GM receives first part of emergency funding

By Matt Brogan | January 02nd, 2009

General Motors has today received the first US$4 billion in emergency loans that the United States federal government has promised the car-maker.

Both GM and Chrysler are scheduled to receive a total of $17.4 billion in federal loans that the Bush administration offered to extend after the companies warned they were close to running out of cash.

Treasury Department spokewoman Brookly McLaughlin said, “We’re working expeditiously with Chrysler to finalise that transaction, and we remain committed to closing it on a timeline that will meet near-term funding needs.”

Chrysler said it remained in talks with the US Treasury to finalise its own US$4 billion loan agreement and expected to receive its share of the funding soon.

“The discussions relating to Chrysler LLC have been positive and productive and we look forward to finalising the details of our financial assistance in the immediate future,” Chrysler spokeswoman Shawn Morgan said in a statement.

GM spokesman Greg Martin said his company and the Treasury agreed on the government loan at about 4:30pm Wednesday, and GM subsequently received confirmation of the transfer of US$4 billion from the federal government.

The Bush administration has promised another US$9.4 billion for GM in the next few weeks. The final US$4 billion of that amount will require congressional action.

The Treasury Department this week also approved US$6 billion in aid for automotive lender GMAC, after allowing it to become a bank, and has signalled a willingness to help those suppliers whose shut-down would bring car-makers to a halt.

Car-makers receiving emergency loans must file plans by February 17 describing how they will restructure to become viable for the long term.

Unless agreements are changed by the incoming-Obama administration, a President’s designee, or ‘car czar’, is to decide by March 31 if a car-maker’s restructuring plan is sufficient. If not, the first loans will be called in, possibly forcing that company into bankruptcy.

Ford Motor Company is not seeking an emergency loan but wants to be able to tap a US$9 billion government line of credit if necessary.

Together the Detroit three (GM, Chrysler, Ford) CEOs told politicians early in December they need access to at least US$34 billion from the government to get through the extreme economic downturn.

Some analysts and economists say much more government help will be needed.

ZF

GM and Chrysler are gone anyway. It will be impossible to make a profit or even a good loss anywhere in the near future for these hopeless companies………..the sooner they die the better. The economy cant afford to prop them up any longer.
Sam

Who is going to buy them even if they are able to continue making them? Not Americans, they are losing their jobs at the rate of 20,000 jobs a day! They are stuffed. America as we know it, is dying, make no mistake. 2009 will go wooosh like 2008 did and we will wonder on December 31st how we didn’t see any of the events which unfolded coming for us. Hold onto your seats, this ride is just beginning.
ZF

Sam .I agree……….and they have no-one to blame but themselves. America is a greedy nation and now they will pay for it.
The Realist

I’ve seen great articles on BBC, NBC, CNN and Fox in the past few days about the woes of GM, Ford and Chrysler, and senior academics from no less than Brown and Harvard stated the best solution would be to let the three companies die and rise again afresh with a clean slate.

Many cannot believe the three have been operating with such a poor business model which allows for no room to restructure. And their thoughts on the Auto Unions stance in the current climate was quite scathing.
eh179driver

Ford, Chrysler and GM will survive. They will re-structure and will probably ask for more government money. Why? Well simply it is far cheaper for the US Government to give them “grants” and “loans” than to pay for unemployment benefits. It is the same here in Australia. The car industry (mainly Toyota and Holden plus some parts suppliers) are the second biggest exporter of goods in Australia. This brings billions of dollars in taxes to our government so with the recently announced grants all our government are doing is handing back a small portion of the taxes earned. Nobody complains when the government builds roads railways, ports, deapens shipping chanels or anything else for our food or mining exporters so why complain about some grants for our car manufacturers. Remember these same companies (and their suppliers) are training hundreds of apprentices and engineers that go onto to help the nation in latter years. Without them we have no training ground for these skilled workers. For every direct emplyee there is another 7 indirects working at parts suppliers and dealerships. Thats over 100’000 people that would be out of work if he industry was to close local manufacturing. The same applies to the “big three” in the US but on a larger scale. I can’t remember the number quoted in a recent newspaper article but it was well over 1.0million people in the USA alone. No government will allow that to happen. Also don’t forget GM and Chrysler are a huge supplier to the US military. They may well have to shift manufacturing to lower cost, non-union states. But they will survive. You might not like their cars but don’t allow that to colour your judgement. In times like these your job might be next!
http://www.facebook.com/profile.php?id=674330849 lazybones

At least we’ll know the fate of Holden and Opel by March. I’d have to agree that the US Government will keep trying to bailout the car markers. But the simple fact of the matter is, the market has shrunk and cannot support all 3. So at least one will have to go under or operate in a greatly reduced capacity. Which still means job losses.
Wheelnut

Quote [EH179Driver]: “Ford, Chrysler and GM will survive. They will re-structure and will probably ask for more government money. Why? Well simply it is far cheaper for the US Government to give them “grants” and “loans” than to pay for unemployment benefits.. It is the same here in Australia……”

I’ve been saying that since the start when all the rumours reports speculation in relation to GMs [and Holdens] future started on this site – back in June/July
Wheelnut

Lazybones – GM have released a statement outlining their restructuring plans inorder to survive etc. In it they stipulate that they will be Holden on to Holden Opel Vauxhall Chevrolet and Cadillac… no Pontiac; No Buick; No Saab etc

Proof that GM recognise Holdens potential is the fact that they have committed more funds and given the green light to Holdens plans to build an”unknown” smal;l-medium sized car at Elizabeth [they have made similar announcements in relation to Opel as well].

So even if GM do go bankrupt there would be nothing from stopping them from pulling out of the USA and continue to build cars in Australia and Europe.. remember GM don’t actually build cars they just own a number of companies that do
Duck

^^^^^^^^^^No Buick!!!!!!!!!!! Oh well.

And Saturn too I’m guessing?
Duck

^^^^^^^^^^^^And no GMC and HUMMER too?
Duck

And what about GM Daewoo, Wheelnut?
Cupid Stunt

THats a good way of getting through the crunch, borrow more money. Yeh makes really good sense that.
How about sacking the overpaid nobs who’s shortsightied imcompetance got them there in the first place. GM Europe is the only profitable area I believe, partly due to making cars that people want and sell well.
Andrew M

Duck,
Daewoo is very much in GM’s books.
They have invested heavily in the facility. That alone says GM’s small cars will revolve around the Daewoo Empire.

Lets just hope they can flush out the old Daewoo designs (pre GM take over) before its too late
Phill

GM stands for GIVE MONEY
Nick

Hard to say it but The Realist is right. It has to wipe off its debt and get rid of the cost base and start all over again. Times are tough if Toyota are making a loss.
Wheelnut

Realist – I’ve also read various articles about the problems the big 3 are having.. and a number of them say that there’s a strong possibility that they may do the unthinkable which is cease production and pull out of the USA particularly considering how expensive it is to build cars in the USA ATM – what with American Auto workers being paid $40p/h

So they may in fact die and rise from the ashes but be located offshore with FWD centres in Europe and RWD centres in Australia. where they have far more efficient more flexible assembly lines etc

The fact GM have just given Holden [and Opel] money to start new projects – money that could have come from the bailout; makes me think that it could be sooner rather than later.. that is GM is getting ready to leave.

If they don’t leave they will be not as centralised in the USA as they once were.. wait and see I guess
Andrew M

Wheelnut,
GM wont pack and leave the US.

They will go Bankrupt before that happens. Pulling out of the US all together will put a bigger strain on the economy, than what going Bankrupt will.

The idea that Holden or Opel is going to become the GM savior is a bit wacky i think.

What new projects is Holden starting?? Building a small car that is daewoo derived using Aussie Government money isnt exactlly a new project, and No, the money hasnt come from the US to fund the re-tooling etc for what ever the small car is.
Aussie money is the fuel behind it, not US money, and its clearly stated in the press releases that the aussie grants are what has kicked off the venture.

They need to go Bankrupt.
Its really the only way. They can come out the other side in a pretty strong way if they structure it well
Wheelnut

Yes the Astra is and the Daewoo share the same “Delta” platform, However; the small car Holden will be building in 2010 will be more like a Astra derivative [the way the Territory is to a Falcon] yet it won’t look like a Astra or a Daewoo but it will use the Delta Platform like the Astra – that’s all

Although – I would rather see a locally built RHD Insignia
because as it says in Wheels Magazine [Jan 09]

The Delta platform is a “global” platform which is used by the Astra Daewoo and a number of other Small Cars in the GM line up which are assembled in China Russia and the USA . Whereas the Insignia is built on the new Epsillon Platform which at the moment is only being built in Europe.

Therefore; its illogcal to build a car here that can be imported from a cheaper pacific neighbour [given that Australia has free trade agreements with China and Korea]. It makes more sense to build a locally made car that can only be built in more expensive Europe.. the Opel Insgnia

Either way Holdens new small car will mostl ikely be exported as it will be an Astra Derivative not an Astra replica or a Daewoo
Wheelnut

Almost half the $1bn dollars GM-Holden spent on the research and development of the VE was actuallyt spent on the tooling and the new “skillet” assembly line.

Now do you really think that the Aussie Gummint would be willing or able to find the $500 million for Holden to install the new robots etc on the second assembly line where the old medium sized vectra was built? because it will cost almost the same amount of money…. The KRudd and SA Gummint “chipped in” with a few mill but the rest of the money will have to come from GM.

Its similar to Toyota getting the $35m to build the Hybrid Camry – Toyota had plans to build it here anyway.. the Gummints contribution sealed the deal and gave the project the green light
Wheelnut

Quote [Andrew M] They need to go Bankrupt.
Its really the only way. They can come out the other side in a pretty strong way if they structure it well

I agree – if they restucture properly they will survive.. make it through these tough times.. and quite possibly be better for it.

One of the best ways for them to restructure and remain competitive in the modern global market is to become de-centralised. For too long GM Ford and Chrysler have been insular and ignorant – typically American in a way.. focussing only on America [which no multinational company can afford to do] and now they are paying the price for it

they had the idea “Americans like big ugly boxy cars and SUVs…. Therefore; so does the rest of the world.”

If they set up centres in Europe and Australia for example and gave management in those countries more power to make decisions they would be able to react quicker to market trends etc in that area.

They are finally starting to take advantage of the experience and expertise their subsidiaries have – I mean one of the reasons you buy into or take over a company because of its reputation and its potential.
Andrew M

When i say money to tool, i dont mean solely tooling, although some money would still need to be spent on it.

I cant see the insignia being done here. personally i dont like the design, it reminds me of the Taurus a bit.

Also, i doubt it (Insignia) would rack the sales needed.
Astra is the best bet to rack some solid sales.
They need to have chosen a volume seller to top up the lacking Commodore sales.
Astra is really the only other Holden model that could comfortably make a good case
Wheelnut

Andrew – When Holden made the announcement about building the new car they said it won’t look the same as an existing Opel [Astra/Cora/Insignia].. the way the car looks will be done at Holdens state of the art design studio in Melbourne. So even though you mightn’t like the look of the insignia Holden will make a few changes to the front and rear of the car.

The insignia is a lot more advanced and a lotmore flexible than a Taurus as the Epsillon Platform can accept FWD RWD and AWD.. so Opel could build FWD versions Holden could build “up-spec” RWD models

I think it will sell relatively wll as it gives customers a “smaller” alternative to the Commodore.. the same way a Camry does to an Aurion.
JEYKL & HYDE

this is just a guess but,

if you look at the artists(gm australia) impression of the new “astra”,and then look at the cgi of the 2010 astra,they look “somewhat the same”.now if you go to opel europe,you will also see smaller capacity turbo engines in the lineup,sedans,diesels etc.put two and two together.i think the insignia(which IS coming)WILL come from europe.i just hope they leave the name alone.the viva just got sh*tcanned in aus,so also have a close look at the cruse,its my pick to be the gm korea small/med car

its always amusing to hear the ford/toyota guys talk daewoo down,when in essence its gm.daewoo WERE alsolute crap cars,and their corrupt once boss is now in the clink.daewoo to koreans is like holden to australians,and like hyundai-kia they have immense pride building these cars and exporting them all over the world(hence gm dat).gm korea,like hyundai-kia,are on a steep learning curve,lets hope gm lead them a lot better than they previously have,and get the end product right…
Andrew M

Wheelnut,
how does the insignia being more flexible make up for what i dont like about the looks of it??

I still doubt the Insignia will be done here.

The Camry/Aurion thingy is quite the opposite scenario.
The Aurion is supposed to be a bigger alternative to the Camry. All they did was call the V6 Camry a different name.

I still cant see the insignia being an instant sales hit.
Holden havent had a decent mid size car since Vectra.

Holden suffers from the same tag as ford.
Holden are known as the Commodore car company, and ford are known as the Falcon car company.
it takes a lot to change the images in peoples heads about that no matter how good the other products are.

I feel they are better off sticking with a car with at least some recognition like the Astra.
They cant afford to enter with a new venture that hasnt been tested in this water
Wheelnut

Andrew I didn’t say that the fact that the insignia is built on a flexible FWD/RWD/AWD platform more than makes up for the fact that you don’t like the look of it. They were two seperate points/paragraphs.

- Holden will make cosmetic changes to the car to create a derivative of an existing Opel.. be it a coupe or wagon.

- The insignia is built on a flexible FWD/RWD/AWD platform.

Plus the Insignia/Commodore is the same as the Toyota Aurion/Camry given that the Insignia is almost the same size as the Commodore the Insignia could be offered as a 4 cylinder family car – instead of making a 4 cylinder Commodore [even though the Commodore was originally a Commodore people have come to expect a 6cylinder Commie]
Wheelnut

Andrew – The insignia is the same size as the Torana TT-36 concept which was displayed at the Australian Motorshow a couploe of years ago and has since created alot of interest in a medium sized Holden sedan.

There are a number of people on here that have been discussing the possiblility of them reviving the Torana name etc..
Holden already have the Astra which competes with the Focus what they need is another neew car a a medium sized sedan to compete against the Mondeo and Mazda6 etc

People are gradually turning away from large cars but don’t particularly want to go to hatchback. It makes more sense and there would be just as much demand for it.

Infact if they decide to make the insigina here don’t be surprised if the designers make it look like the Torana [a smaller commodore] by changing the front and rear end.
Andrew M

Wheelnut,
On the Taurus/Insignia comparo,
what i was getting at was i said i put both of their designs in the “I dont like Basket”
I dont know how you thought a mention of AWD/FWD/RWD or what ever was relevant.
I know they are seperate points of interest, i just dont know why you mentioned it when i merely said i thought both looked nothing flash.

Maybe its Just me, but i cant see the logic of chosing to make the Insignia to build here over the Astra.
Also if they revive the Torana name, they will shoot themselves in the foot.

Ford already had the Focus to compete against the Astra before they decided to make that here too ,
and Holden already has a medium sized car competing against the Mondeo and Mazda6
Either way, what ever comes here wont be an entrant to a new category for holden

I also think the industry talk and logic getting around speaks far stronger than a few people on here discussing the possiblility of them reviving the Torana.

But hey,
If it all pans out against what i believe will happen, I here by give you the right to the very first “I told you so”.
Wheelnut

Andrew – Have you read the article in the January issue of Wheels about Holden building a new small/medium sized car here in Australia yet.?

It lists the possible cars Holden could build – they are:

The Astra which is based on the Delta Platform which is shared by a number of other GM cars that are built in the USA China and Korea – countries from which its cheaper to import cars from….

and the Insignia which is based on the new and much more flexible Epsillon Platform and at the moment is only being built in Europe a country which is more expensive to import cars from.

And the main reason Holden started to import Daewoos – which are built on the Delta Platform and sell them as Astras instead of from importing them from Europe.

As for the Torana name it may be associated with Bogans etc but it also has a motorsport heritage which is one of the reasons the Falcon GT is so popular.. and let’s face it there are just as many bogans these days driving around in Falcons as there are in Commodores and Toranas.

Its the reason Ford continue to use the name Mustang and Cobra Holden use Monaro and Chevrolet use Camaro – people who grew up dreaming of owning a Camaro or a Mustang or even a Torana are now in the position to buy one.
Andrew M

Wheelnut,
the official press release from GM entailed that it is infact the Delta platform that will be used.

That rules out the Insignia.

I well and truely respect that names such as Torana etc have some great heritage and history attached to them, but there is also a lot of people who would turn at such heritage in an effort not to be branded a racer or whatever.

they need a name that can settle with females aswell as the males.
how many females do you think would cream themselves over the opportunity of buying a car called a Torana??
It would be like trying to promote the Barina to attract a solid male audience. most males wouldnt even look at a barina purely because its called a barina, and it carries branding as being a teenage girls car

The Astra name plate has worked well in OZ attracting both males and females.
The Astra doesnt seem to have a gender associated with it.
Bret

I think it’s a bit of a long shot trying to talk up the prospect of the Aus built 4 cyl “small” car being somehow an Australian designed car based on a European Opel.

The reality is this car will be little more than a cosmetic restyle of the Daewoo designed car based on the Delta 11 platform. $30 mill is the total budget for R&D on this car – that does NOT get you a new car, it only gets a locallised re-style, and locallisation of suspension and HVAC and the like.
Wheelnut

Quote [Andrew M] “how many females do you think would cream themselves over the opportunity of buying a car called a Torana??”

Andrew these days there are just as many females out there who are interested in the Street Machine/Show Car/Muscle Car Scene as there are males not to mention V8 Supercars.

And as there are Torana SLR/5000s XU-1s and A9-Xs being sold for upwards of $60K… The Torana is more associated with Car Enthusiasts than it is Hoons or Bogans

And if Holden do release a Torana; if it’s anything like the classic GTR-XU1 SLR5000 or A9-X…. I know one special lady who would be in the queue to buy one – but wouldn’t if it was called a Gemini.

Peter Hughes who designed the TT-36 and the VE says they are still toying with the idea so it’s still a possibility
Wheelnut

I know the official press release form GM-H says the new project car will use the Delta platform which the Astra uses. However; that doesn’t necessarily mean that it will be an Astra

Because the the press release also says that Holden designers and engineers will be doing a bit of work on the car.

Given that the new Chevy Volt [Hybrid] is also built on the Delta platform but is bigger than an Astra or a Barina [almost the same size as the Insignia]
When you think about it there is nothing to stop Holden from building a car that is the same size as a Volt and calling it a Torana.
Wheelnut

What I mean is they could just do a bit of work to the look of the Volt [it could do with it] ; drop in an existing 4 or 6 cylinder engine and still stay within budget…. anything’s possible
Andrew M

OK,
now you are dreaming.

are you at least going to stop calling the new “small” car the Insignia???

I got no problem with revisiting the Torana with some special models, I just dont think its suited to be reborn as a main stream model.

What did it cost Toyota to throw the Aurion front on the V6 Camry???
thats about all the changes the new holden will get.
They wont get a complete new design for the budget (as Bret already pointed out)
and even if they grew a bigger budget to afford a much more distinct design (which i highly doubt) then they havent learnt one single thing over the last 10 years.
Most manufacturers have realised native models for certain areas doesnt make you bucks.
for the small aussie sales it would receive, the higher development costs would take forever to recoup

Astra, Astra, Astra
Yep, Yep, Yep (for OZ)

everything you said is physiclly possible, but bugger all of it is realisticly possible
Wheelnut

Andrew – I will stop calling the new small car the Insignia. However; will you stop calling the new small car the Astra.

As I said just because it will be based on the same platform as the Astra doesn’t mean it will be an Astra. they will most likely continue to imnport them from Europe

I also expect Holden will most lilkely end up importing the Insignia too

The Camaro is built on the same platform as the Commodore but its not a Commodore…. The XR-5 Focus uses the same engine as a Volvo but its not a Volvo is it?

Anything is possible Andrew – remember last year Ford Announced that they were axing the Falcons Inline 6 but then a couple of months later it was back….So what’s not to say things at Holden will change and the Torana makes a comeback..mmmmm……?
Andrew M

Wheelnut,
they dont have enough money to totally design a new car for OZ, simple.

Ill also have to revisit the press releases to check, but I believe that it was said that it is a current design they are using.

Why dont you like the Astra???
nothing to be ashamed of, I reckon its quite a stylish looking vehicle
Wheelnut

No Andrew M – I do like the Astra they are safe reliable practical and good value for money. I Particularly the Coupe; I even like the look of the Astra Twin-Top Cabriolet compared to the Focus but its not as good as the Peugeot

I know that they will be using an existing design but Holden will be doing a bit of “touch up” work to it in terms of looks etc.

I mean the Hideous 300C is virtually the same design as the Cool looking Dodge Magnum except for a few exterior panels etc… it will be the same with Holdens new small car
Andrew M

perhaps not quite that extensive.
they dont have the coin to afford that.
Wheelnut

Maybe they don’t ahve the funds at the moment – but Ford somehow found the extra coin to get another extra couple of years out of the old I6 didn’t they?
Andrew M

Wheelnut,
that charge was lead by the new president who was an australian, and hence actually cared about this market in OZ
the changing force was someone with a bit of passion
Bret

Just to put to bed any ideas that anyone had about this being unique to or designed in Aus:

GM design executive Simcoe says the sedan and hatch versions of Holden’s small car will be near-identical – both inside and out – to the Chevrolet Cruze versions rather than custom-designed for Australia

However, as part of the global lineup GMH are doing the hatch styling (and were well before GMH dipped into the Govt money bucket for local production).

“I told you so”