GM wields the axe
April 27, 2009
The US automotive giant also announced that its Pontiac brand would be phased out in the latest round of radical steps the company is taking to deal with its $27 billion (20.5 billion-euro) mountain of debt.
GM said these, and other actions, would "speed the reinvention of GM's US operations into a leaner, more customer-focused and more cost-competitive automaker."
"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, GM president and chief executive.
"Our responsibility is clear – to secure GM's future – and we intend to succeed." He added. "At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."
GM, which last week took $2 billion of emergency US government loans to bring its total so far to $15.4 billion, was told by the Obama administration in late March it had until June 1 to dig deeper and move faster if it wants continued government support.
GM wields the axe
As part of a new viability plan which GM hopes will lead to an extension of government aid, the Pontiac nameplate would be phased out by the end of 2101, with the key focus shifting to four core brands in the US - Chevrolet, Cadillac, Buick and GMC.
The revised plan seeks to find a buyer or phase out the nameplates Saab, Saturn and Hummer by the end of 2009, at the latest. There was no mention of how this new plan would affect Opel in Europe.
GM would also reduce its US dealer network from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent – a further reduction of 500 dealers, and four years sooner, than specified in its February 17 Plan.
"This reduction in US dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets," a GM statement said.
As GM's future continues to be shrouded in doubt, Opel continues to search for a buyer which could save it from being potentially hit by further radical restructuring at its US parent company.
Desperately seeking suitors
On Monday, German politicians including Vice Chancellor Frank-Walter Steinmeier, were quoted in a report in the Financial Times Deutschland (FTD) as saying that they would prefer Canadian group Magna, rather than Fiat of Italy, to take over Opel.
"Magna is a more serious option than Fiat," the report said, quoting sources close to Steinmeier, the Social Democrat candidate for chancellor in September elections.
Steinmeier has already held talks with Magna's director of European operations, Siegfried Wolf, as well as with former Austrian chancellor Franz Vranitsky, who now also works for the Canadian auto parts company, the FTD wrote.
Over the weekend, the regional premier of the western German state of Hesse, Roland Koch, also voiced support for Magna. Opel's headquarters are located in Hesse, near Frankfurt.
German Economics Minister Karl-Theodor zu Guttenberg is to meet this week with Magna representatives, according to the magazine Der Spiegel, in the search for a solution.
A purchase of Opel by Fiat has not been completely ruled out however, though Fiat said Friday it had not made an offer.
Der Spiegel's Internet site quotes sources close to Fiat as saying it is committed to maintaining Opel's four German factories, though it did not pledge to keep them running at their full pace.
Opel employs around 26,000 people in Germany.
A Fiat-Opel initiative originally came from GM, the magazine said, before Rick Wagoner's ouster asl CEO a month ago. The plan has generally been received with great skepticism in Germany.