Posts Tagged ‘Chrysler’
Wednesday, June 10th, 2009
Chrysler’s Resurrection
Today is a new beginning for carmaker, Chrysler, as they finally closed a government-brokered alliance with Italian carmaker Fiat.
Just a few months ago, Chrysler had been regarded as dead but, after a 5-week reorganization in federal bankruptcy, they’re off to a new start. They have sold most of their assets to a new company, called Chrysler Group, which will pick up where the old Chrysler left off. The task for the new Chrysler is to prove that they will not forget what they’ve learned from these past few years of painful experiences.
Marchionne, who was immediately named CEO of Chrysler Group LLC said, “The alliance is a bold first step to implement those lessons we’ve learned, but it is only a first step. Now we must prove we can make it work.” Marchionne said workers have already began developing new fuel-efficient small cars. So far so good?
Tags: Chrysler, chrysler group, chrysler group llc, fiat, fuel-efficient, marchionne
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Tuesday, June 2nd, 2009
A month after Chrysler declared bankruptcy, America’s biggest carmaker, General Motors came next in line to file for Chapter 11. GM has officially declared itself bankrupt in a legal filing, making it the biggest industrial collapse in U.S. history after racking up losses of $81 billion over 4 years. GM is also the 3rd largest bankruptcy of any sort, after the investment bank Lehman Brothers and the telecommunications firm WorldCom.
However, GM will continue to manufacture and sell cars. The U.S. government is hoping for a “surgical” process to build a new, smaller GM out of its remains. GM’s chairman, Kent Kresa, described this process as a “new beginning” for the company, saying that, “A court-supervised process and transfer of assets will enable a new GM to emerge as a stronger, healthier, more focused and nimbler company with a determination not to just survive but to excel.”
This massive reorganization of GM would leave the U.S. government holding 60% of the company’s equity but, nevertheless, this is an essential process in order for America to sustain a feasible US auto industry. Yet still, Obama had to reiterate that the government was still reluctant about becoming a shareholder in GM, but acknowledged that to go to with the alternative, which would be to extend more loads, would be worse.
Today, GM announced that they plan to sell their Hummer brand to Chinese equipment maker Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd., in a transaction that would secure more than 3,000 U.S. jobs.
Yet another question lingers in our minds as we think to ourselves, “Will GM’s bankruptcy work?” Some people believe that GM has finally made the necessary changes to be competitive but still others hold their doubts about GM’s future prospect.
Tags: bankruptcy, chapter 11, Chrysler, general motors, GM, hummer, investment bank, kent kresa, lehman brothers, obama administration, sichuan tengzhong, telecommunications, worldcom
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Wednesday, May 27th, 2009
Will this be the end of General Motors? Bondholders have rejected a debt exchange offer from GM, which expired at midnight last night. The United States’ biggest automaker has failed to persuade enough creditors to ingest their losses and is now approaching their deadline that the Obama administration has set for them–June 1, which is next Monday. This leaves GM the rest of the week and the weekend to finish restructuring for a possible miracle or resort to filing for Chapter 11 bankruptcy, which is more than likely to happen.
One thing is for sure: GM’s uncertainty over its finances has hurt sales of their cars, as consumers worry about matters such as warranty protection. Would you purchase your own car from a company that is nearly bankrupt? For many people, this bankruptcy issue does not affect their personal interest, as the case shows that Chrysler’s sales have been holding up well even though they had recently filed for bankruptcy.
Does the news of GM dampen our optimistic attitude about the economy and its possible recovery by this year? More than 90% of economists predicted that the recession will end this year, acknowledging that the recovery will be bumpy and slow. Nevertheless, this news still may have a significant impact on consumer confidence, although there has been some positive reading in that consumer confidence has been improving lately. However the reality is that the economy is still very weak, which is also stated by Alan Gayle, senior investment strategist at RidgeWorth Capital Management.
Tags: alan gayle, automaker, bankrupt, big three, chapter 11 bankruptcy, Chrysler, detriot, economics, general motors, GM, obama administration, recession, ridgeworth capital management
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Thursday, April 30th, 2009
Goodbye Chrysler
Today was Chrysler’s deadline and unfortunately they had to file for bankruptcy, along with an alliance with Italian carmaker, Fiat, as commanded by the Obama Administration. So now what happens next? Well, a new Chrysler will form, which will buy all the assets of the old Chrysler out of a Chapter 11 bankruptcy. United Auto Workers (UAW) union has also made attempts to save jobs and make Chrysler more competitive, forming concessions on wages, benefits, and retiree health care. Will General Motors (GM) follow in their path on June 1st, their deadline? 1 down, 2 Detriots left. We’ll just have to wait and see what happens…
Goodbye Lewis
Mr. Kenneth Lewis, who helped build Bank of America into the nation’s largest bank just a couple years ago now seems to be the center where criticisms are fired at. Shareholders have swiped his chairman position, though the vote was very close – 50.34% that had opted to remove Lewis as chairman. Investors attended the annual shareholders meeting, some even wearing shirts that expressed their feelings, with comments like “FIRE!!! KENNETH LEWIS.” In fact, 1/3 voted to remove him from the board altogether. However he remains chief executive, as its board of directors had unanimous support for him.
Why so angry? Angry investors held Mr. Lewis accountable for what was perceived as inept actions that he took, which had potentially forced the bank to accept two government bailouts. It wasn’t too long ago that Mr. Lewis was praised by many, even for his takeover of Merrill Lynch. Now, critics say that Mr. Lewis not only overpaid Merrill, but it seems like the takeover has done such detriments to the ex-largest bank. Merrill’s losses have prompted Bank of America to seek their second rescue from the government and this is where the criticisms start to roll in. Walter E. Massey, president of Morehouse College in Atlanta, will replace Lewis as chairman.
Tags: bailout funds, bank of america, bankruptcy, chapter 11 bankruptcy, Chrysler, detriot, fiat, general motors, GM, kenneth lewis, merrill lynch, uaw, united automobile workers
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Sunday, April 26th, 2009
Four days left for Chrysler?! Could they be preparing for a bankruptcy even faster than General Motors? The Detroit automaker, Chrysler, faces a fast-approaching deadline of April 30 to able to show the federal government a new plan for financial viability. Experts say that the likelihood of bankruptcy is greater than 50%. If they do go bankrupt, the company will be split into 2 parts, one that will deal with bankruptcy, and the other that will merge with Fiat, Italian carmaker.
Over the four remaining days, offers and counteroffers will fly back and forth between the White House and banks in their last attempts to save Chrysler. The White House is determined to save jobs at Chrysler, along with auto supplier companies that could also fall into bankruptcy if Chrysler does not survive. Then, the failure for those suppliers could impact GM, as well as Ford, and other foreign automakers that manufacture in the U.S..
The United Automobile Workers union have reached an agreement with Chrysler, meeting the federal government’s requirements for Chrysler to receive more financing. The agreement also including reducing the amount of money Chrysler must pay for a new health care fund for retirees.
“My sense is that it’s not liquidation, that it would be a reorganization,” a Detroit-area Chrysler dealer, Carl Galeana, said Sunday. “I just think a shutdown of a corporation this size, in this economy, would be devastating.”
I guess we’ll just have to wait 4 more days to find out and see what happens. Good luck to Chrysler.
Tags: chapter 11 bankruptcy, Chrysler, current news, fiat, ford, general motors, GM, obama administration, President Obama, united automobile workers
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Friday, April 17th, 2009
Fritz Henderson, the chief executive officer (CEO) of General Motors (NYSE:GM) said that “it is still feasible” for GM to meet the Obama administration’s June 1st deadline to come up with a new, acceptable plan and an effective form of management. Regardless, GM’s executives are still preparing to seek court protection if they are to file for bankruptcy, which Henderson considers as a “two-track plan.”
“It’s pretty simple,” Henderson said. “If we can’t accomplish it outside a bankruptcy, we would do it inside a bankruptcy.”
GM’s shares have dropped 5% so far from today’s open to $1.84. More info on GM’s bankruptcy can be found in my previous blog on April 23, 2009.
And what about Chrysler??
Chrysler could still be at a great risk if GM fails. However, Obama’s administration requires Chrysler to join an alliance with the Italian carmaker Fiat, which would then lead to management changes, for the better of course. This alliance would allow Chrysler to receive more government financing and decrease their chances of filing for bankruptcy. Once the alliance is completed, new management will take in effect as the U.S. government and Fiat will appoint a board of directors that are independent of the two companies. This means that the majority of the directors will not be employees of neither Fiat or Chrysler and then, the board will decide who to appoint as the new chairman and CEO in each other’s consent. Seems like some pretty good news right? Well..if it works out, that is, and considering that the new management will be effective.
Any news from Ford?
Good news! Standard & Poor’s raised its ratings for Ford Motors (NYSE:F) Reason why? Ford recently cut its debt by nearly $10 billion! But, keep in mind that there are still warnings that Ford might still be at risk for running short on cash.
Let’s hope that GM arrives soon with some good news!
Tags: chapter 11 bankruptcy, Chrysler, current news, fiat, ford, fritz henderson, general motors, GM, obama administration, poor's, President Obama, rick wagoner, standard, two track plan
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