General Motors to declare bankruptcy tomorrow

Tomorrow will be a truly sad day for the automobile industry. General Motors, the largest automobile manufacturer in the world, bankrupt. It just doesn't make sense saying it, even though we've been talking about it for months now.

General Motors was once THE company to watch in the industry. You could have said, what General Motors wants is what America wants. Unfortunately that isn't the case any more. Poor management decissions and the inability to keep up with market trends led to yearly losses in the billions of dollars. Couple that with legacy costs, the UAW, and the failure to restructure after government loans to the tune of $20 billion and we're left with the smoldering pile of goo that was once General Motors.

The saddest part is the loss of some great GM brands. We lost Oldsmobile in 2004. Hummer and Saab had been up in the air for the last 6 or so months, Saturn was poisoned by GM management over the last 15 + years. Opel is being divided up. And the biggest blow, Pontiac. Finally when Pontiac is making some great, fun cars they get the rug pulled out from under them.

This leaves GM with just Chevrolet, Cadillac, Buick, and GMC truck. I doubt we'll see the giant of GM that once was in the 1950s and 60s.

Stay tuned for more info as it becomes available.

Chrysler names C. Robert Kidder as Chairman of Chrysler LLC

Bob "The Builder" Nardelli will be stepping down from his post as Chairman of Chrysler LLC when a new leaner Chrysler emerges. We won't be too critical of Mr. Nardelli in the fact that he really didn't grow Chrysler all that much, as that would take an entire blog all to itself.

Rather we'll focus on the new Chairman of Chrysler LLC, C. Robert Kidder formerly of the Borden Chemical Inc. and Duracell Batteries. Mr. Kidder has a very impressive resume and will be a welcome face to the new Detroit Michigan when its all said and done.

Source: Chrysler LLC

Press Release:

C. Robert Kidder to Become Chairman of Chrysler Group LLC

Auburn Hills, Mich., May 20, 2009 -

Chrysler LLC today announced that C. Robert Kidder, former Chairman of Borden Chemical Inc. and of Duracell International Inc., will become Chairman of Chrysler Group LLC, once it completes its acquisition of the operating assets of Chrysler LLC and completes a global alliance with Fiat SpA. He will succeed Robert L. Nardelli.

"We are most fortunate that Bob Kidder will lead the new company through its transformation," said Nardelli. "My number one priority has been to preserve Chrysler and the livelihoods of thousands of people who depend on its success. With his broad expertise serving on numerous world-class boards and his accomplished business background, Bob will provide the leadership and strategic counsel that will help to create a strong global competitor moving forward." With more than 40 years of experience, Kidder currently serves on the boards of Morgan Stanley, where he is the lead director, Schering-Plough Corporation, and Microvi Biotech Inc. He previously has served as Chairman and Chief Executive Officer of both Duracell International Inc. and Borden Chemical Inc. and as director of such companies as Electronic Data Systems Corporation and General Signal Corporation. During his tenure with McKinsey and Co. Inc., Bob worked with a major OEM client in the automotive industry. Bob currently is Chairman and CEO of 3Stone Advisors LLC, an investment firm that focuses on clean-tech companies. He holds an M.S., Industrial Economics from Iowa State University and a B.S., Industrial Engineering from the University of Michigan. He resides with his family in Columbus, Ohio.

“I am pleased to join Chrysler at a time when Chrysler is poised to launch an exciting new era,” said Kidder. "I am confident that Chrysler will emerge from Chapter 11 a lean and powerful competitor, combining its own rich history of innovation with Fiat's technology and expertise to invigorate the American car market and to challenge other car companies around the globe." Chrysler LLC announced on April 30, 2009, that, as a result of the comprehensive restructuring plan agreed to by many of its stakeholders, it had reached an agreement in principle to establish a global strategic alliance with Fiat to form a vibrant new company. On the same day, Chrysler LLC and 24 of its wholly-owned U.S. subsidiaries also filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York. Chrysler also filed a motion under Section 363 of the Bankruptcy Code requesting the swift approval by the Court of the agreement with Fiat and the sale of Chrysler's principal assets to the new company. The benefit of this type of filing is speed. It will allow a leaner new company to emerge in less than 60 days from the time of filing, well positioned for long-term viability.

Nardelli, Chrysler's Chairman and CEO since August 2007, announced on April 30 his plan to leave the company following the completion of the transactions. He will return to Cerberus Capital Management LP as an advisor. He said that it was "an appropriate time to let others take the lead in the transformation of Chrysler with Fiat, and I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance." As stated in the terms of agreement, upon successful completion of the alliance, a board of directors for the new company will be appointed. The majority of the directors will be independent (not employees of Chrysler or Fiat). The board will select a CEO with Fiat's concurrence. A complete biography of C. Robert Kidder is available at:

NADA responds to GM dealer announcement

The National Automobile Dealers Association won't go quietly into the night. They are continuing to fight for the Chrysler dealers who were cut yesterday, and the announcement earlier regarding General Motors announment with the reduction of some 1100 GM dealers by the end of 2010.

Source: NADA

WASHINGTON (May 15, 2009) -- General Motors’ plans to cut its dealer network are drastic and far-reaching and will impact more than 63,000 dealership employees and thousands of their sales and service customers.

We view GM’s action with a profound sense of sadness and disappointment.
GM’s decision comes through no fault of the dealers, who are, in many cases, family-run businesses that have been loyal partners with GM – through good times and bad – for multiple generations.

NADA fully expects GM to honor all its obligations to the affected dealers, whether or not they decide to wind down their operations. It’s critical for GM to treat each affected dealer fairly and equitably.

NADA will work aggressively on all fronts with regard to assisting these dealers during these historically challenging times.

GM dealer network update

General Motors is going a different route than Chrysler LLC in regards to their dealer network. Rather than just say adios, you're done. GM is electing to not renew sales and service agreements with 1100 dealers when they come available for renewal in the 4th quarter of 2010.

Dealers targeted were stores that have poor annual sales 35 units or less per year. That makes up 400-500 of the dealers. The rest are not meeting their required sales and service performance, CSI, etc. that are performing below average. These 1100 dealers make up 7% of GMs yearly sales.

There are about 500 dealers who are dedicated to Hummer, Saab & Saturn brands. There will be a further update regarding these brands and those dealers in the next week or so. General Motors North America Vice President Vehicle Sales, Service and Marketing, Mark LaNeve did make it clear that dealers of these three brands "will exist outside of General Motors next year".

It was made clear that without GM filing bankruptcy, that these letters will be hard to enforce. This is why GM is putting the options into the dealers hands to enforce whether to wind down business and close, or find another brand to carry.

GM's intentions are to land somewhere in the neighborhood of 3600-4000 dealerships.

"This is one of the most difficult decissions we have as part of our restructuring" LaNeve said.

Press Release:

In conjunction with conversations General Motors started with its U.S. dealers today, GM issued the following statement -->

GM Statement Regarding Dealer Network Communications

As noted in our recent S-4 filing and updated Viability Plan, General Motors plans to reduce its dealer network from 5,969 stores today to approximately 3,600 by the end of 2010.

This process starts today, as GM begins contacting dealers regarding its long term planning. Approximately 1,100 underperforming and very small sales volume U.S. dealers will be advised that GM does not see them as part of its dealer network on a long-term basis. In most cases, existing franchise agreements run through October of 2010.

In addition, we will be updating about 470 Saturn, HUMMER and Saab dealers on the status of those brands and we will be discussing how the remaining dealers will support our retail plans going forward. While additional cuts will be made, we believe the vast majority, over 90 percent, of the remaining dealers will be offered a chance to remain with GM. However, specific dealer issues, further attrition and additional possible dealer network actions are expected to bring the number of future GM dealers to around 3,600 by the end of 2010, as described in the Plan. The actual number could vary given levels of attrition, etc. outside of GM’s control.

“We have said from the beginning that our dealers are not a problem but an asset for General Motors,” said Mark LaNeve, GM Vice President of Sales Service and Marketing. “However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient.”

“In response, we are letting them know about our long term plans. GM’s viability plan calls for fewer, stronger brands as well as fewer, stronger dealers. We have taken a very difficult step by identifying those dealerships we’d like to keep in the GM dealer network and those with whom we will have to wind down our business relationships,” LaNeve said.

As independently owned businesses, dealer owners will make their own decisions if and when they want to make this information public. GM is not releasing the names of any dealers.

“We are not terminating any dealerships today,” LaNeve clarified, “We will be talking to all of our dealers over the next few weeks, letting them know now in the spirit of open communication, so they are advised well in advance, about our long-term plans and their role in them. Long term, GM should have fewer, healthier dealers, maintaining GM’s current high customer satisfaction ratings, with more sales per outlet.”

GM to cut 1100 dealers today

Following in the steps of Chrysler LLC yesterday, General Motors is planning to announce the closure of 1100 GM dealerships this afternoon. A press conference call is scheduled for 12 noon. We will update you with further details as they become available.

NADA responds to Chrysler's dealer announcement

As the U.S. dealer network continues to take in the loss of 789 Chrysler, Dodge & Jeep dealerships. The National Automobile Dealers Association weighs in on the truth of the matter.

Source: NADA

Today’s announcement by Chrysler that it is rejecting 789 of its Chrysler, Dodge and Jeep dealers marks a very sad day in retail automotive history.

These dealers and their more than 40,000 employees have done nothing but proudly represent the Chrysler brand through good times and bad, and today find themselves left behind as the company reorganizes itself in bankruptcy court.

While NADA understands the realities of the current marketplace, we also know that dealers didn’t cause the situation that Chrysler finds itself in today. Furthermore, we believe that these draconian dealer cuts are not only misguided but counterproductive. Fewer dealers mean less revenue for the automakers. Dealers are the manufacturer’s customer; they buy the cars and parts and even the signs in front of their dealerships.

NADA fully expects Chrysler to honor all its obligations to the affected dealers who have been nothing but good partners over the years.

NADA will continue to work aggressively on all fronts with regard to assisting these dealers during these historically challenging times.

Chrysler to close 789 dealers.

In compliance with bankruptcy protocol, Chrysler LLC is exercising the option to close 789 Chrysler, Dodge, and Jeep dealers across the United States. This is just one of the many steps being taken to return Chrysler to profitability when they emerge from bankruptcy proceedings and the new aliance with Fiat.

44% of the dealers affected have dual brands, meaning Chysler & Dodge, Dodge & Chevrolet etc. So some dealers will only loose one brand. But one of the key alignments is to align the dealers with the expected annual sales numbers of 12 to 14 million units per year. So you will see a Dodge dealer, that may take on Chrysler and Jeep in the near future.

Jim Press, Co-President of Chrysler LLC states that "Chrysler is open for business". And assures Chrysler customers that they will still be able to purchase cars, parts, and have their Chrysler products serviced for many years to come.

This raises the question of what will happen to the current inventory of Chrysler vehicles when the 789 dealers close. There is currently 400+ thousand Chrysler, Dodge & Jeep vehicles spread across the 789 dealers. The cars will be taken back by Chrysler and redistributed to the remaining dealers. This is due to Chrysler's decission to not produce any more vehicles during the bankruptcy process. So dealers that will be taking on new franchises will have a supply of cars to pick from.

Source: Chrysler


Chrysler LLC Files Papers to Retain Majority of U.S. Dealer Network as Part of Company's Sales ProcessAuburn Hills, Mich., May 14, 2009 - Chrysler LLC today filed a motion with the U.S. Bankruptcy Court seeking to reject certain U.S. dealer agreements, and a list of U.S. dealer agreements to be assigned to the buyer of its business assets. Subject to Court approval, 2,392 Chrysler, Jeep® or Dodge dealers will continue with the new company in a global alliance with Fiat once the sale is complete. This action will help improve the landscape of the Chrysler dealership network following the sale and enhance the full line portfolio of Dodge, Jeep and Chrysler products for customers."We are in the process of revitalizing Chrysler's business to succeed as a viable enterprise under new ownership in the future," said Jim Press, Vice Chairman and President. "The unprecedented decline in the industry has had a significant impact on our sales and forced us to reduce production levels to better match the needs of the market. With the downsizing of operations after the sale and reduction of plants and production, similar reductions must be made to the size of the dealer body. We appreciate the support of our dealers and regret this painful action. We wish market conditions made it possible to keep everyone."Chrysler plans to maintain "business as usual" with all of its dealers through the transition. The Company intends to honor warranty and incentive payments during the period that rejected dealers remain active. Chrysler is committed to working with these dealers to ensure a positive relationship with customers. To ease the burden on dealers whose agreements have not been assumed, Chrysler will work to assist in the redistribution of new vehicles and parts to the remaining dealer network."It is with a deep sense of sadness that we must take steps to end some of our Sales and Service Dealer Agreements," said Steven Landry, Executive Vice President, North American Sales and Marketing, Global Service and Parts. "The decision, though difficult, was based on a data-driven matrix that assessed a number of key metrics. In total, 789 dealers, which represents 14 percent of our sales volume, will be rejected and, subject to the court approval, they will discontinue selling Dodge, Chrysler or Jeep vehicles on or about June 9."The review was an objective and rigorous process that was both thoughtful and thorough. We plan to work to have an orderly transition. These are extraordinary times, and they call for an extraordinary response. It is important to our dealers and to our customers that these steps be completed quickly and seamlessly as we transition to a new Chrysler," Landry added.Additionally, on May 12, the Court approved the motion regarding Chrysler LLC's agreement with GMAC Financial Services to provide the automotive financing products and services to the Company's dealers and customers moving forward. GMAC Financial Services will be the preferred lender in North America for Chrysler, Jeep and Dodge dealer and consumer business, including wholesale of new and used vehicles as well as retail. GMAC Financial Services will be able to offer the best long-term finance options for Chrysler dealerships and customers and is established as a bank holding company with access to a variety of funding sources.While difficult, the actions to restructure its dealer network are a necessary part of Chrysler's viability plan and are central to the proposed sale transaction. These actions will help ensure that both remaining dealers and the new company will be stronger and more profitable going forward."A stronger dealer network supported by GMAC's long-term finance options provides an advantage to consumers, and that is what will ultimately drive the creation of a significantly stronger global competitor," said Press.Additional information, including the motions filed, can be found at
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