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Bankruptcy Leads Possible Plans for GM, Chrysler

Bankruptcy Leads Possible Plans for GM, Chrysler. Samantha Ludwig Shogo Matsuta Matthew Mau R.J. Meadows. General Motors. “Good” and “Bad” Components good” or “new” component to stand alone Chevy and Cadillac “bad” or “old” Hummer and Saturn Sell parts Avoid Bankruptcy

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Bankruptcy Leads Possible Plans for GM, Chrysler

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  1. Bankruptcy Leads Possible Plans for GM, Chrysler Samantha Ludwig Shogo Matsuta Matthew Mau R.J. Meadows

  2. General Motors • “Good” and “Bad” Components • good” or “new” component to stand alone • Chevy and Cadillac • “bad” or “old” • Hummer and Saturn • Sell parts • Avoid Bankruptcy • New labor contracts • Reductions in health care benefits • Make $$$ on smaller cars • Faster progress • 60 days to come up with a strategy for viability

  3. Chrysler • “Good” and “Bad” Components • “ good” sell to Fiat SpA • Bankruptcy • Force new labor contracts • Rework debt deals with secured creditors • Fiat is views as the only route to survival for Chrysler

  4. Obama’s Administration • Administrative choice • Chrysler • 1 month to wrap up a partnership with Italy’s Fiat • GM • 60 days to come up with new strategy “We cannot, we must not, and we will not let our auto industry simply vanish.” -President Obama

  5. Oct. 5, 1998: G Richard Wagoner Jr. becomes president of GM. • Oct. 28, 2001: GM agrees to sell its Hughes Electronics satellite unit to EchoStar Communications. • Oct. 3, 2005: GM reports a sales drop of 24% in September 2005 compared with the same month a year ago. • Oct. 17: GM reports a net loss of $1.63 billion. GM faces a $51 billion obligation to union members. Problems in GM

  6. Problems in GM • Week of June 9, 2008: Average price of gas was above $4 a gallon. • Aug. 1: GM reports a $15.5 billion net loss for the second quarter of the year, which is the third-biggest in GM’s history. • Nov. 18: The chief executives of Detroit’s Big Three auto makers appeal for U.S. taxpayers to help their industry. • Dec. 2: Auto makers return to Congress with turnaround plan. GM says it needs $18 billion in loans.

  7. Problems in GM • Dec. 19, 2008: White House agrees to $17.4 billion in bailout loans. • Dec. 31: GM receives first $4 billion in loans. • Feb. 26, 2009: GM announces a $9.6 billion loss in the fourth quarter of 2008. Total loss in 2008 was $30.9 billion. • Feb. 29: Wagoner resigned as Chairman and CEO at the request of the White House.

  8. Industry Outlook • Auto task force determinations • When will the steep plunge in car sales end • What will the market look like once it revives • Auto sales • Funding • UAW vs. Bondholder

  9. Bondholder Factor • Bondholders and the Union • Negotiating work forces, lower wages, and health-care fund • Bondholders

  10. Questions…..

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