Now Senate scrutiny awaits GM, Chrysler

GM bankruptcy: Detroit woes hurt dealers

Members of the Senate Commerce Committee plan to grill GM Chief Executive Fritz Henderson and Chrysler President Jim Press about the lone aspect of restructuring that has triggered a broad response from Congress since dealers are nationwide.
“Rapid dealer reductions increase unemployment, threaten communities and decrease state and local tax revenue without any material corresponding decrease in an automaker’s costs,” said John McEleney, Chairman of the National Automobile Dealers Association who sells vehicles made by GM, Toyota Motor Corp and Hyundai Motor Co in Iowa.
At risk are dealers at both companies that employ more than 1,00,000 people, industry estimates show.
In his testimony, McEleney will emphasise the need for government to provide new financing to Chrysler so the company can buy back unsold inventory, parts and other assets, and give dealers more time to close their businesses. Press told Congress last month in a letter the company would help dealerships losing their franchise agreements beyond the deadline set by the company. Chrysler plans to shut 789 showrooms, about 25 per cent of its dealers, by June 9. On Monday, a bankruptcy court judge in New York approved the sale of substantially all of Chrysler’s assets to a group led by Italy’s Fiat despite objections from dealers and other groups that Chrysler was moving too fast.

Court approval

The court must still approve Chrysler’s dealership strategy. Chrysler, which is close to stepping out of court protection, would not comment on Press’s testimony ahead of the hearing.
Henderson, who steered GM into bankruptcy on Monday, plans to contrast his plan as a softer landing for dealers not part of GM’s future.
GM wants to cut 1,100 of its smaller and least profitable dealerships and will lose another 470 by cutting its Saab, Saturn and Hummer brands.
GM expects to offer an agreement to those businesses slated for closure to wind down their operations in orderly fashion over the next 18 months.
GM plans to end up with about 3,600 showrooms.
That plan must also be approved by the judge overseeing GM’s bankruptcy. More than three dozen lawmakers in both the House of Representatives and Senate have asked the Obama administration to intervene on behalf of dealerships.
The US government will own 60 per cent of GM and 8 per cent of Chrysler once their restructurings are complete. Both will be privately held for the foreseeable future. Additional help for dealers beyond government money intended to help them finance floorplans is not out of the question, according to Senator Carl Levin of Michigan.


GM India to unveil Spark variant soon

New Delhi,  ians: General Motors Corp may have filed for bankruptcy protection, but its Indian arm is all set for the launch of a new variant of its popular small car Spark. General Motors India, will unveil the new model on Friday. It also plans to develop Rs 2-lakh small car .


Hummer could now become Chinese

New York: General Motors has struck a tentative deal to sell its Hummer brand to a Chinese company, raising the prospect of quasi-military American vehicles becoming a mainstream choice for drivers in China’s rapidly industrialising towns and cities.
GM signed a memorandum of understanding to offload Hummer to Sichuan Tengzhong, a manufacturer of heavy industrial machinery based in the south-western Chinese city of Chengdu. A source close to the negotiations said Tengzhong would pay between $150 million and $250million for the business. It will be the first time that a Chinese company has purchased a US car brand and Tengzhong has pledged to clean up Hummer’s dismal environmental image by developing models which use less petrol. Tengzhong Chief Executive, Yang Yi, described Hummer as a name “synonymous with adventure, freedom and exhilaration.” 

The Guardian

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