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.
Tag Archives | Chapter 11
Chrysler To Refinance Debt, Repay Government Loans
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.
Toronto-Dominion Bank To Buy Chrysler Financial
By Chris Haak
Toronto-Dominion, the second-largest bank in Canada based on deposits, announced today that it has acquired Chrysler Financial. Chrysler Financial has had a number of ups and downs over the past few years, but the entity is clearly ending its life on an “up” note. Toronto-Dominion is better known in the US as TD Bank.
Previously the captive finance arm for Chrysler and its various brands, Cerberus purchased the lender along with Chrysler’s automotive operations in 2007. Partially due to Chrysler’s struggles, and partially due to the financial crisis, Chrysler Financial was undergoing major struggles. As Chrysler exited bankruptcy, Chrysler Financial lost its status as Chrysler’s captive-finance arm, with that role moving to GMAC instead under the government’s direction. Chrysler Financial executives declined to accept TARP funds to shore up the company’s balance sheet, and it looked like the firm would be liquidated. It was generating little new business and seemed to have dim prospects for the future.
Opel Withdraws State Aid Requests; GM Will Finance Restructuring Itself
By Chris Haak
Less than a week after the German government declined to provide the state aid that Opel requested to partially fund its restructuring, GM’s European arm has decided to withdraw all requests for state aid. Instead, the automaker will fund its €3.6 billion restructuring program with money from the parent company, according to GM Europe CEO Nick Reilly (pictured).
Though the company did not say so, most of the change of heart is probably an attempt to shed the “loser” image that Opel increasingly seems to find associated with itself, as its initial request for aid dates back prior to GM’s bankruptcy, or more than a year ago. In the ensuing months, Opel has begged, pleaded, and cajoled Berlin – not to mention other European capitals and other German state capitals – to open the purse strings to improve Opel’s competitiveness, from a cost and a product standpoint.
GM Reports First Quarterly Profit Since 2007
By Chris Haak
General Motors Company has released its first quarter 2010 earnings report, and the news is actually pretty good for a change. Helped by massive restructuring, shuttered brands, lower incentive spending, and a generally-improved global auto market, GM reported net income of $865 million and an operating profit of $1.2 billion. The company lost $5.98 billion in the first quarter of 2009 as it stumbled into bankruptcy.
Global revenue spiked from old GM’s first quarter 2009, from $22.43 billion to $31.48 billion, a 40 percent increase, in spite of having four fewer brands in the US. The company’s operating income was offset by $203 million in stock dividends that the company had to pay to its owners – primarily meaning the US and Canadian governments and the union’s VEBA trust fund.
GM May Return to Captive Finance
By Chris Haak
Back in 2006 when GM sold a 51 percent controlling stake in GMAC to a consortium led by Cerberus Capital Management, many saw it as a sign that the company was desperate to sell any assets that it could to raise cash and hopefully stave off bankruptcy. The term “crown jewel” was often thrown about when referring to GMAC, since GM’s captive-finance arm had been a steady profit-generating machine for the automaker for years. In fact, absent GMAC’s contributions, GM’s automotive operations on their own had much trouble standing up.
In the ensuing three years, both GM and GMAC (recently renamed “Ally Financial” in the past week) have both become wards of the Federal government and have received billions of dollars in aid. The government owns 61 percent of GM and 53.8 percent of Ally Financial. Chrysler Financial is being wound down, with GMAC (which, for the time being, has kept its name for automobile finance) becoming the de-facto captive finance company for Chrysler dealers as well.
Geithner Claims “Reasonable Chance” GM and Chrysler Will Repay Aid
But of course, there’s a catch.
By Chris Haak
US Treasury Secretary Timothy Geithner told the Senate Appropriations Subcommittee that taxpayers were still at risk of loss from the investments that the US government made in GM and Chrysler, but that any potential loss would be just a fraction of the original amounts feared. He also said that there was a “reasonable chance” that both GM and Chrysler would be recouped.
However, it’s important to hone in on specifically what he said. He said there was a “reasonable chance now that we will recover all of the dollars we put into these companies” since January 2009. Of course, on January 20, 2009, the Obama administration took office. The key phrase (which I italicized above) is “since January 2009.” (Alternately, “we put into these companies” would work, if “we” in that context is the Obama administration.
Is GM Overhyping its “Loan Repayment?”
By Chris Haak
Since Wednesday, GM has been making a big deal about its repayment of the remaining $5.8 billion balance of government loans ($4.7 billion to the US and $1.1 billion to Canada). GM Chairman and CEO Ed Whitacre had this to say. “GM is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse we build here in Fairfax. We are now building some of the best cars, trucks, and crossovers we have ever built, and customers are taking note. Our dealers are increasing their sales, we are investing in our plants, and we are restoring and creating jobs.”
That’s all well and good, but the reality of the situation – reinforced by an audit report provided to Congress this week by the TARP inspector general, Neil Barofsky – is the GM repaid the money with “other TARP funds currently held in an escrow account.”
Congressional Panel Calls for GMAC Breakup
By Chris Haak
The Congressional Oversight Panel, created by Congress to oversee the Treasury’s spending of Troubled Asset Relief Program (TARP) money, said late last week that GMAC could have been required to undergo a quick-rinse bankruptcy similar to what GM and Chrysler did last year. Bankruptcy would have allowed GMAC to shed itself of the millstone of its troubled non-core ResCap division, which continues to lose considerable amounts of money thanks to bad mortgages that it assumed during the real estate boom years.
The panel, chaired by Elizabeth Warren – an attorney and Harvard law professor – also criticized Treasury for not requiring GMAC to have a viable business plan in place going forward, despite receiving its first bailout money more than a year ago. To date, GMAC has received more than $17 billion USD from the US government to prop up the company’s finances. Both Treasury and the company assert that it is now solvent and will not require any additional bailout funds, but the Office of Management of Budget estimates that the government will never recover $6.3 billion USD of the money given to GMAC.
GM Will Reinstate 661 Rejected Dealerships
By Chris Haak
The saga of rejected dealerships – a fallout of the bankruptcies last year of both GM and Chrysler – took another dramatic turn in the past 24 hours. GM announced this afternoon that the company will immediately reinstate 661 of the 1,160 rejected dealerships that have applied for arbitration concerning the loss of their franchises. This means that more than half of the rejected dealers who applied for arbitration will be reinstated without question by GM. The remaining dealerships that have sought arbitration will continue to go through that process, or GM will attempt to settle with them outside of arbitration. Altogether, GM rejected 1,350 stores last year during its trip through bankruptcy.
GM held a dealer briefing at 2:00 p.m. today, and GM North America president Mark Reuss and head of marketing Susan Docherty held a press conference at 3:00 p.m. on the subject of “an update on the dealer arbitration process,” when the company announced the news.
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