, all the major automakers are losing money, except VW. In fact, in the first quarter Toyota lost more money than General Motors and Honda lost more money than Ford.
That’s it for today’s top news in the global automotive industry. But don’t forget to tune in for Autoline After Hours tomorrow night at 7 p.m. Joining us for that show is Csaba Csere, the former editor of Car And Driver. Thanks for watching, we’ll see you tomorrow.