Want to see GM’s stock price recover to something closer to the IPO price or – gasp – closer to the price at which Treasury would actually break even on its bailout of GM? Perhaps the answer is addition by subtraction. Maybe it’s time for GM to cash in its chips in Europe and put Opel, Vauxhall, and Chevrolet (the Europe version) out of their misery and sell them. And if nobody wants to buy them (a very strong possibility), GM should wind down the businesses.
It might finally be time to say goodbye to Government Motors, because General Motors is buying back $5.5 billion of the common stock that the U.S. Treasury currently owns. GM will be paying $27.50 per share, which is a 7.9% premium over its most recent trading price prior to the announcement, but is a 17 percent discount vs. GM’s $33.00 IPO price in 2010. Of note, the price that GM is paying for its own shares is also about half of the $52.39 the shares would have to be in order for Treasury to break even on its “investment” in GM.
Well, the writing has been on the wall for years, but now it’s official: Suzuki will stop selling new passenger vehicles in the U.S. The company filed for Chapter 11 bankruptcy protection this evening and will stop selling new cars in the U.S. The company’s marine engine and motorcycle business units will continue as going concerns, and the filing does not impact American Suzuki’s Japan-based parent company, Suzuki Motor Co., Ltd.
Put this one in the “no good deed goes unpunished” file. Today, Spyker (the former owner of Saab, before Saab went belly-up last year) announced that it is suing GM for $3 billion for its role in Saab’s bankruptcy. Spyker had a sale lined up to China’s Youngman, but the sale required GM’s approval, which GM declined to give. You see, GM didn’t want to empower its competitors in the critically important Chinese market with its intellectual property just for the sake of nostalgia for Saab. As much as I liked Saabs, GM made the right big-picture decision for its own reasons. When Saab’s/Spyker’s interests are aligned with GM’s (as they were when GM sold Saab to Spyker initially), then all is rosy. But when those are in conflict, guess which one GM is going to pick? Guess which one any company, or any person, is going to pick?
By Kevin Miller
I don’t know why it had to be Saab that caught my eye in the late 1980s and made me a fan – and driver- for life. I wrote about it once upon a time for Autosavant, that post is linked here. Whatever the reason, I’ve been caught up in my favorite brand’s gut-wrenching decline for two years. Even in December 2009, I had practically written my favorite brand’s eulogy. Although the Swedish brand’s fate was delayed for two years, it now, unfortunately, seems to be for real. Continue Reading →
By Chris Haak
As a fan of diversity and healthy competition in the global automobile industry, it’s not easy to write this. I think there would be nothing better than a healthy, self-sustaining Saab, pumping out the new 9-5 sedan (and soon, a 9-5 SportCombi), GM-built 9-4x crossover, and new Saab-developed models such as the next-generation 9-3 and a potential smaller 9-2. However, the reality is that Saab is an extremely sick company, one that hasn’t buit a car in five months (and therefore has no incoming cashflow) and whose short-term existence is dependent upon the good graces of the Chinese government in approving investments of Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. in the struggling Swedish automaker.
By Chris Haak
Last week, about two years after exiting bankruptcy protection, Chrysler Group LLC has repaid its outstanding government loans. Between a $5.9 billion USD repayment to the US government (principal plus interest) and a $1.7 billion USD repayment to the Canadian government, the company repaid $7.6 billion USD of its obligations to the two countries’ taxpayers. Today, Fiat announced that it has purchased the 6 percent of Chrysler owned by the US government for $500 million USD.
By Chris Haak
Probably due to its much larger size, GM’s bailout and repayment of some government loans has drawn far more attention than the assistance provided to Chrysler has for the past several years. Chrysler doesn’t even get the perk of a derogatory nickname like “Government Motors” has.
Former “Car Czar” Steven Rattner’s book described how the Obama administration was split nearly 50-50 on whether Chrysler was even worth rescuing, and not everyone is certain of the viability of the now Italian-American automaker in the coming years.
By Brendan Moore
The chatter in Washington is that the U.S. Treasury Department is going to sell most of its shares it received in General Motors stock in 2009 as part of the auto industry bailout package, perhaps as early as this summer. The reasons are either political or financial, depending on whom you ask. Some will tell you that the Obama administration wants the sale this year so that the federal bailout of GM is a non-issue in the 2012 presidential election, and some say that the sale is going to happen this year because the Treasury department thinks the current stock price is as high as it’s going to get for the foreseeable future.
Either way, unless the share price climbs above an unlikely $53 a share before the sale date, the Treasury’s dream of making a profit on the bailout is not going to be realized. At $53 a share, the federal government breaks even on the $50 billion it “loaned” GM, but at the current share price of approximately $30 (well below the $33 IPO price of last November, which raised around $20 billion), taxpayers would lose around $11 billion.
The U.S. Treasury currently owns 500 million shares of the reconstituted GM, which represents 33% of the company’s worth.
By Chris Haak
Just over a year into its new life as an independent company (forgetting the fact that it’s actually held by Spyker, a boutique automaker of sports cars), Saab is again facing financial difficulties.
Spyker’s annual report released today – which is not an April Fool’s joke – said that the company’s continuity is uncertain unless it receives additional funds to finance operations and fund its business plan. In fact, the situation is so serious that production had to halt for several days earlier this week because some key suppliers stopped delivering parts to Trollhattan due to non-payment.
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