G.O.O.D

Source: Bloomberg.com

GMAC LLC won Federal Reserve approval to become a bank holding company, a switch that may enable the money-losing auto and home lender to tap U.S. financial bailout programs and help keep General Motors Corp. in business.

The Fed used emergency powers yesterday to grant Detroit- based GMAC’s request, citing turmoil in financial markets and the potential impact on GM, the biggest U.S. automaker, which has warned it’s running out of cash. GM and Cerberus Capital Management LP, GMAC’s majority owner, will give up control of the lender to comply with federal rules on who can own banks.

Saving GMAC is a step toward salvaging GM, which received a temporary bailout earlier this month. The $9.4 billion loan will sustain GM at least until January, when President-elect Barack Obama must find a more permanent way to save millions of auto industry jobs and avoid deepening the year-old recession. Dealers and analysts say a GM rescue is more likely to work if GMAC is still around to make car loans, which the Fed’s action ensures.

“It will certainly lessen any questions about their survivability,” said Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York. “They should be able to change their operations enough that they’ll be able to continue to provide at least some minimal form of financing operations for the auto business.”

The Fed order said the plan “would benefit the public by strengthening GMAC’s ability to fund the purchases of vehicles manufactured by GM.” GMAC finances about three-quarters of GM dealers’ inventory, and last year handled about 35 percent of their retail customers. The lender was shut out of credit markets this year after piling up $7.9 billion in losses dating from the middle of 2007.

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Technorati Tags: GMAC, General Motors

Source: International Herald Tribune

Even a U.S. government bailout could not save three of the last remaining plants in the United States still making sport utility vehicles.

Reeling from its financial problems and a collapsing SUV market, General Motors on Tuesday closed its factories in this city and in Moraine, Ohio, marking the passing of an era when big SUVs ruled the road. The moves followed the shutdown last Friday of Chrysler’s factory in Newark, Delaware, which produced full-size SUVs.

The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big SUVs since the early 1990s.

Most of the plant’s 1,100 remaining workers were not scheduled to work the final day, but many showed up for an emotional closing ceremony. Dan Doubleday, who had 22 years on the job, broke down in the plant’s snowy parking lot afterward.

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Technorati Tags: General Motors, SUV

Source: CNN.com

The collapse of negotiations could possibly doom General Motors to a bankruptcy and closure in the coming weeks, with Chrysler potentially following close behind.

While Ford Motor has more cash on hand to avoid an immediate crisis, its production could be disrupted by problems in the supplier base, as could the production of overseas automakers with U.S. plants such as Toyota Motor and Honda Motor.

The struggling automakers may get some money anyway.

As part of their effort to urge skeptical Republicans to back the deal, Bush officials made clear that if Congress didn’t act, the White House would have to step in to save Detroit from collapse with funds from the Troubled Asset Relief Program, according to the sources familiar with the conversations.

One of the sources said that a White House official made it clear to a GOP senator that would be the worst option, because the loan could go to the auto companies with few or no requirements along with it.
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The sources asked not to be named because of the sensitivity of private conversations.

Democrats pressed the White House from the start to help Detroit by using some of the $700 billion for the financial sector, but the White House and Treasury Secretary Henry Paulson refused.

“I would only hope that the president, who has worked so well with us for the past several weeks, would now consider using the TARP money,” Reid said after Thursday night’s vote.

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Technorati Tags: General Motors, Chrysler , bailout

General Motors Corp and Chrysler LLC

Source: Reuters

General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi-billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.

In response to automakers’ bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the sector without liquidation, Bloomberg said.

General Motors and Chrysler could not be immediately reached for comment by Reuters.

Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.

All three automakers have urged Congress to authorize $34 billion in loans and credit lines, saying they will restructure, and cut models, jobs and executive pay to remain viable.

The White House did not dismiss the industry’s $34 billion figure on Wednesday but said it was too early to say what it might support on an emergency basis.

Senate Majority leader Harry Reid wants to try to find a way to avert threatened bankruptcies in the U.S. auto industry with Detroit Three chief executives readying for a make-or-break hearing on Thursday on the bailout request.

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Technorati Tags: General Motors, Chrysler

Opel in Ruesselsheim, Mercedes in Bremen, Volkswagen in Wolfsburg etc.  Obviously Opel will be hit too by the trouble General Motors has, and without Volkswagen, there is nothing in Wolfsburg…

Wolfsburg Volkswagon Plant

Source: Reuters

* Porsche schedules 8 days of production stops at main plant

* Volkswagen may stop production in Wolfsburg for 3 weeks

* Audi says production halts are a precaution

* BMW says will cut further 400 temporary jobs in Leipzig

* Porsche shares down 8.8 pct, VW down 17.7 pct

(Adds Audi production stops, BMW temporary job cuts)

FRANKFURT, Nov 25 (Reuters) - German carmakers made another move to cut output levels towards the end of the year to offset slumping demand as the global economic crisis prompts consumers and companies to closely monitor their finances.

Sports car maker Porsche (PSHG_p.DE: Quote, Profile, Research, Stock Buzz) halted production at its headquarters in the southern German town of Zuffenhausen, for one day on Nov. 21, and planned to stop assembly for another seven days until end-January.

The company said on Tuesday it no longer saw its financial year unit sales to end-July reaching the previous same period’s level of 98,652 vehicles.

The German car industry accounts for about one in eight jobs in the country, according to German auto industry association VDA. The downturn in car sales has also started having an impact on other sectors such as chemicals and electronics.

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Technorati Tags: German carmakers

Source: The News Journal

Moody’s Economy.com chief economist Mark Zandi estimates that 2.6 million jobs — about 1.9 percent of the U.S. work force — would be lost if GM, Chrysler and Ford were to go under.

That includes more than 255,000 people directly tied to the three companies and another 2.3 million whose jobs are indirectly dependent — everything from people who work in the steel, glass, fabric, tire and electronic industries to the barista who makes $4 cappuccinos for the ad executive who’ll be out of work when his auto industry business ceases to exist.

Zandi argues the economy is too weak to absorb that fallout.

“This could be the thing to push us over,” he says. “The ripple effect is like throwing a big boulder into the economic pond.”

The auto industry is woven into the grass roots of the U.S. economy, through its dealer networks, the advertising it buys in newspapers and local TV and radio stations, the health care it buys for its workers and their families and the retirees it supports.

The domestic auto industry supports nearly 800,000 retirees and spouses with pensions and, until recently, health care for everyone. Now that’s being cut back for white-collar retirees, but if the automakers file for bankruptcy, they could shed their pension costs and force the government to pick up the tab.

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Technorati Tags: General Motors, Chrysler, Ford