GM bouncing back strong

Don’t mess with the General. GM announces the addition of a 3rd shift at Lordstown as the automaker ramps up for the new Chevy Cruze. If this vehicle is a hit GM will be “cruzing” into the Spark launch in the near future.

From the Detroit News:

General Motors Co. has invested $1.4 billion in more than a dozen plants and created about 5,500 jobs since emerging from bankruptcy court in July.

The investment and job moves are a stark contrast to last year, when GM shed factories, implemented unprecedented production cuts and slashed thousands of jobs in bankruptcy.

GM emerged from bankruptcy with about $50 billion in federal aid.

Read the full article here.

  

Judge clears the way for GM to emerge from bankruptcy

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They did it. Most of the experts said the government could reorganize GM through bankruptcy in such a short time, but now a judge has cleared the way and the “new GM’ will emerge as a new company.

The path is now clear for General Motors to leave bankruptcy protection in record time as a leaner company that is better equipped to compete in a brutal global auto market.

On Thursday, a judge’s order allowing GM to sell most of its assets to a new company went into effect, despite a last-minute appeal by plaintiffs in a product liability case.

GM spokeswoman Julie Gibson said U.S. Bankruptcy Judge Robert Gerber’s order became effective at 12 p.m. EDT. GM lawyers are working on paperwork to close the sale as quickly as possible, after which GM would leave bankruptcy protection.

GM CEO Fritz Henderson will hold a news conference in Detroit Friday morning to explain executive cuts, management changes and the company’s plan to make money by emphasizing quality and fuel economy. He will be joined by Edward Whitacre Jr., who will lead the board of GM.

Once the world’s largest and most powerful automaker, the “new GM” will become government-owned, but leaner and greener, cleansed of debts and burdensome contracts that nearly dragged it into liquidation. But the new company faces tough international competition and the worst auto sales market in more than 25 years.

John Pottow, a University of Michigan Law School professor who specializes in bankruptcy, said opponents of the sale had little legal recourse to block it because their issues were shot down by higher courts in Chrysler’s bankruptcy case.

“It’s done,” Pottow said. “I knew they were dead as soon as the Chrysler case was decided.”

He expects GM to close the deal and emerge from bankruptcy on Thursday in 39 days, a record for a company its size, he said. GM spokesman Tom Wilkinson said he could not give a time frame for when the sale will close.

The “old GM” will wind down all the assets that won’t be going over to the new company. It will be interesting to see what happens to all the old GM brands.

  

GM needs success at Cadillac

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The GM restructuring raises the stakes for Cadillac, one of the four brands that will survive the GM bankruptcy. The Detroit News explains that while the brand still has some challenges, quality has improved and the brand has other factors going for it as well.

Under bankruptcy, Cadillac will be able to cut its dealers from 1,500 to 500, enabling the survivors to reduce discounts and become more profitable.

Cadillac is revamping its lineup, too. It is developing a large sedan, the XTS, to replace the STS and aging DTS cars. It will build a small car to compete in the segment dominated by BMW’s 3 Series.

It is now launching the SRX crossover with taillights that evoke glamorous fins of the past.

Next month, Cadillac will roll out a CTS wagon and a coupe next year. “You’ll see us playing in all those segments,” Hill said.

By many measures, Cadillac holds its own against the top-tier luxury brands. “They’re there in quality,” Csere said. “Some models are absolutely there in styling.” The CTS-V, the performance version, “is perfectly capable of running with a BMW M5 or a Mercedes E63 AMG.”

Alexander Edwards, a partner at the San Diego consulting firm Strategic Vision, said Cadillac scores well in surveys measuring “things gone right” — features that appeal to customers, as opposed to the absence of flaws. In the latest survey, it beat out Lexus and BMW, he said.

In this year’s J.D. Power and Associates’ Initial Quality Study surveying new car owners, Cadillac came in third place, behind only Porsche and Lexus.

With its new vehicles, Cadillac is picking off import buyers like Oscar Cabrera, a salesman at Credit Suisse’s fixed-income trading desk in Boston. He and his wife went for Japanese models until three months ago, when they bought an SRX for $36,000. “It came down to the features and price. I like the car,” Cabrera said. “The interior is very nice. It feels very high end.”

Still, while Cadillac has improved its vehicles, analysts say the brand is not clearly defined.

Compared with the German carmakers, it has a lineup of models that bear little relation to one another, from the cushy DTS sedan favored by an older crowd, to the Escalade SUV that attracts superstar athletes and the crisp-handling, rear-wheel-drive CTS.

“You know what BMW stands for, and what Mercedes stands for. Cadillac is all over the lot,” said Art Spinella, president of CNW Research in Bandon, Ore. “They have to decide how to make that lineup cohesive.”

It’s easier to market vehicles when the brand is well defined, he said, and it costs less.

Cadillac also lags in showcasing advanced technology. It rolled out a plug-in hybrid concept at this year’s Detroit auto show, the Converj, with a drivetrain similar to that of the Chevrolet Volt. But, says Howell, “that’s not a project you’ll see in the next couple of years.”

Similar considerations led GM to drop the $80,000-plus XLR sportscar. “Part of that’s driven by the economic situation GM’s in,” Howell said.

The article goes on to explain how Cadillac will not be a major player in Europe, where competition is very tough, and will instead focus on emerging markets like China and Russia. That makes sense for the long term.

  

GM clears important hurdle in bankruptcy

The Chrysler bankruptcy set the standard, and now GM is steamrolling its way through the bankruptcy process with the support of the Obama administration.

A federal judge approved a plan by General Motors late on Sunday to sell its best assets to a new, government-backed company, a crucial step for the automaker to restructure and complete its trip through bankruptcy court.

The decision by the judge, Robert E. Gerber of United States Bankruptcy Court in Manhattan, came after three days of hearings to address the 850 objections to the restructuring plan and after he had received a revised sale order from G.M.’s lawyers.

A group of individual accident litigants appealed the ruling on Monday morning, Bloomberg News reported.

In his 95-page opinion, Judge Gerber wrote that he agreed with G.M.’s main contention: that the asset sale was needed to preserve its business in the face of steep losses and government financing that is scheduled to run out by the end of the week.

“Bankruptcy courts have the power to authorize sales of assets at a time when there still is value to preserve — to prevent the death of the patient on the operating table,” Judge Gerber wrote.

Many bankruptcy experts expressed doubt that Chrysler and GM could move so quickly through bankruptcy, but these are extraordinary times, and the courts seem sympathetic to the arguments by the government that a speedy, negotiated reorganization with the support of the government offers the only viable alternative to a destructive liquidation.

  

GM will threaten bankruptcy if it doesn’t get more aid

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The auto bailout helped to keep GM and Chrysler on life support, but GM will make it clear in it’s plan to be filed this week with the government that more money will be needed in order to avert bankruptcy.

General Motors Corp. will offer the government the choice of giving it billions more in bailout money or seeing it file for bankruptcy when it presents a restructuring plan next week, according to a report published Saturday.

The online edition of The Wall Street Journal, citing unnamed sources, said the competing choices present a dilemma for the Obama administration, which may fear seeing the industrial icon carmaker fall into bankruptcy and cut more jobs if it’s refused more aid.

The government has already committed $13.4 billion to GM as part of a federally-funded bailout. The automaker is expected to include its call for more funds in a restructuring plan it’s required to submit to the Treasury Department by Tuesday, though the company isn’t expected to include a dollar amount, according to the Wall Street Journal report.

However, Treasury Department officials believe GM needs at least $5 billion more in loans to keep operating beyond the first quarter, according to the report.

The key will be the plan laid out by GM. Will it have real concessions from bondholders and the union?

  

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