Bailout Part Deux

Yesterday was the deadline for the US domestic automaker's second "viability plan" to Congress. The purpose of these viability plans (an optimistic name if I've ever heard one) is to secure additional bridge loans from the federal government (out of the pockets of taxpay

18 May 2015

The first bridge loans to two of America's automakers (General Motors and Chrysler LLC) amounted to $13.4 billion of US taxpayer money, meant to hold them over through hard times. Well, times got worse, and annual automobile sales in the US dropped to their lowest point since 1992. GM and Chrysler are still nearly bankrupt, they still can't sell any cars, and they're getting more money.

GM's viability plan asked for a grand total of roughly $30 billion USD, approximately $16 billion immediately, simply to stay afloat. Chrysler requested an additional $5 billion USD by the end of March to stay afloat, in addition to the $4 billion they received in December.

So what are the automakers doing to justify this "loan" to Congress (not necessarily the American consumer... they'd rather thank America for the money no one wanted to give them)? Well, for one thing, lots of cuts. Chrysler idled all of it's production plants from mid December through January 19th to cut back on the vast overproduction it suffers from, due to the fact that no one wants it's cars. GM has been spinning off anything they can to raise cash, but considering they lost a total of $74b in 2008, I'm not sure how well that's going to work.

So what's next? Well, more cuts. GM announced during their viability plan press conference yesterday that Saturn is going to be dead by 2011. Saturn is the easiest brand for GM to cut. Why? Well, for one thing, they're not profitable and never really have been. Also, due to the fact that Saturn's only been around since 1989, GM had the foresight back then to include protective clauses in their dealer agreements that protect them somewhat from legal liability if they close down Saturn. This was the economic problem they ran into when they shut down Oldsmobile back in 2003-2004.

Now, I like Saturn. Or rather, I like some Saturns. Well actually, only Saturns that aren't really Saturns. Still, in today's market where GM is struggling as hard as it can to bring it's public perception up to import-brand levels, it's depressing to see them can their bespoke "import competitor" division. Yes, I know - Saturn has never really been competitive with it's import counterparts. But it had potential.

Also on the block is Pontiac. Sort of. Pontiac will still exist in name, but it will no longer be a seperate division of GM - it will be absorbed into the Buick/GMC fold to reduce costs, and will remain as a purveyor of "niche" vehicles. I'm not sure what that means, but it better mean they're importing my blasted El Camino. Seriously though, I expect Pontiac will basically become the American version of Holden, GM's stand-alone Australian subsidiary - which I'm fine with, as Holdens are the best cars GM makes.

So, what about Chrysler? Well, they haven't got quite so many ideas. They announced they were discontinuing three old, unwanted products that everyone knew were dead anyway. The PT Cruiser (in production virtually unchanged since 2001) is gone, as are the Dodge Durango and Chrysler Aspen, two old-fashioned body-on-frame SUV's that have never sat well with today's market. So, uhh, what else?

That's apparently the 2010 Chrysler 300. And...

That's apparently the 2010 Jeep Grand Cherokee. These computer renderings of Chrysler LLC's two most popular long-term products brag about improved fuel economy - which isn't saying much - as well as 40% better reliability than the industry average.

By which they mean, their amount of warranty claims has gone down about 40% over the last few years. Perhaps this is related to the fact that Chrysler can't move 300's and Grand Cherokee's off their lots even if they come packaged with a PS3 and a small Asian child?

Only time will tell how this all turns out, but I hope at least GM survives. They are making cars people want. Whereas Chrysler makes insipid crap for people that don't know any better, in addition to being a privately held company that the public has no real stake in. Take that as you may.