Tech & Biz

Last Chance for GM and Chrysler

by Jordan Yerman | March 30, 2009 at 08:32 am

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US President Barack Obama is giving General Motors (GM) and Chrysler one last chance to viably restructure in order to survive. The business plans submitted by the Detroit automakers were deemed untenable. GM is given 60 days to come up with a profitable plan, and Chrysler only 30.

Predictably, both companies' stock got hammered today.

Chrysler has reached an agreement with Italian automaker Fiat for a global alliance in order to secure an additional $6 billion in federal loan money. Also, the White House unveiled a Warranty Committment Program, which will guarantee warranties on new vehicles sold by GM and Chrysler, in order to stave off buyer scepticism while shopping for a new ride. Also, to spur the urge to splurge on new wheels, talk is surfacing about reviving the shelved Cash for Clunkers program, which would allow owners of older cars to trade in for up to $5000 towards the purchase of a new vehicle.

This follows yesterday's events, during which GM CEO Rick wagoner was asked to step down, following eight years at the helm of the sinking ship.His likely replacement is COO Fritz Henderson.

Speaking from the White House, Obama laid out publicly what his administration said on Sunday night: The companies cannot continue to survive as they are now structured.

During the past four years under Mr. Wagoner, GM has lost $82-billion and been overtaken as the world's largest auto maker by Toyota Motor Corp.

It has been forced by the global financial crisis and automotive meltdown to go cap-in-hand to governments around the world seeking bailouts.

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Swan

at 09:18 on March 30th, 2009

Hello Jordan,

I have to wonder what happens when the current bailouts have been expended - and they will be. Will they again go cap-in-hand asking for more money from various governments?

Good article Jordan!
~ Swan