GM Says can survive March without new Gov't money

[DBeaSSt]

http://news.yahoo.com/s/nm/20090312/bs_nm/us_gm_funding_2

GM says can survive March without new aid

DETROIT (Reuters) – General Motors Corp (GM.N) has told U.S. officials that it can survive through March without the additional $2 billion in emergency aid that it first requested, the automaker said on Thursday.

GM said in a statement that it had been able to defer the first tranche of its aid request after stepping up the pace of planned cost-cutting and holding back on some spending that had been planned for January and February.

Shares of GM rose 9 percent to $2.03 after the announcement.

The automaker has been kept in operations since the start of the year with $13.4 billion in loans from the U.S. Treasury and has asked for the government to provide up to $30 billion to fund its restructuring.

A task force headed by Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers is considering GM's aid request and a separate request for up to $9 billion in aid from Chrysler LLC.

The task force has until the end of March for its deliberations as GM works to secure new concessions from its bondholders and the United Auto Workers union to cut its debt by a combined $28 billion.

GM burned through $5 billion in the fourth quarter and ended the year reliant on the first $4 billion in loans it received from the U.S. Treasury.

Under the restructuring plan submitted to U.S. officials in mid-February, GM had forecast that it would burn through another $5.1 billion in January and February.

It was not immediately clear how the cost-cutting efforts GM made in the first months of the quarter had affected its projected cash burn rate.

GM Chief Financial Officer Ray Young said the company remained in talks with the Obama administration task force overseeing the industry's aid requests.

"GM will remain in regular contact with the presidential task force on the auto industry on the status of GM's restructuring actions, its liquidity position, timing of future funding requests, and other relevant topics of mutual concern," Young said in a statement.

(Reporting by Kevin Krolicki, editing by Maureen Bavdek)

Hopefully this is the start of some good news. Unfortunately saving money by cutting programs (diesel for pickups) isn't going to help in the long term.

[carman21]

This is great news. I just hope its a sign of better days ahead and not just a fluke.

I knew GM was in dire straights but I knew that the restructuring combined with new world-class product would lead GM to a turnaround. Now let's see some profits so GM can get out from under the Federal government's thumb.

[Robert Hall]

Ok, through March is ok. But what about April? May? June? December? December 2010? etc...

[smk4565]

This is a PR ploy, to make it look like their cost cutting efforts worked. They can get through March, but still want $16 billion for April to December. They aren't out of the woods yet.

[Daryl Z71]

This is a PR ploy, to make it look like their cost cutting efforts worked. They can get through March, but still want $16 billion for April to December. They aren't out of the woods yet.

Nobody said they were out of the woods they just don't need any money this month. No matter what little bit of good news they do have people still have a reason to bash the hell out of them. I think this is good news. Yea they might still need money, but at least they can get through ONE month without some. Now if Toyota would have news like this the media would be all over it and the whole entire world would be saved from destruction because Toyota is the best thing in the world!

[Justin Bimmer]

It has been on the front page of Yahoo all morning. I'm sure MSNBC and CNBC have talked about it.

[Robert Hall]

This is a PR ploy, to make it look like their cost cutting efforts worked. They can get through March, but still want $16 billion for April to December. They aren't out of the woods yet.

GM needs to think outside the box on how to raise funds...maybe place execs disguised as homeless guys at the bottom of the freeway exit ramps throughout the Detroit metro area to collect change...or panhandle on the streets of Detroit. Or collection boxes at dealerships (Donate to Help Save GM!).

[Brougham-Holiday]

Good news guys and gals, Ford said it can make it through March without more Federal money...oh wait, they never needed any.

Someday, many years from now, people will look back at headlines like this and tell the story of how America's most powerful company threw it all away.

Edited March 12, 2009 by Brougham-Holiday

[smk4565]

Nobody said they were out of the woods they just don't need any money this month. No matter what little bit of good news they do have people still have a reason to bash the hell out of them. I think this is good news. Yea they might still need money, but at least they can get through ONE month without some. Now if Toyota would have news like this the media would be all over it and the whole entire world would be saved from destruction because Toyota is the best thing in the world!

But why would GM turn down the $2 billion if they know in April they will have to ask for it. What if the government turns them down and doesn't give them anymore than the $13.4 billion they already got? They should hold on to that $2 bilion and stop asking for more money.

[cletus8269]

But why would GM turn down the $2 billion if they know in April they will have to ask for it. What if the government turns them down and doesn't give them anymore than the $13.4 billion they already got? They should hold on to that $2 bilion and stop asking for more money.

it could be the fact that they are being lumped into the same boat as CITI. by not seeking more money they could distance themselves from the appearance of being a black hole of financial dispair. theres also that tiny little insignificant rumor about citi and other establishments being "nationalized". if i recall correctly that little rumor turned into a huge scare that sent the stocks running south.

[Z-06]

GM needs to think outside the box on how to raise funds...maybe place execs disguised as homeless guys at the bottom of the freeway exit ramps throughout the Detroit metro area to collect change...or panhandle on the streets of Detroit. Or collection boxes at dealerships (Donate to Help Save GM!).

Detroit city is already broke. They should go to the streets of LA, SF, LV, NY, Bo, DC, Mia, Hou to do that.

[turbo200]

Detroit city is already broke. They should go to the streets of LA, SF, LV, NY, Bo, DC, Mia, Hou to do that.

I was just gonna say that would get them nowhere. the city of detroit is being decimated [though to what extent I cannot know since I am not there].

[turbo200]

Nobody said they were out of the woods they just don't need any money this month. No matter what little bit of good news they do have people still have a reason to bash the hell out of them. I think this is good news. Yea they might still need money, but at least they can get through ONE month without some. Now if Toyota would have news like this the media would be all over it and the whole entire world would be saved from destruction because Toyota is the best thing in the world!

though I appreciate the pro-GM sentiment......people have a right to be angry with GM, it is after all taxpayer money that is keeping them alive because of problems created by themselves. honda and toyota [ford as well, and all the others] haven't gone asking for bailouts....only money from japan to loosen credit in America.

[Daryl Z71]

though I appreciate the pro-GM sentiment......people have a right to be angry with GM, it is after all taxpayer money that is keeping them alive because of problems created by themselves. honda and toyota [ford as well, and all the others] haven't gone asking for bailouts....only money from japan to loosen credit in America.

Oh so its ok to give money to the banks who go blow it on stupid $h!, but as soon as we should give it to GM to try and help keep people in a job its not worth it. Give me a break! Seems like people forget that the banks brought it on themselves too, but you don't here people bitching about that do you.

Edited March 13, 2009 by Daryl 83

[cletus8269]

ah, thanks for clearing that up for me. here since september of last year i had it in my head that it was poor planning on more than one companies part. i was thinking that somehow it was the culmination of a heavy dependence on foreign oil, people encouraging buying things that was far out of their means by way of financing themselves into debt so they live paycheck to paycheck and therefore resulting in the defaulting of home business and auto loans when gas was hitting $3.50+ a gallon. see even though i didnt buy that house by financing for 110% of the cost because i didnt qualify for it to begin with but did anyway cause it was "fair" i am now paying on that house because the bank owns and no one will buy. the government steps in and rewards those banks for sticking their necks out there with the bailouts and when the auto industry everyone says foul why should we save them? "poor products" aside, when the home team doesnt have the advantages as the visiting side due to loopholes and other free passes the government allows, to me it doesnt seem fair. Japan would laugh if we demanded the same perks as their companies get here if we wanted to manufacture cars over there. there is not one single "ah-ha" answer to what has befallen this country except for plain and simple greed . everyone is guilty of it. me, you, the government, corporations, the whole shibang. when people finally realize that 3500sq/ft homes with 10 50"tv's 5 Bedrooms 4 baths, and a 3 car garage with 2 brand new cars and a boat in em arent necessary to have "made it" in life, this country can get back on its feet and shine like it did when the "greatest generation" were running the show.

[turbo200]

Oh so its ok to give money to the banks who go blow it on stupid $h!, but as soon as we should give it to GM to try and help keep people in a job its not worth it. Give me a break! Seems like people forget that the banks brought it on themselves too, but you don't here people bitching about that do you.

difference is the world's economy depends on banks' balance sheets looking good.

[Daryl Z71]

difference is the world's economy depends on banks' balance sheets looking good.

And the economy doesnt depend on the American Auto Industry? Without it there will be even less jobs and it will get worse. Id rather hand my tax money to GM so the workers can keep their jobs instead of hand it to a bunch of corrupt banks who hand all of their money out for stupid company trips and over paid CEO's who don't do a damn thing but pick their nose all day long.

[Drew Dowdell]

difference is the world's economy depends on banks' balance sheets looking good.

Doesn't that mean there is now an incentive for the banks to make as big of a cock up as they can of things so they can get government money?

The banks are being GIVEN this money.

For GM it's a LOAN..... and lest we forget, it's been done before with Chrysler with great results. (financially)

[wildpaws]

Doesn't that mean there is now an incentive for the banks to make as big of a cock up as they can of things so they can get government money?

The banks are being GIVEN this money.

For GM it's a LOAN..... and lest we forget, it's been done before with Chrysler with great results. (financially)

I agree with your statements. We also have to remember that the Congress and banks together pushed through programs which made thousands of loans to people that would not normally qualify for loans, in many cases not even verifying that they had a job much less that they had sufficient income to repay the loans. If GM can get enough concessions from the unions and also cut enough costs through getting rid of extraneous expenses, then there is hope for a leaner/meaner GM to emerge that will operate at a profit while producing vehicles that consumers want and are willing to purchase. We can only hope that the government does't strangle them by forcing them to build nothing but uninspired fuel effecient econoboxes.

Clyde

[CARBIZ]

One thing being lost in all this bitching and moaning about 'bailing out Detroit,' is that when the economy in the States finally recovers in late 2009 or early 2010 there will be a huge pent up demand for autos. 2010 COULD be a 20M sales year. IF GM retained 20% of that figure, that amounts to 4M in sales, which is nearly where it was pre-cutbacks. GM COULD pull a Chrysler and pay back these loans within a couple years. GM has a lot of new vehicles in the pipeline, including the Equinox, Cruze and even the much hyped Volt.

I know - that's a lot of COULDS; however, it would be a shame for all that money to flow out of North America and over to Japan Inc., dontchca think?

[G. David Felt]

One thing being lost in all this bitching and moaning about 'bailing out Detroit,' is that when the economy in the States finally recovers in late 2009 or early 2010 there will be a huge pent up demand for autos. 2010 COULD be a 20M sales year. IF GM retained 20% of that figure, that amounts to 4M in sales, which is nearly where it was pre-cutbacks. GM COULD pull a Chrysler and pay back these loans within a couple years. GM has a lot of new vehicles in the pipeline, including the Equinox, Cruze and even the much hyped Volt.

I know - that's a lot of COULDS; however, it would be a shame for all that money to flow out of North America and over to Japan Inc., dontchca think?

Totally agree with your comments.

[daves87rs]

I was just gonna say that would get them nowhere. the city of detroit is being decimated [though to what extent I cannot know since I am not there].

Let's just say it's bad....

[daves87rs]

difference is the world's economy depends on banks' balance sheets looking good.

And that is going to change sooner than you think....

[daves87rs]

One thing being lost in all this bitching and moaning about 'bailing out Detroit,' is that when the economy in the States finally recovers in late 2009 or early 2010 there will be a huge pent up demand for autos. 2010 COULD be a 20M sales year. IF GM retained 20% of that figure, that amounts to 4M in sales, which is nearly where it was pre-cutbacks. GM COULD pull a Chrysler and pay back these loans within a couple years. GM has a lot of new vehicles in the pipeline, including the Equinox, Cruze and even the much hyped Volt.

I know - that's a lot of COULDS; however, it would be a shame for all that money to flow out of North America and over to Japan Inc., dontchca think?

Agreed. I am one of those people...waiting....

[Teh Ricer Civic!]

One thing being lost in all this bitching and moaning about 'bailing out Detroit,' is that when the economy in the States finally recovers in late 2009 or early 2010 there will be a huge pent up demand for autos. 2010 COULD be a 20M sales year. IF GM retained 20% of that figure, that amounts to 4M in sales, which is nearly where it was pre-cutbacks. GM COULD pull a Chrysler and pay back these loans within a couple years. GM has a lot of new vehicles in the pipeline, including the Equinox, Cruze and even the much hyped Volt.

I know - that's a lot of COULDS; however, it would be a shame for all that money to flow out of North America and over to Japan Inc., dontchca think?

The argument misses the point that your just perpetuating a business model that cannot sustain itself in bad times. GM has been a WEAK BUSINESS for some years now that was kept afloat by decent economies and bubbles. A post Chapter 11 GM would be far more flexible in times of economic troubles and would likely have larger profit margins, allowing it to re-expand and reclaim far more of its old market share than simply limping along with its current business model propped up by the government.

Now, like everyone else here i want GM to survive cause i really want a new Camaro from a company that's AMERICAN, but i don't think that government intervention in this way is any way to run a company. GM's feet need to be held to the fire in a CH 11 bankruptcy so that they can emerge far stronger than before (even if they are smaller, they can always regain their market share through innovation etc).

The same argument could be made for the financial sector as well

[CARBIZ]

Well, from what I can see, GM has acheived much of what it could have and still avoided Chapter 11. They've wrestled huge concessions from the unions involved, dealers are dropping like flies and it may even be easier to drop a brand or two with all the bad news about.

I wouldn't be surprised if this was Wagoner's plan all along. The cost cutting that has taken place over the past several months has been huge and could only have been done while GM was on the precipice. There are dangers to this course, but if GM comes out the other end, leaner and meaner, it will be worth it.

And I am saying this from the point of view of one of those casualties.

[enzl]

Well, from what I can see, GM has acheived much of what it could have and still avoided Chapter 11. They've wrestled huge concessions from the unions involved, dealers are dropping like flies and it may even be easier to drop a brand or two with all the bad news about.

I wouldn't be surprised if this was Wagoner's plan all along. The cost cutting that has taken place over the past several months has been huge and could only have been done while GM was on the precipice. There are dangers to this course, but if GM comes out the other end, leaner and meaner, it will be worth it.

And I am saying this from the point of view of one of those casualties.

It's still not enough....they haven't dealt with legacy or bond-holders debts....

GM currently owes more to creditors than it can EVER earn in profits, assuming it can make money on operations, which I don't believe it can in a sub-10mill marketplace here in the US.

[CARBIZ]

It's still not enough....they haven't dealt with legacy or bond-holders debts....

GM currently owes more to creditors than it can EVER earn in profits, assuming it can make money on operations, which I don't believe it can in a sub-10mill marketplace here in the US.

If U.S. auto sales stay sub-10M, it won't matter what GM does: nobody in America will have a job by then. You and I both know that 15M is acoming, and possibly even 20M with a rebound in the economy in 2010 or 2011.

It's disingenuous to suggest otherwise.